Closing Bell - Closing Bell: Rally Resilience 5/15/24

Episode Date: May 15, 2024

Is it okay to be more bullish on stocks? Josh Brown and Cameron Dawson break down where they stand. Plus, Big Technology’s Alex Kantrowitz weighs in on Apple hitting $190 for the first time since February … and where he sees the stock headed from here. 3Fourteen’s Warren Pies is skeptical of one key piece of inflation data. He explains why and what it could mean for the broader market. And, Anastasia Amoroso from iCapital maps out the sectors she is betting on right now.

All right, guys, thanks so much. Welcome to Closing Bell. I'm Scott Wobner, live from Post 9 here at the New York Stock Exchange. This make or break hour begins with the run to record highs and where stocks are really capable of going from here. We'll ask our experts over this final stretch, including Ritholtz Wealth Management's Josh Brown and New Edge's Cameron Dawson with me momentarily. In the meantime, let's see the scorecard with 60 minutes to go. In regulation, a cooler than expected CPI report sent stocks higher right from the jump today. We're watching the Dow closely. Needs to be above 39807 for a new closing high. And as you can see, we are above that level. We've already put in a new closing high for the S&P and for the Nasdaq. And we're just extending that 5300 on the nose there for

the S&P 500. So we'll track all of it over this last hour of trade rates. Well, they're lower across the board. And that means that tech, well, utilities, they're leading the way, too. You take a look. There's tech. There's utilities. There's a Russell 2000. Small caps getting a nice bump as well.

And how about shares of Apple? They've been on a tear lately. Now back above $900 a share. 190, I meant. $190. It's dropped a little bit below. I'm getting a little ahead of myself. Let's get the AI announcement first.

Maybe an iPhone refresh. You get where I'm going. Big Technologies' Alex Kantrowicz will be here shortly to give us that story, too. It does take us to our talk of the tape, whether it is okay to be more bullish on stocks. Let's welcome in Josh and Cameron, both here at Post 9. Josh is a CNBC contributor. I got way ahead of myself on Apple's price, but we're not getting ahead of ourselves on these new records for all of the major averages. So I just ask you, is it time to get more bullish?

Well, I guess I don't get more or less bullish based on price action because I'm not a swing trader. But if you're somebody that's a little bit more short term oriented and you're trading based on momentum, yes, obviously you're getting the green light here. You're getting confirmation everywhere you look. It doesn't matter what sector. It doesn't matter what overseas index. They're all flashing the same green light. And it's coinciding with the type of economic data that we've been waiting for and hoping for. You have prices in the economy, the growth of prices in the any of those things that we would have thought were guaranteed given the rate of interest rate increases that were going on over the prior 18

months. So when you put everything together and people are looking at the $6 trillion that went into money market funds over the last, I don't know, two years, people are just saying, you know what, maybe I'm not long enough. Maybe I am ignoring what the market is telling me. Maybe I am missing out on a typical, very typical mid-cycle bull market. And that's where we are right now. It's an interesting thought. And Brian Belsky of BMO, he came on halftime earlier today. He raised his price target to the highest on the street to $5,600.

And he told us why. Listen. I think we can have an opportunity to add to positions at cheaper level, Scott. But for now, we see we see that dreaded word momentum continuing. We think that the markets head higher as people continue to reallocate. I think people aren't talking enough about that reallocating back into stocks. All right. That's Belsky. That's what brown was just talking about right yeah uh not to brag i was hanging out with belsky last week and we were talking about career risk and you could pretend all you want that every investment dollar comes into or out of the market based on the fundamentals but in reality people have a job to do and that job is to earn a return on the fundamentals. But in reality, people have a job to do. And that job is to earn a return on

the capital that's been entrusted with them. And that is a huge driver in the second half of the year in both directions. Right. So we saw a washout in September of October or October of 2022. This is the reverse version of that. Now you have the Dow, the Nasdaq, and the S&P 500 as of noon today, all making all-time highs together. That doesn't happen all the time. The last time we saw it was March 20th of this year. It's only happened 241 days since 1985. It's a fairly rare phenomenon. But when it's taking place and you're out of the market and or underweight, it's deafening. You cannot sit there and watch that go on. And not just because you feel a certain way, but there's an agency problem in investing, which is when you're running money

for other people, they have expectations. And one of those expectations is you better not trail the SPX by a thousand basis points. Otherwise, you're fired. So we can all pretend that doesn't happen, but those of us who have been here for a while, Cameron will tell you, this is a very real phenomenon, and I don't think it's played out yet. Cameron, what do you think? So I think that we have to appreciate that there are these tailwinds of momentum,

the fact that the market is not overbought, that breadth is getting better, and the fact that liquidity is supportive of this market we have the Fed tapering Q. T. we have Treasury liquidity that supportive you also have fiscal stimulus which is helping to keep GDP estimates high EPS

estimates highs so now that you've removed the boogeyman of the potential that the Fed could raise rates further and we thought it was more of a fear than an actual risk. But the fear that they could raise rates further. And we thought it was more of a fear than an actual risk. But the fear that they could raise rates further, you've taken that off the table.

Markets breathe a sigh of relief. The question is, can we get to 5,600? If you get to that level based on 2025 estimates, you'd be back to peak valuations you saw in 2021. You'd probably want to, at that point, revisit your risk positioning. What do you think about this 5,600 number? You don't have to, you know, if you don't want to address the number, because I know you don't like to, at that point, revisit your risk positioning. What do you think about this 5,600 number? You don't have to, you know, if you don't want to address the number,

because I know you don't like to do that, but the idea... 5,601. But the idea that we're... This is not Price is Right. That we're at 5,300 today, that we have enough momentum and there are enough things, as Cameron was sort of going down the list, of items to get us to a level like that. Listen, it is remarkable the degree to which we, colloquially, all of us,

underestimated the ability of the best 500 corporations in the world, make up the S&P, to pull various levers and get earnings to right now be near all-time highs and some of the fastest earnings growth that we've seen in years. Most of us would not have expected how good these companies have been at doing that. We're now looking at a situation where revenues are coming in, give or take, on target, but earnings are exceeding by 7.5%, 8%. And it's not one sector. It's not just, quote-unquote, the NVIDIA phenomenon. It's happening all over the place. I think that's an underappreciated aspect of the landscape over the last couple of years. And it's probably the thing that the Bears despise the most, because even though we all got this wrong, they didn't have that on their bingo card as the way that they were going to lose.

They would have guessed if the Bears were going to be wrong, they would have guessed it would have been because there'd be more rate cuts. Turns out that's not the correct answer. The way the bears lost was earnings growth outperformed. Last thing on this, Judge, if you were to ask me, if you were to say, here's the CPI number. It's about in line and no one's going to freak out about it. What will happen in the stock market? All of the guesses that a normal person would have made is exactly what's playing out.

You've got tech leading here. You've got right now all the bond proxy stocks doing really well. And you have growth stocks outperforming. Semis and tech are the two best sectors, up 3% and 2%. The home builders are also moving, also highly interest rate sensitive. So this is one of those cut-on days and courtesy of the data, which, by the way, wasn't that cool, but cool enough. Even where, you know, revenues have been a bit lackluster or, you know, not where they once were. Case in point, Apple. Let's show the intraday chart.

You've had, in Josh's words, these levers to pull like a big buyback, the biggest on the street. Stock back above 190 earlier today. It's right at that level. And there it is for the first time since February the 7th. Big Technologies, Alex Kantrowicz is a CNBC contributor. He's with us here at Post 9-2. It's been a pretty remarkable turnaround since the lows in April. This stock looked like it was kind of left for dead. Some were calling it dead money um surprise it's back yeah i mean that's what happens when you buy back 110 billion dollars in stock right i think you could almost call it the tim cook put they're just not going to let apple get underneath a certain level and i think you saw shareholders respond in kind you add to that the fact that we've had this

rebound in the market people are going back to previous leadership, and that's Apple. And there you go. You have Apple above 190 today. Should we have doubted that people were going to go back towards the leaders of yesteryear, so to speak? Because this has all been about, you know, talking video through the moon every day. Apple was kind of left out of the conversation. Oh, the market doesn't need Apple. Apple, who knows, revenue growth down three, four straight quarters. Maybe the best days are really

behind it. And here we are. Stocks roaring back. I think people use Apple like they use treasury bonds, honestly. I think when there are better trades to put on, Apple loses market cap and we see people run into like NVIDIA and AMD. And then the semiconductor rally falters. They're not going to sit in cash forever. They go back to what they know they feel comfortable with. That's Alphabet, Amazon, and Apple right now. And those stocks are, it's weird. They shouldn't act defensively, but they have had that defensive tenor. What's really frustrating for the people that don't like them on days that are risk on, they also go up. So it's really tough. If you're in a position where you're like a serial underweight

of the best five companies in the world, and like that's your investment strategy, I'm going to underweight these things because they're expensive or whatever, it's not fun. Like you are not having a good time. You're probably on Stone Street in an hour from now, you know, throwing back whiskeys because you're watching this day at this grind

higher. These companies are not growing the way that they were. And yet people are using them as like a safe haven and or an equity investment like both. It's crazy, but that's what's happening. What do you make of this sort of return to what's worked? Right. And that's what it what really has been. Josh was talking about, you you know technology being uh a leader certainly a leadership on the week it's a leadership today and it seems like the money's starting to flow back there again yeah tech and the new tech which is now officially utilities are the only sectors that are outperforming the s p 500 today every other sector is underperforming that's important for the market overall because tech is such a big part of the market at 30%. But we think fundamentally at its core, this market is all about earnings growth revisions,

which is that you are still seeing earnings growth go up for tech, which is helping bid tech higher, even though it's extraordinarily crowded and it's expensive. We have to appreciate that because at some point, earnings revisions may turn lower like they did in 2022. And that's when you could see a true exit out of the sector, at least for a period of time. We're not seeing that, which is why it can shake off crowded positioning and high valuations. And Alex, we're reminded this week of why we got here in the first place in terms of AI, right? OpenAI has their day. Then Alphabet has its day. Microsoft's going to have its own. And then, of course, we're going to be talking about Apple itself with WWDC.

Is some of what we're seeing at Apple just getting ahead of that event? Yeah, and I think the most underrated piece of news this week, if you're watching Apple, is the fact that OpenAI released a ChatGPT desktop app. And which operating system did they release it on? Windows, which Microsoft owns and Microsoft's funded them with billions of dollars? Or Apple? They released it with Apple and there have been these rumors that OpenAI and Apple are going to partner on some sort of Siri partnership.

And you imagine bringing this new OpenAI ChatGP ET technology, which can sense emotions and seems to interact with you like a more normal person versus Siri, which has been a disappointment for so many years. And you start to see the possibilities. Maybe these two companies are coming together and Apple does have a vision for AI, the types of which we haven't seen them admit and talk about until now, but maybe that's coming next month. Is this helpful to the situation that Apple is currently in where they need to sell more devices, period? Like we could talk about services all day long, but the narrative that Apple is currently in, where they need to sell more devices, period. Like, we could talk about services all day long, but the narrative around Apple is,

until they find a new way to get people to upgrade their iPhone faster, it's going to be one of these stocks where people are perennially just looking at, like, well, that's fine, you're not growing. Well, that's because the iPhone's still half the business. So, to Josh's point, that's why it's half of revenues, isn't it? So the iPhone did drop 10 percent last quarter. And I understand this question. It makes a lot of sense. Here's my perspective on it.

We're not going to see an immediate upgrade cycle on iPhone immediately because of this, because all this stuff was built on 2017 technology, the transformer model. And if you think about it, on my iPhone right now, I got ChatGPT working. I have Claude working. So do I need to buy the iPhone 16 to get the new Siri working? Probably not. But Siri is terrible. But it's going to upgrade overnight because it's not necessarily the fundamental technology on the phone that's changing it. But I do think you do have a long-term story here where I think Apple is going to tell developers, we have this M4 chip. We're going to enable you with our own technology. If you build an AI app on the iPhone, it's going to be the best AI app that you can build. So I think that's going to happen, but it's not going to be an overnight turnaround.

I don't think the iPhone 16 is going to be the thing. Maybe the 17 or the 18. That's where you really start to see the impact. Cameron, what about these other sectors that have done really well over the last month? And it's not, I mean, utilities, they stand out. It's up 13.5% as a group, but financials over one month up better than 5%. Healthcare up better than 5%. You've got staples up near 6% too. What should we make of that? And how should that maybe color

the way we look to invest in what might be the next leg of this bull market? Yeah, I think we should appreciate that they are under-owned because all of those sectors that you've listed have had outflows over the last 12 months where you've seen the inflows go primarily into tech. The one that stands out that is a little bit eyebrow-raising and concerning is consumer discretionary. It hit new relative lows today on a day that retail sales disappointed, Amazon weaker on a day that the e-commerce line and retail sales were weaker. So it is still a bifurcated market. It's on a day that the e-commerce line and retail sales were weaker. So it is still a bifurcated market. It's not a rising tide that lifts all boats, but you are seeing better trends out of financials given the movement in the yield curve, industrials, some better

support in manufacturing. So pick your spots carefully. You've called Amazon the other day the new Apple in terms of the way that stock was reacting. Yeah. I mean, Amazon is not currently being appropriately valued given how important AWS is going to be to this AI build out that's going to take place over the next five to six years. The the anthropic stuff and then just the AWS mentality of bring your own large language model will make it make it work here. That's going to be very advantageous, I think, to the company's efforts to monetize AI faster than most of the other companies that are saying, hey, look, we're AI. I would also point out cybersecurity very quickly on this same theme. Very underrated. Cyber threats are just

absolutely exploding. Underrated? Well, I think underrated in the conversation about AI. We can all be excited about, you know, chat GPT powered Siri or whatever's about to be announced next. But we have to all remember the threats with AI will be amplified as well. I want to point your attention to a new all-time record high currently being printed in CrowdStrike. This is a stock that's up 4% on the day with no news. This is going to accompany the AI rally. You're going to see one of these cyber companies becoming a massive market cap. Hopefully it's this one because I own it. But I think that whole

area of the market, it's not the sexy part of AI. It's not the chatbot that sings happy birthday to you like Marilyn Monroe. Hey, it's not a utility, okay? No, it's not. Just relax over there. It's no utility. But listen, as bullish as we're all getting on the potential for these massive platforms monetizing AI, let's remember the protection that they're going to have to pay, mafia style, is not going to go away. I got another story that you guys are going to want to react to. Julia Boorstin is going to deliver this news alert for us regarding Netflix.

Julia, what do we know? Well, Scott, Netflix announcing in its upfront presentation that its ad supported plan now has 40 million global monthly active users. That's up from five million a year ago and up from 23 million in January. The company is saying that over 40% of all signups in the countries where they offer ads now come from the ads plan. The company also announcing that it will launch an in-house ad technology platform to give advertisers new ways to buy and measure their impact, telling us that they plan to move entirely over to their own collection of tools to manage digital advertising by the end of 2025. Sounds like it'll be a gradual

shift. Now, Netflix is also expanding its partners for selling ads on its platform beyond just Microsoft, which was its launch partner, saying that this summer they will also add the Trade Desk, Google's Display and Video 360, as well as Magnite. Scott? Julia, appreciate that very much. There's a nice pop there for Netflix. I love what our colleague and friend Carl Quintanilla posted about five hours ago on social. The company that once said they weren't interested in one, original content, two, advertising, three, password crackdowns, four, live sports. Well, things change. Well, two things on that. They make more money on the ad support it's here, it turns out. They actually would prefer it. If it's okay with you, please subscribe, pay us monthly, and also watch these three ads. So that's number one. Number two, I don't know if you remember this,

but we talked about when the ads here finally came into view after that huge earnings miss, and they were finally like, okay, we're going to explore it. They ended up hiring Microsoft. And we all pointed out at the time how important that was probably going to be. And that Microsoft was the technology that Mark Zuckerberg actually relied on when he needed to build an ad business into the original Facebook desktop and app. So this is a situation where Netflix pulled it off. They found the right partners. They found the right price point. And now they're making more money doing this than anything they've ever done before. Slow uptake maybe at the very beginning of the ad tier, but maybe we're finally here coming around. I mean, the growth is undeniably very impressive. So we got to give

Netflix that. To me, hearing Julia, the thing that I was most encouraged by was the fact that they're going to invest in their own advertising technology. Having used that platform, one of the things I've seen is you can go by those ad slots and nothing serves. That shows me that they're undersold. They need more partners for demand. And that's what they're going to go with right now with the trade desk and Google, in addition to Microsoft. And they need better technology to show advertisers you're going to be able to buy television style advertising. And you're going to be able to track it the way that you track Internet advertising. If you do that on a base of tens of millions of users and provide them with this digital-style tracking, you're really cooking.

And that's what Netflix is going to be doing. Alex, this is still the thing. If I'm buying network ads, I have a rough idea, according to Nick Nielsen, of who might be seeing those ads, but that's it. I have a rough idea, according to Nick Nielsen, of who might be seeing those ads, but that's it. I have a rough idea. If Netflix can literally tell the advertisers, this is the age of the four people living in the household, and this is which of those four usernames just watched two hours of this content, and here's the other things that they watch, and here's what else we can infer about this person that accelerates the

ad revenue from traditional television and cable and linear even quicker over to a platform like Netflix. And that is like the holy grail from an advertising perspective. But the big question is how they're going to play the creative side, right? Because one of the things that makes TV work is that you have limited advertisers. So they spend a lot of money on creative. And if you watch TV, it's a great experience because those ads look good. Netflix is going to have to set a bar here. You're going to, there's going to be some managed service component where if you're going to place ads with them, you're not going to get the programmatic stuff like you see with display advertising. It's going to have to come from ad agencies. That being said, everything you said in that statement is totally

right. They're going to be able to track like nobody's business. And that's going to make Netflix. They can't do Murray's Wigs. No. Right. No Murray's Wigs. They have to do like real ads or else people will upgrade just to not have their eyes bleed. Exactly. But there's still a significant revenue potential there for Netflix.

I guess, Cameron, lastly to you, it's no surprise, I suppose. Look, this stock is up 85% over the last year, but it just reminds me of where we all started and why we're seeing technology lead us back to these new record highs and then extend that level. You just go with the excitement. The excitement's been all around these kinds of stocks, and here we see it yet again today because of announcements

like the one that Julia told us about. You get the NFL on Netflix now. So it's kind of the whole story. It's all about operating leverage. The good thing about Netflix is that now they have revenues that can scale with their CapEx and scale with their costs. And that's the big change, which is why the stock can move higher. And I think that's what the tech companies have is they have incredible incremental margins on growth. When revenues are growing, which they are growing very strong for them, it flows down to the bottom line,

which is why you're seeing 18, 19 percent earnings growth for the sector this year, better than the overall S&P 500. That's the leadership. Guys, that was great. And it's great to have you, all three of you, on this record-setting day. Yet another one here on Wall Street. We should all hang out. We should all hang out sometime. We can figure that out. At Murray's Wigs? At Murray's Wigs. Send some dates. We'll figure something out.

All right. That's Josh. That's Cameron. That's Alex, of course. Let's send it to Christina for a look at the biggest names moving into the close. What do we see? I'd like to hang out, too. But let's talk about GoodRx shares jumping as a health care company announces a direct

contracting agreement with grocery chain Kroger. The agreement will allow GoodRx to offer prescription discount coupons at over 2, chain Kroger. The agreement will allow GoodRx to offer prescription discount coupons at over 2,000 Kroger pharmacy locations. GoodRx and Kroger initially ended their relationship in 2022, so think of this deal as a partnership renewal that hopefully brings savings to customers. Shares up 10%. Shares of Brazilian oil giant Petrobras plunging as its CEO steps down following months of tension with the federal government over dividend payments. CEO Jean-Paul Prats will be replaced by Magda Chambriard, the former head of oil and gas regulator ANP.

Shares down 7%. Scott. All right, Christina Partsenevelos, thank you. Back to you soon. We're just getting started here. 314 Capital's Warm Pie says there is one piece of the inflation data he's still skeptical about. He's going to explain why, how it could impact the rally in the months ahead. We'll get his views on the market at large on this record-setting day yet again on Wall Street.

That's about the highs of the day, I think, for the Dow. Better than 300 points. We're well above a new closing high there. We're back right after this. We're green across the board, as you know, in this final stretch, Dow, S&P, Nasdaq all heading towards record closes and not after a lighter than expected April inflation print. Let's bring in Warren Pies of 314 Research. Good to see you again. Welcome back. Thanks for having me. How impressive is this move to you in this market?

Oh, man, it's pretty impressive. You know, we tried to do a tactical underweight for equities back coming into Q2. And after watching Powell's press conference, we rolled that back and got back market weight. And so we were pretty bullish coming into the year and saw potential for this. But still, it's impressive to watch it happen. Market clearly wants to go higher. Yeah. So what does it really mean, though, for where we can go from here?

It's kind of the question I asked at the very top of our program. How likely is it that this is the, I don't know, beginning of the next leg? You tell me. Yeah, I mean, I think it's hard to be underweight stocks when the Fed is easing, which they are. I think the aggressive taper of QT is an ease. And when you don't see a recession, we look at the economy from a number of different angles, and we don't see a recession. So with those two factors, I think you have to stay market weight at the very least with the stocks here. But I'm a little skeptical of how this summer is going to play out.

And that's really back to the inflation data. I think that the Fed and the market is assuming there are factors in that data, specifically shelter, that are going to roll over as we get through the year. And when you really dig into the details and look at the housing market and what's happening coming off the back of the big rally in stocks and falling yields, I don't expect that. I don't think that the markets, the Fed's going to get their inflation target because of shelter. And so I just I think that's the one area where the market has it wrong. And that's what I would expect to be the stumbling block. But we can definitely go higher before then. Then you would think that the chair himself has it wrong because he sort of underscored recently, too,

that he thinks it's so much of a lagging indicator that it's going to be coming down and will become more favorable and will help inflation get back towards target. Yeah, it makes me really uncomfortable to disagree with the Fed chairman. And that is exactly what he said. And he explained the mechanics of shelter inflation and why it lags really well at his last press conference. The only thing that gives me really reassurance that our work is actually correct is he said

almost the same thing verbatim 12 months before that last meeting when he testified in front of Congress in June of 2023. So he has been wrong in the past. And I think he's going to continue to be wrong. And I think the market's taking its cue from him. So you really need to get into the data and roll your sleeves up and do your own work. Well, does does that mean when you hear a price target like BMO's Belsky today of 5600, you're skeptical of that or do you think that's achievable? Well, you never say never given the background what I just laid out, but I am skeptical. You know, I don't that wouldn't be my base case. And if you remember when I came on with you last December, we said we thought the market would be at 5200 come May. And back then, I think that the skepticism was on us. And one of the things that I kept

bringing up to you is I expected to see strategists up their targets and chase this market as we came into the year. I thought that everyone was underweight, actually, more underweight than it felt at the time. And this is part of that scenario playing out to me, is seeing these targets go up well above the market's current level is is kind of what you see at the end stage of a rally so i am skeptical uh i'm gonna try and be open-minded at the same time and not try to stand in front of the freight train of a bull market but um i'm certainly skeptical and those actually those are kind of contrarian bearish indicators and you see just raise their targets you said you said that's not my base case.

What is your base case? What seems like a more reasonable return, let's say, over the next six months to you? Yeah, I think that we're going to have I think we're gonna be basically flat to down over the next six months. That would be my base case. I think that bonds are overvalued, stocks are overvalued. And I don't know what the sequence of those returns is going to be, but I feel pretty confident that we're not going to, when we go back to the end of this year and we look out at 2025 and everything that this market's priced into it, I'm pretty confident that we're not going to be at that 5,600 level on the S&P. So yeah, I think that we're pretty much priced to perfection. You know, in the near term,

could we keep going to 5400, 5500? Sure. But when you go out six months, this is one thing I wrote to our clients. Perception is reality in the market for now, in the short term, but over the long term, reality is reality. So when does that reality hit?

I think by the end of the year, it will be here. But I mean, the 10-year, as I look at it, we're down like 35 bips since the Fed chair wasn't as hawkish as people thought. You just think that's a blip that we're going back up? It's hard to say a blip. You know, I think a lot of markets are connected. And so I think the 10-year is taking somewhat of its cue from the Fed and some of its cue from oil. And so I do think oil is going to be soft throughout the rest of this year. I think that the 10-year is, quite frankly, it's overvalued. It's already priced an entire cut cycle. So if you think typically the 10-year trades at about 150 basis point premium to the Fed funds rate. Well, right now, it's trading at like a 100 basis point discount from Fed funds rate. So it's already discounting

an entire cut cycle, which I think is going to be long and coming. So the only value you get in buying bonds here is if we get a recession. And I just I don't have any evidence to make a case for a recession ahead. So, yeah, I would be looking for opportunities to lighten up my bond exposure. But are you doubting that the next move from the Fed is actually a cut? No, I think that's pretty overdramatic to say that if you know, I think there's some people who are getting ahead of themselves and the Fed's going to hike again. Well, I mean, Powell made it pretty explicit, right? I mean, that's not on his bingo card. Correct. And I think that that's not where we're at. I think the Fed is restrictive now, though. And I think that they need to still, like, think about their first quarter SEP. First

quarter SEP, they looked at the core PCE at the end of 2024, and they projected 2.6%. In order to get to 2.6%, exiting 2024 on core PCE, you need to average like 0.15% month over month on core PCE for the rest of the year. That's not going to happen, especially if you consider that housing is adding like 8 to 10 basis points as a baseline factor, given what we said about shelter not rolling over. There's just no path to get to the Fed's inflation target. So the next step is just going to be a prolonged hold. We go back to the soft landing thesis that kind of drove this market. Soft landings are characterized by short pauses from the Fed. So three to seven months is what we've seen historically. We could be on pause this entire year going back to last July. That'd be an 18-month pause. That's when bad things happen. You stay at restrictive territory for that long. You can't predict it, but that's when bad things start to happen in

the economy and in markets. Which is why I think they're kind of itching to cut just when they think the time is right. To be continued. I appreciate the conversation, Warren, very much. We'll talk to you soon. Thanks for having me on. All right. The major average is all heading towards record closing highs today. Up next, iCapitals Anastasia Amoroso is back with us. She reveals the sectors that she is betting will drive the next leg of this rally just after this break. We are back with the Dow, S&P 500 and Nasdaq all set to score record closing highs today. Our next guest sees a few spots in the market that look ripe for even more upside. Joining me now, iCapital chief investment strategist Anastasia Amoroso.

Welcome back. It's good to see you. Good to see you, Scott. Thoughts on this market before we get to specifics? Well, I think the upside move is justified. I heard you ask the other guest whether he was surprised, and I think the word is justified. Look, this morning's CPI report and the retail sales report, I think it really supports the notion that we are in the last mile of fighting inflation.

And look, core CPI, which is 3.6 percent today, was about two percentage points higher a year ago. So I would say we have made substantial progress. And if the Fed keeps on hold, which is what they'll do, it's certainly not a hike. I think that holding pattern is quite supportive for markets. You know, because I've heard some try and make the argument that, you know, this also means it's once once we, you know, we hit these new record highs that it might be the last mile for this bull market. It doesn't sound like you buy that. No, I'm not a buyer of that, Scott,

because I do think there are a lot more reasons to be optimistic than pessimistic in this environment. And a lot of people talked about stagflation over the last couple of weeks, but I don't really see the stag, nor do I see the inflation in this market right now. When you look at retail sales, for example, this morning, it seemed like it was a little bit soft on the surface. But when you think about retail sales and the report we actually get with that, it's about people buying goods. It's not so much about people buying services. And I think that's exactly what people are doing right now. It's travel, it's lodging, it's concerts and entertainment.

So when we look at the real-time measure of what the consumer is spending on, that is still very, very strong. And, of course, if you look at the Atlanta Fed GDP, for example, that's running just shy of 4%. And the other thing that I'm encouraged by, Scott, this is not just a U.S. phenomenon. We have seen growth pick up and broaden out globally. About six months ago, we're annualizing, we're pacing about 0.8 percent global growth. Today, that's closer to four. So that, of course, that economic growth supports earnings, supports companies, supports markets. OK, so what's going to take us there? Well, I think what's going to take us there is continued earnings momentum and also people pushing out this notion of a recession or even a soft landing. What sectors? That's what I mean. I'm sorry, Anastasia. I think broadly macro is going to take us there is that earnings rebounding towards nine or 10 percent earnings growth by the end of the year. But what's

going to take us there sector wise, I do think that it's the cyclical parts of the market's also catching up. If you look at the first quarter, it was all about big tech reporting something like a 65 percent earnings upside. But as we go into towards the fourth quarter, we do see other cyclicals catching up. So I do like broader, bigger financials, not the regionals. I do like consumer discretionary stocks. And I also like industrials. So I'd be looking to construct a basket of cyclical stocks. And of course, semiconductors should also be a part of that. All right. We'll see you soon.

Thanks for the thoughts, Anastasia Amoroso, joining us once again. Up next, we're tracking the biggest movers into this record-setting close. Christina Partsenevelos is standing by once again with that. Tell us what you see now. Well, consumers, you're talking about record-setting, but consumers are turning away from another luxury retailer. And now to that record-setting. Dell shares hitting an all-time high.

I'll tell you why after this short break. All right, welcome back. I want to show you the Dow because we are right at a new intraday high, right about 39,889. We were there a second ago, so we got to watch that. We're all well above right now, by the way,

a new closing record high for the Dow Jones Industrial Average, just like we are for the S&P and the NASDAQ. But now we have something got to watch that. We're all well above right now, by the way, a new closing record high for the Dow Jones Industrial Average, just like we are for the S&P and the NASDAQ. But now we have something else to watch over this final 15-minute stretch. Let's get back to Christina now for the stocks she's watching. Lots to watch. Let's talk about Dell shares, also hitting a record high. They're up, what, 9% right now.

Last I checked on a bullish call from Morgan Stanley with a new price target of $152 a share. 9%. It's already almost 12% right now. The analyst believes Dell is gaining momentum of its AI servers with enterprise clients, and they mentioned Tesla. The positive supply checks spilling over to competitor, which may not be good in the future, Supermicro shares are up 15%. Tough times, though, for luxury brand Burberry.

Profits fell 40% year over year, driven by weakness in the Americas as well as China. The UK fashion retailer now expects a challenging first half of next year. And these are similar trends and comments we heard from luxury fashion group that owns Gucci, Kering, and Mulberry as well. You can see Burberry down about 7%. Scott. Christina Partsinovelis, thank you very much. We will see you in the market zone, so don't go anywhere. Still ahead, 13Fs, they're trickling in. That deadline is looming. We're going to run you through what to look out for as more big investors reveal their Q1 bets. Closing bells right back.

Up next, Cisco reporting top of the hour. We'll tell you what to watch for when those numbers hit the tape. Market Zone is coming up next. We're in the closing bell market zone now. CNBC Senior Markets Commentator Mike Zantoli here to break down the crucial moments of this trading day. Plus, 13 F filings for major funds coming in. Leslie Picker has the latest there. And Christina Partsenevelos is back looking ahead to Cisco earnings after the bell. Mike, I'll start with you.

Obviously, you've got a record setter today, and we're finishing strong, too. Yes. We had a sort of useful scare over the last seven weeks, and I think what it's been able to do is sort of test a lot of the premises of this bull market and come out on the other side of it feeling like we're in okay shape, both in terms of soft landing, economy, patient Fed, and obviously inflation not getting any worse. It's a bull market, so you have to give the benefit of the doubt to the upside. New highs are bullish, not bearish.

They're not something to run away from. That being said, I don't think we really got to that point where you built up a ton of potential energy for the upside. It's much more about it's kind of what we had before in terms of the backdrop and the markets, I think, digesting it very well. Even though we're at new highs, we're not as expensive because earnings have come up. Even though we're at new highs, we're not as overbought as we were at the highs in late March. So there's room to go on that front. So I think everything's working together. We know, we're going to be left with a little bit of a what next issue. But, you know, the grind can work in favor of the market. We've had some of the cheaper, quote unquote, areas of the market get us here, too, which is interesting to discuss, whether it's utilities up 14 percent over the last month or health care,

for example, or consumer staples. Or even commodity related stuff. I mean, there's small parts of the market, but materials have been very strong. So what that has enabled is the high momentum parts of this market that really roared us up through February needed to cool off. They did cool off. You've had this real unwind in terms of the momentum leadership and it didn't hurt the overall market. The other thing that I think it has done is it's allowed people to kind of true up their expectations on the AI fundamentals. And this is for real. And and can we really continue to pile on capital to this area? I think it's still an open question. But for now, especially today, it's the mega caps.

It's the it's the secular growth stuff that's pushing the upside. Going to have to print these Dow 40K hats. I have one proactively was sent to me in my cube. So I'll be happy to bring it out and jinx the market. No, no, no, no, no. Don't do that. It's like the S.I. cover jinx. Don't even put that put it away like in the drawer. Leslie Picker, we're going to learn pretty soon what some of the big money, so to speak, is doing with these deadlines that are coming.

Yeah, absolutely, Scott. In about an hour and a half, they have that time to meet the deadline to file their Q1 reports. These detail a snapshot of the long equity positions as well as some options exposure as of the end of March. Now, we've seen a few early filers today. Tiger Global just recently disclosing sizable ads in Alphabet and Amazon. That's Chase Coleman's firm tripling its stake in Alphabet to hold roughly a billion and a half dollars worth as of six weeks ago. And it bumped up Amazon by 30 percent to garner more than a billion dollars worth of stock

there as well. So sizable holdings for both of those names. And it appeared, guys, from the filing that Tiger Global bumped its stake in Instacart's parent company, Maple Bear, tenfold. But I just chatted with a source familiar with the firm who said they didn't increase the position. It's just the conversion of prior holdings into common stock. Warner Brothers Discovery getting a little less love in Q1. Seth Klarman's bow post slashing that stake by 85 percent while Michael Berry dissolved his holding. Those shares down a little over 4 percent on that news, Scott, or maybe on that news and other things today. Yeah. Context is everything. And you put that into

perspective yet again. Leslie, thank you. That's Leslie Picker, because you've got to pay attention to the deadlines when these are filed, et cetera, et cetera. All right. Christina Partsinello, Cisco. We talk a lot about tech. This stock just hasn't played ball. It hasn't played ball. It has underperformed the general market, the Nasdaq, which is up 35% just over the last year. The stock, though, for Cisco, up 5%. What we're seeing is there was concerns about enterprise demand, specifically from telecom. Cisco is known for networking equipment, and last quarter, the company revised its guidance law for a second quarter in a row, blaming weakness and enterprise, and like I said, telecom customers.

But shares could be poised for a turnaround, and this is according to analysts, not me, Bank of America, Mizuho, Deutsche Bank, not because demand is about to skyrocket necessarily for the company, but because shares have been so de-risked and the bar lowered. As well, Cisco's recent acquisition of cybersecurity firm Splunk wasn't included in its previous guidance and is expected to boost top line growth. So what we're seeing today is there's just a little bit less caution from investors heading into this earnings report because numbers appear less risky after two consecutive guides down. That's why shares are up 1.5%.

All right, Christina, I appreciate that. Christina Partsenevelis, I go back to Mike with about a minute left. So we're almost right at or if not exceeding the intraday, prior intraday highs, too. And we talk about closing highs because that's what we sort of mark in the books. But these intraday highs, we got that, too. Yes. So essentially, we're not really working underneath any hurdles that we've been looking at before. You know, there is a little bit of a mechanical.

We get the breakout to a new high. People who are bearish on the market will kind of scare out and regroup. So we have that in place right now. I do think we're going to have a renewed focus on the trajectory and pace of the economic data as it comes out. If we're getting comfort on the inflation side and the Fed's reaction function toward inflation, it is a matter of making sure that growth doesn't slip further from here. So far, it's in a fairly comfortable zone. We've got weekly jobless claims tomorrow, and it's going to maybe start that phase.

They always clap down here, of course, at the close. But perhaps today it has a little more meaning as the bell rings because we've had another record-setter on Wall Street. All three of the major averages new closing