Closing Bell - Closing Bell: Retail Playbook, Apple & Nvidia 3/4/24

Episode Date: March 4, 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.

Welcome to Closing Bell. I'm Scott Wobner, live from Post 9 here at the New York Stock Exchange. And this make or break hour begins with the breakaway bull market, leaving bears in the rear view and threatening to broaden even further. We're going to ask our experts over this final stretch whether there's reason for more optimism in the weeks ahead. In the meantime, take a look at your scorecard with 60 minutes to go in regulation. The brightest spot today, well, it belongs to the small caps. The Russell's outperforming the major averages. Dow is basically flat. We'll call it a smidge negative. But there is the Russell up one third of one percent.

Tough going for a few big names in the market. Apple, well, it's been trading in the 170s. Alphabet still suffering from its botched AI launch. Tesla falling rather sharply in today's session, almost seven percent to the downside. Well, interest rates, they're a touch higher today, as the Atlanta Fed President Bostic warns in an essay today of cutting rates too soon and touching off potentially a new level of euphoria in financial markets. All of it takes us to our talk of the tape, why some key market watchers say we're only in the middle innings of this resilient and

relentless bull market. Let's ask Adam Parker what he thinks. He's the founder and CEO of Trivariate Research, a CNBC contributor. Welcome back. Thanks. Stop me if you've heard this before. NVIDIA's up, and so is the S&P. It's almost like a daily occurrence now, right? The S&P is, you know, 5,100, 5,150. What's the next stop?

Where are we going from here? You know, obviously, you know what I'm going to say. It depends on the horizon and what you're planning for. If you look out 12, 18, 24 months, I think we've got plenty upside. But, you know, one thing I was thinking over the weekend is semiconductors are cyclical. Okay? They're a cyclical industry. And maybe the amplitude and periodicity of the

cycle is different this time to bring out the physics terms just because you have ai so they're sort of they're not acting cyclical yeah right i know they are and so i'm starting to get a little worried about just how big the movement's been and uh what's discounted for the next couple of quarters obviously the holy grail would be if you could figure out, you know, how much these companies are over-earning and when they're going to tell you that they can meet demand. And three months before that, you probably want to get out for a downside move. This is somebody who used to make your living as a semiconductor analyst,

so it's a space you have an eye on all the time because of what you used to do and what it still means to the market. NVIDIA, I joke about it, it literally is up almost every day. AMD, new high today. You've got Broadcom coming this week. Super Micro. Yeah, I don't know how to figure out what that's worth. But anything where they're mentioning AI-related terms on their website and their transcript seems to be up a lot. And we know those businesses are cyclical.

And so I think that's the challenge is if you miss the whole first $2 trillion, it's today the day you walk in and buy it for the first time. And then you're worried you get it wrong in both directions. If you're looking out 12, 24, 36 months, then there's going to be more upside to the very early phases of the trend. I think your question about the broadening, though, is always a good one. I think you saw we wrote over the weekend. I don't think Russell can outperform in a down tape. So if people are saying, well, I'm a little worried that we're going to get a pullback,

then I don't think you go pile into the Russell for that trade just because it looks like it's cheaper on price to earnings. I think you have to believe they can outperform in an uptake. And if you are bullish and you think it's middle innings, then you're saying the gross margins for the average company are going to go up. And I want to own plenty of other things besides the MAC-7. And I think there's some intelligence to that view. Well, I mean, even if you don't like the Russell and you say, well, you know, a third of the companies in the Russell, they don't make any money. And then we have the regional banks to worry about and all that.

Maybe don't use that as the tell of whether this market's broad because it is probably the wrong place to look. I could tell you outside of tech, Disney, 52-week high. Darden, Lenar, I have a list. I don't know. There's like 100 stocks on my list, if not more. But I'm Darden, Lenar, Colgate, Costco, Marathon, Bank of America, BlackRock, JP Morgan. This is today, okay? Hitting new 50 two-week highs or all-time highs today.

Danaher, Lilly, A.O. Smith, Copart, Cummins, Cat, Eaton. Don't tell me industrials aren't a good place to be. The manufacturing data is still kind of squirrely, and these stocks are going up. You know we've said this a lot and written this a lot. I think it's lame to blame your performance on the MAG-7 and say it's only been that. There's been

tons of names that have gone up. That's a different question. The question about the MAG-7 is simply can you afford to own zero or be equal weight when there's such a big piece of the S&P and then you're having like a risk management issue. But there's been lots of alpha generative opportunities. We look at all the volatility we get on earnings. It seems like every day there's sweet greens up 20 or something. There's plenty of stuff, if you're a fundamental stock picker, to pay attention to. I think what people don't really get is that there's so much money being run quantitatively with a three-hour to two-day investment horizon where they purposely don't

trade around earnings. So it's the movement between earnings that's troubling people. Wait a minute, it worked on earnings and then it fades the next 10 days or it kind of missed and then it rallies, Palo Alto missed and then it rallies the next 10 days. There's a lot of stuff happening after earnings that I think is confounding people because the trading's not confirming the trend you heard on earnings. But I see a lot of dispersion. All right. Let me ask you this. I want to I want to know if you agree with Tony Pasquarello of Goldman Sachs, whose latest note says the bullish thesis is clearly defined. We are perhaps in the middle innings of a major bull market. And even though he doesn't like the current location as a place to add incremental risk. Right. I mean, he's alluding to the fact that we're up a lot.

Yeah. He goes on to say the recent wisdom of a secular bull is a reminder to keep your eye on the ball, right? He's not the only one talking that way these days. Do you agree? Bullish, clearly defined. Middle innings of a major bull market. That make sense? Yeah, it could be early innings. I mean, I could see us, you know, having a nice several-year run

where earnings go up a lot over many years. I have never met him. I've seen his stuff on and off through the years, and I agree with it a very high percentage. I feel like I have a bit of a bromance with him, even though he doesn't know me. So maybe he can arrange a little coffee or wine between us. I think he makes a lot of

sense. Look, I think my view has been the Fed's going to be accommodative, but appropriately, that gross margins are likely to expand and earnings can grow for several years. And you should be bullish on U.S. equities. I will not tolerate two arguments. One, that bond yields will back up and break the financial system. If you get nervous about risk, bond yields will go lower. We've seen that every single cycle. And two, that you like non-U.S. equities more than U.S. equities. All the major trends, whether it's AI or software or life sciences, disproportionately accrue to the U.S. equities. And this whole thing where it's optically cheaper in Europe, I think is a joke.

And you want to play that trade, good luck to you. But Europe is good for vacation and not for stocks. It's always been the case. All right. Well, let's bring in Christina Hooper now of Invesco and Malcolm Etheridge of CIC Wealth. Malcolm's a CNBC contributor, along with Adam, as we said. It's great to have you both with us. Christina, I'll turn to you first. Do you agree with Adam's assessment? Yes, largely I do. I think what we're certainly seeing right now is the broadening of the market, and that's really critical for this rally to be sustainable. We are seeing greater small cap participation. We are seeing more

cyclical participation. It's everything we wanted when everyone was so nervous that the market was so narrow and concentrated. So I certainly think this has legs. What's going to help it be the catalyst for continued rally? It's largely going to be about the Fed, I think. Now, the Fed has been driving markets for years now, really since the global financial crisis, in my opinion. It's had an outsized impact. Not the only factor, but certainly a big factor. And so I think what we're likely to see

is a Fed that is arguably more accommodative than markets anticipate. We heard all the hawkish Fed speak. Raphael Bostic, they're all trying to talk down markets. And it's been a constant stream of very hawkish Fed speak for a while. They're trying to tamp down and a premature easing of financial conditions. But the reality is, I think they recognize that policy is very restrictive now. I think they're going to

start cutting in May. And I think we're going to get more cuts than the market anticipates this year. You know, Malcolm, I almost feel like this bull market is like a good and deep and dominant football team that says, you want to play the game this way, we'll beat you that way. You want to play it the other way, we'll beat you there. You want to, you know, a good ground game, you want to ground and pound, well, I'll stay in the mega caps. And when that stops working, well, okay, we'll throw the ball now and we'll go to some of these other more broad plays in the market. And you know what? That's working, too. So, you know, this bull market is beating the Bears by multiple ways, it seems, almost every day. Yeah, you're basically describing Bill Belichick and the Patriots that eventually their reign came to an end.

Right. Tom Brady moved on. So did the rest of the team other than Bill Belichick. And I think that's probably what we're setting ourselves up for here. I'm very concerned that the market and investors seem to be capitulating around the idea that a soft landing is all but guaranteed at this point. And we're basically talking about the magnificent one. Because if NVIDIA had had disappointing earnings and the market went the other direction the following day, we wouldn't be talking about this magnificent one. Because if Nvidia had had disappointing earnings in the market and went the other direction

the following day, we wouldn't be talking about this broadening anymore. We'd have all piled back into the safe haven trade of mega cap tech, hid out there for a few months and called it a day. But because Nvidia surprised us to the upside the way they did, it's lifting the entire semiconductor industry, AMD, Intel, Broadcom, all the others you had on the screen in a way that doesn't really make sense. You can't describe it as anything other than FOMO, which reminds me of 2022 when, oh, by the way, Bitcoin was also trading in lockstep with the NASDAQ the way it is today. I hear you. But, you know, this is a far different market than we've

been used to, Christina, right? Best sector over the last month, do you know what that is? Materials, okay? Industrials, financials. Tech isn't one or two or three. Now, maybe four, but this is a lot more broad than people are giving a credit for. And what it's telling us is that the economy is going to re-accelerate, right? We tend to have that discounting of what's going to happen in the economy six to nine months ahead. So my anticipation is that we see a landing. I wouldn't call it soft. I think it's going to be bumpy-ish, but I think it's going to be brief. And then we're going to have a reacceleration in the economy. And that's what the performance of the cyclicals, the materials, for example, is telling us right now.

Chris Harvey at Wells today says repress your urge to go contrarian. It's like, OK, the mega caps maybe may take take a breather. But it's like Pasquarello says, you know, keep your eye on the ball of what continues to work. When you think even that things are a little too stretched, maybe you're not keeping your eye on the ball enough yes alphabet's down year to date apple is not performing tesla is a loser of late but you know what else is on my all-time high or 52-week high list meta amazon so they're still you know magnificent four or five or whatever stocks that are still working. You know, it doesn't sound like this group's exactly on the same page. I mean, Malcolm.

As you. Christina sounds kind of on the same page. Malcolm thinks the economy is slowing a little. And I tend to agree with Christina that the equity market leads the GDP, not vice versa. And the equity market is telling the economy it's probably going to be fine six, nine months from now. I think empirically that's true. As a Patriots fan, I wasn't sure if Malcolm was ripping on the Patriots in there at some point also. So maybe I was reading it with a sensitive lens. I'll buy you a coffee. Yeah, I think as the worst team in the league this past

year. But I think margins are likely going to expand. I think that's what I anchor to all the research we do on fundamentals is can the gross margins expand for stocks? And if there's plenty of opportunities where I can see that. So that's kind of what I'm focused on. And I tend to think there's a lot of alpha generative opportunities. But I think it's going to be hard to sketch out more than 6%, 7% upside from here unless you really think that earnings are going to accelerate massively in 2025. So you think the, Christina, you think the multiple of the market, which has expanded, obviously, can hold up, that it's not only justified where it is now.

I've heard some people make the argument, well, I think the economy is going to do just fine, but the multiple of the market is going to have a correction. So I think it can do just fine because we have to assume, I'm assuming, that the 10-year yield comes down. I think pressure comes off. I think that alters the P.E. multiple picture. And I would also say, so that to me says this is not irrational exuberance. It is rational exuberance. And I would also say that there will be a point when there are concerns about valuations, but there are opportunities outside the U.S.

You can diversify a portfolio with European equities, which, by the way, even though you might be not thrilled with the economy in the Eurozone, it's all about positive surprise. And if we can get a little positive surprise, if we can get the ECB to start cutting a little sooner, that can be a nice catalyst for European stocks to go up, which, by the way, went up significantly last week. Malcolm, why aren't you more positive on the market? I want you to explain your position. I mean, if you if you thought we were too concentrated perhaps before and, you know, it's NVIDIA's world and we're just living in it. Well, this market seems to be

telling a different story these days. Yeah, I think the phrasing that you use, repressing the urge to go negative or go contrarian, is exactly how I feel right now. I am not saying by any means that anybody should be stepping out of this market because it can't go higher. We learned that lesson this time last year because in March of 2023, before ChatGPT came on the scene, you saw the estimates in the low single digits, single digits s p targets for the year and then all of a sudden chat gpt comes along microsoft gets sets on fire and so does the rest of the market so i'm not necessarily saying we should all go negative on the markets i am saying though we should be cautious right we still haven't seen the yield curve flatten. We know what that brings with it in historical terms, at least. We also still haven't seen the impact of higher for longer rates

really take hold of the small caps. The S&P 600 and the Russell 2000 are up at a time where Rafael Bostic is telling us we're going to keep rates the way we are and we may only get two cuts at some point this year the reaction we've seen from markets is the opposite of what you would expect at a time when the fed's not giving us what we wanted coming into the year where we expected to have cuts as early as march yeah i i hear you but i think what was is not what is that the economy is strong enough right now and earnings have proven to be good enough that we don't need cuts as soon as maybe we thought we did a handful of months ago. That's a good enough insurance policy.

And the bottom line is that we know what the Fed's next move is, and that's a cut, and that's all we need. How would you respond to that? Who cares when? Who cares how much? And who cares how many? We just know that the next one's lower. And that's what we're trading on now because we're anticipatory of all of that. But I do think it matters when it is. I think we're looking over the fact that a lot of the smaller companies, you mentioned the number of them that aren't profitable in that smaller portion of the market, they need rates. Every quarter point

raise matters to a company that's small. And we're buying up the S&P 600 and the Russell as if rates don't matter. And I think that's a problem. That's where I expect that reversion back to mega caps to happen is when the reality sets in that the only companies that can actually afford to fund their growth going forward are the ones that have these fortress balance sheets like an Amazon or a Microsoft or a Google or whoever. And the parade of small caps that has been happening, the broadening that we're talking about, finally starts to lose some steam because at some point reality has to set in. It just doesn't make logical sense. All right, let's circle the wagons here. What would make the market go lower?

Either China deteriorates massively and we get a demand problem that looks incremental, it hurts the materials, it hurts energy, hurts industrials, takes some air out of the tech trade. Two, the U.S. consumer collapses more than we think. Everyone thinks it's kind of wasn't in good shape, is eroding. We've seen some signs discover before the deal, other stuff that it was softening. So China, the consumer, or this quantitative tightening. Forget the front end that you're focused on. Let's focus on the balance sheet and liquidity. Maybe that's the issue.

I think those three things, if they get materially worse, could derail the market. Sure to that, we're going higher. We're going higher because you're going to dream earnings are up next year versus this year. Marginalized are fine. And I totally think what Scott said is right. And it's been right for a year, which is there's an asymmetry that they're going to be more accommodative than not on the Fed. And all of us have learned, if we learn anything in the last 25 years, that we don't want to fight the Fed on the front end. How do you think about that?

I agree. But I would say it's a very slim chance right now that we see anything dramatically bad happening. Let's take, for example, the consumer. Some say that's a big risk in and of itself. The only risk out there seems that people are saying there are no risks. Yeah, but you can't. You can have a bumpy landing, but you're not going to have the consumer fall apart. With low unemployment and with the fact that of the outstanding mortgages out there, 92% are fixed rate and the average mortgage rate is 3.62%.

So that tells us that the kind of pressures that Canadian consumers are feeling, that European households are feeling because of rate increases aren't being felt. That transmission mechanism is not as strong. Fluxuating rates versus fixed. Exactly. So fixed, we don't have the level of variable rate mortgages we had going into the global financial crisis. We learned and we had that great luxury of having a 30-year fixed rate mortgage. That's a critical factor in terms of ensuring that there's

a significant pool of healthy consumers. That plus a very low unemployment rate, even if it goes up one percentage point, I don't think it can trigger a recession. So I agree that the consumer's likely to sort of slowly erode, not implode. The part that I don't know, I defer because I focus on U.S. equities, but I don't see how we get two cuts with unemployment this low that fast. So I think they're going to be a little less accommodative than you're forecasting, I guess. By the way, the ECB meets this week, since we're talking about all that. Maybe they lead the central bank parade to the

pool of cutting. Maybe. Maybe it's Bank of Canada, which has been something of a first mover at times in recent years. But I think the key, though, is that as you said, Scott, we're moving in the right direction. We're going to get cuts, and I think it's going to happen sooner than we think.

What about, you know, Bostic Malcolm talked about the risks of cutting too soon being you have the risk of, you know, stimulating even further this what, you know, euphoric behavior in the market. You look today, for example, Bitcoin, I think as I'm asking you this question, is up six and a half, almost seven percent. The biotechs continue to be bananas as a as a trade. I mean, there's some activity that leads some to believe we've got some overload of speculative action in the market. And we need to keep our eye on that very closely, not to mention some of the higher growth, higher multiple AI related plays that have gone crazy, too. Irrational exuberance, Scott. So Christina's last point about not necessarily seeing any meaningful risks out there is exactly what makes me cautious, right? It's the age old lesson from the Berkshire camp to be greedy when others

are fearful and fearful when others are greedy. When we start talking about there's really nothing out there that we see as a risk to this particular bull market, that's when my antenna goes up and I start to worry about where we are. And also, you've used the word accommodative a few times, but I'm not so convinced that this Fed is talking about being accommodative. They're talking about pushing out the rate hikes that we started this year, saying, will they come at the front end of the year? Will they come in the second quarter? And those were the only two questions anyone was willing to entertain, the bond market included. I understand. But you're suggesting that you can't be real bullish the market until the Fed actually cuts. But the market, as we always say, the train leaves the station long before that.

And by the way, it's already left. It depends on how far down the tracks you want to let it go. That's the biggest risk at this point. I think the point that I'm making is that we may have already gotten the bull market, that rush that we're all talking about and we're all anticipating. We're up 7% so far to start this year, and we're not even through Q1. We may have already gotten that bull market rush that we're all talking about may be coming. That's the part that I'm concerned about.

Real quick, Christina Coggan. I would just say, look at Jim Bullard's comments. He's the one person who's no longer part of the Fed, so he doesn't have that vested interest in tamping down financial conditions. Two weeks ago, he said the Fed should start cutting now. I meet with institutional investors every day, all day. Lots of them have lots of concerns. I don't agree, Malcolm, with your statement that nobody's saying there's anything to worry about.

I think people are worried about all the things I listed, the consumer. They're worried about commercial real estate. They're worried about China. They're worried about the balance sheet and liquidity. So I don't see it as being fearful when others are greedy. The markets risk on and speculative, but I think people are fearful and worried. And they're trying to figure out, do I rotate to the two-year or do I get more defensive within the U.S. equities? But they're not whistling, I would say.

If anything, markets have been climbing a wall of worry for months. All right. Well, we're going to keep following it and keep having these conversations. Malcolm, thank you. Christina, thank you. Good to see you guys. Parker, good to have you back here post-9 as well. Christina Partsenevalos now looking at the biggest movers as we head into the close. Christina. Well, at a tech conference in San Francisco today, the CEO of Fox, Lachlan Murdoch, said he anticipates five million customers will sign up to the Fox, Disney and and Warner Bros. Discovery Sports Streaming Joint Venture all within the first five years of its launch. This new streaming platform will launch

this fall. We don't know the name yet. It would include ESPN Plus and any linear TV networks that carry sports programming. Murdoch expects this sports streaming venture to actually be incremental to its existing revenue base. You can see Fox shares down about 1%, Warner Brothers 6%, Walt Disney the only one up almost two. DoorDash and Lyft shares are higher after RBC upgraded both stocks individually, suggesting there's an opportunity for both these firms to work together. The synergies kind of make sense given DoorDash is the food delivery company, Lyft contributes to the delivery part of the equation. The analysts also think Lyft is becoming increasingly competitive with Uber. Both shares are up over 4 percent. Scott. All right, Christina, we will be back to you shortly.

We're just getting started up next. Shopping for upside with the number one ranked retail analyst on Wall Street, Matt Boss. We're going to get his read on the retailers ahead of a big week of earnings and the top names investors should be adding to their carts. We'll do it next. We're live for the New York Stock Exchange. And you're watching Closing Bell on CNBC. Welcome back. Shares of Macy's surging after investor firms, Ark House Management and Brigade Capital raised their bids for the retailer.

The new offer values the company at more than $6.5 billion. My next guest recently raised his price target on that company following last week's earnings beat, citing potential for multi-year growth. Joining me now, J.P. Morgan's Matthew Bossie is ranked as the number one retail analyst on the street by Institutional Investor. Welcome back. Thanks for having me, Scott. How is this going to play out with Macy's, do you see? Look, I think Macy's is laying out a fundamental opportunity.

That was their bold new chapter plan. We actually were in stores this weekend, and I'll tell you, some of the test stores have better staffing. They're amplifying the key brands within the box, and they're really focused on expanding the TAM, which I think factors into a lot of retail consolidation. Macy's itself closing the worst 25% of locations since the pandemic. Sounds like you're describing what you think might be an inflection point. I mean, those are my words, not yours, but that sounds to me what you're describing. You raised the price target to 23 from 19 a week ago. Yeah, look, I think we're hitting an inflection for all of retail, meaning you had a period of brick and mortar consolidation. I think Macy's is potentially signaling the later innings of this in this final consolidation of 25 percent of the

boxes. I think you're seeing an intentional consumer out there that's shopping for brands. They want value and they want convenience. And that points to off-price, best-in-class brands and the retailers that sell those brands. So who are the other big boxers, if you will, who are also going to be riding this new wave? If it is truly an inflection for all of them, who takes advantage? So I think what you're seeing, again, is the customer wants name brands. The name brands where you can find value, that would be your TJ Maxx, that would be your Burlington, that would be your Ross stores. But then they also want destination as well as experience and service. And that is what Macy's right now is focused on, on a fundamental

perspective. And the last piece of this is the direct consumer brands. Look, they've done a lot of work, meaning you now can buy directly from Nike. You can buy from Ralph Lauren. You can buy from Coach Brand. And I think that's the piece that the global brands have now put the investments in to stand on their own as well. All right. So we have a big week of earnings. Nordstrom, Ross, Abercrombie, Foot Locker, Victoria's Secret, American Eagle, Gap among them. Is Ross your favorite of all the companies this week? I think you're going to see strong numbers out of Ross and Burlington. So the two off pricers, I think in the specialty space, we're focused on Abercrombie later this week. That's a company that's done a really nice job expanding that total addressable market as well. And I think, again, what we're focused on are these best-in-class brands.

You've seen it with Birkenstock. You're going to see the continued results out of the brands that the consumer is coming out to with organic traffic. What's the story with the Gap, which you upgraded to neutral on 226? That means you're kind of like, meh. Margin self-help. To me, you've stabilized Old Navy. You've stabilized the gap. That's 80% of sales.

Now you have $150 million in cost savings. And on top of that, you have the product cost savings that the entire space is facing. I think the one other thing that I wanted to say here, look, you have a near-term inflection, too, meaning our economists are citing $38 billion in wealth effect here. I mean, you have the S&P that's 75% higher than where it was in 2019, and you have the low-income consumer that's now going to be cycling the food stamp cuts, the tax refunds. So you're now back to, I think, a point of normalization, and that doesn't even put into

place if we were to see inflation actually potentially come down. Why was the most recent retail number then disappointing? So tax refunds were against you in the month of February. And then in January, you had unfavorable weather. Two out of the four weeks were very detrimental. So the inflection that I'm citing is really now as you move into March, with especially this favorable weather that you've seen across the country, tax refunds move in the right direction, you lap against the snap and food stamp cuts, and you have this larger picture wealth effect that I think for the higher income consumer that trickles down to the aspirational, I think sets up very well. Wow. So you think, I mean, the wealth effect from the market is one thing.

Yes. Obviously, the labor market is strong, stronger than people probably thought. You get another read of it later this week. But as long as that remains intact, I think the runway for the consumer is what, endless? I think the consumer is stable. And now you have normalization at the low end with a wealth effect at the high end. I think it's a very good picture for the consumer. The question is across retail, who wins? And that's what we were just walking through. Value, convenience, innovation, and differentiation.

What about Foot Locker? Foot Locker, I think, is a mixed picture. So you have the battle between the direct-to-consumer brands and all of the digitization that Nike has been focused on, as well as the other brands. So Foot Locker's in the midst of a turnaround. I think their fourth quarter was better than expected, but now you have to lap some of these clearance actions as they've been working to get back to a place of stability. You said Abercrombie, American Eagle, you have on a positive Catalyst watch. You like both? I think American Eagle's going to set up a three-year outlook, and they're very focused on the margins, similar to gap. And so we see upside there, especially in 24 numbers. All right. I appreciate you coming back. Great to be back. Matthew Boss with us right here at Post 9. Coming up, more of a chart

than a science. Top technician Jeff DeGraff is back with us. He's charting out the road ahead for this broadening rally, including the one sector on the verge of a breakout, according to what he sees. Another, he says, is priced for perfection. And he saw this rally coming before a lot of others did. So you want to pay attention to what he says next. Welcome back to Record Close for the S&P 500. Insight today in what could mark a third record-making session in a row, if it can turn positive again.

Let's get a technical read now on this breakout with Jeff DeGraff, founder and chairman of Renaissance Macro Research. Welcome back. Nice to see you again. Thanks, Scott. Things that jump out to me, certainly from your notes, S&P at 5,800 by year end. So did you recently up your outlook based on what you're seeing? No, we hit that with escape velocity, which we got in November. And that's part of this combination of 20-day highs that we look at. It was a big number. I mean, it was in the 70% readings. And those are

really a handful historically. And what we know from that data is that the market is generally up a little over 20% from that point, which is, look, it's not a comfortable thing to say, but that was 5,800. And so we said, look, the data is good data. We believe in this momentum indicator. And so we did that back in November of last year. OK, when you look at the charts, you're going to show us one that sort of confirms this high momentum market that you suggest we're in, correct? Yeah, look, I mean, there's there's, and I'm an unapologetic trend follower and momentum player. I mean, that just is what it is. But there are points where momentum becomes vulnerable.

There's no doubt about it. And being in a momentum market is different than being in a dangerous momentum market. And so one of the things that we look at is what percentile are we in in terms of returns for high momentum versus low momentum names. And when that gets, that spread gets into the 90th percentile, that just says, look, momentum is working at the expense of everything else. And it really becomes a reflection of the narrative, right? What's the prevailing narrative out there. And that's where we tend to take a step back and say, okay, this is, there's, there's danger here of reversion. We're in the 87th percentile,

and I know that feels like it's close enough to make that call, but the data says it's not close enough to make that call for us. So we're on guard, but I still think that we've got several weeks ahead of us that we can stretch this, get us into that 90th percentile, but have us back on. We'll talk about it, but that's the point where we'll get more cautious about the market overall. All right, booking done. Put that on your calendar. Soft booking. We'll reach out and firm it up. Chips. What am I supposed to think about the chip stocks which have gone just crazy? And it's not just NVIDIA either. AMD, Supermicro. I mean, I could go down the list with 10 more names. You know what I'm getting at. Absolutely. And look, this this comes back to the momentum idea.

Right. So there's there are two factors that we look we look at when it comes to being concerned about industry groups. One is because in isolation, it doesn't matter. It doesn't work. But when the combination hits, it's very powerful. And that is we've had a good run. We're momentum names. So these are reflective of some of the highest performance names. But today, people's expectations are even higher than the historical momentum that we've seen.

And we price that through the option market. And when we have that combination of a good historical momentum in these specific names, and then the option pricing is saying we're betting on even higher prices from here, that's the point that we say price to perfection. You can have it. We're going to take our ball or at least half our ball and go home and play somewhere else. So we're seeing that in semiconductors that started about two weeks ago. And, you know, obviously that can be a little bit early.

But statistically, that's a it's a meaningful signal. And we're seeing that only in semiconductors here. So that's one area that we'd be more cautious on. You have been writing some about biotechs, too. Do I need to be concerned about what I'm witnessing there? So just the opposite of what I just described, Scott, is happening there, where we have momentum. And again, momentum and isolation is fine. It's something that we pursue.

But we have a lot of incredulousness in that space. In other words, people don't believe it, they're betting against it. And so, when we see this, what we call the incredulous advance, where you have momentum, but people are, the sentiment just doesn't really buy into it, that tends to be very powerful to the upside. The trends tend to persist and it kind of drags people kicking and screaming into the market, much like, let me just say that, much like they were doing with semiconductors a year ago.

It's just starting to kind of evolve with biotech. So I do not think it's too early. The other part that I would just note, and our clients see this, is our excess return model that we run for every individual sub-industry group, it was actually some of the lowest excess negative returns that we've seen in biotech over roughly a 40-year career. So that's a good starting space, right? In other words, a lot of the excesses have been rinsed out. People have kind of forgotten about it.

They've moved on. As these are breaking out and starting to show momentum, the sentiment has actually been fighting that trend, and that's a good sign, not a bad sign. I got to bounce. So I'm going to ask you to be brief in your answer. You got anything on Apple, which is at 175 and obviously has looked ugly lately. It has. I think it's a really astute observation. It's a big name, part of the Mag 7, and it's the weakest of them all. Google's not far behind it, but it is behind it. I think you want to move on from

Apple tactically, right? I mean, this isn't about the next 30 years. This is about the next three to maybe 12 months. But it looks to me like it's distributing and it looks like it's in an elongated consolidation in our view. Wow. All right. Good food for thought. I appreciate it, Jeff. We'll see you soon. Don't forget about that date we just made. All right. Put it on your calendar. Thank you. All right. Up next, we're tracking the biggest movers into the close. Back to Christina Partsenevelos with that. Christina. Well, Ford tells us hybrid cars are gaining in popularity and customers are pushing back against one Chinese EV maker. I'll explain all those details next. We're just about 15 for the closing bell.

Back to Christina Partsenevelos now for a look at the key stocks she's watching. Christina. Well, I'll start with U.S. listed shares of Chinese automaker Li Auto. They fell more than 12% after the company reported disappointing February deliveries just last week. The reason I mention that is because the stock had soared more than 25% last week after reporting an earnings beat. So what we're seeing today is some profit taking as well as some concerns that the EV's latest model's price point may not be as low as people wanted, as well as there's some complaints about the interior designs. And that's why shares are down over 13%. Sticking with cars, though, Ford shares are moving the opposite direction, up over 2.5% after the carmaker saw strong February

sales data of 10.5% year-over-year. The gains are led by a sales jump in electric and hybrid vehicles. Ford plans to double down on its hybrid technology. All the rage these days. Got it. Christina, thanks so much. Still ahead, Bitcoin's big bounce today crossing above 67,000, getting closer to a new record high as well. We're going to break down what's behind that surge.

And the closing bell comes right back. Coming up next, New York Community Bank Corp tumbling to a 28-year low while Bitcoin rallies closer to an all-time high. Plus, we are keeping an eye on NVIDIA, those shares tracking for yet another record closing high. That and much more when we take inside the Market Zone. We're now in the Closing market zone. CNBC senior markets commentator Mike Santoli here to break down the crucial moments of this trading day. Plus K Rooney Bitcoin is verging on a record making

breakout again. I mean it's in the midst of it now. Leslie Picker on the ongoing sell off that's going the other way for New York community bank shares Mike I'll begin with you a little bit of selling as we edge towards the close here. But

really it's all about Nvidia. It's about Bitcoin's about Bitcoin and whatever else you want it to be about. Well, you know, normally a day when the indexes are so tightly lashed to the flat line, you say, yeah, it's kind of boring and boring is bullish generally in markets. I actually see a lot of push pull underneath today, especially the winners winning even more. The losers actually undergoing some pretty heavy selling pressure. If I'm looking at the bottom performance of the S&P today, it's Tesla, Paramount, Albemarle, Warner Brothers, American Airlines, Charter, Enphase. They're all down 20 to 50, 60 percent off their highs. And so there's this big kind of relative value, like we're just

going to press and press and press. So I'm not looking for a reason to be negative, but there's a lot of internal friction going on in this market right now. The Russell 2000 just turned negative, and it's all because Supermicro's $60 off its high. So there's a lot of stuff that you can look at and say, let's be aware that there's a little instability underneath the surface. It doesn't have to really matter that much ever but I'm mindful of it I'm looking at Apple as you're talking to I'm curious your take here We've noted it obviously hasn't traded well, and it's sitting at 175, right? So this is part of that too I mean Apple and an alphabet just newly for sale in the morning on kind of nothing

I know we had news on Apple, but it shows you that people are willing to just go momentum on top of momentum. So whatever's working, stay behind it. And I think it's obviously a quantitative relative value stuff going on right now. And everybody wants the earnings momentum, which, you know, the good news is the stock momentum has mostly been following earnings momentum and vice versa. All right. Bitcoin. I mean, obviously, Kate Rooney, it's a big story as we approach a new all time high. Yeah, Scott, talk about momentum. You've seen Bitcoin really inching in on that new all time high. It's above sixty seven thousand dollars. All of this has been powered by institutional demand and ETF demand, as well as some speculative bets ahead of this market event called the halving that's coming up in April. You

can see that showing up in leveraged positions or open interest that's topping the most speculative peak we saw back in 2021 more leverage tends to make this market more sensitive to some of the steep price drops we've seen in the past and you've got even a small decline for example could make traders need to all sell at the same time that is a risk here in another sign of speculation if you look at what some call meme coins, you remember Dogecoin? That has been soaring this week. Fundstrat says that unmistakably signals a resurgence of speculative enthusiasm in this market.

There's also been steady demand for those Bitcoin ETFs I mentioned. BlackRock has been leading the pack of inflows by $10 billion in assets under management at this point. And then Cryptoproxy stocks also getting a bid from all this, Scott. Yeah. Okay, Rooney, thank you so much. Leslie Picker, what's happening with New York community bank shares? It's certainly a far different story than some of the other bright spots in this market. Yeah, another ugly day here.

Down about 20% in NYCB shares as this company exists in basically an information vacuum until its annual report is filed. Remember last week, NYCB flagged that an issue with its internal controls required the delay of its 10K, given that the internal controls were related to an internal loan review and that review remains ongoing. So the concern is that more troubled assets could arise in the portfolio. NYCB said it expects to be able to file its 2023 form within the 15 calendar day grace period. So we should see it within the next week and a half or so. Without assurances, though, that there's nothing else bad out there, it's hard to find buyers in the stock. Quote, it's an exercise in extreme patience.

Analyst Chris Marinak of Janney Montgomery Scott just told me by phone, he's one of the few analysts who still have a buy on the stock. He said investors are asking what the company could do to defend itself at this posture. More capital is an answer, he said, but whether NYCB raises at these levels is a debate. You can see shares down 23 percent right now. LP, thank you. That's Leslie Picker. I mean, the fact of the matter is we got less than two minutes to go. There's just other things to buy in this market than, you know, investors just don't necessarily want to take risks in something like that. I mean, and I think that what you would take away from it is, you know, the regional banks

as a whole are kind of flattish to up on the day. It's not as if people are extrapolating, saying that this is something that can gallop through the sector. You know, it's not great. You don't want to see, you know, sub $3 stock in a decent sized community bank. But in general, there's just no financial stress that's generally rising. And so unless that, you know, hits the credit markets or something, it's just not there. In fact, credit's one of the strongest things happening in the markets right now. So that's why it's not really to me about the macro message of the market as much as it is a little bit of the sort of internal dynamics that seem like they're just getting wound a little bit tight. That's all I would say. That change at all, the macro message of the market, and Powell's on the hill this week twice.

Yeah, theoretically. But, again, I think that the right sectors are leading in the sense of industrials and consumer cycles and all that stuff. But I don't know if we'll use it as an excuse to say, hey, we're due for some kind of a pullback, and use Powell, whatever he says, to justify it. We'll get a modest pullback today, obviously, right across the board as we head into the end of the session.