Closing Bell - Closing Bell: Rally Stalling or Heading Higher? 7/5/24

Episode Date: July 5, 2024

From the open to the close, “Closing Bell” and “Closing Bell: Overtime” have you covered. From what’s driving market moves to how investors are reacting, Scott Wapner, Jon Fortt, Morgan Brennan and Michael Santoli guide listeners through each trading session and bring to you some of the biggest names in business.

Kelly, thanks so much. Welcome to Closing Bell. I'm Scott Wapner, live from Post 9 here at the New York Stock Exchange. This make or break hour begins with the bull case for stocks hitting record highs yet again today. And why the Wharton professor, Jeremy Siegel, says bull market not done yet. He will join us to make that case in just a moment. In the meantime, take a look at the scorecard with 60 minutes to go in regulation here. Well, jobs report was largely in line, though a tick up in the unemployment rate sent yields lower. The major averages are all in the green at this moment. Communication services and tech, they're the two best sectors today. Hence the Nasdaq extending those record highs. Meta, Alphabet, Apple, well, they're seeing gains today. And so is Amazon hitting another all time

high. And how about Tesla going for seven straight up days elsewhere? It's been mostly mixed as we look ahead to next week. It's going to be a big one, too. More inflation reads will be on tap. An appearance on Capitol Hill by the Fed chair happens midweek. That's going to dominate the conversation, of course, as will the start to earning season. The banks are going to report to be reporting in just about a week or two. It just takes us to our talk of the tape. The road ahead for this rally. Let's welcome in the warren professor of finance is jeremy siegel he's back with us professor hope you had a nice

fourth of july holiday it's good to have you on today thank you scott happy to be here thank you what is your take after this jobs report and the markets reaction to it you know i think it was a pretty weak report uh... Yeah. You know, I think it was a pretty weak report. You know, when you look at the details, I know the headline number beat, the revision was beat, the details were not good.

We are in a slowing economy. You know, the Fed at the beginning of the year, last December, said that GDP growth this year was going to exceed 2%. Well, we got first quarter. That's under 2%. And although we're all enthusiastic thinking, oh, this quarter, it looked like three, then it looked like two. Now, most of the experts, including Atlanta Fed and the other banks, think it's under two. I think it's really time for Fed Chairman Powell to really tee up in the July meeting a cut in September and maybe another one in November. I think inflation is definitely under control and I don't want to see this slowing economy turn into something worse. Now, that's the risk, right? As you lay it out, that the job market, half the mandate, right? Let's not forget, half the mandate about employment.

The job market doesn't get away from the Fed just when they think they've got it right. Yeah, absolutely. You know, there's an economist, Claudia SAHM, who many years ago had a rule that she investigated that when the unemployment rate rises a half percentage point, and that was on a three-month moving average basis, the probability of a recession was well over 90%. Well, guess what? With today's report, we just moved to one half percent over the low that we hit earlier this year. So I'm not saying there's a reset. Now, I don't think it's anywhere near 90%. I'm just saying that the Fed has to take some of these indicators, including the inverted yield curve, into account, including the slow growth of the money supply, which, although has stopped shrinking, is not growing fast enough to, I think, support a strong GDP economy. So although I think stocks are still in an uptrend and the growth stocks still are certainly walloping the value stocks,

I think Powell has to take note. I feel like you're suggesting that no cut in September means recession on the table. No cut in September means this market might be in trouble. Potentially, yes. And again, you know, I'm looking at the future. Listen, next next week we get the CPI. That's certainly going to be very important. We have jobless claims. You know, I like to see them under 240. They've just been tickling that 240 level, a breakout on that. Why not be preemptive? The commodity market is under control. All the others are under control. As you know, Scott, we've talked so long about the fact that they use realistic shelter costs in their CPI. They would be much lower than what they have now.

I think he can afford to bring us a more normal Fed funds rate and relationship to those long rates, which do see, as we saw today, a potential slowdown. Why then do folks like the former Fed vice chair, Roger Ferguson, who was on this very network today, say good number. It wasn't a great number. I'm not sure it's the all clear to cut. He sees only 50 50 in September. He's a voice I think we need to take seriously. Oh, certainly. Roger is one of the brightest guys, although he has put a lot of capital into saying that, hey, the economy is strong. We don't need one this year. When I listened to his interview this morning,

I thought I saw a little crack like, well, you know, I'm not going to change my opinion, but we have to look at the data. And let's face it, Scott, you know, the Fed must be 100 percent data dependent. They they don't have any magic ball seeing what is going on in the economy. I think they have to look at what historical slowdowns are and say, you know, maybe I can afford it. I think he's going to tee it up on July 31st. We're going to have a lot of data before then. But I think the mindset has to be there now. So you expect a telegraph, if you will, in July. Some suggest, like Mohamed El-Erian, who I spoke to within the

last couple of weeks, that the economy is even weaker than people think and that they should cut in July, that don't tee it up in July, actually do it in July. What's your reaction when you hear things like that? I agree with him. I'm saying tee it up because I know how Jay Powell works. Unfortunately, he's so deliberate, and let's hope he's not, you know, overly deliberate on the way down, like we already know how overly deliberate he was on the way up, that, you know, July seems to be premature unless things really, you know, fall apart in the next three weeks. But I also, by the way, you know, we all think about two cuts and one cut. Listen, when they had a raise rate, they did about 75 basis points. We should not dismiss a 50 basis point cut if we see data actually telling us about the slowdown. We have to be as flexible

on that way down as before. And yes, if I were Fed chair, I would lower it. What I see right now on July 31st. But again, we have three weeks of data that we're going to view. I feel like we're putting the cart before the horse in some respects. We're talking about September. Here we are. We just had July 4th. It's the beginning of July. We just made the turn into the second half. So taking all of what you said in context, of course, of how you might answer this question because of what you foresee, what about the market in the here and now? How does it look to you as we've narrowed again? Obviously, we're talking about the same mega cap stocks hitting new highs. Some have targets like six thousand on the S&P between now and the end of the year.

So what's your thought in the here and now, not in the fall? Well, the here and now is that the momentum is still with stocks on the way up. I think we have to listen very carefully to all the earnings reports that will be coming out in the next two to three weeks about whether there's warnings. Now, so far, we have not gotten many pre-warnings, which is a very good sign. But, yeah, that narrowness does concern me. And honestly, and I've said so before, Scott, I don't think the small or the value stocks can rally until the Fed does lower it. I think they'll stay in the doldrums and all the money is going to, and all that momentum trade is going to continue to focus on those tech stocks. Now, again, as I keep on saying, they bring home the bacon.

Let's hope they continue to do that. But, you know, I think if you want to give a chance to the rest of the market, Jay Powell has to think about the entire economy and not just the digital, you know, the semiconductors and the AI trade. There's a lot of other companies that are not enjoying the expansion. Look at how narrow the employment gains are in the health care, in the government sector. Outside of a few of those, we've had very, very little. And by the way, with GDP under 2% for the first half, and that's what it looks like, we've had very poor productivity figures. First quarter, very poor, looking not good for the second quarter. This doesn't look like an AI revolution, certainly, when you have productivity way below trend.

Another reason why I think we have to lower the cost of capital short term, which hurts small firms much more than it hurts those big tech companies. You tee up a good debate that is being had right now in the market, and we've been having it on our programs almost every day. This idea of whether it's too soon to buy into the value trade or buy into the small cap trade. On that note, let's broaden the conversation. And I want to bring in Brian Belsky of BMO Capital Markets and CNBC contributor Bryn Talkington of Requisite Capital Management. The professor tees it up for you, Brian, because he says it's too soon that you can't buy these stocks until Powell and company act. You make the case in part that you need to do it now and you're going to kick yourself

down the road if you don't. Well, thanks for putting me against Dr. Siegel. Why would I ever do that? It's just an honor to be on with him. You didn't. I think this I did. I think this I think you have to be an investor and kind of look a little bit longer term. And you know that we've been, if you take a look at just fundamentals, Scott, with respect to free cash flow and operating performance and earnings and earnings discernibility and really the scarcity of less and less publicly traded small and mid-cap companies, we think we're going to be kicking ourselves five, ten years from now. Now, that doesn't help the momentum traders that absolutely positively have to perform with the market. And with our big cap money,

meaning our benchmark being the S&P 500, we absolutely are still buying tech. We're absolutely still buying financials. Those are our two overweight sectors. The rest of the sectors have such strong dispersion, Scott, that you absolutely positively have to be a stock picker. So I think for large cap, the momentum continues, but we would be buying Russell 2000 small mid cap in value right now. But hang on, hang on, hang on. You say, you just said the words,

we're still buying tech. Okay. The implication of that is that right now you look at these levels in these stocks and you're still buying them at these levels. But in the same breath, you suggest that these stocks are priced to perfection and need to crush their earnings. So are you literally still buying these stocks or is that just a figure of speech you used? It's a figure of speech because we haven't made any new positions. We're maintaining our positions. We've long said that the Super 7 or whatever you want to call them are your core consumer staples type tech.

We've said you've got to trade down. If trading down into a $500 or $600 billion company like Qualcomm, if that's a trade down, we think Qualcomm, AMD, Broadcom, Oracle are going to be the real winners the second half of the year. I continue to be quite worried that this is going to be a July 1996 type event. If you remember what happened then, and I was a strategist back then as well, these companies did not hit their earnings after a huge run the first half of the year. We had a pretty sharp correction. We still think we're going to have a 10% correction between now and year end. And we do think July and August could be when it comes, especially if we do not get Powell, as Dr. Siegel has been talking about, which we actually

agree with. If Powell does not tee up a rate cut in September with the volatility with respect to the election, especially the conventions in August, we think we could see some downside. So Bryn, are we set up for a big earnings disappointment and a pullback for big tech? You know, I don't think that's going to be this quarter. I think earnings for big tech are going to be strong. But what investors need to know, because the market will sniff this out, is starting really in Q4 of 2024 and then next year, the earnings of the mega cap are going to start to decelerate. I mean, that's what's baked in right now. And so you do have to be mindful of that. I think what's also unique, though, and Brian touched on it, is the lack or really the dearth of IPOs. If you look

at like 98 and 1999, you had over 700 IPOs. Most of those, over half, were internet driven. In 2022 and 2023, we had 62 IPOs. And so there's really been no way for investors to play the new wave of AI or really new companies in general because there just haven't been IPOs because most of these companies are sitting on VC and VC adjacent balance sheets. And so I think until that unlocks, you're going to continue to see investors buy into these same names that are durable from an earnings perspective. They may not be growing a year from now like they are today, but I think because of the lack of IPOs that we're seeing, that has really changed the construct of the market. I also think on the small cap, we've been out of small cap for a couple of years. If you're going to get a rate cut, I still think because the regional banks are such a large part of small cap value.

If we were going to go back into small cap, we'd actually look at small cap growth, where you get those growthier names that actually could benefit from rate cuts and have growth and staying away from the regional banks, which I just think have a limited upside because of all of the commercial real estate and just the real estate on their balance sheet on top of regulation. Professor, I feel like this conversation we're having is very reflective of the overall tenor and tone of what's in the market. You've got somebody like Brian Belsky who says, you know what, we're probably ready for a correction. These stocks, the mega cap tech, are priced for perfection. They better crush their earnings.

Bryn's really suggesting the same thing. Gosh, these things have really gone a long way. And even though I think they may eventually have a problem with their earnings living up to the hype and these stock moves, it's not going to be this quarter. So we might as well just continue to buy these stocks you you got my you got my my drift here is that well absolutely even if there are conditions that would warrant a pullback they're not coming now so just keep buying these stocks i think we're talking about the difference between the short run and the long run i i think i really agree with b. I think in the long run you're going to be rewarded. I mean, that's what history says with with low P.E. stocks.

Despite the fact that, you know, this this 10 year period has been the worst for low P.E. stocks relative to high P.E. stocks in our history but if you go back all you know hundred years you know valuation is better as a goal for a long-term investor momentum is more important for a short-term investor the momentum is still going towards these tech stocks they have not yet disappointed. So at this particular point, you know, what are you? Are you going to be a trader or someone that's just going to put away a portfolio, you know, in a 401 or IRA and say, I'm going to look at it 10 years from now or I'm going to look

at my retirement, then I'm going to go a different way than what I would do right now, because right now, until you lower. Now, the comment is low, small stock growth. I think any small company that finances short and small companies finance short is going to be helped immediately by a rate cut. Long, you know, the tech companies are all finance long, either long term bonds or equity, and it's really cheap for them in both cases. It's really the pain of this tightening is being felt by those smaller companies that have to roll over inventory and other loans at the bank level, and they need the relief. And until they get that relief, it's hard to see them joining in the tech parade.

We're talking about momentum, of course. Bryn leads me to Tesla, which is up, hard to believe, 27% this week, in one week. You own that stock. Yeah. I mean, it's a sad time for the shorts, right? Because because it's like these people people continue to want to hate on the name i do think it's kind of fascinating i think there's some options trading i think there's short covering i don't think that beating your vehicle sales by 4 000 even has anything to do with why the stock is up i do think that with nvidia money come out of nvidia money coming out of NVIDIA, money coming out of Bitcoin,

you are seeing a switch over here to Tesla. I mean, we'll see what happens, you know, on August 8th when we talk about the robo taxis. But I just think this is one of those names that people are fine not to own it. But to short, the name has just been a real widow maker time and time again. Yeah. So, Professor, at what point, let's talk politics for a minute, because we're four months away from the election, OK? And if we think that the goalposts may have moved following the debate, at what point does the market start to price policies in if we think that a certain outcome may be more likely and given what is likely to be a continued level of conversation within the democratic party as to the future of you know

whether president biden stays in this rate that in the race excuse me the conversation at minimum is not going to go away anytime soon. When do we start to really think about what policy could mean for where the markets go from here? Well, first of all, whether it's Biden or Kamala Harris, which if it isn't Biden, I think my opinion is that she is going to be the prohibitive favorite. There's no policy difference really between those two. I mean, certainly Trump did get a bump up in the election. His probabilities and all the betting markets went up. And there was a little bit of reaction. By the way, I don't think that little bump in bonds, bond yields was

due to, oh my goodness, there's going to be a worse deficit under Trump than Biden. I think there were a lot of other things that were basically happening at that particular time. But, you know, we had Trump for four years. I mean, there's much less uncertainty with a Trump presidency now than there was in 2016. If we remember, when he surprisingly won, we had a plunge in the S&P futures on that election evening. And then five hours later, they soared when they saw the Republicans won everything and were going to give a massive tax cut. So, I mean, it's going to be very, very different now. Even the tariffs that he proposes, if he can even get those through or goes through with them, are milder than they were back then. And nothing

else is really as extreme. So in some way, I'm not sure we're going to have that election volatility that we saw eight years ago or or or even four years ago. Well, I mean, the deficit is is higher now than it was. Obviously, the prospect of tariffs plus much harder line immigration policy is what some would suggest much more inflationary. Correct. is what some would suggest much more inflationary, correct? So there is the prospect of bond yields remaining at least somewhat elevated until there's more certainty around those types of policies should the former president be elected again.

Yeah, I would say that. I mean, it's interesting if we if we make the argument. I mean, and some have that the the immigration legal or illegal. I mean, you know, basically, Trump has said, I, I like legal immigration and I want to give green cards to everyone that has a college education. The problem is with a lot of the immigration we had there, at this point, they're among the lower skilled. And that's why we've had maybe no productivity growth during the last six months. I'm not trying to say one thing or the other in terms of who we're going to let in and not let in, and whether these tariffs we're going to let in and not let in and whether these

tariffs are actually going to come through or not. Listen, it's going to depend on Congress. Are the Democrats going to take the House? Are they going to keep the Senate? There's a lot more than just a five percentage or four percentage point tick up in probabilities that we saw in those prediction markets, I think, to really change the scenario. Ultimately, it's going to be the economy. It's going to be the earnings of the tech firms and all the other S&P components that are going to be driving this market, I think, more than what I see on the presidential side. All right. We're going to leave it there.

Professor, I appreciate your time. Brian and Bryn, we'll see you soon as well. Everybody have a good weekend. To Pippa Stevens now for a look at the biggest names moving into this close on this Friday. Pippa. Hey, Scott. Well, shares of Macy's are popping about 10 percent after a Wall Street Journal report that the investor group of Arkhouse Management and Brigade Capital Management is sweetening its buyout offer. The journal says the group is now offering about $24.80 per share for Macy's.

That's up from $24 previously. And Caesars Entertainment is slipping after announcing it's buying Australian sports betting technology company Zero Flux. Financial terms of the acquisition were not disclosed. Those shares down about 20 percent so far this year. Scott. All right, Pippa, thank you. We're just getting started. Up next from the professor to the dean of valuation class is. Well, it's not back in session. It's continuing with NYU's Aswath Damodaran.

He's breaking down how he's navigating the mag 7 and the pullback in NVIDIA. He'll join me after the break. We're live from the New York Stock Exchange. You're watching Closing Bell on CNBC. All right, welcome back. NASDAQ again leading the markets today. It's an all-time high heading for another record close. Mega caps, Amazon, Alphabet, Meta, and Microsoft, also Apple climbing to their highest levels ever.

Joining us now to share whether this rally has gotten overextended is the dean of valuation himself, Aswath Damodaran. He's the president of finance at NYU's Stern School of Business. Welcome back. It's nice to see you. Thank you for having me.

I feel like, you know, it's becoming a bit of a broken record. I mean, we have you on. Tech stocks go up. NASDAQ extends its record high. And I ask you the same questions because they're the only questions that really seem to matter right now. But your answers might have changed because the stocks continue to go up and the valuations theoretically are getting more extended. How do you answer it now? It's a bit like Groundhog Day. You're absolutely right. We talk about the same issues over and over.

But collectively, these seven stocks have had, I mean, it's not just the last six months. If you look at last year and a half, they've added $8.8 trillion in market cap, just these seven companies. Just to give you perspective, the second largest market in the world, China, is a market cap of $12.1 trillion. These seven stocks alone have added more in market cap than the entire German market, the French market, the Swiss market. It's been an astonishing run.

But I would also argue that before we dismiss these as risky tech companies, these are the money machines in this market. So when Jeremy Siegel talked about value stocks, I think in many ways, these have become the value stocks for investors who care about earnings and cash flows, because these are the companies that are delivering those earnings and cash flows. Wow. So you don't necessarily think that we're in any kind of danger zone in terms of valuation here? No, if we're in a danger zone, it's not just the seven stocks that are in the danger zone or tech stocks. It's the market overall. I mean, I compute a monthly market equity risk premium. It's my

personal indicator of how hot or cold the market is. Start of July, that equity risk premium, the implied equity risk premium for the market is 4.11%. That's the lowest number it's been since September of 2008. In other words, it's almost as if the market has raised the last 15 years, and we're looking at numbers very much like what they used to be before the big crisis, the 2008 crisis. And the question we can ask is, is the market overreaching on that assumption? But a 4% T-bond rate and a 4.11% equity risk premium is 2005-2006 numbers, not 2018 or 2019 numbers. Does that tell you that we might be heading into a certain place we need to be aware of? Yeah, I think we need to be careful. I think 4% to me is a red flag, at least from the

numbers I've looked at historically. Once equity risk premiums drop below 4%, it's almost like a magnet pulling them back towards a 4%. So I'm going to track that number, and I track it at the start of every month. And at the moment, I think we're getting to a point where even pre-2008 status, you'd say this market is reaching a zone where you might need a correction to clean it up again. I think what's interesting is you also make the point that the market is not being driven by rate cut expectations. Now, once I'll grant you that because it feels like we recently anyway stopped obsessing over the Fed. However, however, today we're thinking about it again because we got the jobs report. The Fed chair himself is on the hill for two days next week and we're going to have

more inflation data coming down the pike in the next handful of days or so. And we're going to have more inflation data coming down the pike in the next handful of days or so. And we're going to start thinking about rate cut expectations. And I think at this point, there's a pretty good expectation, and it shows in the market futures itself, of September, December cuts coming. So we must be pricing it in at least a little bit. Let me suggest an alternative narrative, which is, let's say rate cuts happen. The Fed cuts rates in September, December. But let's say U.S. Treasury rates, especially at the long end, don't change very much. In a sense, the market's saying the rate cuts happened. T-bill rates, the short end of the treasuries might be affected. But my point is that the market seems to be going up in spite of rate cuts not happening.

It's almost as if the market has decided there's a different narrative driving it. And I think the closer we get to November, I think the less rate cuts are going to be the issue and more the issue is going to be what's going to happen on tariffs and taxes, which are going to be driven by what happens in the election. Well, that's what I ended my conversation with the professor about. Do you think, I mean, are you already thinking about that as you think about where the markets can go over the next five to six months? And at what point do you really think the market starts to price in changing policies around both of those issues? I mean, it's always it's been one of the things that's troubled me over the last year is how the market doesn't seem to be factoring in the potential shift in corporate tax rates that

might occur next year. I mean, I value companies and changing the marginal tax rate from 35 percent to 21 percent, which is what happened in 2017, has a big effect on value. And if it changes back to 35 or 30 or even 28, there is going to be a valuation effect. Maybe in the momentum we're ignoring all of that, but I think it's going to become more central to the market discussion the later we get into this year and the closer we get to the election. Well, I mean, what if it goes down to 20, right? There are some suggestions if, you know, the former president's reelected that, you know, he wants to reduce them even further. I think at this point, 21 to 20 is less of an issue than 21 to 28. So I think there's no big boon you're going to get from getting from 21 to 20 because the effective tax rate would

probably shift down a few basis points. but 21 to 10 would make a big difference but that would drive a deficit through the roof and i don't think anybody's talking about 10. but there are people talking about 28 or 30 percent tax rates professor to be continued i appreciate you joining me enjoy the weekend we'll see you soon it's professor aswath motor in nyu thank you up next capital wealth planning's kevin. He's going to tell us what he thinks today's data could mean for future cuts from the Fed, where he thinks investors should be putting their money to work in the second half. He's an always active participant in this market. See if he's got something new for us, too. We'll do it next. We're higher today.

Stocks are after the June jobs report sent bond yields lower. My next guest says this record-setting rally could be running out of runway. Joining me now is Kevin Simpson. He is the founder and CEO of Capital Wealth Planning. It's good to see you. Why are we running out of runway? Some say we've got a lot of room left to go here. I think over the longer term,

intermediate term, absolutely, we've got longer, higher and better. But over the short term, I think volatility is going to play a bigger part. Obviously, with the election, there's going to be tremendous volatility, at least within the headlines. But just looking at how stocks are priced, Scott, since February, we've been very, very range bound. The Dow's up 5 percent, the equally weighted S&P's up 5 percent, maybe 4 or 5 percent in that range. Most of that return came in January and February. We know the AI story. I mean, there's nothing more to talk about the fact that they're pulling everything higher within the broader indices. But I just think that markets are priced to perfection right now for most of the market, for most stocks. And if we get a little volatility, if we get a little

air pocket, I think it's a buying opportunity, not something you're trying to time or sell the news. But I just think with a market that hasn't given us a 5% or 10% pullback in seemingly so long, that we may see some opportunities here in the shorter term. How can we be priced for perfection in so many stocks when so many stocks haven't performed nearly as well as the mega cap tech ones have? Yeah, you know, there's absolutely value in some of the names that we own because their earnings have gone higher and their stock prices haven't moved. They've been buying back shares. So their their P.E. ratios have come down a little bit. I think I'm talking more just the broader index, because you talked earlier about the market calls of fifty six hundred, fifty eight hundred, six thousand on the S&P. So much of that earnings is fueled by the big tech stocks. Here we are in July. We can start looking forward to twenty

twenty five earnings, but they need to be the big boys here. They need to be the ones to carry that market. So for the broad indices, I think they're very close to perfection. Oh, I got you. I got you. I mean, that's why precisely why some always point to the outperformance at the index level versus the individual stock level when looking at year to date performance of the markets themselves. Now, let me ask you this, because I look at your holdings, okay? And, you know, unlike many that we've been speaking to lately anyway, you hold a bunch of stocks in a wide swath of areas, right? You've got Caterpillar, Conoco, Walmart, Verizon, TJX, Procter, Honeywell, Home Depot. I've only named a smattering of the ones you have. My point is they're outside of mega cap tech. Yet you suggest to our producers outside of

AI, there's not much compelling or that we feel that we need to own or rush to own in any way. Man, if that doesn't say what the current market environment feels like, I don't know what does. Yeah, you know, it's been like that for two years. So maybe I've got PTSD with these value names. But if you look at this week, truth be told, we had a half day Wednesday, a lot of people playing hooky today. It was a huge day today for economic data. We'll get that digested by the markets, I think, on Monday, Tuesday and Wednesday. You look at the ISM manufacturing on Monday.

Not great. ISM service on Wednesday, like contracture, like very much in contraction territory. If you strip out the COVID years, it was like the worst print we've seen since 2009. So it shows the economic growth is slowing a little bit. I think that's what the Fed expects. Today, the jobs number was really good from the perspective of what the Fed wants to see. Four point one percent unemployment. It's not horrible, but it's looking at that dual mandate jobs, inflation and inflation is coming down, even though it's stalled for a while. So the good news is bad news. Mantra holds

for now because it gives the Fed the ability to move forward the rate cuts. I think after today, December is like a sure thing. September still may be 50-50. It's going to be data dependent. I don't think they're going to rush into it. I listened to the great interview with the professor. I understand the theory that the sooner the better, so that you don't run the risk of tripping over a recession before you start rate cuts.

But I don't know that if a September rate cut's the first one or a December, it's going to make that much of a difference. I think the idea that you're going to see at least one rate cut this year is constructive. The market is absolutely pricing in two, Scott. Yeah, I know it certainly is. I've got to bounce. I'll see you soon. Thanks, Kev.

Thank you. Kevin Simpson up next, tracking the biggest movers into the close. Pippa Stevens back with us. What do you see? Hey, Scott. Well, one stock is hitting a new high for the first time in 24 years. We've got the details coming up next. It's Friday. We're less than 15 from the closing bell.

Let's get back to Pippa Stevens now for a look at the stocks that she is watching. Pippa. Hey, Scott. Let's start here with SoftBank because those shares hitting a new record high for the first time in 24 years. The Japanese giant has been given a boost by the public market success of British chip designer Arm, which SoftBank owns a majority of. Founder Masayoshi Son has said the firm has shifted from defense to offense because of investment opportunities around AI. And private equity firm Carlyle Group is reportedly in exclusive talks

to buy medical device maker Baxter's kidney care spinoff Vantive, according to The Wall Street Journal, which says the deal would be valued at more than $4 billion. Shares of Baxter jumping about 5% on the news. Scott? Pippa, I appreciate it. Thank you. Pippa Stevens still ahead. The big banks falling in today's session. We'll find out what is behind that sector's drop and what to look out for when those names report earnings later next week. All that's coming up. We'll be right back. All right, coming up on Monday, an interview you do not want to miss.

I'm going to be sitting down exclusively with Boston Celtics majority owner and governor, Witt Grossbeck, after winning their record 18th title, announcing they are planning to put the franchise up for sale. The majority ownership group is. You don't want to miss it. Get into all of that and more. It's three o'clock Eastern right here on Closing Bell from Post 9 on Monday. Up next, Bitcoin is falling and on pace now for its worst week in more than one year. What's behind that drop and how the rest of the crypto market is holding up we'll take inside the market so next. We're now the closing bell

market zone CBC senior markets commentator. Mike Santoli here to break down these crucial moments of the trading day. Plus today McKeel on the selloff in bitcoin and crypto stocks. Leslie Picker joining on the banks falling ahead of earnings next week. Michael, I'll begin with

you. We're going to close this shortened week with record highs for the S&P and for the Nasdaq, barring a dramatic turnaround in the next four-plus minutes. Yeah, well, I mean, we can sort of hope for that, but I doubt it. I mean, it's one of those objects in motion tend to stay in motion stories. And it's also the manner in which it's doing it. So today, of course, everyone can point to the mega caps just kind of upward drift is enough for the indexes to be up, the S&P to be up half a percent. But not only that, it's not just that they're hogging the upside. It's that it's almost contra to the rest of the market. The low of the day this morning for the Nasdaq 100 was the high of the day for the Russell 2000.

They're trading inversely, not just somewhat distinctly. And that just sort of tells you what's going on. When the market plays defense, it buys the secular growth stocks, lower highs in treasury yields, lower highs from the prior time in the dollar. Clearly, the market is pricing in risk of a deeper slowdown, and maybe the Fed's going to have to shift toward an ease before long. And in the meantime, it's still in the market's mind, OK, to buy Microsoft and Meta. Maybe it's a little bit of risk off is feeding into Bitcoin down 20 percent in a month. That'll get your attention today, won't it? Yeah. Yeah. It's been quite a day. You know, we've been talking about these Mt. Gox distributions all day long. This, of course, was the exchange that was hacked and then went bankrupt 10 years ago.

And this was an expected event. The trustee gave the market a heads up that those distributions were going to begin this month. So to me, you know, it was always likely a short-term move. And it kind of looks like the market is feeling that, too, a little bit at this point in the day. Bitcoin and crypto equities definitely off their lows. Bitcoin down, you know, just 2-3% now. Coinbase getting ready to close flat and I know a lot of the mining stocks have actually flipped green.

So, yeah, it looks like, you know, the selling was maybe a little bit aggressive due to the US holiday yesterday. And buyers are finding a nice kind of entry point here. Yeah, I'm going to track, obviously, risk sentiment as it generally has. So we'll watch that today. Mikhail, good weekend to you. Thanks for being with us. Leslie Picker, three sectors in the red today. And the one you cover is one of them, financials.

It is indeed in the red, Scott. Regionals such as Fifth Third Citizens kind of leading to the downside, as well as Key Corp. Discover Financial Services is the worst performer among the financials today. The moves come after Wells Fargo analyst Mike Mayo downgraded the 2Q earnings estimates for several of the regional banks, including Key Corp, Comerica, and Truist. That was on weaker net interest income commentary. There is this expectation that the profitability metric for loanmaking, NII, will trough sometime in the first half of the year, but as rates stay higher for longer, that could get pushed out.

So that's some of the concern there. We'll have a better sense, of course, when banks kick off 2Q earnings one week from today with J.P. Morgan, Wells Fargo and Citigroup leading the pack. Perhaps it's worth noting, though, that Mayo actually upgraded some of the larger names, J.P. Morgan, Morgan Stanley and Goldman Sachs, upgrading those earnings on the prospects of a capital markets revival, Scott. Well, I mean, he's long made the case, right? Goliath is winning. Those are his words, not mine, as he makes the continued case for the bigger banks.

Les, thank you. Good weekend to you as well. Leslie Picker, big week next week, OK? Yes. Fed chair on the hill, PPI, CPI, and then these bank earnings say hello, earnings season. For sure. No, I think CPI in particular, I mean, it's not necessarily, you know, the central swing factor of what happens with the Fed.

But right now, nothing going on in terms of the economic data or even the Fed's projected path is telling you that the soft landing is off the table or telling you that we're off course with regard to the great 1995 soft landing scenario that we all perhaps would consider the ideal. But the longer it goes and the less friendly data you get, the more that does change. The banks move is interesting because I actually lump it in with a lot of what's going on with

wavering confidence in the immediate cyclical story. And it's hitting the banks. It's hitting consumer discretionary to some degree outside of Amazon today. And it's also hitting the industrial. So I do think we're at this hesitation moment where nobody's abandoning the story, but you're also at the margin losing a little bit of faith that we're going to pull it off. Well, because you got the unemployment rate at 4% or below for 18 straight months. So even a tenth of a tick higher sort of just raises your antenna.

Yes, the trend is definitely pretty entrenched right now for softening labor conditions. There's no real way to look away from that. And then you figure how that factors in as well as to how the Fed is thinking about it.

And we'll get some clues, perhaps, from the chair next week. On the Hill. Good weekend, everybody. I'll see you on the other side of that in the OT now with John Ford.