Closing Bell - Closing Bell: Dow, S&P Hit Record Highs 2/7/24

Episode Date: February 7, 2024

The S&P 500 nearly topping 5,000 in today’s session. Ritholtz Wealth Management’s Josh Brown and Senior Market Commentator Mike Santoli break down the crucial final moments of trade. Plus, Yardeni Research’s Ed Yardeni drills down on his forecast for stocks as we sit at record highs. And, Laura Martin from Needham tells us what she is watching from Disney’s report in Overtime. 

All right. Thanks so 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 the markets march to new highs with some eater, even greater milestones now very much within reach. We are on S&P 5000 watch over this final stretch today. Coming up, we'll ask Josh Brown how far this rally can really go. In the meantime, your scorecard was 60 minutes to go in regulation. Stocks are higher, as you see across the board. We are just about two points away from S&P 5000. Nasdaq's higher by near 1%, as many of the mega cap names continue to run. Meta, Microsoft, Nvidia, all higher today. In fact, Nvidia is on the cusp of $700 a share and Cybernames ripping too. That after Fortinet's strong earnings report. Not so great for Snap shares, though,

plunging today after the company's earnings and guidance. That stock now on pace for its worst day in nearly two years. That's a stunning drop of near 36%. It does take us to our talk of the tape, the state of this rally. Whether it's too tech-heavy, as some now say, it is actually worse than the bubble of 1999. Let's welcome in Josh Brown, Ritholtz Wealth Management co-founder, CEO,

also a CNBC contributor. But let's deal with this market on the cusp of history, something extraordinary, I think, S&P 5000, given where we were and how fast we've come to the doorstep. Yeah. And just for fun, I went back and looked at when I first launched my blog in November of 2008, the S&P 500 at that time was like 700. The NASDAQ was 12, the NASDAQ 100, 1200. The Dow was under 8,000. And look how much has changed between then and now. And the entire way up, there were so many reasons to just give up, throw in the towel. The market's too tech heavy. It's too oil heavy. What about geopolitics?

What about the election, Brexit, COVID, et cetera, et cetera, et cetera, the Fed every minute of the day? And the people that stuck with their investments and have made it to S&P 5000, I think, should be commended. Because think about all of the things in the backs of all of our minds we've all had to contend with on the way here. So is it too tech-heavy now? Is that the biggest criticism? Okay, I'll accept that. The thing is, market returns have been tech heavy since 2016 when the cloud had its coming out party after Amazon announced that shocking out of nowhere profit that no one was expecting. Ever since then, and think about how long it's been, ever since then, eight years, we've had a tech heavy rally the entire way up. The only time it wasn't tech heavy was when the market fell in 2022.

Other than that, that's what has led us from there to where we are right now, which is just shy of $40,000 on the Dow, just shy of $5,000 on the S&P. Hopefully, we'll hit that in this hour. And when you think about these milestones along the way, mathematically, they're unimportant. But I think from a sentiment perspective, they are a reminder that most of the time the meteor misses planet Earth. Do you take any pause in how fast we seemingly have gone here from, you know, the October lows from November 1st until now, it really has been nothing short of extraordinary. The pace and the size of the move, theoretically on expectations that the hiking cycle is now in the rearview mirror and the Fed's going to cut.

And that is really all that matters at a time where the economy has held up incredibly well. I think one of the things that is worth pointing out alongside everything that you just said, which and all of those are true things. Earnings growth has been explosive for the areas that are getting the most attention from investors. It's not as though investors are playing in a group of stocks that don't have good fundamentals. I was looking at my board just now, looking at CrowdStrike up almost $20 on the day. They didn't report today. There are so many stocks like that in enterprise software, in cyber, in cloud, semiconductors. It's not really just six stocks. There are six very

important stocks, but then there are hundreds of companies with earnings growth, 20, 30, 40%. Those are the stocks that are working right now. It's not some peculiar group of names where we're all laughing and making memes. That was two years ago. These are the stocks that are working right now. It's not some peculiar group of names where we're all laughing and making memes. That was two years ago. These are the best earnings growth stories in the market. Are they going up too fast? Perhaps. I wouldn't argue with that.

It's getting a little bit extreme. I said that on the show yesterday. But if that's your biggest quibble, that they're going up too fast and not, oh, these are terrible companies or, oh, earnings are falling apart. If that's your biggest quibble, then do yourself a favor. Take something off. Trim something. That's what I'm doing.

Sell your least favorite stock. I did that yesterday. It's okay. You can stick around and not be taking the biggest risk at the party. We were literally at less than a tenth of a point away from S&P 5000. Did I jinx it? Is that what happened? Let's just keep that up as we have this conversation. You mentioned some of the trimming of big winners.

Somebody buy Apple, please. We really want this to happen in our hour. Trimming of the big winners, you said you were doing it. Obviously, it brings to mind NVIDIA, which you took 20% off the top of. Yes. And that stock is now about to hit seven hundred dollars, a price target of eight hundred last week from Goldman, a price target north of seven hundred today from Morgan Stanley, professor of the so-called Dean Evaluation, Aswath Damodaran of NYU Stern, saying, hey, I own this stock, but this is insane. So the S&P 500 over the last 10 years has been compounding at about 12.5%. This stock has been compounding at 69%. Mathematically, if you never sell any, it becomes your entire portfolio. There are very few stocks that have

kept pace with this. So for obvious reasons, I have to, every once in a while, take a little bit off. It would be a mistake, though, for someone to say, oh, you're calling the top, or, oh, you think, like, it's never going higher. I hope it goes higher. I have most of my position. I just don't think the current rate of acceleration in this stock is warranted. Like, the fundamentals are great.

I don't think they've gotten this much better. This name is up 45, 50% since the start of the year. I don't think anybody would argue nvidia's situation has gotten 50 better since january 1st so that's all i'm that's all i'm saying i would also just point out because it's so apropos to our conversation the first close above 4 000 on the s&p 500 happened on april 1st of 2021 theG7 stock from the close on that day until now that has the biggest gain by a wide margin is NVIDIA, up more than 400% since April Fool's Day on 2021.

That stock's been anything but a fool. I'll tell you what. The thing with NVIDIA that I think makes it the stock of the century so far, I mean, mathematically it probably is, is that all of the reasons people said it would work were the same technology that allows them to render those games will allow for parallel processing. What do we need parallel processing for? Well, not a lot right now, but eventually it will be the only way we get to scale in AI and machine learning and virtual reality and metaverse. Crypto was part of the story at one point. I don't think anybody talks about that anymore. The reason we all said NVIDIA had a bright future actually ended up happening and it happened all at once. And it happened. This is the important part. NVIDIA was in a 72 percent drawdown in 2022.

I don't think a lot of people remember that, Judge. NVIDIA had lost more than two-thirds of its value on the eve of OpenAI releasing ChatGPT. And that's how quickly things can turn. I think that's why we all love this game. That's why we're all so fascinated watching CNBC investing in companies, because miraculous things like that can and do happen. What's most extraordinary is that we're really only here because of the promise of AI. These stocks, the Mag 7, now maybe the Mag 6 or 5 or however many you want to put in that group, have so carried this market on the hopes, promises, dreams, expectations of what AI is going to mean for the NVIDIAs of the world and the Microsofts and the Amazons, the Alphabets, to a lesser degree, Apple. But even that announcement is on the come.

And that stock, even with an earnings guide that was less than perfect, that stock has rebounded in a big way as well. So to the people that say this is all tech-driven and therefore it's somehow illegitimate or needs an asterisk. I was around in 2007. The market was being led by literally oil and steel and things that China needed to import. And we had like the early start of inflation and we had this illegitimate home building and mortgage bubble. Is that what you would prefer the market to be

led by? Now, why was AI the thing that saved the market? Quite frankly, if you are the CTO at a Fortune 500 company and you are not already 10% of the way toward building out your company's AI strategy, I don't care if you're Pepsi or Pfizer or UPS or American Express, AI, AI, AI. Now, how are you going to implement this? Well, you talk to Microsoft, and if you're not ready to do something, Microsoft puts you at the back of the line. I had a conversation with Dan Ives about this. It's not irrational for us to be as excited as we are about AI,

given what it can do for the profits, corporate profits picture, for as far as the eye can see. But companies have to start somewhere and nobody wants to be at the back of the line. Nobody wants to go to their board and say, where are we with AI? Nowhere, nowhere yet. We haven't decided what to do.

So there's a lot of excitement, maybe too much. Not all of these stocks will continue to do what they're doing. Some of them are drastically overpriced, but you cannot argue with the spending, the CapEx. And we heard it from Apple. We heard it from Microsoft. These companies are spending more, not less. And that's why NVIDIA is ramping. NVIDIA hasn't even reported yet. These AI and related software players are ramping because the biggest companies in the world are telling you capex is going higher let's

keep this up and we'll keep watching this it's not all sunshine and roses it is not obviously there is new york community bank and we continue to watch that that stock was sliding yet again today it's up today um it was sliding earlier so maybe it's it's reversed. You were in it for a trade. You're out of it now. It's still below five bucks. I only bring it up because I'm curious as to whether the market's too complacent about certain risks that are out there relative to this and commercial real estate. If it's just looking past all of it and we need to pay more attention to it. I think we need to pay more attention to consumers and the potential for credit card delinquencies to rise. And I would be more worried about that than I would be worried about some sort of a systemic issue coming from commercial real estate. It's highly concentrated amongst regionals. I don't have any exposure to

regionals. I put our trade on a New York community bank, lost 20% quickly and was out. Now I hope it goes to zero after I sell. But the truth is, commercial real estate takes a really long time to go bad. It's been going bad now for three years. It ain't going to turn around this year or next, especially if we're talking about office real estate. However, this is the ultimate extend and pretend situation. The banks don't want to end up with these properties. They just don't. The lenders really don't want to have to mark losses on these things.

In the case of New York Community Bank, they were not ready to be $100 billion plus. That's a title for bank. They were jumped up into that category by virtue of the acquisition of Flagstar and then the rescue of the assets at Signature. They didn't know what they were doing. It is very company specific. Company failed to manage risk correctly. They actually got rid of their chief risk officer at the end of last year, according to reports. And now they have to figure out how they can salvage their reputation amongst investors. It doesn't appear that this is having any effects on the deposit base, according to the company.

So this is not a bank run. This is not that type of situation. It's just a horribly mismanaged situation. I think the fact that the stock is still four is pretty miraculous given how much people have given up. But this is not happening at Bank of America. This is not happening. And I think that's really the main point. So are we whistling past the graveyard here? I don't think that's the case.

All right. So we're about one and a half points still away from S&P 5000. Let's expand our conversation now and bring in Ayako Yoshioka of Wealth Enhancement Group. Ayako, welcome back. It's nice to see you on what very well could be another historic day for the stock market. What do you make of it? Good to see you again, Scott. Yeah, I know. It's been a relentless ride ever since the October lows of last year. Markets have been continuing to move higher. I know several of the stocks that have propelled us here

are mostly tech stocks. But as Josh said, there's a lot of reason that these stocks have propelled us here. CapEx being a big component of that, you know, in terms of the ride here. Do we need to be concerned, though? I bring up a note here from Marco Kalanovic, J.P. Morgan. He's been, you know, bearish on the market for a while now, says today, quote, market concentration continues to flash a warning sign as we are near the highs of the dotcom era. Stocks at highs effectively means that stocks are not pricing in any chance of recession, and a low VIX echoes the strong sentiment. As our equity colleagues point out,

the current period is in some ways worse than the dot-com bubble. Does he have a point or not? You know, I think everybody loves to go back to the historical analogs and talk about how this may or may not be similar to the dot-com bubble, especially just given the tech concentration. But I would argue that there's, you know, vast differences between what things were back in 1999 and 2000 and how things are now. You know, yes, valuations are high, but back in 99, 2000, we were seeing triple- triple digit multiples and things like that. And a lot of that was very hardware related. And, you know, especially as we headed into Y2K and all of that, you know, at this point with a lot of these cloud names, you know, it's a little

bit service oriented. You know, there's a lot of sustainable sort of growth that's in there. You know, I think it's a very different scenario than what it was back in 1999 and 2000. What about the idea that a big reason that stocks are rallying are on the expectations that the Fed is going to cut several times in calendar year 2024? And it remains to be the case. Are we over our skis on expectations? Does it even matter as long as we know that cuts are coming? The number is insignificant. Yeah, we definitely probably overpriced it at the end of the year, right? Six cuts were getting priced in when the Fed said that they were just going to do three. You know, I think that that's getting recalibrated at this point. And whether we go in March or May or June, I think that's, you know, sort of besides the point.

I think the point is that the Fed is looking to cut. They need the data to sort of corroborate it. But they are looking to cut. And once they cut, it sort of helps the underlying financial conditions for many of these companies, you know, access to capital and things like that. And we can expand that market breadth and maybe not have some of this concentration that we keep talking about. Josh, it's not just, you know, concentration in the largest names in the market in terms of the, you know, mag seven, seventy seven billion dollar market cap. I don't know. CrowdStrike sub six percent. Fortinet has good earnings. CrowdStrike rips. I'm looking at Palo Alto right now. You want to talk about some of the hottest spaces within the market. Palo Alto is up

6.5%. You own Crowd. Yeah. So if you want to be bearish, this is the reason to be bearish. You have stocks running 10 and 15% into their own earnings. Then the earnings come out and they're great and they go up another 10 and 15%. We're celebrating on both sides of the ball. When we get into that mode, that's a moment where you just look at your names and you just say, this is probably as good as it gets. It probably can't get much better than this. From my perspective, that's the reason to be cautious in the short term. If you're sitting with 18 stocks and they're all levitating, do you really have to add the 19th stock right now? It's not going to make you any happier, prettier, skinnier.

You can trust me. None of those things are going to take place. So I think that the caution is warranted when you're looking at we're pre-gaming, partying before the earnings. Then they come out, after hours pop, and then the next day, six upgrades, and it goes up even more. That environment is probably too good to be true. So I'm not actively looking for names right now. And I've taken some profits in things that have worked. And I've gotten out of things that haven't worked where I've gotten hit because what do I need to own my 20th favorite stock for? So I think a lot of people are thinking that way. And maybe that's why the misses like

Snap are being punished as much as they're being punished. So I, you know, I read you, Kalanovic, what he says. And look, he's bearish, as I suggested. But Ed Yardeni is not bearish. He's as bullish as anybody we've spoken to on this program, who also brings up the word in recent notes that he's put out, euphoria. Maybe not quite here yet, but the seeds are being sown of that kind of environment for stocks, and it makes him nervous. Should it make more of us the same? I think all of us who are in this game, you know, are nervous when things get better. You know, it's the retail investor who might feel a little bit of FOMO or fear of missing out. But for all of us who do this day in and day out, you know, when things get frothy like this,

we all get concerned that there is going to be that big rug pull because it could happen with, you know, a headline. And so, you know, I think being cautious is at least here is the right approach. Yeah. I appreciate it very much. You being with us on what may end up being, as I said, a history making day for the S&P 500. I want to go through a couple more stocks with Josh before we wrap this segment. Snap is a disaster. Yes. Today, it's fair to say you were in this name until yesterday or this morning? After the close, I got out of the stock last night. It was already crushed. But at a small position and honestly, I said going in, I don't trust this thing. I should have listened to

my own instinct. They announced layoffs the day before earnings. And I wrote that down in my little book as red flags from now on. If you need to do that announcement any day, but the day before earnings would probably be a better sign. If you're already doing that preemptively, you probably don't have a lot good to say on the actual report. So I did not heed my own mistrust of these people and they did not let us down. A couple other stocks I want to hit with you. Uber is your largest position. Yes. This is traded very interestingly today.

Wouldn't pay much attention to a one-day post-earnings move in a name like this because the many-day pre-earnings pop was so considerable, correct? Yes. The stock is 47 percent above its 200-day moving average. There were not a lot of those. It's 14 percent above its own 50-day moving average. But earnings per share growth this year for Uber is expected by Wall Street to be 27 percent, 75 percent next year. And that's what's led to the rally in this name. It's one of the best performing names of the year. It's not even, from my perspective, it's early, early innings in the story of Uber. And I'm not a trader here. I'm a longer term investor.

So I don't know if the next five points is up or down, but I'll be there. You're watching PayPal, too, which, by the way, reports in overtime. This company's been through a lot, to say the least, over the last six plus months. You were recently in the name. Yeah. You got out. You were fed up. You didn't like the investor day or whatever the recent event was where the stock went down as the CEO laid out some new plans there.

We learned in the last 24 hours or so that Brad Gerstner's altimeter is now in this name. They sent sort of a missive out yesterday, if you will, on social media, rather critical of what the company has done of late. And Brad has confirmed today that they're in the name. Why are you watching this closely today? Look, I want this to work. So I'm not in the stock, and I had been in it recently. But I want it to go up, not rooting against the turnaround. I just don't feel confident, at least right now. We'll see what the earnings are and how they're received. But I really don't like the way the CEO, the new CEO, who has never been the CEO of a public company before, set a trap for himself and then put his own foot in it.

So as a rule of thumb, you do not want to come out and say, we're going to rock your world this year. I know he didn't mean this one announcement. I got that. Just don't say that at all. Just do it. Just come out with the actual news. Don't set the table first because the expectations are always going to be too high, especially with technology companies. So that didn't seem savvy. They announced a 9% workforce reduction, which I guess makes sense. Everyone else is doing it. Why not? Earnings are expected to come in at $1.18, $7.8 billion in sales. I think that's all beside the point. They need to set the tone for what this year is going to look like, product launches that they have coming, and whether or not this company can return to organic growth.

It's a huge question. Most people don't think they can. They're growing revenue right now at a 7% CAGR. It's a $65 billion market cap. I don't think it's worth $65 billion if a 7% growth rate is going to be the standard going forward. Okay. So because we're on the doorstep of S&P 5,000, I'm going to ask you to hang out with us. I because we're on the doorstep of S&P 5000, I'm going to ask you to hang out with us. I know we're supposed to leave, but the Sedells you had for lunch is going to power you

through the next... I feel like I can make it. ...35 minutes or so. So Josh Brown's going to stay with us. Let me send it to Christina Partsenevelos now for a look at the biggest movers as we head into this close

and we keep our eye on the S&P, Christina. Well, I want to talk about Roblox because it just keeps losing money. Sales, though, are still jumping for the video game company. Revenue was up 30% year over year, as well as average daily active users. And why was that? It was driven by traffic, specifically from Meta's Quest headset, as well as Sony's PlayStation console.

The company's still warning that they expect net losses to continue for the next several quarters at least, but that still hasn't stopped shares from soaring about 12%. Roblox's CEO will be on CNBC tomorrow at 8.40 a.m. Eastern. And then we have shares of global footwear firm VF Corp moving in the complete opposite direction, down about 10%, a miss on the top and bottom line, a Cfo who's stepping down and a turnaround plan that has yet to prove beneficial vf corp ceo even calling the quarter disappointing shares down 10 scott all right christina thanks so much christina parts nevelos we'll see you again shortly i'm sure we're just getting started here on closing bell up next we get the pimco playbook

from aaron brown she flags where she's seeing some big buying opportunities right now. She joins us after this break. And we continue to watch the S&P 500 closing in on 5,000 for the first time ever. We're live from the New York Stock Exchange. You're watching Closing today on Wall Street. The S&P closing in on 5000 for the first time ever. My next guest says now is the time to add equity risk and is betting on the U.S. to outperform globally this year. PIMCO's Aaron Brown joins us now.

Welcome back. What a day to have you. What do you make of what we're witnessing here? So I think this is really just a continuation of the very strong economic data that we continue to get in the U.S., which is surpassing expectations. I mean, there were a lot of calls that have been calling for a slowdown. And what we're seeing is the consumer continues to deliver, financial conditions continue to ease, and growth is really good in the U.S. right now. And I think that the strength that you're seeing, particularly in U.S. large caps, is really on the back of that. You know, we're almost at 5,000. We're going to probably reach it today on the S&P 500.

Next target that I'm looking at is breaking through that 16,000 on the Nasdaq. We're still 2% below the all-time highs on the Nasdaq, which to me is really the next move to go through. The thing that really gets my attention today, I think, from you is the urging people to buy stocks, that it's okay to buy stocks at these levels. Back that up. Yeah. So, I mean, valuation is usually called into question. But when you disaggregate the S&P 500 from the MAG-7, the rest of the S&P 500, valuations are actually pretty reasonable. And growth estimates are also pretty reasonable given the still healthy economic backdrop. What we're hearing from corporates is that they're seeing margins expand as inflation continues to move lower.

Demand is still strong and they're able to cut costs, you know, because of efficiencies that they're driving productivity through AI and technology. So all of this is a pretty robust environment for earnings bottom line. And I think companies are going to be able to deliver this year. Do we care about concentration too much? So you talk about earnings. Yes, the mega caps are the ones delivering the others. Not so much. Is that picture going to improve? So I think that there's a real challenge. You look at the Russell 2000, the small caps are about 20 percent off their all time highs. There's a huge gap that's emerged between the large caps, which have access

to capital, which are well capitalized, healthy balance sheet companies and the small caps where high interest rates are really starting to bite. And I don't see that really ebbing until we start to see meaningful interest rate cuts from the Fed. Right now, liquidity is really abundant if you're a large cap. But if you're a small cap, your access to capital is a lot more constrained. And so I think that that valuation gap and that wedge is going to continue to widen until we see rates come down, you know, more out of restrictive territory. It's really extraordinary, Erin, what we're watching here. I've got Josh Brown, by the way, sitting next to me. You do want to know, let's show NVIDIA intraday as well as we continue to watch the S&P. But the S&P isn't where it is without NVIDIA being

where it is. And it's above 700 bucks now. Seven, almost seven hundred and two dollars, Josh. Another three percent move at six percent in a week. It's forty three percent in one month. Yeah. I remember when it hit five hundred. It was like 10 days ago. Where were you on the day NVIDIA hit 700? The milestones with this stock just keep coming fast and furious. Pretty extraordinary. Aaron, euphoria. Are we here? Are we not? Do we need to worry about it? As some well-known strategists say, this is worse than 1999. So first of all, I don't think that's true at all. There has been heavy concentration in the tech sector.

Again, when you look at the broader market, valuation is extremely reasonable. And when you discount the ROEs that you're getting from the tech sector, that's really not unreasonable either. What's really interesting is that over the last two and a half years, the valuation for the MAG7 hasn't increased at all. It's been flat. So all of the growth that you've seen in the MAG7 has come from earnings growth and margin expansion. It hasn't come from multiple expansion.

So it's really hard to argue that we're in a more euphoric environment today, even for the MAG7 where we were two and a half years ago. Erin, I appreciate your time very much. We'll talk to you soon. That's Erin Brown, PIMCO, joining us today. Up next, as we say, the S&P closing in on 5,000. Ed Yardeni joins us as we track this major move into the close today. He joins us right after this break. Closing bell coming right back. Welcome back to Closing Bell.

The S&P 500 closing in on 5,000 5 000 for more let's bring in ed yardeni of yardeni research ed it's so good to talk to you your thoughts your thoughts as we close in on history well yeah i mean happy days are here again as they said in the 1920s this is the 2020s and my roaring 2020 scenario is almost on steroids here. I've been, last year I was talking about 4,600. By the end of last year, we got there by July. This year I've been talking about 5,400. And here, by the end of this year,

we're already at 5,000. So it's been phenomenal. Yeah, I mean, it didn't end very well last, when you talk about the 1920s, did it? No, but you'll have me back before the end of the decade. I'm sorry to talk over you, Ed. Go ahead. I was just going to say there are some who are suggesting that we're repeating one of these type periods here,

that there's just too much euphoria thinking that it's just going to go on forever in a very small number of names. Well, I agree with what Aaron and Josh were pointing out. I would add that the productivity numbers have been awesome. I've been expecting the productivity growth boom this decade, and I think it's already started. It started last year. We had much better than expected productivity numbers during the last three quarters of last year. Productivity is up 2.7 percent, and that's like fairy dust. Productivity allows the economy to grow faster, keeps inflation down, allows wages to rise faster than prices, and it's great for profit margins and profits.

But you're the one who used the word euphoria in recent notes, not necessarily suggesting that it was here today, but that the early signs of it were starting to be present. Can you explain? Well, it's really more exuberance. And the question is, is it rational or irrational? I was saying that the alternatives to the roaring 2020s is something like the 1990s, where we get irrational exuberance and things move too quickly. And there are similarities in what we're seeing here in terms of the concentration in tech. But remember, back in the late 1990s, a lot of tech really didn't have earnings. And not only that, but a lot of tech was rigging their sales with the seller financing, particularly in the telecommunications area. This time around,

the earnings are real. These companies that are doing well don't depend very much on debt. And they've got what it takes to deliver for investors. Hey, Ed, it's Josh. Good to see you. I was going to say there are a lot of signs that we're not at euphoria, at least not yet. For starters, Americans put a trillion dollars into money market funds last year. Most of that, if not none of that, has come out yet. That's not euphoria. How many IPOs did we have last year? Four? Seven? I feel like I can count them. That's not quite euphoria. No IPOs this year yet either, we're speaking of. Those are two of the things just off the top of my head that you would say would be very inconsistent with this idea that

it's 1999. And to your point, I was around, Michael Santoli was around. We saw the types of deals that were coming out. Forget about earnings. They didn't have revenues. They were worse than the 2021 SPAC vintage. So this is not that. We might get there if this keeps up. We just we haven't gotten there yet. I think it's rational exuberance so far. I think it's justified by the performance of the economy. And by the way, on a global basis, we really stand out. China's in a recession. Europe is in a recession. The world isn't looking too good. Meanwhile, we're doing remarkably well. Inflation has come down without a recession here because China's had the recession.

So all in all, the U.S. is benefiting from a lot of the developments on a global basis. And even though the geopolitical situation is just downright awful, we haven't seen its impact so far on the price of oil. If we suddenly see the price of oil going up, ask me to come on again and I'll be concerned about the 1970s all over again. What if we're doing too well, though, and that prohibits the Fed from cutting rates when the market wants because you've got the labor market still too strong and GDP prints that are going to shock people. Well, I have no problem at all with the unemployment rate remaining below 4 percent. I know some Fed officials previously said that they'd like to see the unemployment rate above

4 percent in order to bring inflation down. But much to their surprise, not to mine, quite honestly, we've been able to see inflation coming down without unemployment going up. And that's because productivity is making a comeback. Look, I have not been in the camp that has been rooting for or expecting that the Fed's going to give us five, six, seven rate cuts this year because I've not been in the recession camp. I have been in the disinflation camp. But I think interest rates have normalized. They're back to where they should be. I don't really think we need to cut rates.

The economy is doing just fine. It sure is. I've got Mike Santoli with us here at the desk as well as we watch this market elevate into the close here. Rational exuberance, the words that you just heard Ed Yardeni use. Look, you've seen a lot of markets and analyzed them over the years, too. Look, it's anchored in real things, which is we have this winner-take-most economy that disproportionately is benefiting a relatively small number of these massive platforms that now are the biggest market-kept companies in the world.

I do think that the 1999 comparison, not only does it not really hold up across the board, as I was saying earlier, but it's also a bit of a red herring, because the overwhelming odds are we never get there in exactly that way again. And so just because you're saying, guess what? It's not a bubble like 1999. All that means is, as I said earlier, the market's not going to be cut in half in two years and the Nasdaq's not going down 75 percent because that's what came next. So saying it's not 99 doesn't mean we're perfectly set up for great returns going forward.

Right. So you have to just understand what we're arguing about here. The trailing three year S&P 500 total return annualized 10 percent. Nice. Not excessive. Five year, 15 percent annualized. Pretty good. Market doesn't owe you anything, but it's been better. And it does usually take these big bites of upside and then sort of figure it out after the case. So I think a lot of that, a lot of the same stuff can be true at the same time, which is, yeah, people sure do love that NVIDIA. They keep discounting the exact same good news every single day. And as I said yesterday, it trades five, six, seven times the dollar volume

of Microsoft every single day. And Microsoft's 75 percent bigger. It shows you there's a fever. It doesn't mean it's breaking. Does it continue to astound you, Mike, when the stock was not, it was $600 not that long ago. Now we're over $700 and price targets continue to elevate by the day. Until the earnings momentum flags, until you have analysts who have a reason for stop raising the numbers, it's probably not going to matter. Right? I mean, and even the collective price target is not even for any upside because it's got to outrun the analysts objectives. Guys, you'll stay. Ed, thank you so much for coming on. Ed Yardeni, we'll see what happens with this market. I know we'll talk to you in the days ahead.

Up next, all over this major milestone for the S&P into the close. Can it get there? Can it get to 5,000? Can it close above it? We'll track every move for you right up to the end of the trading session. We do have earnings as well coming in over time. We'll talk about the key themes, the key companies that are reporting when we come back.

Well, we're less than 15 minutes from the close and we are all over this big market move today as the S&P 500 closes in on 5000 for the very first time. Plus, coming up, we do have Disney on deck. We have top media analyst Laura Martin standing by with what she'll be watching into that print. Closing bell comes back after this break. We're less than 10 minutes away from Disney earnings in overtime tonight here to break down the setup ahead of that print. Needham's Laura Martin. Laura, welcome. You're not that enthusiastic about the stock. It's had a nice run now into what's going to happen tonight. What should we expect here? OK, so we think he's going to have a good quarter

because it's the last earnings before he has a vote on his board. And if he wants to get his board reelected and not the activists, he better over deliver estimates. We're looking for 24 billion on the top line, which is 3 percent growth in revenue and a buck to which is 3 percent growth at the EPS line. I expect them to over deliver. I think the things most likely to move the stock, assuming he can do that on the financials, is what are the losses in the DTC business, so the streaming business? And is he still going to break even by the end of the year in direct-to-consumer because that is the biggest thing weighing on earnings per share growth? And secondly, we have a new CFO here. And so will that CFO commit to higher cost-cutting than the $7.5 billion that Bob Iger has already committed to in the past? Those are the things that are already committed to in the past.

Those are the things that are most likely to move the stock up if they commit to those. So I was going to ask you about that. It's sort of bridging the gap between wanting to cut costs, but also acknowledging that they do need new content. How do they navigate that? So the problem with content, it takes 18 months to make, and he's fighting for his life at the board. Like, he really doesn't want activists. So I would say that he's going to be more short-term oriented and really focus on this quarter and the next quarter in 2024. And he has to invest in content. But as you know, film content and TV content is many quarters in the future. And if he doesn't sort of win in the short term, he's going to have a really difficult long term here. Laura, I appreciate your time very much.

We've got to run. We'll see what happens. By the way, the he is Bob Iger, of course, the CEO. And we have a CNBC exclusive with him this evening, 4 o'clock Eastern on Overtime. Don't miss that with Bob Iger of Disney. We're all over the move in the S&P as we edge towards the close. Josh Brown and Mike Santoli are here with me to break it all down in those crucial last moments. Market Zones next.

We're now in the closing bell Market Zones. CNBC's Mike Santoli. I was expecting to see that bump up first. It was like, Ritholtz, Josh Brown. Yeah, you got it the right way. Don't worry about it. Exactly. No offense. No offense. You know who right way. Don't worry about it. Exactly. No offense.

No offense. You know who's here. There's Josh. There's Mike. All right. We're all on the same page now. To say we were close was an understatement. Forty nine ninety nine point eight nine.

Michael is where we got to on the S&P 500 before we backed off a little bit. Yeah. I mean, sometimes, of course, it does get a little bit asymptotic here at the round numbers. You have an obvious place where you'd say, fine, that would be a stop. We'll see if it does get through by the close or just soon thereafter. The bigger picture doesn't change much. Super persistent rally. It keeps finding a way. It rotates away from danger. Yep, it's getting extended absolutely in the short term. Usually the back half of February brings a little bit of a choppy surprise.

But for now, it's tough to argue. By the way, equal weight industry was up 1% today. They're at a new high, too. It's not just megatech. Yeah, I was going to say, if it doesn't happen today, it's OK. I don't have the hats printed yet anyway. Agreeing with Mike, though, one of the things about the rotation beneath the surface that we debated earlier this week, it's not really as strong of a rotation as you would like to see. And you really want to see those internals turn back around. Today might have been a turning point.

We'll see if you get a follow through tomorrow. But I don't think we want to have a scenario where absent the defensive areas, we only have one or two S&P sectors itself making its own all-time highs. We need more. Maybe we get more. One day does not a trend make. Yeah. The Russell, Mike, it's hard not to notice, right? We see on the right-hand side of our screen S S&P, Dow, Nasdaq looking great today.

No fun. And the Russells, no play. Right. And, you know, there is still a little bit of a shadow over financials. It's not a broadly inclusive rally. This is not a the economy is reaccelerating and it's happening in this disinflationary way and everybody's going to lift because somehow we got the fountain of youth and the economic cycle is now back to back to an early stage.

It's not there again. Broadening out can happen in a bunch of different ways. And it can happen in part by most consumer cyclical stocks managing to do pretty well, which they have been, even as they go over this overhang of, you know, consumer card delinquencies rising toward pre-pandemic norms and all the rest of it. So I don't think we have to worry about running out of things to worry about. And one of the things that, as I've said before, investors have gotten themselves concerned about is the very concentration of this market. And it almost rebuilds the wall of worry because if professional investors have a hard time trusting a market fully, that seems like it's just these huge names doing

their own thing. You talk about these things to worry about and then we you know sort of made the comparisons between now and 1999 and how it ended and what it meant for the market in the subsequent years ahead. New York Community Bank obviously you know people think of you know banking issues they bring up oh is this the next big systemic risk Is it another 08? It doesn't have to be another 08. It can still have issues for this market that are yet to be reconciled. We just don't truly know what they are. We don't know. As people have said, it's very idiosyncratic to a degree in terms of the kinds of assets that NYCB had. It seems like a botched thing to let them be the acquirer of some of the other troubled banks. But I pointed out earlier, you know, the Silicon Valley bank failure was the

moment that the market said, fine, we're just going to buy quality, quality balance sheets, big growth stocks that have clear paths of earnings. We're not going to worry about financial conditions impacting parts of the market. And that's almost like the playbook that has unfolded here in the last couple of weeks. So, I mean, the KRE doesn't act great, but it's also not really showing outright distress. Josh Brown, thank you so much for sticking around with us today. Doesn't look like we're going to make history today.

I mean, we'll get an all-time high, but doesn't look like we're getting S&P 5,000. We shall see. That does it for us. I'll see you tomorrow. Into OT with Morgan and John and big earnings ahead.