Closing Bell - Closing Bell: Following the Hedge Fund Money 5/8/24

Episode Date: May 8, 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.

All right, welcome to Closing Bell. I'm Scott Wobner, live from Post 9 here at the New York Stock Exchange. This make or break hour begins with the bull market and how best to play it right now. We're going to ask our experts over this final stretch, including one who says stocks are going much higher from here. In the meantime, your scorecard with 60 minutes to go in regulation looks like that. It's been a relatively muted day, although we have had some buying in the Dow at least, which, by the way, is at 39,000. It was just there on the nose. So we'll watch that over the final stretch. Plenty of individual names making news today.

Uber down sharply following a surprising loss in its recent quarter. Shopify smashed after earnings and especially the guidance there. Reddit, though, well, it's been green, delivering its first report as a publicly traded company, hanging on to pretty nice gain. Takes us to our talk of the tape. What will continue to power stocks higher? Let's ask Josh Brown. He's the co-founder and CEO of Ritholtz Wealth Management and a CNBC contributor. He is with me here at Post 9. It's good to see you. Feel like it's good to see you. Growth is good to see you, Scott. I feel like growth is the story of the day today. Yeah, yeah.

Mostly ones that are getting wrecked, which is like Shopify and Uber. What do you make of that and that trade in general? So my take is we probably are just retracing some of the enthusiasm that we came into the start of the year with. Markets had almost gone parabolic from the fall into the early spring. And then April was the worst month that we've seen in quite a while. And I think that was really a precursor to some of the reactions that we're now getting after earnings reports. Actually, technology stocks, even the Beats, the average company after reporting is negative. I don't think there's anything to do with whether or not the growth trade can survive. I think it's a very short-term

phenomenon. And I think most of it has more to do with where we are versus what's actually being reported. That's actually the good news. The number one thing, Scott, that I want you and the viewers to keep in mind is this. On Wall Street, there's no such thing in our language as good or bad. These two things don't exist. There's only better than expected or worse than expected. That's the bottom line. So you've got companies right now that are doing the number, quote unquote, the number. They're seeing a sell off because it wasn't materially better. And that's perfectly fine if that's the way we're going to consolidate and catch up to that huge rally that we've seen, I think it's the least bad way for that to take place. How much of this is due to the fact, like Brad Gerstner suggested yesterday on Halftime

with us, that we've had a year's worth of gains in a reasonably short period of time. He's taken his exposure down by 10 to 20 percent. Druckenmiller taking exposure down and NVIDIA a little bit. Adam Parker talking about growth managers protecting capital. You know what the story is of late. It's just like semis up 60 percent since the October bottom. Software up 23. Now, from the beginning of the year till now, those numbers may even look a little more extreme. If you throw some of the stocks that have carried the load in those areas into the mix.

Is that what's at play here, too? Is that what you what you mean? Like where we are? if you throw some of the stocks that have carried the load in those areas into the mix. Is that what's at play here, too? Is that what you mean, like where we are? Maybe it's more like where we've come from. Right now, the S&P 500 pullback is somewhere between 5% and 6% from the high. It's nothing. It's nothing. Now, it's less than that.

It's nothing. It was 5%. Now, we rallied all the way back. We were like 2% away. This is my point. So if this is the way that we're going to correct through a consolidation rather than something more sinister, I think like 99% of the people watching this would say, OK, let's do that. So you had overbought conditions in areas like semiconductors. You don't have those anymore. You have huge dispersion in that sector. The only stocks that have held up pre and post earnings are AI related chips, chips for anything else.

There's not enough demand out there to justify what those stocks have done. We heard it from the auto chip companies. We heard it from the cell phone chip companies. It's not a bull market for anything other than training and inferencing AI related chips. Do you think that some stocks got too much of a halo off of thinking? You mentioned the word AI over the last six months, and you're off to the races. Maybe we're correcting a little bit of the froth that got into that area? I think investors appropriately got very bullish as we came into the year

because earnings were going to be better than expected. And now, that was the rumor. This is the news. They actually are. We've had 80% of the S&P 500 names in going into today. Earnings are now 8.7% above what the expectations were. We're actually seeing earnings estimates go higher, which infrequently happens from the start of a quarter. Usually, it's the other way around. And earnings are going to be up over last year.

And by the way, CapEx is going up. Revenue numbers are hitting where they're supposed to hit. You've got dividends being raised. Yeah. And it's an overseas phenomenon as well. Got bull markets happening all over the world. European banks are rallying. International small caps.

I mean, you're still bullish. I want to point something out, though. I want to go back to what I started with. It's not good or bad. The news is unequivocally good. It's better or worse than expected. Consider this phenomenon. S&P 500 Healthcare has the most S&P companies

with earnings beats this quarter. 90% of them came in ahead of the estimates. That's really good for sector-wide earnings performance. And yet, healthcare is tied with discretionary for having the least amount of stocks above a 50-day. So you've got stocks not doing well despite the fact that sector-wide they're coming in and crushing. Look at energy. It's the reverse. Energy has been the worst sector. Only 57 percent of S&P energy names are beating estimates. Ten percent are in line. Thirty three percent are missing. And energy stocks look better than health care right now.

So remember this. It's better or worse than expected. And we should expect that next quarter to it ain't going to change. How are you feeling about your Uber holding, which I think is the largest of all your holdings? Honestly, it's making me want to eat. I have to be like very honest with you because sometimes rather than deal with my problems, I'll go Uber Eats. People are very stupid.

So I'm looking at the reason why they quote unquote had an earnings miss. And it's like glaring. The company hit on all of their operating metrics and gave great guidance. They have securities portfolio. They've made investments in other things, both publicly traded and privately held. And those things have to be marked to market. There's volatility.

Prices change. We see this phenomenon with Berkshire all the time. And Berkshire even writes about it in their letter how foolish it is when an asset goes down in value. They have to write it down. Then it goes back up. There's no concomitant write up. Right. So this is like an accounting thing where they own stakes and things around the world. The prices of those things changed. Therefore, it leads to a quote unquote surprise loss. It's not an actual loss. I think if people grew up a little bit and behaved more like investors and less like somebody that reacts to every news headline, you probably wouldn't see it down as much. The stocks had a nice, huge move.

Not enough for me, Scott. Well, what's obviously not. But, I mean, what's wrong with a little bit of a pullback? I mean, come on. Nothing. It's 14% below its 50-day. It's 8% below its 200. Already washed out on relative strength.

You've got a 33 RSI here. You're selling the stock today. I will be selling you a jar of paste later on this summer. You can eat directly from it because that's how you're going to feel, I think, when people refocus on the actual fundamentals here. Are you rigging up the sale on toast? What's happening with toast? I should probably sell it because this is a way better reaction to just a decent quarter. So be totally upfront. I'm not selling it because it's not a big position of mine and I'm a long-term shareholder. I don not selling it because it's not a big position of mine, and I'm a long-term shareholder.

I don't really understand why it's up 14%. There might be some short covering here. It was a good quarter, not an amazing quarter. And I don't mean to talk down a stock that I own. But frankly, what's happening here is really exciting for me longer term. This quarter was nothing to be that excited about. They added 6,000 locations. They're now, I think, above 100,000 locations.

That's individual restaurants or stores using their products. One thing that they did that the analysts didn't love, they used to report this metric, how many locations are using six or more of Toast's different services. They, like, out of the blue just said, oh, yeah, we don't talk about that anymore. So some of the analysts are like, wait, why? So I didn't love that. But listen, great stock reaction. We'll take it. This is a 52 week high approaching a two year high.

And maybe it'll follow through and I'll stop talking down. Not every high beta sort of growth name is down, gets wrecked. And this is a good example. Let's bring in Chris Harvey now of Wells Fargo Securities and Keith Lerner of Truist Wealth. It's good to have you guys with us. All right, Mr. Harvey, you heard that whole conversation, okay? Now you have to follow that. You guys watch it live, so good luck. Good luck to you.

I'll see what I can do. 55.35. Can't help but go there first. That's your year-end S&P target. You're correct. So you're pretty bulled up. Pretty bulled up. I don't feel bulled up, but at the end of the day, what we're seeing investors do, they're looking further out.

They're being more aggressive with their discounting. It's really not discounting. The D stands for disruption at this point in time. And the other thing is, if you look at what else is happening, we repriced out Fed fund expectations. Now we're pricing them back in. Credit spreads are still 85 basis points, underlying fundamentals. If you look at what we saw during earnings season, it's actually pretty good. Margins expanded a little bit. Top line was better. We had more beats than misses. And we had more guidance, probably either four to one or five to one guidance raises versus cuts.

So that's not a bad environment. Yeah. Keith, does that environment lend you to be as bullish as Mr. Harvey is? We're still positive, Scott. I will say this. I mean, when we think about the last six months, I mean, we had five straight months of gains. We had a strong first quarter. From a technical standpoint, those are characteristics of a bull market. You can test that out. And you tend to have above average returns when you look at 12 months. Then you throw on top of that, as what we just talked about, is the earnings season.

The earnings season as Christmas is pretty good. What we look at a lot is the forward earning estimates. Every week we look at them and every week they're making new highs. And as long as economic growth continues to move forward, those earning estimates should also move forward. So I think it's a positive there as well. And then going to the Fed, I mean, you know, when Powell came out last week, I think he's basically saying the bar to cut rates is much lower than to raise them. So therefore, you almost have a little bit in our view, a bit of a put if the market or the economy starts slowing down quicker. You put that all together, and I still think the risk-reward for stocks, when we look out the next six to 12 months, is still favorable. But we're having a little bit of a chop after this rebound off the lows. And by the way, we did actually upgrade equities on that 5%

pullback, but the market rebounded pretty quickly here. Josh, I keep hearing those words more and more now, Fed put, that it's back. I'd be interested to hear from these gentlemen. You've got a 10-year under 4.5. So if we were thinking about 5% on the 10-year as a red light for adding to equity exposure, is 4.5 low enough to say it's a green light or is it a yellow light? And how much of that fall in interest rates over the last two weeks, by the way, we're at a monthly low.

How much of that would you say is responsible for keeping the market as buoyant as it's been? Chris Harvey, I would suggest you think it's had a lot to do with, I mean, how could you not? It's almost the whole story. Powell was less hawkish. Rates came down. Stocks went up. That's pretty much it. And so it's a green light.

You were going to 5%. You stopped at 470. We're now at four and a half. You have some paper coming to market today and tomorrow. If it trades lower, that's a really good sign. And what we're doing is we're pricing. Now we've priced out cuts. We're pricing back in. That's going to weigh on things. And it looks like it's a green light, at least for now. How much has to go right for you to get to that target? Like, does the Fed, do you need cuts to get to 55-35? It's a big number. Yeah. Do you do you need the economy to remain as strong as it is now to get to that number? Do you need earnings growth to be better than it was this quarter to get to that number?

Yeah, we don't need Fed cuts. We need to believe that we're at the start of a multi-year easing cycle. What we also need is the economy is not strong. It's just stronger than what most people expected. It's around two, two and a quarter, maybe two and a half. That's fine. That's great for actually large cap stocks. As far as what we need is we need credit spreads to stay where they are. We need the fundamentals to continue to fill in. And we need that a little less volatility in the rate market and the belief that, OK, we're not going to see five again or we're not going to see five for a sustained period of time. You have that. You can get you can get about 5500 without too

much trouble. Josh, I saw you, you know, nodding your head in agreement. I totally agree. We talked about this idea that so long as the rate cuts are almost here, but haven't yet arrived or don't come really quickly because something goes wrong, it's like a really great situation to be in. 7% to 9% earnings growth is now becoming consensus with the possibility of falling rates in the next six months. It's like a really, really nice place to be. People are making money on cash. If you look at the flows into fixed income funds, I was with my friend from J.P. Morgan Asset Management for lunch today.

The money is coming back in over the transom for bonds, which is why I feel good about that 4.5% rate, by the way, anyway. This is a great setup. So what could go wrong? Of course, the usual suspects, everything that we're not thinking of right now. But if you talk about the big upfront fundamentals, inflation getting under control, slightly getting better, rates going down at some point in the near future, earnings growth, dispersion across different sectors, winners separating themselves from losers. People are happy and the markets are acting rationally. And I think we can be here for the summer. I don't see why it has to change. Keith, what's going to carry us? So if

you're a little more bullish than you were, you upgraded equities, you said you heard about the target we have over here. Josh gave you all the reasons why it's prudent to be constructive, bullish in this market. What areas do you want to really lean into right here if you think we're going to have a few months more of this set, let's say, at least? Yeah. By the way, I do think we might chop around here a little bit first, but I think the trend is still positive and you want to stick with that trend. So I would say we still like tech longer term. The earning trends, they are actually still stronger than the overall market. Tech outperformance when the earnings momentum is stronger than the overall market, we're still seeing that. But I'd also lean into an area like financials because of the Fed pivot, because of

valuations and a lack of interest over the last couple of years. I think that's another area you're seeing relative price strength starting to improve there as well. And we still like industrials longer term as well. I mean, they've pulled back a bit more. You know, Uber is actually part of that. So maybe that's part of the reason why it's selling. But we like the more the infrastructure side of the industrial side as well. So it is a broader rally. So it's not the growth side like it was last year. And I think those areas that I mentioned kind of a barbell between growth and some of the cyclical areas will continue to do well over the next six to 12 months. Chris, you suggested to our producers that the best risk reward is in mid-cap growth. That's right. That's right. You have a great valuation, a relative valuation. Technicals are turning, right? They are self-help. They don't

need the economy to move forward. If you're going to do M&A, a lot of these companies are prime M&A targets. And if you look at them, they're outperforming year to date and they're outperforming over the last 12 months. And it is also becoming a mo play, which is what people are chasing at this point in time. So I think across the capitalization, that is your best risk reward. And if we do think rates are going to either settle here or come down, it's going to help out as well. You agree with that call? I think that's smart because, you know,

if you believe that the broadening that we saw... You make everybody happy. He's just smiling. No, because... I mean, we take the wide shot. He's having a great time. We had a broadening theme early in the year. Everyone agreed to it. Then it sort of got shaky when rates were headed, we thought, to 5%. People started talking about rate hikes again. It kind of wrecked a bunch of charts. But that kind of damage is not substantial technically and could heal itself relatively quickly. You don't have to be in the Russell too. You could be in those mid caps. I would even argue like non mega cap, large caps. I just think there's, when I look at the strongest areas of the market,

I find stocks in every sector right now, and they're not $3 trillion market caps. They're almost everything but. So I think that's right. Are you kind of alluding to the fact that it's okay to buy even small caps here because you have this idea that rates are going to continue to come down? I almost feel like you're kind of going there. Yeah. So as you know, we haven't been real constructive on small caps for a while. We're just less negative on them. And we're starting to see things that maybe around Russell rebalance will get more positive. But if we're going to go down the capitalization, it's still mid cap growth. But we're less negative on small caps at this point. Keith, what about you? We're sticking on small caps at this point in time keith what about you

we're sticking for with large caps at this point uh the main thing is the earning trends are stronger there i do think if we had a stronger soft landing type of move like we had in the fall of last year or late last year you know small and mid would do better but listen we don't try to catch the bottom we want to see a shift in the trend we're not seeing it as of yet but i do think mid caps are showing some improved relative strength. So I would list large caps first, then mid-caps, and then small caps at this point. Are we, Chris, going to be hanging on now just the end? I mean, I'm trying to think of catalysts from here. Running season all but over.

The Fed beatings in the rear view. Powell said what he did. I don't feel like Fed speak is really going to do much for us because we heard from the chair. Right. Is it inflation data? Is that now what matters more than anything else? I think so. It's inflation data.

The phrase you should be using, we're data driven. And that's the Fed. That's the Fed. That's what they should have been saying, but that's what they're saying now. So if you get a couple prints that are not hot, then people are going to think the Fed has more confidence. That's going to be really positive for the market. If you get the economy to cool down, that's going to be really positive for the market. Well, that's why, I mean, the jobs, you know, the jobs report took us that next leg higher this past Friday.

That's right. That's right. So just watch the data. And that's your catalyst. Nothing more, nothing less. I would agree. And I would say in a in a trending bull market, individual catalysts are not really what we're looking for. What we're looking for is continuity and confirmation. The continuity doesn't come from having one great day where the Dow rises 600 points. That's not a good that's not great.

We like we like the grind higher, better. And we like that dispersion that I talked about. Some people refer to it as rotation. Whatever you want to call it. This idea that we could have stocks like Shopify lose $20 billion in a day, but not knock the NASDAQ completely off course, as though there's a hole been torn in the universe. I like seeing that kind of thing. Because for every Shopify, there's a Reddit.

So this is construct. That's constructive. That's one too. These guys are looking at mid-caps, talking about mid-cap strength and it makes sense. What are in the mid-caps? Industrials and they look sick. Industrials are the best charts in the market right now that aren't utilities quite frankly. And that's a good chart to lead. It's okay if tech calms down and industrials take the wheel. So I think there's a lot of positive attributes to the tone of the market,

not just what the Dow and the S&P do, but what's moving beneath the surface. It's mostly, other than that utility thing I just mentioned, it's mostly what you would want to see helping tech take us to the next level. I mean, look, for every Amazon and Alphabet, which are red today, there's a Meta and Microsoft and now even Apple, which is back in the green. Guys, I appreciate the conversation very much. Josh, thank you. Chris Harvey, thanks to you as well.

Keith Lerner, we'll see you soon. To Christina Partsenevelos now for a look at the biggest names moving into the close. Christina. Thank you, Scott. Well, positive trial results of a schizophrenia drug pushing shares of Teva to a five-year higher today. That trial is really just overshadowing the pharma firm's mixed earnings report and reiterated financial guidance for 2024. That would be revenue guidance.

Investors are instead focused on the company's pipeline of new medicines like that schizophrenia drug, as well as an upcoming immunology medicine. You can see shares up 13%. Shares of TripAdvisor are plunging today. Yes, plunging. I'm using that because it's almost 30% down. Worst day ever since its IPO in 2011 because the online travel firm decided they weren't going to be up for sale. The company's special committee felt that no transaction with a third party was in the best interest of the company and shareholders, shareholders clearly not liking it. Stock down, Scott. All right, Christine, I appreciate it. Thank you. Just getting started here. Up next, tracking the smart money hedge funds piling into

one of this year's leading sectors and one that is still in correction from recent highs. What is driving that activity and where else are they seeing opportunity? Coming up, we're going to tell you. We're live at the New York Stock Exchange. We always are. And you're watching Closing Bell on CNBC. We have a market flash in the cybersecurity space. Our Steve Kovach has details there.

Steve? Hey, Scott. Yeah, this is Zscaler. You see shares here down about 4%. This is after some posts on X. We can't really confirm that they're legit or not, but some posts on X showing screenshots purportedly from the dark web showing Zscaler data is out there and has has been obtained. Zscaler put out a statement on the matter, saying they're aware of these posts on X and that they're investigating the issue.

They're also saying that they don't have any evidence of it. I'll quote them here. Any evidence or of incident or compromise to these environments and quote. So basically investigating the issue. They're aware that these reports are kind of swirling on social media right now. Still, it's enough to send shares down 4 percent, Scott. All right. To keep us up to date, Steve Kovach, thank you very much. NASDAQ taking a breather for a second day after its early May surge,

with momentum stocks again taking a leg lower. But recent hedge fund activity suggesting there could be more potential in that space. Mithra Warrior joins me now. She is Citi's North America head of capital introduction. Welcome. It's nice to have you on the program. Great to be here. How would you assess how hedge funds are feeling in the current environment now,

given the pullback we had and then hear the rally back? So I would say so far in 2024, confidence in hedge funds' ability to find alpha generating opportunities is quite high. And remember, that doesn't mean it's just long only opportunities. It's long and short. And so our clients are finding opportunities across the markets. Now, it's not uniform. And there are few places where there is that confidence in finding alpha generation opportunities. One where people are putting money to work is trading-oriented, market-neutral strategies. Quant has certainly had a good year this year. In fact, quant hedge funds are some of the best performers so far as of end of April.

And we're seeing that continue, although that's not a strategy you think of as your capital compounder. Where the capital compounding comes is in these fundamental stock picking strategies. And there are a few sector specialists where we're seeing a lot of activity and excitement. Energy is one of them, biotech and tech. And it's interesting, you guys were talking about it earlier, those three sectors are a hot topic of conversation.

Yeah, I'm sure they are. And seeing a lot of opportunity there. I mean, tech and biotech, to pick on those for a minute, part of the reason is there's a lot of macro impact on this sector that creates dispersion. There's also a heavy AI influence on both sectors, arguably more so than any other sector that's creating opportunity. Third is that there's been a lot of private investment opportunity in both tech and biotech. And what we're seeing is a lot of managers are applying the skills in due diligencing in private investments

to the public markets. And there's that deep research and deep fundamental analysis that provides opportunities beyond what you're seeing in the broader market. I'm going to guess that Stan Druckenmiller is not the only well-known investor or hedge fund manager, family office person who looks at what's happened with AI stocks and these mega caps and starts to feel a little uneasy and wants to take a little bit of profit in the names. Is that fair to say? Is that what you're hearing? Yeah, what we're hearing is that certainly in the long only space, there's a feeling that there's been a lot of gains already at the beginning of the year. The second half of the year brings a lot of uncertainty, whether there's an election, what's going to happen with rates and things like that.

So we are seeing some people think of the long side as maybe an opportunity to either take some profits or even find some shorts. Our securities lending desk actually noted that the week of April 29th, hard to borrow volume was the highest it's been all year long. And hard to borrow is crowded names, right? So we're seeing short interest coming back in the market.

And again, that's an alpha generation opportunity for your hedge fund. It's funny. I mean, yesterday, Brad Gerstner and his hedge fund, his long only fund was talking about increasing some shorts and taking exposure down by 10 to 20 percent. It's being borne out by the very people who are managing money, especially growth managers. Is it mostly happening from growth managers? So I think we're

seeing it in general, in general, across the board, the feeling that the long only side may be some time to take some profits that's persisting across the board in terms of shorts. Yes, certain sectors are more active than the others, especially ones where you feel that the market gains have not been broad-based and there's opportunities for dislocation. I was also struck by the, I think, the overall tone, if I want to call it that, from Milken out in LA, that it seemed to be more positive than maybe some had expected. Did you get that feeling too? Yeah, absolutely. I think there's just, again, there's opportunities abounding. I mean, one of the things that people are excited about is that there's cautious optimism in the IPO space, right?

And the IPO market, while not at its 2021 high, seems to be returning. And there's some excitement there. There's opportunities in the deal environment that people are excited about. So there's things to do and places to put money to work if you look beyond just the long-run space. And that's why it's an exciting year for hedge funds. Is that because at the end of the day, we believe that there are going to be rate cuts and that at least lends itself to some level of optimism? You know, it's obviously famous within that community,

don't fight the Fed, right? It works both ways. If you know they're going to hike, maybe you're going to batten down the hatches. If you know they're going to cut, maybe you're going to look to deliver more gains. Yeah, I think there's also expectation that leading up to an election, prior to an election, batten down the hatches. If you know they're going to cut, maybe you're going to look to deliver more gains. Yeah, I think there's also expectation that leading up to an election, prior to an election, we may see some surge.

There's also that overhang there. But I think in general, hedge funds participating as liquidity providers in the capital markets is certainly a trend that we're going to see growing. All right. I appreciate you being here. Welcome to Closing Bell. Mithra Warrior. Thank you so much. All right. From Citi, joining us. Coming up, from the playing field to the front office, legendary lacrosse player and head of the Premier Lacrosse League, Paul Rabel is here at Post 9. Next, he's going to discuss his game plan to grow the sports popularity, how he is reshaping the big business of pro lacrosse, his new book, which is really a manual on success.

We'll discuss next. All right, welcome back. Success in business and in sports can often follow similar paths, have a big dream, be part of a great team, and hopefully perform at an elite level. Well, our next guest has done just that and now hopes to inspire others to be the best they can be. Paul Rabel is the co-founder of the Premier Lacrosse League, often called the Michael Jordan of lacrosse. His new book, The Way of the Champion, Pain, Persistence and the Path Forward is out now. He joins us here at Post 9. I know you don't, you know, you don't like those references. I'm excited to be here with you, man. You're the MJ of news. People say you're the greatest lacrosse player of all time. I have described your book as a manual for success.

Yeah. Be it business, sports, whatever walk of life you happen to be currently on. What do you want the takeaway to be? Well, from some of my experiences, but mostly from lessons I've learned from the greatest athletes, entrepreneurs, and entertainers in the world. I share a range of wisdom that's resonated with me. And I would say getting an understanding of what it takes to win and then how to build tolerance for pain and how to be world-class at persistence. Those are the two attributes that I've identified with the greats. Risk-taking plays a role in there too, I would

suspect. No question. One of my favorite chapters is called The Greats Lose a Lot. There's this misconception that the best ever have winning come easy to them. We think about Bill Belichick, who's won eight Super Bowls. He's the second losingest coach in NFL history. Michael Jordan missed 9,000 shots. Kobe Bryant didn't score a point in his first season. Cy Young blew more saves. Mark Zuckerberg and Meta had the biggest single

day market cap drop. And it's what they have been able to do in way of risk aggression and resilience through loss that is unmatched by the rest of the field. Belichick wrote the foreword, by the way, which is pretty cool. What specific anecdotes can you share with our viewers from the athletes that you either talked to or read about or took some knowledge from? Well, I'd like to say that the first piece is around discipline and commitment. There's a chapter called You Can't Miss a Day, which is a lesson I got from one of the legendary lacrosse coaches who said, Paul, as an eighth grader all the way through your senior year in high school, if you shoot 100 shots a day, you will get a full ride to the college of your choice. But you can't miss a day, not for a holiday, not because it's game day, not because you're sick or injured. So there's a discipline and commitment. I took that bet. And then as you

progress through the book, it turns into a bit of a business lesson. So I learned from Howard Schultz and Steve Jobs and even Magic Johnson around the courage and humility it takes to ask for help. It's noted as the best attribute of leaders. And it takes courage because if you ask for help as an athlete, you're worried you're designating that you're not ready or didn't prepare. And as a leader, if you're asking for team for help, same thing. So if you have that humility, you're far more likely to succeed and get to an answer fast. Oh, how far pro lacrosse

has come. I say that because you're so identifiable with it. You are a great reason why it's traveled from there to here. And there was one point in your life where you were embarrassed to tell people that you played pro lacrosse. Yeah. Take me there. Well, that was in 2008 when I graduated from Johns Hopkins and was signed to a rookie deal with MLL for $6,000 for the entire season. I worked my way up to becoming an MVP and champion. At that rate, I was getting paid $15,000 for the season. All along the way, new media and tech were disrupting the big four on behalf of the UFC, MLS, F1. We started scratching our heads being like, why not lacrosse? So I got to

give credit to my older brother, Mike. He's my co-founder and our company's CEO. Him and I put our heads together, brought the best players in the world over in 2019 to start the PLL, and we changed the model. Well, you really approached it like a startup. Yeah. Right? Like, I mean, we talk about founders every day and venture capital, and you literally took that approach. Yeah, well, we were thinking, OK, if radio was to Major League Baseball, what television was to the NFL, social media could be to the PLL. On top of it, what's more important to us? And that is garnering attention quickly and bundling to grow revenue. So we're actually a C-Corp. We own the league, all eight

teams, marketing rights to players, field activation, online activation. So it's very different than a traditional trade association team sports league. Well, you give equity to players, don't you? Our players are now paid four times of what my average wage was on average. They have equity in the league. They have health care year round. So we believe that, hey, if we roll out the red carpet for them, fans of the game will see what pro lacrosse is meant to become and they'll be more likely to watch. You had the chance to sell at one particular time

in the anthology of this league and you did not. Which I'm fascinated by as well because another thing we talk about, founders and getting these offers when you start from nothing and then you get offers worth millions of dollars and the pull to sell. What enabled you to say no? And what's your game plan now? Well, we feel like if we said yes that early on that we were only in the early innings and there was so much more we wanted to continue to innovate on we still feel that way but when we were first offered in 2020 we had yet to get

the sport back into the Olympics one things I tell people about lacrosse is it's the oldest game in North America it's been at the college level since the 1800s the fastest growing at the youth level it was once in the Olympics in 1904-1908 we've helped revive revive that and invested in the pro level. We said no because we believe that lacrosse and the PLL can be a big six sport in America, right behind MLS and NHL, and you guys know the big four. Yeah. Speaking of non-big four, is there too much of a saturation, so to speak, with these other

in quotes leagues like yourself and a pickleball? And it seems like you turn on the TV these days and you have your choice of 15 different other sports. Yeah. Well, the most difficult thing to do in the sports business is secure media rights deal. Most emerging leagues have time buys or they do rev shares. There have been 200 sports leagues that have started since 1990 with a 1% success rate. And that's ability to sustain beyond three years. Cut to spring football and formerly women's soccer, and now they've figured it out. That was pro lacrosse.

We're trying to figure it out, heading into our sixth season now. You have a rights deal. We have a major rights deal. Yeah. We're on the ESPN family networks. We started with NBC. And by the way, both of those networks, I think, have done the best in pivoting around maintaining the relationship with broadcasting cable and streaming services.

So we feel like we can continue to grow as a tier two emerging sport at a faster rate than, you know, 1% at a time if you're tier one MLB competing with NBA and NHL, which, by the way, both playoffs are going on right now. Are you watching negotiations that are happening, let's say, for NBA TV rights? Yeah. What do those large numbers make you think about as it relates to your own sport? Yeah, well, it's a great question. Adam Silver's been a mentor of mine, and he's going through it right now. I suspect that he's going to two, maybe three X.

I think he might three X. In a good way for him. Yeah, that he's going to two, maybe three X. I think he might three X. In a good way for him. Yeah, in a good way for NBC, too. I heard about potentially what they've offered to try to get back into the room as they were in the 90s when I loved watching MJ on NBC. Yeah, the NBA on NBC was a thing. Here's what I'll say. Big tech has added inventory, budget, on any size screen, global reach. And the Blue Blood networks are figuring

out the attrition of cable, but they're content owners and content licensors and they know how to distribute. So they've activated their streaming platforms. What makes sports so unique is once streaming has captivated entertainment and you no longer watch ads, it's the only appointment watching form of television next to your show, which means it's more valuable for the ad network, which is still a $60 billion television network in the U or television business in the U S $235 billion globally. The ad market is approaching a trillion. So that's why big tech is getting in. And that's what makes sports interesting. Good luck with the book. Appreciate you coming here and talking

about it's Paul Rabel. The way of the Champion is out now, as we said. Up next, tracking the biggest movers into the close. Christina Partsenevelos is standing by once again with that. Christina. Well, Scott, Misery likes company. Very different earnings reports from two online merchants, and yet both are plunging. I'll tell you why after this short break. Less than 15 to the closing bell. Back to Christina for the stocks that she is watching what do you

say shopify because that is plunging what down 20 worst day ever since it since its 2015 ipo after the e-commerce platform company for merchants reported better quarterly results great but gave what's being viewed as more disappointing current quarter profit and revenue forecast. Shares down 19%. Consumer lending firm Affirm also falling in sympathy with Shopify, even though Affirm had a strong third quarter, better than expected gross merchandise volume. It's an important measure of transaction volumes often cited. And also provided an upbeat guidance. Mizuho suggesting investors buy this dip, and this dip means 11% lower today for a firm.

Got it. Christina, thank you. Christina Parts and Nevela still ahead. Airbnb's numbers out after the bell. That stock nearly doubling the S&P 500 this year. We break that down next. And later, a very big interview you don't want to miss. NVIDIA founder and CEO Jensen Wang, that is at the top of the hour in OT. We're back on the bell right after this. The big earnings set up and more in the Market Zone next. We're in the closing bell Market Zone. CNBC Senior Markets Commentator Mike Santoli here to break down the crucial moments of this trading day. Plus, another busy earnings afternoon.

Seema Modi on what to expect with Airbnb. Kate Rooney on Robinhood's quarter. Michael, what stands out to me, JPMorgan Goldman Sachs Financial is doing pretty well. What stands out to you? Absolutely. No, that's a big part of it. Market's just obviously kind of gathering itself after it's had this nice little bounce.

But if you look at that on the checklist of, okay, what's good, what's not so good, financial leadership since the Fed meeting has been very clear, and that's continuing today. Market breadth in general coming into today, very strong on a 10-day basis, one of the strongest breadth readings we've had in a while. It's global,

the recovery of other markets working creditly seems fine. Volatility markets, super, you know, calm. And they've kind of slotted back into the sort of predictable zone. So, you know, the grind is fine for a while. I do think we have questions about, you know, whether we really did restore the energy to the upside here for a real big move or if it's just going to be kind of, you know, we can we can stay supported around these levels. Fifty two hundred in the S&P. The first time took us a few weeks to get through. I mean, able to withstand some growth blow ups. Yeah. Which is not insignificant. We mentioned them at the top of the program. Sure. Find others. Yeah. Shopify. So that old kind of cloud software basket that was going to be the future, it's clearly, you know, it doesn't have enjoyed the real benefit of the doubt among investors.

So you have to say what happened lately. The Shopify numbers in particular, I think it fits into this theme of anxiety around small and medium-sized business and what they're experiencing. A lot of software companies reliant on that sort of stuff. And that, I think, maybe is what we're seeing evidence of in some of these shortfalls. I guess Simamodi will get a good look at consumer demand as it relates to Airbnb and OT. Yeah, absolutely, Scott. What's interesting is that Wall Street has already brought down estimates on Airbnb

after the company in February said growth rates in the first quarter will moderate from the previous quarter. But that hasn't stopped shares from rallying. Airbnb outperforming competitors Booking Holdings and Expedia this year. In the last week, remember, Booking said home rentals category is growing, while Expedia said its Vrbo business is slowing. So the question is, what is Airbnb seeing? Analysts at

Mizuho believe increased demand for home rentals during the Summer Olympics and elevated hotel rates could drive Airbnb's growth. Their price target, $200 a share. Following TripAdvisor's CEO Matt Goldberg's comments today about mixed signals in the travel sector, the street will be keen to hear from CEO Brian Chesky of Airbnb on pricing and again, the impact of inflation on the consumer. Scott. All right. Seema, appreciate that.

Seema Modi. Now to Kate Rooney on what to expect from Robinhood in overtime. Kate. Hey, Scott. Yeah, we are here in Menlo Park at Robinhood. Some of the big themes. Investors are focused on cost cutting, any growth in deposits and user growth, and then some new regulatory risks around crypto. But margins are something investors are really watching. Robinhood

has also seen the surge in monthly deposits, in part due to some splashy promotions matching IRA rollovers, for example. So investors want to see if that's going to continue. Top line is still very much driven by transaction-based revenue. It's essentially trading. Crypto is expected to be especially strong thanks to Bitcoin's recent all-time high. And then what we saw at Coinbase could bode well for Robinhood. Beyond trading, though, we're going to see how Robinhood is doing at growing its retirement and its credit card business. So outside of that core trading business and then interest income as it holds more deposits, that has been rising in the past few quarters, at least. And then there are some new regulatory risks with crypto this week. Robinhood disclosed what's known as a Wells notice from the SEC for what the

agency says are violations of securities laws. See if we hear more about that on the call. And then we're also going to talk to Vlad Tenev, the co-founder and CEO of Robinhood, right here in Menlo Park. We're going to hear a lot more about the quarter. It's coming up on last call on 730, Scott. All right. Good stuff. Kay Rooney, thank you very much. Back to Mike Santoli less than a minute to go. Utilities best this week. Yeah. Defensive, rates down, helping, AI power play, all of the above. Mostly defensive and sort of under-owned stuff has been doing well.

Healthcare has made a good move, too. So it has been a little bit, I think, just about the ebb and flow. The market overall is managing to get traction. And what happens is the movements occur in between. Tech leadership has really flagged. Consumer cyclicals, I think they're really on watch here because they really are underperforming staples now on a year-to-date basis. So you have to see if that sort of consumer fatigue plays through that group as well. All right, some red flags going up there lately.

We'll hold 39K on the Dow. Won't quite get to 5,200 on the S&P, but that always leads us tomorrow. I'll see you then. Into OT with Morgan and John.