Closing Bell - Closing Bell: Move in Stocks Too Top Heavy? 3/29/23

Episode Date: March 29, 2023

The seven largest names within the S&P 500 have accounted for nearly all of the year’s gains. Is that a sign of strength or weakness for your money? Trivariate’s Adam Parker and Requisite Capital���s Bryn Talkington give their expert takes. Plus, star Wedbush analyst Dan Ives breaks down what he is calling “the new safety trade.” And, Jim Stewart of the NYT weighs in on the latest shakeup at Disney. 

All right, Kelly, thank you very much. Welcome to The Closing Bell. I'm Scott Wapner, live from Post 9, right here at the New York Stock Exchange. This make-or-break hour begins with stocks rallying, led by what else? Tech. You heard that before, haven't you? The standout sector so far this year on the move yet again. From Meta and Microsoft to Apple and Amazon, the money just keeps flowing in. Here is your scorecard with 60 minutes to go now in regulation. The Dow popping for most of the day today, led by a nice jump in Intel. And speaking of that tech trade, the Nasdaq often running again after a two-day breather, a little rest period. That leads us to our talk of the tape, whether the move in stocks is now too top-heavy. We ask, as the seven largest names within the S&P have accounted for nearly all of the year's gains,

is it a sign of strength or weakness for your money? Let's ask Adam Parker. He is the founder and CEO of Trivariate Research, a CNBC contributor, live with me right on set. All right, here's the megatech gains this quarter, okay? Apple, 23%. Then you've got Microsoft, Alphabet, Amazon, 16, 15, and 19, respectively. And if you're not impressed by that, take a look at that, okay? You got the second tier, NVIDIA, 84.

Meta, 70. Tesla, 56. The seven mega cap tech stocks responsible for a 5% gain in the S&P, you know what that means? The 493 others have underperformed. Is that a worrisome sign? Is it a sign of strength, as I ask, or weakness? You know, if you study that, like is the concentration or breadth an issue, the results are actually a little bit inconsistent. Sometimes it can be a positive harbinger and others follow, and other times it isn't. It's more of a short-term risk-off or, you or you know kind of relative risk I think the market and these names are up too much personally I

think one of the sort of inconsistencies that I see in the last few weeks is an economic recession or a demand recession seems to be in some parts of the stock market like commodities energy metals prices, say, in semiconductors, like you mentioned, NVIDIA, which is only up 84% this year. I think it's 130% since the lows last fall, right? Right. So it's hard for me to see how, I mean, look at Micron's report last night. I mean, the stock's up a lot today. I think what they told you is your view a year ago, not your view, but one's view that, hey, maybe they don't lose money at the trough, turned out to be ridiculous. Well, you've got to be in the right space when it comes to chips. I mean, believe me, I'm not preaching to

you. You should be preaching to everybody else. You used to cover the space, right? You know this space better than most. Yeah, well, published on Sunday is that within tech, I don't like semis right now because if I look at just like the five or six month performance of the semi index, yes, it's NVIDIA's big contributor of it versus the broader market. It's now outperformed by over 25%. That's at the highs in the last 13 years. So the relative outperformance of the market is massive. We know there's inventory problems. You saw that from Microsoft's results. So to walk in today and say, I love semis. I'm going to get long for a trade i think that's way too late and so i think there's other parts uh that that i would rather gamble on and and the other thing i think is really underappreciated

i've been talking about this with clients a lot is when you looked at silicon valley bank they told you something interesting they told you that across their whole deposit base, there was a 14% annualized decline in the month of February. Part of that means that some of the tech venture businesses were starting to slow down fundamentally. I find it hard to believe all tech companies are immune from that. So I'm not saying, oh, it's like a disaster. I think you get people hiding in the bigger names. They feel safer about them. Oh, is that what it is? It's a defensive? I think it's a little bit relatively defensive. More justifiable.

But I don't think it's massive offensive tech when, at least in my mind, it's kind of obvious that the probability the economy is slowing is higher than the probability it's accelerating. Well, why do you think that the run has been as strong as it has? Is it based on the idea of a Fed pause? Yeah. I think it's as simple as that. I think the knee-jerk reaction is going to be the price-to-earnings ratio expands when the Fed gets dovish. Why is that wrong? Fed's close to a pause, isn't it? Yeah, I don't think that's wrong. I

think what's interesting in a... Closer, closer to a pause. I wrote about this, I think, two Sundays ago. The most tortured set of investor conversations I've had all over the map from people saying, oh, they're going to cut 100 bips to get the banking system to survive, that they're going to keep hiking. And then the most obvious market response, which is just by growth, and it goes up. It was like the market was clear and investors' rhetoric was tortured. If I take a step back, like as you mentioned, a lot of these names are up quite a bit since this event. I think the one thing that makes me worried about getting too negative is just how resilient the stock market has been in the face of what's clearly deteriorating outlook.

So you raise a really good point. That word resilient. Yeah. Has it been? Now, on the surface, it looks like it has. Right. But we just let in saying that the whole thing's top heavy. Seven stocks have done everything. Under the surface, it's not nearly has. But we just let in saying that the whole thing's top heavy. Seven stocks have done everything under the surface. It's not nearly as strong as it would

appear. Is it really as resilient as it looks? I think year to date, those numbers are right. I think if you look at the last couple of weeks, there's been broader participation. You've seen a bunch of other tech stocks go up. So I think the interpretation has just been, hey, they're dovish. If I really mark to market, how do I feel about the world today versus a few months ago? I have 24 earnings numbers. They embed a V-shaped recovery that's implausible. The numbers are too high. I don't think the Fed's going to be anywhere near as dovish as what this recent multiple expansion implies. I think the valuation isn't particularly compelling versus, say, bonds or other asset classes or even on 23 or 24 numbers. I think speculation's kind of up a lot. If you look at profitless software, if you look at Bitcoin,

if you look at Tesla or Nvidia, whatever your proxy is. Yeah, I read you those numbers. So the only thing you really have is just, man, positioning was kind of light. Rhetoric is kind of negative. I know. I mean, it was maybe the most off-sides positioning in the last however many decades coming into the year. Yeah, low nets, and people like non-U.S. equities more than U.S. So now all of a sudden people said they're dovish. I think where the rubber will meet the road will be, will the earnings really grow? Because if this P.E., the price earnings expansion

is a leading indicator for earnings growth, then yeah, man, this is great. But I don't think so. I don't think the Fed's truly going to get dovish until the earnings look like they're going to be more impaired. Let me ask you this before I bring in Bryn. Yeah. Would you agree that the events around the regional banks lowered the expectation of where the terminal rate was going to get to? That seems undeniable. Yeah, I think so.

Okay, so work with me then. I think on the other hand, it's bad for growth, right? Because they loan to CNI loans and CRE loans, commercial real estate loans and industrial loans. And I think they're going to get more regulated and have lower growth. Okay, that's for the banks. But if you do believe... But that's for the economy, though, too. They loan to help the economy, right?

Yeah, but if you don't believe the Fed's going to go as high as you once did, and thus we would extrapolate from that and say, okay, the Fed's closer to a pause than it's been as a result, right? That's why these stocks are- I think that's right. And that's clear. That's why the growth stocks are up. And the question is, right now you're walking today, have you seen a lot of multiple expansion relative to where we were two weeks ago? I think so. There's a lot of tech stocks that are up 10, 15% in two weeks. Well, the forward PE, I think on mega cap tech is up 30% since October. Yeah, it's a lot. As Lizanne Saunders has been saying and tweeting for the last few days, good points, right? So I think that problem is that that's probably too much

relative to how incrementally dovish they got. I think that's the debate. And you got to remember, the price that you're solving for is the price of earnings times the earnings. And so if the price of earnings goes up because they get dovish, what you're really saying is, all right, maybe there's a soft landing. The economy is going to be all right,

or they're not going to hurt the economy as much. I don't really know if that's true. I think that the earnings are probably going to slow a little bit and probably disappoint. So I think now you're discounting a lot and you're saying, hey, no recession at all in semiconductor demand because those stocks are, but in energy, it's going to be a disaster. I mean, that's kind of what's in the price. And that seems an inconsistent sort of application across the board. I said Bryn was waiting in the wings. She's going to join us now. Bryn Talkington, of course, requisite capital management, CNBC contributor, of course. It's good to see you. So you've heard what Adam has to say. You've been urging,

I think, a fade, a bit of this tech rally, right? Yeah, I think, you know, I agree on Adam with so many things. So to kind of dig into that even more, if you look at Micron today, what I heard from them were layoffs and AI. And that's like the tech playbook right now. If you announce layoffs, your stock's going to pop. If you announce AI, your stock's going to pop. They did both. And so they were up almost 6% in the morning. And so I think that a lot of the stocks, especially the NVIDIAs, which I own, have just gotten in front of themselves. And when an NVIDIA starts the year at a 50 multiple, and right now it's about 110, 108, and we're only at the end of March, that's just too much too fast because AI is not all coming in 2023. This is a long, long-term secular trend. So I don't think their chip demand is just

going to skyrocket over the next two quarters. And so I agree with Adam. I think that within a lot of these names, especially the ones that have AI attached to it, it's too much, too fast. And also, if you think about earnings of the market as a whole, going into 2023, what sector was the great sector for growth this year? Financials. Financials, which were 13% weighting going at the beginning of the year, were looking to grow at 13% earnings. So I called, I said no on that at the beginning of the year. I didn't think that was going to happen. I definitely don't think you're going to get a 13 percent growth rate from financials, especially with after the regional banks. I know they're not that big of a waiting, but still credit tightening is coming soon. And that's going to hurt Main Street

more than Wall Street. What do you think, though, lies ahead for the market overall in what still is a seasonably favorable time for the market? Bespoke had some good information out a short time ago that Carl Quintanilla had shared on Twitter. Over the last 100 years, the Dow's average positive April return 61 percent of the time. Only December's average gain is stronger than April's. So are we still in a seasonality play that works? If you're going to be invested in the market, April is the number one month and December's number two. And so when I'm thinking about asset allocation, I'm not looking straight down in front of me. I'm looking further out. And I think what still is confounding is that, you know, the two and the tens have been inverted and we talk about it ad nauseum, but they've been inverted since July of 2022. And so it's like we have the ingredients for

a contraction, the regional banks. Those are more ingredients for a contraction. But you really need an event to occur to make that happen. And so that's where I think I thought this was going to be a difficult year for investors because you're getting so many conflicting signals. So I just stick with what I've been saying all year is we're defensive in how we're positioned because I want to stay invested because you have to respect the market wants to go higher right now. And if we get this event, then that will change the game and everyone will then say, oh, yeah, the yield curve was inverted. It should have told us. So have you completely sort of gone to the dark side in terms of the banks?

Would you invest in banks here or no? I, you know, I've never recommended regional banks ever in my life for 15 years. Not regions, but the whole, just the whole system. No, I don't think so. I don't think they're good. I think part of the reason is that they're nowhere near as cheap as they optically look. I mean, we talked about it a couple weeks ago with Bank of America as an example, where they have a $100 billion loss on health maturity. So the tangible book looks like it's $175 billion, but the intellectually honest loss-adjusted number is more like $75 billion. So they don't trade at 1.6 times tangible. They trade at 4 times.

So I think the banks are not cheap. They're going to get regulated more. And I don't think it's a great place to make a very big bet. As long as they're sitting on this mountain for some of unrealized losses, no touch. I mean, at the very least, they're just not, you know, they're not cheap. And I think that was the argument prior, you know, to it. I think also like, you know, have I learned three things in the last 25 years? If I have, one of them is tightening financial conditions ain't great. Not for banks. Not for banks. So, you know, I think that's, you know, I think that's a big issue. I'm sort of telling people, avoid semis and avoid banks right now. I'd rather find other things that I think can either have lower expectations, they can exceed them, or maybe there could be an M&A sort of thing that could happen.

So I think there's things to own, but I just think what's happened the last two or three weeks is that there's been some inconsistent, you know, demand. You know, demand's going to be terrible for energy, but it's going to be great for semis? It's impossible. I got less than a minute to go. So the best thing to own, then, is what? I like energy a lot. It's been the worst got less than a minute to go. So the best thing to own then is what? I like energy a lot. It's been the worst performing sector year to date.

You started to see a little bit better data today. I think the capital spending story is still the same. I like copper. I would probably go on some small cap software. You've seen a number of deals there, Momentive, Qualtrics, Coupa, and Q4. The private guys have a lot of stuff on the sideline. Even though there might be some fundamental slowdown there, at least I have that M&A bid that's happening.

I'd much rather own that than semis. Bryn, 20 seconds. Energy still one of your favorites too? It is. And as I said last week, I think that energy was pricing like we were going into a recession while tech is pricing a soft landing. And I think if we don't go into a recession, and that seems to be further out, energy is really cheap here, high free cash flow yield. So it was a good opportunity last week to come in and add to names. All right. Good stuff, guys. Thank you very much. Bryn

Talkington, Adam Parker, right here at Post 9. Talk to you again soon. Let's get to our Twitter question of the day now. We want to know, is it time to fade the tech rally? Head to at CNBC closing bell on Twitter. Please vote yes or no. We got the results coming up a little later on in the hour. We're just getting started, though, here on Closing Bell. Up next, the new safety trade. One top analyst makes the case for a key sector he says still has some serious upside. He tells you the names he is betting on most.

You're watching Closing Bell on CNBC. Do not go anywhere. Got 40 minutes to go in the trading day. Let's get a check of some top stocks to watch as we head towards the close. Christina Parsonevalos here again. With that, Christina. Well, Micron is definitely worth a mention again because it continues to rally despite yesterday's dismal Q2 earnings report. The biggest quarterly loss ever, $1.4 billion in inventory write-downs, much larger than expected, by the way, a sales plunge of over 50% and further CapEx cuts. And yet, bam, the stock is over 8% higher

because investors were prepared for the worst and also like the forward-looking comments from management, especially when the CEO called for a bottom. Lululemon is leading the Nasdaq 100 today as the athletic wear company beat Wall Street's expectations when it reported earnings results after the closing bell. Lulu issued upbeat guidance for the next few quarters as well. And that has shares popping over 13%.

Scott? All right. Underline to underscore it. I know. I like drawing. Thank you. Yeah. All right. One more chance later on in the show. So keep at it. Christina Partsinello. All right, tech stocks.

We've told you how they're outperforming today with the group now the top performing sector this year. Our next guest believes the risk-on rally in that space is just getting started. Joining us now, star Wedbush analyst Dan Ives. He's live here at Post 9. I read at the very top of our show the tremendous gains that these mega cap stocks have seen.

You believe that's legit? Well, I believe there's a handful of things going on. I think one, I think guidance is essentially de-risk. I think what you saw coming out of January earnings, we've actually seen a slight tick up in terms of cloud spending and cybersecurity. And you look at the overall, what I'll call big tech names like Apple, we haven't seen cuts in iPhone demand. So I think the setup for this earnings season, I view more of a catalyst for tech rather than something to fear. I just wonder what that setup's going to look like, given what the stocks have done. I mean,

they've run so much. So how does that make the setup better going into earnings? Well, I think there's two things. I think one is that it's still under-owned. I believe seven of every 10. Under-owned? Tech? Big tech? Look, if we look here what's happened, from an institutional perspective, I think many continue to sort of be naysayers in the rally,

and many believe that we've gone too far too quick. And what I'll tell you is from our checks, both from Asia as well in the rally. And many believe that we've gone too far too quick. And what I'll tell you is from our checks, both from Asia as well as the U.S., I believe we are ultimately seeing what I really view as fundamentals starting to stabilize within enterprise relative to where we saw in January. And I still believe when I go into 23 and 24 numbers, the path's high or not lower relative to God. What if the Fed is more hawkish than the market wants to believe that in part, as I discussed with Adam Parker, this rally is due to the idea that the Fed's going to pause. Rates have come down and it's obvious as to why the money continues to flow into this space.

What if that's all a fallacy? Yeah, look, that's that's definitely an event that would be negative for TAC. I think right now it is three-pronged. I mean, one feels like the Fed's handcuffed, 10 years seen its height, and ultimately that is more of the risk on rally. I also do think you've seen more generalists and even more retail focus more on tech because you don't got to worry Sunday night what the head on is. So I think you're seeing it, what I'll call, even you know, the really, even though it sounds twilight zone, the new safety sector is tacked. Well, you know, as you said, twilight zone, here we go again, right? There was that way a couple of years ago. We're just back to that play again, ride the seven biggest stocks in the market and everything else be damned.

Well, I think what I believe is going to happen is as we go throughout earnings, I think that's going to spread more. Smidcap, I think you're starting to see it in cloud and cybersecurity. Some of these, you know, that I believe could catch up. And look, it goes back to last year, a horrific year, obviously, for tech in 2022. But now you're seeing the cost cuts. You're seeing what I believe is really sort of the setup to, I believe, a tech comeback that's starting to play out. All right. Tar Heel Blue? Tar Heel Blue. And look, I believe this is the start of what could be a comeback and I think potential for Tar Heels as well.

Okay. All right. Dan Ives, thank you. It's good to see you, as always. Up next, a big bull bear debate you do not want to miss. Ed Yardeni and Veritas Greg Branch. They square off debating where they see stocks heading from here. That's after this quick break. Closing bell right back. Welcome back. Double digit upside versus double digit downside. It is a bull bear debate over those two competing market calls from our next two guests. Ed Yardeni of Yardeni Research and

CNBC contributor Greg Branch of Veritas Financial, both with me live. Welcome back. Let's do this again because we started this once and then we had a little banking crisis pop up, Ed, and it doesn't feel to me from looking at your projections like that swayed you at all. You still think we go 4,600 by the end of the year. Why? Well, what has swayed me is that the financial crisis that we've had here, this banking crisis, is going to be very well contained by both the Fed and the FDIC. And at the same time, I think it's going to keep the Fed from raising interest rates any further. I don't see the Fed lowering interest rates, but I think they are currently now at a restrictive enough level where they don't have to keep raising interest rates. And meanwhile,

the economy has been in a recession since the beginning of last year. It just happens to be a rolling recession, hitting different sectors at different times without adding up to an economy-wide recession. So I think, on balance, companies are going to continue to generate profit gains. I think we are going to see a decline on a year-over-year basis in the first quarter, maybe 5%, 7% for earnings. But from then on, I think we're going to see positive comparisons and probably something like up 10 percent in a year over year basis for the fourth quarter of

this year. You know, Greg, as Ed was talking, I wrote down two words, pause and put both related to the Fed, because it sounds like Ed thinks both of those are back. They're going to pause and the Fed put exists. If something happens, they're going to come right into the rescue, as they always seem to do. What's wrong with that view? Well, I agree with the pause part, obviously. I'm not going to be a hypocrite about this, Scott. You know, last year, one of my main complaints was that people wouldn't believe the Fed when they said it's a 4 percent terminal rate. We're talking about a pivot. Why don't you believe the Fed? So let's believe the Fed. I'll continue to believe the Fed and

think that they only have another 25 basis points. The thing that the market is not getting is that the financial conditions in the system itself is going to pick up the momentum. And so the Fed does not need to continue to raise rates because underwriting standards are going to increase. Credit is going to continue to tighten. And as my good friend Adam Parker said in the segment before, when credit conditions are tightening, you get slower growth. And so while my theme for 2022 was that I thought we were going to have a massive deceleration in earnings growth and top line growth that consensus was not taking into account, 2023 is the year of inversion, Scott. We're going to

have a massive profit and earnings inversion. I think that you'll see company top lines come in rather significantly. And yes, consensus is now at negative six for the first quarter, but it started the quarter at slightly positive and it's come down 6%. And we saw with the fourth quarter that consensus just isn't good at getting percent. And we saw with the fourth quarter that consensus just isn't good at getting this right. We went into the fourth quarter with consensus thinking that it would be negative 3 percent earnings and it turned out to be a negative 5 or 6 percent earnings. So I think that the market is still missing this. It's breathing a sigh of relief right now. But everything that the Fed did is going to start to impact. We're going to see

company profits and top line turn around. We're going to see company profits and top line turn around and we're going to see a more discriminating consumer, which is what Target and Walmart and others told us already. Ed, I mean, that sounds highly reasonable to me, if not a base case, right? We know that credit is going to contract. We know it. It's undeniable. Seems a formality at this point, given all that the Fed has done and what happened with the banking system. Am I wrong? Well, I don't think we know it for sure. I think that credit is still going to be available. I don't think we're looking at an economy wide credit crunch. I think standards are going to tighten. I think we've already seen

a lot of bubbles burst without taking the economy down. We saw that last year with the meme stocks, with the SPACs, with the ARK stocks. And you can even argue that there was a bubble in the bond market. And that bubble certainly has burst. And it could have taken the whole system down except for hell to maturity. It's kind of like, you know, kind of the accounting device that has really kept the banking system intact. And I think they're going to raise their deposit rates. I think they're going to continue to make loans, but the loans are going to be

at higher interest rates. Meanwhile, there's still a lot of stimulus left over from the pandemic. State and local governments are still sitting on a pile of rainy day cash that they accumulated when the federal government gave them money to spend and they didn't know really what to do with it. I think now the Biden administration is telling them you got to spend it or we want to claw it back. And I think you're going to see some significant spending by state and local governments. And then there's all the fiscal stimulus that's still in the pipeline for building infrastructure, for building chip plants and green new deals. And, Greg, at some point, the cycle is going to turn back positive, isn't it? In part because of all the reasons that Ed just said.

You have the last word. Of course they will. But let me take these points one by one. What Ed was talking about when he was talking about credit tightening situationally is very different than credit tightening across the board. As you see, top lines start to decelerate and invert. And as you see the cost of capital go up significantly, if companies can get it, what I think you're going to see is lots of duress into the second and third quarters and that is going to be systematic as opposed to episodic uh which is what ed was was referencing number two i'm not sure we can rely on local government spending to prop up the economy um i'm not sure we should ever build the base case on that uh and and number three i'm just not sure that with employment going the direction the fed wants with a consumer that, yes, they have

there is some stimulus left over, but concentrated in the upper echelon of household earnings, certainly not at the lower end, that we can continue to see the spending be what we thought the NRF came out and said four to six percent. And that's simply not what the companies are telling us. Gentlemen, I appreciate it very much. We'll hear from you again soon and we'll do round three. Maybe we'll go 12, maybe 15 like the old days. We'll see. Guys, thank you. Greg Brandt, Ed Yardeni. I'll talk to you both soon. Still ahead, we discuss what is next for the banks following two days of hearings over the collapse of SVB on Capitol Hill, of course. But first, a shakeup at Disney, another one. And what could be seen as the nail in the coffin for the Nelson Peltz drama.

We'll break it down and what it might mean for the future of that company with somebody who knows it better than most. Pulitzer Prize winning author, New York Times columnist Jim Stewart is with us next. We're back. Marvel chairman Ike Perlmutter has been laid off from Disney. Mr. Perlmutter had been backing activist investor Nelson Peltz in his recent proxy fight to join the company's board and had a long history of clashing with CEO Bob Iger. Our own David Faber asked Mr. Iger about that issue when he sat down with him last month. We bought Marvel in 2009. I promised Ike a job

that he would continue to run Marvel after that, not forever necessarily, but after that. And in 2015, he was intent on firing Kevin Foggy, who was running Marvel's studio, or the movie making at the time, and I thought that was a mistake and stepped in to prevent that from happening. That created some ill will, you think? Well, you'd have to ask Ike about that, but let's put it this way. He was not happy about it, and I think that unhappiness exists today. Joining us now to discuss further is CNBC contributor and Pulitzer Prize winning New York Times columnist Jim Stewart. Jim, welcome. What a perfect day to get your opinion on this. Do you think the writing was on the wall the moment that Bob Iger decided to come back? Absolutely. Well, the real nail in the coffin

was Ike Perlmutter's flirtation, shall we call it that, with Nelson Peltz. I mean, that was perceived inside Disney, and I'm reliably told by Iger as well, as an unforgivable betrayal. This was somebody who went out, who knows what Ike Perlmutter told Nelson Peltz as Nelson Peltz was preparing his proxy attack on the company. But this was an unspeakable breach of company loyalty, and it may also have been a breach of confidentiality. I don't think there was any way that Ike Perlmutter was going to survive unless Perlmutter had succeeded, I'm sorry, if Peltz had succeeded in gaining influence and could have protected him. But no, he was doomed once he seemed to cross over into the Peltz camp.

And by the way, as you can see from that interview, there was bad blood between Unger and Perlmutter going way back. Oh, for sure. It's interesting, too, because your newspaper, The New York Times, today in writing this story says, Mr. I'm quoting now from the article. Mr. Perlmutter has been a distraction inside Disney for more than a decade, as irascible and unrelenting, you know, in his interaction with, you know, whether it's the CEO position or others within the C-suite, if not the board. But he was there for a long time. Well, yes. And I, you know, it's very interesting. This was characterized as a layoff. I mean, essentially, that he was fired. They didn't even give him the option of quote-unquote resigning, as far as we know, which would have been a more graceful and, you know,

less humiliating way for him to leave. I mean, there's a lot of ill will here running both directions. So they didn't even put a fig leaf over that. Yes, people have been complaining about him for years. And a lot of it has come. I mean, he clashed with Kevin Feige, particularly from investors' perspective. Kevin Feige is the genius behind Marvel. He made it what it is today under Disney. It's a vastly more profitable and more successful enterprise than when Ike Perlmutter owned it before selling it to Disney back in 2009.

But it was his company. And as Iger mentioned, he did give him some kind of assurances. I mean, we may see even litigation about this, depending on what exactly it was that Iger had promised Perlmutter. And for many years, however distracting he was, they tolerated it because there was this agreement. He had sold them the company, and Iger had personally given some kind of insurance that he would, quote unquote, run the Marvel Enterprise. Well, that was more and more illusion than reality because they'd moved the movie division to protect Kevin

Feige away from him. So his power was much diminished. But for this humiliating ending, I think it shows the level of bitterness that had grown up and particularly the anger over his dealings with Nelson Peltz. I can't help but think of a little bit of irony here in that, you know, Mr. Perlmutter obviously wanted a shakeup in the company. That's why he backed Peltz in part. You know, otherwise, you know, of course, their friendship as it existed or still exists. He didn't get the exact shakeup how he wanted it.

But at the end of the day, he got the shakeup. Yeah, it's true. Well, I mean, Peltz, when he withdrew his proxy fund, said the reason he was doing it is that Iger had basically agreed to do everything that he was agitating for. Now, I don't know exactly. I'm sure that's entirely true. He certainly didn't get the board seats he wanted. was agitating for a shakeup, apparently supported by Perlmutter, who was, you know, acting as a liaison with him and encouraging this, that suddenly his is the first and the biggest and the most prominent head to role. I think there is a message there to anyone else at Disney, high-ranking or otherwise,

who might be pondering whether they should be, you know, communicating with potentially hostile outside investors in the company. Jim, I got to run, but I want to ask you one last question. I want to switch topic because it was topical yesterday as shares of Paramount had a really good day. And, of course, your new book is unscripted and it details the redstones. And there was an analyst note yesterday that said one of two outcomes is going to happen here. They either get streaming right or they likely sell the company at a significant premium. And I would just like your insight because of your book and how you know the Red Stones and Sherry and how you see it all playing out. Get it right, A, or not, and sell.

Well, I don't think it's an either or there. I have gotten to know members of the Redstone family pretty well, and I got to know the company and the current leadership pretty well working on Unscripted, which was a very fascinating experience. But I think an important thing to consider is, I mean, I give Sherry Redstone tremendous credit for surviving all the challenges and upheavals she went through and bringing some order and calm to the company. But the strategy is get the content, get the business rationalized, get the business right.

But I think almost everyone agrees, certainly Wall Street analysts agree, and I believe people inside the company too, that Paramount Global does not have the scale on its own to compete in this new world of, you know, massive spending and streaming with the likes of Netflix, Amazon, and as we just mentioned, Disney. You have to have incredibly deep pockets. And I give them credit because they've had some real successes both in the movie division and in streaming, like with Yellowstone, and that makes them more valuable. And that starts getting them to a valuation and at a premium for a takeover there where you could maybe see a deal. It's not there yet.

I mean, I've been hearing numbers like in the 50s, maybe. You could see a willingness to make a deal there. But I don't believe that Sherry Redstone wants to be a media mogul necessarily for the rest of her life. And I think at the right price and with the right partner, they would either work out some kind of joint venture or even complete takeover. Something in the 50s would be one heck of a premium. Jim Stewart, thank you so much. We'll talk to you again soon.

Look forward to that conversation next. Last chance to weigh in on our Twitter question. We asked, is it time to fade the tech rally? Head to at CNBC closing bell on Twitter. The results after the break. Through the results now of our Twitter question, we asked, is it time to fade the tech rally? The results are split, which is very interesting considering where we are in this market. 50.7% say yes, 49.3% say no. Coming up, Intel shares are soaring today. Top chip analyst Stacey Raskin standing by with his outlook for that name when we take you inside the Market Zone.

We're now in the closing bell Market Zone. CNBC Senior Markets Commentator Mike Santoli here to break down these crucial moments of the trading day. Plus, RBC Capital's Gerard Cassidy on what is next for the banks. And Stacey Raskin of Bernstein on whether Intel's latest rally is just the beginning. Mike, begin with you. We're basically highs of the day. We are. HOD as we go into the close.

Yeah, S&P also right up about where it was in that initial rally after the Fed meeting last Wednesday. So that was 40-40. So bumping up against this area where it's been the highs for the month. Yes, we've been talking about how the big growth stocks have protected this index, have protected the market. S&P XTEC up a little bit this week, up a little bit year to date. I think the big thing is the rest of the market that led before we got into March have not broken down. So industrials hanging in there. The consumer stuff's OK. Home building stocks are fine. And so I think a lot of it is we were positioned for a lot more damage, a lot more financial market stress, a lot more banking drama than we got this week. So at least for now,

we can relax higher, probably some end of quarter pumping going on in there, too. The question is whether more bank issues are going to crop up. Gerard Cassidy, are we all clear or are you still concerned? Scott, I think we're much clearer today than we were obviously two or three weeks ago. I think the deposit disruption that took place is pretty much behind us. So if you want to call that an all clear, I would say it's an all clear. Does it make you want to go big or go home, so to speak, that, you know, at least on the regional level, it's just a little too risky? If you want to use that word at the moment and if you're going to invest in the banks, just go big. It's going to be interesting, as you know, the numbers will come out beginning April 14th with J.P. Morgan and other large banks on that Friday.

And I think what we're going to see, the numbers not just for the very large banks, but for the big regional banks, I think could surprise to the upside. As you know, the stocks have sold off very hard and there's a lot of discounting of the news going forward. And I don't think the numbers are going to be that bad even with the regionals i think you're going to see some nice deposit flows for the bigger regionals not necessarily the smaller ones but the bigger regionals probably held their own the question is are those deposit flows going to get higher rates on them which obviously as you know as well as anybody net interest margin. Is that a real concern? Scott, it's a great, great question. And I would say that there's going to be higher rates paid, no doubt about it. But we have to remember, you know, the money, whether it's corporate excess deposits or high net worth deposits, those deposits have either already left the banks

six months ago because rates were much higher back then versus banks, what they were paying. So I think you're going to find that the banks will use CDs to keep more of the deposits, but there will be pressure on the margins as these rates remain elevated, at least temporarily. Gerard, we'll talk to you soon. Thank you. Stacey Raskin of Bernstein following Intel's stock move today and its investor webinar. So they said today they see a, quote, clear path to regaining leadership, end quote, of the market, well positioned to capitalize, they think, on the accelerated growth in AI. Do you believe that? I think it really remains to be seen. I'm not exactly sure why we're all believing them at this point. They've had lots of disappointments over the years. But we're at a point in the stock now, to be clear, where I think things just not getting worse is almost as good as things getting better.

And that was, I think, my primary takeaway from the event. I didn't really hear anything that was hugely unexpected. But at least at this point, it doesn't, for now, it doesn't seem like things are getting worse. And today that seems to be enough. What makes them get better then? They've got to get products out on time. The products have to have the performance that would give them a leadership position in the market. This has been one of the huge issues they've had over the

last several years. Not only have the products been delayed, it's when they showed up. Just because they were delayed, they didn't have the degree of competitiveness that they needed to really like do well in the markets. And so they need to stick to the roadmap and they need to get things out on time. They need to perform how they perform and and maybe they'll crawl back. I don't know yet, but I mean, it's going to be a slog. And as much as they're talking about things now, it's still years away before we're going to know. So they're getting a little bit of credit for it today, although some of this is just the broader space, like responding on the back of Micron's print and everything else.

But speaking of that, speaking of that, Stacey, before I let you run, would you would you fade the SMH run? You know, it's really interesting. So the stocks have had a great run year to date. And in some sense, it's sort of the standard playbook. Estimates and numbers have been coming down across the board. They actually peaked in June, and they're down 30%, 35% since then. It's one of the biggest negative revisions we've had actually since the financial crisis. And so people have been buying those cuts. Now, all that being said, you start to look at the numbers now.

I do get a little nervous. You look into the back half, estimates are broadly above seasonal. So people are starting to put that lift into the numbers. If you look at inventories across the channel and distribution, everything, they are ludicrously high right now. I've never seen them this high before. And you look at the valuations in the space, the sector, I think as of a week or so ago, last we looked was at something like a 30% premium to the S&P, which was a record, at least going back to the recovery off the financial crisis. So I very rarely seen things here. So by and large, people are playing the recovery thing, but it does seem to be getting put into both the numbers and the valuation.

So I think you maybe need to step a little lively here. Well, NVIDIA may be the greatest example of what this space has done. I read at the top of the program just how much that stock has ripped. You do have an outperform on it, of course, and a $300 price target. You may have to revise that, who knows, in like 10 minutes. Stacy, thank you. We'll talk to you soon. Back with Santoli as we approach the two-minute warning here.

A few seconds away from that to our Twitter poll. A split decision, speaking of NVIDIA, on whether it's time to fade or ride these tech stocks. Yes. I get it, right? You want to go with what's working. They certainly show the signs, especially semis, of being new leadership for this phase of the market. But, you know, the dichotomies have gotten pretty stark between you know not just tech it's really just the very largest of the NASDAQ 100 stocks and the rest of the market. I don't think there's one way this kind of gets resolved. It really isn't. There are some times when a narrowing the market is dangerous. There are some times when people migrate toward big stable defensive stuff and then you can get a chance to refresh the demand for the rest of the market. So I'm not really that comfortable saying like, oh, we know how this ends. We have the VIX down

at 19. Why is the VIX down at 19? Market's been incredibly calm. The 10 and 20 day actual volatility of the S&P 500 in VIX terms is like 16, right? So the market has stayed relatively on firm footing, and it's because of this rotation that we've gotten here. The other piece of it is the extreme growth stock outperformance that has held the index up is the answer to those people who say, stock market's oblivious to the recession risk. The stock market's oblivious to what the bond market's saying. Well, not really.

Not really. The rest of the market is still kind of trying to get its feet under it. And if you look at things like the very broad 1,000 biggest stocks in the market, equal weighted, you know, they're holding up. They're not back to the December lows, but they certainly don't look like the S&P, which is now on track for like a 5% quarter. Seasonality, your friend, too, right?

We said before earlier, April, a good month. It has tended to be. It's obviously just that's just the background climate of the market. But it's certainly not a reason to get incrementally more worried about the market. So I think you sort of, you know, I always say you can stay involved and keep expectations low because you've already gotten, as I said, 5 percent three months into the year. You're up like 12, 14 percent off the October low. All right.

The bell's ringing. Tech is running. The market's going to finish nearly at its highs. I'll see you tomorrow. Morgan and John, take it over now.