Closing Bell - Closing Bell: Election Volatility & Apple Earnings Aftermath 11/01/24

Episode Date: November 1, 2024

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

Welcome to Closing Bell. I'm Scott Wapner, front and center right now. Very big week ending. An uncertain one about to begin as the bull market tries to make sense of all of its stocks rallying across the board. We're going to ask our experts over this final stretch, what lies ahead in this last and very important hour? Take a look at the scorecard with 60 minutes to go in regulation, a weaker than expected, but noisy jobs report, all but being brushed off by the markets today, which are being led higher by Amazon and the consumer discretionary sector. Most other mega caps higher, too, with the exception of Apple following that company's earnings last night. You see that stock down about one and a half percent. Other big winners today, Intel and

Chipotle, which is bouncing back following its post-earnings sell off. It does take us to our talk of the tape. Two months to go for stocks and a very big week ahead with the election and the Fed meeting looming large. Let's ask our panel what's really at stake. Stephanie Link of Hightower Advisors, Greg Branch of Branch Global Capital Advisors, and Ayako Yoshioka of Wealth Enhancement Group. Steph and Greg are CNBC contributors. It's good to have everybody with us. Nice to see you back here with us. Mr. Branch, so what's your current view of the market? So it's still neutral. And other than the election, I'm really searching for a catalyst to believe in either negative or positive.

Now, when we look at the election, you know, of course, there's some de-risking here that goes on no matter what the outcome is with one candidate on another level down. When you transition from candidate to elected official, we get to weed out some of the rhetoric and noise that was never going to make it into policy anyway. So I think that that's a de-risking event as well. And then thirdly, both of these candidates have been in office before. So we know what sectors and industries they've been supportive of and where we might see a very particular and specific talent. So you've been willing to stay neutral, I think, for a while, right? In the slow lane, so to speak. Right.

All this traffic's been passing you in the left lane. It has. And why have you refused to hit the pedal and join the rush? Because you've because you've missed out, obviously, on a good amount of this rally. Sure. This full market. I think my answer is typified by some of the market activity we've seen over the last months. And that is the data still kind of mixed. So earnings growth for five straight quarters is great. However, this quarter is at 3.6% as opposed to last quarter's 13%.

That bears some watching. On the inflation front, obviously we continue to experience disinflation and it remains a topic that most don't want to talk about. However, the core number has shot back into the 30 basis points range for month-over-month core growth for the last two months now. So wherever I look, there's data that makes me optimistic, but still things that give me pause for thought. And I think I'll become more bullish when I find multiples and consensus expectations

leaving room for outperformance. And I just don't see that right now. Steph, what do you make of that? Well, I think we should applaud 2.8 percent GDP growth because that's above trend, well above trend. I think the labor market, it's softening, but it's still on balance for the most part. If I look at ADP and initial jobless claims, if I look at the three-month moving average for non-farm payrolls, you're at 140 versus 258 a year ago. So I understand that we are certainly slowing there. And that's the reason why we have a Fed that is embarking on a Fed cut cycle. We have lower inflation at an employment cost index of 0.8 this week, which was less than expected.

A PCE at 2.1. And consumption, the consumer is hanging in there. To everyone's surprise, look at final sales to domestic purchases up 3.2%. That is a very healthy number. And, of course, you have this manufacturing renaissance. And all you need to do is point to Eaton, Quanta Services, GE, Vernova as examples of this renaissance, anything tied to the grid and power and electrification. And that, of course, is tied to AI.

So I added up and I see total revenues at 5%. And earnings right now on my numbers are up 9%. So I think that's very healthy. I think we have some volatility into next week. We've got a lot going on. But I think that once we get through it, I think we rally in November and December as people chase because they're underperforming. And you've got six point four trillion dollars in money markets. Greg, earnings versus a year ago are up eight point four percent.

I'm not sure where your number is coming from. S&P only numbers. Here's what I think the bottom line is, is that the economy is undeniably good. Yeah. Right? Great. Okay. Well, because you said the data is mixed. In total, it's not really mixed.

Let's stop there for a second. Because I second a lot of what stephanie said you know not only is gdp great right but the third quarter doubled the sorry the second quarter doubled the first quarter number the third quarter number show is going to show acceleration as well but to what extent is it too good is my concern when we see the core number jumping back into the 30 basis points. Look, I'm not the only one who is concerned that perhaps they moved too far too fast, right? And so-

They did one hike of 50 basis points. I gotcha. And here we are back in the 30 basis point core month over month again. So my bet is- I know, but where- My bet is it'll be 25 for the next cut. And the concern will be, let's make sure that it doesn't accelerate from there.

I beg your pardon, but I'm going to bring in Steve Leisman, and I'll come to you in a moment. But I just feel like now's a good moment to talk to Steve, our senior economics reporter. I presume you've heard the conversation from the beginning. Do you want to weigh in on whether I mean, I'd say whether Greg's too pessimistic, but he admits that the economy is good. He's just thrown a bit, I suppose, by the most recent inflation report. So it's coloring his overall view, I think, about what might lie ahead. Yeah, I don't think Greg is wrong to be concerned about those risks. I think Stephanie has it right, and I'll put an asterisk next to that, that the economy does look like it's doing good and doing well and should be set up for corporate

profits. The problem I have that is not really something I have any expertise in is the market seems to have valued that pretty well, right? So you take a look at the longer term, look at the market, and it's come up pretty strongly. There is an expectation out there, I think, that things go along, right? You've had stronger growth than expected. You've had a stronger consumer hanging in there. You've got inflation coming down. And the job market hanging in there. Scott, my canvassing of economists today, you know, they say, well, if I made them make a call on this very distorted number, they would say on balance it was softer than they expected. And that's because, A, they were below expectations,

even though the strike effects and the hurricane effects were anticipated, they were greater than expected. But you had those downward revisions. If you look inside the numbers, Scott, I took a look. You had a 50K decline, for example, in temporary help. And then I went back and looked at different weather things out there. When we have big spikes in people not being there for weather, there you go. There's your temporary help down 49. Manufacturing, that's

your strike right there. So maybe it's 100,000, which means you were only at 112 if you do very, very strict math on this. Maybe there were a few other places where the hurricane or the strike showed up. But then you look at some of these weather events and they come back pretty strong. Look at that. 1.8 million weather absence in January January ninety six. The blizzard of ninety six it was. And then each time you had a spike in temporary help loss. People say hey I'm going to keep my temporary help at home if I can't get any customers at the office

or at the store. So that's part of it. But still you were still only at one twelve. So there is some weakness and the markets like hey the Fed is still going to cut with the debate being I think the market has just a little bit wrong. It's not about, will the Fed cut this month or next month? It's about where the Fed ends up.

And really, the market's having an interesting terminal rate debate right now. Well, I think also, Steve, I presume that you saw the Greg It piece in the journal as well about, you know, the headline being the next president inherits a remarkable economy. That's the headline of his piece in which he talks about the growth is being great in its own right. But the quality of that growth, that's the word that he uses. And I want you to weigh in on that, too. those who are concerned or naysaying on what's happening are truly appreciating the productivity gains that we've already seen and the ones that we anticipate as a result, in part because of what artificial intelligence is doing and changing the way we live, work and just about everything

else. It's fascinating. First of all, Scott, as you know, the economy is a disaster, right? You know that that's what has been said about the economy. It's just not in the data. People feel poorly about the economy, in part because of price increases. But what Greg is getting at is the gazillion dollar question. If there is more productivity in these numbers than just straight buying and selling us stuff, but we're getting more efficient. And that's and that's what we do want to tell you, Scott. Anytime there is a bump up in productivity in the short term, the better bet is that it's temporary. It's always the better bet.

But if something profound is going on, that has a big, massive, huge implication for the stock market, the economy and the Federal Reserve. You know, Scott, there was a day this week. There were two headlines on the front page of the journal that I thought were repeats. One company was looking for $50 billion investment in AI. The other was looking for 40. I thought they misprinted the numbers and repeated the story. No, they were not separate stories. They were not the same story.

They were separate stories. $90 billion just in one day being announced of investment. And remember the old Greenspan sort of saw on this thing. What he would say is if people are investing in it, there's probably some value there. Yeah, I mean, it's I guess it's going to continue to be a pretty, you know, good debate on this topic. Steve, thank you. I want to I going to continue to be a pretty good debate on this topic. Steve, thank you. I want to turn all of this back to the market. Because if you believe that the economy is in as good a shape as most people would not only believe but would have you believe, and the Fed's cutting interest rates, then what does that mean for where we go from here? Sure. So, you know, when I look at earnings growth in this past earnings season,

we've had a pretty solid earnings season. It hasn't been fantastic or, you know, knocked it out of the ballpark. But, you know, it's been pretty solid. We've had over 70 percent of the companies that have reported beat on earnings, 60% beat on revenues. So I think that continues to be a positive. And then to Steve's point about productivity, I mean, we saw it from Google's quarter. They talked about over 25% of new code being written by AI. You know, Amazon talked about it on their quarter in which they had great operating efficiencies in AWS with operating margins expanding by 780 basis points year over year. So we're seeing that at the

largest tech companies, and that's going to trickle down eventually over the coming months to other companies. Steph, what did we learn this week from these mega cap companies, other than the fact that they're just not going to trade, it doesn't appear, at least in the near term, as a monolith, right? We're differentiating ourselves. We're separating ourselves from the pack. Amazon, obviously, which you added to last week into the number, is having a great day. Apple's sort of, eh. And Meta and Microsoft fell pretty sharply after their own earnings. Well, I think it's a lot about expectations, Scott, right? So I think Amazon had very low expectations, but the quarter was actually outstanding.

I had just mentioned the margin side of the story is really very, very powerful. They expanded margins in retail in North America by 100 basis points, international by 360 basis points, and in AWS, 780 basis points. We also saw margin expansion in other sectors, though, Scott. We saw margin expansion at D.R. Horton in their housing business. We saw margin expansion in Chipotle. We saw margin expansion, again, in some of the MAG7, not all of them, even a little bit at Apple, right? So number one, I think earnings season, it's going to be good revenue numbers,

but better margin story. And I think that's a 2025 story as well. That's number one. Number two, free cash flow is just enormous. And then the big names that reported this week, the hyperscalers, they are going to spend $2 dollars on ai this year alone that's up 41 and probably another 250 billion next year and we got that in spades so this is not a bubble in terms of ai are some of the stocks expensive absolutely are expectations really high for some

of them absolutely that's why you saw microsoft and and alphabet um well, mixed results. I mean, Microsoft was down and Meta was down, and Alphabet was a little bit better, and Amazon was a little bit better. So I think you can pick stocks and look for strong fundamentals where the companies are delivering and where they're investing for growth in the future, and where the expectations, though, are a little bit less. And that's the story of Amazon and Alphabet. I mean, Greg, your big takeaway, I suppose, is that if you're cautious on the market overall, you don't sound really that cautious from your notes on this group, that you think breadth is going to narrow once again and that this is the place that you want to remain.

Yeah, that's right. You know, when you look at, again, the fact set numbers for the S&P, the overall was 3.6 percent. But in communication services driven by Meta and by Google, that sector was up 20 percent. And so generally, as we get into the territory where Steve said we are, where things seem fully valued, where we don't see an acceleration necessarily across the board in earnings, will investors retreat to those that have much superior earnings power and, as Steph pointed out, much superior cash flow generation? Well, that's one of the debates.

I mean, the market, some would suggest, not that Steve was necessarily saying it himself, that, well, the market's priced all this stuff in, that it's fully valued now. It already knows, right? The earnings growth is good. It's going to remain what we think pretty good. The Fed's cutting. The multiples kind of, you know, maybe rich, maybe not, maybe not. Because if you can maintain this kind of economic growth that we have, if you can maintain the kind of earnings growth that we have, you're going to get a reduction in interest rates. Firmly believe that. There's no reason to think we're not.

We may get fewer and slower than we once thought. Right. But we have to find a neutral rate. Okay. Well, for sure. And the neutral rate's, I'm sure, higher than what the Fed initially thought it was. I think we can agree on that. Probably.

Okay. And then you're going to unleash all this pent up demand and what some have called smart investors have called animal spirits that are just waiting to do M&A. And you're going to paint a picture that just doesn't look nice and beautiful to hang on the wall. It doesn't look ugly. It doesn't look ugly. I'm not bearish. I'm not saying that we should go out and short anything. All I'm saying is that we can achieve a good return right now without taking on excess risk. And to me, that means focusing on companies that I'm confident, no matter what happens with the macro environment, because there's all kind of political and other macro risks that we haven't even touched upon. But in an environment that may get more hazardous,

I'm confident and I'm more confident in investing either in things that have a structural supply and demand imbalance, something like shipping or the GLP-1 companies, or these tech names that continue to put up 30% plus earnings growth. Yeah. So, Ayo, what's wrong with that point of view? Right. I mean, it's narrow. Greg's just narrowed his horizons on where he thinks the best risk reward is in this market, whether it's mega cap tech, whether it's GLP one. Steph has a new buy this week of Eli Lilly on the pullback. So clearly she views that, too. But give me your perspective on that. Sure. So, you know, I think what everybody's sort of getting at is that diversification is important, right? We need to have some tech exposure. You know, we continue to see the growth that's coming out of a lot of these mega cap hyperscalers. But, you know, diversifying outside of tech is also very important, whether it is adding to health care or even some of the financials. You know, they were one of the first to report. And, you know, JP Morgan had a

great quarter. You know, we think we should still have some exposure there despite rates coming down. And so, you know, it's really about having that full diversified portfolio. Steph, I front ran your move here. The fact that you bought Lilly this week on that pullback that it had. Talk more about that. Yeah, I mean, it's not cheap, Scott, so I'll give you that. But it is the number one franchise in one of the hottest places to be in terms of weight loss and diabetes. You're talking about between the two, about a 500 billion billion total addressable market by the end of the decade. And I'm probably low by a factor of two or three times. This is, as I mentioned, the number one player.

And I think that they just delivered 42% total revenue growth in the quarter. If you want to X out the diabetes and weight loss drugs, they still grew their legacy businesses 17% in revenues. Find me any pharmaceutical company that is growing at that level with the best in breed company management team with prescription trends sequentially in weight loss and also diabetes up 25%, 25% sequentially. And so this is not a demand problem. This is a supply problem. But I would go back to the market as a whole. You're right. It's not cheap, but there are themes.

Animal health is one. Financials are another. And housing is another. Animal health. There's lots of places to find cheaper stocks beyond tech. And even in tech, there are some stocks that are still very attractive. You just got to be selective. What about, Greg, the idea of, okay, forget, and we've had this conversation this week.

We had been, I think, having a debate, well, if not mega cap, then what about small cap? Because you figured a drop in interest rates would help those stocks finally do something. What about mid cap stocks, which seem to be in in a potential sweet spot I think it was Tony Pasquarello who talked about them being a gem a gem sitting out there waiting to be discovered and I think over time that that's probably right right because as as we search for the neutral rate as we are in the midst of not just a US but a global rate-cutting program, the reduction in the risk of financial duress impacts the mid-cap and the small-cap more so than the large-cap.

The increase in demand as we pick up demand globally, I think, benefits the mid-cap as well, probably far more so than the small cap still scott even as i go down cap size i look through this as with the same prism as i do with large cap and so if i want some mid-cap exposure i'm going to look in shipping at zim or masterson in the u.s that can take advantage of the supply demand structural imbalance that we see coming out of europe and asia let me just finish with you real quick uh and then we'll wrap the conversation up. I mean, market is about to post its second great year in a row, right? What gets you off the neutral bench?

I have a hard time, and we always have this debate. We do. I have a hard time trying to figure out, if not understand how somebody who has missed for the most part I think that's fair to say the bulk of the move over the last two years now decides that now's the time to change their mind and thus their view right because the market wasn't trading at 22 times before. The market did not have the kind of earnings growth that it had before.

The Fed was not cutting interest rates like it was just now, and it's going to continue to do. So I could understand having a negative view at that particular time because I think the environment has turned out to be better than most people thought. I would agree. But yet you haven't changed your view as a whole. Right. You have not. Well, I think moving moving from being bearish to neutral was was a pretty significant change. I also want to correct for the record that that the market a year ago at this time was at forty one hundred. And so, you know, 100% sure there's been a humongous move in the last year, but even those of us who were bearish got to

participate by participating at the short end of the curve. Did we put up 24%? No. But again, not all of our clients want to chase the last mile of alpha. Some of our clients are much more concerned with principal preservation and they appreciate that folks like me saved them from suffering a 20 percent decline in 2022. Hey, Jim, I just got cut off. I was on. So I think what gets me from neutral to bullish, Scott, and I'm waiting for it, and I want to be, so that you and I argue less, for one. But so that the thing that gets me there is, either I want to see multiples come in a little bit, because I do believe that we're somewhat fully priced overall.

I want to see consensus numbers that I think have upside to them, so that we are generating a level of upside surprises that will sustain a tailwind. And that's when I think I'll become broadly more bullish. But you're right. I think the sectors that I talk about are the sectors I have talked about for a year. Right. And so it's not that I haven't participated at all. Of course.

All right. No, I appreciate you articulating your view, most especially for our viewers who have watched many of our conversations and says, oh, he's neutral. He's negative on the market again. No, no, no, neutral, neutral. I just want people to fully understand your point of view. I appreciate that. And myself included.

It's good to see you, as always. Good to see you, Mike. That's Greg Branch. Aya, thank you. Steph, thanks to you as well. To Pippa Stevens now for looking at the biggest names moving into the close. Pippa. Hey, Scott.

Well, Chevron is in the green after the oil giant beat top and bottom line estimates during Q3, returning a record $7.7 billion to shareholders during the quarter via buybacks and dividends. The disputed Hess acquisition does remain an overhang, but CEO Mike Wirth told CNBC he's confident in their position on the arbitration and that they'll see it through. Now, rival Exxon is modestly lower following a mixed quarter. Production grew 24% year over year to nearly 4.6 million barrels of oil equivalent per day, which helped offset ongoing weakness in the company's refining business. Exxon did also raise its Q4 dividend to 99 cents per share.

Scott? All right, Pippa. Appreciate that. Thank you, Pippa Stevens. We're just getting started here on The Belt. It's Friday edition. Up next, Apple shares slipping post-earnings. Star analyst Eric Woodring standing by with his first take on that report and his forecast for iPhone demand heading into year. And that's critical. We'll hear from him. We will hear from him next. Apple shares under some pressure today after earnings.

Investors weighing iPhone sales growth and record services revenue against the lack of clear commentary on AI driven demand. Joining me now is top Apple analyst Eric Woodring of Morgan Stanley. It's good to see you. Welcome back. Thank you very much. Good to see you as well. So post report, you suggested that the shares are going to remain. I think the words you use, range-bound. Correct. But you think the downside's limited. Expand on that.

So why first, I can understand why you would say range-bound, but why do you think the downside is limited? Sure. And maybe the caveat to that statement is if we see a deterioration in the data, then of course there might not be limited downside, of course. But knowing what we know today, if I think about my earnings for fiscal year 25 of around $7.25, Apple's been trading close to about a 30 times multiple, maybe you discount that a few turns just to be conservative, you're looking at something like $200, $205, $210 stock. It's $222 today. So we're talking about relatively limited downside in the event we don't see the data deteriorate. And again, in the event we can look forward and get excited

about Apple intelligence, the iPhone 17, and look beyond just the near term, my price target is $273. You know, there's more than twice as much upside that I see kind of near term downside, even though, of course, I did say and I stand by it that I think the stock will be range bound for a handful of weeks until maybe we get closer to the end of the year. We got no real guidance on AI demand for Q4. So it's one thing as an investor, I'm not sure what to do about that. But how do you as an analyst whom I'm relying on, do you feel like you're being forced to guess on what you think demand is going to look like in the fourth quarter, what the degree of any upgrade cycle may be, because we just really don't know?

Sure. I mean, I don't think it's necessarily very different from any other December quarter. There's always an unknown going into the holidays with a new product. What is different about this cycle, of course, is that the key feature has been Apple intelligence that is really only available to US consumers as of this Monday. And so it is just so early to make a claim on whether Apple intelligence can drive that inflection in iPhone demand or not that maybe there becomes a bit more guessing game this holiday period relative to past years. But this is always the course of business, which is let's track demand.

Let's track what's coming out of the supply chain. Try to tie those two together to make an informed decision. The forecast that we've come out with the December quarter, about $123 and change of a billion of revenue, is the latest viewpoint that we have today. But we'll have to continue to track the quarter. Again, the holidays are very important. They can fluctuate significantly year to year.

That job is no different this year. It's just there's an added dynamic, an added factor in Apple intelligence, the newness of it that might make this a little bit more of a dynamic quarter than than last quarter. I'm trying to, I guess, entertain the idea of what happens if this is a very prolonged and rolling upgrade cycle, which is very, very hard to calculate. And coming out of the pandemic, which has obviously wreaked havoc on supply chains and consumer behavior. It just warped the way we lived for a few years. And I think you can make the assumption that it may do so for the next few years when it

comes to consumer products. We don't know what we really need yet. We don't know what we really want yet. We don't know what we really want yet. And thus, this might be rolling. Right. What do I do with that? Right. So I think you are seeing that with the iPhone 16 today, which is Apple intelligence is really too new to drive those real upticks and upgrade rates yet. But it's kind of lingering out there as something that I think consumers are interested in, but need to learn a bit more about. And of course, for those of us that aren't in the U.S., need to actually be able to upgrade to.

Generally speaking, consumer electronics spending today is quite weak. It's been quite weak since the kind of middle to end of 2022. And we published on this monthly, there hasn't really been any end in sight to this pain. We see a lot of challenges in the consumer hardware world. And so that's why I think you're seeing part of the iPhone 16 performing the way it is, is because of the macro. In terms of the rolling kind of upgrade cycle, of course, that potential exists. Where I stand back and I kind of look on this cycle or Apple intelligence

and what's coming to market is, one, there are still 700 million plus iPhones that are three years old that are not eligible to run Apple intelligence that need to get upgraded. So that base is there. There is pent up demand and elongated replacement cycles. And you just need that catalyst to turn this from a potentially rolling upgrade cycle to one that can be a bit more severe to the upside and when we look to the iPhone 17 again What we've been talking about is Apple intelligence will be in the market for about a year before the 17 is is released And so the consumer will have a better understanding of what that can do from a utility value standpoint and help to drive upgrades there. Also, we still do think there will

be a slight form factor change, even if minor with the iPhone 17 switching from a plus model, which kind of gets lost in the mix, to a slim model, which can actually be very attractive for users that are looking for a different form factor than they've been able to get. Form factors are usually a big factor in driving upgrades historically. That's why the iPhone 17 is interesting, is you have Apple intelligence. You also have a bit of a form factor and you have them coming together in one year. Interesting. All right. We'll leave it there. Eric, I appreciate your time as always. Thanks for coming on Closing Bell with us. Eric Woodring, Morgan Stanley. Up next, Plexo Capital's

low. Tony is here. We get his first reaction to Amazon's report. We'll find out how he's navigating the tech sector amid market uncertainty. We're back after the break. Shares of Amazon rallying on strong quarterly results. Investors rewarding the company's ability to balance profit and growing AI spend. With CEO Andy Jassy saying on the call last night that Amazon will continue, quote, aggressively pursuing AI investments. Joining me now is Lo Tony of Plexo Capital. He's a CNBC contributor. It's good to see you.

Welcome back. Thanks for having me. When you make those comments, he also called it maybe once in a lifetime type of opportunity, clearly setting the stage that they're not going to stop spending a lot of money. Their CapEx was up 81 percent year on year. Remarkable. Yeah, it is remarkable. But I think when we take a look at the magnificent seven that have reported in total, we can see that the AI ability to drive revenue is here. And a key player is actually growing three times faster than AWS at this similar state. Now, think about that comment and think about how significant AWS has been for Amazon. So to make that comment, I think that portends what the future holds for Amazon with AI. Do you think that Amazon was the best of the group

this week? How would you put our report card out? That's a great question. When I think about some of the other folks, I mean, obviously, you know, Microsoft had great results. Alphabet had great results when you really narrow in and focus on both cloud. But I think the, and Apple, I think one comment that I would add to your prior guest is the Apple, Apple's ability to really increase that services revenue, which is going to become more important to give them a little bit of a cushion around the dependence on hardware. But yes, I would say that Amazon's results were quite impressive. And I would say just particularly the way that Amazon is positioning itself, leveraging the ability to have that customer base from AWS to not only provide their own suite of products from Amazon around AI, but also, you know, they also can offer competitor solutions as well through Bedrock. I want to ask you a broader question, though, about the environment out in Silicon Valley,

if I may. And it's because something caught my eye earlier this week. And it was a comment that the LinkedIn co-founder Reid Hoffman made about the climate in the Valley because of the political discourse and the different sides that some large names there have taken in this election, to which he described a rift, one that might be long lasting, one that might have interfered with business in the Valley. The idea that some LPs or investors have chosen sides in the way they're investing now and might in the future. And I'm just wondering what you make of that. If there's the possibility that that could reduce the pools of capital to some venture backed companies based on which venture firm that they have been backed by. How do you take that issue in total about,

you know, what you're seeing and who you're talking to out there about that issue? Yeah, thanks for asking that question. One of the things that I have noticed within the past couple of years is the increasing importance of policy for those that are playing within the private company ecosystem. We know that for public companies, they have spent money around their interests in Washington, D.C. through lobbyists or through having their own government affairs folks. We're now seeing that same thing happen within the Valley. And I think, you know, if we were to take a look at a couple of administrations, both this current Biden administration as well as the Trump-Pence administration, you know, the Biden administration has been very systematic and aggressive, you know, filing a record, I think, 50 lawsuits against, you know, technology companies.

And it's really suppressed the M&A activity. It was a little bit more selective during the Trump administration. But nonetheless, you know, we are now looking at a probably about a 10 year low in M&A activity. Why is that important? Well, it's important because it's a reflection on the leadership of these agencies, the FTC, DOJ, in my opinion, we need to remind ourselves that not only are we suppressing the available capital, because when we think about M&A activity, that's a strong way to get capital back to investors like the limited partners that invest in venture capital funds. Venture capital funds look for the next Googles, Microsoft, and Facebooks. And the inability to have that capital return means that the LPs are not investing back enough

into the venture capital firms, which kind of suppresses our ability to drive innovation. I think it's also important, thinking about it from a perspective of America as a company, we need to maintain our competitive position globally. And I think a lot of the suppression that we're seeing around M&A activity, it also suppresses our competitive nature when we start to look at the ability for big tech companies to pull in a startup and then provide those products to the customer base. And then also thinking about AI and really

how we're trying to, I think, in my opinion, with these current administrations or agencies, over-regulate AI. The market can figure it out. And I think looking backwards, which is the way that a lot of times we're making these types of policies is the wrong direction to look. And unfortunately, I just don't know if we have the right talent and leadership to understand how dynamic the changes are within our industry, especially around AI.

I can barely keep up. So I'm not sure how folks that have so much on their plates and have chosen to go down that career path can keep up. So I'm not sure how folks that have so much on their plates and have chosen to go down that career path can keep up. To be continued. Lo, I appreciate your time as always. That's Lo Tony, Plexo Capital joining us here on Closing Bell. Up next, we track the biggest movers into the close. Pippa Stevens is back with that. Hi, Pippa. One chip company is trying to right the ship and jumping after earnings. The name to watch coming up next. We're less than 15 from the closing bell. Back to Pippa Stevens now for the stocks that she is watching. Pippa. Hey, Scott, shares of Avis are surging despite a Q3 miss on the top and bottom

line, including a 60 percent year over year decline in earnings. Deutsche Bank, which has a buy on the stock, said the company is positioned for a return to growth in 2025 at the modest detriment of the second half of 2024. And Intel is the best performer in the Dow after reporting a surprise profit for the third quarter. Revenue also came in ahead of forecasts, with Intel raising its guidance. It comes amid the chipmaker's restructuring initiative, which CEO Pat Gelsinger called one of the most seminal in the company's history. Those shares up 8 percent. Scott. All right. Thank you. Pippa Stevens still ahead. We'll tell you what's weighing on Wayfair in today's section. We're back after this. We're now the closing bell market zone. Courtney Reagan with more on the move in Wayfair today.

Phil LeBeau with the latest on the Boeing strike. Plus plus Bob Pizzani breaking down the crucial moments into the close. Court, it's great to have you back. Hey, it's good to be back here. And I got to tell you, shares of Wayfair slumping here, Scott, after reporting better than expected sales and profit. But it was the earnings were really driven by expense control, not really stronger sales. Wayfair reports fewer active customers and fewer orders delivered compared to last year, though the average order value did grow more than 4%. And on the earnings call, CEO Neera Shah said the quarter saw a continuation of choppy macro trends and that consumers remain trepidatious. Shah said Wayfair is, quote, seeing a broader pullback by shoppers

in the lead up to the election. Attention focused away from the home right now, particularly, he says, in bigger home purchases, which of course is where Wayfair skews. Now, quarter to date, trends are flat to down slightly and executives on the call expect roast profit margins also to be the lower end of guidance. It gets more expensive for Wayfair to be able to drive sales and gain new shoppers going forward.

Back over to you. All right, that's Courtney Reagan back with us. All right, Phil, if you don't first succeed, try, try again. I guess that's something how that goes. So we'll vote again. Third time. This is the third time the machinists will be voting. And look, this is a far richer offer than they voted on just a couple of weeks ago or even back in September. A 38 percent pay raise over four years, enhanced 401k. Signing bonus has been bumped up to 12 grand, but still no reinstatement of the pension, which is what many machinists would like. For CEO Kelly Orberg, he believes that this is hopefully the deal that finally gets the machinist,

33,000, back to work today. He sent out an employee email saying, it's time we all come back together and focus on rebuilding the business and delivering the world's best airplanes. There are a lot of people depending on us. As you take a look at shares of Boeing, keep in mind that the machinists will be voting on Monday, Scott. We don't get the results until late Monday night. So Tuesday morning, we'll know whether or not the workers will be going back into the plants at Boeing, perhaps as early as Wednesday morning.

Scott, back to you. All right. Thanks, Phil. We'll see what happens once again. That's our Phil LeBeau. All right, Bob. So obviously we're going to have a nice day here, the 1st of November for trading. But we've softened a little bit into the close. And I noticed that some of the mega cap stocks that were higher today have turned down.

Yeah, I think the key story here is we still have a decent economy. And the real story is strong earnings. And that's overcoming these concerns and these election jitters that we are seeing. You look at the earnings, we're 70 percent through. I just went through them today. We have 8 percent growth in the S&P. The tech sector, 19 percent growth in the earnings. And it's been going up in the last couple of weeks, not down. And the fourth quarter numbers, which is what matters, are really holding up well. Tech's going to be up another 15%. And they're not cutting those numbers appreciably, Scott. And that is why the S&P is only 2% from a new high. If you want two problems,

one, the market's expensive. The bad thing about good markets is it's hard to impress people. But I think more importantly, those bond yields on a daily basis, every day we get worries about that. And you don't want the bond vigilantes controlling the market. A lot of this rally is just based on reasonably low rates. If that gets out of control, it's going to be a problem. And, Scott, that's why there's been this change in tone. That's why we're not going up anymore. We're back where we were a month and a half ago in the middle of September, I think largely because of the concerns about Biden.

Well, we do, Bob. Thank you very much. That's Bob Buzami. We do have a few important things in front of us, namely the election on Tuesday, which, of course, we're going to be live all evening, 7 to midnight here on CNBC and early squawk as well, so you don't want to miss that. But we'll see you on Monday, of course, as we size up what lies ahead between the vote and then the Fed. Great weekend.

And OT with Morgan and John.