Closing Bell - Closing Bell: Momentum Grinding to a Halt? 8/5/25

Episode Date: August 5, 2025

Is this market just taking a breather before launching its next leg higher or has momentum grinded to a halt? We discuss with Trivariate’s Adam Parker, Robinhood’s Stephanie Guild and Truist’s Keith Lerner. Plus, Morgan Stanley’s Sherry Paul breaks out her private wealth playbook. And, Jim Stewart – who wrote the book on Disney – tells us what he is watching from that company’s report tomorrow morning. 

All right, Morgan, thank you very much. Welcome to the closing bell. I'm Scott Wobner, live from Post 9 here at the New York Stock Exchange. This maker break out begins with skittish stocks in a market that can't seem to settle itself. Is the economy breaking down or are things just slowing slightly? Are stocks too expensive at current levels? We'll ask our experts all of these key questions over the final stretch. In the meantime, here's the scorecard with 60 to go in regulation today. The major averages took a turn lower late morning after the ISM services report came in below expectations, and it's been a bit of a struggle ever since. The sector view is mixed today.

How about the stock of the day? It's got to be Palantir, right? Which is higher after its big earnings beat, and that stock has just been a rocket ship. Apollo also green today after its own earnings report was well received on the street, which takes us to our talk of the tape. Is this market just taking a breather before launching its next leg higher or has momentum just grind it to a halt. Let's ask Adam Parker. He is Trivariate's founder and CEO and a CNBC contributor. Welcome back. Thanks for having me. You make the argument that dips should be bought. Why? Well, you know, I think

most institutional investors think we're going to get some kind of growth scare, maybe a stagnation scare here August through October. Is that what this is now? You think? I don't know. Not yet, but I think people want to buy high quality stocks if they go down 10.50%, 10, 15%. So it makes me I think we're not going to get a very big sell-off. You know, I don't know. When I looked at the earnings season, the trajectory earnings, they're higher. I don't feel more negative today about 26 and 27 earnings than I did a month ago. So, you know, obviously markets don't go up every day,

but I don't think the valuation is a problem, kind of looking at the way you set up this segment. I mean, there might be individual names where I find it challenging. But at the market level, I'm comfortable with it because I think that margins are probably going up for the average company, this pretty solid dream that I'll get productivity for a lot of companies in the next 18 months. You talk about a dream. The reality, according to Brian Moynihan, who was just obviously on exclusively on this network, sounds pretty darn good. Consumer hanging in there. Don't pay attention to what they say,

pay attention to what they do, and they're spending. No rate cuts coming this year. He alludes to the fact that maybe you don't need them because his people say no recession. And he's as close to the front line of the consumer as you can get in a job like he has, he sees everything on tariffs. You're starting to see the goalposts, so things are more clear. That's a plus. IPO and M&A, the pipelines are full, he said. You want to sell stocks listening to that? I don't know if he's repeating back what I said to you last week during our segment.

It sounds like it. It's hard to be negative listening to Brian Moynihan. Yeah, I mean, the bank earnings were really good across the board. Visa, you know, people are, they provisioned less for consumer law. than we thought. So I think the aggregate consumer is in pretty good shape, maybe eroding from highs, but still in good shape. And I don't even think that's listed off as one of the bear cases in my meetings now. I think it's more, you know, ASML told us there's tariff problems. Market probably can't rip if semis don't work well. So maybe I've got to focus on semis a little bit.

Maybe the bank earnings were good and the stocks didn't go up very much. Maybe that's a little bit of a tactical concern. For some reason, everyone thinks that September is like on average a bad Well, I mean, historically, it's not great. You need like a thousand years for that to be statistically significant. I think we just had, you know, randomly some stuff in September. So, like, I don't know if people want to say that's when we get a sell off. But I think that that was born out of something that's unlikely to happen this time. I think in the past, you got negative revisions in September. People come to New York. They go to big tech conference in September after Labor Day. And, you know, the numbers get cut. I don't think so. The numbers are coming up right now

for both 25 and 26 based on what we just heard in July. So I think the risk scores skewed to the positive for year-end and, you know, any kind of material weakness, I think, is going to get bought for the dream that earnings are going to be good next year. I feel like the kind of the point that Moynihan makes, too, is that we've got the best companies, right? And we've got the best CEOs. Right. And they know what the heck they're doing when they actually can see in front of them. His point was now things are more clear. Yeah.

So we, collectively, as the CEO cohort, can better operate our businesses and we'll figure it out. Do margins maybe take a little bit of a hit here and there? Maybe. Maybe not, yeah, maybe. But maybe not. I agree with that. Look, I got asked that in a client Zoom earlier this morning in front of a big group about non-U.S. versus U.S. equities. And I just go back to the themes that I think are going to grow above global GDP.

The U.S. companies are overexposed to them. So, you know, maybe in some short-term window here, you think the dollar weekends, you think we're in a different policy path. But in the end, the companies we have, tech, comm services, are. financials here are 58% of the S&P, and I think they're generally pretty well positioned for earnings growth for the next two years. So, yeah, I like the U.S. equity market. But I mean, if we're going to have a growth scare, as you suggest, is possible, whether this is the early stages of it following the jobs revisions, that makes it harder than to go outside and far away from big tech and AI, doesn't it? I mean, I'm not going to buy small caps, am I,

if I'm worried about a growth scare. I'm not going to go down the cap. space much at all if I'm worried about the economy slowing down more dramatically, am I? No, I agree with that completely. And I think the biggest issue for a lot of long-only investors trying to beat the S&P in the last three, four months is low-quality stocks have outperformed. And it's hard to kind of go down and buy some higher bid and buy some lower quality to keep up. So if any- People are doing that. Right. And they are and they've been forced to, the retail investors doesn't care. But I think the institutional guy, it's harder, especially if they have lower turnover. So I think maybe if we get a little bit of what we call the positive,

maybe we're just getting a little rotation out of some of the high flyers into some, you know, kind of higher quality names. That could actually help the market, you know, go up higher later. What if Moynihan's right and the Fed doesn't do anything for 25? Is that a market problem or no? No, I actually agree with that part in particular of what he said. I don't think it's good if they cut. You know, we talked about it before where I just think, you know, they're only going to cut if they see data that really deteriorated. They lag. The Fed lags. I mean, we know what the prices move first. Generally, the price action the last three months has told you their earnings are going to be better next year than you thought. Economy is going to be better. Then the next thing, we all gathered real-time data. We're going to LinkedIn for jobs data, not for, you know, not for the PLS or whatever.

Then what? You get the corporate earnings results. We sweep all the transcripts. We look for every phrase we can. We mine it all. That's what everyone does, right? Then what? We get economists giving us the, we get the data. And then lastly, the Fed reacts to all that. So we know it's super lacked. So I don't think the Fed's going to act unless things really deteriorate. And I think the market will be down a lot before they do. Well, I mean, it remains a critical question. Yeah. Hang with me for a second.

Let's bring in our senior economics correspondent, Steve Leesman, with more on that. Because that's kind of the conundrum here, whether they even need to cut, whether they should cut. What Moynihan just said, he lays out a pretty decent picture, Steve, as to why maybe they don't need to cut. at all despite the revisions that we got last week from the jobs data and all of that of course with jackson hole looming where powell may want to set the table for everybody for what comes in the fall so here it is scott this is the sort of dilemma that we said was going to arrive with these tariffs and other changes that were out there and and it's considerable right there's three sort of tidal waves coming ashore sort of at the same time let's talk about we have the

higher inflation, it is not going down. It's still elevated above the Fed's 2% target and moving the wrong way. And you have this weak job goes. This is exactly what people thought was going to happen. You also have this immigration deportation thing, which is having interesting effects in the jobs market that are probably too early to even figure out, but it's happening for sure with this native-born foreign-born hiring and some possibility that expansion could be limited by labor availability. And then the third element is the big, beautiful bill, the other fiscal elements that the Trump administration is changing.

You have this accelerated expensing and depreciation stuff. That's really good. At the same time, they're removing $20 billion of solar from the IRA from the Biden administration. So there's a lot of things happening. It's interesting, Scott, to say, well, we don't know when the tidal wave is going to arrive and you remove that uncertainty

and somebody can give you a time on it. It doesn't change the fact that big changes are coming and they're here now. Yeah, but when there's an earthquake, there's inevitably a tsunami warning. And sometimes they just do that to alert people, but it never actually comes ashore. There's also a difference between weaker job growth and layoffs. And we haven't seen the layoffs. And Moynihan, as I said, who's as close to the front line as anybody, says we just haven't seen that yet at all. No, that's right. And also sometimes there is a tsunami and it's much less than they expected. A little wave laps up on the shore. That's possible.

But, Scott, in the month of July, I believe it was, the U.S. government collected $29 billion in tariffs. That's $350 billion in an annual rate. And I've seen estimates that over a couple years, this could be $2 trillion. The notion, and let me just be clear, economists have always said, Conservative economists have always said in capital letters that when you tax something, you get less of it. How is it possible that we believe we're going to have this $350 billion increase in taxes, and there'll be no economic impact? The fact that we haven't seen it early doesn't mean it ain't coming. And I'm not saying it's coming in a way that's going to overwhelm or wash out everything else out there, but there is going to be an impact, and we just shouldn't be quite so complacent about. not having seen it. I think that job revision taught us otherwise. Sure, but you could also have

productivity offsets and massive ones as a result of AI. Sure. There's a big change coming from AI and how much of a change. And I believe it was Scott Besson, who on an interview, I think about a week ago, was talking about Powell pulling a Greenspan. And what that meant in context was Greenspan did see the productivity coming from the boom in 1996 and didn't raise rates as his colleagues urged him to do. So this is a fascinating time, Scott. We've got a couple of Fed speakers tomorrow, Kashkari talking to Sorkin in the morning, Cook and Collins talking in the early afternoon. And what I'm listening for is this. You have this problem with jobs, and we know it's out there that there's been weaker and probably will stay a little bit muted over at least some

period of time here, but you still have the inflation problem. And I'm listening for how they balance that. They can't come forward and say, oh, my God, jobs are falling apart. We have to cut rates and say, well, what about that inflation problem you told us about and walk away from that? That's why I think Mr. Parker is interesting in this regard and why Mr. Moynihan is interesting in this regard that the Fed can no sooner walk away from the inflation problem it still has then it cannot address the jobs problem. What about the issue, lastly, of Jackson Hole? And you have to believe that if the Fed is going to cut in September,

that Chair Powell wants to set the table, so to speak, he wants to condition the markets and use the platform that that event provides to ready people for what might be coming in the fall. What do you think? I think that assumes that the jobs report on Friday, was dispositive for the Fed chair. I'm not 100% sure that's true. I would say if I were the Fed chair,

and I didn't have to make a statement that was definitive about September, because I still had substantial data to come before that September meeting, I might hold out. Now, there are those out there who may come forward in interviews from Jackson Hole and say they're ready to cut. Barry Daly already has sort of put her foot down and definitely taken a doveish view

of where rates ought to go based on the jobs report. Bostick, not quite so much, and others as well. We'll see where they come down. But I think that Powell probably will pay for time. Another week September report on jobs that meets his litmus test, Scott, of jobs, the job mandate being further from the goal than the inflation mandate is, that's the one that he has said is the test that he would use to figure out how to act with these two different forces acting upon the Fed and the economy at this time.

I was going to make that the last one, but since you mentioned Mary Daley, I mean, you don't want to have dissenter by dissenter by dissent. It's a bad look. I mean, it's not a great look for the chair if you start to get a bunch of dissenters. And it also would throw into question like, well, if they think, if more people continually now think that they should cut rates, he really risks being. earning the moniker too late. I don't think he would do it that way, Scott. I think that there would be discussion

and that the chair will have a consensus with in whichever way he goes. One thought I had, Scott, and I haven't had a chance to report this out with my sources on this, is I think Powell wants to set up a series of cuts. And that's a reason he's been a little bit late or perhaps a little bit late

is the sense that he doesn't see the Fed cutting just a quarter. I think he sees a series of cuts. He certainly would foresee the market pricing that in and wouldn't want to create volatility around that. Oh, no, I think that's 3,000. I think that's 3,000 percent accurate. I mean, I want to be clear.

I'm alluding to the fact, too, that when they cut, it's the beginning. It's not the only. American, I cut 25 basis points and go back into hibernation. So let me just riff off that point, which is that he could do the, quarter and still argue that technically he's restrictive. So that would be a way for him to essentially play this dilemma of the Fed, which is how do you cut interest rates when you have

higher inflation but also weaker jobs. The Fed could be considered to be anywhere from 50 to 100 basis points restrictive. So a quarter point cut with a we will see and not a promise of another one could be an interesting way for the chair to negotiate or navigate this very difficult time. Yeah, you use their two most valuable tools. You actually make a policy move and you jawbone in the same sentence, which will be really interesting. And hold it back. It's like sitting on a horse and holding the reins. Yeah, you can try that. I don't know how well it worked, but all right, Steve, thanks. It's provocative and it's going to continue for sure. Steve Leesman, our senior economics correspondent. Let's bring in Robin Hood, Stephanie Gildnow and Truest Wealth

Keith Lerner. It's good to have you both with us. Steph, how do you see things here? I think in the near term I'm a little bit, a little bit cautious because I think we've gotten valuations that have now gotten to heights, even looking out to 2026. And you do have, I think when you look at the market over the history, it usually gives you a couple of times to worry about the volatility in a swing down. And I'm talking about a correction. I'm not talking about like a big pullback. And I think Friday was one of those warning signs. I don't think the labor market is actually weak. I think it's just spent, you know, because if you look at like the prime worker age, 25 to 45, you know, we're at 80 to 81 percent of population. That's like

at a peak. The only time we were better than that was around the year 2000. So I actually think we're just at a point where we're just kind of fully spent. A lot of things are fully priced in. and we kind of need a short-term correction. I feel like I always ask you about the retail investor and psychology and flows because at Robin Hood, obviously, you have a better perspective than many. The idea of what's happened with meme stocks and so-called low-quality names and high-beta names, what do you think about it? What have you seen on the so-called front line of that activity?

We've seen some of that. Like, you know, there was some of that with open door and names like that. For sure. You know, it hasn't actually been the bulk of our, like the biggest volume. The biggest volume still is in the names that you kind of know and everybody's sort of trading. And, you know, and our clients continue to trade the volatility. So Amazon goes down, it becomes a big buy. You know, meta goes up.

It becomes a big sell. Interesting. Keith, you suggest that the bull market deserves the benefit of the doubt. It does. Still? Yeah, well, it's great to be with you. And, yeah, I think it definitely has earned the recent. and the benefit of the doubt, the underlying trend is positive, and that uptrend has been

supported by forward earning estimates that are at an all-time high. But I also do, maybe it's a growing consensus, think that we just need some digestion. You know, if you think about this market move up since April, at the April lows, the market was baking in about a 65% chance of recession. If you look at Polly Market, that's down to 10%. You know, sentiment's got a little bit more, you know, positive. So, listen, markets don't move in a straight line. We've moved up 28%. and maybe just a little bit of time digestion, I think, would be a positive. But overall, I still think the underlying trend is positive. So I would stick with the overall market.

If we get pullbacks, I would use that to add to the leadership that we've already seen, which is tech communications and growth. Yeah, I think the probability that the perception about growth for earnings improves is probably slightly higher than it gets worse. And it's funny, when I listen to you to you talk to Leasman, I have like PTSD from all the interest rate strategy meetings. I had to sit back in through the year. and, like, in the end, I don't know what I learned

because I feel like we can have that conversation every two or three months about the Fed. You said something, you might be right. I don't know. Like, I don't know. Maybe they will do 25 and not do anything for a while. Like, I have no idea. Like, I get the logic.

I don't mean, like, it's 25, and then, well, hey, thank you. We gave you your rate cut, and now we're never cutting anymore. But who knows what they ultimately end up doing? I'm saying, like, yeah, I hear you. And, like, I almost think that I'm saying, all right, I don't care. I almost think, like, everything you guys talk about, I don't care. Yeah, but you do care because you say a Fed cut would be negative. I don't know if it's good, but I think if...

Well, how isn't it good? Because they're only doing it because the economy deteriorated. When did they ever do it? Why did they ever, why do they ever cut? I'm sitting here thinking, well, the perception about earnings growth somehow improve or get worse in the next two or three months. I think the chances it might improve because if I start getting any more AI productivity proofcases, I'm going to believe we're going to get high singles, maybe 10% earnings next year.

And the stock market's going higher if that happens. So I think the one bare case that I struggle with the most, if somebody comes in as like, Adam, you're kind of bullish on equities and how do you answer this? This is what I struggle with most. How do I reconcile the nearly half a trillion dollars in capbacks from Google Meta and Microsoft and Amazon? Because all of my historical prior work would say short asset life, depreciation burden on cars go up, gross margins go down, even if forecasted sales goes down, that can't be a great cocktail. There's some counter examples where in media and cable in the past, we've seen where high capx can work because people think there's revenue coming later. So we're in this sweet spot where I kind of think people will still think there's good return on it. Every company said we could get higher return if we could spend more, so people still believe that.

I know, quote, that they won't believe that for the next five years. Like at some point, people will like, wait a second, you had 9% capEx sales business model. Now it's 15. I'm not paying as high multiple. I just don't know when that will break. And so I can't answer it other than say, I guess my judgment is like it won't be in the next 12 months. Are these valid questions? I was going to say, what about the productivity that you just talked about? Like, that could be an environment where the Fed can cut without actually being because of much lower growth, right? Like, that could be an environment where inflation is a bit less.

Yeah, yeah, yeah, no, I agree that. I'm just saying if the long-term earnings growth was whatever, 8.5% a year for the S&P, and now I believe it's 9 or 10 for the next few years because I get some productivity for the top couple hundred companies, you know, market can go much higher. Let me ask you this. When was the last time we were in a don't fight the Fed environment? But they cut in 0-8-09 market ripped from there. They cut... 2020. No, but I mean, you didn't fight the hikes. You didn't fight the hikes. You knew it was coming, so you sold stocks. I think it's because, I don't know, the reason I say that is because we have small end. At the same time they were doing the front end, they were expanding

the balance sheet out of the wazoo, right? They were buying mortgage-backed securities by the trillions and every MSA. So I don't know how to answer that in isolation. Like, I can download the Wednesday data. Week of Week change in the balance sheet. It's statistically significantly associated with week of week change in the S&P. So when I go back and evaluate those periods of talk about, we were also expanding the balance sheet massively.

So it's not like a clean, you know, you know. Well, they haven't completely run off the balance sheet now. No, no, so I'm saying. So, like, I'll be bullish as heck if they're going to expand the balance sheet at the same time. But if they're not and they're doing the front end, like i don't know if it has as much juice that's what i'm saying you know where do you come down on this on this conversation save us man yeah i'll do my best uh no one thing i think it's it's almost like we start to rotate about what's the most important thing i'll go back to profits being the most

important thing and the question is how much are the interest rate cuts going to mean meaning on the way up you know everyone was thinking we're going to recession and the market the economy was less interest interest rate sensitive so if they cut a quarter at 50 basis point is that is that going to change things dramatically i don't know that it will maybe perhaps we'll happen at some point is that it will help the composition of the market, meaning, you know, if you look today, we're talking about the S&P at all-time highs, but that's really tech and growth-driven. You got small caps 10% below the all-time highs. The average stock is just back to the all-time highs. So maybe the composition at some point changes. Whether they cut

25 or 50, I don't know that it makes a dramatic difference because I think it goes back to the earnings as a whole. So I don't know. I would go back to earnings as the really core theme for this well what is 25 or 50 then becomes more that's kind of the point that's kind of the point it's never one it's rarely rarely one and done yeah i don't i i i don't think there could be a trading rotation where you buy home builders or retailers on so already buying them right already buying them now yeah yeah but i look back at the fundamentals at those and i say do i want to buy them here and the answer is no like i think i want to fade that that rally in those names i think the retailers and some of the staples are more subject to tariff issues and eating pricing.

I think the homebuilder fundamentals are pretty bad. Why would you fade the homebuilders now? Well, I mean, everybody's faded them. Now they're finally working. Professor Leasman made an interesting point, which is, well, first of all, in the thing of like we hear data, but we're not sure it's right, how many people tell you, hey, man, we need like 2 million to 4 million more structures in the U.S. And you like, Google it always says that. And the answer is like, why? Let's look at some homeowner stocks, guys.

No, no, they've ripped off lows, but they've been bad for three or four years. No, I know. Yeah, but I'm saying so... Well, they should have been bad for three or four years. But it's anticipating rate cuts coming and a slower growth. Right. So, yeah, I hear you. I think it's the knee-jerk reaction.

I'm saying, I think I want to fade that. I don't love it. Well, that's kind of cautious relative to, like, earnings. Yeah, I don't think home builders matter for the SB earnings very much, and I think it's a cyclical that won't be supported by better fundamentals. The reason I say that is, like, go talk to some private companies in the whole building market, like in Texas, and ask them how much of their workforce is illegal. immigrants. Get the real number. They pay $7 an hour for roofers if they're illegal and 17 or 18

if they're American. So like if any of the immigration stuff leasman alluded to hits, I think the homebuilders are in trouble on margins. I don't think we've seen enough of a correction in pricing. And I think they're going to third tier sort of locations to expand on growth. So like it's not an awesome story for me. I get there's a knee-jerk three-month trade on dreams of rates helping the economy. But I don't think it's like great for structures. The market's been wholly paralyzed by high rates. But, yeah, high borrowing costs and high home prices. Right.

So you need home prices to come in a lot more for me to say, you know, I have a different view. So, look, I'm not saying. Well, you can afford a higher price if you have a much lower interest rate. Yeah, right. No, totally. You need, you're in the wrong quadrant and you need at least one of them to break. And look, I'm just saying I don't want to chase that rally. I don't want to chase that rally.

That's what I'm saying. All right. I faded. I'd rather own Invidia. No, we're fading you right now. We've got to go. We're cutting the mic. That's fine.

Sorry, man. I got excited as usual. I'm sorry. Thanks, everybody. See, Keith. We'll see you soon. Stephanie Adam and Keith. Let's send it to Christina now for a look at the biggest names moving into the close.

Christina. Let's start with Palantir trading at record high today. After the software analytics provider topped a billion dollars in revenue for the first time, and also upped its guidance. Palantir, which is trading over 6% higher, is up more than 600% just over the last 12 months. Axon is today's biggest gainer on the S&P 500, also on strong earnings. The company makes tasers, bodycams, and other law enforcement tests. technology and is benefiting, unfortunately, from rising corporate spending on executive security

as well as increased federal investment in immigration enforcement, both driving the bump in its full-year guidance. That stock has now just about tripled just over the last year. And Lemonade shares have also tripled over the past year, squeezing out, yes, pun, about 29% today, despite operating at a loss, the insurance company is better than expected full-year guidance is what's helping shares. Scott? All right, Christina Parts de Novelas. Thank you. Back to you. soon. We're just getting started. Up next, Morgan Stanley, Sherry Paul is breaking out her private wealth playbook. She'll join me right here at Post 9 after the break. We're live

with the New York Stock Exchange. You're watching Closing Bell. CNBC. Welcome back. Are we at an inflection point for stocks after a record-setting run from the April bottom? Let's ask Sherry Paul. She's an advisor and portfolio manager with Morgan Stanley Private Wealth. That's nice to see you again. Welcome back. Thank you. Is the bull market intact? Yes. What is this then?

Is this like a pause that refreshes? Yeah, pause that refreshes. And I think that the next leg of this bull market is going to come from a broadening out beyond just the AI story into three other thematics that are emerging. And those are going to center on AI, de-globalization, longevity, which we could talk a little bit about, and deregulation. And what's unique right now about this setup is all four of those are interacting and communicating and accelerating in the same time zone. So we should see an opportunity for investors that have missed this first kind of leg that's been AI-driven, coming to a market. There's still room to go. So you don't buy the story that the worst of the tariff impact is yet to come.

And it's going to hurt the economy, which is going to hurt your broadening story, isn't it? Well, you know, the economy is funny because oftentimes the economy and the market, they communicate but in different time zones, right? So the economy is always judged in arrears and markets are forward thinking. And this is why so many skeptics on the AI trade a few years ago, for those of us that have been talking about this for quite some time, we're looking for proof of earnings concept, and we just got that last week. And so that opportunity set for this cost-saving, productivity-enhancing bull market becomes an engine in this 11 train car of the S&P. It'll continue to lead the market, but there'll be more opportunity ahead. So since AI is a big theme of yours and has been, when you see those KAPX numbers,

You don't pause at all and say, look, I want to see some kind of tangible return on those tens of billions of dollars sooner rather than later because you believe that it's still going to come down the road. Well, which is unique. It's such a good question. It's where people are getting hung up and I understand it. But we really are in sort of this candlesticks to light bulbs moment where the ability to scale and implement and download this technology to produce earnings power in so many different proven business. models is the key to this. It's very different than like the early days of the internet. Now am I all in on AI? No. A diversified portfolio is a smart way to play this. And there are a lot of different ways, again, going back to the de-globalization thematics, is also married to AI because in de-globalization, the world kind of goes into more conflict. And so defense spending increases. And the, at the chassis of that is how modern militaries are going

to modernize their equipment, and that also speaks to AI. Just as one example. And so, materials, industrials become a great sector play in addition to tech. Well, I mean, a lot of those areas, frankly, have already seen tremendous gains. They have. And you think that's just getting started. Yeah, industrials are like second best. Yeah. And you just think that continues.

Well, I think that there's a quantifiable merit to the story with a capitalist kicker that if you're an investor by definition, you should be venturing into territory that you think is opportunistic, not something that's already been completely approved. And I think the story is directionally correct. And I think the same thing about interest rates. You know, I see, now remember, my perspective as a senior portfolio manager, I work with real people. Like my clients, they always want to know, well, what do I do now? That's the number one question that I have to answer because they're putting their kids through college.

Well, it's the most simple but important question. The simple, what do I do now? Well, interest rates are going lower. That's all we need to know. So if you're overweight in cash, you're getting a pay cut. But how are you so sure they're going lower? And in what time frame are they? Well, the time frame isn't as much as the direction that we know the pay cuts coming.

And the market typically sniffs this out six to 12 months ahead of time. How many cuts do you think we get this year? Since we were just on that topic at the start of our program. Morgan Stanley's interest rate team is like a couple plus five more next year. And so much of that is going to be data dependent because I think what this Fed has shown us since COVID is that they will talk the market before they actually take action. And right now in the last meeting, the market talk that the Fed gave us was, hey, we're not quite so sure. They're pretty hawkish talk, right? Yeah.

So the market's already starting to wrap. We've seen rates are going lower right now. That's what we need to know. Now, for investing individual client money, three to five year in the bond curve, enjoy some dividends that are rising in the Staples or the utility sector where we're getting huge appreciation plus great cash flow, plus the growth story. Rather than sitting around in money market that you know is going to get cut. Well, that's the craziest thing. We're having this conversation on halftime today. There's a lot of crazy things out there, Scott.

Utilities and power, whereas you used to buy them for the dividends, and you still do, and defensive nature, they're the new growth stocks. Yeah, it's so true. Well, even, like, look at what's happening at the distortion of the S&P, where you have companies that are producing handheld devices, but also producing movies, and they're sitting in a tech sector. But other consumer discretionary stocks that do the same thing are sitting in, or discretionary. I mean, there's a distortion happening, and it's happening very quickly.

And this is why breaking apart the S&P 500 is so crucial because the corridor of opportunity is narrowing. But for investors, the corridor is still open. And that's really my responsibility for investors, is to lean in and invest in that, which is what we've been doing. All right, good to get your perspective. It's nice to see you again. We'll see you soon. That's Jerry Paul. Up next, Disney is on deck tomorrow morning with earnings. The man who wrote the book on the company, quite literally, Jim Stewart. He is here at Post 9. Next. We're back. Disney shares have sputtered lately after a solid start to the year.

Investors will be watching the company's earnings closely tomorrow for signs of where the consumer currently stands. Jim Stewart is a columnist with the New York Times. He joins us now. He's also a CNBC contributor. This is our quarterly visit. It's nice to have you as always. Good to be back.

I feel like we have the same type of conversation. Parks and streaming. Is that the whole thing this time? Well, I've lately gotten way more interested in the sports segment, which they now break out separately because ESPN is finally going direct to consumer this fall, at least it's scheduled to go. We'll have to hear what they say about that. That is a seismic change for this company. When you look back over the years at how profitable ESPN has been, how profitable that franchise has been, even last quarter, there was 4.5 billion in revenue. That's a lot.

That's a lot. That's a lot. Not has been, still is. It's still big. And this is, you know, once you can get. it streaming for what looks like it'll be about $30, how many people are going to stick with the cable? So, I mean, this is also a seismic event for the whole cable industry because so many people, I think, only have the cable now to get ESPN.

So you're thinking about can direct-to-consumer, I don't know if be as profitable as cable, but in any way replicate the profitability of maybe not be as vibrant. Exactly. And I think that's why Disney has waited. so long to actually take ESPN to direct-to-consumer where they, you know, they launched streaming elsewhere much sooner because they have this golden cash cow that they've been milking now for many years. But again, they had 4.5 billion revenue, but the profit was down 17%. The cable model is disintegrating. It's not going to go away overnight. But I think we may see a very rapid decline in the cable revenue as people move. Now, $30, it's a decent number, but that's never going to get

them to those kinds of revenues. If you wipe out the cable revenue, you need a lot of subscribers to get up to that level. So presumably they're going to, you know, they'll get people in there, then they'll raise it, they'll find out how price sensitive are people with this. So there's some big question marks, I think, right now over Disney's future. What about the parks? Julia Borson was talking earlier on a prior show, talking about increased competition. You know, our parent company has some new offerings relative to Universal. How do you think about that? I mean, it's a good reason. on the consumer, obviously, too.

Yeah, well, you know, the parks are primarily sensitive to consumer sentiment, and, like, you know, Disney stock really took a hit when people were worried about recession earlier in the year because of the impact on the parks. And I think a lot of that has dissipated. I think competition in the theme park area is kind of weird, like, you know, there's a new park in Florida, but then everybody just goes to both of them, or they stay longer. There's some synergy there. So I'm not concerned about it. They're going to open that Abu Dhabi, I think, thing they mentioned. they've got new cruise ships coming online. They're investing quite a bit of money in it.

I think it looks pretty good. I think another really bright spot for them is Iger has kept the cost under control. He's done a great job at that. He's been very disciplined. You know, everybody is complaining about it. Oh, I wanted to go there because you set that up perfectly. Because it leads in some part to the succession conversation. Right.

So he's already spending less. The creative community is probably. up in arms. Yes. The issue in part with Mr. Chepec, who was the prior CEO, was a disconnect, I think, is fair to say, between the C-suite and the creative side of the business and in Hollywood. Mr. Iger has already laid the groundwork for the cost cuts. So now the new CEO doesn't have to be the one to announce big cost.

cuts or a change in the model. Does that help whoever the new person is going to be? And do you have any inkling on when exactly we'll know in early 26? I don't know when and I don't know who. Of course, everybody would love to know. But, yeah, I think Agar has, you know, prepared the glide path for the new CEO. It's hard to see how much more they can cut. They really have, you know, they've got to keep producing new material. And, you know, everything is not going to be hit, as we've seen this year. So they're going to have to spend. And the fastest way for a new CEO to become popular in Hollywood is to open the spigot a little bit.

Well, of course. And he's going to be, he or she, will be under pressure to do that. I mean, every agent in Hollywood would be, you know, calling, you know, for, let's do another deal, let's do this. It's like up the spending here. So there will be that kind of pressure. And there may be some leeway for a little more spending. And again, one of my concerns about Disney is can it stay this lean forever? I mean, it's got some, you know, significant competitors with Deep Pockets who are spending.

You know, Apple is spending. Netflix is still spending. The legacy producers are not spending, and that's taken some of the pressure off. But you look at the Disney lineup, it's very conservative, it's very sequel-driven. Can they keep that up indefinitely? I think that's another big question. All right. A lot of intrigue.

And we will talk more about that. Jim, thanks. That's Jim Stewart, New York Times. We'll see what these numbers are. Up next, we track the biggest movers as we head into the close today. Closing bell, we'll be right back. Let's get back now to Christina Parts of Nevelos for a look at the stocks that she's watching. What's at the top of the list?

Coinbase, because those losses are just accelerating. The crypto exchange is down another, what, almost 6% right now after announcing a $2 billion offering of convertible senior nodes, which can eventually convert to shares, and that could potentially dilute existing shareholders, hence the drop. Coinbase shares have lost a quarter of their value just in the last two weeks or so. Gardner is plummeting almost 30% today. The tech-focused research and advisory firm slash their guidance due to declining revenue at its largest research firm. And Vertex Pharmaceutical plunging as well.

Double digits down about. Look at that 20%. The company said it will stop development of its experimental next generation pain medicine after missing the mark in its phase two trial. A lot of red there, Scott. All right. Still ahead. Thanks, Christina. A rundown of what to watch for when AMB reports results at top of the hour.

We're back on the bell after this. We are now in the closing bell market zone. CNBC senior markets commentator. Mike Santoli is here to break down these crucial moments of the trading day. Plus, we set you up for some big earnings at OT. Julia Borsten covering Snap for us and Christina Parsanovo, standing by with what to watch for from AMD. Julia, we begin with you with SNAP. Well, after last quarter, Snap didn't give any second quarter guidance, citing macroeconomic uncertainties.

The stock has lagged the broader markets since then. So now investors are hoping the company will have more visible. will also show its focus on direct response ads paying off. The SNAP's revenue is projected to grow 9% from the year ago quarter, while earnings per share are projected to fall from 2 cents last year to 1 cent this quarter. Now, analysts are sitting on the sidelines. 76% have a hold rating. Bernstein writing, quote,

we see positive risk reward for Snapchat into earnings as there is room to beat against lowered expectations. However, longer term, we struggle to underwrite sustainable growth. The ad numbers out of meta and YouTube are so strong, we'll have to see if Snap echoes that success. Back to you. Julie, we'll be watching. Thanks so much, Julia Borson. All right, Christina, what about AMD? Well, AMD is not necessarily considered the AI bellwether like NVIDIA or Broadcom, but growing expectations around its AI capabilities are helping investors really push shares up front, roughly 45% this year. So far outpacing the entire chip sector, as they bet, AMD will capture more hyperscaler, Demand. Heading into earnings, though, bulls are pointing to several catalysts, a new core

GPU product ramping in the second half, fresh rack system offerings, which means it could better compete against NVIDIA, China sales momentum, if they get those licenses, and continued CPU share games from Intel. But revenue growth is still expected to be driven by pull forward demand in PC and consumer segments because of those tariffs. Mizusso, Zuho, ha ha, says the key metric to watch is Q3 guidance. They need to see number is close to $8.5 billion, plus clear signals that the data center segment and new MI 355 chips, or just the latest AI iteration, are gaining strong initial traction with customers. Mazujo.

All right, yes, happens to the best of us. Christina, thank you. Christina Parsonevles. All right, Mike Santoli, sum up this day. What stands out to you the most? Market didn't do all that much. The most notable thing that happened, really, was the ISM services report, which caused the market to go red. Yeah, and modestly read, I do think, you know, you have to acknowledge that, you know, at one point the bank index was down like a percent and a half after that ISM number. It shows a little bit of fragility or sensitivity to any sign, you know, that the economy is softening up more than anticipated. On the other hand, the bank index regained most of it back. I'll also note that the big AI bellwethers are taking just a slight breather after a strong day yesterday.

But, you know, the NASDAQ 100 down 60 basis point. The Russell 2000 taking the opportunity to be up 60 base points shows me it's still this kind of churn rotational market. We're not making any big bets on the macro side. Not a lot. We're going to hear from macro again. And then, of course, Palantir is doing more than a share to help support the S&P 500. So working under the highs of last week, but not in a way that suggests that there's really a lot of urgent selling pressure in the market. Bond yields holding around those lows.

So I feel like everyone's kind of hoping this period of time can pass. with the seasonal weakness, you know, potentially hovering over the market, but not necessarily biting too badly. Yeah. Well, a bunch of Fed speakers, too, are coming up the days ahead. Steve Leesman was mentioning that in our conversation earlier. Mike, I'll see you. And Mary Daly's comments, I do think, is a little bit of a psychological backstop.

Yeah, he mentioned that as well. All right, we're dealing with a weak guy outside. We'll see in a bit on fast money, Michael. Thank you very much. That's Mike Santoli, of course. They're clapping because the bell's about to ring. It will be a modestly negative day. We'll be right across the board.

It's up a force for the rush. Two-thirds of one percent. They're about in the green. It does it for us. I'll see tomorrow. And the O.T. Morgan is up.