Closing Bell - Closing Bell: Critical Week for Your Money 6/9/23

Episode Date: June 9, 2023

Will this week go down as the one that saw the bull market return or not – regardless of what the numbers might suggest? Fundstrat’s Tom Lee makes his case. Plus, Leslie Picker breaks down a new risk for the big banks. And, Netflix shares jumped on a report of a surge in subscribers. We discuss what that might mean for the rest of the streaming space. 

Welcome to Closing Bell. I'm Scott Wapner. We do begin with breaking news. Charges against former President Trump. The indictment unsealed just before 2 p.m. Eastern time. You see the live shot there from the Justice Department. Special Prosecutor Jack Smith expected to make a statement any moment now. We are going to go live to Washington when that happens. First, though, take a look at where we stand here just past three o'clock in the east. The S&P 500 trying to close above 4,300 for the first time since last August. It's about four or so points above that right now with the big question for investors right now, has the rally really ushered in a new bull market as the long followed definition would suggest? Or are the bulls still, or the bears, excuse me,

are they still in control? We'll ask that question to Fundstrat's head of research, Tom Lee. He joins us right now. Tom, welcome back. So we know we're 20% off of the lows, the technical or follow definition of what a new bull market would look like. But are we really, are we really in a new bull market, given everything that we know, and in some cases, everything that we don't? Scott, you know, we think the bull market did start in October. Every new bull market has always met with deep skepticism. We know that happened in 2020. And we know that happened in 2009, when even as late as October of 2009,

people were calling for new lows and pointed to the lack of earnings recovery. But I think a few things that viewers have to keep in mind is there's been eight months now of rising trend, and the S&P is solidly above the 20-day. And now the 200-day moving average is rising again. There's been an expansion of breadth, and historically, since 1900, so 125 years of data, earnings bottom 11 to 12 months after the market boom. So I sense that the S&P earnings revisions will start to bottom in the next six months, and that will confirm that the bottom was October. You know, I guess the obvious comeback would be how can we possibly be in a new bull market when so many areas of the

market are not that strong? And I think we know exactly what we're talking about. You take out the Magnificent Seven, however you want to describe big cap tech, plus a few others. It's not that pretty of a picture, Tom. So how can we really say we're in a new bull market when so much is not participating in it? That's true, Scott. I mean, if someone was an equit investor, they may not be feeling the same upside. But I think one thing that we point out to our clients is that the drags in the market this year have been the defensive sectors like utilities, healthcare, staples. That's really where you have awful breadth. And actually, those are among the most expensive sectors. So if someone was just looking at cyclical groups like tech, discretionary,

industrials, materials, they're actually meaningfully in a bull market because the participation of those groups is much greater. And I think from an index perspective, I know people are trying to discount the index, but just keep in mind, if you take the top 2% of companies, or like the MSCI Global, or the Eurostox, or Japan, they're often over 35% of the market cap. In the U.S., that number is like 25%. So the U.S. isn't as concentrated as other country indices. And in the U.S., we've had two quarters of consecutive quarterly gains now on our track for the third. It's never happened in the middle of a bear market. So I just think too many signs point to this being a bull market led by the large caps because

there's fundamental drivers. And now expansion of breadth is what we can expect. I think the opposite is that, you know, some would suggest, well, too few signs point to it relative to the number of stocks that are actually in what you would even consider a bull market. I mean, at what point, I guess, on that note, do some of these other areas and let's just let's just talk about them. Healthcare, down year-to-date. Staples, down year-to-date. Energy, down year-to-date. Industrials, barely higher year-to-date. Utilities, down year-to-date.

At what point do some of the sectors that have lagged need to catch up to the real winners? I think it's a great question. I mean, one, I just really recommend the viewers not be overweight, these defensive groups, energy not being defensive, but the other ones are all defensive. But I think next week is the key moment because, you know, we have a Fed that's been less hawkish, but has not necessarily said that they agree financial conditions should be easing. And and they pause. So I think next week is almost one of these big come up in moments because of the Fed essentially acknowledges there's been progress on inflation. We have a June pause and maybe even a July pause. I think it's going to be a green light for some of those groups to

finally get a bid. And I think it'll be led by groups levered to easing financial conditions. That's industrials, discretionary. It's not necessarily great for utilities or health care, but as you point out, Scott, discretionary and industrials aren't up 12 percent. They're up 5, 6, 7 percent. Yeah. We have the shot up on the screen. As all of you can see what our breaking news is, we're waiting on the special prosecutor, Jack Smith, to make a statement regarding the charges against the former president. And we're going to go live to the Justice Department when Jack Smith does appear. We've already been given a two minute warning, so we expect that that will take place

momentarily. In fact, you see the special prosecutor and his team approaching the podium in which we're going to hear the charges and the counts against the former president, 37 counts in all. Let's listen. Good afternoon. Today, an indictment is unsealed, charging Donald J. Trump with felony violations of our national security laws as well as participating in a conspiracy to obstruct justice. This indictment was voted by a grand jury of citizens in the Southern District of Florida and I invite everyone to read it in full to understand the scope and the gravity of the crimes charged. The men and women of the United States intelligence community and our armed forces

dedicate their lives to protecting our nation and its people. Our laws that protect national defense information are critical to the safety and security of the United States, and they must be enforced. Violations of those laws put our country at risk. Adherence to the rule of law is a bedrock principle of the Department of Justice, and our nation's commitment to the rule of law sets an example for the world. We have one set of laws in this country, and they apply to everyone. Applying those laws, collecting facts, that's what determines the outcome of an investigation.

Nothing more and nothing less. The prosecutors in my office are among the most talented and experienced in the Department of Justice. They have investigated this case hewing to the highest ethical standards, and they will continue to do so as this case proceeds. It's very important for me to note that the defendants in this case must be presumed innocent until proven guilty beyond a reasonable doubt in a court of law. To that end, my office will seek a speedy trial in this matter consistent with the public interest and the rights of the accused. We very much look forward to presenting our case to a jury of citizens in the Southern District of Florida. In conclusion, I

would like to thank the dedicated public servants of the Southern District of Florida. In conclusion, I would like to thank the dedicated public servants of the Federal Bureau of Investigation, with whom my office is conducting this investigation, and who work tirelessly every day upholding the rule of law in our country. I'm deeply proud to stand shoulder to shoulder with them. Thank you very much. Why Florida, sir? Why did you decide to bring the case in Florida? Okay, a brief statement there from Special Counsel Jack Smith commenting on the charges against the former president.

Our Eamon Javers is in Washington watching all of this unfold. Seven charges in all, Eamon, containing 37 federal counts. That's right, Scott. And you could see there that Smith, the special counsel, not taking any questions from the reporters in the room who certainly had some questions for him about the details here. But he's very much putting this in the context of the men and women of the armed services of the United States, underlying the gravity of what he sees as the underlying misconduct here, suggesting that the former president of the United States put the nation's security at risk with his conduct here,

and that's why he had to move forward with these charges. The special counsel there is saying that we have one set of laws in this country, and that applies to everyone, no matter who they are in this country. And you can see in this indictment, which we've been going through over the past hour or so, Scott, the level of detail that we're now being provided in terms of what the documents were that the former president allegedly took to Mar-a-Lago and to New Jersey with him.

They specify in this document the specific top secret items that the former president had on his possession, including things like a document dated January 2020 concerning military capabilities of a foreign country, a document dated March 2020 concerning military operations against the United States, a document secret concerning nuclear weaponry of the United States. I mean, these are some of the most valuable military and intelligence secrets in the United States. The former president had them in Mar-a-Lago, and in the indictment, they detail exactly the level of security and scrutiny that the former president had over those boxes of documents, which were stored at one point in a ballroom on the stage where events were held and people presumably coming in and out of that ballroom all the time. And this is not a secure situation for those

documents to be stored in. And then alleging as they go through the indictment that what appears to be, according to the prosecutors, a willful pattern of trying to obscure exactly what he had and exactly where all that information was being held, Scott. So this is history here. We have never seen a former president subjected to federal charges, certainly not under the Espionage Act involving U.S. nuclear secrets, Scott. Complicated as well, Eamon, by the fact that former President Trump would like to be the president once again and figures to be running a campaign when a lot of this may be in a courtroom. Jack Smith today saying that he's going to seek what he says is a speedy trial. Do we have any indication when that might commence? We don't.

At this point, we have no idea. I mean, the former president will appear before a magistrate judge next week and they'll begin the legal process on that. But we don't have any sense of when we could actually see a trial taking place here. A lot of people in this position that the former president is in now being indicted with an indictment like this, with the voluminous evidence that's now been laid out, you would think would be looking for some kind of settlement. Is there a plea bargain agreement? Can I plea down some of these charges? But the political element of this makes that tricky, right? Because the former president is running a campaign suggesting that the Department of Justice is simply corrupt and trying to get him for political reasons. So if he negotiates this down and pleads guilty to

something, then in fact, he says that the Department of Justice was right here. So for political reasons, you know, he would seem to have to continue to fight this. For legal reasons, you could see a number of lawyers advising him, you know, see what you can do here to cut a deal. Those two things are at odds with each other. And the president, the former president, is in an entirely unique situation here with that. And we'll just have to see what he values more, this campaign or these legal negotiations. Eamon, I appreciate it very much.

That's Eamon Javers with the latest out of Washington, D.C. for us. Back to our market conversation as once again, we look at the S&P 500 at this moment. We have about 45 minutes to go. We're hanging on barely, Tom Lee, above 4,300. What would it mean, do you think, to the validity of this move if we were able to close above 4,300, Tom, on the S&P for the first time since last August? Scott, round numbers matter for a lot of folks, especially just sort of thinking of psychology. So 4,300 is a big deal. And probably more important is 4,325 because that was the August highs. And I think from a sort of those who are skeptical of this move, I mean, one thing for them to keep in mind is that, you know, next week, given the short a lot more positions squaring so that 4,300 then with service supporting, we could make a move substantially higher.

So it's it's a big deal, Scott. It's tricky, though, Tom, with a Fed meeting looming, a CPI report coming next week as well. If this is, in fact, the beginning of a new bull market, it could prove to be perhaps the shortest lived one we've seen in some time if those are disappointing events as the market would take them. Scott, I think you're kind of right on. I'm not sure if someone has been investing since October or steadily throughout the year. They're sitting on some nice gains, especially on FANG. If someone's trying to decide if they want to be buying stocks today on Friday ahead of the Fed meeting, you're absolutely right. I mean, it might be prudent to wait till after June 14th. That being said, I don't think the symmetry of this is actually that we re-enter a bear market. I think if the Fed does

say they want to be hawkish and they're talking about two more hikes, is that going to justify the S&P going back down to 3,500? I mean, I might just say no one's going to really want to sell the FANG. And the PMIs globally are bottoming, so you still want to stay cyclical. And again, as I point out, anyone who's been overweight cyclical, which is a bull market trade, has done really well this year. So I think it is a timing question, but I don't think it means that we could be slipping back into a bear. Let's expand the conversation, Tom, bring in Kevin Gordon of Charles Schwab and Victoria Fernandez of Crossmark Global Investments. Kevin, begin with you. You're sitting here right next to me. What do you make of what Tom Lee says? It's the bull market for sure in his mind. And it began a while ago.

Well, I think you still have a long laundry list of things that just have to be checked off. And much like you were covering and you've all been covering all week, which is, you know, lack of participation from small caps, the average stock cyclicals, Dow transports, the advanced decline line. I mean, the list goes on. So I think from that perspective, you know, objectively, you're not really in a territory that would be consistent with what we've seen from prior bull markets. So in that aspect, you know, you're kind of making history either way. It's either the longest bear market rally we've seen, or it's the weakest start by far to a bull market that we've seen. And I think just at this point, you know, eight months

off the low, the fact that the banks are still down, small caps have barely moved. You're even giving back some of the move today in the Russell 2000. And the fact that, you know, new highs relative to new lows on a 52-week basis haven't yet gotten in that consistent double-digit territory for the broader market. So I would just base it off of that. I don't think it's any precursor, at least, you know, the mega cap sort of narrowness in the leadership in the rally, I don't think that is necessarily the precursor for weakness. I think it's the lack of any movement for the rest of the market. If you start to see what we saw last Friday and in the middle of this week, where you

get much more participation, that to us would be much more favorable. You can get much more constructive, but it's just not happening yet for the broader market. So, in light of that, Tom, let's do a point-counterpoint. What's your counterpoint to what Kevin just said? Well, I mean, foremost, I think at the core, a bull market isn't defined by an advanced decline line or small caps. It's historically whether or not the index is advancing. And as you know, in 2009, after the March 09 lows, there were many people, I mean, the vast majority of people argued against a new bull market starting because they said the banks were lagging and they pointed to the internet bubble. So they didn't think tech

could be the leadership. And they pointed to what they saw was very poor prospects for investment spending and a hostile government. I just think people build a case against a rising trend. I think that that's probably the most important thing I would point out. The second is a lot of these things that I think are fair, like the lack of participation, can really change if the Fed signals they're comfortable with where stock prices are. So I think next week's a big moment. I mean, I can't say I know what the Fed signals they're comfortable with where stock prices are. So I think next week's a big moment. I mean, I can't say I know what the Fed's going to say. And if the Fed says inflation is still a problem, I think it's going to create the bifurcation still that we have the FAANGs and we have the tech and things that solve inflation and everything else. And it might feel

like a two-stage market. So I think he's bringing up, Kevin's bringing up fair points, but those historically aren't good arguments against a bull market. Okay, Victoria, how do you see it here? Yeah, so I lean a little bit more towards the bearish side on this, because I think when I'm sitting down in front of my clients, I can say, yes, we've seen some positive things in the market. Now, just over the last week is when we see the breadth really come back from around 30% of the Russell 3000 above their 20 day moving average up to around 47%. That's great. We like that. But you look at the factors that are still doing well in the market, risk on and momentum factors are still lagging the quality factors, which tells me that we're still a little

uncertain as to what's going on. And you have to look at leading economic indicators down 13 months in a row. And Scott, the level of change that we have seen in the LEIs, we've never had that level of change without going into a recession. We're just now hitting the time period after the first rate hike that you typically go into a recession. And there's a lot of these under the element kind of pieces that we're missing. We had the bank crisis earlier. We talked about commercial real estate. What about private lending? We've seen private lending increase significantly over the last month. Is that an area where we have to be concerned? Rising debt costs,

the illiquidity that's coming, and the sectors that usually do well during those time periods are the things we're talking about that are lagging right now. Healthcare, staples, value names. So I think you can't have a confirmation bias as to whether you're a bull or a bear. You have to take it all in. But saying that, that doesn't mean if you're bearish, you're out of the market. We've never been out of the market, even though we've had a bearish view. It just depends on where you are within the market. And I think that's key. Kevin, you know, the issue is there's a lot of uncertainty, obviously,

and there's going to be. The market's already up 20% off the low. By the time there is this alleged certainty, whatever bell rings that suggests it's here, the market may be even further down the tracks. Bell meaning the recession itself? No, that there's no more uncertainty, that we're certain we're actually in better times,

that we may not have a recession, that this, in fact, is the beginning of a new bull market. And in some ways, I think that extends kind of the timeline that you can be constructive. If you push back the recession, the only, I think, negative down the road for the market is if you push back the start of the recession, typically you see markets dive when recessions start.

And I think, you know, as it pertains to the Fed and monetary policy and the clarity around that, I mean, yeah, that'd be a welcome sign. If you get any indication from Powell and from other members, whether it's next week or following that, that there is more clarity, I think that'd be welcome. At the same time that you do have more of a catch up from everything that's gotten beaten down. So again, to the point of it's not necessarily just concentrated leadership that's going to get you the reason to move lower. The best case scenario, the most benign, is just kind of maybe muddle through at the top end and then giving the rest of the market a chance to kind of catch up a little bit. Victoria, you heard Tom still favor FAANG, which has led the way, and I guess for obvious reasons.

How do you feel about that space here? Is it time to take some gains or just continue to go with these stocks? Because you believe that fundamentally in what is a fairly uncertain world, you get at least a degree of certainty, better balance sheets, better growth. They're in the right, you know, where the action is, so to speak. Yeah, I think you need exposure to these names, right? We're underweight those names, but we still have exposure to them. You don't want to be completely out of these names because of the momentum that they've had. I know, I'm sorry to cut you off, but if you're underweight those names, you're underperforming the market. I think that that's my point.

At what point do you say, you know what, this is where the action is going to be. So where I was underweight, I'm going to go overweight or this thing is going to get a little bit further away from me. While I'm still thinking that the more cyclical or value part of my portfolio isn't going to come around like I thought it might. Well, and I think that's why, at least in our portfolios, you have risk parameters around how far you want to make that bet in these names. So we've actually added a little bit in some of these tech names because we don't want to be too far underweight, but we're not sure we want to be exactly market neutral or even overweight because we do feel like there's going to be this rotation and some of those high flyers are going to pull back a little bit. But where we've added and where we're not necessarily

underweight in tech, look at names like Salesforce. We've actually added to Salesforce this past week. That's a much more reasonable valuation than some of the other names in the space. So I think you can still add to tech. You can still have the exposure to those big names, but find some other elements, some better valuation names that you can build that sector and have some exposure the start of the broadening out or not, it certainly got a little more broad than it had been. You saw what small caps, for example, have done. At what point do you just say, you know what, it's time to be more positive?

Well, I mean, constructive, we got more, a little bit more constructive at the October low when you did start to see kind of the conditions you would want to see at the beginning of a new bull market. The problem is is that just didn't sustain itself. So now us being eight months off of the low, not seeing any conditions that you would want to see at the beginning of a new bull market. The problem is, is that just didn't sustain itself. So now us being eight months off of the low, not seeing, you know, any conditions that you would want to see from a breadth perspective when you get to this point. So we'd get more constructive if that was the case. But I mean, there are other areas of the market that have started to pick up, which would suggest that what was a very top heavy

market isn't such anymore. And that would lead people to be more bullish than they've been. Yeah, and I think that's what you want to see. So like we were saying over the past week, you want to see those kinds of moves, but they have to be sustained and carried forward. So on a day like today, I mean, one day doesn't change everything. But if you kind of see these reversals and you kind of have everything going back into just those handful of names, I think that presents a little bit of a problem.

But to the point around anybody who is bullish, you know, start to look for some of the signs at the sector level even that participation is broadening out because even in industrials, for example, equal weight industrials relative to cap weight is doing really well. It's the same thing in utilities. Two different plays from a cyclical versus a defensive perspective, but it's starting to show up in different parts of the market. So I would be, you know, worried or at least alert of that and aware of that and, you know, take hold of it. All right, Kevin, thank you. Victoria, thanks as well. Tom Lee, we'll talk to you again soon. Appreciate you joining us. Don't miss,

by the way, when Tom joins our CNBC Financial Advisors Summit next week, that's June 15th, and you can scan the QR code on your screen to register or visit CNBC events dot com slash financial advisor. Let's get to our Twitter question of the day. We want to know what you think. Is this really a new bull market? Head to at CNBC closing bell on Twitter to vote. Tom Lee says yes. What do you say? We'll share the results later on in the hour. We are just getting started, though. Up next, a big risk for the banks, the sector outperforming this week, but a hit to their bottom line to be on the horizon. We'll explain after this break and later Netflix moving higher as we head closer to the end

of the session on this Friday. We'll tell you about the data setting that stock higher, how it could impact the rest of the streaming space ahead. You're watching Closing Bell on CNBC. Bank stocks lower today, still tracking for a fourth weekly gain in a row as the group bounces back from the regional bank route. But another headwind could be coming for that group. So says Leslie Picker, who's following the money force. Leslie. Hey, Scott, that's right. For a while now, banks have been able to keep their deposit rates low, even as the Fed hiked interest rates. Take a look at the current gap between the Fed funds rate and the average deposit rate, nearly the biggest difference on record. The gap gets even wider

when you look at just brick and mortar banks as opposed to online banks, with those institutions paying just a few basis points on savings. It's been this way for a while, and customers have largely gotten used to the idea of giving up yield on their cash to the benefit of banks, which have been able to keep funding costs low for the loans that they're making. But this dynamic is changing in ways that could dent banks' bottom lines. Executives speaking at conferences over the last few weeks indicated modest deposit declines. Competition from higher-yielding money market funds and the deposit drain from quantitative tightening have been pulling cash out of the system as well. In order to capture and keep deposits amid shrinking pie, banks will have to pay customers more.

In a new note out yesterday, Goldman Sachs said the three firms that would see the biggest EPS hit from more expensive funding include U.S. Bancorp, Citi and J.P. Morgan. Scott. Yeah, Leslie, Mike Santoli is here with us as well. I mean, pay more for deposits and make less money. Without a doubt. And I think it explains why there has been this malaise in terms of the bank stocks. It's not so much that there's this crisis of rapid deposit flight. It's just the wear and tear of higher funding costs. It helps explain why the regional bank ETF trades under book value. We don't know if those book values are going to erode in the next quarter or not. But it shows you that people have a hard time seeing the way out of this fix, especially when you're talking about maybe the consumer starts to lose some steam as

well and you have credit costs going up. So I get why there's this concern here, although I think fixed, especially when you're talking about maybe the consumer starts to lose some steam as well, and you have credit costs going up. So I get why there's this concern here, although I think that the slight reassurance that the very largest banks probably don't feel the need to add tons of deposits, right? They've gotten, they've been net beneficiaries here. So maybe they're not going to drive the competition. It's more just the more sophisticated and mobile customers are looking for ways to get elsewhere. And, of course, there's been a rush of cash into money market funds. Leslie, it's credit costs going up, credit contracting in some regards, and may even further overhang of the economy, what the Fed's road ahead is going to look like.

All this uncertainty is still hanging over the banks. Oh, absolutely. All of that plays a role. Of course, that affects loan demand. That affects the amount of deposits that are overall in the system. Banks, not only have they been able to keep their deposit rates low in a lower interest rate environment over the last few years, but also they've benefited from just the overall stimulus in the system that has really flushed the entire system with tons of deposits. So those are starting to kind of taper off. Those benefits are taping off, not just because of QT, not just because of T-bill issuance, where customers are looking to buy into that,

but also just overall spending levels. People are spending in the economy and they don't have that stimulus that they had in 2020 and 2021 still in their bank accounts. Leslie, thank you. Our Leslie Picker following the money in the banks is always up next. EV stocks charging higher today. We'll tell you what's driving that move. Plus, we're debating what could be next for the Fed, where your next opportunity in the fixed income market might be. We're back on the closing bell right after this. Let's get a check on some top stocks to watch as we head into the close. Seema Modi is here with that. Hi, Seema. Hey, Scott, let's start with Adobe hitting its highest level since April of 2022 as Wells Fargo upgrades the stock to

overweight and hikes its price target by over $100 to $5.25 a share, stock up 4%. Analysts say Adobe is well-positioned to benefit from early enterprise adoption of generative AI. Elsewhere, ChargePoint and EVgo are firmly in the red as GM follows Ford's footsteps in adopting Tesla's charging standard and gaining access to supercharger stations. Meanwhile, Tesla shares have doubled this year and are tracking for an 11-day winning streak. And take a look at 3M, the U.S. judge rejecting 3M's efforts to resolve over 250,000 airplug lawsuits in bankruptcy, which Wall Street had seen as one way the company could minimize its legal liabilities. 3M saying it is considering an appeal stock down about 1.2%

in today's trade, down about 17% year to date, Scott. All right, Seema, appreciate that very much. Seema Modi up next time to bet on bonds. New fleet asset management's Dave Albright is back. He's breaking down his forecast for the Fed where he sees opportunity right now as well. Plus, Target is tumbling again today. It's not all gloom and doom, though, for the retail space. We'll give you the details. The closing bell comes right back. We're back. The rally in stocks has gotten nearly all of the attention recently as the S&P 500 approaches a new 52-week high. But bond yields, though, have also been on the rise. And our next guest is finding real opportunity across the fixed income market.

Joining us now, Dave Albright, CIO at New Fleet Asset Management. Welcome back. It's nice to see you. Good to see you, Scott. So we start the show asking the question. I get the technical definition of what the market considers a bull market to be. The bond market isn't exactly confirming this alleged equity new bull market, is it? Well, I mean, if you look at relative value across fixed income, we haven't seen these type of levels going all the way back to the global financial crisis. You know, right now you have discount dollar prices, you have high yield yielding eight and a half bank loans giving you about nine percent, IG corporates at five and a half percent. So it's a great time to be dollar cost averaging in, Scott, because, you know, your total returns, that's we are a total return player looking for appreciation and yield hasn't been better going back, you know, almost 14 years. So there's definitely

value in fixed income. I mean, I know you like high yield and you say that the quality is is the highest it's ever been. The problem with that, I hear you, of course, but what about the quality deteriorating if the economy, in fact, does take a turn for the worse? Yeah, well, that's something you have to be cognizant of. That's why we're doing up in quality. If you look at our recent high-yield holdings, we've been buying stuff yielding anywhere from 6.5% to 7.5%, stuff like Fortescue Metals, DT Midstream, Newell Brands, all very good, solid businesses that we feel very, very comfortable with. If we start to see the economy begin to tank and we see the Fed shift and begin to cut rates, then we'll look to take more risk. But right now, those are pretty defensive positions.

We also do that in bank loans. We're taking very defensive posturing. In bank loans, you can get a coupon around 8%. You can go into very high quality double B names, Icon, Aramark, Avalon, Building Materials Corporation, Hilton Hotels, and those that don't need to have access financing in the near term and are very well capitalized and very strong fundamentals. So we say that those are great opportunities now. And if you say the market weakens, defaults are coming off a very low point. That's one of the reasons why we think the Fed can orchestrate a soft landing. Plus, high yield and loans, you know, they're in much better shape than they were for the last five recessions. People have turned out their debt. Leverage is down. Interest coverage is up.

You know, and as I had mentioned, defaults are coming off a very low point. Throw in the consumer, which five months ago, delinquencies are at 40-year lows if you looked at mortgages, credit cards, and auto loans. So coming from a much better point. So not a bad time to be dollar-cost averaging into the fixed income market, Scott. Quickly, sorry, quickly before I let you go, the Fed, and I've had breaking news, and I appreciate your understanding of that. Is the Fed done or not? I think they'll probably skip. They maybe do one more 25 basis point increase. I think if you look what happened in Australia and Canada, they skipped. They had to raise rates again. It's not the end of the world. They're near the end of

the cycle. They're going to probably pause and really take a hard look at the data, probably begin to cut sometime next year. And our base case is for a soft landing. So should be dollar cost averaging in the fixed income at current levels. Dave, we'll talk to you soon. Appreciate it. It's Dave Albright joining us once again. Last chance to weigh in on our Twitter question. We asked, is this really the start of a new bull market? You can head to at CNBC closing bell on Twitter. We'll bring you the results next. And a special programming note this weekend. Across the networks of NBC News, we're shining a light on those who are inspiring America. People like LeBron James, Eva Longoria and more featured in a network special airing all weekend, Saturday and Sunday. And as we head to break,

here's NBC News' Lester Holt talking to actor Gary Sinise about his passion for helping America's war veterans. How did the idea of supporting veteran causes become so near and dear to your heart? Probably starts with the veterans in my own family. And on my side of the family goes back to World War I, World War II, Korea era. And then my wife, when I met her, she introduced me to her brothers, who both served in Vietnam. Let's get the results now of our Twitter question. We asked, is this really a new bull market?

Yes. Winning by a very slim margin, 52 to 48. Coming up. Netflix shares popping. We're drilling down on the data that's got investors cheering today Senior Markets Commentator Mike Santoli is here, as always, to break down these crucial moments of the trading day. Alex Sherman with us on how Netflix's crackdown on password sharing is paying off big time. And Courtney Reagan on why Citi is getting cautious on Target. Mike Santoli, 4304. It would be nice to get that first close above 4,300 since last August, wouldn't it? Yeah, probably would.

4,305, I guess, is the closing high. You've got about a half percent above that ultimately in August. But we're in the zone of maybe culminating this phase of this move. We've banished the idea that 4,200 was some kind of a rigid ceiling. That was the case, I think, as recently as a couple of weeks ago. So the weight of the evidence is definitely piling up on the side that this is a somewhat sustainable recovery, that we're in an uptrend. We want to declare it a bull market. That's fine.

That up 20% from below is certainly not a foolproof indicator that the next year is going to be great, but it absolutely has put the odds in your favor. Let's say 90% of the time they're going to be higher. It doesn't mean you're race ahead. The market's kind of answered some of the criticisms, but not all of them, basically about where we are in the cycle and obviously in terms of the breadth of the market, which is slightly improved. So the bulls argue that, you know, technically we've gotten over some good hurdles.

Things have broadened out much more substantially in, you know, I don't know, in the last week or so to make them feel better about where they are, to be able to justify that this is something to build on. Exactly. And I think really more broadly, you could say, what does it mean right now to be fighting the tape and fighting the Fed? Right. tape and fighting the Fed. Last year, fighting the Fed meant being bullish and buying stocks, and fighting the tape meant being bullish and hoping that we were going to actually turn it around. This year, maybe it's different. It seems like the Fed is deciding it does not have to kill the labor market to do its job. It's about at its destination. So that maybe is at least benign or neutral for here. And then, of course, the tape is improving. Again, it's not

some kind of unanimous decision that we have off to the races here. We are certainly at these levels that seem like they could be a challenge to get through. We have been overbought a little bit on the on the big cap indexes. You know, you've seen this burst of optimistic sentiment. I don't think it's overdone, but it's definitely something to notice after so long when people were despondent. Yeah, I've noticed. Speaking of noticing, Netflix today, Alex Sherman, up near 3%. What's happening here? So investors are excited that there's a new growth avenue from this password sharing crackdown that's finally going on in the United States. So Netflix customers in this country have been receiving letters informing them that either they have to pay $7.99 per month if they want to keep sharing a password,

or the customers that have been mooching off that free password for who knows how long need to pay for their own accounts. And there's third-party data now out showing that the amount of new subscribers for Netflix in this country is at an all-time high since this third-party antenna has been recording data back in 2019. So think about the huge gains you saw in Netflix over the pandemic. Even before that, we're seeing more subscriber ads in the past four days than at any point during the pandemic. That is good news for Netflix. That's why you're seeing the shares pop. Yeah. You know, Mike, with a lot of talk about all of the other Fang Plus stocks, not so much about this, though there should be. The stock's up 26 percent in a

month. Yes. Another big rebound move, of course. Keep in mind, this was once a $700 stock. It's also a whole lot smaller than those other franchises market cap wise. But in terms of essentially redeeming the long-term hopes from way, way back that they could get scale and they could eventually get pricing and they could eventually essentially establish themselves as the indispensable hub of streaming entertainment, that's all basically in place. So, yeah, it's a bonus that they have these extra revenue streams. They have pricing power and they don't have to worry about a lot of the ancillary issues that the other media players do. It's an expensive stock, but probably earning it. Yeah. Courtney Reagan, Citi's getting more cautious on Target,

which has just had a really rough go. What's the latest now? Yeah, absolutely. So Citi is looking and saying, look, Target's had a really good run since 2019. the latest now? Yeah, absolutely. So Citi is looking and saying, look, Target's had a really good run since 2019. They've increased sales 40 percent. We heard from Brian Cornell with a lot of detail on this last earnings call and the one before that talking a little bit about these decelerating trends in sales and in traffic. And so Citi is just saying, hey, they've put in their gains for now. We're going to downgrade the stock here to hold. And it's possible that a competitor like Walmart is picking up some of the share. Target did actually report negative digital sales two quarters in a row. Walmart is still seeing an increase in their net U.S. online sales. It is possible that's part of the reason. Maybe

they're pulling in some share. I think it's also important to look at the macroeconomic conditions and know that they do favor a Walmart over a Target as we buy less discretionary items, less home, less apparel. And that's what Target over-indexes in compared to Walmart, where Walmart has 55% of its mixed food. Target has 55% of its mixed discretionary. Yeah, Court, thank you. Just noticing that Biogen shares, they're halted.

Bertha Coombs, what's happening here? They've actually been halted all day as an FDA advisory board has been voting and deliberating whether to fully approve the company's Alzheimer drug, Lekembe. And FDA advisors say the late stage trial verifies the clinical benefits of their drug. This is a Cy and Biogen's Alzheimer's treatment. And they, by unanimous vote of six to nothing, voted to fully approve. At this point, the drug had only had an accelerated approval. And Medicare, CMS, had said that in order for people to get covered under those conditions, they would have to be part of a trial. Full approval now means that Medicare will cover it, but with the caveat that people will have to, doctors will have to register their patients.

They're in the process of building a dashboard where doctors will be able to register it. CMS director Chiquita Brooks-LaSure says it will not be onerous, but this is one of the things that the industry is fighting against, saying they don't think that there should be more hurdles for people in order to get these treatments. At this point, we don't know when the stock is going to be open. We'll watch. All right, we will watch that, and I know you will for us. Bertha Coombs, thank you very much. We've long had the two minute warning here, about a minute left in the session. We'll see if we can get above that forty three hundred level as the debate continues. Maybe a technical bull market by some people's definitions.

But the debate will rage as to whether it really is. It will. It'll continue. It's always a retroactive definition. Right. Because if the bull market started, then it really dates back to October on some level. The dullness and the kind of lack of drama in the market is a net bullish thing. People keep pointing to the volatility index being under 14, as if somehow that indicts this and means people are complacent. I think it just means that the index itself has been calm. It's got traction. It's firmer footing. There's a lot of rotation as opposed to people leaving the market. And a 14 VIX means it'll trade plus or minus 4% in the next month. That's not crazy. We'll see what CPI and the Fed have to say about that next week, though.

They always cheer at the close, as you know. They may have extra reason to. We're going to find out as things settle out here, as that bell rings, can we get over 4,300 by the time we settle out? We shall see. Have a great weekend, everybody.