Closing Bell - Closing Bell: Nvidia’s Moment of Truth 11/21/23

Episode Date: November 21, 2023

What’s at stake when Nvidia reports in Overtime? All-star panel of Stacy Rasgon, Jason Snipe and Joe Terranova break down what they’re expecting. Plus, Schwab’s Liz Ann Sonders explains what she is expecting from stocks in the new year. And, Capital Wealth Planning’s Kevin Simpson is shaking up his portfolio. He reveals his latest moves. 

All righty, welcome to Closing Bell. I'm Scott Wapner, live from Post 9 here at the New York Stock Exchange. This make or break hour begins with the earnings report on everyone's buying today. NVIDIA set to report in OT, so much at stake. No stock in the S&P has done better this year. Shares up 240%, that's all. Oh, it's only up more than 20% this month alone, and it is trading right around an all-time high as well. We're going to race you right up to the numbers with key shareholders and top analyst Stacey Raskin. We'll do that in just a moment.

In the meantime, your scorecard with 60 minutes to go, and regulation looks like that. Stock's been in the red all day long, and that's following five straight days of gains. So you'll forgive the market if it takes a little bit of a breather. Tech down as well. Microsoft giving back some of its recent gains. Yep, the drama with OpenAI still unfolding there.

As for yields, they are falling. Take a look at the 10-year note yield, 441. If there's a standout today, it's from retail. It's Burlington. That company raising the lower end of its guidance, and that's good enough to send shares surging by better than 20%. Takes us to our talk of the tape, the last of the mega caps to report, and just maybe the most important one yet,

given the hype around AI and what this stock has done this year, as we just told you. The question now, can that record run continue? Let's ask Odyssey's Jason Snipe, Joe Terranova of Virtus. Both are CNBC contributors and own the stock. And top-rated chip analyst Stacey Raskin of Bernstein has an outperform on it and a $675 price target. Stacey, I begin with you. The most important thing to watch for in OT is what? There's only a few things to watch on this print. It's a major print, but it's the data center number. Where's the data center number in the quarter?

Where is it in the guide? So, like, from the print itself, those's the data center number in the quarter where is it in the guide so like from the print itself those are the only numbers like it's so big that nothing else in the income statement or anything really matters right i think when we get to the call there's other things beyond just the numbers we'll want to hear there's like a there's a there's a narrative as well that goes along with the numbers itself right we want to hear anything they can tell us on their visibility like where investors are getting nervous is just the numbers are getting so big so quickly, they're worried about sustainability. So anything they can tell us about sustainability into next year and then even potentially into 2025, anything they can tell us on visibility,

anything they can tell us on how they know these parts are getting used, anything they can tell us on supply versus demand. I think on top of that, the other thing that people are looking for is China, because clearly the export controls have limited their abilities to ship their current products into China. They are supposedly developing new products that will be able to be shipped. And people want to know if we should be writing China completely off or not. So anything they can give us on that will be important. But when the actual paper hits, it's the data center number. That's all that matters. All right, Joe, you know, sustainability, interesting word that Stacey

uses. I think that's apropos here. How much better can it get? They've wowed us so far over the last two quarters. What can they say this time that's going to live up to that hype? Well, that's the challenge that you have if you're trying to invest or trade off of a quarterly earnings report 15 1 5 of the s p 500's performance year to date is attributable to nvidia so without question this is the stock market nvp the problem is is that the expectation now is always beat and raise. Beat and raise is what they must come in and do. It's like you go to a restaurant and the chef keeps bringing out the best dish that he could serve you. Sooner or later, there's going to be a fall

off in the meal that you're being served. I'm going to fight you real quick right now. Do they really have to raise? I mean, how much more can they possibly raise they gave you guidance that was so stratospheric maybe they just have to say you know what we're on course to meet the guidance that we already gave you they're going to raise again so i actually love the way you describe that because that speaks directly towards how you should own how you you should own this stock. There's a lot of volatility surrounding earnings reports. Let's statistically put that into context. Tonight, options are implying a 7.5% post-earnings move. But here's something that's very interesting.

Over the last 20 quarters, this company has beat on earnings 19 times out of 20. They have a streak of 18 consecutive quarters of beating on revenue. In the 19 of 20 quarters that they've actually beaten, guess what? 14 times the stock went up, 6 times the stock actually went down. So do not be surprised, to your point tonight, that they come out, they beat and raise. It's a spectacular number, and the stock goes down. Well's what happened last quarter. But what you want to do is have a steady hand. All right. Jason, Jason Snipe, what's your read here? What do you think? And going in? Yeah, so I mean, you know, Joe, Joe pointed out really, really appropriately, I think what's what's important to me going forward is the sustainability,

absolutely, of demand going forward. I think China absolutely is a concern in the longer term, not necessarily in the near term, because as Stacey mentioned, there are other chips that they are creating that will be available for sale in China, but China is 20 to 25 percent of the business. So that's definitely a concern going forward. Data center absolutely will be the big number. I also am looking for gaming to start to really reaccelerate and grow from here. But again, I mean, 200 billion dollars of market cap has been added so far this month. You know, the stock, to your point, Scott, has already run 240 percent year to date. So we'll see how the numbers report. But again, if they do $16 billion of revenue, that's 170% above last year's number at this time. So I'm very excited about the quarter. I think it'll be a strong print, you know, and it will carry

into following quarters into next year. Stacey, they can't just keep beating and raising forever. Can they? Maybe I'm maybe I'm the one who's crazy here. You look at they say trees don't grow to the sky. Right. So, I mean, nothing can go up and up and up forever. But the question is, like, how long can they be raised? And I mean, so there's two things here. There's the tactical question. These questions about sustainability and like eventually do they have an air pocket? And look, we've seen them before. We'll probably see it again at some point there's the broader question and you were talking about like like how do you own this stock like for the long term the question is like in in five years in 10 years like how big is this opportunity and we're early and in five years are we going to be talking

about numbers that are materially higher than what we are talking about today whether or not they beat or miss in in two quarters or four quarters whatever. If you're owning the stock, I mean, that's what you're owning. I personally do believe that the overall opportunity is enormous. I do believe that we are early. And I do think that in five years, in 10 years, we will be talking numbers that are materially higher than we're talking about today. And in terms of that air pocket or sustainability risk, I get the nervousness. I don't think the time to worry is now. For now, I think the numbers are going up. Like, they're going to beat and raise.

I mean, that seems reasonably clear just given the amount of demand and everything we're hearing from everywhere else in the supply chain right now. So I don't think the time to worry is now. That's incredible. I mean, the fact that you can make a credible argument that there's still so much material upside ahead is astounding given what they've already done. Now, what about the stock? The stock we said is up 240% year to date. It's up better than 20% in a month. It was $100 on Halloween. It's $500 as I ask you this question. What does that mean for the print? Yeah, to be fair, this is one of those prints where I feel like you could hand me the earnings report right now, and I'm not exactly sure I could tell you which way the stock is going to go,

because whether they beat or raise, like if the number is not good enough, that's a problem. If the number is too good, maybe it's a problem because it causes that worry about sustainability to pull in, right? At this point, look, I think the number itself is going to be very good. I think the narrative that they're going, the story that they're going to tell is going to be good. They're not going to say anything on this call that makes anybody come off of it thinking that the opportunity is smaller than before the call started. I think you have to be there. But, I mean, as I think somebody said, you have to have a steady hand with this one. Sometimes you've got to have a strong stomach.

The stock can be volatile. But if you look at it over time, like, it's been up. Like, they've delivered. What about competition, Stacey? You know, we heard this week, you know, Microsoft has announced a new chip. Others are, you know, going to be racing to catch up. Is that material enough to even worry about? The narrative from the beginning of the year until now is kind of, well, they run the game.

It's the only game in town, or at least to this point, the only credible, monetizable one, where they charge so much for what they sell, and they're already doing that. How should we think about competition? Well, they're really not. So people get worried about, like, internal silicon. You mentioned Microsoft. Like, all the hyperscalers are working on their own chips. It's not new.

Google's been doing their own chips. They're the one that are deploying the biggest size. They make something, they call it a TPU, a tensor processing unit. They've been delivering it for eight years. Like, it's not new. The idea that everybody is working on their own chips is is not new amazon has deployed some again it depends do you think the opportunity is large or or not if you think it's large like there's room for other players number one number

two like i don't know if we have the time to get into discussion here but there's there's a whole discussion to be had about like where to use general purpose or more programmable silicon versus the more um custom designed chips that like that we'll have to do that somewhere else for sure that some other time I get back to you that sounds really amazing conversation I would definitely want to have it I think they're fine yeah you. You own Broadcom, too, okay? I do. Make me a credible argument right now that I don't want to buy Broadcom here if I'm not in either of the names.

Do I want to buy Broadcom or do I want to buy NVIDIA in the here and now? Because Broadcom's no slouch either. The stock is up 90% over the last 12 months. It's up 15% in a month we just don't talk about it no as incessantly as we talk about nvidia yeah so let's let's speak here what broadcom was for me was a more reasonable alternative to amd so that's the choice i made it wasn't um i don't make the distinction where i want to own broadcom or i want to own Nvidia. I look at Broadcom, I measure it against AMD. And I think to Stacey's point on all of this, look, if they miss tonight, I still think there's tremendous demand underneath the market from portfolio managers that have not participated

in Nvidia's rally. And I think that demand is going to be well entrenched. There's going to be a lot of buying on the downside. Okay. St, I'm gonna say thank you and let you go. I appreciate you being with us as we run up to what is a highly anticipated earnings report. I wanna continue the conversation with these guys and broaden it out a little bit more to MegaCap. And Joe, I'll just turn your attention quickly to Microsoft, which has been at a high, obviously.

It's given a little bit back today. You still got the chaos around OpenAI. No one truly knows how that's going to end up. But in terms of the mega cap universe, this report, I don't want to talk about NVIDIA specifically anymore, but its importance to this group, which has had an incredible run in its own right, is what? Well, I think tonight's going to exemplify that the spending on advancing the innovation from artificial intelligence to generative AI is there. I heard Dan Nathan say on the network that he believes that Microsoft will overtake Apple in terms of market cap and never look back. That's a comment I can't agree with anymore. He's spot on

with that. I think Microsoft, when we look at it and measure it relative to Apple in the coming years, there's going to be such a remarkable distinction where the premium will be paid for Microsoft. And clearly, the situation as it relates to open AI, I think now Microsoft wins in any scenario, whether Sam Altman stays at open AI or whether Sam Altman ultimately goes to Microsoft. They're clearly going to be the winner. It's not like Microsoft is trailing by such a dramatic amount in any way, shape, or form. Jason, how would you answer that question? What's at stake for this group, which has carried this market so far?

So, you know, I think the major point, and I think Joe just alluded to it, I think my focus is really on the CapEx that's being spent on AI. I think we're really at the early, early innings of this, and that's why I could see Continued Runway and NVIDIA and many of the other names in the space, because I think there's room for growth. There's obviously room for competition. So my focus, again, is this material spend and programmatically what's happening, what's going to actually happen for productivity once this artificial and generative AI is installed in different businesses and different sectors across the globe.

Yeah, I know. But look, I mean, let's be honest. I mean, do you feel like these stocks can keep up the pace? The moment there's a real whiff of a soft landing, like a legitimate one, we truly believe that the cuts are in the cards, et cetera, there may in fact be a rotation. There may in fact be a rotation to more cyclical areas of the market and a massive catch-up trade if the market wants to take that kind of a turn. A hundred percent, but I would flip it on the other side, Scott. When we think about a lot of the rule based money managers that have been managing throughout the year and throughout

generations, right, there are reasons why they cannot be overweight. Some of these names that have run so much, the quote unquote Magnificent Seven that we've all talked about throughout the year. You know, so that's why I think in the near term, the catch-up trade can still be in mega cap tech and some of these semiconductor stocks. Obviously, NVIDIA is the one that we've been talking about. So I think a lot of that can happen. I think for the overall health of the market going into next year, yes, the cyclicals have been beaten down and deserve a catch-up trade. But I think that happens next year. If you're rules-based, you look at the mega cap companies, and in the future, if you see a little bit of a breakdown,

deterioration in fundamentals and technicals, yes, you could be a seller. If you're discretionary, boy, you are hesitant to sell because you got burned in Q4 of 2022. You are going to really give these stocks the benefit of the doubt if it appears there's a slippage in the fundamentals. Speaking of discretionary, Amazon is an interesting story. I know, Joe, you don't own it. Jason, I can't remember. Do you own Amazon or not? I do.

I do. So let me ask you this, because there's these reports by our own David Faber that Bezos has been selling and selling large. And he may, in fact, still be doing that. And I'm looking at an email that Kramer has sent out to his investing club with the headline, don't buy the Amazon sell off yet. I don't think anyone wants to be on the other side of Jeff Bezos selling. So you're on the other side of him today because you're in the stock. How do you feel about this? Right. Right. So, I mean, I think I saw it as pulling back around 3%.

I think he was trading around 1.6 million shares of stock. You know, these obviously events happen throughout the season. You know, Bezos is going to do what he needs to do for his own personal life and his business life, right? So I wouldn't necessarily get ahead of it today. We don't know how much more selling there is there. But, you know, I believe in the long-term fundamentals, obviously, of Amazon. And what's been exciting to me is, you know, Jassy's at the helm now.

Obviously, AWS was his baby. But really, really important to me is how operational margins have really started to grow over the last couple of quarters. That's what's really exciting to me about Amazon this year and going forward. Is it interesting to you, Joe, that of the mega caps, the between Alphabet and Microsoft and Apple and Meta and Amazon and Bidia, that Alphabet's the only one in the green today. And I think that ties directly into what's happening around OpenAI and Microsoft is, you know, they try and figure out whether Sam Altman is going to be under their roof or if he's going to be back at OpenAI and what the financial implications and the relationship implications are going to be about all of that. And maybe the market trying to place a bet that Alphabet is raising its hand and saying, don't count us out just yet, that maybe this is better for all of us.

And stop talking just about Microsoft. Absolutely. I think that's spot on. I said yesterday I believe this is a situation where all can be winners. look at the intellectual team that was built in 2018 by Elon Musk, Peter Thiel, Reid Hoffman, and the OpenAI team, it was to slow down Alphabet's progress on AI. It was bringing over the chief scientist from Alphabet to OpenAI. So now, with the news of the weekend and the developments in the last couple of days, I think Alphabet is sitting back. They're breathing a sigh of relief to a degree. And I believe, to your point, that Alphabet looks at this and says, OK, come our way. We're going to gain a lot of intellectual capital as

well. Yeah. Let's see where this goes over the next handful of days on the other side of the holiday and all that. Speaking of, Jason, you have a great holiday. I'll see you soon. Thanks for being here. That's Jason. Thanks, Joe Terranova. My same sentiments to you. Let's get a check on some top stocks to watch now as we head into the close. Christina Partsenevelos is here with that. Hi, Christina. Hi. Well, let's start with VMware shares.

They're moving lower after Broadcom received all required regulatory approvals to acquire the cloud computing company. And these approvals did come from China. VMware is down almost 5% right now, as Broadcom does plan to close this $69 billion acquisition on Wednesday. There was a little bit of a holdup in China, but not anymore. Analysts at Oppenheimer are upgrading C3 AI to an outperform rating. The stock is bucking the major averages and moving higher, as analyst Timothy Horan noted. C3 AI remains, quote, one of the few pure plays helping customers drive new revenue sources. Shares are up almost 2 percent. Scott.

All right. I will talk to you in just a few. Christina Partsinevelos. We're just getting started here. Up next, Schwab's Lizanne Saunders is back breaking down her forecast for the markets. What looks to be happening in the new year? That's after this break. We're live from the New York Stock Exchange. You're watching Closing Bell on CNBC. All right, welcome back. Stocks, well, taking a little bit of a breather,

but it's been a big year, especially in tech. So what's in store for the new year? Let's bring in Lizanne Saunders now, Schwab's chief investment strategist. Good to see you. Welcome back. Thanks, Scott. Happy Thanksgiving. Yes. And the same to you. I'm sorry that I missed you as well at impact, but. Yeah, ditto. Do it next year. That nasty COVID thing. Yeah. Well, it's good to have you back. So thank you. Let me ask you this. I'm

looking at the notes and you say that it doesn't yet look like a durable new bull market. That says to me, you're not a believer in what's happening in the market right now in terms of this rally. And why not? Well, first of all, as we know, this year has been dominated by the Magnificent Seven. So if you look under the surface, you look at equal weight, you look at the S&P 493, you look at small caps. I actually think the leadership there or lack thereof is reflective of all the uncertainties we talk about with regard to Fed policy and where the economy is. It's just in cap weighted indexes, they're biased on the upside. But there was lots of analysis done by us and everybody else at the point where we hit the one year mark in the the move from the S. and P. low now fourteen months ago thirteen months ago. And the the absence of

participation by small caps by banks- and we breath statistics just said that there was still something lacking that doesn't mean that the. Indexes have to retest prior lows I think we can kind of muddle through but I think for a sustainable move. I think you need to see a broadening out. And I do think there is a lot of money itching to move into areas other than those mega cap names. And that may be where the opportunity sits next year. So the bottom line is that until you get those other stocks to do anything in a meaningful and sustainable, probably the best way of

saying it, a sustainable way. It's just not you can't say we're good. You just can't yet say we're good. You could just say that the market is incredibly concentrated and performance is driven by a very small handful of names that not that's not in and of itself a an imminent risk for the market that often happens with cap-weighted indexes, where you get performance bias up the cap spectrum. It's when you've got dramatic underperformance by the remainder of stocks. Now, it's not as bad as it was at the

beginning of June, when you had a record low percentage of the S&P at that time, outperforming the index itself over the prior three months, over the prior six months. That's improved a little bit. But I think broader participation, more soldiers on the front line, so to speak, as unpopular maybe as battlefront analogies are, I think would be a sign of a more sustainable rally, especially if financials and banks in particular can start to play some catch up. What's the likelihood that we get that? We probably have to get past some of the near term concerns with regard to some of the debt coming due as we roll into 2024, the constraints from a credit environment. I don't think we have anything resembling a 2008 scenario, but I think that's clearly one of the things holding banks back is even though we were not suffering from contagion associated with what happened back in March, though that was more idiosyncratic, but we still have in front of us the concerns within those same smaller and regional banks of deposit flight and exposure to kind of the weak links within commercial real estate. So we may need to have a little less opacity there to get a sense of whether what looks to be a pretty decent earnings trajectory for those stocks actually provides enough comfort to get more sustainable buying interest.

You know, it's interesting that the Fed minutes today, there were no surprises. There are a lot of the similar language that we've been consistently hearing. They did say, though, to your point, that financial conditions have tightened significantly. Not that that's new, but that it's on their radar. Now, they obviously feel, I would assume, and we think that they can control the fallout, so to speak, from the fact that those conditions have tightened significantly in their words. You're just not wholly convinced that there's still to be some level of fallout that's going to weigh on the market at some point.

I think it's more in terms of the commercial real estate exposure. I think it's more of a simmering commercial real estate exposure. I think it's more of a simmering problem over time as opposed to, you know, a Lehman-esque moment in time. If you just look at how widely spread it is, the fact that the exposure is in the traditional banking system, but also the shadow banking system and, you know, a graduation in terms of when the debt comes due. So I don't think it is a moment in time. when the debt comes due. So I don't think it is moment in time. But specific to the Fed, one thing we have to remember when looking at these particular Fed minutes

is that was a discussion that happened before the fairly benign inflation report. I think since then, it very much cements the idea that the Fed has done in this cycle. I think what is still yet to be decided is whether the market's expectation of cuts starting as soon as May has validity. And if you extrapolate the current combination of circumstances, I'm not suggesting that's what's going to happen. But if you do, inflation not yet at the Fed's target, employment having had some cracks but still hanging in there, the economy doing OK. To me, that that doesn't justify rate cuts, even though if inflation continues to come down, it means real rates go up even without the Fed doing anything.

I think that they at least subtly pushed back against that. If you if you read into maybe the backstory of the minutes. So if you believe that the Fed is going to cut, let's just for argument's sake say May, the market's placing a bet that it's going to be around that period of time. Would you feel comfortable then buying small cap stocks here? I mean, last week, obviously, the Russell was up 5%. In the last month, now much of it done last week, obviously, the Russell was up 5 percent in the last month. Now, much of it done last week. We're up about 7 percent. What's the moment that you would say, you know what? OK, they're going to cut. And that that is an area that I need to be in now. All right. Well, if they cut, it's probably because you've had more deterioration in the

economy broadly, in the labor market more specifically, which could be the trigger. And by the way, I think if and when that happens, whether or not it's ultimately declared a recession, I'm not sure that matters as much. But near-term weakness in the economy, I think, is the better scenario from the perspective of the Fed for the equity market. It probably means a further re-rating down in forward estimates. But I think what the kind of trigger is to your question is a sense that the forward estimates, the trajectory turning back higher are valid because the swing factor in small caps is much larger than the swing factor in large caps. The rub is whether we can rely on those 2024, 2025 estimates. I'm not sure

that they really reflect reality at this point. That said, small caps, you can't look at monolithically. Russell 2000 has, I don't know, about 1,850 stocks in it. 30% of that index is companies. I think about 40% are not profitable. So if you want to use an index to start as a base to look for opportunities down the cap spectrum, start with the S&P 600 because it's got a profitability filter. So I think you still want to stay up in quality, even if you're going down, going down in cap. But what's what's also inherent in the point that you're making is that you don't subscribe to the belief that the Fed will cut because it can, not because it has to. They can cut because inflation just has trended to the point where they feel comfortable doing that, cutting rates. But if you have inflation still above their target, the labor market not deteriorating and the economy still hanging in there, I think they would view that is too much of a risk to start cutting not to mention potential credibility issues so I think you I actually think the point at which the Fed

starts to telegraph or actually initiates rate cutting I think where they're going to get that message from is probably the other mandate aside from inflation, meaning the labor market. Clearly, in the hiking cycle, they were focused on and driven by the half of their mandate that is the inflation. I think what's going to what they'll key off of more in terms of when to cut is probably going to be the labor market coming into clearer focus where they have an eye on both of the mandates as opposed to just inflation. I got you. Great having you, as always. And happy Thanksgiving to you and your family. You too. Thank you.

All right. That's Lizanne Saunders joining us here from Schwab. Up next, five-star stock picks, capital wealth planning. Kevin Simpson is back, always making some big moves in his portfolio. So he'll tell us what he's doing now. We are back on Closing Bell after this. All right, welcome back. S&P is on pace now to snap its five-day win streak, still on track, though, for its best month in more than a year. Our next guest sees more potential upside into the end of the year, making some big moves in his portfolio as well. Kevin Simpson of Capital Wealth Planning is here with us again at Post 9. Welcome back. First and foremost, Apple, it got called away. You sold it. I mean, you sold it, but it got called away.

You know, it seems like we talk about it every month or two for the past year and year and a half. And finally, as a covered call writer, we got the Apple position called away. But one thing I want to point out, Scott, is that this is actually the ninth time in the past 12 years that I've had Apple called out of the portfolio completely. In the eight previous instances, six of those times, we were able to get back in cheaper. So even though it's not a linear uptrend at this point, I think it's not the worst exit position. We bought in $13 of premium over the past two months. So effectively, we're out $185, $7 and a half. Any pullbacks will

be back in the stock. I mean, the stock was, you know, 167, 169, not that long ago. Yeah, like two months. And here we are, you know, it was at 191 yesterday. That's to your point about, you know, when this thing starts running, it's hard to have a covered call. Yeah, yeah. Well, that's the risk of the covered call seller. Sometimes you don't make all the upside. Yeah. Yeah. Well, that's that's the risk of the covered call seller. Sometimes you don't make all the upside. Yeah. We traded it pretty well. I think at twenty nine times earnings, there's still a little bit of a stretch. They they've had eight quarters where they haven't had accelerated growth. So there is potential weakness there. I know there's the Berkshire put the Apple put the S&P put. But I'll bet we get a chance to get back into it again. You sold a covered call against Microsoft yesterday with the news that came off. You know what? Speaking of news, I've got news out of D.C.

There's a major enforcement action, by the way, today in the cryptocurrency space. Want to go to Eamon Javers right now in Washington with the very latest. Eamon. Scott, that's right. Take a live look now here at the Department of Justice, where you see the attorney general, Merrick Garland, is now standing next to Treasury Secretary Janet Yellen. The picture you are seeing here is unprecedented. We have not seen this Attorney General and this Secretary of the Treasury do a joint press conference before today. And the reason is because of the scale of the alleged criminality that they are announcing here in this deal with Binance. Binance, the largest cryptocurrency exchange in the world,

the DOJ says has pleaded guilty today and agreed to pay over $4 billion to resolve allegations related to violations of the Bank Secrecy Act, failure to register as a money transmitting business, and violations of the International Emergency Economic Powers Act, those in relation to U.S. sanctions. They're also saying here that as an individual, Binance's founder and chief executive, Chen Ping-Zhao, a Canadian national, also pleaded guilty to failing to maintain an effective anti-money laundering program, violation of the Bank Secrecy Act, and he has now resigned as the CEO of Binance. A couple of other details here. Merrick Garland says that using new technology to break the law does not make you a disruptor it makes you a criminal also got some information here scott from the department of treasury this is the largest enforcement action in the history

of the treasury department and you get a sense of why that is when you read the specifics of what the treasury is laying out here in terms of alleged criminal activity that took place on finance that finance did not inform the u.. government about over a period of years. They're saying that Binance never once filed a suspicious activity report with the U.S. Treasury. That's something that's pretty standard in the financial industry not being done in the crypto space. They say as a result, terrorist financing took place on the Binance exchange, including

for groups like Al- Qaeda, ISIS, Hamas and others. They're saying that ransomware was paid for on the Binance exchange. They're saying that child sexual abuse materials were paid for on the Binance exchange. Binance never reported transactions with websites devoted to selling child sexual abuse materials. They're also saying that all sorts of illegal activity, including drug purchases, were transferred on the exchange through darknet markets, scams, and other illicit activity. All of that is the reason why the Treasury Department is now imposing monitoring on Binance, which will get active reports inside the firm

to understand what's going on in real time. Monitoring has never been done before in the cryptocurrency space. We have seen that in other criminal allegations in corporate America. This will be a first for the crypto space. And there also is an important detail here, Scott, which they're calling the SAR look back. SAR is, again, the suspicious activity report. The Treasury Department is going to get a look back at suspicious activity that took place historically on Binance. So they're going to get intelligence on all sorts of alleged criminal and terrorist transactions that took place on that exchange going back for years. It will be

a treasure trove for U.S. investigators, U.S. intelligence, U.S. law enforcement and the rest as they pour through all those transactions and try to make connections between all those various groups and follow the money going back years here, Scott. So a real historic announcement that we're witnessing from Merrick Garland and Janet Yellen right now. Appreciate that very much. Eamon Javers live in Washington, D.C. for us. Also want to bring in Kate Rooney, who, as you know, follows the crypto space. Kate, I want you to talk to me about the broader fallout here, as well as the tremendous fall from grace for not only CZ, but just this space in general. Obviously, coming on the heels of FTX and Sam Bankman-Fried, the trial that you covered just blocks from where I'm sitting right now. Yeah, Scott, this is enormous. CZ really was a global

leader in this space. I do want to read you a statement. We just got a tweet or an X from CZ here. He says he stepped down as CEO of Binance. Admittedly, it was not easy to let go emotionally. He says it was the right thing to do. He says here, I made mistakes and I must take responsibility. It's best for the community, Binance and myself. He says that Richard Tang, who is the global head of regional markets, he has been named officially as the new CEO of Binance today. He says here he's a qualified leader, talks about his experience in financial services, and that he was the CEO of financial services regulatory authority in Abu Dhabi. So familiar with regulators here. He says,

as a shareholder and former CEO, I will remain available to the team to consult as needed, consistent with the framework set out in our U.S. agency resolutions. He says, what's next? He's going to take a break. He says he has not had a single day off, phone off break for the last six and a half years. Long statement here, Scott. But he says at the end, funds are safe, which is basically funds are safe. But again, a stunning fall from grace for CZ, the head of the largest crypto exchange, the founder, former head of Binance.

But it comes after you had Sam Bankman freed, admitting, excuse me, being found guilty to seven criminal counts. You had the Winklevoss twins. You had another crypto exchange, Kraken, getting sued by the SEC just yesterday. So this is the latest salvo by major U.S. regulator going after this industry. I will say the reaction I'm getting from investors, those in the crypto space, is actually pretty optimistic. They're saying this was the last shoe to drop. This was the big uncertainty hanging over these markets. And that if it can survive something like this happening, CZ getting taken out as the CEO of this company, that there's a lot of optimism that maybe this is now priced in. They know what the price tag is in terms of the resolution, the plea deal here. Binance is not shutting down. It now

makes up about 30 percent of global volume. It was 80 percent at one point. But that worst case scenario of Binance needing to shut down is not happening. So there's a little bit of optimism here, despite this being objectively negative news. So interesting take there from some market participants, Scott. Yeah, appreciate that very much. Kate Rooney, thank you. Kate Rooney, Eamon Javers, both reporting on this development out of Washington, the implications for the broader cryptocurrency industry. So let me turn back to you, Kevin Simpson. Let's get back on Microsoft, because that's what we were talking about when I had to go to Washington.

So, again, you sold a covered call against the Microsoft position. You bought Broadcom, which I was just talking about top of the show, because we're waiting on NVIDIA earnings. Tell me about this. Yeah, well, we knew the Apple position was going to get called away, so we wanted to maintain exposure into the tech space. Broadcom still, for our perspective, is a company that qualifies. It's got a good dividend, good dividend growth. We know everything's going to hang on NVIDIA's earnings today, but it's not a candidate for our portfolio. Today, we did get news that the VMware deal was approved. That's a good

thing. I think there was some sell the news on both stocks today, but it's going to help them a lot on recurring software revenue. The whole is better than the combined parts are very, very profitable moving forward. You bought more CME Group? CME Group, unlike Apple, that didn't have revenue growth for eight quarters,

is double digit growth for nine quarters on the top line, 9% on the bottom line. And they might pay a special dividend. Last year at the end of the year, around Christmas, they gave a $4.50 special dividend. They pay about a 2% normal yield. If they do it again, there's no guarantee that they will, but it'll be like a 4% yield on a great stock,

incredible growth. You want to talk about what you think the year ahead is going to mean for dividend-paying stocks? Yeah, hopefully better for 2024 than it was for 2023. It's a terrible year, right? I mean, dividend growers did OK, but dividend payers had a terrible year. Well, I'm a dividend growth strategy, so it's not about yield to me. And we didn't have that great a year in our universe. I mean, again, it's these megatech AI stocks. Thank goodness we could own Microsoft. Thank goodness we had Apple helped us, you know, incredibly. In context, though, you had a great last year in a horrible market year because your strategy worked very well.

This was such an idiosyncratic, if you will, market year that it throws your types of strategy kind of out the window. My whole point going into 2022 is like if we don't lose any money while they're raising interest rates, that's our job. You know, we put a belt on suspenders. they threw 550 basis points of yield into the market pretty much everything maybe with the exception of nvidia is probably close to where it was at the end of 2021. now that we're done with rate hikes and i feel pretty comfortable saying that i don't think higher for longer's to change but but this gives us an opportunity for the second half of next year into 25 and 26 where you see rate cuts and a broader expansion of the market. Still want to own those big names, even though we can't.

People always pay up for growth. But dividend stocks should have their say in 2024. All right. We shall see. Thanks for being here and happy Thanksgiving. That's Kevin Simpson, Capital Wealth Planning. Up next, we are tracking the biggest movers as we head into the close. Christina Partsenevalos is standing by with that.

Hey, Christina. Well, there may be some new discount travel coming your way with Allegiant, but options traders are betting on some volatility. And we're going to get some more from insurance companies. Details next. We're about 10 away from the close. Let's get back to Christina now with the stock she's watching. Christina.

Well, let's start with insurance stocks right now, performing today with the spider insurance ETF ticker KIE, hitting an all-time high in intraday trading. You've got that led by AIG, Everest Group, and Progressive. They're all leading the way with all three stocks touching record highs as well. But there's no major news catalyst for this ETF, aside from AIG acquiring Hughes Insurance and Argus Research Analysts upgrading the stock to buy. Switching gears, Allegiant

Travel is shedding about, let's see, over 3% right now after increased activity in the options market. The December 15th $170 call has pretty much high implied volatility today, which means investors are expecting a big stock move in the underlying stock in any direction. So the travel company separately also recently announced its plans for 12 new domestic discount routes. Discounts means lower margins. Could be a reason too.

Stock down 3%. Scott? All right. We will see you in overtime as we have those NVIDIA earnings. Christina Partsenevelos, thank you so much. We are just minutes away from that. We'll give you a rundown of what to expect from that report when we take you inside the

Market Zone. Are we now in the closing bell Market Zone? CNBC Senior Markets Commentator Mike Santoli here to break down the crucial moments of this trading day. Courtney Reagan on the big moves in retail today. And of course, Christina Parts and Neville is back to share what to watch for when NVIDIA reports in overtime. What are you thinking of today? You know, it's all about what's going to happen in, you know, a little more than seven minutes. Sometimes the market does just idle when it knows something big to potentially react to is right ahead of it. Nothing to disturb the general view of maybe we've seen peak yields, peak Fed, peak inflation, peak oil, peak dollar, all that stuff. Those all remove the reasons to get negative and to sell.

We had three months of selling worried about whether the economy could handle what was going on with rates. And now it's about is there going to be any fresh energy on the buy side beyond just trying to get exposure for a year-end rally. That's what remains to be seen as we get up into, you know, a little bit of overbought, a little bit of resistance. Today's type of action, if it were to persist, is actually the ideal way to consolidate a nice 10 percent rally. Maybe a little much to ask for that it be this quiet, though. All right, Courtney Reagan, a big day for the haves and the have-nots in retail, right, in terms of how the stocks have reacted. Absolutely, Scott. I mean, today's earnings report is really messier than what we heard last week.

The stock moves are kind of reflecting that. So American Eagle shares are down like 16%. And to me, this move doesn't match the report. The apparel retailer beat on earnings and revenues, gave a stronger revenue forecast for the holiday season than the street was looking for. Its operating income forecast mostly below consensus, but I don't think it justifies this move. You've got Kohl's down 10% or so. Look, shares likely getting additional pressure from just the broader department store worries we have about the space and have had. Kohl's beat earnings, missed revenues and comps, and issued a mixed forecast. Burlington up 20-some percent on its 2024 guidance. It's maintaining its previous holiday quarter guidance, but it did say

November is off to a solid start, so more hopeful than what we've heard from others. Lows down 3%. That's kind of a conservative move, in my view, after missing on revenues, comps, and lowering its forecast. Abercrombie up 2.5%. This also, I think, muted, considering I would consider Abercrombie the strongest report again this quarter across retail, and I would say that for the third straight quarter, at least in my report card. They really kind of hit it out of the park and issued some stronger guidance. Scott? Yeah.

Thank you, Courtney Reagan. Mike, it's hard to cover this space. Yeah. It's hard to cover the space because you can report good, the stock can go down, you can report, huh, and the stock goes up. These are pretty small market cap companies with a huge swing based on, you know, the final month of a quarter. And that's how the comps are going to break one way or the other. So, yes, it's a very tough group to trade. Some of them have a lot of short interest. And they're seen as, you know, it's sort of a zero sum game. Right. We know that not every mall store is going to be able to get a lot of traffic. So it is trading some customers back and forth.

But I think up off the lows and the Best Buy really not selling off much on some sobering commentary is not the worst thing. Although that's an ugly two-year chart for Best Buy. Yeah, Burlington, of course, the big winner. We showed you at the very top of the program. All right, Christina Partsenevelos, here we go. Just moments away. Here we go. Yeah, well, the stock did close at an all-time high yesterday. Investors clearly have high hopes. There's a consensus right now of 170% quarterly revenue growth this quarter

versus last year. That translates to $16.2 billion in Q3 revenue estimates, driven, of course, by data center revenues. That should come in at about $13 billion. BuySide is expecting a little bit more than that. And this optimism comes despite updated export restrictions and tight GPU supply. But after a 241% year-to-date stock growth, management really is going to have to convince investors they have not hit this AI peak, and there's incremental revenue to be had. Investors will want to see what demand will be once supply constraints have subsided. For example, Microsoft's CEO, CTO I should say,

said in September that the supply of NVIDIA's AI chips was actually improving, which could be a good thing for supply. The other overhang is China. NVIDIA may be making workaround chips, but is that enough to offset the export impact given China contributes 20% of data center revenue? Lastly, you got some gaming weakness. AMD fell 5% quarter per quarter in September.

They're expecting a decline in the December quarter. What does that mean for NVIDIA? Expect stock reaction, though, given the average one-day post-NVIDIA earnings move over the last 20 quarters is 6% in either direction. And movement from the Magn the magnificent 7 as well, given NVIDIA AI demand commentary, will be a tailwind for the group. Scott. All right, we can't wait.

Christina, thank you for setting us up for that. So I turn it back to Mike Santola. We've got about 90 seconds left in the show. I mean, Stacey Raskin, very top of the broadcast, said there's still a lot of material upside ahead. Don't think they can't continue to raise. Yeah, that is. And that's in the numbers or getting into the numbers. The sustainability question that Stacey also highlighted, I think, is the whole game, really, because if you look,

I was just looking at this. OK, it's under 30 times next year's earnings. Everyone talks about how it's cheaper because earnings estimates are up so much. If you look out three years, right, so this is 2026, $25 a share is the estimate right now. So it's only 20 times earnings anticipated in that year. That implies $60 billion of net income. Sales this year is $55 billion estimate. So it just shows you they're supposed to earn on the bottom line in three years what they're taking in on the top line this year. So that's a massive trajectory. Who knows if you can count on it?

That's why it matters so much, exactly what the angle of ascent is in terms of sales and how long that demand pipeline is. Mike, that's what this whole AI game's been about, is making a massive, massive bet on the future and hoping that these companies are going to realize what we're bidding them up to believe they can. Yeah, and how long the build-out takes and all the rest of it. Yep. All right, good stuff. Good Thanksgiving to you.

There's the bell. All right, now it's going to go out to Modest Lost, really across the board, modestly in the red. I'll send it in to OT now with Morgan and John.