Closing Bell - Closing Bell: Remarkable Run for Stocks 10/9/24

Episode Date: October 9, 2024

Capital Area Planning’s Malcolm Ethridge, American Century’s Mike Rode and Obermeyer Wood’s Ali Flynn Phillips tell us where they think the rally is headed. Plus, top wealth advisor Richard Saperstein reveals his year-end playbook. And, Phil Lebeau explains what’s behind the drop in Boeing’s stock today. 

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 a record high for the S&P and the Dow. The bull market marking two years this week. We'll ask our experts over this final stretch. How long can it last? Including top wealth advisor Rich Saperstein of Hightower. He'll tell us how to position in the months ahead. In the meantime, take a look at the scorecard with 60 minutes to go in regulation. Outperformance from the semis again today. But you can see it's a gathering strength rally today as we are above record closing highs for the Dow and the S&P. Kelly was just talking about cruise lines.

Well, they're in part putting stocks on track for that record close because they're all higher today. Got some upgrades in the space. Norwegian's up near 10 percent. Yields continue to be a big part of the story. They've calmed down and that's helping stocks as well. We do have other standouts today to note, including General Motors that did get an upgrade today. Nike's higher on a favorable teen survey. All of it takes us to our talk of the tape. This remarkable run for stocks up 60 percent since the bull markets start. How much can we count on this rally to continue? We will ask Malcolm Etheridge. He is managing

partner with the Capital Area Planning Group, also a CNBC contributor, and is here at Post 9. Welcome to New York. Good to see you here. Always good to see you. I guess that's a key question, right? We're two years in this week. Saturday is going to mark two years of this bull market. How long can we count on it lasting? How much time we got? I think that AI really is proving that it has that kind of staying power. Last year, the story was Microsoft. This year, the story has been NVIDIA. What's going to be the stock next year that the AI arms race powers higher and higher? That's the real question we should be asking, not necessarily will it go on. So I guess implicit in that is your belief, it sounds like, that you think mega caps are going to continue to take us to the promised land here.

Well, yes, and I think mega caps will definitely continue to take us to the promised land, not at the pace that they have the last couple of years necessarily, but I think that what we're seeing is the broadening, to use that word that we keep using, is really being impacted by AI once again, right? So you look at things like real estate, you look at things like energy, you look at materials, manufacturing, those things are all really being powered, again, by our demand on the grid. Let's talk about this two-year-old bull market because it's overcome a lot. Now, there do remain naysayers on what's happening. I don't think as many as existed before. But can you just speak to the resiliency of this market and what continues to guide it today in the face of continued noise here, there, and in parts everywhere?

Yeah, I think you're making a really good point. If you consider that rising rates were supposed to be the thing that really crushed the markets. And in the face of the highest rates we've seen historically in decades, right, the markets that I don't really care, especially since the companies powering the markets outperformance were ones that didn't really need to borrow to invest in growth anyway. Right. If you consider the cash sitting on the balance sheet of Microsoft or Google or Amazon, they weren't really worried about the Fed so they could go build these LLMs that are powering still the AI revolution that we're talking about. So now we're at a moment where we're in an easing cycle. The Fed is cutting rates, which means that the companies

that couldn't necessarily invest in growth to catch up to what's happening with the trend, have the capacity now to either issue debt or go borrow to invest in AI, which gives us another second leg of this AI revolution. You feel like we need to reset our expectations at all on where rates are going to go from here or the pace at which the Fed is going to continue to cut rates. I go to the minutes, which were released an hour ago. Markets pricing in a 20 percent probability now of no change in November, although obviously the overwhelming number is still favoring 25 basis points. But the pace of what the Fed is going to do feels like it's going to slow. I think we have to at least brace ourselves for the idea that the Fed could decide to go slower from here.

Right. To your point, maybe it's still 25 basis points at the next meeting, but then it's zero for some time. Rather than assuming that an easing cycle means it's an elevator down. Right. It's been an escalator up. Probably won't be an elevator down. That's your point of view. Because, look, I remember you were one of the outliers who were saying, look, I know everybody's on the same side of the boat talking about cuts. There is a chance that they actually hike. Not that we need to really reset our expectations, not only for what they're going to do, but what the action in the bond market is going to be. Well, I think that we have to throw out the playbook of what has worked in the past that got us here simply because we can't look at decades of historical data and extrapolate

what's going to happen going forward here, because the whole COVID pandemic cycle that we're still dealing with has been such a unique situation, right? So the fact that unemployment has been as low as it has with interest rates being as high as they have, and that hasn't really had an impact on a bull market the way that it normally would historically. Those are two things that usually compete with each other for who's going to lead the day. I think that we just have to reset our expectations for what that means. But I do take your point on interest rates. And I look at the fact that historically, right, I have to bring this up again. The yield curve un-inverting is usually the sign of things to come.

And so we should at least consider that maybe the recessionary indicator that it is is telling us something. And we need to position ourselves for that. I mean, does it have the ability to make us further question the multiple, the price that we're willing to pay for stocks if rates remain elevated? Earnings have to live up to a pretty good expectation. Rick Reeder was on with us yesterday on the Halftime Report in which he said, I feel uncomfortable at these multiples being long. I mean, there's so much cash on the sideline. It's not like he's short or bearish by any stretch, but it's starting to get a little uncomfortable for people who look at the multiple of the market and say, I think it's a little rich. Yeah, but I think you could make that case in 2013, 15, 17, 19, 21. Like every time we have these headlines that say

multiples are stretched, they're too high, you can't justify it from here. Companies like NVIDIA come out and say, yes, we absolutely can. Right. And so I can't justify it from here. Companies like NVIDIA come out and say, yes, we absolutely can. Right. And so I don't think it's necessarily a case where we look at the multiples alone. But I do think what's happening where we were talking broadening before what's happening is the market is coming. Earnings estimates for the rest of the market are coming up to meet the mag seven, not the mag seven decelerating and coming down. I think FactSet is looking at 2025 earnings. The estimates now are at like 17.5%.

The rest of the market is roughly 1%, basically, for the same time period. Well, that's actually an increase from January 2023, I think, when the bull market first started. And so you have to consider that the broadening is everywhere else but tech, but tech is not slowing down to meet that broadening happening. So I understand the argument on multiples, but I don't necessarily think that it is indicative, once again, of the market that we have today. Let's talk about some of these mega caps that you own. Amazon, I want to start with because there's been several downgrades of late. Stock

was down like eight of nine days, had a bit of a rebound for a couple of those days. But are you concerned about the near-term trajectory of that stock? I'm not. I think it's a big mistake to be selling off Amazon here. I think one of the things that's being underrated right now is that advertising business that lives inside of Amazon. And it's sort of the third most important player, if you just consider what we normally talk about, AWS, retail, and then advertising. But again, AI, if we think about the power to generate advertising using AI and how much that improves the margins that already were really nice to begin with, north of 50 percent estimates say, we have to consider what that means for a company like Amazon that has all of that data on what you and I love to buy. I feel like Microsoft is another one we need to talk about because it's kind of quietly underperformed and reasonably dramatically so. It's gotten downgrades. There are notes about OpenAI losses that are going to be absorbed by Microsoft.

As I asked one of our guests yesterday, we gave all the love on the way up because of OpenAI. Now do we need to maybe take a step back and think about the lack of profitability for OpenAI, Microsoft's investment in it, maybe what the road looks like towards profitability and what ultimately it's going to mean for the stock, which is only up 3%, not even over the last month compared to, let's say, Meta, which is up near 17. NVIDIA is up near 24. Let's consider the fact, though, that Microsoft invested $13 billion, roughly,

credits and everything else that made up that number. And in return, they received about a trillion dollars in market cap. I would take that bet all day, every day. And so I take your point that quietly on the way down, we're not hearing as much noise. And I think that they do need to clean up what their relationship with OpenAI is going to be, right? They rejected the board seat that they once wanted. Apple also decided we don't want to touch it either.

We don't want the DOJ scrutiny. But I think that figuring out what OpenAI is going to turn itself into from here, post this last funding round, is going to help Microsoft figure out its own path forward. It's definitely been a bit of a distraction and not the helper that it was throughout 2023. All right, let's broaden our conversation now. Let's welcome in Mike Rode of American investments and ali flynn phillips of over myer wood it's great to have both of you uh with us ali i'll ask you first um presumably you heard our conversation um we have new record highs on the s p and the dow jones industrial average today

um what is your outlook moving forward well first first Scott thanks for having me. We remain cautiously optimistic. It's really nice to see interest increase breath in the market. Earnings remain strong and we feel that economy is going to have somewhat of a soft landing here. So for us in terms of

staying invested focusing on high quality. And focusing in terms of on those companies with great fundamentals for that long term cyclical trends. Is the way to stay positioned in this market. Mike, you know, I remember many conversations that we've had on the way up. As I said, we're marking we're marking two years of this bull market. Are you are you bullish?

Are you not? What's your outlook? Yeah, I'd say we're bullish on fundamentals. We we struggle a little bit more with valuation. I recognize Malcolm's point, but large growth in the Magnificent Seven look pretty expensive. Price for perfection, I think. And there are other areas, whether it's the S&P 493, mid caps, small caps, where you're seeing that acceleration in earnings and you're not paying for it as much as you are in large cap growth in the Magnificent Seven, where there will be a slowdown in earnings. So I think there are areas to go where you're not overpaying. There are some

good and improving fundamentals driven by whether it's the yield curve steepening, whether it's like AI expanding out from NVIDIA and helping utilities and other companies, or whether it's reshoring, bringing back manufacturing to the U.S. There's a lot of really positive tailwinds that are happening in the U.S. economy. And so, but I think you do have to be aware of where valuation is and try to go to areas that maybe haven't priced in such a perfect outcome. I feel like, Mike, maybe one of the principal lessons of this bull market will look back on and say that valuation will prove to be that one thing that some look to overplay, that it made people uneasy on the way up at several times along the way up. It was, man, those stocks are

they're too expensive. They're well above their historical averages, for example. And here we are here we are marking new highs. So if you've used valuation as a reason to sit on the sidelines, you've watched the party go by. Oh, for sure. I would hope that folks are not on the sidelines. But, you know, in the moment, valuations can look, you know, when you look at fundamentals and look at stocks, there's that fear of missing out and you want to chase and you think things are going to continue to get better forever. You extrapolate today's results out into the future. But the reality is over 100 years of investing, valuations are probably the biggest driver of long-term returns. So we believe valuations are important, whether you're investing in growth or value.

And on the other side, kind of the more important thing is less important is the absolute earnings growth rate. It's more the direction. So when you're getting acceleration and improvement, that typically leads to alpha generation. There's some areas in the market today, like whether it's housing or on the consumer side, boats and RVs, those groups are down 50, 60 percent from the peak. And we might be bouncing along the bottom and things looking to potentially improve on lower rates, on a better economic outlook. And so we think there's opportunities in areas

that haven't kept up and may not be as hyped as some of the Magnificent Seven stocks have been. Ali, where's the best value in this market right now? So first I'd say on AI, so many people talk about the hyperscalers or the chip designers, but the key thing is really looking at the companies that are taking AI to benefit their overall businesses. about the hyperscalers or the chip designers. But the key thing is really looking at the companies

that are taking AI to benefit their overall businesses. They're creating great efficiencies and wonderful competitive economic votes. Look at something like Walmart that's using multiple language models to improve their catalog, or look at Deere that's using it to improve in terms of how you're doing pesticides

and things such as that. So these traditional companies that are using technology to improve, that to us is great value. Other thing is probably the housing sector. I mean, we're gonna finally see an improvement in housing, something like a Home Depot. They're gonna really improve

in terms of when people are repairing those older homes, buying the new appliances and hiring the professionals. So while we agree technology is doing well, broadening the scope and actually looking at some of these other opportunities, to us it's really compelling value. You like the housing trade? I think it's a reasonable trade,

but I think the housing sector is so broken that it's gonna take more than a couple ticks down in interest rates to really unlock the pent-up demand that exists. I mean, mortgage rates are up, obviously, since the Fed cut rates because of what yields have done. We haven't gotten the expected drop I think some were looking for in rates. I remember, you know, Diane Olick the other day was just talking about how mortgage rates were up like 27 basis points in a really short period of time.

But we're still underbuilt, right? That's the real historical problem. Since 2011, the home builders, housing starts trended down for a decade because housing build, home builders just did not want to put shovels in the dirt and take the chance to be caught out if another 2008 type scenario happened. And we really haven't recovered from that. So at a point when you have millions of millennials that are looking to actually spend money to buy their first homes and get out there, there's just no supply, right? So that's really the problem that we have to fix. And I don't think interest rates are really going to be the thing to do it. What do we think about, Mike, financial stocks as we're going to be talking about earnings here at the end of the week? It's going to set the tone in some respects

for what this season may look like, at least at the outset. And the space is done quite well. Some suggest you can't lose the financials if you want to believe that the bull market could continue to roll on at any kind of clip. Yeah, so financials have done a little bit better recently, but it's been a really tough run. I mean, we've had an inverted yield curve for almost two years, and that's really tough for regional banks, definitely, which are trading 20, 30 percent below their long-term average. And there haven't been a lot of IPOs. So if you look at the bigger banks, I think Jamie Diamond was out yesterday saying that it needs to be easier for companies to go public. A little bit self-serving, but he's probably right. IPOs have been pretty slow, but there have been a few. And I think as we look into next year, you're going to see that these large pipelines actually come through. So in terms of financials in general, I think we have a contrarian, more positive view on

regional banks, given the steepening yield curve and credit metrics have been really good. We hear a lot of stories about commercial real estate issues and other delinquencies out there. But the reality is the underlying metrics have been pretty good. And what you have with regional banks is, again, 20, 30 percent discount to average valuations. And you're getting dividend, you know, four or five percent yields in many cases. So I say we have a contrarian positive bias on that group. Yeah, I get the argument that interest

rates are going to be the thing to really drive the financial sector. And I think historically, again, that has been true. The net interest margin is the thing that really drives the show. But in reality, if you're going to play the financials, the GSIBs are where you really want to be, because those are the companies that have the ability to collect those deal premiums on M&A activity. They're taking companies public.

They're forcing mergers and acquisitions, those kinds of things that are very likely to happen following November's election with a much more favorable administration than the one that we currently have with Biden. We'll leave it there. Thanks, everybody. I appreciate it. Mike and Ali, thanks, Malcolm. We'll see you back here, hopefully soon, on our set at Post 9. To Julia Boorstin now for a look at the biggest names moving into the close. Hi, Julia. Well, let's take a look at some stocks moving on Piper Sandler's new teen survey, which surveyed over 13,000 teenagers across 47 U.S. states on their spending habits. Nike remaining the number one brand for teenagers in both apparel and footwear, but Piper noting that the brand has lost mind share, especially with women.

Shares of Nike, though, up nearly 2.5%. Elf Beauty also maintaining its position as Gen Z's number one cosmetic brand, gaining interest especially with female teens. Shares of Elf Beauty also moving up about 1.3%. And Instagram was found to be the most used social media platform among teenagers at 87%, but still follows behind TikTok, which is teens' favorite social media app.

Now, shares of Meta are down about half a percent. Scott? All right, Julia, thank you. Julia Borsten, we're just getting started here. Up next, navigating the tech trade, EMJ's Eric Jackson's back. He's going to reveal the names he is banking on right now. We're live at the New York Stock Exchange. You're watching Closing Bell on CNBC. Welcome back. Nearing the two-year anniversary of the October 2022 bottom for

stocks. Tech leading the way since in a big way. Most of it on the back of NVIDIA's 1,000 percent gain. But is the sector still set up for more upside after that run? Let's ask EMJ Capital's Eric Jackson. Welcome back. It's good to see you. You too. Good time to sort of take the temperature of tech, if you will. What's the reading? Well, I agree with Rick Reeder, who you chatted with a couple days ago, who says, you know, it's getting more difficult to find screaming buys. Two years on in a rally, Scott, for sure. But there are still some great

stories out there. I mean, I remember coming on with you in June of 23, banging the drum for Carvana at the time was like 15, 17 bucks, something like that. Today, it's like 190. So, you know, it's very difficult to kind of look around and say, what stocks are out there? They're going to 10x from here over the next, whatever, 18 months. You know, that's going to be tough. But that story of Carvana, you know, and there are a lot of others, you know, NVIDIA, too, fits this bill. You know, a lot of these stories, you sort of set it and forget it. If there's a good long-term secular growth story, you can get so distracted by focusing on the macro and the Fed or Black Monday, Tokyo Monday and all this.

And the growth stories play out over time. And I think there are still a lot of those out there. So let's go through some of the holdings. I want to ask you about China specifically, but I want to hold off on that for a moment. You have Apple. What's your read on where this stock goes from here? I mean, I think there are some legitimate questions about demand for the new phone, how much these new AI innovations are going to spur an upgrade cycle. What's your own

take? I still like it. It's one of my favorites amongst the big tech names because I think there's not this immediate rush to go out and add Apple intelligence on the new iPhone. These features, like you say, are going to play out in a staged process, but they are powerful. I do believe that we are going to see the mother of all upgrade cycles, probably the biggest upgrade cycle for Apple since about, you know, 2015 or something like that. But it's going to happen over the next year, not just September, October, leading up to the holidays. So I think that that is still a very strong, powerful story. What are you thinking about the robo taxi event with Tesla tomorrow? I think it's going to be the biggest event that they've had since probably the unveil of the Model

X. Sometimes these things are duds and we just don't know. We don't know whether tomorrow night's event's going to be, you know, is Tesla about to, you know, basically disrupt Uber and Lyft and put these guys out of business? Or are they going to partner with them? Are they going to reveal some, you know, great leap forward in terms of their neural networks or their deep learning that only, you know, they have that no one else has based on all the FSD miles traveled? So I think it's going to be significant. I own it. I still like it. It's been one of the laggards amongst the big tech names. And I think it's still underappreciated as an AI story. They still get the benefit of the doubt for Elon and Pixie

Dust and all this. So even though the bears say they shouldn't get the credit. So I think if they if they do come forward with, you know, announcements about permits or something, it could could be a significant catalyst for the stock. You told our producers, quote, the biggest opportunity to make money in the next six months is China, especially China tech. If and a big if the government follows through with its stimulus plans. I mean, we're getting some sniffs here that maybe they're not going to follow through to the degree that the markets seem to be euphoric about. So what does that mean for the Alibabas that you own and some of the other names that are in your book?

Well, you know, anytime David Tepper comes on the network and bangs the drum, you got to sit up and take notice like he did a couple of weeks back talking about China. And he doesn't do it very often. You know, he did say, you know, the government has to follow through. But listen, they've indicated that they will. I think the market got a little disappointed on Tuesday morning when the press, one of the press conferences that they had over there just didn't follow through with a specific stimulus number that they attached to what they were coming at with next. However, they have another press conference coming up this Saturday.

And we've seen sort of two days of selling. The market's having a bit of a tantrum. I think they, like Tepper, I think they are going to follow through. I think they have to follow through. I mean, that economy has been in deflation. It has been slowing for a long time. This has the potential to be the biggest economic announcement ever in Xi's tenure. So when you look at all these stocks, and I'm looking for a 10x-er from here,

you know, China is the place where it has to happen. If there's government support, all these stocks are trading at multi-year lows in terms of their multiples. So you have, you know, there's a name I own called VIP Shop Holdings, e-commerce player over there. 35% of its market cap is cash that's just sitting on its balance sheet. So names like that, you know, really undervalued names are going to rally. I mean, you mentioned Alibaba. It's like 70 percent below its 2021 high. A lot of the Chinese tech names are like that.

So if there is any kind of follow through, these names are going to explode back to the upside. Like if you told me that you had sold Alibaba because of the pop in such a short period of time, I wouldn't have been surprised at all. And I mean, it is worth noting, too, that, you know, for a David Tepper, there's a Stan Druckenmiller who says, no, thanks. As long as she is still in charge, I'm not interested in owning any stocks over there. I'm paraphrasing a little bit, but that's the general theme of thought of what he had to say. You haven't you haven't been wrong to be conservative about China

to kind of hang back. And so, you know, I don't think you'd be wrong to hang back and wait to see what Saturday's press conference holds. However, I just think that the odds are stacked, you know, in the favor of this is a government that's got, you know, self-preservation is important here. They've got to do something. Things are not looking right unless they stimulate that economy. And if they do, there's such little exposure to these Chinese stock names, especially compared to where they've been historically. I mean, it's not inconceivable that you could see some of these names, not just double or triple, but 7X, 8X. They've done it before and they can do it again. I mean, some of the brokerage names over there have been the quickest to jump back when there was a hint that the bazooka was coming

out. So I would look at those kinds of names because obviously people are going to jump in and buy stocks over there. So Tiger Brokers is the name I own. Food2 Holdings is another Hong Kong-based brokerage firm over there that I think has benefited but could jump again if the bazooka comes through. Eric, we'll talk to you soon. Thanks, Derek Jackson, once again joining us here on Closing Bell. Up next, top wealth advisor Rich Saperstein is back with his year-end playbook. Join me just after the break at Post 9.

We're back on The Bell after this. My mom is a Cuban refugee. I'm first-gen, born in the United States. And I think about the times when my parents were teaching themselves English, when they were showing up in spaces, when maybe they were not only uninvited but unexpected. Resiliency lives in my DNA. And I'm really honored to be able to take up space and look in environments and ask who is underrepresented and how can we bring them in. All right, welcome back. Stocks rising for a second day now. Dow and S&P both on track for a record close. Tech once again leading

the rally with Microsoft, Amazon, Apple all higher today. My next guest holds all three. He remains overweight, Tech. Joining me now with his year-end playbook is Rich Saperstein of Treasury Partners, ranked number four on Barron's 2024 top 100 financial advisors list. Always good to get your thoughts, especially as we, I guess, enter into the home stretch. There we go. Of this year. About to mark two years of this bull market. It's pretty crazy, man. Time just flies. How are you feeling about it?

I think the setup is really good. We have the two largest economies stimulating or easing monetary policy. Labor is strong. Economic activity is strong. Inflation is declining and you know the real issue for the stock market going forward is going to be the elevated multiple and the inflated estimates for earnings in 25. Well you say inflated so you're insinuating that you think they're too high? Well multiples are 21, 22 times

next year's 275 estimate which is a 15% increase over this year's estimate. That's right. So it's a lofty goal. And you doubt whether we can reach that? I'm still fully invested. So as a long-term investor, I believe in the equities and where I'm positioned. We should show the S&P 500 because I just have my eye on that as we get ever closer to 5800. Do you think we'd be at 5800 now? I mean

just given all that this market has had to absorb over the last couple of years, I mean forget the couple years even like six months, it's been really resilient. It's truly amazing but monetary policy was designed to slow the economy and bring down inflation. Yet you have fiscal policy that is stimulating through a $2 trillion deficit. So you have an offset, and that's enabled the stock market to continue to push forward. Interesting performance in the last quarter, right? We had tech take a back seat.

Things like financials and utilities and other areas of the market. Does that change anything about how you view the rest of this year? No, we still like large cap technology. They are the established owners of human attention. So they are the dominant global players, billions of customers, and that will continue to be a key part of the growth story. So you continue to lean into those names? Absolutely. We could discuss them individually, but there's factors impacting all of them, which is why we like them. But I find it interesting, though, that while you suggest a little bit of discomfort with the multiple, these stocks are the epicenter of the discomfort,

aren't they? Yeah. So how do you square that? Because I'm basically positioned with the idea that these are long-term holds and they have tremendous growth elements and the market's going to rotate how much they're pricing these companies. But I'm going to hold them for the long term and I see what they're doing. These are very clever managers in all of these companies. But I'm going to hold them for the long term. And I see what they're doing. These are very clever managers in all of these companies. Yeah. You watch Amazon lately. I asked one of our guests already about the stock. I mean, it's traded poorly lately. Concerning at all? No, because they're coming out with Cooper, the wireless broadband that's going to compete with Starlink. So you think about Starlink is running at a six and a half seven billion dollar rate right now. They're going to compete with Starlink.

Think about what it does to the Prime membership and the lock on that, let alone the retail business when you start marrying all that. So Amazon's got a great future going forward. Let's talk about utilities. I mentioned these other groups that did really well last quarter. You've liked utilities for a while. I've been talking about the power generation that's going to be needed for the revolution that you're talking about in AI. All that said, the group was up like 19% in the last quarter, right? Was the best performing of the S&P? Yeah.

And you think that continues? So we started buying Vistra Energy in 2021. A lot of people like that name. Well, we were in it at 16. It's 125 right now. And we recently added more to it. The story is basically the power generation versus consumption is only a 2% cushion in America today. Then you have coal being decommissioned. You have the tremendous growth in AI and data centers. They've doubled since 2021 to 5,400 data centers around America. And then you look at the PJM, the annual auction for surplus power. It was up 800% year over year. All that is a tapestry of great demand, secular, for power generation.

I'd be very focused on the independent power producers in America, like Vista Energy. Okay, so we talked about what you like. Let's talk about what you don't. I just had a conversation, as you may have heard, with Eric Jackson about China. He loves it, assuming the stimulus is going to continue at the clip in which the market was seemingly expecting. You avoid those stocks? Avoid it. Absolutely. China versus the U.S. in the last 10 years, the U.S. has dwarfed the return by 70 percent.

So think about it like the bricks in 01. How's that working out for everyone? So it wouldn't be dabbling in China. Look, if you're a trader, I think you could figure that out. Well, I mean, India is, you know, you may have quibble with, you know, Brazil, Russia, China, I get. But, I mean, a lot of people loved India and its markets did well. And so did America. So did large cap tech.

So, look, you don't have to leave fish to find fish. There's great fish here in America in the markets. Okay. So, do you like the small fish? No, I don't have to leave fish to find fish. There's great fish here in America in the markets. Okay. So do you like the small fish? No, I don't. Because that's a good debate right now, too. That's right. If the economy does well, large cap stocks and small cap stocks would do well.

So small is at a discount to large, which is very wide right now. But I'd rather own the large and not buy the reversion of the mean trade or the fact that the Fed's more accommodative, lower cost of capital for the smids and their floating rate debt. I'd rather stay with large cap stocks. All right, we'll leave it there. That's a good way to end it. Rich, thanks. Good to see you. My pleasure. Rich Saperstein of Hightower joining us here. Up next, we're tracking the biggest movers into the close today. Julia Boorstin is with us for that. Hi, Julia.

One drug maker agreeing to pay up to $2.2 billion on settled suits and one chip maker surging on new AI offerings. More after the break. We're about 15 out from the closing bell on yet another record setting trading session. Julia Boorstin looking at the key stocks today. Julia. Well, shares of GSK jumping about 6% as the drug maker agrees to pay up to $2.2 billion to settle 93% of U.S. state court liability suits, which claim that a discounted version of GSK's heart burden treatment drug, Zantac, had links to cancer. And shares of Astera Labs gaining about 15% after the chipmaker introduced a new series of fabric switches, a key component of data management in artificial intelligence.

Yep, now about 15 percent, Scott. Julia, thank you. Julia Boorstin still ahead. CNBC catching up today with JP Morgan COO Daniel Pinto. We've got the highlights from that big interview just ahead. We're all over this rally, too. Dow and the S&P, both, as we said, on track for a record close. S&P trying to top 5,800. We'll watch that next. We're now in the Closing Bell Market Zone. CBC Senior Markets commentator Mike Santoli here to break down the crucial moments of this trading day. Plus, Boeing, the worst performer on the Dow today.

Philip Oh is going to tell us what's going on there. And Leslie Picker with the headlines from her sit-down with J.P. Morgan's president and COO. All that coming up first, though, Mike. We're pushing on 5,800 on the S&P 500. We'll have a new record close for that and the Dow today. Yeah, it seems like we're burning up some of that caution that really did set in place coming into October,

this idea that so many people were braced for potentially more downside chop. I feel as if, as I said before, we're dealing with all the known positives, an economy that actually seems like it's perkier than we thought it was. Yep, Fed might slow down the easing path, but so what?

It doesn't come at any cost. CPI tomorrow. Yeah, there's some stakes involved there, but since we've already gone into a place of listening to a potentially less dovish Fed message, it doesn't seem like it's that dangerous. All that being said, we still have the VIX at 21. People are still saying it's pre-election time. We can't just assume that it's going to be cutting loose to the upside in a real dramatic

way from here, but we'll see. I mean, positioning will be interesting right now, obviously. You have this good thoughts about the economy. Well, Fed's going to be cutting maybe a little less than we thought. Case in point, the Russell. That's where it probably shows up more acutely, right? I think that the threshold for belief in the Russell is higher. You have to see these companies actually coming out and justifying where they're trading right now

and showing that you're going to have decent earnings growth to look at there. But in general, it's a more balanced market than it was. It maxed out and underperformed for a few months. Now, its select ones are participating again. So it's all pretty healthy. Everyone's talking about valuation. It's an issue. It's definitely a little bit of a restraint on expected forward returns.

It doesn't usually manifest, though, in the here and now when the Fed's cutting and earnings are growing. Not all great today. Obviously, Phil LeBeau, Boeing, the worst in the Dow, as we said. Tell us what's going on. Well, we're almost a month into this strike with the machinist union, Scott, and there's no indication that it's going to end anytime soon. Yesterday, they concluded a second straight day of talks with a federal mediator, and then they put out a note, Boeing put out a note at night saying, we're pulling our offer off the table.

There was no progress made. The Machinist Union says, look, there was no new improved offer to discuss. So why continue talks? And there are no talks that are scheduled this week. Put that all together, and that's why shares of Boeing dropping as low as they have today, now at a 52-week low. By the way, the strike cost estimate, according to S&P yesterday, when it put Boeing on credit watch negative, $1 billion per month.

And again, we're almost one month into this strike. They are expected to raise at least $10 billion to help out their liquidity. The question is, when, Scott? Do they wait until after earnings, as many expected them to? Or do they wait even longer until they have some type of an agreement? They can't wait too long because they're below the $10 billion threshold that many believe they have set as sort of the floor in terms of they don't want to go too far below it in terms of liquidity.

Yeah, you've got a busy week. Between that, the Tesla robo-taxi, you've got the hurricane, the airlines. Phil, thanks so much. We'll see you a lot over the next couple of days. We look forward to seeing you fill the boat. Leslie Picker talked with J.P. Morgan's CEO. What did you find out? Yes, Scott, it was a rare interview with Daniel Pinto, the president and CEO of the world's largest bank by market cap. We spoke a lot about rate cuts and their impact on the economy, as well as the firm itself. He said he thinks the Fed will, quote, thread the

needle in a way that soft lands the economy without a recession. But inflation is still there, despite some components that are concerning about inflation, though. He said the Fed is on top of this and will manage it all. As for rate cuts impact on the firm and the bank's profitability metric known as net interest income, Pinto said in mid-September that market expectations were too high. The reason why we passed that message to the market because we saw that the analysts were a bit too optimistic on what to expect based on what the rate curve was showing at the time. So I think that the bosses have stabilized too, but we saw that NII at the time was a bit too high in their expectations.

So now they have adjusted some of it. So you think that the expectations are now more acceptable? They are more reasonable in line with what I mentioned at Barclays, yeah. Pinto, of course, was somewhat limited on guidance because the firm does report third quarter earnings on Friday, Scott. Only so much I can say. Les, thanks. Great stuff. Appreciate that. That's Leslie Picker. Mike, I'll send it back to you. Speaking of the banks. Yeah. They they kick it off on Friday and we'll be talking a lot about that. Those stocks are looks like they're all up today. Yes, they're running a little bit. They tend to as a group not to trade that great

off of numbers, not because it's anything too scary in them, but because a lot of times the sources of any upside surprise is usually not something you would want to extrapolate to. Oh, they had a great trading quarter or they had credit that was better than expected, but you can't really project that forward. So all that stuff, I think, makes them trade a little bit noisy. In general banks the bank index KBW bank index breaking out to a post Silicon Valley bank. Meltdown high so you'd have the financials in the industrials really in the bulls column here in terms of sources of strength within the market. Again it's all pushing up against have we already priced in soft landing. You've been talking about two

years into a bull market. The overall returns aren't that great, but this is the best start to a calendar year since 1997 to this date. Let's go. I remember when we were talking on halftime, you know, I said, all right, Ryan Dietrich puts out this thing since 1950, the average bull market last five and a half years. You go, I think it was 181 percent gain. Exactly. You said I quibble with those numbers a little bit. So give me give me. I quibble with the average length of a prior bull market. Now, by the numbers, if you say a bull market lasts until it goes down 20 percent and then it resets, well, if you move that to 19 percent, believe it or not, four markets actually had 19 plus percent

declines before bottoming on a closing basis. That was 90, 98, 2011, 2018. So if you basically say the 13-year bull market from 87 to 2000 was actually a 3 and 8 and a 2, I'm just saying, if we go down 19 percent from here, the S&P is at 4,700. We're going to look at each other and say, hey, but it's still a bull market. It's fine. You know what I mean? So I think that there's an aspect. It doesn't change the overall point that this is not a particularly mature bull market. It's not a particularly, you know, high performing one in terms of overall return. So there could still be plenty more to go. We had two bear markets in the last four and a half years. That's usually more than your quota over any four and a half year period. So I do

totally buy into the idea that there's no reason to believe that this is going to die of old age or run out of fundamental support anytime soon, given what we know right now about how the economy is doing and how the Fed seems to be reacting to it. Yeah, it's been a remarkably resilient market. And you're going to go out. Well, you may not get to 500 plus on the Dow today, but nonetheless you've got a record close on the Dow, a record close on the S&P as we're pushing up against 5,800.