Closing Bell - Closing Bell: Rally Getting Overcooked? 11/22/23

Episode Date: November 22, 2023

After gaining more than 10% in under four weeks is this stock market getting overcooked? Or can the market continue to feed off soft-landing hopes and positive seasonal patterns into December? Bryn Takington of Requisite Capital Management gives her expert forecast. Plus, oil was under pressure today after OPEC+ postponed its policy meeting. We break down the details and what is at stake for the energy space. And homebuilders on the move on the back of key mortgage data. Homebuilder analyst Ken Zener from Seaport gives his take. 

All right. Thank you, Kelly. Welcome to Closing Bell. I'm Mike Santoli in for Scott Wapner. This make or break hour begins with the celebration already underway on Wall Street. The S&P 500 climbing to within one percent of its 2023 high ahead of the Thanksgiving holiday before just a mild little pullback here. The Nasdaq 100 outperforming on the day despite a slight dip in Nvidia shares after that company's stellar earnings report after the close yesterday. The 10-year Treasury yield steady, just above a two-month low. We got a hot inflation expectations number at the University of Michigan Consumer Survey, but bond market taking it more or less in stride as oil prices sink on more supply concerns.

Which brings us to our talk of the tape. After gaining more than 10 percent in under four weeks, is this stock market rally getting overcooked or can the market continue to feed off soft landing hopes and positive seasonal patterns into December? Let's ask Bryn Talkington, managing partner of Requisite Capital Management and a CNBC contributor. Bryn, it's great to have you here. Market seems in a pretty comfortable mode here. I guess the question is, are we getting a little bit overbought? Is something going to come along to disturb things right here?

We got through earnings season. It seems like GDP is tracking okay in the fourth quarter. And, of course, we have the holiday week trading, which has an upward bias. Well, Mike, I mean, we sure have had a big Santa Claus rally well before Santa Claus is even coming down the chimney. But I think that the market will continue to grind higher. I think that you have not only animal spirits, but you have the seasonality that's in full effect. I think the mutual fund selling at the end of the quarter was really extreme. And since then, since that November 1st, we've been off to the races. And so I think the technology will continue to lead going into the eight-year end, but we'll grind higher. I think the majority of the returns for the year have already been had. Yeah, a grind is certainly,

you know, you take it after what happened from August through October, I suppose. Everyone seems to be very eager to want to see the non-technology stocks contribute. And they did come off their lows. We have seen a little bit of a back from the brink action in cyclicals and banks and things like that. Is that important or what is it just nice to have as part of a rally? Well, I think longer term, you want to see that, right or what is it just nice to have as part of a rally? Well, I think longer term, you want to see that, right? Because you don't want to have seven stocks holding up the proverbial other 493. And by the way, there's lots of other names that have done exceptionally well besides the other seven. But I will say, you know, Goldman had a really good report out about looking forward. And if you look at those magnificent seven stocks from 23 to 25, they're expecting sales growth of 11 percent versus 3 percent for the other 493 and margins to come in at 22 versus 10.

And so I really think that we've got a really good bounce off the bottom with these, especially the small cap names. But I think right now, while we still don't know if we're actually going to get rate cuts next year, which I think it's that I disagree with the market. I think it's going to be much later in the year than the market has priced in. I think right now, especially the small caps, those should be a trade, not a strategic allocation to go into at this moment. Yeah, it's a good reminder that when it comes to the dominance of the very largest Nasdaq stocks, for one thing, they're mostly just making a round trip from two years ago. And for another, it's really just an outgrowth of the so-called quality trade, right? The predictable earnings, the better balance sheets, the clear growth outlooks.

And, you know, we'll see how long that can last and how expensive those stocks can get on that basis. But in terms of the Fed, do you think that maybe the market is over anticipating that, at least on paper, because you think the economy and inflation are going to be stickier, more resilient, or just because, you know, the Fed wants to to wait as long as possible? I mean, I definitely take my cues from the market and look to be pragmatic, not dogmatic. And so, I mean, the market is telling us the Fed is done. That being said, the Fed being done at five and a quarter Fed funds, higher for longer is not priced in. To me, what's priced in right now is, as you're seeing the animal spirits with a lot of the meme names, is that we're going to get cuts sooner than later.

And that's what I just don't see that. I don't think the Fed's even had that narrative. If you look at core CPI, that's not telling you that we're going to have rate cuts on the horizon. And so unless some event, some exogenous event occurs and being that would be exogenous, we can't predict it. I think that the market is a little bit ahead of itself in terms of the Fed cutting rates. But higher for longer definitely has an impact, especially for regional banks, commercial real estate and some of the smaller segments of the market, which to me kind of gives legs to once again going back into tech, which really are somewhat immune to a higher for longer environment. Yeah, that's definitely the market's determination that they're immune to some degree from rates, but also from, you know, various types of disruption going on in other parts of the

economy. And on that point, stick with us, Bren. We're going to talk a little bit more about NVIDIA shares under pressure despite strong results. Christina Partsenevel is here with a breakdown of that report. Hey, Christina. Loss of China revenue still remains a concern, even though management assured investors they could find growth from other regions. That's because U.S. export controls are blocking sales to the country and would, quote, significantly impact Q4 revenues. And that's also limiting its guidance. The number is at 20 billion for this upcoming quarter, but that number could have been higher, according to management. The CFO also admitting they don't know the impact of the controls over the long term. So it's a big overhang, which also has some investors

questioning how can NVIDIA keep up the pace of these beats and outlook raises without China as a major customer? There are doubts over also the sustainability of demand once this major backlog gets worked down. Think inventory digestion, especially if some companies are double ordering. But when you take a step back, you look at the stock. The stock is only, what, 3% off its most recent high of $505. Mike, I know you've talked about this before. It's rare to see a stock hit an all-time high, but also have its forward PE come down. Right now, it's trading at, what, 32 times, with the bulls arguing that's cheap, especially when you compare it to its five-year average. Plus NVIDIA is ramping up new products, which would maybe create a new replacement cycle specifically within GPUs. They're expanding in software

networking with management also noting increased purchase commitments. And that's positive visibility into the future, which kind of answers that demand question. But the sell-off continues today. China could be the end of the week. There's a few reasons. Demand concerns, AI peak, but still not that major given options market was pricing in a 6% move. Exactly. If there's a surprise, Christina, it might be that it is a relatively modest move altogether. And as you mentioned, the stock just getting back to where it was for the first time less than two weeks ago, I think. Christina, appreciate that. Bryn,

you own NVIDIA. I'm guessing you feel as if the long-term story is more or less confirmed. I think the big question here, though, is exactly what trajectory this kind of breakneck growth can continue on going out the next couple of years. Sure. And I think that's also why you see the stock sell off a bit today. I mean, obviously, it's up over 240 percent year to date. But if you think about this, Mike, I mean, this continues to be the company that is fully monetizing AI. I mean, they did 18 billion this quarter. That's more than they did all of 2021. And if I compare it to AMD, which is just an awesome company as well, though, AMD did 5.8 billion. So if people are worried about the growth of AI chips or the whole platform of AI, it's much more than chips. What does that mean for the other

companies that haven't even ramped up yet? And so I think that it's just clear that NVIDIA remains in pole position. And so, I mean, from CUDA, the beginning of the process that helps the developers make the GPUs more efficient to the GPUs, to their what's called InfiniBand, which is like Ethernet on steroids. NVIDIA is just controlling from A to Z on this whole AI. And I do agree. I mean, Jensen said multiple times, this is a decade long change in data centers and going from CPUs to GPUs, and it's a trillion dollar spend. So it's all not going to happen in one year. And so I think people should be patient if you don't own it, you know, take the opportunity to

dollar cost average, but they're just dominating just across the whole sector. And they're just, they're playing chess while everyone else is playing checkers. Yeah, it's it's it's without a doubt the numbers are stark and you can't deny the magnitude of this growth. I almost wonder, though, if at some point it works against the company just because the base effect gets so large. I mentioned yesterday, if you look at the the earnings estimates a couple of years out, It looks like 60 billion dollars in net income. Sales this year are tracking for under 60 billion. So like they're kind of going to eat a huge chunk of whatever the overall spend is supposed to be. You're spot on. And if you actually look at the history of the of NVIDIA stock over the last 20 years,

there's been about 10 years where it's been up well over 100 percent And there's been multiple years where it's down 50% plus. And so I think investors need to understand there's a lot priced into this name. And to me, as I think through it, I sell calls against it at this level, because I do think 500 has been that ceiling now for two quarters. And so I think what's going to make it push through that 500. So I think selling 550 calls, you can bring in about $20 of premium helps you dance around this level. But ultimately, as an investor, you have to say, have they leveled up in earnings and then grow from this level? Or is this going to be an epiphany and they level back down? Right. I think that they've leveled up and they grow slower. But this is a level up. Yeah. Also dancing around one point two trillion dollar market cap.

Let's brought it out here. We'll bring in Sonia Meskin of BNY Mellon Investment Management and Ayako Yoshioka of Wealth Enhancement Group. Welcome to you both. Sonia, you know, the market seems again, every time we have a little bit of relief in the market, it seems to be the soft landing is back on. The Fed is done. We have peak yields, peak Fed, peak inflation, maybe peak oil. All those things seem pretty friendly to markets. Is it plausible? I think it is. I think it is. If you think about where the peak inflation was since COVID, it was considered almost 10 percent, considerably higher than right now. And we've disinflated thus far without unemployment coming up much at all. We're still under 4 percent unemployment. I don't think a couple of years ago, certainly a year ago, this was actually quite conceivable for many investors. The fact that it's happened, I think, is quite encouraging for the soft landing story. That said, we do expect inflation to prove a bit sticky here. So we do expect it

higher for longer next year from the Fed. OK, so if inflation is sticky, we're in the 3 percent area, I suppose, or core a little bit higher than that. The market, you think, is getting ahead of itself in terms of what it thinks on rates next year for rate cuts? I think a little bit. Yeah. But given the trajectory thus far, I don't think it's unexpected that the market is getting a little ahead of itself. Sure. Aya, how does this play into what you're expecting out of the markets next year? I mean, obviously on the headline S&P level, we're talking about a 20% total return for this year. Not many people thought we could do that.

On the other hand, we're below the all-time highs. So how does the macro environment set us up for 2024? Thanks, Mike. You know, in terms of, you know, what's going on for 2024, it's really going to be determined by all of the macroeconomic data as it comes in. The Fed is dependent upon what data comes in, where those inflation levels are. I mean, we just saw it today in terms of the inflation expectation levels being a little bit higher than everybody wants them to be. The University of Michigan numbers keep coming in a little bit hotter. So I think the Fed is going to be reactive. And so then the market is then going to be reactive to how the Fed

believes the data is coming out. And do you think, Aya, that that means that the current market profile of, you know, the resilient growth stocks, the secular growth stories can work, everything else is kind of a show me story? Or have we already kind of discounted the cyclical groups enough and maybe we can find some way to them participating. Sure. I mean, I think that in either scenario, whether we are heading into a recession, I think those are the times in which you want to pick up some of those cyclical stocks because they get hit the most and they can recover the most. But if we are truly in a situation in which we have a soft landing,

then the pullback in the economy isn't going to be as bad. And the valuation discounts of a lot of these cyclical names is probably too much. Sonia, you know, we say the Fed hasn't said it's going to cut rates. It's not going to say it's going to cut rates. But if you look at how transparent the Fed has been to the extent they're able to, they still have said they feel like they have to keep policy restrictive to run the economy below trend for a while. We haven't really been running below trend. Employment hasn't really moved that much. I see some loosening of the labor market to some degree. But how long can we kind of keep up with that, that sort of we're good for now, but we expect a further slowdown down the road?

I think that's a question the Fed is asking itself. I don't think they've expected this if you look at their projections, even from this summer. And I think that they've been quite encouraged by what's been happening in employment. So some of the secondary markers have been slowing, but unemployment hasn't, again, come up all that much. I think a bit hinges on participation rate next year. We really want the participation rate to keep expanding or at least not contract because that helps with wage growth and it helps, therefore, to keep Fed on hold and comfortably on hold. But the Fed did come out and say they were asked about when they're going to

lower rates. And they've also given verbal guidance. I think Chair Powell has given verbal guidance that not until the second half of next year. Yeah. That being said, they don't even expect to get to their inflation target until a couple of years from now. It would seem that they have time to allow the data to come in their direction.

Absolutely. And I think part of the reason the market is pricing sooner cuts is because the market may believe the data is going to help the Fed more quickly than the Fed itself anticipates. Yeah, I mean, Bryn, you alluded earlier to that idea that whenever the market starts to feel better about things, you sometimes do see some of the speculative stuff run a little bit. That's happened to a degree recently. And maybe that reflects people expecting rate cuts.

On the other hand, if inflation is down and trending and below 4 percent, the stock market usually does OK with that. And if long term yields have seen their highs, at least for the foreseeable, maybe the stocks can essentially find a way around it. Yeah, sure. I mean, I think going into the beginning of this year, I think I know myself included felt the probability of a soft landing was very, very small. I think you definitely have to have a bigger spectrum to say, hey, that may be the base case. But you got to put like an asterisk around that soft landing and the unintended consequences, because never in the history have we had this much fiscal stimulus pre-recession and not been in a war in the U.S. And so what are the unintended consequences of

that? And I know yields are down, which is great. But to me, I still think these Treasury auctions with how much fiscal debt we have are going to be front and center, especially in election year. And so you can't really say, hey, the Fed did such a great job. We had all this fiscal stimulus that no one talks about. Right. Now, there's no doubt that there's going to be a bit of suspense around the Treasury auctions for a little while, though maybe the big unintended consequence was, you know, 13 percent inflation for a little while. But I would be curious to know the conversations at year end that you are having with your clients, because one of the things you want to look out for after the market has had a nice run is,

are retail investors getting overexcited? Are their expectations becoming unrealistic, or are they still looking to play defense? Sure. I think it's a mix. I mean, from the short term, definitely a little bit of defense, just because the run up has been so great this year. I mean, there's tax loss harvesting opportunities that retail investors are definitely taking advantage of, you know, and just given the uncertainty in terms of the

outlook for 2024, people are being a little bit cautious. But at the same time, I think that's why a lot of the quality names have been where people have been hiding. Yeah, for sure. Doesn't hurt to have a little bit of a wall of worry still remaining in the market as well. Aya, Sonia, thanks so much. Bryn, we will see you again in a little bit in the market zone. We're just getting started here. Up next, trouble in the charts. Why one technician is flagging some weakness for stocks as we look ahead to 2024.

He will make his case and break down where he's seeing opportunity right now. We're live from the New York Stock Exchange. You're watching Closing Bell on CNBC. Welcome back to Closing Bell. The S&P 500 up about four-tenths of a percent today, looking to lock in its longest weekly win streak since June. And while our next guest remains positive in the near term, he says the charts could be pointing to potential longer-term trouble for stocks.

Let's bring in John Colivo's head of technical strategy at Macro Risk Advisors. John, it's good to have you here. Certainly in following your work, I know you were giving credit to the market for this recent reversal hire just because it was broad and you had a little bit of a sense of urgency in some of the technical readings off of that low, but maybe not getting escape velocity just yet. What still gives you pause? Yeah. So thanks, Mike. Thanks for having me on. Happy Thanksgiving. So what's giving me pause? Well, where do I begin? I would say, for starters, it's still the lack of breadth that's going on. The Magnific seven it's quite magnificent there's really nothing wrong with those particular stocks it's just the market

of stocks themselves are troublesome so what i've been telling clients is this it's okay to be bullish the s&p but it's not okay to be bullish the market of stocks so number one it's breadth number two yeah the macro has gotten a little bit better over the last couple of weeks, but it's really hard to say with high degree of confidence that the trend of interest rates has fully reversed or that the dollar stock has vastly lagged the S&P 500 market cap weighted. It's clear to everyone. It's been kind of remarked upon. People are unnerved by it to some degree. I do think it makes sense, though, to get at exactly why you feel that it is an issue. I mean, about a third of the S&P 500 stocks are up 10 percent plus this year. That's not a lot, but that's not seven. And I just wonder what it is about relatively weak breath that should be worrisome. Sure. OK, I think it really goes into animal spirits. Right. So when I talk to clients, unfortunately, they have to own more than seven stocks. Right.

So when I sit down with them, I go through their portfolios. A lot of their stocks, a good chunk of their portfolios look like the Russell 2000 or the RSP. It doesn't really give them a lot of conviction to go further out on the risk curve. So you need to see those parts of the market perk up, break out, and turn into uptrends for animal spirits to kick in. And that way, we can have a strong bull market of everything. Right now, it's just a bull market of just a few. Now, can the S&P continue to push up higher? Like I said earlier, sure. The Magnificent Seven's fine. They're up a lot, sure. But there's no real chart damage there.

So the S&P 500, if it were to break out above the highs of 22, we could be looking as high as 52.25, if not 5,500 at some point next year. So I think more of the same is basically what I think is going to happen for next year. Interesting. And so as we monitor how things are handled, I mean, the market in the short term looks kind of stretched already. You're probably going to get some kind of a pullback. How would you be grading things on that pullback? Right. Great question. And I think that's really what we need to observe here on the market is how the next pullback comes. We already know there's demand at lower prices. We saw those in those breath thrusts, but we haven't. This has been uncorrected. So what are we looking for?

One, we just want to have a corrective decline, something that doesn't have negative breath, low volumes on the downside. Don't really want to see the S&P break down underneath 4,200 in any sort of meaningful way. If that breaks 4,100 in particular, then guess what? This two-year range or bear market, because it kind of still is until you make a higher high, it still is a bear market, can work lower, maybe as low as 3,800, if not worse. All right. Yeah, that would get us back to the lows, I guess, back from March in the regional bank crisis, if not lower. John, thanks a lot for the time today. Appreciate it. Thank you for having me.

Have a great holiday. All right, up next, crude crushed oil under pressure today. We'll tell you what's behind that sharp leg lower and what is at stake for the energy space ahead. Closing bell. We'll be right back. Oil under pressure as OPEC delays its policy meeting. Brian Sullivan here with the details. Brian, what do we make of it? Well, the market came back, Mike.

I mean, oil at one point was down as much as 4% before making that comeback. Still ended lower, but quite a day. I mean, kind of on the back of an OPEC shocker. As you noted, OPEC this morning delayed its in-person meeting. That meeting scheduled for this Sunday. In a couple of days, a number of us already, flights and hotels and everything, booked. They've delayed it to Thursday the 30th. Now, the delay, apparently over a disagreement around current production levels of some of the member nations like Nigeria, Angola and Congo.

I know those are smaller producers. Well, Nigeria is big, but the rest are smaller. But still, they all have to agree. Now, could this disagreement, Mike, here's the question, be the sign of a bit of a fracture in parts of OPEC or just kind of a relatively benign four day pause to have those member nations current current output verified by third-party analysis. Either way, this meeting, hotly anticipated, because really an important inflection point for OPEC. Some decisions, some big ones have to be made. They're really whether to extend the current Saudi and Russia production cuts in the next year, that would be seen as slightly bullish for oil,

or extend and enhance them, in other words, either make them longer or make them bigger than the 1 million from Saudi Arabia and 300,000 a day from Russia, that would be probably the most bullish for price scenario. Or if OPEC Plus ultimately simply cannot make a deal, let those cuts roll off at the end of the year, which then, of course, would add another 1.3 million barrels per day back to a market which already has more than enough oil. Oil prices then could fall and maybe significantly that is seen, I got to say,

is the least likely outcome. That is just Russia and Saudi Arabia's cuts because it also comes on top of debates around the total cuts by all 23 OPEC plus nations. Those were done, Mike, by setting a quota system back in June that runs for a year. So those have to be agreed to again. And renegotiating those quotas is going to be the hard part because, as we just talked about, Nigeria and a couple of other nations may want more of their oil to be sold, which means if they want to keep total OPEC plus output at a specific level, somebody like the Saudis will have to cut their production to make up for those extra barrels. And Saudi Arabia, not sure if they'd agree to that because they have already been bearing the brunt of the production cuts.

Oil now below where it began the year. Unclear if the new meeting on the 30th will be in person or virtual. We will hit more on this tonight. Of course, on last call with Halima Croft and Bob McNally, two of the few energy analysts out there, guys, that actually do go to OPEC meetings. There you go, Brian. Appreciate the thorough setup right there. We'll be tuning in for that later on. Thanks very much, Brian Sullivan. So where are we right now with crude in the U.S.? We want to talk more about this and how it fits into all the portfolio positioning

you might want to do. Let's bring in Warren Pies, co-founder of 314 Research. Warren, let's start with oil. I know you do plenty of work on that. What's the read on it? I mean, it acts like a market that's oversupplied. Should we be taking away anything about global demand or the economy? And where does it go from here? Yeah, thank you for having me. I am probably not one of the analysts that go to the OPEC meetings. Everything I do is based on data and kind of modeling. So with that kind of preamble, I think everyone in the oil business is used to this week of the year, Thanksgiving, a lot of nervousness. We've had bad meetings, horrible meetings back to 2014, all involving OPEC and unable to get on the same page. And I think we're at a similar kind of junction right now. So we have all this OPEC supply that's been

held off the market now for most of the year, for a better part of this year. And it's something we've been thinking about for a while at 314 is how's this this production come back you know and i think that's where we're in that the middle of that debate and so that's kind of the overhang that's um weighing on the market right now but from our perspective what's really driven crude oil prices through the whole year has been speculative positioning so every time we get to an extreme and speculative positioning, it's paid to go the other direction. We saw that in early July. We were long oil in early July, and then we got out of that position in mid-late September.

And it was just based off of speculative positioning and going too far in one direction. So right now, I think we're in the process of working that off. November is a notoriously weak month for oil because you're coming on the back of Mexico hedging all of their production. So banks and dealers have a tendency to sell futures to Delta hedge all the puts they wrote to Mexico. So we're in a trap door. It happens almost every year. We're out of the market right now. And I think for the most part, I think OPEC is going to come to an agreement here. But I'm not sure that it's going to be anything that can save that speculative rotation that we're in the middle of right now. So whatever the dynamics driving prices to where they are right now, it does seem as if it's helpful to, you know, the general, you know, slow down, but not too slow story.

The soft landing, the fact that you can refresh consumer buying power, take the edge off of inflation expectations, perhaps bond yields coming lower. So, I mean, is it fully benign or can we find something to worry about in all this? Yeah, it's not, in my opinion, demand driven. So we've had non-OPEC supply ramp up. We've had OPEC cheating. And this is why the Saudis, they've carried the water this entire cut. And they're getting frustrated, understandably. So you've had Russia cheating.

Iraqi production is coming back as there was a big pipeline outage there that's coming. So that's allowing Iraqi production to come back. UAE is constantly wanting to get more production on the market. All these small producers that Brian was talking about. I mean, it's a supply story. It's not a demand story. So unfortunately, I don't think you can read recession from the drop in oil price now. And so ultimately, it's a good it's a good thing for consumers and for markets. And then where does it leave you with regard to, you know, stocks as we've had this

rally in the indexes? We're not too far from the highs for the year. You know, it feels as if we're in this period where, you know, the market can deal with the idea that the Fed has done without necessarily getting those cuts as yields come down. So what's the opportunity? What are you looking out for? Yeah, we're in a Fed pause. So this is the period that follows the last Fed hike in a cycle. And traditionally, if you composite all these things together, it lasts eight months. And this is a period of hope and optimism regarding a soft landing. Generally,

it lasts eight months. That would put the first Fed cut in March. And stocks generally rally every case except for one. Bonds have rallied every Fed pause on record. And so this is a time where all assets are rallied. But at the same time, you have to look at what's happening under the economic surface. I do think the soft landing evidence is building. But unfortunately, on the other side of that, markets have already kind of fully priced that in. I think stocks have fully priced in a soft landing. So any disappointment from the Fed, any disappointment on interest rate policy, you're seeing 33% chance of a Fed cut in the March meeting already. I think that's overly optimistic. So there's a setup for a disappointment. You have

the economic reality on one hand competing with what markets are pricing in on the other. And I think the markets continually get ahead of themselves in this cycle. And I think we're seeing that again. So our positioning, just to be really clear, is we've been riding bonds over stocks. I think there are more paths to victory with the bond position here versus the stock position. And that's been our position really since October 19th, when yields on the 10-year hit 5 percent. Yeah. And, you know, that eight-month average between, you know, the Fed's final hike and the first cut, as you know, that's an average. It's been as long as 18 months a couple of times in the last 60 years, been as little as like three or four months, which were already pretty much passed. So I guess, you know, you have to operate in this limbo of as long as the economic numbers

hold together, the market is probably going to stay supported. Yeah. And now I think that pause can only last so long. And so, like you said, there's a big variation. And one thing we've noticed on soft landing cases, if you're going for the soft landing, there have been 12 cycles that we count. Four soft landings, eight hard landings. So you're already against the odds for a soft landing. The longest pause we've ever seen for a soft landing is seven months. That was 2018. Same Fed.

That was Powell back then. So that's the outer limits of a Fed pause. And so I think it's something to keep in mind. So if we go all the way to March in the eight-month average, we're already beyond the limits of a soft landing. And one more data point I would throw out for everyone to consider is we've seen a 0.5% rise in the unemployment rate. We haven't had job losses yet. Unemployment rising really because of multiple job holders. That's never happened in a soft landing. We've never seen a 0.5% rise in unemployment rate. We haven't had job losses yet. Unemployment rising really because of multiple job holders. That's never happened in a soft landing. We've never seen a 0.5 percent rise in unemployment rate. So clearly, the economy is decelerating. Soft landing and hard landing

feel the same at this stage. And what happens next, I think you can make a case either way, but the market's pricing fully for a soft landing. Well, there's certainly never a moment where you're going to get an all clear. So we're going to have the debate for as long as as we're in this state. Warren, great to talk to you. Thanks so much. Happy Thanksgiving. All right. Thanks a lot. Up next, we're tracking the biggest movers as we head into the close. Christina standing by with those. Hi, Christina. Well, Mike, there's a theme among earnings report this season. A beat just doesn't cut it. Investors want assurance the future looks bright and two names might be saying otherwise. Details next. Breaking news on the vehicle explosion at Niagara Falls Rainbow Bridge. Eamon Javers has the details. Eamon. Mike, WNBC's Jonathan Deans has obtained

exclusive video now of the incident at the U.S.-Canada border in Niagara Falls. Take a look at these images. We're going to play it a few times here. You're looking at the very top of your screen, and what you're seeing moving from left to right here is a white vehicle coming into the border patrol area at a very high rate of speed. It hits some sort of barrier there and then goes completely airborne. You see higher maybe than that guard hut there. The perspective can be a little bit off here, but that is a vehicle. You can imagine the speed that that vehicle must have in order to get that airborne.

And what we're told happened just after this clip ends is that the vehicle then hits the Customs and Border Protection guard area, bursts into flames, and then explodes. We're now told that there are two dead in this incident, two confirmed dead, and those are the occupants of that vehicle. Still unclear here, Mike, what the intent was here, if any, and authorities, as you can imagine, are pursuing that.

We also know that at this time, the airport in Buffalo is now closed. Authorities are keeping a lookout for any other suspicious activity. The mayor of New York has said that he has sent NYPD officers to Buffalo to assist in this investigation. We'll see what more details come in the hours to come. We also know that the White House says that the president has been briefed and is monitoring the situation. So not clear if this is at this point, Mike, some kind of freak accident or if this is a deliberate act of terror. We're going to have to wait for authorities to get to the bottom of this and see what was going on. All right. Yeah. Amen. Appreciate the update. We have 16 and a half minutes until the closing bell. Let's get back to Christina for a look at the key stocks to watch.

Christina. Well, it takes a lot to impress investors these days. Agricultural equipment maker Deere may have beat earnings, but guidance fell short. Corn and soybean prices are falling, and that could hit farm incomes. When incomes fall, that means less money for equipment. Oh, dear. Stock is down over 3%. Software, Autodesk may have beat earnings.

Similar scenario, but the mixed outlook, not pleasing investors, with shares down 6%. Billings fell 11% year over year because instead of using an annual customer renewal system, the company moved to three-year contracts that are billed up front. The CEO was asked about this weakness on CNBC this morning and attributed that weakness to cyclicality.

Quote, there's always puts and takes in this business. Shares down almost 7 percent. And every business for that matter. Christina, thanks so much. Exactly. All right. Up next, streamers struggling this holiday season and now some of the biggest players are shaking up their approach to garner fresh gains. The details, how it might impact those stocks after the break. Shaping up as a tough holiday season for streaming companies, and now some of the biggest names in the space are shaking up their approach to gaining subscribers. Julia Borsten here with all the details. Hi, Julia. Well, Mike, the streamers are under pressure. We know they're under pressure to deliver profitable growth, which is why they all have hiked prices this year.

Now, Netflix shares have outperformed all the other streamers this year, and it added the most subscribers, 24 million in the past four quarters, which might be why it's promoting some of its products based on shows like Bridgerton or Stranger Things, rather than offering discounts for the holiday season like the other streamers. Now, Hulu is offering its ad-supported plan for $1 a month and $80 savings if subscribers commit for the whole year. Warner Bros. Discovery's Max is slashing the price of its Max with ads to $3 from $10 for the first six months. And then Paramount is offering new subscribers three months at a nearly 70% discount. Meanwhile, Peacock, which is part of our parent company, is offering new subscribers its premium tier for $20 for the whole year. Now we're going to have to see how consumers respond to lower cost ad supported plans and this push

for longer commitments. Mike? Yes, we will, Julia. The presence of those ad supported plans, a new wrinkle this time around. Appreciate that. Up next, we're just a few days away from Black Friday, the key stocks every investor needs to be watching as we head into the busiest shopping season of the year when we take you inside the market zone we're now in the closing bell market zone brenn talking to the requisite capital management is back to break down these final minutes of the trading day plus seaports ken zener on the recent breakout in home builder stocks and courtney Courtney Reagan on the outlook for retailers this Black Friday. Welcome to you all. Bryn, you know, we talk about the big seven.

Yeah, Meta and Amazon making new highs. Microsoft. I was looking at the new high list today, though, and there is a variety of names. You've got Take-Two Interactive, Chipotle, Expedia, Hilton. Parts of the market that are outside of tech that are these predictable growth stocks. Is that an area that is still kind of fruit worth picking or is it already picked over? Well, I mean, I think those are individual names that will continue to do well. I mean, I think Take-Two and Chipotle have nothing in common except maybe they're well-run companies.

And so I think there's always opportunity for active selection. And so I think that as investors, yeah, we talk about the seven, but there's always great names to go and parse through to find good long-term secular winners like at Chipotle specifically. Yeah, quality growth seems to be in favor for sure. Let's get to Ken Ziener from Seaport on the homebuilders. Ken, you know, we had a 20 percent decline in this group as rates started to take off. They bottomed. Now we had a 20 percent climb as rates have come down. Is it as simple as that? What else is going on in the homebuilders that you can grab hold of? Well, there's certainly thank you for having me on.

There's certainly the macro conditions, the interest rates that are causing that volatility. However, the market's early cycle bias, falling interest rates, the Fed not tightening anymore. If you look at the 10 years, longer term inflation expectations, historically is very good for the group. And a lot of our work pre-1982, especially the late 1970s, shows that you can have these 20 percent drawbacks.

However, with unemployment rate at 3 percent, there's still lower existing inventory, a condition actually at secularly higher rates. So we expect that to be a tailwind as well for builders. And we expect them to trade up into the end of the year and into next year. So if existing home sale inventory does start to increase, if you start to clear this market a little bit, whether because rates are friendlier or whatever, is that to the disadvantage of these home bidders? Because they seem to be really benefiting from the lack of turnover otherwise. Well, most trade up buyers and new homes,

they do benefit, obviously, from just general liquidity. So to the extent people are trying to position normalized inventory, if you will, as a bear case, we think that's inconsistent with history. And I would note existing home prices at 4% September year over year. Actually, I think we really need to recognize how much of a disconnect that is from the post-1982 world. We think about affordability, compressive price, if you think about 05, 09. That was not in the case in this 1960s or the 1970s, I would point out. All right. Yeah, we got to go further back, I guess, into the past to see a similar setup right now. Appreciate the time,

Ken. We do have to run. Courtney, what are the retailers expecting to see in the next few days? Yeah, Mike, you know, obviously tomorrow begins retail's most critical five-day stretch really of the year. And the National Retail Federation predicts more Americans will shop over this five-day stretch than ever before, at least in its tracking. Now, the XRT nearly flat here on the session, but the iBuy ETF made up of largely e-commerce heavy retailers, that's up more than 1%, outperforming the broader market today. Adobe says that Thanksgiving to Cyber Monday stretch will make up an estimated 17% of total online holiday sales with particularly big days on Black Friday and Cyber Monday. And Adobe says we're already up 5% November 1st to the 20th on those e-commerce numbers.

Now, shares of Burlington, actually one of retail's strongest today, gaining more than 4%. And that's on top of Tuesday's 21% gain on the back of earnings. Beauty, nearly positive across the sector. Mike, this has been a standout category in retail earnings reports

and expected to be a key gift this holiday season. So we're going to watch shares there. Nordstrom, Urban Outfitters, and Guess, though, all trading down pretty sharply after their After the Bell reports Tuesday. Back over to you. Yeah, no small moves in this group, it seems, Court. Thank you so much. Bryn, we talk about the health of the consumer, low unemployment, maybe some slowdown, but still good consumer balance sheets. And yet, you know, retailer by retailer, it's hard to predict how it's going to play.

Is this an area that you'd be looking at right now? I mean, I think it's an area that we like to look at going into this type of year and type of shopping. I mean, I think if I were going to invest here, the three names I would look at are Walmart, Amazon and Shopify. Obviously, Shopify is the rails. Amazon, everyone shops there and everyone wants a good value. So I think, you know, Walmart sold off quite handily after earnings. And I think that was kind of a mixed bag. They had really solid numbers. So I think Walmart actually looks kind of interesting at these levels. That suggests somewhat more defensive, right? I mean, that you can't necessarily count on the economy reaccelerating or discretionary purchases starting to come back too much.

Well, I mean, I think Walmart's up to their game, though. They have a really good clothing section. They have a ton of games. They've got video. They've got food. And so I think as everyone's looking at their wallets and what can my dollar spend and what can my dollar buy, Walmart, to me, has just really changed the experience over the last 10 years. And so I think inflation is still there for a lot of consumers. And so I think Walmart would definitely

benefit this holiday season. And with that sell-off we saw after earnings, you probably have some good momentum going into first quarter of 2024's earnings. Yeah, good point. The stock's still roughly 9% off its highs after that pullback. Bryn, thanks so much for the time today. Happy Thanksgiving. We'll talk to you again soon. As we head into the close, S&P 500 up about 0.4% to 1% above 4550. At the highs of the day, it was about 4568 this morning. That takes you back to August 1st. That was the level where things fell off the table there. So covering some ground, the highs for 2023 for the S&P 500, right around that 4600 level intraday. So we are getting to within about 1%.

The Russell 2000 up two-thirds of a percent today, trying to pull even for the week to date. Treasury yields have remained relatively quiet, under 4.5% on the 10-year. That's enabled this stock rally, which now mounts to about 10.5% in under four weeks to continue at least for now. The Wednesday before Thanksgiving continues its status as one of the seasonally most bullish days of the year.

Don't forget to tune in for a special edition of Closing Bell this Black Friday. That is at 12 p.m. Eastern time. That does it. Happy Thanksgiving. John and Morgan taking it to overtime.