Closing Bell - Closing Bell: How Much Is Riding on Nvidia? 8/27/24

Episode Date: August 27, 2024

Amidst a broadening market … how reliant are we on Nvidia and other tech heavyweights? Solus’ Dan Greenhaus, NB Private Wealth’s Shannon Saccocia and Branch Global Capital Advisors Greg Branch debate their forecasts. Plus PIMCO’s Erin Browne tells us why investors should wait to buy the dip. And, it could be a new era for the NFL as team owners vote on private equity investing. We drill down on what that could mean for the league. 

All right, guys, thanks so much. Welcome to Closing Bell. I'm Scott Wabner live from Post 9 here at the New York Stock Exchange. This make or break hour begins with a road ahead for stocks and how much is really hanging on those NVIDIA results tomorrow. It's the key question we'll ask our experts over this final stretch. As some argue, so much good news already priced into this market. In the meantime, take a look at the scorecard with 60 minutes to go in regulation, a mixed picture for the majors today. Although we are now green. Dow is trying to hang on. Any positive close there is going to be a new record. Financials, consumer staples, they're leading the way today. That tells you the kind of market action it has been. The

aforementioned NVIDIA, well, it's higher. And that is ahead of that key report tomorrow, up about one and two-thirds percent. Several other mega caps are modestly lower today. That's capping a little bit of the action all the way around. It does take us to our talk of the tape. Amidst a broadening market, how reliant are we on NVIDIA and those other tech heavyweights? Let's ask Dan Greenhouse. He is chief strategist with Solus Alternative Asset Management with me here at Post 9. Are we as good to see you?

Are we as reliant on NVIDIA and these names as we once were? I mean, by definition, no, because a lot of the other markets are picking up some of the slack. But listen, this isn't the most important earnings report ever. The last NVIDIA report, maybe the one before that also, were crucially important. I don't think there's really any discussion right now

about demand not equaling supply. And I don't think there's any expectation that the company's going to have negative commentary about one quarter forward or two quarter forward. Why is this less important than the other times? I think there was nervousness about the company's ability or about the amount of demand out there to justify the move in the stock right now.

And just from anecdotal conversations around the street, I just get the impression people are more comfortable, which maybe opens up the likelihood of further downside if something does miss. But I think people are just comfortable with the idea that demand is there. It's not as uncertain as it might have been, call it, one or two quarters ago. So I want you to listen to what Rick Reeder told me a couple hours ago on halftime about where mega cap stocks are like NVIDIA, how much good news is already in these names and therefore what we should expect on the other side of these results. Listen to Reeder. I think the golden age of watching, you know, this incredible tech sector promote top line revenue growth and earnings growth and free cash flow

growth. You know, I think we're done with that. I think, by the way, I think there's still good numbers. But I just think, gosh, you priced in an awful lot at this point. And it's OK. It's just OK, though. OK, that's that's Rick Reeder. Just OK, though, is just OK good enough for where these stocks are trading from a valuation standpoint uh i mean probably not you listen i'm not going to disagree rick rick is is usually right and i think he's probably right there uh but but at the end of the day uh the the the demand for the these chips obviously there's a there's a transition issue with blackwell and i'm certainly go get dan ives if you want the details but but obviously there's an transition issue with Blackwell, and I'm certainly, go get Dan Ives if you want the details.

But obviously, there's an issue with the transition, although I believe that's a couple of quarters forward. But from a broad market standpoint, there are other things going on. Post what happened with Japan, some of the hotel stocks like Expedia and Booking, GM and Ford, some of the card companies like American Express, all the warehouse companies, Walmart, Target, Costco. There's a lot going on here in the market that's not just mega cap tech. And so from a weighting standpoint, obviously, these are crucially important names, obviously. But from an investment standpoint, for those of us that don't traffic in mega cap tech, there's a lot of other stuff to do. And that's been the case for some time. And I would expect it to be for the immediate future as well.

You're making the case for the broadening that you clearly believe in. And by the way. Mind you, I've been making the case for the broadening. Yes, you have. Before the broadening happened. Yes, you have. In fairness, you have. And also, in fairness, before the retail sales report came out, before Walmart's earnings came out,

and some of these other retail names that were actually decent, you cautioned us about being too negative on the consumer. Sure. So you still maintain that view? Oh, yeah. I mean, listen, Jabba's claims, which are your, as I always used to tell clients and I tell investors now, you don't need a PhD, just watch Jabba's claims. And they jumped up $250,000 or so.

They've come back down a little bit. That's your most timely indicator. The credit card data that comes out of some of the banks, Citigroup, Barclays, have done a good job of aggregating their branded card spend patterns. And that provides you some timely data. But at the end of the day, the jobs market's been holding up. Consumer confidence today we saw is not terrible at all. Obviously, it's terrible on a relative basis, not on an absolute basis. And we heard from Walmart, which does $600-plus billion in revenue a year. Obviously, Target,

which is a little idiosyncratic, but still had good things to say. And I just don't see the worry about the consumer in general. Again, for the 100th time, we know the low-income consumer is under a little bit of stress here. But income growth has been fine. The job market's holding up. And this incessant worry about the consumer has proven false for a year and a half now. And I don't know why it's going to change tomorrow. When I tell you that real estate is leading over a month, utilities are second, staples are third, does that make you feel great about the market? I don't mean to ask it in a leading way. Those are generally viewed as more defensive sectors.

But when you do have yields coming down, they become more attractive because of the yield they offer. Yeah. What I would say is, first of all, I'm not positive that utilities are purely a defensive play. I mean, obviously, there's a yield play at work here. But if we look at something like Vistra, there's nothing. Well, sure. But still, there's nothing defensive about that idea. About real estate, I mean, listen, if viewers have not looked, go take a look at the charts of SL Green, Vernado, BXP as well, I believe.

These stocks are well off their lows on the idea that the worst of the New York City real estate and office collapses is behind us. And I think that's based on their quarterly earnings. That's probably true. And again, it just gets back to the idea that there are other things going on. Does it make me worried about the market that those are the names leading? No. At the end of the day, mega cap tech has such a large weighting. It's hard for anybody else to do any heavy lifting beyond what those names do. And so we are until that that math changes. We are at there. Well, it's never going to change. It's not going to change anytime soon. I mean, these stocks have such a heavy weighting within the S&P. So at the index level, they remain critically important.

The way that the S&P goes, you know, as so goes the S&P or as goes the S&P, so goes these mega cap tax. They're tied together. That's right. Again, my point would just be, and Solis doesn't do, as I've said 100 times, we don't do any mega cap tech. So we've got to find ideas. What's the best idea you've got right now? What's the something you came upon recently that you said? And if you don't want to name a single stock because you can't like sector wise, like what's just jumps out to you? It says, you know what? This is finally looks good to me. A name, an idea that we have played with off i'll riff

off of the consumer if you will the idea for a long time was that streaming was here was going to dominate and eat everybody's lunch and that was going to be the end of it and obviously that has proven not to be the case for some time now this is not necessarily new um and so when you look at things that the consumer could do based off of that what are what's consumer behavior shifting when streaming isn't the only place for movies to go, when streaming isn't the only place for consumer spend to go? There's areas that are offshoots of that idea that are still attractive to us. Also, sticking with the consumer theme for a while, it's not all planes. It's not all trains. It's not all automobiles. There's other ways for, and I can't

get very specific here, but there's other ways for consumers to spend money and travel that still look attractive to us. Okay. Let's bring in Shannon Sikosha of Enby Private Wealth and Greg Branch of Branch Global Capital Advisors. Both are CNBC contributors, and it's nice to see you both. Greg, I'll begin with you. Judging from your notes, you still remain, I guess, leaning a little more negative from center. Is that fair? That's probably fair, Scott. Look, there's a scenario where I think Rick is right and Dan is right and the breath widens and we get to capitalize on performance in some other areas. I just don't know if that scenario is likely. And that scenario is that the Fed

decides to do something preventative, not recuperative, because there's no reason right now, based on some of the things Dan just said, that they need to cut rates. They are eager to, but we just haven't seen any cracks in the economy. We got GDP growth for eight straight quarters, Q2 of this year doubling Q1. Just seen the largest EPS growth we've seen since fourth quarter 2021. Jobless claims are quite tame, as Dan intimated. And even after the revision, we've added approximately 174,000 jobs a month, which is decidedly expansionary. 100,000 is usually seen as the neutral rate. So if the Fed is going to do something preventative and start cutting rates in September, then this will likely

continue to be a rotation. As, you know, looser monetary policy without a driving downturn undoubtedly and disproportionately benefits underperforming smaller cyclical stocks. And so it'll set set the environment up for that rotation to continue, in which case I have to remain neutral. Well, what if they're cutting not because they have to, but because their current rate makes no sense relative to where inflation is? That's the debate based on what you're suggesting and the kind of conversation I had yesterday with with Ed Yardeni, who argues something similar to your point. No reason to really cut now. Look at the economy. But that misses the point. Their rate makes no sense. I think it depends on what mandate you're looking

at, Scott. And you and I have had this debate before. But after you've, from all accounts, missed one of your mandates for three and a half years, where we've had above-trend inflation. And conversely, we've only had unemployment at the 4.3 percent level for two months, and you don't have any cracks in the economy. I don't think that the Fed's anywhere in their mandate, does it exist, to say we're going to cut rates because we can. I think that the danger here is that we see a reacceleration in inflation. And remember, we just saw one in the first quarter, so much so that it had Michelle Bowman

out openly talking about rate hikes being still on the table as recently as June. And so I think the danger here, and I think what they will be cautious about and the next week or two of data is going to be critically important is that they don't do it too fast and in advance of when they need to. Shannon, how does how does this all factor into your current view of the market? Well, I think the one thing that you make a great point, Scott, is is is that we're thinking about rate cuts in terms of what the traditional narrative has been. And as a reminder, we haven't had a soft landing for 30 years. And therefore, it is really important that we think about what could potentially be the outcome of some of the moves today. We don't really know how to forecast that. In terms of our view on the market, you know, Scott, we've been there in the broadening out camp

for probably longer than a lot of people have. And that hurt us when we've seen some of these tech rallies, particularly as we moved into 2024. But if you look at just the delta between the earnings growth of the MAG7 and everything else in the S&P 500, that delta is starting to shrink. And when you think about the importance of these stocks, yes, they're important at the index level.

We don't want earnings growth to fall off the cliff for mega cap tech stocks because that will impact the index. However, we do think that there is opportunity in energy, in financials, in industrials, and even to some of those sectors where you called defensive earlier in the show. Are utilities defensive? They're not that defensive right now. Healthcare doesn't seem very defensive. There's a lot of growth within that sector. So I think there are opportunities here, whether or not, depending on the path, really, you know, you can nail the path for the Fed. I don't think that's as relevant today as it was maybe six months ago. No, I mean, I hear your point. I mean, there are utilities that are viewed offensively, like Dan said, because of what they mean for powering the AI revolution. There are health care stocks that seem offensive because the

lilies of the world are transforming to this new trend of GLP-1s. I get all that. But what's your response to what you've heard? Well, I agree with a lot of what Shannon had to say. And I think it's also important to remember, to age myself a little bit here, you may recall, in the middle of the 2010s. Why are you aging me with you? We are because we are older. We have advanced age, my friend. Speak for yourself. Go ahead.

Just because we moisturize a lot. I'm in with you. Go ahead. Viewers can't tell. But listen, there was a period of time in the middle of the 2010s where utilities and consumer staples were leading for a period of time. And there was worry about, is that good for the market? And it ended up meaning just about nothing. And I imagine that this instance will be roughly the same.

And so I agree with Shannon that there's a lot going on within utilities and health care that aren't exactly defensive in the traditional way that it gets thought about. I disagree with almost everything Greg had to say. Well put and an articulate view of the bearish narrative, if you will. But I think you made the right point, which is the idea is not that the Fed has to cut. The idea is that the Fed wants to cut. And we can debate about it. The time has come. As he said, the time has come. And we can debate, and Greg and I and you and everybody, we have that debate repeatedly. But focusing on the negative economic outcomes that generally result in rate cuts is not correct right now. The idea is, as Scott mentioned, is the rate correct for the current economy based on the inflation rate and the path of the unemployment rate?

And the Fed has decided the answer is not. So as investors, what we have to do is put aside our own political biases. And Greg, I'm not talking about you right now. I'm talking to the viewer at home. You put aside your own economic and political biases and you say, OK, the Fed is telling me that rates are coming down over the next couple of months, whether it's two or four or six, doesn't really matter. What does that mean for the economy and the risk landscape? Do I dial up risk in my portfolio? Do I dial it down? Do I tilt in favor of names that

are levered to lower interest rates? Just look at like something like the mortgage servicer companies or do I dial it in this direction? And those are the debates that we should be having, not whether or not they're going to cut rates for the right reasons or the wrong reasons. It's rates are coming down. They've told us more or less. What do I do with my portfolio as a result? I think that's a good point. Greg, how do you respond? Look, and I'm not going to vociferously disagree with that. And it's not necessarily that it's my opinion. I'm trying to read some tea leaves here and say what can go wrong over the next month. And when the whole market you've been wondering, like what can go wrong for the last 18 that that's part of our the i don't know if you want to say discourse but we've had debates

and and your repeated points quite frankly are what could go wrong now what could go wrong three months from now what could go wrong six nine twelve fifteen months from now and here we are 18 months later and we've got the Dow at another record high. And anything positive today is going to going to extend that. I hear you making the argument in some respects, too. Well, Michelle Bowman, as recently as June or July, was still talking about cuts. I mean, it's clear you're about to be voted off Bowman Island because the Fed share himself has made it clear that the time has come. Hasn't the time come for you to be more constructive on the market?

Not yet, Scott. Not yet. And I think moving from bearish to neutral is a constructive move. I think highlighting areas where we've increased exposure as far back as December as a constructive move. So I think it would be difficult to say that I haven't been more constructive over the last eight months. But I think it's an important point that if the entire market thinks that a rate cut is forthcoming, we've all decided that the Fed has decided that. I think that they stopped short of saying that, quite frankly. And I just want to see two more weeks of data. I don't know why that's an unreasonable thing to think. I'm sorry to interrupt. They're never going to say we're going to cut by 50 basis points in September. That's not a thing that the Federal Reserve ever says. And I know that you I know you read the speeches and I know you read the minutes.

They've come and Jay Powell specifically have come as close as any Fed member ever has come to saying we're cutting at the next meeting. I got you. I got you. And I heard all that as well. What gives me pause is that I think the next two weeks of data will have something to say about that, Dan. I think that jobless claims, when we get them this week, will have something to say. And PCE, and on the third, ICM, at least the employment component, because I do agree that they're now focused on employment and whether or not being at full or close to full employment is in the cards right now. They've stated that it is. They haven't put a time frame on it. So that leaves a possibility open. I think it's important for us to recognize that nothing's 100 percent probability. Shan, NVIDIA tomorrow, we started out the program by debating how important this really is at the

current time. We've had we have had this broadening. Rick Reeder suggesting, of course, you heard from him directly that a lot of the good news, if not most of it for all of these mega cap stocks is priced in. Like, what can you really expect from revenue growth here forward that we don't already know? Well, you and I talked about this with Joe last week on Halftime, Scott. And I just think right now the AI trade is incredibly narrow. And I think that that's why you've seen the continued resilience. And for instance, when NVIDIA sold off after the unwind of the end carry trade, you saw this massive amount of investor interest and come

back in and push that stock higher once again. And so I think that the challenge here is that only about 5% of corporations in the US are utilizing AI right now. And so it's really about how much of the hyperscalers going to continue to purchase, how much are they going to continue to create CapEx. And, you know, if you look over the next couple of quarters, Scott, they're not giving you any indication that they intend to pull that back. And so at least for the time being, I think that this is the, you know, this is the tip of the spear for AI. There's enough spending going into AI that I think people are not worried about that potential drop off a cliff in terms of demand. And so it's going to be increasingly a conversation about valuation and the next product down the line.

I think 2025 is really where you start to see that potential competition for NVIDIA. But as it relates to the second half of 24, they really are sitting in a position where that that demand is likely to continue. And the competitors just aren't quite there yet to be able to unseat them in a meaningful way. If nothing else, Dan, I guess, you know, something disappointing tomorrow, even though I don't think it's anticipated at all or expected. And, you know, maybe it shouldn't be expected. Could reintroduce volatility to this market in a way? Look, we had this outlier, OK, three weeks ago where we had the VIX spike and then we've sort of calmed down again. We have an election 70 days, if not a little less away. Do we expect more volatility between now and then? And is NVIDIA something that reintroduces it? I would separate NVIDIA from those other items you mentioned.

They're idiosyncratic one-offs, if you will, specifically what happened with Japan, for instance. But in the case of NVIDIA, it's broader than that. And listen, again, no one expects anything negative to come out, although admittedly nobody ever expects anything negative to come out. It's true. It's true. Look, you've been proven to be foolish to think that they're going to disappoint. And especially when you have, there was a story I was reading about Sergey Brin saying,

and I don't know that he said it or not, but the story was that he said he'd rather go bankrupt than fall behind in this race. And so, to Shannon's point, for the next couple of quarters, that demand's going to be there. But if for some reason it was not, why it's different is because NVIDIA is the nucleus, if you will, in the concentric circles of risk. It's not just NVIDIA. It's Avago. It's Vertiv. It's Eaton. It's all the, it's Avistra we mentioned.

It's all the ancillary plays that go into building out what is becoming the AI ecosystem, if you will. And NVIDIA at the center of it, if they were to come out and say, all right, well, demand is slowing or it doesn't mean everything implodes immediately. But when you look back at what happened in 2000, there was a point where the numbers stopped going up as much. And then there was a point thereafter where the numbers stopped going up. And it happens in that succession is the assumption. And we have not seen even the slowdown as of yet. And so investors of all stripes, whether you're in mega cap tech or not, given how important it's been to the market in general, you're looking for that slowing. But to Shannon's point and to my point, I'll reiterate, we haven't seen it yet. So, all right, well, we'll make that the last word for this conversation in this debate, which I appreciated very much.

Shannon, thank you. Greg Branch, my thanks to you as well. And of course, Dan Greenhouse here at Post 9. We'll see you again soon to Kate Rooney now for a look at the biggest names moving into the close. Hi, Kate. Hey there, Scott. So first, we're going to take a look at Netflix today on pace to close at a new all-time high. The streaming giant rising about 2% today after Evercore now says it sees more upside than previously expected. The firm also says Netflix is in a historically strong position when it comes to things like competition, financials, and then fundamentals. On the other side of this, Kava, going in the other direction here, shares down as much as 5% today after some insider selling was disclosed.

The CEO of that fast casual restaurant, Brett Shulman, and then some other top executives, did sell off some of their shares, that's according to new SEC filings. But you zoom out, that stock is still up more than 40 percent so far this month, Scott. All right, Kate. Thank you, Kate Rooney. Just getting started here. Up next, PIMCO's Erin Brown. We get the playbook, why she says investors should wait to buy any dips right now. We're live at the New York Stock Exchange. You're watching Closing Bell on CNBC. All right, welcome back. Stocks hovering around the flat line today. The Dow and the S&P trying to close at record highs.

Any close positive for the Dow will be a record close. S&P's got a lot of work to do. We look ahead now to tomorrow's key earnings report from NVIDIA, the importance that it has on this overall market, your best strategy right now. Our next guest says it's time to, quote, conserve firepower, wait to buy any dips. Let's bring in PIMCO's Erin Brown with her playbook. It's good to see you. Welcome back. Thanks for having me. I hope you've had a nice summer. Why should you wait if this market has a little bit of an upset? That would have been a mistake if you would have done so on August 5th. Yeah, and to be fair, we have been optimistic on equities and have been long,

but we think now is a time to step back. My model right now is to sell in September and buy in November. And we have two pivotal market events which are likely coming to fruition over the next couple of months, that being the first Fed cut, which we think will happen in September, and then also the U.S. election, both which we think will add volatility to the market. Regarding the Fed, I think the market's probably gotten a little bit ahead of itself in terms of the pace for Fed cuts, particularly over the next couple of quarters. While I do believe that the Fed's likely to cut in September, some of the optimism about them going 50 as opposed to 25 came after the last payroll print.

And I think you're going to see a reversal. Some of the anomalies that hit last month I think are going to be worked out, and you'll see more of a normal payroll print in the upcoming print. And I think that that will take some of the sort of optimism about 50 out of the market for September. So I think that's going to add a little bit of volatility as you see front end interest rates reprice a little bit higher in terms of yields. And then I think also as we come closer to the election and a Democratic sweep becomes more in play,

I think that also is going to focus the markets on the potential implications of what it might do for corporate taxes and personal income taxes, all which I think will add volatility over the next couple of months. OK, so there's a lot there. First off, on the point you make about the Fed, isn't the pace at this point less important than the trend itself? Absolutely over the medium term, and that's why I wouldn't be a seller over the medium term. But I do think that the market reacts to the pricing at hand, and little changes in the market can have an

outsized impact on how stocks trade. And so if right now the market is trading a higher probability of a 50 basis point cut or a faster pace of cuts and then that gets ratcheted back, that is going to have an impact on how stocks trade. Well, because you think bonds are going to reprice and that yields, as you said, let's say the two year yield goes up because the pace is going to be slower than some had originally accepted or expected, probably a better word. And that is going to have an impact on equities. Right, exactly. I think that will add volatility to equities. It will add, you know, I think it takes some of the sort of froth out of the equity market that's,

you know, occurred over the last month. And I think all of that is going to be a hiccup on what is still an upward trajectory in stocks. It's not a U-turn in stocks, but it is, I think, going to be a hiccup for the markets. But it does lead to the, I guess, controversial topic in and of itself of essentially selling the first rate cut, even though you're constructive about the trend and longer term about stocks is selling that first move when so many for so long since 2009 have been conditioned. Don't fight the Fed. Right. And look, that's why I'm saying this is a temporary strategy. I don't think this is a long-term strategy. But I think with that and the election, there's a lot of skepticism and I think uncertainty right now in the markets. And you heard it from second quarter earnings call with a lot of corporates outside of AI stalling tech

and selling capex investment until after the election. There's a lot of uncertainty, I think, around what the policy is going to look like after the election. And I think you are going to have a little bit of a lull in terms of, you know, activity data into November, which is going to cause, I think, the markets to pull back a little bit. To me, that's an opportunity to buy, to get in at better levels. But I do think that you should expect some level of volatility over the next couple of months. And it's appropriate in that environment to either take a step back, lighten your equity exposure or deploy put strategies or at least some types of option

strategies to protect your downside. We look ahead to NVIDIA tomorrow, obviously, with great anticipation. Rick Reeder suggesting earlier that much of the good news already priced in for a lot of these names, NVIDIA included. You share that view? So NVIDIA is up over 150 percent year to date. It's hard to say that there's not a lot of optimism priced into the market tomorrow. That said, if you look at broader AI names that are leveraged to the AI theme outside of Nvidia, they're still down about 10% from their all-time highs. And Nvidia pricing right now, even on a valuation basis, isn't expensive relative to its five-year average. So while certainly there's

a lot of optimism priced in, I think that they still can deliver upside and surprise the market to the upside, which may lift NVIDIA, but I think even more broadly lift the AI names outside of NVIDIA. To me, the investment in CapEx hasn't stopped, and I think it's going to accelerate into next year. Forgive me, I didn't mean to interrupt the investment in CapEx hasn't stopped. And I think it's going to accelerate into next year. Forgive me. I didn't mean to interrupt the final points that you were making. That's Aaron Brown of PIMCO. I've got to leave it there. I do have some breaking news that I need to get to. We'll talk to you soon. Thank you for joining us.

To Alex Sherman now, as we're getting some news out of the NFL regarding that imminent vote on private equity investing. And this is a juicy detail here that you've reported on. Can you tell us what you know? Yeah, Scott. So part of the vote today, I'm told, remember, the NFL has never allowed private equity ownership before. So they're really setting the rules. And one of the rules here is in terms of what the NFL would like is to take a percentage of the so-called carry. That's the profits that a private equity firm makes when they have a transaction and sell an ownership stake for its own return. The NFL wants a piece of that. We don't know exactly the percentage

of the carry yet that the NFL would like, but no other league does this as an across the board rule. As you remember, the Major League Baseball, NBA and the NHL all allow up to a 30 percent ownership stake. The NFL, for the first time now, considering up to a 10 percent ownership stake. And in addition to that smaller ownership stake, it now may, for some firms or all firms, take a piece of the profit. So we're seeing these more restrictive rules for the NFL, which you could interpret sort of in one of two ways. Either it's smart, this is an opportunity for the NFL to take more money. Or if you're more cynical, you could say they're sort of acting as the great vampire squid here, you know, kind of grabbing its tentacles anywhere where it can make more money, as the league has done in so many different ways before.

I mean, I would I would look at it a couple of ways. Number one, this is the NFL flexing the muscle that it has in a way that other leagues can't because they don't have the same juice, so to speak, as the NFL does. And also that private equity wants into this pie so badly that they would be potentially willing to do this. Look, there's consternation, no question, among some of the private equity firms and even some of the owners who prefer more of a free market approach here. But you're absolutely right. Thefl has already limited the amount of private equity firms that it's even going to allow in the door to to a number less than 10 to begin with so we're seeing this sort of incremental steps here by the league that's now interested in allowing private equity ownership to a limited degree because the

valuations of these franchises have gotten so high and it allows for a liquidity event for some of the owners that don't want to sell the full team. And of course, the league itself doesn't want a lot of full team transactions. They are very much in the interest and of the mindset that they want generational ownership of these teams with owners that have long-term decision-making, not short-term profits. So they're putting in these rules now, or at least trying to, to benefit the league for the long-term and also, yeah, make life a little bit harder for the private equity firms who are still undoubtedly going to have interest in buying stakes in these teams. I want you to stay with me and I want to bring in our senior sports reporter, Michael

Ozanian, who joins us now with more. Michael, it's good to see you on our program. Your reaction to this news that Alex is talking about? Well, first of all, as Alex touched on, none of the other leagues are as strong as the NFL. Private equity needs the NFL more than the NFL needs private equity. The NFL does not need more capital. The NBA, Major League Baseball, Major League Soccer, they were all in greater need of capital than the NFL. Dial Corp, the PE firm, does have a carry agreement with the NBA. So this would be a little similar to that. But at the end of the day, if any of these PE firms

object to what the NFL wants, I have no doubt that the NFL could substitute a different PE firm. And Michael, the greater point, I think, is as we were discussing with Alex, is that the NFL is holding all the cards here and it's flexing a degree of muscle that it has that the other leagues just simply don't. Absolutely. The NFL is the biggest and most profitable of any sports league in the world. It's almost impossible to lose money in the NFL. None of the teams lost money last year. The NFL is growing its revenues in the high single digits. It's going to continue to do so thanks to its massive TV

contracts, which, oh, by the way, it can opt out of in six years. It's moving into streaming, which has been very popular. One way to look at the difference in the NFL from the other sports last year, the NFL was 93 of the most watched 100 programs in this country. Just think about that in terms of dominance in the sports world. It is remarkable. Alex, we know that, at least we think we know, that PE money is going to be capped at 10 percent initially. Other leagues allow maybe up to 30. Do we know whether that number will increase? And if so, when? Yeah, look, I think even part of this discussion on the percentage of carry is part of a long pathway where the NFL wants to start looking at private equity investment, but they want to take it slow because they can.

I mean, to Michael's point, the reason why the NFL has not allowed private equity investment up to this point is they haven't had to. So I believe that number. In fact, Roger Goodell has publicly said that he would be open to that number increasing from 10 percent up higher, perhaps toward where the other leagues are over time. But there's just not a particular urgency to do so. So you might as well start small, see how this goes, anticipate any particular challenges or things that the league doesn't like, and try to put in the rules early that benefit the NFL in as many different ways as possible. It speaks, Michael, to what you do best. You're known as the guru of sports team valuations. So you better than most know what

predicament, if you want to use that word, potential owners have been in. The fact that valuations continue to increase exponentially. You have six billion just paid for the commanders by Josh Harris and his team. And there's only one way that these things go, and that is generally up. Yeah. What a horrible business to be in, right? Valuations are going so high, we just don't know how many people can afford to buy them. But to your point, this money will be used generally to fund the limited partner portion of the purchase of teams. So to your example, the commanders sell for six billion. You have limited partnered funding on that, the need of about three point two billion,

assuming now you use the max of one point four billion of debt. If you look at the numbers here that the money is about five hundred million per team, it could be capped at that five hundred million would go a long way in helping expedite the sale of the $6 billion NFL franchise. The other part of this is going to be some of this money will be used by team owners to renovate and improve their stadiums because the money that comes in from luxury suites, hospitality at the stadium, NFL team owners do not have to share that with the other members of the NFL like they do with gate receipts. So that's another reason why these team owners would like to get some of this

private equity money into the NFL. I mean, because you've been on the ground floor of this, Michael, from the beginning of when we really started to obsess about valuations, are you at all surprised at how consistently and how largely they've grown? We're looking at some pictures right now, presumably of the owners at the hotel, I would assume it's at, in Minneapolis, where this special vote is taking place. There's Jerry Jones, of course, and Stephen Jones, I believe, of the Cowboys. You saw the Crafts walking in, the Cronkies as well, of the Rams. So this vote appears to be imminent.

But are you surprised? And there's the Commissioner Goodell, obviously, as you see him, too. Are you surprised at how quickly and how consistently these valuations have increased? You know, years ago I was, but not anymore. I mean, when I first started doing this in the early 90s, I remember I asked a valuation expert, I said, could these NFL team values continue to go up the way they've been going up? And he said, no, no, no, it's impossible, he said, because there's no way the TV money is going to go up like it has been in the late 80s. So think about that for a second. Look, what you're dealing with here is almost a perfect economic model. You dominate the sports world and viewership. You dominate the sports world

in terms of the general psyche, what people talk about. You have the most revenue. Your revenue is growing. You're all profitable. And by the way, thanks to collective bargaining with the players, you're capping what you pay the players at 49 percent of revenue. I mean, this is a license to print money. And Scott, let me just point out just on the back end of that, part of the reason we're not seeing a lot of full team sales beyond the idea that these are sort of generational assets that pass down from one family generation to the next is that because the TV rights are going up and there's an out clause in the current NFL deal at the end of the 2028-29 season, there's a general expectation that the amount of money coming in from TV is only going to go up two to three times even more than what the NFL is already making. The NBA just did its own media rights deal and almost got triple the valuation of its previous media rights deal. So this idea that there's yet another one of these media rights negotiations coming up in four years

is leading a lot of owners to assume that their valuations are just going to continue to increase. Guys, we'll leave it there. I appreciate you surrounding this story for me. I urge everybody, go read Alex's piece on CNBC.com, so you get a little more depth into what exactly is at stake. Michael, it's great to welcome you here as well. Thank you. And you've got some exciting news coming up that we're looking forward to as well around the kickoff of the season on valuations, too.

So this is a good scene setter for all of that. Guys, thank you very much. Thank you. By the way, don't miss CNBC and Boardroom's Game Plan Conference. That's an event bringing together athletes, owners, investors, and innovators to explore the intersection of business, sports, music, and entertainment September 10th out in L.A. You can scan the QR code or visit CNBC events dot com slash game plan to register. And please do. Up next, we're tracking the biggest movers into the close. Kate Rooney is back with that. Hi, Kate. Hey, Scott.

We are so a luxury car maker driving to a record high and yet another tech company today targeted by short sellers. This one's an A.I. We're going to bring you all those details coming up next. We're less than 15 from the bell. Let's get back to Kate Rooney now for the stock she's watching. Tell us what you see. All right, Scott, we're going to start with Ferrari. Shares of that company roaring ahead today to a new all-time high. It comes after Morgan Stanley analyst Adam Jonas boosted his price target to a street high today.

Still has an overweight rating on the carmaker. He's arguing today that Ferrari fits into this trend of what he's describing as ultra-premiumization, driven by those high net worth buyers, says Ferrari stands out among those luxury peers. And then Supermicro getting hit today by a report by famous short seller Hindenburg Research, that firm disclosing a short position in Supermicro and accuses the AI server maker of, quote, accounting manipulation. Shares of Supermicro down now about 2 percent, but they've nearly doubled so far this year, Scott. All right, Kate, appreciate it. SK Rooney still ahead. Hims and hers health falling today.

Eli Lilly revealing some new plans for its own weight loss drug. All the details coming up. Closing Bell is coming right back. We're now in the Closing Bell Market Zone. CNBC Senior Markets Commentator Mike Santoli here to break down the crucial moments of this trading day. Plus, Angelica Peebles on the move in shares of Eli Lilly today in hims and hers. Gabrielle Fonrouge looking ahead to Nordstrom earnings. They're out in overtime, too.

Mike Santoli, you first. Anything positive will be a record close, a new one for the Dow. But this very much has the flavor of let's see what happens with NVIDIA tomorrow, and then we'll see what we want to do. Yeah, it seems like the market, broadly speaking, sort of waiting for permission perhaps to give a try to the old highs in the S&P 500. Since the beginning of last week, every single day, the S&P has closed within half a percent of 5600. I mean, so the all time high is about one percent up from where we are right now. And whether, you know, it's the catalyst or it just gets out of the way or it confirms the long

term story or not, it's not been a consistent pattern in terms of Nvidia beat and raise. Its stock takes off and the overall market gets escape velocity but obviously it would help the story somewhat um meantime you know it feels as if uh we're figuring out just how much of the ideal soft landing scenario we've already taken credit for yeah i mean aaron brown you know makes the point too that the the market may get upset by the pace that the the fed goes yeah by and it may be at least initially more important than the trend itself, because a slower pace could mean more elevated yields and thus a little more upset in equities. In the near term, I can see that as a reflex. And it's mainly because even though the response of

the market on Friday to what Powell had to say implied that we were like, this is right on time. It's not too late. It's not too late. It's not too early. It's perfect. It's more likely that people worry that it's too late. Right. So it's more likely that, you know, the two year yield is so far below Fed funds. It's the market's way of saying get on with it. And so if they want to be slow and incremental about it, maybe it's going to feel as if they're allowing themselves to fall further behind. On the other hand, you know, historically, you don't want them to have this urgent slash and burn rate cutting campaign because usually it means they're scrambling to deal with a bad economy. Sure, but you don't want it to be too late.

No, exactly. That's the fine line. That's a delicate part. And that's why the soft landing can be the baseline premise of everybody, but it's constantly tested. You constantly have to say, are we still on track, are we still on track? Okay, back to you in a second. Angelica Peebles now on these moves and health care names.

Tell us. Yeah, Scott. Lilly's making vials of Zepon available at half the normal price for people paying out of pocket. It'll cost about $500 for a month's supply, depending on the dose. And only the two lowest strengths are included in this program. Lilly's clearly making a play for people who are willing to pay for something, pay something for a weight loss drug, but not the $1,000 a month that's up on cost without insurance. These are people who might consider compounded versions of GLP-1 drugs that are all over the Internet. And that's why you're seeing pressure on HIMSS today.

That's docked down about 8%. Remember, it wasn't that long ago that the company started selling a compounded version of Novo Nordisk obesity drug, Wagovi, and said that they planned to eventually sell compounded Zepound. Now, Lilly's coming in with this discount. But even at that price, you're still paying a few hundred dollars more a month for Zepound. So we'll watch to see how many people actually take Lilly up on this offer. Scott? Angelica, I appreciate it. Thank you. Gabrielle, tell us about Nordstrom. What should we expect?

Yeah, Scott. So there's going to be some mixed sentiment heading into Nordstrom's second quarter earnings tonight. On the one hand, the luxury goods sector has been on a steady decline for more than a year, which, of course, has been bad news for Nordstrom. But on the other hand, the company's off-price banner, Nordstrom Rack, has been growing, and it's helped prop up results across the company. Last quarter, Nordstrom Rack outperformed Nordstrom, and investors will be looking to see if that trend continued during the second quarter. They'll also be looking to see how the department store is improving operations and cutting costs,

and of course, any color on its efforts to go private. Headed into the print, analysts from Else Seg are expecting earnings per share to fall about 15% to 71 cents on sales of $3.9 billion. Scott? All right. Gabrielle, thank you. I appreciate that. It's been hard for the market to get all that excited about department stores. Oh, yeah, for quite a while. For a long time. I mean, to the point where if you just look at how the market has expressed its preference for Walmart, Costco, TJX, and to a degree, Ross stores, that's where they believe is the tell on the consumer. So good or bad sales at some of the more narrow change in the department stores, it doesn't

necessarily mean the consumer's out of steam. It means they're secular losers of market share. and so not as much of a macro tell. I mean, I think in general, you know, the consumer spends what the consumer has, and 4% annual wage growth is okay. We still haven't had a lot of layoffs, so that seems okay. But it's hard to know if that's going to be, you know, the lead area of this market, even if we are in that, you know, rate cutting trade.

About eight tenths of a percent or so away from S&P record high. So we're not going to get that today. But as we said, anything positive for the Dow is going to be a new record. Yeah. And the equal weight is basically flat on the day and it's holding at its own record high as well. Yeah. A little broadening again today.

Secker's outside technology doing all right, at least a couple of them. We'll leave it there. So we're going to go out green, as we said, on the Dow. We'll have a new closing high. The S&P 500 will go positive, too. No closing high today. And there is the Nasdaq as well. But, of course, all eyes are on NVIDIA tomorrow in overtime, those highly anticipated earnings.

Can't wait for that. Into OT with Morgan.