Closing Bell - Closing Bell: Road Ahead for the Record Rally 2/27/24

Episode Date: February 27, 2024

Does this record rally have more room to run? Sofi’s Liz Young and Marci McGregor from Bank of America Merrill Lynch give their forecasts. Plus, Apple shares popped on a report that the company is winding down its electric car plans. BakerAvenue’s King Lip – an Apple shareholder – gives his instant reaction to the news. And, Occidental Petroleum CEO Vicki Hollub weighs in on Warren Buffett’s latest comments about the company. 

All right, thanks so much. Welcome to Closing Bell. I'm Scott Wobner, live from Post 9 here at the New York Stock Exchange. This make or break hour begins with the strength of this bull market. Today, marking four months from the October bottom with stocks near all-time highs, a rally that has broadened well beyond tech. Can that continue? Key question. We're going to ask our experts over this final stretch. In the meantime, your scorecard with 60 minutes to go in regulation looks like this. A bit of a wait and see ahead of the PCE on Thursday. That's all important, of course. NASDAQ, though, highs of the day.

We're going to watch that very closely. The Dow lower. Amgen, United Health, Salesforce are the biggest drags there. Dow component. Apple, though, popping in the last hour. That's helping the Dow. It's helping the NASDAQ, helping the S&P. That on reports that

it's winding down its electric car plans, the project the company was working on for a decade. Now, many of those employees who are working on that program will reportedly be shifted to generative AI projects. We'll get reaction from an Apple shareholder coming up in just a bit. Otherwise, some well-needed rest perhaps for the mega caps today. As the NASdaq's mostly muted, as we said, takes us to our talk of the tape. Why some say this record rally isn't only justified, it has a lot more room to run. Barclays today raising its year-end target for the S&P to 5,300. Let's find out what Liz Young thinks. She's SoFi's head of investment strategy.

Back with us at Post 9. It's good to see you. You too. All right. So they go to 53. And dare I say, you become much more of a believer in this rally as time has gone on. Is that fair to say? Guilty as charged, I suppose. But here's the thing. I actually tweeted this last week.

If you looked at the year end price targets that were out there already for 2024, many of them had already been blown out. So I think we should expect the targets to move up incrementally. Shouldn't be a huge surprise that we're going to start to see that. There's been a chase. Right. So are they going to be accurate? I mean, I've never been a huge believer in year-end price targets, especially in February. They're just shy of 5,100 now. Right. Can't possibly know what's going to happen by the end of this year.

So in this moment right now, and here's the thing, I'll say guilty as charged because it's tough to argue, number one, that earnings haven't been stronger than most expected, or at least have come in and said, everything is still okay, we're able to maintain margins. There are, of course, some concerning ways that I think companies have been maintaining their margins because revenue hasn't necessarily picked up the slack. So they have cut labor. This is actually only the second year since 2009 with the highest amount of cuts in January. Last year was the largest since 2009. So that's not a great sign.

Also, the cuts were more broad. They were across a lot of different sectors. So there are a lot of different companies out there. It's not just concentrated in tech, for example, to say, oh, we were bloated, we need to cut. So I do think that there's going to be a trend of companies cutting costs to maintain those margins. However, we're in a period where inflation obviously has come down. Consumer confidence took it on the chin a little bit today, but that's just one month.

It's been decently strong. And it looks like some of the manufacturing data isn't getting worse. Perhaps it's getting better, but it certainly isn't getting worse. So there is reason to perhaps be more comfortable at these valuations today. That does not mean, however, that I don't think things are going to deteriorate throughout the year. I no longer think that there has to be this huge crash or there has to be a big event. Of course, there always could be, but there doesn't necessarily have to be. It could be a slow grind lower. You're not looking for it anymore. I never believe that the business cycle won't continue as

it usually does. So there will be one at some point. I can confidently say there will be one. It's going to be another hurricane and rain's going to fall sometime. But I mean, seriously, the idea that before you were pretty set on the fact that there was going to be a recession. Now, I mean, and I'm talking about in the near future, in calendar 24. OK, now you don't see that. I still think it's possible in 24. Here's where I think it changed for me. This late cycle, and we can have debates all day long about whether we're in early, mid, or late cycle.

I feel confident that we're still in late cycle. We will when you're done saying this, so go ahead. I still feel confident that we're in late cycle. Okay. It just so happens that it's lasting much longer and that we've been able to be resilient in the face of it. The themes that have emerged that have kept the market afloat, so AI, obviously, the weight loss, the healthcare theme that's kept things above water, without those, I don't think we'd be here.

And yes, there's been some fundamental backing in some of those stocks, but the economy has slowed down. So here's where the rub is. If the market is right and we deserve to be at 20.4 times forward earnings and GDP growth needs to stay at this clip in order to maintain that or in order to maintain revenues to keep companies operating margins at this fatter level. Okay. Then inflation doesn't go down the way that we need it to. Then the Fed won't cut rates as much as the market wants them to. And we end up in this situation where valuations remain high and yields probably remain high.

At some point, that game runs out, especially the yields game. Because forget the inverted yield curve even for a second. If yields stay high, both on the short end and the long end, you've got capital constriction that continues. And once you get up against a maturity wall, things like small caps or things like just the corporate debt maturity wall, there's been this huge balloon of corporate debt issued this year alone. That's when it starts to take a bite. Now, that could last a long time, right?

That may not happen until 2025. All right. Let's debate some of these further, OK? Please. Let's go where you ended. I've been waiting for you to ask me this. All right. I've been furiously taking notes as you were speaking on the places I wanted to go.

Rate cuts, OK? Yeah. Maybe we don't need them as much as we initially thought we did because the economy has remained much stronger than people expected. And so have earnings. So that's number one. And credit spreads are really tight. So credit's not blowing out. There's no like, you know, the commercial real estate sirens aren't blaring like some said they were going to do right now right given all of those reasons maybe we don't need rate cuts today maybe we don't need them tomorrow and maybe we'll get them in the summer and maybe that's just fine

how about that we don't need them if as long as the market does actually broaden out and and manage to succeed this time. So what I mean by that is that rate cuts, what they did, the expectation of rate cuts, what they did starting in October was allow for more multiple expansion and a justification of higher multiples, particularly for growthy names. And money flew back into some of those really rate-sensitive areas, small caps being one of them. Obviously, big tech did really well.

If we don't get as many rate cuts as the market originally expected, then multiple expansion is not as supported, which means in order for the market to continue going up or to stay strong, there needs to be a rotation into more fundamentally based stories. What if I say to you, well, there already has been, it's not getting any credit. There's no respect. Sure. It's the Rodney Dangerfield broadening. Yeah. I could tell you right now, financials are up more than 6% year to date. Okay. Yep. Industrials are up more than 5% year to date. Healthcare almost 8%. I mean, yeah, healthcare. I'm sorry. It's hard for me to read my screen.

Many sectors have done so much better than people would otherwise have you believe that this market is actually much broader than it's getting credit for. So we're already getting that. You suggested, well, without these two transformational trends of AI and GLP-1 that, well, we wouldn't be here. But, I mean, those are so transformational, each in their own way, that I'm not sure if that's a fair characterization to say, because, I mean, we are where we are, and those are trends. One, perhaps the next industrial revolution-like thing, and the other one just transformational for all of the reasons

that everybody knows. How would you rebut that? I'll start on the first half, the broadening out. It hasn't gotten enough attention, frankly, and I have noticed. I think that it is important, especially, especially, and this is the big thing that started to make me think, maybe we're more resilient than I thought, or at least we're more resilient in the market than I thought. The broadening out happened even in the face of us very quickly pushing the first cut from March to July and taking an expected number of six cuts down to three. And the market faltered in some areas, mega cap tech definitely being one of them. There's obviously been a breather that's gone on, but that's okay. I mean, from a really high level, a breather is not that big of a deal. It's a minor bruise. So the fact that there's been a rotation rather out of equities, it stayed in equities and

just moved around and people are trying to find valuation opportunities. That's rational investor behavior. And I think that is good risk-se seeking behavior. In other words, I was, you know, for a moment as well, looking at, say, well, the market's not that broad. Look at the Russell. It's not really doing that much. And then I think it dawned on a lot of people, myself included, that maybe that's not the litmus test of a broadening market. You really need to look at areas like industrials, cyclical areas of the market. Obviously, the Russell 2000 is full of regional banks, and those are still a question mark because of commercial real estate. So you can easily see why that may have two steps forward, one step back,

one step forward, two step back, that kind of activity. But as I said, you go into the surface, every sector of the S&P year- date is positive except for utilities. And that's probably for obvious reasons, too. There's been less reason to be defensive and interest rates being elevated. Why would you buy, you know, utility stocks in mass, correct? Yeah, correct. I also think if people are starting to seek dividends, they've gone in the consumer staples route rather than the utilities route or maybe even energy stocks. So utilities have been underloved for sure. I don't think they'll spend the entire year in that category. But if we think about just what investors are looking for in a stock right now.

So if the money is going to come out of big tech just because it got so overextended and because there isn't going to be this huge tailwind from rate cuts, where should it go? And you're right, it has gone, a lot of it's gone to industrials. There have been a couple other cyclical areas of the market that it's gone to. Small caps are one of those things that keep me up at night. They always do. I'm constantly thinking about them, but they do keep me up at night because those haven't quite gotten off the mat. So that's what tells me that we're still more late cycle than earlier. They may just be challenged from an idiosyncratic nature because of that heavy weighting in regional banks and things in the way that we would once look at a space. Part of it. Maybe isn't the way we should look at it now. But let's broaden the

conversation now. Bring in Marcy McGregor, Bank of America Merrill Lynch Managing Director and also Senior Investment Strategist. Marcy, it's good to have you back. I hope you heard our conversation because I'd like your views as well on sort of where you think we are and more importantly than that, where you think we're going from here. Yeah, when I think about this market, we actually did some work looking back at history when you pass these kind of round number milestones for the S&P 500. And we looked out, you know, one, three, six, 12 months out. And what we found was 75 percent of the time when we passed one of these round number milestones, the market was positive on all of those time horizons. So we're constructive

on markets this year. We think broadening is going to be one of the themes that continues. Obviously, the Magnificent Seven has done a lot of the heavy lifting for the market, because especially on the earnings front. But tech earnings really bottomed last March. I think earnings picking up for the other 493 is going to be the catalyst to carry this market forward. Not to say we're not going to get choppiness. You know, Washington is being noisy again. We're in an election year. It may all feel like a bit of a grind, but generally speaking, I think this market has the momentum to climb higher. In other areas beyond tech, correct? You like health care, you like energy, discretionary,

industrials. A lot of the spaces, as we suggested in the conversation earlier with Liz, that have actually been working pretty well, they probably deserve a little more credit. They deserve a little more credit. They deserve a little more credit. We recently added a lot of that cyclicality in our sector portfolios. We upgraded small caps as well in anticipation, again, of an earnings inflection point. But I also like the dividend payers when the Fed ultimately does cut. And I would kind of argue that the Fed pivot actually happened in March of last year because liquidity has been expanding so much but when the fed ultimately does cut you know maybe this summer dividend payers are

actually what outperforms so i think the broadening story is going to still have legs to it right now we're seeing it in large cap you mentioned in those cyclical sectors but i think the next leg could be small caps we all know the valuation story. The Russell 2000 is trading at a 17 percent discount to the Russell 1000. Rates are lower. But I think it's going to be earnings that's the catalyst. I mean, Liz, this has been an equal opportunity rally. And certainly over the last month, the Nasdaq, the S&P and the Russell are all identical, really three and three quarters percent. So that speaks to the kind of broadening that has some believing that we're perhaps just getting started in that, which also has them believing, like, you know, Chris Verone from Strategas, who was with us yesterday,

who suggests we're mid-cycle. We're mid-cycle. We're not as late cycle as we once thought we might be. Yeah, well, I mean, I love Chris. I do disagree with that, though. I think the late cycle piece, we never got're gonna want dividends. If the Fed does finally start cutting rates and they're not going to get that yield anymore out of Treasuries, out of a money market, out of CDs, they are gonna want dividend payers but they're also going to want capital appreciation. Those are large cap stocks, those aren't small cap stocks and that's still more late cycle behavior. But it's the risk that I think we really really run this year is that we're close. We're close to getting to a point where the Fed can say, we did it. We have conquered

inflation. We feel confident that it's on the path towards 2%. We're close, but we're not there yet. And if it overheats, if the economy overheats again, then we will be decidedly late cycle and chasing our tail, trying to make sure that we don't end up in a real stagflationary environment. What if, Marcy, rate cuts don't happen anywhere close to where we think, nor do they happen to the magnitude in which we believe they might? So our view is that when the Fed ultimately pivots, and they have told us that their next move will be towards easing, that the hiking cycle is behind us but they want to be absolutely

certain I think they're being intentionally patient here watching the data- before they start easing. I wouldn't be surprised if you get a fed that and we heard this from Fed speakers last week that you get one rate cut then maybe they go

on pause for a couple meetings are really slow steady pace to the cuts really a recalibration of policy almost more like what you saw in the mid 90s with the mythical soft landing that actually is the one example we can point to uh versus you know a consistent path so i think they're going to be really patient um i i think they're really going to navigate that this is a they're going to communicate this is a recalibration of policy and adjustment, because I do think the path of least resistance for inflation is still lower.

I know we got a lot of noisy data in January, but the way rents are calculated and the lag in how they're calculated, I think is going to show up in inflation numbers for the balance of this year. Not to say we don't run the risk 25 and beyond of another peak of inflation. The Fed needs to stay really resolute. And that's why I think the pace is going to be really cautious even when they do start cutting. Lastly to you, Liz, and briefly, PCE Thursday. How closely are you going to be paying attention to that given what happened with the prior two reads on CPI and PPI? We figure this may be a little bit hot, but also skewed a little bit because of the time of year it is. Well, and I think that's really going to be the story, is that if it does come in hot, it'll get explained away by the fact that CPI was also hot. This is consistent with the pattern that

we normally see. I don't think that it's going to be as big of a newsmaker as CPI was. I think we already did that and we had that moment and we've pushed the cuts back already. It is interesting, though, that it's expected to come in at the same level that the Fed expects to finish the year, right? We expect PCE to come in at 2.4 percent. Core will still be at 2.8. That's what the expectation is. But if that's the case, then real data is actually quite ahead of itself versus what the Fed thinks. So that makes the March dot plot and the summary of economic projections that we'll get much more interesting to watch. Perfect way to leave it. Thank you very much. I enjoyed that very much. Thank you.

Liz Young, Marcia McGregor, thank you. We'll talk to both of you soon. Let's send it to Christina Partsenevelos now for a look at the biggest names moving into the close. Christina. I've got one big one. 227 percent in one day. That's how much Janix Therapeutics shares have jumped today, pushing the company to a market cap above $2 billion. The drug developer reported positive early stage data from a trial with 23 patients. So, yes, it is small, but for its experimental therapy to treat advanced prostate cancer. A TD Cowan analyst says this prostate cancer therapy has multi-billion dollar potential. Viking Therapeutics also on fire today, up over 125% right now

after trial data for the company's weight loss drug outperformed existing treatments from Eli Lilly and Novo Nordix. This is according to the company. Viking said its weight loss drug led to, quote, statistically significant reductions in body weight. 88% of those patients who received the drug achieved at least a 10% weight loss. Christina, we'll be back to you shortly. We're just getting started here on Closing Bell. Up next, check out shares of Apple. A late day popped there on new reports. The company winding down its electric car plan, shifting gears towards what else? Generative AI.

We have an Apple shareholder standing by with his first reaction to that news. We're live from the New York Stock Exchange. And as I said, you're watching Closing Bell on CNBC. Welcome back. Apple shares seeing a pop within the last hour on reports the company is ending its work on an electric car and shifting that team towards work on generative AI. Joining us now, Apple shareholder, Baker Avenue Wealth Chief Strategist, King Lip. Welcome back. What do you make of this report? Market seems to like it. Do you?

Hi, Scott. Yeah, I would say as an Apple shareholder, it's music to our ears, frankly, that the company is terminating the car project. We were honestly never big fans of the car project. I mean, building a car is capital intensive. It's low margin. There's serious entrenched players already in the EV market. So now that a company's, you know, officially dedicating more resources, it's something

that as a shareholder, we were always kind of wondering how committed is Apple to their generative AI. And it looks like they're committing some serious resources to it. Let me ask you this. Given the installed base, I mean, we're pretty much a product company, first and foremost, software, I get it. How big do they need to be in AI to make a shareholder like you happy? Well, you know, first of all, I think a lot of the generative AI

is going to be built into their operating system, you know, first of all, I think a lot of the generative AI is going to be built into their operating system, you know, into the Macs. It's going to be built into the iPhone software, for example. And as we know, there's a couple of billion devices, active devices that Apple has. So the consumer distribution for Apple is probably second to none, you know, from that perspective. So I think there's a lot of opportunities there. So let's talk about Alphabet, right? Because you've got positions in all of the stocks that have mattered, OK, including Alphabet, which is one of your top holdings. And now we seem to be talking about, you know, even more missteps related to their rollout of whatever their co-pilot or generative AI product is going to look like.

How concerned are you? It has been a disappointment as an Alphabet shareholder. That being said, we continue to think the valuation is attractive on Alphabet, but it is a show-me stock at the moment. It's trading somewhere between 10% to 15% below what we think is fair valuation in light of the fact that the company's anticipated to grow earnings over 20% this year. We do think the company's going to get it right. The company has significant resources to be a leader in the AR arms race. So we think they're going to get it right. And we think the stock is right now at selling at a discount. I'm just wondering about that, not whether they'll get it right or not. That's that's not for me to judge about the valuation, because one of the

arguments I would always hear from investors about Alphabet before we were even mentioning the words artificial intelligence was, well, the stock's cheap. You look at it versus a lot of the other mega caps and it has a lower valuation than many have. And now you say the same thing that its valuation is still attractive, it's still cheap, but we're talking about missteps and, you know, using words like embarrassing when it comes to, you know, the way that some of these things have rolled out. How can we judge both of those as equal? That the valuation was cheap before. Now it's still cheap and attractive, but after missteps. Maybe now it's actually cheap for a reason.

Yeah, that's a good point. We do think it's cheap for a reason from the perspective of as an investor is what is Google, I mean, what is Alphabet's AI missteps from that perspective and are they going to be able to get it right? So I think it's cheap for a reason for now. That being said, it hasn't grown as quickly as the other Magnificent Seven, if you would, which is the reason for the historical discount. But now I actually think given the sort of bad news that's already been encapsulated in stock, it actually makes it much more attractive to us. It's good talking to you. We'll see you soon. King, thank you. King Lip, Baker Avenue.

Coming up, the CEO of Occidental Petroleum here at Post 9. We're going to get her take on the oil space, the Crown Rock deal and Warren Buffett's latest comments about that company. It's just after the break. Closing bells coming right back. Shares of oil and gas giant Occidental up less than 2% year-to-date as prices of both commodities have languished. The stock a large holding of Berkshire's Warren Buffett, who said in his annual letter over the weekend he has no interest in buying that company outright.

CEO Vicki Holub is here at the New York Stock Exchange today to ring the closing bell in celebration of the 60th anniversary of Oxy's listing here. Joins us live now at Post 9. Nice to see you. Nice to see you. Great to see you. Welcome to town. Congratulations on this great milestone. Thank you.

So speaking of the listing, you know, I was looking at analyst reports getting set, and I noticed two-thirds of the analysts who cover your stock have a hold rating on it. And it seems to be that there are concerns over the Crown deal. Not only whether it'll get done, but what kind of value it's going to deliver to shareholders. Address the latter point first, if you would. The value that you think this deal can actually deliver to shareholders is what? Yes, the value that it brings to us is, to the shareholder, is an acceleration of value. For example, in the Permian Basin,

we have a tremendous inventory of Tier 1, Tier 2, Tier 3 assets. Some are concerned about the debt that we were raised to close the deal, but the reality is that we have divestitures that can help along with cash flow from operations to pay that debt back down, and that's our intent. But the Crown Rock assets actually are so, are such high quality that they come into our tier one inventory. They are assets that deliver lower than $40 breakeven

production and cash flow. So it's not only improves our inventory, but provides us a chance to bring more immediate value to the shareholders. FTC is asking you for more information. Do you think you can get the deal done? Absolutely. What makes you so confident? Well, there's nothing that would create a trade issue here. This asset that this company we're buying is like a business unit for us. It doesn't create any antitrust issues in the Permian. It doesn't create any antitrust issues for the United States. It's a process clearly that the FTC wants to go through.

I have no doubt, though, that we'll get the deal approved. How far are you willing to go to get it approved? As far as we need to go? If they sue to block it, what will you do? We will continue the process. You will. Are you closely watching what's happening? You must be with Exxon and Pioneer and Chevron and Hess. Do you think those deals will get done? And if they do, what are the ramifications for you? I really don't know enough about those deals to make a comment, but I will say that it has no repercussions for us. We are producing our own assets in the Permian Basin. For those deals to happen,

it really doesn't impact us in a negative way or positive way. There's no impact. There are a lot of operators in the Permian Basin. So I don't think any of these deals that are being proposed today create any antitrust issues. But are we at some moment here for more consolidation, whether it's, you know, we're talking about large companies, those and yours. Is this the beginning of something we need to follow more closely? I don't think it was. It was the beginning. The beginning probably was with our acquisition of Anadarko. And the reason you acquire is to be able to make, create value for your shareholders, but to do it in a way that where you're looking for assets that make your

assets better or create synergies for you or provide you an acceleration of value to your shareholders. And every company that does an M&A is doing it for different reasons, but I think M&A will continue to happen. There's a lot of companies, so that won't make any difference in terms of the ability of smaller operators or big operators for it to change the way they operate at all or impact them in any way. We mentioned at the top, big player in oil and gas. When you look at prices of natural gas, do you sit there yourself and say, oh my goodness, this is unbelievable? Did you foresee that they were going to drop this low? And when does the turn happen? I was surprised when natural gas prices were $5 or above, but I am surprised that prices are below $2. I didn't think that this would happen.

I think it's a short-term thing. I think the approval of LNG to those terminals ultimately will improve the price of gas, natural gas here in the United States. You think that's hurting your stock in any way, both where oil has been and natural gas? No. For us, natural gas is less an impact than oil. We have actually our chemicals business is a hedge against low gas prices for us because our chemicals business uses gas. So we can make more money in chemicals when gas is low.

So gas doesn't have so much an impact. Oil is important to us, clearly, because we're mainly an oil producer. So the current prices, though, are not out of line for us to be able to make substantial free cash flow. Where's your break-even? What's the critical level for you? Our break-even is at $40 or a little bit below. Okay. So upper 70s, you're okay. We're fine. Okay. Let's talk Warren Buffett. Over the weekend, he said in his annual letter, he has, quote, no interest in purchasing

or managing Occidental. I'm curious, just given the presence that he is and what he means to the whole investing universe, what's it like having him in your stock? Is it in part housekeeping seal of approval? I've got Warren Buffett believes in my stock and continues to buy it. Or does part of you also sit there and say, I wonder what this gentleman's up to? I think that I personally am incredibly happy that he's invested in our stock. I take it to be a positive and it's actually created an opportunity for me to have the chance to speak to him pretty regularly. That alone has given me, I think, lessons in life and lessons in investing and lessons in leading that I otherwise would never have gotten the opportunity to be a part of.

And so I'm grateful for not only his investment in Occidental, I'm grateful for the time that he spends with me when I get to visit him. Given what you just said, and without putting you on the spot, is there a particular lesson that you, or bit of insight that he gave you that you still carry with you? I carry a lot of them. I don't think I've ever had a conversation with Warren Buffett that I didn't come away with a nugget to think about. Was there a moment when he was continuing to accumulate the stock that you wondered whether he might be interested in buying the company outright? I wondered because I looked at the way he invested in other stocks, and especially the ones that he ultimately bought.

And so, yeah, I looked at those to figure out, try to figure out what his ultimate goal was. But just with all of our shareholders, I'm so appreciative of having the shareholders that we have, and all of those who invest in us. I'm interested in why they invest. I don't really question why they do. What I do question with our large shareholders and those that invest with us is I like to know their view of how we're doing and what they would like for us to do differently. But I don't ask for their investment thesis. Some shareholders may want you to return more cash to them.

We hear that. I know you do, but at a reasonably low rate relative to what some of your competitors do. Are you thinking about the dividend? What would cause you to hike it? I know you're trying to pay down debt, too, and that's where a lot of the capital is going to. But how are you thinking about that? Yeah, we're still transforming the company. This has been a major transformation for us to go from being a company that had assets internationally that weren't delivering value,

that were cash consumers instead of cash providers. So back about 10 years ago, we started this transition to divest of those things that weren't creating value and had no pathway to create value. So we ended up going from a company that was 50% international production to now 80% of our production is here in the United States. The Anadarko acquisition was a part of that process and that transformation. So that acquisition gave us a boost to get to where we want to be and need to be. This acquisition of Crown Rock is another part of that. So our debt is not where it needs to be right now. We do need to further lower it. Our goal is to lower it to about $15 billion. And then we'll get back to the rest of our value proposition, which is to provide a growing

dividend for our shareholders, but to do it within the means that whatever happens in the industry, we can still provide and support that dividend at $40. But also sharing, you know, one of our value propositions is to create value for our shareholders, not just in absolute terms, but on a dollar per share basis. So share repurchases are also a part of our value proposition. So as soon as we get the debt back down to where we need it to be, we'll start the share repurchase program again and start creating value that way.

That then enables us to grow the dividend without the absolute cost going up. So it's all all part of a model that's going to ensure that we protect the downside but create value on an ongoing basis so the shareholders see what the delivery of that on an annual basis should be in the future. We wish you well, and you have fun on that balcony right over there. We'll see you soon. Thanks for spending time with us.

Thank you. All right, Vicki Holub, Occidental, joining us right here at Postline. Up next, we're tracking the biggest movers as we head into the close. Christina Partsenevelos is standing by once again with that. Christina. Well, we have one software firm struggling to work through restructuring plan. And a cruise line company posting record bookings. Details on the stock movers next.

Got about 17 minutes before the closing bell. Let's get back now to Christina Parts of Novelos for a look at the key stock she's watching. Christina. Well, it's been a five-year drought, but Norwegian Cruise Line has finally reported a profitable year as its fourth quarter losses dropped dramatically. Strong growth in ticket demand helping its bullish 2024 forecast. Cruise companies like Carnival and Royal Caribbean up in sympathy right now. And you can see Norwegian up 18%. Unity Software, though, not providing a similar rosy outlook with Q1 adjusted earnings about $50 million less than street estimates. The app monetization firm is working through a restructuring plan to cut costs and win back the trust of developers after new fees angered its user community. You can see shares down about 7%.

Scott. All right, Christina, thank you. Thanks. Up next, top technician Jonathan Krinsky is looking outside of the world of big tech for some big opportunities. He'll join me here at Post 9 with the three sectors he is betting on right now, just after the break. All right, welcome back. NASDAQ shaking off earlier losses, getting closer to hitting a fresh record close for the first time in more than two years. Jonathan Kridsky, chief market technician at BTIG, joins me right here at Post. Nice to see you in person.

Good to see you. What do you make of this market, man? I mean, it surprised so many people. I think it surprised everybody. The fundamentalists, the chartists like yourself, you didn't think we'd be here now, did you? No, I think last time we were here, we kind of talked about one of two things was going to happen. Either the kind of the high momentum names, the leadership stocks were going to kind of catch down to what the broad-based market was doing, or we're going to see breadth expansion

and everything was going to catch up to the Mag 7. We're obviously seeing the latter. So it's encouraging on the one hand to see some breadth expansion. We're seeing healthcare, biotech have a massive breakout today. At the same time, we haven't resolved some of the extreme upside issues on some of the tech names. Like what? Are you talking about the mega cap tech names? Are you talking about sort of the below the mag seven ones that have ripped a lot, that are in this AI halo? I would say AI specifically. If we talk about the S&P 500 Semi Index, for instance,

if the year were to end right now, the two-year performance last year and this year would be 125%. In the history of the semis, the only time we've seen a better two-year performance was 98, 99, 131%. And we're only in February. So we're pushing the thresholds of what we've seen historically for that part of the market. Yeah. What does this all tell you about where you think we're going from here? So I think we've had to adjust the, you know, the massive bearish narrative for the S&P 500. I think we're seeing that breadth expansion. I think small caps are finally starting to participate. That insulates somewhat the big drawdown. With that said, I think the biggest issue right now is kind of this factor momentum trade. If you look at something like a long, short momentum index, it's just been one way to the upside because of the AI names moving to the upside and a lot of the other names have not. So I think the risk is that some air comes out of

those high flyers. And that's a big part of the S&P right now, too. So, you know, I think 4,800 in the S&P is very good support if we were to get a shakeout. But it's clearly, I think, that breath improvement has taken off the bigger bear picture. I feel like almost everybody loves healthcare right now, including you. Right now. It was our top pick in December coming into the year. I think it started with the mega caps like Eli Lilly, that kind of trade. Now we've seen a broadening. If you look at year-to-date performance on an equal weight basis,

healthcare is the best performing sector on an equal weight basis. So it is broadening. If you look at year-to-date performance on an equal weight basis, healthcare is the best performing sector on an equal weight basis. So it is broad underneath. And if you compare it to technology, it's not had the big kind of hockey stick move so far. So I think there's still some runway to go. Yeah. What about energy? I have some people on the show today picking energy as one of their favorite groups. I mean, it's obviously been an underperformer. How should we view it now? I'm looking at it here. It's done almost nothing year-to-date. It's in the green, but barely. I think energy is just on your watch list. I think materials are actually kind of an interesting sector in the commodity space. They get even less attention than energy. The material sector just broke out to a new high after 18 months in

consolidation. So we'd focus there for now. Energy will have its time if it can make a turn. All right. What's the upside, you think, for the S&P? If 48 is like a line in the sand for support or watch out, what's upside? When you're at all-time highs, it's very difficult to ascertain an upside because there's no obvious resistance. I think 52, 52.50 is probably a good level, but we'll see when we get there.

Okay, yes, we will. Jonathan, good to see you. Jonathan Kresge here at Post 9. Up next, we are setting you up for earnings in overtime. eBay and First Solar among the names hitting the tape. We're going to tell you what to watch for just ahead. All right, we're in the closing bell market zone.

CNBC Senior Markets Commentator Mike Santoli here to break down the crucial moments of this trading day. Plus, Courtney Reagan on what to expect when eBay reports in overtime today. Pippa Stevens following First Solar's quarterly release. We're going to get to all of that in just a moment. We do have some breaking news regarding UnitedHealth. Our Bertha Coombs has that story for us. What are we learning here, Bertha?

Scott, the Wall Street Journal reporting that the Department of Justice is investigating UnitedHealth over antitrust issues. In particular, this appears to be looking at UnitedHealth's insurance side and the way it works with its OptumHealth services side. UnitedHealth has tens of thousands of doctors and has bought up a number of physician groups over the years. And apparently this is the focus of the investigation. UnitedHealth, along with CVS and Cigna and their pharmacy benefits groups, are already under scrutiny from the FTC over the way those PBMs look. So this is another probe, according to The Wall Street Journal. We reached

out to UnitedHealth, which has no comment on that story. And we're awaiting word from the Justice Department. Back over to you. And we'll watch those shares. Bertha Coombs, thank you very much. Mike Santoli, I turn to you. We have a nice little pickup towards the very end of the day. NASDAQ may not get that new closing high today, but it looks like it wants to make that run. And maybe Apple waking up can help it do that. Well, Apple going up $25 billion in market cap because they're canceling the iCar that may never have existed anyway shows you that there's just this willingness to believe out in the market. I think that the long-term investors comfortably involved, the core volumes in this market are actually very light in the things like the S&P 500.

On the fringes, YOLO happening. 5% up in the biotech index. Yields up. And the Russell 2000 microcaps up 1.5%, 2%. It shows you the speculative juices are back. Doesn't mean it's getting overdone just yet. But that's where the action is. That's the phase of the rally we're in.

I mean, the chartists, you're Jonathan Grunsky. Chartists like him, they've been denied. I mean, they've been making the argument for many months that, you know, something's got to give and something's got to break and nothing's given and nothing's broken. The market has answered most of the big complaints and it hasn't left you with much except for the big, you know, valuation conditions and seasonals and sort of the slow-moving stuff that might matter at some point. And look, we get a big disappointment on inflation. If we're going to have to really reprice the rate path again, if yields break out, then we might have the excuse for something bigger. Yeah, for sure. Courtney Reagan, what should we expect from eBay in just a little bit? Scott, so eBay has underperformed both the iBuy online retail ETF and the XRT retail over the last three months.

So the street is expecting earnings of $1.03 on $2.51 billion of revenue. So investors, listen up. A capital IQ analysis shows that more often than not, in the last 79 quarters, whatever direction eBay shares go in response to results after market, they will move further in that same direction in the next day's trade. Now, while the holiday quarters results are going to matter here, of course, Scott, analysts really focusing on eBay's year ahead, specifically watching to see how management hits its goals of focusing on enthusiasts from any of these collectible verticals while also expanding the

market for refurbished goods. Traditionally, eBay's competition online has been Amazon, but the street is carefully watching the rise of Shein and Timu and how those names are taking share from eBay's and other online, particularly when it comes to cross-border trade. Back over to you. All right, Court. Appreciate that very much. That's Courtney Reagan.

Pippa, First Solar, what do we need to know? Yeah, Scott. Well, First Solar has outperformed the broader sector over the last year, thanks to its exposure to utility-scale solar, which has held up better than Resi, as well as its advantageous position as the only sizable domestic panel manufacturer. Now, module prices have come down, but as RBC put it, First Solar is immune to current oversupplied market conditions because its backlog extends into 2027. Now, guidance here will be important because right now developers are willing to pay a premium for

assured delivery. But as more production comes online in the next few years, does that start to change? Now, several factories are also under construction. So an update from First Solar on those timelines will be important, as well as commentary around how the company will use the 700 million in IRA tax credits that it sold at the end of last year. Scott? All right, Pippa. We appreciate that. Pippa Stevens, we have about a minute to go. It's going to get loud in here, too, because we've got the Oxy anniversary, the listing, got about 100 people here.

I'm told many making their first trip to New York City as well. So you know they're going to be loud and proud. So let's keep that in mind. I stand with less and less than a minute to go. Speaking of energy. Yeah, it's been a big disappointment. Right. You look at natural gas prices are unbelievable to look at.

Oil is, you know, made us believe, OK, maybe it's going to move higher a little bit. But these stocks, not too much. No, not too much. I mean, it just doesn't seem to be where the attention span is at the moment, right? It's almost the opposite of the stuff that's working, which is the more digital, the more AI you can get, the less real asset. On the other hand, crude hangs in there. And I don't think you can write it off that this range is going to be the range for us. Okay.

So the bell's going to ring again. We see what the NASDA that does in the day ahead, but it really feels like we're looking ahead to P3E on Thursday. I'll see you tomorrow. I look very much forward to that. Have a great evening at the OT with Morgan and John.