Closing Bell - Closing Bell: Investing in a Growth Scare 2/26/25

Episode Date: February 26, 2025

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

Welcome to Closing Bell. I'm Scott Wapner, live from Post 9 here at the New York Stock Exchange. This make or break hour begins with the countdown to NVIDIA earnings. All that is riding on those results, we'll ask our experts about that in just a moment. But first, let's show you the scorecard here with 60 to go in regulation. We did get out of the gates pretty well today, as some of the hardest hit names got a nice bounce. We did start to cool a little midday. That is the current picture with an hour to go. We're right across the board. Maybe after President Trump said during his first cabinet meeting, the tariffs will in fact go ahead as planned. There's been some nice bounces, though, today

from many of the momentum names, the ones that have been closely watched like Palantir and Robinhood and Vistra and Vertiv. They are all higher today as that trade remains very much in focus. It does take us to our talk of the tape, NVIDIA's moment of truth. Its earnings about an hour away. And even though the stock is higher today, it hasn't traded well lately at all. Will tonight's results change that? It's the key question. Let's bring in Christina Partsenevelos, who covers that company for us and will tell us, I don't know, is the bar high or not?

It is high, but I would say for the first time in two years, it's actually been lowered, especially by buy side analysts. They've lowered their expectations to align with consensus. And that's signaling that those blowout quarters, to your point, Scott, may be dissipating a little bit. And the key for this quarter is guidance. It's the make it or breakit factor that I'm calling. So $42 billion you're seeing on your screen is the magic buy-side number for the April quarter. And there's many reasons that we've seen caution around Nvidia lately.

You've got China's deep-seek large language models that raise competitive concerns, uncertainty around Chinese demand because of looming export restrictions, any revenue air pockets between chip iterations from Hopper to Blackwell to Blackwell Ultra, declining gaming GPU prices, compressed gross margins, which should go up in the second half, and then questions about CapEx returns. It's a long enough list of reasons why people are on the sidelines. And they have all contributed to investor fatigue over the last eight months or so, which shares, you can see on your screen, pretty much stuck in a range over the last while between 130 and 140.

There is a silver lining. We know fundamentals haven't really changed. Demand remains robust. Hyperscaler, CapEx is climbing. Sovereign AI, France, EU in general, the Stargate here in the U.S. are emerging as a powerful new growth engine. But NVIDIA does represent about 6% of the S&P 500. So any disappointment we know can trigger broader market turbulence. The real question is, can NVIDIA convince investors today

that the next phase of AI spending will be as lucrative as the first? So again, back to guidance. All right, perfectly set up. That's the key question. We will see you, of course, with those numbers. Now let's bring in Trivariate's Adam Parker. Bryn Talkington of Requisite Capital owns the stock. Ayako Yoshioka, Wealth Enhancement Group.

Adam and Bryn are CNBC contributors. Welcome, everybody. Adam, you first. I always like to remind people you used to be a semiconductor analyst, so you understand NVIDIA better than a lot of people. What's your view going in? You know, it's interesting to hear Christina's setup there. I think the buy side does expect them to beat by a couple billion and raise,

that same program they were at. is set up there. I think the buy side does expect them to beat by a couple billion and raise that same program they were at. I think if they just meet in line and guide where the street is, the stock won't love that. So expectations are still sky high for this? I think they were. Which has been kind of dead money for a bit, right? I think they were lower a few days ago, and then they kind of perked back up again here in the last couple of days as Jensen's been, you know, kind of, you know, out and about or his comments are perceived as bullish, as capital spending from the customers looks like it's going to be relatively strong. So you see that with some of the other companies today. So

I think the expectations, maybe they're, maybe she's right, they're a little lower than previous quarters, but I think they've got to be raised on the top line to at least, you know, hold in. Bryn, you're our shareholder here. So how do you view going in? So I still have half my position. Will this answer it? I have half my position with calls, which, as we all know, for the last eight months,

the stocks traded about 115 to 140. So I don't think we have investor fatigue. We've had stock fatigue after the big monster run. I think that this company is going to have, what, 72 percent and 64 percent year over year revenue and earnings growth. And so while the stock is flatlined for the past eight months or so, it's just going to continue to get cheaper from a multiple perspective. And so I think that what the two things that one thing that Christina pointed out margins, I think after the call or during the call, we want to hear about margins. And I think Blackwell is going to be incredibly important. I think Stargate is so new, but I think that this will be a quarter and don't forget Dell comes out tomorrow.

And so I think we have just such a great window between this one-two punch of NVIDIA today and Dell with their infrastructure solutions group are going to give us a very good lens. And I think it's actually going to confirm that we are in this secular trend and that we're not at the peak of this cycle within that secular trend. Aya, your firm owns the stock as well, but you also believe that maybe expectations have come down just a bit, if that's really possible with a name like this. Sure. You know, and I think that overall, investors know that we've got some possible air gaps, right, whether it's the Blackwell supply chain issues or some of the deep sea

concerns that have, you know, come about, or Microsoft scaling back on data centers. There's a lot of controversy, I think, that's come about around the edges. And so that's sort of dampened expectations, at least in the near term. But I think, you know, Bryn and Adam are right. We're talking about long-term growth with NVIDIA and just the overall AI build-out. And I think that's what investors are really going to be paying attention to, is what are Jensen's thoughts about what the trajectory is going forward? Yeah, I mean, you get the numbers, you get the call,

and you get, of course, the big interview tonight on CNBC at 7 o'clock with Jensen Wang, which is really going to be critically important. You, Adam, made the call a couple of weeks ago with us that it was time to lighten up a little bit on the MAG-7s, a call that proved to be pretty good. How do you see the space and what you think might be riding on the hyperscalers tonight? Yeah. I mean, no buy-side firm has a fund called the Deelerating revenue margin contraction fund. Right. And so the challenge with the Mag 7 is like, where is the revenue accelerating and or where are margins expanding? Bryn pointed out you could get a couple of quarters of it with NVIDIA. So my challenge is just that the capital spending to sales for the hyperscalers went up so much.

It looked to me like it was somewhere between eight and nine percent of sales from much of the last five six years and the guidance now is with the company's reporting is something like fourteen and a half percent. So almost by definition that means their gross margins are going lower. Either they're gonna maintain that level of capex for a few years and NVIDIA is gonna be awesome and growing fast for a really long time or they're gonna cut some back and that's gonna you know cause deceleration from a very high growth rate for NVIDIA. So they can't all win.

And I think there's a little bit more risk than there was prior. So that kind of catalyzed me a few weeks back to say, let's lower the exposure. I think the other thing you pointed out in the preamble, you saw VST and G-Vernova and sort of the power side work. One of the things that I've been worried about, you saw with that DeepSeek Monday maybe four weeks ago, three or four weeks ago, where they were all correlated, right? And so you got that moment where the electrification industrials were down. Eaton was down 15.

Vistra was down 15. G, Vrnova, and NVIDIA was down 15. So it's really interesting to see now when they guide tonight and talk about demand, do we see any contagion in the power space or, you know, in sort of the correlated trade? Yeah. Bryn, do you also worry that the MAG7 trade is a little bit stuck where we are right now? You know, Meta, for example, was up 20 straight days. Hasn't traded really well since then.

And if you look at a number of these stocks and it's not just NVIDIA, they're actually in correction territory, down at least 10 percent from their most recent highs. Yeah, I mean, I've been I've said it a million times. I do not think the MAG7 is a monolith. And if you actually break down the earnings over the last couple of years and revenue growth, NVIDIA has been a huge driver. NVIDIA and Meta have been a huge driver of the revenue growth year over year. And so I think if you look at a Microsoft, last year was what, a 15 percent? I mean, Tesla's fallen off a cliff. It's not really in the max seven, but kind of is. And so I think that Microsoft specifically, I think they're being very

intentional to try to put a narrative out there that, yes, their CapEx is going to be, what, 80, 90 billion, but they're going to be very discerning on how they spend that. So they pull back from Kenosha and Atlanta because it's not going to give them the best ROI, but they're still increasing in San Antonio. And so I think you're going to continue to hear, especially as a Microsoft, which is not that cheap relative to its growth rate, trying to get the street to buy into that return on capital is going to be strong and not just money that's not been well spent. I'm looking right there. Amazon's a good, you know, one to focus on, too. It's down 12% off its year high. And that company today unveiling a long-awaited revamp Alexa, revamped Alexa, I should say. Kate Rooney is here with more details on that. Kate? Hey, Scott. So Amazon today rolled out Alexa Plus. This is basically a

souped-up version of Alexa driven by AI. It's going to cost $19.99 a month, and then it's free for Prime subscribers. In that demo today in Lower Manhattan, they showed Alexa as a much smarter virtual assistant, basically. It uses AI to have longer two-way conversations. It takes action. So think of things like booking reservations, ordering groceries. They had it order an Uber at one point. CEO Andy Jassy describing the effort as re-architecting Alexa's brain. Here's what he told John Ford.

We're really excited to announce Alexa Plus today. It's our next generation of personal assistant. She's smarter, she's more capable, she's more useful. And you can do all the things you've been doing with Alexa for 10 years, but just every single one of those functions gets better with generative AI, the way we built it in. This was a major technology overhaul for Amazon and executives called Alexa model agnostic. They are using Amazon's own Nova model. Plus they're also using startup Anthropic, which they're a major investor in Jassy, highlighting this as practical AI

and real world AI. And also if Alexa and the new Alexa is anywhere near as useful as they made it seem in the demo, this could help drive device sales and prime subscriptions. It is going to be available next month on most of the 600 million devices out there. The stock, though, higher on the back of this news, Scott. All right, Kate, appreciate that. That's Kate Rooney. Let's move from from mega cap to momentum. I really want your take, Adam, on what's been taking place within that cohort of stocks, the factor itself. Now, today you're getting a nice bump. And we talked about at the top of the show as we Vista, Vistra, Vertiv, Palantir, Robin Hood. So many stocks that had gone parabolic had a really steep correction. What is going on with that group?

How concerning is it to the stability of the Nasdaq itself, which hasn't traded well lately as a result of that? Well, I think about it in a transition for us this year was moving, and we talked about it a few weeks ago, moving from gross margins to revenue, right? And that after you had the red sweep, you had a lot of euphoria. You had what we call hyper-growth junk stocks, so lower-quality, fast-growing companies. Maybe ARK is a good proxy. Stocks ripped. Applovin I put in that category, too, right? Of course.

Applovin's in there. CrowdStrike. There's just a lot of names that were in that group. We got that huge boost through the fall. And I think now you're transitioning to, I need to see the revenue come through. I need confidence the revenue is going to accelerate or grow. You mean we just decided in 10 minutes we needed to see that? Because I mean, the stocks went straight up. No one had any problem. Retail was piling in, believing in these stories. I would have thought it would have happened earlier in the year,

but you haven't seen a hyper growth junk rally like the one we saw other than the financial crisis recovery and the COVID recovery as strong as when we saw last fall. So this was like, the moves were huge. I mean, Apple, all these stocks were up, Palantir were up so much. So I think it's a combination of a little bit of fear about the growth, a little bit of profit taking, and that like, what you're talking about, like the momentum and factor rotation that so much money is run with. And then, you know, on the Amazon point, too, I think some of it is also a little bit of concern on the consumer side. You saw a little bit of a weak consumer confidence number.

That kind of ties in a little bit into it. I mean, discretionary is one of the worst spaces here today, and it's beyond Tesla. Right. Retail sales. Which has gotten crushed in its own right. Retail sales. Which has gotten crushed in its own right. Retail sales missed a little bit. Walmart, 2% of the GDP or whatever the revenue is, a little bit light on their guidance. So there's enough data points here that the consumer is slowing a little. So I think that may be factored in a tiny bit into the sentiment side, too.

Bryn, what about the Teslas of the world today? I think you have Robinhood also, don't you? Absolutely. Yeah. Want to talk Tesla first? Yeah, go ahead. I mean, because it's more than 25% decline in a pretty short period of time. Yeah. I mean, there's only one Tesla, right?

And I think that I said this earlier in the year on halftime that when it was up at 430, 440, 450, 460, while we see Tesla fundamentals were actually deteriorating, you know, made no economic sense. And so I sold calls then. I think that gravity in the stock market is just like in our is in real world. I think Tesla 277 is the 200 day. I think this stock, the technicals are broken down. The sentiment, which we can all walk through is so negative for multiple reasons. I think until the new Y comes out, until the new car, until that we have like Twitter 2.0, this is today. We see Elon focusing on this company, at least from a headline perspective, I think the stock is going to be under pressure. So to me, 277 is an important level. I think it

hits that. And I don't think you actually get the stock make a new uptrend until you start seeing, you know, volumes of the cars improving. but understand until the new Y comes out and this smaller car, I think there's going to be a gap there. Well, let me ask you this. I mean, Musk has become such a polarizing political figure that are you concerned at all that that has a much more dramatic and lasting effect than perhaps you thought it might. It's one thing for him to be a huge monetary and financial supporter of the Trump campaign. It's another thing to immerse yourself so intensely as he has, to the point where he has become even more polarizing, I would suggest,

since the inauguration because of Doge and some of the controversy around it. I think that's a fair assessment of the current environment. Are you worried about a more lasting negative impact for Tesla as a result of it? No, I think that ultimately Doge will be successful. I think the transparency around that, we as Americans all want to see that. The wasteful spending is absurd. And so I think just like Twitter, everyone's like, what are you doing? What are you doing? Why are you focused on this? This is like times 10, right? Because this is the U. I don't believe the sentiment is going to say maybe one or two people or a dozen people like I'm not going to buy a Tesla. I really think right now people are conflating like European sales going down, like the Europeans are mad at him. I think that it's more about this new version of the car is coming out. Some of the tax credits over there went away. And so I think that we're in this spot between the new Y and the

smaller car. And so there's less purchasing. I think everything else is noise. Let's be honest, it does seem almost undeniable that part of his activity in Europe around elections in various countries have had a negative impact on sales in those countries more so than new models or some of the things that you're referring to? Maybe. I think that's maybe you could be you could be right, but you could also be wrong. And it's actually because there's this gap between the price of the new car versus the old car. I don't know. I don't want to debate it because it's important for this company to sell more cars. And a year and a half ago, we were thinking that they were going to have 2 million cars for 2025. I think the numbers come down around to 1.7.

For whatever reason, that is an overhang on a stock this size. There's no way the market is going to give this company a pass of multiple expansion when the estimates were for 2 million and we're now, I think, around 1.7, that needs to change. And so that's where I think this is this opportunity where you had a lot of froth going into the election and now the reality is set in as until the robots come out, until they're selling more cars, et cetera,

the stock's gonna be under pressure. I mean, I will say, you know, I love selling calls. I think it's a smart way with Nvidia, with Tesla, these companies with higher premium, to be able to own the name. And then you can collect 10% to 12% call premium for about three months selling like 320, 330 out of the money calls. How do you see this? I mean, I'm impressed that you guys are even trying to tie it to fundamentals, the valuation. Like, it's pretty impressive. Bryn's always good at that. I think it's so divorced from fundamentals that it's, like, unanalyzable, at least in my experience.

And, you know, we've been writing whatever, a couple notes a week for 25 years. Like, I'm not smart enough to analyze it. Like, it doesn't make any sense. $100 above where it is, $100 below, it doesn't make any sense where it trades. It's impossible to value, and I'm too much of a wimp to do it. I will say, just anecdotally, that the models that were $125,000 to $150,000 sticker a few years ago, you can buy $25,000, as many as you want, used right now. So I think they've got problems fundamentally on top of it all.

So the new car better be awesome and sell a lot. But to me, I'm not smart enough to analyze it. Aya, let me give you the last word, and you can just wrap it up as you see what's been happening in the momentum factor. Because it has upset the market. And if you want to put Tesla in that, that's fine. You don't have to, but there are plenty of other stocks that have impacted the NASDAQ as dramatically, if not more so than Tesla's decline has. Sure. So, Scott, I think this is really a reflection of just the overall uncertainty that we're seeing in markets, right? This is 2025. This market is not 2024. And, you know, given that people are just a little bit more cautious,

I think, thinking about their overall investments and they don't want the ones with the high momentum to drop. And so I think you're seeing a little bit of that rotation into some of those more value oriented stocks that don't have as much downside associated with them. Guys, we'll leave it there. Appreciate everybody's time. Aya, thank you. Bryn, you as well. And AP here on set with us at Post 9. To Pippa Stevens now for a look at the biggest stocks moving into this close today. Hi, Pippa. Hey, Scott. Shares of General Motors adding 3% after the company raised its dividend by 25% and initiated a $6 billion stock buyback program, $2 billion of which will be bought during the second quarter.

The moves come as the automaker looks to attract investors amid slowing industry sales and profits. And Lowe's is in the green following better than expected Q4 earnings. The company said it still faces a challenging home improvement market amid high mortgage rates that have kept consumers from buying and selling, but added the sales slump it's seen should end in the year ahead. Scott? All right, Pips, thank you. That's Pippa Stevens. Up next, Morgan Stanley's Chris Toomey reveals how he is navigating this volatility in the market. He'll tell us the opportunities he sees right now, right here, Post 9, after this break. All right, welcome back.

Another volatile day for stocks, as you know. Our next guest, though, says it's providing an opportunity for investors. Joining me here at Post 9 once again is Morgan Stanley Private Wealth Management's Chris Toomey. Welcome back. It's good to see you. What do you mean by that? There's an opportunity in this volatility? In what sense? Well, I mean, I think it's an opportunity in the sense that, you know, markets have been priced for perfection.

They've started to come back. You know, we've been pretty patient with regards to that. So, you know, you've seen, as you've mentioned, kind of an unwind with regards to some of the key winners from the last two years. Some of those names are got great businesses. They're growing, and they're coming back to us at better prices. So we think it's a great opportunity to start looking at those types of names. I mean, are you talking about the momentum names? What more specifically are you talking about? Are you talking about the mega caps?

Well, I mean, let's talk about... But you don't strike me as the kind of person who'd be investing in some of the highest-flying, you know, most richly valued stocks within this market. So I know we're not talking about those. No, not necessarily. At least not on the public side. I think from a valuation standpoint, what we're seeing is particularly, I'll give you an example. Let's look at financials, right? So if you look at kind of public equity companies or alternative managers, you know, they had two great years. Some of those

names are down 15, 20, 25 percent. Those are businesses that have huge moats. They're continuing to get assets in. You know, the concern is, you know, is this M&A activity really going to happen? You know, is this Trump trade really going to be great for what they do? Are you doubting that today? You know, look, I think that's something that the market has to digest. If the market's priced for perfection and it doesn't take that into account, you need to discount that a little bit. What I can say is that these are great businesses that I'm getting an opportunity to buy them at really good prices. And so those are some of the areas that we're adding. Are you talking about like the J.P. Morgans and Goldman's and private equity names?

What are you referring to? No, I'm talking about the alternative names that you've heard of, you know, the ones that, you know, the Blackstones, the Carlisles, the Owls, without actually saying those are the names that we're buying. But those are the types of names. Yeah, because you can't do that. Yes, I'm not allowed to do that. Okay. I didn't mean to put you in a bad spot, but I'm trying to get as much clarity as I can on sort of what trades look most attractive today and which ones maybe don't. Yeah, look, I think the thing that we're seeing is you've got a couple of things that are going on that are creating this opportunity, right? So if you look at 2024, that was a situation where the drivers for that was, okay,

the Fed has reached exhaustion and we're going to start cutting rates again, right? We're now in a situation where that's not happening. We also saw a situation where Washington was really driving the amount of fiscal spending. That's coming back. Concerns around Doge, concerns around tariffs, that's going away. You've got concerns with regards to AI, which was a huge driver with regards to the markets. That's getting into question with regards to what's going on with DeepSeek, et cetera, et cetera. And now this week, we saw a situation where growth is now being questioned, right? And so a big part of this whole transition with regards to the administration was sequencing, right?

Are they going to focus in on tariffs? Are they going to focus in on doge? Are they going to focus in on tax cuts? And they're going to focus on deregulation. And they're focusing in on those things that are worrying the market, right? Well, the quote-unquote easier things to do through either executive order or just, you know, for lack of a better chainsaw. I mean, right. That's that's Musk holds the chainsaw up as the metaphor of what is really happening behind the scenes. That's why some

have suggested the first half of the year was going to be a lot more dicey. You get through that, but then you can get to some of the meat of the growth of tax cuts and more deregulation and maybe more deals. Is that laid out right? I think that's the story. But the other issue that you had is positioning was way off, right? So if you look at retail, you look at long only and you look at alternatives, you know, the risk spectrum was all the way to the right, right? You had cash at like all time lows and you're in a situation where valuations were also very high, so you didn't really need a whole lot to offset what had been going on. And then you had those three pillars being knocked out.

We were aggressively seeing, hey, this is a good opportunity to start nibbling at some of these things. But this isn't necessarily a situation where we're only saying, back up the truck and look at equities. What we're saying is prices are coming to us, and we're starting to get interested. I still think if you're looking from a risk standpoint, you know, where you want to be looking for opportunity. I mean, the most interesting place is probably on the private market side, right? You're in a situation where private companies now are raising anywhere from a billion to $10 billion. They've got market valuations of north of $300 billion. And so the question is, we expect the IPO market to

start picking up. We expect there's going to be some very exciting IPOs going into the market. But you're also seeing a situation where a lot of these private companies, particularly in spaces like the AI space, are actually going to stay private. And that's probably an area where there's good valuation, there's great growth, and that's an opportunity that we can take advantage of. Lastly, I want you to react to what Howard Marks, the great Howard Marks, talked about this morning on this network. You know, when trying to assess the price of this market, whether it's too rich, I want you to listen to what he said.

We can just kick it on the other side. Howard Marks. Let me just say, to be clear, expensive, but not bubble. Things aren't cheap today, necessarily. I don't know. I'm not a stock guy. I'm not a tech guy. I'm not an Nvidia person.

But they seem to me to be the stock market is expensive relative to history, but not crazy. So I don't think it's something you have to flee, but you have to look at it cautiously. Expensive, but not crazy. That match with your view? Yeah, I do be in agreement with that. I mean, if you look at the U.S. in general, I think GDP growth is going to be pretty good. I think earnings right now expected for 12 to 14 percent. So I think in a relative basis, it looks actually kind of priced well.

We still think you'd probably get like a 10% or 12% kind of return on the market. Oh, you do. So what Rick Reeder told me yesterday was exactly that. I don't know if you saw it or not, but you agree with that. 100%. No, I think Rick's absolutely right. I think you can get probably a low 10% type of return. Remember, that's half of what we got in 24 and 23.

But I still think that's% type of return. Remember, that's half of what we got in 24 and 23. But I still think that's a very reasonable return. I think the real opportunity is probably going to be in different pockets within the indices and not necessarily indices themselves. I mean, I think one of the things you have to think about is if the market is de-risking, right, and you're in a situation where you've got all of these other things that are affecting you from a momentum and a positioning standpoint, you know, they talk about CTAs are selling $11 billion. If the market goes down another 1%, that could be $22 billion. You know, the things that they're selling are going to be the things that were winners.

They're going to be unwinding trades. So some of the things that were not doing well are going to start going up. And then the other thing is, is you could be in a situation where you get a negative feedback loop. And that's where market cap, you know, some of these bigger names really start to pull back. How closely are you watching the results after the bell tonight in overtime with NVIDIA? You don't have to speak about NVIDIA directly as an ownership standpoint, but how are you thinking about it? No, look, I think you have to look at that because that is a benchmark with not only to the indices, to what's going on in AI. And I think one of the things that people are not focusing in on is, you is, we are in a situation where you look at those big names

in the Mag7, they're AI driven names. They're spending a lot of CapEx with regards to getting ahead of the curve on AI. And I think that's only going to get worse, right? You're in a situation where AI is going from learning to reasoning, the power of commute is going to be really important and everyone's going to be fighting over those assets.

So the question is, what is, not necessarily what's going to happen with important and everyone's going to be fighting over those assets. So the question is, is, you know, what is it not necessarily what's going to happen with regards to NVIDIA's earnings, but really specifically, what does it say with regards to the spend within AI? And I think that's going to tell a lot about what's going to happen in the market. We'll watch it. Always good to catch up with you. Thanks, Chris Toomey, Morgan Stanley, Private Wealth. Up next, Marathon Asset Management's Bruce Richards is back with us here at Post 9 to tell us where he thinks markets could be heading from here. We're back on the bell right after the break. We've been off to an uneven start to 2025 in the stock market, and our next guest says a deeper pullback is likely in store. Let's bring in Bruce Richards, CEO of Marathon Asset Management, with us at Post 9. Welcome back.

Hey, Scott. I mean, you're looking for maybe a 10% decline from here, correct? Which is going to be painful. You know, the MAG-7 is already down 10% from peak to trough, but S&P is not. And so you look at S&P, it's down a percent and a half year to date, intraday, and up as much as three and a half intraday. And I called, I was on your show last time. I said equities this year would be down as much as 7 and up as much as 20.

So we haven't seen anything yet. Vols on the table. Yes. Well, you sat down and you said the cheapest thing in the market right now is vol. From an equity perspective, absolutely. Yeah. And so we pierced 20 yesterday. I think we go higher from here.

The one thing we're not seeing in terms of vol spiking up is credit spread vol. Credit markets are incredibly stable. So this is all about equities being somewhat fully valued and some of the economic policies that are coming out of Washington that might lead to a more stressful growth. And so we're going to have to deal with that in the first half of the year until we can get to the latter part of the year when the Fed's going to start easing. And that's when equity markets rock. do you make of what um howard marx said earlier i played the sound right the stock market expensive but not crazy paul singer has a very

interesting quote in an interview that he gave i think over in europe where he said and i want your reaction to this he said quote the state of stock markets today are just about as risky as i've ever seen leverage is building and building risk taking is building and building. Risk-taking is building. And those statements apply also to governments. It's absolutely astonishing, this negative interest rate policy in Europe and Japan and Switzerland and zero interest rate policy for, what, 10 years in the U.S.? It's crazy. What do you think? And so I think there's some historical perspective to that, because ZERP is crazy. And the rates that he's talking about, negative, they're no longer negative. And we no longer have a ZERP policy. So we've seen the backside of that. But too much deficit spending that we've seen here in the United States leading to these huge deficits on such a

vibrant economy is the pain point we're in now, because what the administration is trying to do, and we'll see how they do with it, but what they're trying to do is cut about a trillion dollars out of spending. And there's some pain in that because the recipients of those trillion dollars represents, we think, up to a million jobs in the marketplace. And so when you cut all that spending, the private sector that's the beneficiary of that, plus cutting 10 percent of the workforce in the federal government, which is out of 2.4 million jobs, 240,000 jobs, together it's a million jobs. And that takes you from 4.1% unemployment, we believe, to 4.5% unemployment. And so the pain of getting through that is difficult. Yeah, how do you get through

that, right? That is going to be painful. And it's going to be a potential hit on growth. How can it not be? It will be a hit on growth. And we think growth won't be 2.3 percent, which is what Fed GDP says now at the Atlanta Fed for the Federal Reserve. We think it'll come in this year closer to one to one and a half. So it'll be a hit in growth. But the back end of this year, you'll get through that because you'll be through that pain, we believe, and the Fed will be easing. And that's when the stock market starts to rock or trade higher. So we think the first half is going to be difficult. Expect a lot of volatility. But the most amazing thing is no recession.

And the reason why I'm calling for no recession, despite rates being down 40 basis points for treasuries, and it's kind of telling you a little bit, be aware of it, is because the credit markets are so stable. Look at the credit markets. For now. For now. And I think that they're rock solid, these credit markets, because we don't see credit risk increasing. Actually, we see some credit risk coming out of the markets. But you're a believer, and you posted this, I saw on LinkedIn, one step back, two steps forward. Right. So that's how you are processing

what's happening in Washington. Also describing a President Trump 2.0 that you think is less focused on the stock market now, unlike in the first term where the stock market was kind of everything. Yeah. Trump 1.0, all about stocks because you had a zero rate in policy or very low rates. Today, you have higher rates, big deficits. He wants to bring rates down. It does two things. Number one, it helps the government fund more effectively and create more of a balanced budget, number one. And number two, it brings mortgage rates down, which is hugely stimulative for the economy. Which are barely coming down.

I mean, they just came in, but the housing market's been a mess. But you have to bring rates down and bring it down even further. And I think all these actions that are happening will help rates come down. So you're a believer in what they're doing? I think it's too early to tell,

but everything I'm saying is one step back for the first half of this year as you get through this to take two steps forward because you'll be at a balanced budget, pro-growth on the backside of this. And it takes a little pain because there's so much excesses in terms of the government spending, the big budget deficits that we have to kind of downsize. And downsizing big government to put capital allocation into the private sector

is hugely beneficial. Lastly, before I let you go, the best opportunity in your wheelhouse of credit today is what? So what you're seeing right now is remarkable. Absolutely remarkable. Remember all that creditor and creditor violence that we've been talking about, where companies take assets, move it over to non-restricted sub and creditors fight against creditors and benefits to equity. Look at what just happened at Altice in France with Rahi. He took $25 billion in debt, turned it into $20 billion in debt. All the creditors, first lien, including the CLOs, and second lien, came together. Big shout-out for Gibson Dunn, who put this all together, who's doing these cooperative agreements.

You've seen it in Bous now, which is a Carl Icahn. It's a public company, but Carl Icahn's the biggest shareholder. He wants to take the iCare part of it, spin it off at the expense of the creditors the creditors are coming together and so no more creditor credit violence and so we're seeing a lot of opportunity buying this discounted debt to work with the other creditors to come up with a really good outcome for both the company and their long-term viability and the creditors as a whole. And so direct lending, asset-based lending, and these opportunistic strategies, tremendous alternative asset opportunities. And that's why Blackstone, Apollo, and the alt managers are up today.

Sure. And a lot of managers. But obviously the return on the lending, because rates are coming down and you think they're going to come down further, the return isn't as great as it once was in direct lending for starters. Well, not the peak, but we're using eternal leverage. Our financing costs are coming down, and the spreads are actually holding well because what we're not seeing is spread volatility in high-yield loans or really the alternative private credit sector.

So we're seeing spreads very stable. It's a great time to lend. Okay. And so it's working very well for us. We'll talk to you again soon. Bruce, thanks. Thank you, Scott. That's Bruce Richards of Marathon.

We're getting some news on Applovin, stock we were talking about earlier. Seema, what's going on? Well, the stock is off the loads of the day after Applovin CEO Adam Farooi responding to allegations made by short sellers Fuzzy Panda and Culper Research that have casted doubts on the integrity of the company's AI-powered Axon advertising software.

The CEO says it's disappointing that a few nefarious short sellers are making false and misleading claims aimed at undermining our success and driving down our stock price for their own financial gain rather than acknowledging the sophisticated AI models our team has built to enhance advertising for our partners. He adds that the reports are littered with inaccuracies and false assertions. You'll see shares of Applovin coming off the lows of the day, down about 16 percent at the lows, now down about 11 percent as a CEO responds to those short sellers, Scott. I appreciate that update. Seema, thanks so much. That's Seema Modi.

Up next, Starship analyst Stacey Raskin. He tells us what he is going to be watching more than anything else with NVIDIA's report in overtime when we come back. All right. You know, by now, NVIDIA gearing up to report results in overtime. Bernstein, Stacey Raskin is here with what he will be watching from those numbers. It is essential to catch up with you going in to all of this. Number one on your mind is what? That's the guidance for April quarter. I mean, that's that's what everybody has been. I mean, people are very nervous about this potential guide. There's been a lot of, you know,

noise around supply chain issues, challenges ramping, what are some very complicated platforms. So people have been very nervous about what they might say around those potential supply issues and what it might mean for April. So that's, I mean, that's clearly the top of the list of what everybody's looking for. Stock's up near 4% going in. I mean, but it hasn't really done anything, as you know, lately. What does it all mean? Yeah, the stock's actually down year to date. It's down a bit from when they reported in November. And again, there's been a lot of noise.

Like I said, there were concerns over the supply chain. There was all the deep seek stuff, really from a few weeks ago that got everybody like very, very worked up. You know my own opinion on that. I think actually deep seek is positive, not negative. I'm sure we'll hear from Jensen on that and his views as as well but

i mean because everybody's been nervous um just given some of the supply chain issues going into this print i think that's kind of kept a cap on it now i will say that to the extent that there are any issues they are clearly not demand issues like demand is off the charts they are going to sell everything that they can possibly get out the door, which is why I'm not really all that worried. I actually do think expectations, I know it's a risk on day today, but in general, I think expectations have been coming down for what they might say for April. I expect the back half to be pretty good as some of these issues resolve. And to be honest, if I'm taking demand and I'm pushing it out, it actually makes the back half and even into maybe calendar 26 look better. This is not demand that goes stale. It

doesn't go away. I mean, they'll clearly sell everything. So I will see if I regret this or not in a few minutes, but I'm not terribly worried going into this because to the extent that there are any supply issues, I do think they really are temporary. And as long as demand is off the charts, which it clearly is right now, structurally, I don't really have any, I'm not as worried about it. But I do know that people are nervous going into April. As always, but it's a great check-in that you just gave us ahead of this print. Stace, thanks. We'll see you soon. That's Stacey Raskin. Still ahead, not just NVIDIA reporting tonight. We're going to run you through what to watch for when

Salesforce also reports in OT when we come back on the bell. We're now in the closing bell market zone. CBC senior markets commentator Mike Santoli is here to break down these crucial moments of the trading day. Plus, not just NVIDIA, as we told you, Seema Modi tells us what to expect from Salesforce. And we will, in fact, Seema, begin with you. Well, Scott, a lot is riding on today's report. Three things the street wants to see from Salesforce. Actual numbers that illustrate the pace at which the company's AI agent business is growing. Whether its push into artificial intelligence will result in more job cuts. And if it's been able to score bigger clients.

CEO Mark Benioff recently saying 200 agent-forced deals closed in the third quarter, including FedEx and IBM. So far in February, Salesforce has had the second biggest downside impact on the Dow. But overall, analysts are positive with an average price target of $400 a share. You'll see the stock is trading at $307. All right, Seema, thanks. A big report. We'll see the results. All right, Mike, just tell us, Riff, what's on your mind? I mean, market is obviously not in the mood to make any sudden bold moves ahead of not just NVIDIA, but also just to see if this little reversal off the low yesterday was really going to hold. A pretty interesting bounce attempt this morning. It seemed really mechanical. Everything that provided defense in the prior few days during the decline was off. And you had some of the hardest hit stuff getting higher and managing to support the S&P.

The thing was, Bitcoin never allowed the overall market to relax fully. Tesla still looks really loose to the downside. So, look, it's OK. We're hanging around just under 6,000. NVIDIA should provide at least a clearing away of this suspense. It doesn't mean it's going to dictate the next move. I look back to last quarter. After the November earnings report from NVIDIA,

the S&P over the next week was up 2%. NVIDIA was down 7%. So it's not always the thing that necessarily determines where we go. But if nothing else, traders want to have a cleaner slate to sort of dial forward their attention on the next thing. Well, I mean, the options markets pricing in plus or minus 10% over the next few days. It is. And 10% basically brackets where the stock has been this year. That's the range it's traveled this year. I will say, too, sometimes the options for NVIDIA get

overjuiced in the sense that the actual move has not been as dramatic as the straddles would suggest. That's what happened last quarter. Who knows? I think if anybody had an edge, it wouldn't be plus or minus 10%. It's a matter of a test of investors' continued willingness to believe the long-term story. Everybody kind of knows the parameters of what it's going to take to qualify as a beaten raise. The question is, does the market get cheered by it and allow it to bring it? I mean, usually, you know, a stock like this big impacts just sort of the stock this big and maybe a couple of others. But now it's like this one is so big impacting others that are just as big. Right. And it looks like a little bit less like everybody can win, right,

because the people spending are not the same in terms of their position, in terms of return on equity as NVIDIA itself is. Mike, thank you. Here we go. Just a matter of seconds, really, until NVIDIA reports into OT with Morgan and Dunn.