Closing Bell - Closing Bell: Stocks Breaking Out? 5/17/23

Episode Date: May 17, 2023

Are stocks about to actually break out of this range they’ve been in? Cheryl Young of the Rockefeller Family Office and New Edge’s Cameron Dawson give their expert market takes. Plus, Tesla shareholder – Bryn Talkington – weighs in on Elon Musk’s comments regarding his controversial tweets and how it could impact his business. And, Leslie Picker shares billionaire businessman Marc Lasry’s latest call on rates. 

Welcome to Closing Bell. I'm Scott Wobner, live from Post 9 right here at the New York Stock Exchange. This make or break hour begins with debt ceiling. Deal hopes, the strong move in stocks we are witnessing at this moment. Here's your scorecard with 60 minutes to go now in regulation. Cyclical areas like banks and energy industrials are lifting the Dow today. Really broad-based move, though, across almost every sector. A nice session for the Russell 2000 as well. The small caps are getting a much-needed boost. There you go. Near two percent for the Russell. Really strong day there. Leads us to our talk of the tape. Whether stocks are actually about to break out of this range they've been in. And finally, we've been waiting for this.

Is it going to happen? Let's ask Cheryl Young, private wealth advisor for the Rockefeller family office out here from the West Coast. It's great to see you in person. Is that what this move in the market today, do you feel, is about, hopes of debt ceiling deal? Absolutely. I think everyone is really realizing that the politicians cannot commit political suicide. There is probably going to be an agreement reached fairly soon. And we view this as, even if there's short-term volatility of buying opportunity, if there is more volatility,

hopefully this is the end of it. But we still have another two weeks to go. Yeah, what about that question I asked at the very top here, whether we can finally get out of this range? We've been looking at, you know, what are the potential catalysts for that? Is this one? You know, I think maybe not yet. I would love to be more optimistic. The S&P is exactly where it was at in April 2021.

So we are two years in a sideways market. And we're tired of being in a sideways market. Trust me, my clients are definitely tired of being in a sideways market as well. I bet. But I think this is a market where you have to be very selective, very patient, very defensive, which is exactly what our chief investment officer, Jimmy Chang, just reiterated to me this morning. I think there's going to be a breakout in certain sectors and certain names. But the broad market, I think there's still some pain potentially ahead. Does the fact that we've been narrow in terms of mega cap leadership, does that make you more cautious than not? Is it a negative sign to you? Absolutely. This is the most narrow range we've ever seen in stocks.

If you take the top 10 mega caps on the S&P 500, they account for 95% of the returns year to date. If you take the top five names, it's 75% of returns on the S&P year to date. If you look at an equal weighted index, which by the way, this week marks the 20 year anniversary of an equal weighted index ETF being launched, it's negative 0.17 as of just a few minutes ago year to date. And so we're really seeing a few stocks move and drive the market momentum. But it causes us a lot of concern that the rest of the markets have not rallied with these big mega cap names. I do hear both sides of that debate, though, that it's not necessarily as negative as some would want to point out. Those stocks are carrying the market. They are the biggest by market cap for a variety of reasons

that they've been going up. And we talk about it, earnings power, balance sheet, cash, cash, you know, cash flow, et cetera. AI. AI. We love AI. Yes. So maybe is it is it does it necessarily have to be as negative as some would would project that it is? I hope not. Look, I've been a lot more positive. As you know, the last time I was on the show I hope not. Look, I've been a lot more positive. As you know, the last time I was on the show was in January. And I said this was a time in January to double down on these mega cap names. So I am still a believer. I'm in Silicon Valley. I have clients who work for these companies and these clients are wicked smart people. And I know the things that they're doing. We see some of the advancement in AI. I know this is all over the news

right now with the Congress testimony yesterday by Sam Altman and several of his peers. I think there are a lot of areas that have upside ahead, especially in the technology sector. But what worries me, we have an M2 money supply that has declined year over year. 4.1% was the reading in March. We have the commercial real estate market, which everyone's been talking about this as well, but we have over a trillion coming due in adjustable rate mortgages in the next year. And that's going to start hitting the market with rates up over 500 basis points. So I don't think we're out of the woods yet in terms of potentially still going into recession. However, I still think this is the time to own stocks. I would be adding defense, maybe add some puts to your portfolio to protect the downside.

But that will allow someone to stay invested. And what I'm advising my clients to do is to stay invested for the long haul. You shouldn't be in stocks anyways if it's short term. But be very selective about the names you're choosing. Because you said you're out in Silicon Valley. I mean, the epicenter of the regional bank issues when they started anyway with SVB. Do you think there's more significant issues to come as it relates to the banks? Look, I hope not. The banks are very well capitalized.

And we have been referring this. The large banks are. The large banks are. We have seen what I will refer to as a walk away from banks where deposits have been leaving the smaller regional banks and really flooding to the larger banks. I know my office has been opening up a lot of accounts for treasuries over the last few weeks because clients are looking for safe haven away from just deposits at some of the smaller banks. So it is a concern. And, you know, especially around some of the

clients that worked with Silicon Valley Bank, these companies were depending not just on their deposits, which have been shored up, but also for loans and lines of credit over the next year. And that's an area where, again, on the private equity space that you have to watch. What do you make of the fact that, you know, this week alone, let's say, on this network, Paul Tudor Jones sort of notes, you know,

something's going on where flows are going in this market. The market's been really resilient. He thinks stocks are going to go higher. There were some reports, which I've corroborated, that Steve Cohen, the famed Steve Cohen, is bullish. Right. He was talking about AI this morning with that call. So maybe people are too negative. The negatives are so easy to point out. And that's why everybody does. And there's a reason to be cautious I'm not suggesting that well everybody should be wildly bullish but maybe people are too negative I I think that you have to remain optimistic for the long term you know if I think about what is going into you know stock

research and where we see some of the interesting areas I think that there is a lot of negativity for good reason. But at the same time, we're seeing a lot of stocks rally despite the negative news. You look at some of these mega cap names and their earnings were actually declining year over year, but they beat estimates. So we've seen CFOs revise estimates. The markets are a lot more, I think, neutral in terms of the outlook. And if companies beat those estimates, there could be some tremendous upside on stocks. I'm even looking at something like, you know, Target, for example, today. It's not like, you know, their earnings were all right.

The outlook wasn't great. And yet the stock is managing to rally some two and a half percent. So those are the kind of things that some people look for to say, you know, OK, something's going on here, whereas, you know, that stock may have every reason to trade lower and it's not. Look, I think overall people want to make money and we have to really navigate the fear and greed cycles in this market. Again, I am long in my own portfolio. I have very little cash. My money is put to work. However, I have puts going through October right now just to get through the next few months. So you're hedged.

So I'm hedged. You're hedged with some protection on. But it's interesting because I've talked to other very highly rated financial advisors like yourself who are in piles of cash. Oh, I know. We're crushing them. It's great. Well, that's why you're one of the highest rated ones. Let's bring in Cameron Dawson now with New Edge Wealth. Happy to have you here as well. I mean,

somebody who's been cautious. Have you changed at all? Well, we continue to see this market stuck in a range where we haven't really seen any sign of breaking to the upside. I think that in our cautiousness, we've expressed it through focusing on quality. This has not been a cautiousness of race and hideout in cash. We've stayed invested. But it's saying that we don't think that names that have high leverage or weak cash generation are where we want to be in this environment. So in a tight liquidity environment, in an uncertain growth environment, you want to stay in those quality names in portfolios in order to ride out the cycles. What do you make of the whole debt ceiling issue as it relates to the stock market? I'll ask the same question I asked Cheryl.

Do you think this 400-point move here is optimism around that? And is this finally the thing that can try and bust us out of this range? I actually think that the debt ceiling is the biggest buy the rumor, sell the news event. Why so? Because the lead- up to the debt ceiling has actually been a major driver of liquidity being pumped into this market. When the treasury has been spending down its cash balance

instead of issuing new bonds, the end result is that it increases reserves in the system. It adds liquidity. And that's one of the reasons why growth stocks, technology stocks, speculative stocks have been up year to date. One of the reasons, other reasons as well. But when we get past the debt ceiling, the Treasury will start issuing new bonds and that will have the net effect of taking

liquidity out of this market. See, that's the same thing that Rich Saperstein said, not what, a day or two ago sitting on this show, that it's a form of de facto tightening. Yeah. Yeah. Because the spending down of this Treasury general account has effectively offset quantitative tightening over the past six months. But see, you mentioned speculative stocks. I mean, mega cap tech is not speculative in any way. Do you see that continuing? Money is going to continue to flow there. And if it does, is that is that a negative or not? The fact that large cap growth is outperforming at the end of a cycle or late cycle is very normal.

Because when growth gets scarce, people flood into the areas where they feel confidence that they can actually get growth. And so the fact that large cap growth is outperforming is much more late cycle than it is early cycle. It does make us nervous that this market gets narrower and narrower because if one or two of these names stumble, it's bad for the index. And so I think that usually in big, strong bull markets, breadth is usually much better than it is today. And I think that would be something to give you pause to see how much it can continue. Okay. So let's then discuss with both of you what breaks you out of your cautious range. What do you need to see? I mean, what is it? You know, I think you really need to see demand pick up.

And what worries me is if you look at the debt levels among consumers, we just crossed $17 trillion. It's a huge number. And simultaneous to that increase in consumer debt and especially credit card debt, we've seen rates go up. So I really don't see how demand strengthens from here, but you have to have demand remain strong. I do think there is sort of this post-COVID effect where people are so sick of being at home. They want to travel. We are not seeing any decrease in people spending money on airlines, on staying in hotels. That demand is very, very strong. And I just don't see how that continues with inflation as high as it's been. It may not continue at the current

rate, but it also doesn't necessarily mean that it's going to completely drop off a cliff. I don't think it will. When I talk to my individual clients, they are saying things like, I'm going on this trip, even though it's costing this much, Cheryl, and they're still going on these trips. Isn't that somewhat bullish? So you could argue that's bullish, or is it a wake-up call that has yet to happen? That's really the whole point of the conversation at the end of the day. It's a debate over what's already happened versus what might still. And the real paradox here is that for as concerned we all are about growth, we're actually seeing growth re-accelerate. Look at housing starts, look at housing sentiment, look at retail sales.

There are signs that things are holding in. Yes, fraying around the margins and some of the labor data, but to your point on the consumer, as long as consumers have jobs, they're going to spend money. And even when we look at those debt balances as a percentage of their disposable income, it's actually below 2019 levels. So, yes, we have higher debt, but overall consumer balance sheets are still OK. What happens if growth as a result of demand you're talking about remains strong enough at the same time inflation continues to come down?

I think that's great for the markets. I mean, how likely is that scenario? I don't it doesn't sound to me like it's all that outlandish to suggest. You know what I would love to see, Scott? I would love to see the the feds use artificial intelligence and making some of their decisions instead of all these lagging indicators. That's what I would love to see. They should use AI the whole time. They would have started raising rates earlier. We'd be done with this already. You know, I do get concerned that we have people in power who are not using metrics that are, in my opinion, up-to-date technology.

So using these lagging indicators to make decisions and drive policy is very, very scary for me. So it is that question of can we get that balance right. I think if the Fed remains a little bit softer in the rest of the year, that things could actually turn out OK in this economy. Do you think the Fed's going to cut? No. You don't you don't see it this year? Not this year. Not many do. Treasury's telling us. Yeah, the bond market does. The bond market continues to believe at some point we're going to have to have a fight and somebody's going to win. And we've seen that fight multiple times. It happened back in February.

It happened back in last summer where we saw the bond market price in a pivot that never materialized because inflation remained higher and demand remained stronger. I think our biggest question is if inflation rolls over and does moderate towards 3 percent, but demand remains strong, is that really enough for the Fed to cut into a full employment economy? Because wouldn't they risk inflation coming back? So forget cut. Are they done?

Do you think they raise? Are they done? I think they have to be done. You know, I think the cracks in the system shown with the banking, you know, they've been small regional banks for the most part, but there's cracks in the system. And I think the Feds are listening to that. And I'm hoping they're done. You think they're done? I think June is now a live meeting. You do? Why? Well, we've seen the probability of a June hike go from negative 5% back a few weeks ago, meaning actually probability of a little bit of a cut to up about 30% on the

back of this stronger data. And if you listen to the Fed speak over the past few weeks, there's been a lot more talk about demand, meaning that they need to see demand move lower. So I'd put it maybe closer to a 50-50 chance than the 30% price down. 50-50, that high? Yeah. Wow. I mean, it's going to be super interesting, especially if the data remains okay. It hasn't been horrible. And they will be data dependent. And so if inflation comes in later, then that probability will drop significantly. So if you're if you're both cautious and you and you think there might be a pullback to take advantage of how much of a pullback I've had ranges, right? People come on and say, well,

we're going back thirty five hundred. We could go back to the October lows. What do you think? I don't think we see the October lows. And if we dip back that much, I think it's very, very temporary. Look, the resilience among stocks is here for a reason. The earnings that we just had, I mean, the last cycle has been mostly very, very good. And again, we're not seeing changes in demand. So I'd be watching how strong the dollar is. I'd be watching not just the U.S.,

but overseas spending. It's not just the U.S. We're really a global economy. And I do think that there is a lot to be said about having such a strong dollar as well. And to your point, if you look at the Treasury general account, this is really a reduction of liquidity back to go into the system as soon as they do raise the debt ceiling, which we think will happen. What do you think? I think that the downside is so very dependent on a recession. Because if we look, the past times that the Fed paused and there was no recession, of course markets went to the moon. You add the liquidity and there was no risk to earnings. But if we have a recession and the timing of that still remains a big, huge question mark, that's where we need to mark down estimates a great deal. And that's of that still remains a big, huge question mark. That's where we need

to mark down estimates a great deal. And that's how we'll judge if the next stop is thirty eight hundred, thirty six hundred. And really, it all depends on the recession call. I mean, if there's no recession and the Fed, the Fed is obviously at some point going to cut rates, not going to stay at five percent. So no recession, Fed cuts at some point, inflation comes down enough. Not many people are planning on that. People are kind of offsides for that, don't you think? That's why I like being long in stocks and buying puts. Well, I think that in that scenario, it's just very unlikely because the Fed cutting into a full

employment economy when inflation is still above their target seems rather unlikely. Unless it starts to go down even faster than it has to this point. Now, granted, it's been sticky, but we'll see. Enjoyed it very much. Thank you guys both for being here. Cheryl and Cameron, we'll see you soon. Let's get to our Twitter question of the day. Will the S&P hit 4,300 or higher if a debt ceiling deal is reached?

Yes or no? Head to at CNBC closing bell on Twitter. Please vote. We'll share the results a little later on in the hour. We're just getting started, though. Up next, trading Tesla. Elon Musk sitting down with our David Faber, as you clearly know by now, shedding some light on his controversial tweets as well and how it could weigh on his business. We'll get reaction from a Tesla shareholder after the break. You're watching Closing Bell on CNBC. About 40 minutes to go in the trading day.

Let's get a check on some top stocks to watch as we head towards the close. Christina Partsenevelos is back with that. Christina. Well, let's start with EVgo shares tanking right now. Down what I would last I checked 11 or 18 percent at the moment after the charging station provider announced they have to issue new shares to raise cash. So the money raised from the sale of $125 million of new Class A shares will go towards expanding the company's charging network. They want to get to $4,000 by year end.

But this is classic dilution, as new shares outstanding means existing shareholders will own a little less of the company once the sale goes through. Western Alliance is leading the regional bank's hire today up about almost 11% at the moment after it said deposit growth for the current quarter grew beyond $2 billion. That was as of May 12th, up from $1.8 billion just three days prior. Other beaten down bank names like PacWest and Comerica are up in sympathy. Scott. All right, Texas, where they discussed everything from AI and the Fed to the possible financial fallout of Mr. Musk's presence on Twitter.

Listen. Do your tweets hurt the company? Are there Tesla owners who say, I don't agree with his political position because and I know it because he shares so much of it? Or are there advertisers on Twitter that Linda Yaccarino will come and say, you've got to stop, man, or I can't get these ads because of some of the scene in The Princess Bride. Great movie. Great movie. Where he confronts the person who killed his father. And he says,

Offer me money. Off offer me money. Offer me power. I don't care. So you just don't care. You want to share what you have to say. I'll say what I want to say. And if the consequence of that is losing money, so be it. All right, joining us now,

Tesla shareholder Bryn Talkington of Requisite Capital Management, also a CNBC contributor. It's good to see you. So Musk makes it clear to David that he doesn't care. Do you care? Well, I mean, I've seen the movie. I think David missed the point. I think viewers.

So what he was saying is in the movie, it's all about staying convicted to one's personal beliefs. And I think that as we've all seen, Elon cares a tremendous amount about free speech. He uses free speech and he thinks Twitter should be a platform for free speech. And he felt so strongly about that he had to sell millions of shares to buy it. And so what he's saying is that I'm willing to sacrifice personal and economic gains in order to protect my own personal beliefs that I believe so heartedly in. That being said, he also believes in making money. And that's why he hired an expert in advertising, which would be Linda. And so I don't think it's not that he cares. It's that he does care so much about those strong,

his strong viewpoints about free speech. Sure. But I mean, look, in fact, I don't think David missed the point at all. And that's all fine and good, what you say and what Musk himself suggests. But he still is the CEO of a publicly traded company in which you are an investor and have to decide whether that is bothersome to you, whether you think it's a distraction to you or to the share price, to the direction of the company, or frankly, anything else? I don't think that in aggregate Tesla shareholders were or have been concerned by him expressing his opinion. I think what happened last year is when, you know, he says maybe in jest, I'm going to buy Twitter. And then he actually has to buy Twitter. And then the issue is like, what's going to happen? Is this going to be a drawn out court case?

How much Tesla shares is he going to have to sell? And that is really why you saw such a massive decline. But the stock bottomed out at what, 110, got as high as 200, and then now has settled in. And so I think he's proven to everyone he can walk and chew gum at the same time. He's running about five different companies and he has a great team underneath him. So I don't think that an aggregate Tesla shareholders would say him tweeting is a distraction to what he's been able to just do globally across all these different companies that he's running. And you don't care because, you know, I think we can honestly say, I mean, CEO is expressing political beliefs. For example, you know, I'm not sure has ever been as under fire as it appears to

be now in some corners of the political space and whether it's a couple of corners, some on the left and some on the right. So do you not have an issue with anything that the CEO of a company that you invest in ostensibly could could tweet about? Well, of course, you know, of course, there's there's there's there's a moral high ground in a way you want certain CEOs to act. But Elon is not just a CEO. He created these companies, right? So, I mean, he took Tesla, which was not doing well back in the early 2000s, took over and has made it into probably one of the most important companies in the world. And so I think you have to separate a founder CEO that's so rare, like Elon, which is like a Steve Jobs, which is like a Thomas Edison, from just some person that's sitting as a CEO that is not the founder of a company.

But once again, Elon is a lightning rod. He is a brilliant, opinionated person that just like speaks his mind. And so clearly that will get into the crosshairs of many people. But to me, like in general, I think he's an important person and it's a very important company that we have in America. And so I'm very pro Tesla, very pro Elon in terms of what he's been able to accomplish in such a short amount of time across so many different important companies. What do you think about his seeming willing willingness for advertising as it relates to Tesla? Well, we'll see. Right. They haven't needed to advertise before, but I think it's becoming so

much more competitive because he was the only player out there before. Now you have every single car company is coming into that EV space. So we'll see what happens there. But I do think the ultimate advertising is he is so dominant on Twitter and every other platform. I mean, I bet millions of people watched David's interview yesterday because he's captivating and people want to hear what he has to say. So I think he is the best commercial for Tesla. Yeah. All right, Bryn, I appreciate it very much. Thank you. That's Bryn Talkington joining us. And we'll see you soon.

Up next, breaking down big opportunities. Goldman Sachs asset management's Luke Barr joins me right here at Post 9. We're going to drill down on one part of the market he thinks could see major gains over the next decade. Closing bell right back. Welcome back. Tech continuing its climb higher today. The XLK hitting a new 52 week high for the third straight day. It's highest level now since April of 2022. My next guest says there could be even more upside for that sector. Joining me now post-9 is Luke Barr,

is Goldman Sachs Global Head of Client Portfolio Managers. Good to see you. Welcome. Hi, Scott. You must be reasonably positive on the market if I look at what you think people should be doing within it. Semis, software, advertising, small caps. Have I characterized that right or wrong?

That's absolutely right. And so when we look at the market today, we're not saying beta returns are going to be great going forwards. We're saying pockets of the market offer great value. When we think about the quality businesses within the tech ecosystem, within parts of the industrial ecosystem, as much as there's a lot of anxiety around recession risk, we still think that's low probability outcome. Debt ceiling is very likely we see some resolution and we can get these great businesses right now where the market's putting a lot of anxiety into a way that we don't think is necessary. Do you think that this move today is in part optimism around a deal? I think in the short term that that's what the market is looking at.

Let's just be frank, the market stayed fairly flat even with some of the anxiety we've seen over the last couple of weeks. What we're really saying is taking a longer term view, the market is misjudging the quality of fundamentals in some of those technology businesses. So you referenced semis, great case in point. We have an underlying industry that is foundational to many of the major tech innovation themes that we see today, whether it's AI, whether it's automation technologies. And so for us, if we can find those businesses that have unique capability, that are still being traded in a way that reflects last year's environment, where the access to capital was more challenging, the discount rate was having to increase. But with the certainty we have today,

it's a very different starting point. I mean, the House view at Goldman Sachs, as articulated well today by David Koston, was pretty cautious. Muted returns, one in three chances of a recession. Do you not share those views? Share those views. One in three. I still think that's two thirds in our favor. But I think when we take a step back and think about the pockets of the market that we're looking at, that can be significant dispersion of stock level outcome. Yeah. So you think this AI run has a little more room to go. It's obviously all the rage. It's what everybody continues to talk about. Even as valuations have gotten more elevated in the early part of this year, how do you address that?

So AI, first and foremost, transformational theme, in our opinion, actually probably the biggest transformational impact to the technology landscape since we've seen the introduction of the Internet. When we think about it in a public market context, it's really early. So let's just level set where we're starting from today. You have to be very thoughtful on how you take exposure within that. There are opportunities in the large cap space where we have very interesting AI capabilities. What's very interesting, take Microsoft, great case in point, the pricing model in Microsoft is avoiding commoditizing that AI capability.

It's allowing businesses to access it, but pricing it at a premium that's very accretive to long term earnings. When we look at the picks and shovels, which is really where we want to play this theme, it's the semiconductor, semi-cap equipment businesses that are going to be benefiting from that transition towards AI, especially those that have unique capability. Can we talk small caps? Because I feel like maybe it's the most controversial part of your view. In that, if you think there's one in three chance of recession, if you think that returns are going to be somewhat muted and this overhang of recession fear is going to be with us for the let's say at minimum the very near term, how do small caps work in that environment?

Well let's just remember we've had 10 to 12 years of small cap underperformance. Without wanting to suggest history always rhymes perfectly, these cycles tend to go in 10 to 12 year cycles. And when we look at the small cap space, we're trading now 40% discount, Russell 2000, 40% discount to S&P 500. The long term average is 7%. So if we think about some of the higher quality businesses, and let's think about re-industrialization of manufacturing in the US as we see that re-off-shoring from Asia and from China.

Who are the beneficiaries? Some of those industrial automation businesses, some of those construction commodity businesses, that's in your small-cap universe. Look at the healthcare space, especially biotech. Biotech's been beaten up for a couple of years. We understand why. Access to capital has been more challenging. These are pre-profit businesses.

They need to fund that growth, fund that commercial path. But this is a point in time where genomic technology, precision medicine, some of the therapeutic solutions we're going to deliver in the next few years is transformational to that industry. What would you stay away from? At this point, we're cautious on the regional banks for obvious reasons. We think the regulatory environment is going to be more challenging for some of those. That's going to put a higher cost of capital for some of those businesses.

And when we look at pockets of the larger cap technology space, we do think there's still a little bit of optimism to be priced into some of those businesses that isn't being translated or reflected in some of the smaller cap names. So it's interesting if you, I mean because obviously the regionals have such a high weighting in the Russell 2000 for example, the smaller cap stock, so you can still like pockets of small caps without liking regionals. You better be really selective, right? 100%. Stock dispersion is the key theme here. We think actually more of the small cap growth opportunity, as we said in some of the biotech names, selectively in some of

the technology hardware businesses, the industrial businesses. That's a really interesting part of the story. Good having you here. I appreciate you being with us on set. This is Luke Bars, Goldman Sachs Asset Management, joining us here. Up next, we're tracking the biggest movers as we head into the close. Christina Parts-Novellos is back with that. Christina. Viva Las Vegas, because sales are booming. Could this just be the start of Wynn's stock rally? I'll explain all of that after the break.

20 to go until the closing bell. Let's get back to Christina Parts-N Novelos now for the stock she is watching. Christina. Wind shares, that's what I'm watching. They're higher after Barclays analysts upgraded the stock, saying the best is yet to come for the casino and gaming company. They raised their price target to $135 from $120, as the resilience of Las Vegas and growth in Macau is fueling optimism in Wynn's upside,

which is trading right now at $109.10, up almost 6%. Barclays also pointing out the new professional sports team in Las Vegas could be a big draw to the city. WeWork shares did hit a new low today after an abrupt CEO resignation yesterday prompted analysts at Mizuho to downgrade the co-working real estate space to a neutral from a buy. They find the change disruptive given the firm's already high cash burn. You can see the stock down 23 percent, trading below 27 cents a share right now. Scott. Yeah, brutal.

All right, Christina, thank you. Christina Parson-Novellos. Last chance to weigh in on our Twitter question. We asked, will the S&P 500 hit 4,300 or higher if a debt ceiling deal is reached? Head to at CNBC Closing Bell on Twitter. The results are just after this break and coming up in overtime. Do not miss the CEOs of ServiceNow and NVIDIA, 4 p.m. Eastern, right here on CNBC Closing Bell. Big interviews coming up. We're back in two.

All right, let's get the results of our Twitter question. We asked, will the S&P 500 hit 4,300 or higher if a debt ceiling deal is reached? The majority of you said yes. 63. All right, that's cool. We'll talk about that with Santoli coming up. Also up next, the writer's strike hitting media stocks. We're breaking down the big impact on Netflix. We've got your earnings set up coming up. Cisco reporting in overtime. We'll tell you the key things you need to watch there and what could be at stake for the broader cloud space. We'll take you in the Market Zone next. We're now in the closing bell Market Zone. CBC Senior Markets commentator Mike Santoli here to break down the crucial moments of the trading day.

Leslie Picker shares billionaire businessman Mark Lasry's latest call on rates. Julia Borsten on Netflix's mounting challenges two weeks into the writer's strike. And Frank Holland looking ahead to Cisco earnings after the bell. We're looking forward to that in overtime. Mike Santoli, only utilities and staples are in the red today. And the VIX is 16. It's down about 6.5%. Yeah, a little bit of tension release.

I don't know that it was necessarily really headline-driven, except we were certainly coiled pretty tightly in this range. A lot of talk heading into options expiration, that there's this clustering of positioning in these areas where maybe you could get released. And then, if not about the debt ceiling, I think you've removed that as a real overhang, negative worst-case scenario type of stuff playing out.

So all of that is one fewer reason to lean against the market. You have seen some broadening out. You've got the regional banks, I mean, looking kind of squeezy, but, you know, it's a higher low on that chart. It looks like maybe they're trying to put some distance between themselves and the abyss. So all those things working together gets the S&P essentially up toward last week's high. So we keep it in context. It's a little bit of an answer to people saying nothing works in this market except for a few stocks.

Small caps outperforming. But it is just one day, and we'll see how it plays. I'm glad you mentioned broad-based. Financials, 2%, energy, 2%, discretionary, 2%. We've got nice gains for industrials, as you said. Tech is still participating as well, along with the materials. And, you know, health care is not doing all that much. But the spaces that have been static are doing a little something today.

Static or worse? Or worse. Static or worse. You've actually had, you know, the Russell 2000 threatening to break down. Things like the auto stocks, other cyclicals really have been, you know, pricing in a more gloomy scenario for a while right now. It doesn't mean we don't get a little gloomier, but for now, the macro data is not eroding that fast.

And in fact, in some areas, it's looking like it's picking up. So whether that means, you know, the Fed is again in the game in coming months, maybe that's going to be the case. But for now, it's enough on a one day basis, as I said, when you had a lot of skeptical positioning going into the day to to spring us a little higher. LP, what did our friend Mark Lazzari have to say about rates? So this is kind of interesting, Scott. Avenue Capital's Mark Lazzari, he was speaking at an investing conference earlier this morning, made a call that the Fed will soon pivot from worrying about inflation to worrying about a recession.

He said the Fed will cut rates. It's just a matter of when. The Fed has already told you they're going to lower rates. For some reason, people don't believe it. People are still nervous. But rates will come down in the next six months. So if there's anybody out there from Bloomberg or anyone, mark my words, within six months, rates will start coming down.

Lazarus Commons appear to be in line with the views of Point72's Steve Cohen, who had spoken at an invite-only session last night. No cameras were there. But Cohen believes that supply chain normalization, AI, and other technology will push prices down and the Fed will pause and start cutting rates sooner than people expect. As such, he believes stocks will go higher, Scott. So you've got Lasry in more of the recession camp causing that cut, and you've got Steve Cohen in the camp of kind of technology-driven,

we'll kind of solve our inflation problem, and the Fed will cut as a result. Yeah. Cohen, from somebody who was in the room, was said to be pretty bullish on stocks, Leslie. Yep. Pretty bullish on stocks as a result of this thesis surrounding technology. What's interesting, and I don't know exactly the timeline. Again, it was an invite only, no cameras there. I have confirmed those comments with people close to him. And it was also mentioned on stage today as well. But he didn't necessarily, we don't know what timeline he's talking about.

Is it that six-month timeline that Lazary mentioned? If so, that seems to be a pretty quick way that this AI technology will work its way in the system in a way that would push prices down and potentially cause stocks to move higher on a broad basis. Yeah, Leslie, thank you. Do you want to opine on this idea that the Fed's going to cut, right? Yeah. In the next six months. Six months. I mean, I think if you looked at the consensus of the Fed Open Market Committee forecast, they were talking about maybe into the first part of next year.

They were assuming they were going to be cutting. I don't know. I mean, I think if we get out beyond a couple of months, it becomes very much a slave to whatever your macro outlook is. So softish landing, they're probably not cutting. I think they can really make the case that they're where roughly they want to be in rates unless things really do rupture in the economy. So I don't even know how you would bet on that through asset prices right now on the Fed cutting, because the path it would take to get there may not be the one

you anticipate. Yeah, good point. Julia Borsten, two weeks and counting into the writer's strike, and we're starting to feel some pain around the way. Well, you know, Scott, Netflix was supposed to host its first ever upfront ad sales presentation. It was going to be live at the Paris Theater in Manhattan. That would have been a big deal for Netflix, but two weeks into the writer's strike, with some intense picketing at network's headquarters, the streamer opted to cancel the event and instead stream its presentation. Now, this comes on the heels of the WGA saying that their proposed contract would cost studios an estimate of $429 million,

noting that that's a tiny fraction of the $19 billion that it estimates will be spent on original content for streaming services this year. Now, the AMPTP, that's the negotiating body for the studios, is not responding to questions about these particular estimates, but it has disagreed with the WGA estimates about the cost of the strike in the past. Now, meanwhile, YouTube, which does not rely on WGA writers, could be a big beneficiary of the strike, according to New Street Research. YouTube is actually hosting its upfront today. It's showcasing stars like Mr. Beast, again, not affiliated with the Screen Actors Guild or the WGA. And they're also talking about some of their ad capping technologies to make sure people don't see too many ads over and over. So they could be a big winner here. Yeah, no doubt. Big, big week for the

upfronts. Julia Boorstin, thank you very much. Big times in overtime today. Frank Holland for Cisco. Yeah, absolutely, Scott. You know, the big thing to watch for Cisco will be orders. Last quarter, orders fell by 22%. Cisco pointed out it was a difficult comp with 34% order growth in the same quarter the previous year. JP Morgan analysts say they're watching this order number as a sign for where we're at when it comes to tech spending. Morgan Stanley is also flagging growth in Cisco's business with the U.S. government. As cybersecurity has become an increased priority, some analysts believe the networking and systems giant could even raise guidance with supply chain issues and sourcing issues normalizing, especially over in Asia. That report coming after the earnings call at 4.30. And CEO Chuck Robbins will speak about the quarter and the current environment for tech spending on Mad Money with Jim Cramer. Scott, what do you have to say?

We'll get some insight, too, into China, right, as Mr. Robbins has been prone to do over the last many quarters. He's had good insight there. So it'll be a good check-in, too, as it's been a little uneven in China in terms of the rebound, Frank. Yeah, for some companies it certainly has. And, I mean, of course, just the size and the scale of Cisco gives a pretty good read of where the supply chain issue in China is right now. This company obviously sourcing different components there. During the pandemic, they had to actually switch where they were sourcing components and make other adjustments. So that commentary on the call about their ability to get what they need will be very critical and give us a lot of insight into China.

Ben left behind, too, a little bit in this tech move that we've had this year. It's been so concentrated towards the mega caps, right? This stock's done next to nothing. It's been flat. You know, it has been flat so far this year, but the question is, does it have more upside? Some analysts, as I mentioned just a minute ago, are looking for a raise when it comes to Q4 guidance. So will that give this stock a pop? That's a question. We're also in this so-called year of efficiency. So there's questions about a good margin number.

Could that be very meaningful for this company where in the past, maybe it's profit or revenue that people are watching, but we are in this year of efficiency. A lot of companies want to see, excuse me, a lot of investors and analysts want to see a company like Cisco become more efficient as the competition in the tech space

becomes more and more fierce. All right. We'll see you in OT. Brian Collin, thank you very much. And we'll see Chuck Robbins himself on with Jim on Mad Money. Always look forward to hearing from him. There's the two-minute warning. We have a little bit of a move higher here. We're better than 400, Michael, on the Dow.

Rates are up today, too, for the most part, along the curve. Yeah, it's a little bit of the economy doesn't look like it's falling apart, but also this breadth demonstration. We've had 80 percent of volume to the upside today with the Nasdaq 100 almost keeping pace up 1.2 percent are really outperforming. Nasdaq 100 is about a half a percent from the August highs. The S&P is a little farther away. So, you know, it doesn't mean it's an either-or market. You know I've been not as alarmed by the fact that you have had this dominance in terms of year-to-date returns. You want to reiterate why that is? Because, you know, I had a conversation at the beginning of our show today with people who say it's a negative.

It's not an absolute positive. You'd prefer to have a broader, more inclusive market. But it's nothing odd about it considering the under performance last year that we had from that area. If I look at a three year the equal weighted S. and P. still killing the Nasdaq one hundred. So it's it's mostly a catch up move. I also were back in twenty fifteen. Here's a quote mega caps are holding up the market. Contributing year to date gains that are greater than the overall index has returned. That's from August of twenty fifteen. That wasn't a great time for forward returns,

but we were at all-time highs, and it was a narrowing of the market that just happens from time to time. Today's a demonstration that Brent can improve from a washed-out state, and you've gotten the rest of the market outside the big growth stocks looking a little more oversold

or at least with lower expectations built into it. All right, so we're going to go out close to 400, at least on the Dow. The debt ceiling deal optimism, I think we can say, is having at least somewhat of an impact today.