Closing Bell - Closing Bell: Stocks climb ahead of inflation data, FTX US President on Ethereum merge, Billionaire VC’s Best Ideas 9/12/22

Episode Date: September 12, 2022

Stocks rose ahead of Tuesday’s key inflation reading – with the major averages building on last week’s gains. Former Fed Vice Chair Roger Ferguson weighs in with his expectations for the CPI report and what it means for the Fed’s rate hike timeline. Meantime Bitcoin got another boost, adding to recent strength. The president of FTX US weighs in on that move, plus a report that Fidelity is considering Bitcoin trading on its platform, and the long awaited Ethereum network upgrade. And legendary venture capitalist Vinod Khosla discusses this year’s rough IPO market and where he’s looking for investing opportunities now.

Stocks are rising on Wall Street again, building on last week's rally as investors await tomorrow's key inflation report. The most important hour of trading starts now. Welcome, everyone, to Closing Bell. I'm Sarah Eisen. Take a look at where we stand right now in the market, up about 200 on the Dow. It's another broad one as well. The S&P 500 up a full percentage point. Every sector is green. Energy, technology, consumer discretionary leading the charge. Apple's at the top of the list. And we're going to talk much more about that move in a bit. If you look at some of the Dow winners, you can see Apple's really powering that index right now. American Express, though, Chevron, UnitedHealth, these are all some of the big winners today.

Most Dow stocks are higher. Amgen, Home Depot, and Intel, the only exceptions at the moment. Coming up on today's show, we will talk to billionaire venture capitalist Vinod Khosla about where he's looking for opportunities right now in tech and beyond. Plus, the president of FTX will join us to discuss Bitcoin's recent bounce back and the long-awaited upgrade of Ethereum this week. Let's get straight, though, to our market dashboard. Senior markets commentator Mike Santoli. Mike, what are you watching ahead of tomorrow's big inflation number? You know, similar dynamics there to last week. This follow through to the upside in stocks is

coming along with U.S. dollar backing off a little bit. Yields are calming down. So there's sense out there that the Fed's hawkish message, which has been very consistent and emphatic, has mostly been absorbed, at least for the short term, if in fact tomorrow's number shows the peak inflation story still has some credence. So hanging around the 4100 mark on the S&P 500, you see it's kind of midway between that August 15th or 16th high and then the recent lows. I do find it interesting. We also went from 3900 right up to 4100. That line there is right before the last CPI report, August 10th.

And you saw you had a little bit of indigestion and then continued on higher and then more hawkish Fed speak and some consolidation brought the market down again. So a very similar move in advance of this month's CPI, just like last week's. We'll see what the numbers give us. Now take a look at financial conditions. We know part of the Fed's project is trying to keep them tighter than they have been in recent years. And that's part of why they, at least some of the officials say they would like to see the stock market really stay in check, not rally so much. Well, here is the Goldman Sachs Financial Conditions Index. The overall index is right here.

And that's actually, you know, show some reasonable amount of tightening, but not that much. You still see it's looser because higher on the chart is tighter. So it's looser than it was just a few months ago. However, if you take the equity market valuation component out of it, it's actually quite a bit tighter. In fact, it's about as tight as it's been in several years back to the 2020 crisis. So it shows you it's mostly stocks that are sort of the out of step with perhaps where the dollar has been, credit spreads and the absolute level of rates. So any of it suggests that the Fed would have to pare back? It's not clear to me that they want. This is not something they're scoring themselves on explicitly. So if inflation cooperates, they're not going to say, well, inflation is getting to

our target, but stocks aren't down enough. They're not going to say that. They think that stocks having to be held in check is part of the overall, you know, mechanism by which that happens. But I don't think that's going to be a make or break. But it does show you that most of the asset markets have more or less repriced into a tighter direction. Which the Fed wants to see anyway. Mike, thank you. Mike Santoli, see you later. Falling gas prices certainly are raising hopes that inflation is slowing down, according to the New York Fed's August survey of consumer expectations. But over the weekend, Treasury Secretary Janet Yellen said higher gas prices do remain a risk out there.

Joining us now is former Federal Reserve Vice Chair Roger Ferguson. It's great to have you back on the show, Roger. Is there any number that could come out tomorrow on inflation that would alter the course for the Fed at next week's meeting? You know what? I really don't think so. There's a hope that the headline CPI number will come in a little lower. Surveys of economists show a number that comes from 8.5 to 8. The core, which came in the last time around 5.8, might move up and down a few tenths. But I don't think there's any number that's really going to move them off of the currently market expected and I think likely 75 basis point move

in September. Sure. But inflation expectations really have come down. Roger, if you look at some of the break evens and the swaps, do you think that inflation will come down rapidly from here? I don't think it's going to come down rapidly from here for a couple of reasons. One is something that Secretary Yellen talked about, which is there's always a risk of a surprise that drives commodity prices, particularly oil, back up. Secondly, labor markets continue to be very tight. The most recent reading shows again roughly two job openings for every unemployed person. Yes, the labor force picked up in terms of size just a little bit, but all those seem to me like, you

know, improvements moving in the right direction, but only modestly so. So I don't see anything that's a fundamental break in the fact that inflation is much too high. And the final point to make is the level of inflation, even if it comes down a bit, is still quite a bit above the Fed's stated 2 percent goal. So you think the market's still getting too excited about a pause early next year in rate hikes? I think the market may be being a little too optimistic about a pause next year in rate hikes? I think the market may be being a little too

optimistic about a pause next year. The Fed officials starting with the very top have simply have been clear that you know they expect to go maybe a little higher than the market expected, they expects, and to stay there a little longer. And so I think it's premature for the market start pricing in a pause. The other thing I think the market premature for the market to start pricing in a pause. The other thing I think the market has got to take on board is Chair Powell's statement that he really does want to see growth come in below trend for a period of time. And so even a slowing, which would have perhaps in the past signaled the Fed pivoting towards an ease, I think is not necessarily

a precursor towards an immediate pause or turning towards ease in the first part of next year. The counterargument, Roger, is that the Fed isn't paying close attention to all the indications that inflation is coming down, from the commodity market to shipping rates to supply chains eas overseas, to some of these numbers like China, wholesale inflation coming down, and that's happening at a time where growth is slowing and where, as you know, there's a lag from tighter monetary policy. So really what might be more appropriate is for the Fed to either pause or cut back on its jumbo-sized rate hikes. That might be more appropriate, but the other side is the Fed has said clearly that they want to see clear and convincing evidence of inflation, not just coming

down somewhat from these high levels, but really coming down enough to give them comfort about the 2 percent target. So I think the disconnect may well be the Fed's clear intention to get the inflation rate much closer to 2 percent, while the market is simply saying, well, a little breather from these astronomically high levels is acceptable. So I think there's a disconnect there. The other slight disconnect may well be that the market thinks any slowing is a signal that the Fed is done. I think the Fed believes that a slowing below trend for a period of time is a sign that they have perhaps achieved their goal, but not that they then want to quickly reverse. They've learned the lessons of stop-start, and I think they're

really trying to avoid that. And we really haven't seen that much pain in the labor market, as you said, still such a tight labor market with so many job openings so Roger is 2% a realistic target for this Fed how long does it take to get there more think you've asked the really important question which is how long it takes to get there there's no doubt that they can over a period of time get to 2% we'll see what their next summary of economic projections points out. The last time they had at the end of their forecast period, which is a couple of years out, getting to 2.4 percent, and we'll see what they expect this time. So you raised the right question. I think they will eventually get there. The question is patience and how much time, and to use Chairman Powell's

question, how much pain. And I think at this stage, all that's a little bit unknown. But the good news, as you point out, is inflation expectations continue to be pretty well anchored. And that certainly has got to be a relief from the standpoint of the Fed policymakers. Roger Ferguson. Roger, thank you very much. Former vice chair of the Federal Reserve. Appreciate it. It is a big day for crypto as Ethereum undergoes a long awaited upgrade and Bitcoin's rally gained some steam. Up next, the head of FTX US weighs in on those developments, plus his company's new partnership with GameStop, which certainly helped that stock. We're pushing a little higher here. The Dow's up 232. High of the day was up 352. You're watching Closing Bell on CNBC.

We've got a news alert here on Bitcoin. According to The Wall Street Journal, Fidelity is weighing allowing Bitcoin trading on its brokerage platforms, which hosts more than 34 million accounts. The news, of course, coming as Bitcoin gets another boost today, now trading at levels that we haven't seen in nearly a month as Ethereum undergoes a long-awaited upgrade. Bitcoin back above 22K. Joining me now post-9 is FTX U.S. President Brett Harrison. Brett, nice to see you. Just on this Fidelity news, I would think that's sort of threatening to you as more players, especially with huge client bases like this, get into the trading game? Well, a huge brokerage like Fidelity is going to have to answer to the demands of their customers.

They're saying they want to get into trading crypto. Well, how are they going to do it? Probably Fidelity has to interact with a network of existing either market makers or exchanges like ourselves. So in many ways, there can be a symbiotic relationship between a huge brokerage like Fidelity, FTX, Coinbase, the many market makers that are out there. So it's not a zero sum world in the crypto industry. But to be clear, you don't have a deal with them to do this. Fidelity. That's right. What are you seeing in terms of customer account activity as the price collapsed and now has come back a bit? So FTX is in a bit of a unique position among exchanges in that the majority of our volume comes

from institutions and institutions are trading on both sides of the market even when the market's going down. For retail not so much you know as the market goes down typically retail tends to pull back on a risky asset like crypto so as we see some recovery here in the global markets in general but specifically in crypto retail volume is starting to pick up again which is why it's been so important for all the investment and building we've been doing during the slower times to make sure that we're ready for any kind of recovery that hopefully will bring back a lot of the retail volume that we're building for. Hence all the big bets you're spreading out. Everything from not just crypto, but also in the crypto lending businesses with BlockFi, our stock brokerage offering that we just launched a few months ago to allow people to trade not just crypto but stocks and FTX US.

It's all part of the goal of trying to build the best retail experience possible for when that demand starts to pick up again. Why in the stock business if Sam is an investor, such a big investor in Robinhood? For us, we really do believe in the retail brokerage business. And of course, Sam is investing in Robinhood for sure, but we've been looking at Robinhood for a while and seeing how successful they've been at adding crypto to their existing stock offering. And for us, we're the first brokerage that were primarily for crypto. Now we're adding stocks. The belief there is that customers are going to look for one place to invest all of their assets, whether it's in stocks or crypto or other kinds of futures eventually, all from one app, instead of having to split their savings

across multiple different experiences. So, well, that's why there are always rumors that you might buy Robinhood or Rive and it might get taken out, which I know you can't really comment on. But ultimately, after the crypto winter is over, people are wondering how much leverage is still in this system. How many bad players are there? Because you're still hearing reports. Just last week, there was one of a miner halting withdrawals because of liquidity problems.

How much has been worked out and how much is there to go? I think most of it has been worked out at this point. We don't know of any, you know, major players in the ecosystem that we believe to be in trouble. Finally, Voyager is allowing some withdrawals of certain assets from customers. Our deal with BlockFi went through. They're in a good spot now. And so we think that probably a lot of the leverage is gone. And now it's back to sort of a flight to quality when it comes to crypto and crypto businesses. It doesn't trade like a flight to quality. It trades more like an unprofitable Nasdaq stock still, doesn't it?

Right. So right now there's a huge correlation between crypto and, for example, the Nasdaq index. As markets are going down, people are trading it like a risk instrument, as you said. But in terms of people looking to get back into the kinds of tokens and projects in the ecosystem that they believe in being high quality and not the promise of a 30% yield with no risk, people are looking for what they're going to invest in to be safe. Everyone's talking about the merge. It's coming. It's coming this week. It is likely coming this week.

So this is a whole sort of reload of Ethereum that is meant to make it much more mass market, but also much more environmentally friendly to reduce emissions by more than 99%. That's right. Is that possible? So the current mechanism for consensus for the Ethereum network is similar to Bitcoin. It's machines proving that they've done these computational puzzles, this work. And it takes a lot of energy to do that work in order to prove that you've solved the problem and therefore are entitled to the rewards of the Ethereum network with

the fees and the actual problem-solving reward that you get from it in the form of Ether tokens. That whole mechanism is changing with Emerge where now it's proof of stake, which means if you have enough ETH, you can stake that ETH in the network and whoever gets to get to do the validation and get the rewards is like a weighted average of rewards of bigger holders. Exactly. And so it's no longer these hard computational puzzles that take energy. It's a much more energy efficient mechanism. What is it going to look like between now and once this gets worked out? How bumpy is it going to be? What do people who own Ethereum or are thinking of buying it need to know? So if you own Ether right now, you don't have to do

anything. It's not like you have to change to a different network when the merge happens. It's all going to happen seamlessly. When a specific transaction occurs, it's going to switch over from proof of work to proof of stake. One interesting thing is going to be there are some networks out there that are trying to hold fast to proof of work. There are thing is going to be there are some networks out there that are trying to hold fast to proof of work. There are some like ETH POW tokens people are going to try to create separate networks that hold on to proof of work. Probably those aren't going to last very long. The majority of the world's computation in the Ether smart contracts are going to move over to this new proof of stake network. And we think it should be pretty smooth. There have been lots of tests,

very talented engineers working on this problem. And they've been testing across multiple different test chains to make sure this goes smoothly. We have pretty high hopes about it. What kind of hopes do you have about GameStop? You have a new partnership with them. You're gonna sell gift cards at the stores. How did this come together?

And what is your ultimate goal? Sure, you know, so we're, again, a business that has primarily catered to institutions. GameStop is a huge presence in the retail market. I mean, not just their stock itself, but also as a retailer. I think we have a lot to learn. But maybe more their stock. Yes. And we have a lot to learn from the partnership with someone like that who knows how to reach this mass audience. You know, there's a lot of overlap between the gaming world and the crypto world. We know we're starting working with them in terms of gift cards in their stores, but we

have a number of other things in store that we can't talk about yet. No pun intended there. To work with them to help them with their efforts in crypto. You know, they released their own NFT marketplace. They have a lot of other ambitions in the world of cryptocurrencies and other digital assets, and they want a regulated player to help them with that. So it's an interesting strategic partnership for us. We will follow it. Brett, thank you for coming by. It's good to catch up with you. Brett Harrison of FTX. Let's show you where we are right now in the markets. 40 minutes left

of trading. We've got a nice rally here, four days in a row. Dow's up 200 points. S&P 500 up a percent. Every sector is green right now. Energy and technology are the leaders. That's why the NASDAQ is climbing more than 1%. Still to come, we will talk to billionaire venture capitalist Vinod Khosla, who has invested in names like DoorDash, Stripe, Square, Impossible Foods. It's a long list. He'll tell us the public and private companies he's most excited about right now. And as we head to break, check out some of today's top search tickers on CNBC.com. Ten-year yield gets the most interest, as always, selling off today.

We've got a little bit firmer yields back above the 3.3 level on the 10-year. Tesla, Apple, which is having a nice nearly 4% surge. We'll talk about that later. And the S&P 500 and crude oil, which is bouncing back today, up 1.4%, still below 90 bucks a barrel. We'll be right back. Let's talk about Taco Bout, today's stealth mover, which is jack in the box. It's a winner today. Big appetite for the stock. Wedbush adding the fast food chain to its best ideas, raising its price target to a beefy $115 from 95. Plenty of upside there. The analysts believe concerns about that potential

minimum wage hike for fast food workers in California should be put on the back burner. Adding investors are also too pessimistic about its ability to integrate its Del Taco acquisition. Stock's up 4%. Apple leading the Dow higher today after a bullish report on iPhone 14 pre-orders in China. Coming up, a top analyst gives us his take. But first, Wall Street is buzzing about a hot new fashion trend. Up next, why pink is the new black and the companies that could benefit from the shift. We'll be right back. What is Wall Street buzzing about? Pink. Pink is the new black. No joke. This was the subject of a Jeffries retail report this weekend. Industry insiders cite the upcoming Barbie movie starring Margot Robbie and Ryan Gosling,

which is set to debut next summer, along with Y2K fashion trends and embracing femininity. Pinterest's global director of data insights says searches for Barbie core, which refers to the pink fashion trend, grew fivefold over the summer. Luxury fashion house Valentino's Fall 2022 runway featured a primarily pink collection with its creative director actually developing his own shade of pink with Pantone. Trend forecaster WGSN even announced orchid flower and intense magenta as the color of the year for 2022. Jeffrey says this broader shift to color and bold designs is a positive read-through for names like Kate Spade, which is part of Tapestry, and Versace, which is part of Capri. And while we're seeing it on runways and new collections

here, apparently it's getting a mixed reception in China. Men are embracing the trend, referring to it as fierce pink, but not so much women, according to Jing Daly. Bottom line, picking retail winners is often about finding who's on trend and what brands are resonating. And right now, it means investors should think pink. Music to my ears as someone who looks for any opportunity to wear pink, including for my own wedding dress. Here's where we stand right now in the markets.

Going strong, up 200 points on the Dow, 1% gain for the S&P 500, led by energy, led by technology. But again, everybody's higher today. The Nasdaq surpassing 1%, and small caps are also above that. The weaker dollar certainly helping out. Up next, venture capitalist Vinod Khosla on the outlook for tech stocks and the two companies he is most excited about right now. And a reminder, you can listen to Closing Bell on the go

by following the Closing Bell podcast on your favorite podcast app. We'll be right back. Intel's planned IPO of its autonomous tech business Mobileye hitting a speed bump. A new report today saying Intel plans to target a lower valuation for the eventual IPO, which has already been delayed. But despite what has been a brutal year for the overall IPO market, our next guest says there are still areas to be excited about. Joining us now is legendary venture capitalist and founder, Vinod Khosla, Khosla Ventures founder and managing partner.

Vinod, it's great to have you back on the show. You think there's a reason to be optimistic about an IPO comeback? I'm clearly optimistic over the longer term. There's a very large amount of technology-based innovation to be done. And I think it will disrupt many, many industries. Most parts of GDP, to be clear. What about the overall market environment?

The fact that IPOs and SPACs have dried up, the fact that higher interest rates has hurt tech valuation so hard. How is that affecting the longer-term optimistic view that you have, if at all? Well, it's a buying opportunity if you take the long view for really strong companies, not in every company, but take GitLab, for example, one of our portfolio companies in the DevOps space. It's single digit penetration into a rapidly growing, very large market,

which is key to all future software development. So do I see very large headroom over the next three, five years? Absolutely. So it's a buy and hold kind of opportunity for me, at least. Similar thing with something like Affirm, another one of our portfolio companies, which is in the consumer lending business. Buy now, pay later is a small niche of the market they're in. MasterCard and Visa is the real market to go after. So these

are exciting opportunities and have multi-year runs. And that's the approach we take. These are portfolio companies that I'm happy to hold for multiple, multiple years. I was just going to ask Vinod about Affirm because the stock was what, $170 last year? It's now in the mid-20s. You know the concerns right now.

Funding costs are rising as interest rates rise never really been tested through a recessionary higher rate environment the competition is coming from every angle what why stay with it why stay with it because they have a huge advantage in credit scoring which is the key to consumer lending. It's a very large market. All of lending, somebody will own, somebody will be the Google of that business, and Affirm will definitely be able to participate in a big way. What about fintech overall? Obviously,

valuations have been hurt. Affirm is just one name. J.P. Morgan today made another acquisition of a payments company, and they're trying to compete with some of these names. I think you're still in stripe as well. How do you see the competition playing out over the coming years between the big traditional bulge bracket banks like a JPM and then some of the growing newcomers? We are in Square, we are in Stripe, we are in Affirm. But when have you seen an incumbent clearly dislodge a new player with a modern infrastructure? That doesn't happen very often. So I'd bet against JPM and in favor of an Affirm or a Stripe.

I think those are very solid long-term bets, in my view. And you have to take the long view. I'm less concerned with quarter-to-quarter variations other than downs are good opportunities to buy if one believes in a five-year picture. You don't think there'll be a convergence at some point where J.P. Morgan could acquire one of these big players? You think it's one at the expense of the other? I'm more interested in the case where one of these things acquires J.P. Morgan. Yes, I'm only joking, but it does happen. You know, Tesla has the large enough market cap to buy any one of the auto companies. But it does happen, you know

Tesla has the large enough market cap to buy any one of the auto companies When people kept talking about who will acquire Tesla, so I do think this Reverse opportunity is a possibility though. The new companies do not want to take on the legacy infrastructure and Hence, it's much better for them to grow on their own or acquire small innovative players rather than back into legacy infrastructure. I think this conference I'm at, crypto is a big theme. The blockchain will innovate fintech services and will disrupt a lot of models. I doubt it's one of the traditional players that will be the big player in the end in

the blockchain space. You know, we just had the head of FTX US, he was at SALT and you're there as well earlier. But I did also want to get to climate tech with you because I know that's one of your areas of expertise. Since we have the Inflation Reduction Act, since it got passed, I wonder if you think that opens up more opportunities and where that is. I do think opportunities were always there. The Inflation Reduction Act will definitely accelerate some of these technologies. Hyd one will be accelerated energy storage will be accelerated we are very excited about quantum scape as a solid state battery company the leading

solid state battery company that could change the economics of the ev market so those are good examples we are investors in many private companies in producing the best low-carbon cement, Commonwealth Fusion in energy production, in Nitro City, which is a fertilizer replacement company with very strong carbon advantages. BottomScape, another one that has just been hammered. I know you're not looking short-term, but down almost 50% over the last 12 months. I assume you think that's an opportunity and a long-term hold. I'm sorry, I missed which company?

QuantumScape, you mentioned. Been hit really hard over the last year. But it's been up over the last three years substantially. It had a $2 billion valuation not very long ago. Fair enough. If you're taking the long view, you look at the trends over the long term. Understood. Vinod, thank you for joining us and talking through some names and some trends with us. Vinod Khosla, joining us and talking through some names and some trends with us.

Vinod Khosla, Khosla Ventures. Bristol Myers, take a look. Big winner today after receiving FDA approval for its new psoriasis drug. A top analyst reacts next. Plus, Uber CEO speaks and why Apple is leading the doubt today. All of it when we take you inside the Market Zone next. We are now in the closing bell Market Zone. JMP Security CEO Mark Lehman is here to break down these crucial moments of the trading day. Plus, Baird's willpower on Apple and Wells Fargo's Mohit Bansal on the pop for Bristol Myers. We'll kick it off broad right now with the Dow of 216, Mark, and another

broad rally for the S&P 500 with every sector higher. Your beloved tech stocks are catching a bid just as everyone was starting to hate on them again post-Jackson Hole on worries that the Fed is not going to slow down its interest rate increases anytime soon. What's caused the change in attitude? I think a combination of things. I think there was a fair amount of pessimism going into Labor Day, which you just mentioned, post Jackson Hole. Post Labor Day is also a time, and I've been on Wall Street for 30 years, where companies pre-announce their earnings if they're going to miss the third quarter. I've yet to see a big tech company have a negative pre-announcement, which I think is a positive sign. And frankly,

the backdrop was just not as negative as some of the pundits we're talking about i think we have a better sense of where inflation is heading we'll certainly learn more this week on that front but stocks got too expensive at the beginning of the year they got too inexpensive recently and i think they're finding a home right now and we're starting to make stock picks as opposed to picks just for the overall stock market and that's beneficial to the best tech companies. Well, we have lots to talk about there, but let's hit Apple because you mentioned tech. Those shares getting a big pop today, leading the Dow. There's a report in the South China Morning Post saying Apple's site in China crashed after a spike in pre-orders for the iPhone 14 Pro and Pro Max. Joining us now is

Baird Equity senior Research Analyst Will Power. He's got an outperform rating and a $185 price target. Will, we've heard rumors before about demand and pre-orders in China. They usually come from different sources. How much stock do you put into this? Well, Sarah, good afternoon. Thanks for having me. Yeah, look, I mean, there's always a rumor du jour as it pertains to Apple. Certainly, you know, any indications of demand are positive, given some of the consumer macro uncertainties out there. We had our own note out this morning just taking a look at, you know, current demand lead times for the current iPhone lineup versus a year ago in past years. And, candidly, you know, demand indicators for the Pro and Pro Max look quite good. I mean, the wait times are stretching beyond where they were a year ago. And, again, I think that just really references the remarkable resilience that Apple's had,

both for investors and consumers here. But you also have some data on iPhone 14 and 14 Plus that are not as great, right? Yeah. No, that's right. I mean, it's probably mixed great, right? Yeah, no, that's right. I mean, it's probably mixed overall, but I think, again, against the backdrop of some of the consumer macros, you know, spending pressures and concerns, overall results does look pretty solid. And I think, you know, when you step back, Sarah, I think one of the key things to remember here is, you know, there are close to a billion iPhones in service globally, right? So every year you've got

a couple hundred, several hundred million iPhones that in theory could be eligible for an upgrade. And in the United States, which of course is still the biggest market, the carriers continue to be aggressive with subsidy levels. You've got AT&T and T-Mobile that are offering up to $1,000 off with an eligible trade-in, at least for some models. And that's a big number. That matches the record highs of last year. So that's helping, I think, spur what continues to be looks like solid demand initially. Mark Lehman, wanted to bring you in because I know you like the tech trade. Apple stock is up almost 20 percent in three months. What sort of expectations do you think

are in there now? I think the demand that you just described is certainly baked into the stock. I think more and more as this becomes the piece of everybody's life, more of the cyber expectations, more of the add-ons that they have, whether it's in health care, whether it's in mobility, whether it's in other facets of our life, it's becoming clear. And I think the ubiquity of that blue text that we all look forward to and the people of the green text don't want it anymore. We've talked about the fact that this Android competition is, I think, dissipating over time and globally. So I think as we hear more and more about their adjacencies, more and more about the things that they're doing in everyday life, and particularly with the upgrade that we've had here, what is allowed to do, that we're all going to have the iOS upgrade, it just shows you the power of this device in every facet of our life. You talked about Affirm with the last visitor with Vinod Khosla. You talk

about buy now, pay later and what they have with the iPhone. I mean, that is becoming ubiquitous. It's the most important acquisition that anybody makes for yourselves and for your kids. And it's proven every single day. So it's a reminder that this is the juggernaut for the market. And as Apple goes, so does the stock market. And its as the juggernaut for the market. And as Apple goes, so does the stock market. And its ascent obviously bodes well for the Nasdaq and the rest of the market through the rest of the year, in my opinion. So, Will, you think the stock is going to 185. I think it's your price target. And the risks are what? China, for one, the macroeconomic environment and how much people will be willing to spend if they're okay spending a thousand dollars for iphone they didn't raise their average selling prices as some of wall

street had hoped how do you think we get to 185 yeah look i mean prices were effectively flat in the u.s they did raise prices overseas and that will be important to monitor to what degree that impacts demand so it's certainly not without risk, as you point out. I mean, China probably foremost, whether it's supply, demand, regulatory. But Apple historically, at least, has been able to navigate that environment very well. Look, I mean, our bet is very much around the ecosystem and the strength of that. And we're seeing that even with watch. Watch demand looks good. AirPods continue to be the key driver. Services is now close to 20 percent of revenue and still growing double digits. And that's really what the iPhone enables, right,

is that services stream in the broader ecosystem. And this is a long-term bet, right? So our view is don't try to trade the cycles here. We're betting long-term on the ecosystem benefits and the cash flow they continue to generate. Will, thank you for joining us. Will Power from Baird on Apple. Let's move to Uber. It's been a big winner recently, rallying roughly 12 percent this month, but the stock is still down more than 20 percent or so this year. Earlier on the exchange, Deirdre Bosa asked CEO Dara Khosrowshahi whether he is considering buying stock at these levels. We're definitely thinking about buybacks. For us, the priority right now is to get to investment grade credit ratings as it relates to our debt. Having access to cash flow,

liquidity in both certain and uncertain marketplaces is super important. Once we get to that investment grade, we're going to look to allocate our free cash flow, which is going to be substantial. And I think buybacks are definitely going to be on the docket. Deirdre Bosa joins us now. Boy, he sounds so different from the early days of the narrative around Uber, Deirdre, right? Talking about profitability and free cash flow and buybacks. What were your big takeaways? So the reason I asked him that, Sarah, is because investors, they've actually been responding very well to Darmer Kalser Shahi's profitability drive.

Earlier this year, you might remember in May, he's one of the first CEOs to get out ahead of this market shift and say, OK, we're going to focus on profitability as it relates to free cash flow. In the past, Uber had always talked about adjusted EBITDA, which took a whole lot of stuff out. However, here's the thing. Uber's free cash flow they delivered last quarter. However, stock based compensation was actually greater. So some would argue that this isn't actually a true reflection of profitability. Some companies do buyback so that their existing shareholder base isn't so diluted. And that was what I was getting at with him. He's told me in the past that, yes, they can achieve real gap net income profitability. They're still very far from that, although he's on the path. And I guess that's what investors have hopes in. But this stock

has rallied. It's what, 32, 45 right now. Remember, this is a company that went public at $45 a share. And even around that IPO, there was conversations that it could be valued as high as $120 billion. And during its public life, it certainly hasn't gone anywhere close to that. No, and there was talk about it being the Amazon of transportation and self-driving and everything else. Deirdre, thank you very much. Deirdre Bosa. Mark, I think you like Uber. It's interesting to see the outperformance, especially relative to Lyft. So what do you do with the stock now? You mentioned all the right points, right? You got a question about free cash flow and EBITDA, and it's trading at about 13 times 2024, although it's growing much faster than that. And I think Dara's done an unbelievable job showing the power of the brand and power of

the platform. And you saw the divergence with Lyft. I think you also had questions about the move back to work and the urbanization and everybody kind of coming back to the big cities. And that's been proven out. Obviously, Uber Eats has done quite well. Listen, I think the stock is a bellwether stock, and I think they've done an unbelievable job separating themselves from Lyft. I'd bet on Dara. And I think as we get more and more people back to work in the big cities, this is a great play also globally. And I think at this price point, we have a $45 target with our analyst, Andrew Boone, and we'd like the stock here a great deal. Let's hit some healthcare names. Bristol-Myers getting a boost today after the FDA approved its oral treatment for plaque psoriasis. The stock is now up 16% on the year. Let's bring

in Mohit Bansal, biopharma equity analyst at Wells Fargo, has a hold rating, I believe, on Bristol-Myers. How big of a deal is this psoriasis approval? What kind of market is it? Great. Thank you for having me. So psoriasis is a pretty big market. So this particular drug, we are wanting this to become close to $3 billion, so $2.8 billion total at peak. And this is definitely a positive for Bristol because going in, there was a lot of pessimism around it regarding the label, whether the FDA is going to give them a class label, basically a black box warning of cancer or cardiovascular risk. And FDA did not give any, and that was a positive. However, at the same time, the FDA left the room open for interpretation by including

some warnings there. So that's why we think it is a big deal. It is positive news, but not quite the bull case scenario was where people were hoping for. And I know there's some questions about adoption, right, from health care providers, because you need to give blood tests and there are other treatments, right, on the market. Exactly. So that's the main concern. So on the face of it, an old pill for psoriasis sounds great. However, when we did our doc checks before the event, they noted that if the label asked for a TB test or some kind of blood work before prescribing this medicine, this is going to be a little bit of a hurdle. And that's exactly what the fda did and then on top of that there's another element to it which is uh the treatment that is out there which is very efficacious that is kylezy

uh as abby salzick and that is every three months shot so a convenience aspect of oral pill versus a three-month shot uh it basically patient down to patient preference. It's not as black and white as one would expect, one would see prima facie. Right. Okay. So you're not that enthusiastic. I think you have a hold rating and a $70 price target. Bristol-Myers, though, Mohit, has been a big winner this year, up 16%. Healthcare has been a standout. It's defensive. There's there's increasing deals and innovations like this one. If you don't like that in this environment, what do you like better? Right. So you're correct. I mean, Bristol has been a big winner and a part of it was defensive

play, like you pointed out. And and they also had some patterned wins where one of their assets formally got pushed out. However, we think we like AbbVie at this point in our coverage because this is one stock where we have an outperform rating with $200 target price. The company is facing a patent cliff next year. However, once you look beyond that, this is a stock which is trading at 12, 13 times the trough here, EPS. And this company could be up for a transformation in the longer term. So we like every overall whistle at this point. Got it.

Mohit, thank you for joining me. Mohit Bansal, appreciate it. On BMY, I know you don't talk specifically about it, Mark, but biotech, everyone's been waiting for the deals for years. It's been a left behind sector now seeing some signs of life. Do you like it? Well, I like big pharma stocks going up because they buy a lot of companies and your previous guest talked a lot about patent cliffs and those are real. But we've seen a few deals, as you know, in the last few months. We saw Global Blood obviously announced recently, and there's rumors about some other deals in the marketplace.

So higher stock price for big companies like Bristol-Myers and Pfizer, pretend more M&A. And that is going to happen. This is a reminder that the innovation engine of biotech has not slowed down. President Biden's in Boston today to talk about the Moonshot program for cancer and the amount of innovation that's happening there, albeit quietly under the radar, is absolutely going to happen, is absolutely going on. So as pharma starts to benefit on stock price, they're going to buy more of these emerging life science companies that we cover. And that's the circle and that's the virtuous cycle that we often talk about. So great for BNY, great for sufferers of this disease, and it's great for innovation. Got it. We've got just about two minutes to go here in the trading

session. The NASDAQ is near session highs. And speaking of health care, it's doing well today. It's up a little more than half a percent, but you've got tech leading. You've got energy also higher on the back of crude oil prices. What would be your strategy, Mark, as we don't know whether we've seen the June bottom? We don't know whether that was the low. We don't know exactly the Fed's posture beyond this next week jumbo interest rate hike and just how much pain they're willing to tolerate in the economy.

So what should you do as an investor? I think as an investor, Sarah, it's a great question. I think we've had multiple opportunities this year to have a bottom called, and that hasn't happened. I guess we were going to call the June low bottom. But we've had multiple opportunities to buy stocks at prices we never expected to get them at. And I think even a couple of weeks ago, we had stocks in the tech sector. And as we have seen no pre-announcements, we saw some companies report great quarters like Snowflake and some other ones last week. It's a reminder that we have a market of stocks as opposed to stock market. What do I

mean by that? What I mean is we've gone an entire 20 minutes and we have not mentioned the FANG index once. But that tells you those stocks are trading individually. Apple's doing quite well. We didn't mention Netflix or Facebook slash Meta once, which is a good thing. The companies that are innovating, doing well, Uber versus Lyft, that's an opportunity to buy Uber. The companies that are not doing as well, you want to be careful on. I think you're going to get ample opportunities to buy better stocks at better valuations over time.

Build your toolkit, build your stocks. And by the way, we get a width of an IPO market like your last call, we're going to be very happy. Thank you, Mark Lehman. As we head into the close, we are too far off from the highs, at least for the NASDAQ. Down we head into the close, we aren't too far off from the highs, at least for the Nasdaq. Downs up about 218, got as high as 350. Every sector looks like it's going to go out with the gain. Energy and tech on top. You've got consumer staples, the

least best. It's up four tenths of one percent. What is it? The market always inflects the most pain. Well, guess what? Everyone was getting bearish again, and we are headed for our fourth day in a row higher at the close. S&P 500 closing with a gain of 1%. That does it for me on Closing Bell. Have a good evening. I'll see you tomorrow.