Closing Bell - Closing Bell: Stocks give up early gains, Disney leads the Dow 8/11/22

Episode Date: August 11, 2022

Another cooler-than-expected inflation report helped boost sentiment in early trading, but gains faded throughout the session following Wednesday’s big rally. Cowen CEO Jeff Solomon and Alli McCartney from UBS give their outlook on the market and the Fed’s path. Disney held on to gains after reporting strong earnings and streaming subscriber numbers. Former NBC Entertainment Co-Chairman Ben Silverman weighs in on if he thinks consumers will be willing to pay more for Disney+.

Another cooler than expected inflation print helping boost sentiment today, but stocks have come well off their highs, currently sitting near the lows of the day. 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 overall. S&P 500 is actually little changed, and you have tech underperforming, reversing that earlier rally we saw. You also have some notable strength in groups like energy, financials, materials, industrials, and utilities. Communication services also barely higher at this hour, thanks to Disney and some of the other media names that are rallying off the back of it,

like Warner Discovery, Fox, and Paramount. Small caps holding on to some gains, up four-tenths of 1%. The Nasdaq is negative by about half a percent. Check out our chart of the day. It is Disney getting a big pop today on earnings and helping support the Dow right now as streaming subscriber numbers blow past estimates. A lot to talk about there. Ahead on today's show, we'll talk those Disney results with former NBC Entertainment co-chair Ben Silverman.

Ask whether he thinks customers will be willing to pay up for more Disney+. Plus, talk about a buy-the-dip opportunity. Snackmaker Utz just reported upbeat results in part on strength in its salsa and dips business. I'm sure the cheese balls helped. They're one of the best products. We're going to talk to the CEO about those numbers and how the company is dealing with persistent food inflation and rising prices for consumers. Let's get straight to today's dashboard, though.

CNBC Senior Markets Commentator Mike Santoli here as always. Mike, today's rally has faded somewhat. Which levels are you watching to see whether it's still intact overall after the NASDAQ jumped 20 percent from the lows? Yeah, Sarah, it's quite a sprint higher. We obviously got a little bit fatigued in terms of levels, pretty significant in the morning rally. S&P was up about 1%. And during that time, it did cross above a level 4230-ish, which is where half the halfway mark between the lows in June and back up to the January high. So that was a widely watched area. You mentioned tech stocks underperforming. That's really what's

weighing on things. This is a one year look. And what's interesting about this, you know, 42 and change type number, you go all the way back. It actually was also in the area of some relatively significant lows if you go back a while, especially intraday lows, even back to last fall. So it's sort of the threshold that, you know, would mean if you got above it, you were kind of out of the real depths of the bear market range and maybe into a new one. But it did not stay above there. And it's because the mega cap growth stocks, we're looking at treasury yields inching back up, oil prices bouncing. So we got more relief on July inflation. But the question is,

have we somewhat already priced that over the last couple of days? Take a look at the rush for riskier assets because the credit markets have mostly confirmed what's going on in equities. This is a six month look at the S&P 500 high yield bonds as well as a comparable ETF of treasuries. So this is that's actually the one year. But the six month would show you that they're more or less moving in tune. You have seen this really aggressive move off the low in high yield bond prices. That shows you that there's more embrace

of risk. It's out of the danger zone, I would say, in terms of credit spreads, not yet back to the most benign levels. But this shows you that the economy was we were in a stagflation panic and both the stag and deflation look a little bit less scary after the jobs numbers and what we got from inflation. But, you know, one month is only one month. Right, Sarah? So, Mike, if what you're saying or suggesting, which could be true, that the peak inflation idea is priced in with this giant rally we've had, what now? What do we trade off of? More evidence that inflation is cooling? Yes. Do we need to see the jobs market slow down a little bit, as perverse as that seems to root for? I'm not sure we absolutely need to see outright slowing of the jobs market.

But, you know, what we basically need is confirmation, incremental confirmation that we're correct, not only that we've seen the peak in inflation, but there's going to be a downtrend now that it's not just sort of a choppy, you know, one month to month type of action. That's really not going to help out because the Fed needs to see it go down and companies want to see it go down. So I do think that's where we are. Positioning has been an issue. People were very, very bearish at the lows. They've chased and grabbed hold of equity exposure because they were not really prepared for this kind of a run. Question is, where does that sit right now? Do you chase it here or is it time for arrest? Yeah, just just want to tell our viewers we are awaiting any minute now. The attorney general of the United States, Merrick Garland, it is his first public appearance speaking publicly from the Department of Justice since the FBI search of former President Donald Trump's Mar-a-Lago

home on Monday. We'll bring it to you live as soon as it happens. Mike, I'm watching what's not working today, what's dragging us lower. The ARK Innovation ETF, which has had a tremendous rally of late. It is down 3 percent right now, which could be, you know, it's a leader. And it also leads things like crypto and the Nasdaq and financial conditions. They're all kind of tied together lately. They are. And that's part of the positioning shock. So, you know, anything that was heavily shorted, anything that was kind of discarded on the way down, that's been moving the fastest. And you saw a real reversal in a lot of that stuff intraday today.

It just seems as if we got above 4,200 in the S&P. That's where a lot of folks probably sort of stepped aside and say, you know, I'm not going to fight this rally anymore. That shot us above 4,250 for a while. And now it's kind of what's next, as you said. Mike Santoli, thank you. Let's bring you to Washington and hear from Attorney General Merrick Garland. I made clear that the Department of Justice will speak through its court filings and its work. Just now, the Justice Department has filed a motion in the Southern District of Florida to unseal a search warrant and property receipt relating to a court-approved search that the FBI conducted earlier this week. That search was of premises located in Florida, belonging to the former president.

The department did not make any public statements on the day of the search. The former president publicly confirmed the search that evening, as is his right. Copies of both the warrant and the FBI property receipt were provided on the day of the search to the former president's counsel who is on site during the search. The search warrant was authorized by a federal court upon the required finding of probable cause. The property receipt is a document that federal law requires law enforcement agents to leave with the property owner. The department filed the motion to make public the warrant and receipt in light of the former president's public confirmation of the search, the surrounding circumstances, and

the substantial public interest in this matter. Faithful adherence to the rule of law is the bedrock principle of the Justice Department and of our democracy. Upholding the rule of law means applying the law evenly, without fear or favor. Under my watch, that is precisely what the Justice Department is doing. All Americans are entitled to the even-handed application of the law, to due process of the law, and to the presumption of innocence. Much of our work is by necessity conducted out of the public eye. We do that to protect the constitutional rights of all Americans and to protect the integrity of our investigations. Federal law, longstanding department rules, and our ethical obligations prevent me from providing further details as to the basis of the search at this time.

There are, however, certain points I want you to know. First, I personally approve the decision to seek a search warrant in this matter. Second, the Department does not take such a decision lightly. Where possible, it is standard practice to seek less intrusive means as an alternative to a search and to narrowly scope any search that is undertaken. Third, let me address recent unfounded attacks on the professionalism of the FBI and Justice Department agents and prosecutors. I will not stand by silently when their integrity is unfairly attacked.

The men and women of the FBI and the Justice Department are dedicated, patriotic public servants. Every day, they protect the American people from violent crime, terrorism, and other threats to their safety while safeguarding our civil rights. They do so at great personal sacrifice and risk to themselves. I Am honored to work alongside them This is all I can say right now More information will be made available in the appropriate way and at the appropriate time. Thank you Thank you all for your questions, but as I said, this is all. FBI agents. Thank you all for your questions.

But as I said, this is all I can say at this time. Well, now we know, Shepard Smith now and the CNBC newsroom, we now know that Merrick Garland has requested the unsealing of the document. And here it is. It's just been sent to us. This is the request to unseal both the warrant and the list of the items that were taken from Donald Trump's Mar-a-Lago estate. There are actually three parts to this. The third would, of course, be the underlying affidavit, which would give us chapter and verse of what was happening in this case. That is not being unsealed. What we're

getting now is presumably shortly. there was a lot of speculation about why this news conference, as it were, statement more accurately, was scheduled for 2.30 Eastern time and didn't begin until shortly after three. It's possible that they were waiting for this judge to make a ruling on the unsealing of the limited warrant materials, as it says at the top of this five-page statement. So presumably, shortly, we will know what Donald Trump and his lawyers already knew, and that is the content of the limited warrant itself. Eamon Javers is in Washington with us. Eamon, the affidavit itself would be more revealing, but this will give us an idea of at least what the former president

and his counsel know. Yeah, we're about to know a lot more about this, Shep. And you heard Merrick Garland, the attorney general there, explaining that he's very limited in what he can say. And in fact, Department of Justice observers would be astonished to see an attorney general commenting at all about an ongoing investigation in normal circumstances. And what we just heard from the attorney general here is that these are not normal circumstances. He cited the surrounding circumstances in the publicity of this event, the fact that the former president, Donald Trump, notified the public about this search of his home earlier this week as his right. And he said there is substantial public interest in what the Department of Justice is doing here. Garland going to great lengths here to publicly defend the Department of Justice's doing here, Garland going to great lengths here to publicly defend the Department of Justice's conduct so far this week on this issue and saying he personally

signed off on the search warrant that was applied for earlier in the week. He says the Department of Justice did not take this decision lightly, that is, to go into the home of a former president of the United States against his will. Presumably the Department of Justice knew just exactly what to expect here in terms of the outcry of publicity and the outpouring of criticism from Trump defenders that they have gotten. And just within the next couple of minutes here, we do expect to see these new documents now detailing exactly what the Department of Justice can say publicly so far about all of

this. I'm frankly not entirely sure that that's a given. And that goes to the very end of this document, which I've now been able to read through. At the end of it, it says it goes through the reasons that the Merrick Garland and others believe that this should now be unsealed and then says argument in these circumstances, the court should unseal the search warrant, including attachments A and B and the property receipt, meaning the list of the items that were taken from the property by the We all know that had the former president wanted to release these documents, the former president could have done exactly that. He has every right to release that, just as any other citizen who'd been served such a warrant has the right to do that. But the former president and his counsel chose not to do that. Instead, by all observations, it's clear he used the absence of information, that void of specificity, to create this hubbub,

which we've all been watching on the political right and on certain cable channels, this ginning up of an enormous conspiracy theory, which has led the Republican governor candidate from the state of Arizona and many others in Cary Lake to suggest that the FBI should be disbanded and defunded. I mean, what we're living through at the moment is an appropriate absence of detailed information and an inappropriate ginning up of a large portion of society, which has caused the Department of Justice to take this step. We can only presume that if, in fact, there is no objection from the former president, we don't yet know, we'll have an understanding. Because what we already know is on June the 3rd, June the 3rd, the beginning of this summer,

a subpoena was issued for these 15 boxes of information, which are the property of the United States government, which were taken from the property of the United States government, which were taken from the property of the United States government by a then former employee in the former president of the United States. They requested that those boxes be returned. On June 8th, the information says that there were more classified documents inside Mar-a-Lago. We had the reporting of NBC News that they requested that another lock be put in the area of Mar-a-Lago. We had inside the reporting of NBC News that they requested that another lock be put on in the area of Mar-a-Lago where those documents were contained. And then during a period between June and August, there was an informant who said that there may be more classified documents

inside Mar-a-Lago. And all of that leads up to the September the 8th to the August the 8th, two days ago, execution of this search warrant at Mar-a-Lago. All of this could have been avoided had the former president and his counsel decided to release the documents, which Merrick Garland is now asking a judge to release to all of us. Amen. Yeah, that's right, Shep. And the document that the Department of Justice has just made public within the past few seconds is the United States' motion to unseal the limited warrant materials. So we'll see whether those get unsealed here in the coming hours or days

or exactly when we're going to get that material. But this is a battle that you just saw. Merrick Garland is a man who is trying not to become James Comey here. You remember James Comey back in the 2016 presidential campaign went out publicly and explained why it was that they had reopened the investigation into Hillary Clinton's email server at a time where the national attention on the presidential campaign was at a fever pitch. A lot of Democrats criticized Comey for coming forward at that time, talking about the investigation at all and lending credence to

allegations against Hillary Clinton. In this case, what Merrick Garland is saying is that he did not want to come out and talk about this publicly at all for that very reason. That is, you don't want to cast aspersions on somebody who may be perfectly innocent just because you're conducting an investigation. You may not find anything. But in this case, because the former president went out publicly with this information, therefore that changes the game. There's enormous public interest. He's feeling a need to explain himself at least a little bit here. And we should get some more detail on exactly what it is that they're searching for. What we won't probably get at all is the contents of those classified documents that are at the heart of this whole matter. What exactly is it that the Department of Justice is trying to protect that was inside Mar-a-Lago? That's the central mystery

here. We don't know the answer to that now. It-a-Lago. That's the central mystery here. We don't know the answer to that now. It's not clear whether we'll ever know the answer to that. Indeed, Eamon. And further, that a federal magistrate came to the conclusion was evidence of a potential crime inside Mar-a-Lago. You can't get the warrant without evidence of possible crime. You know, Shep, all week I've been talking to former Department of Justice and former FBI officials, and their consensus on this, as outsiders who know how this works, is that you just couldn't apply for a warrant like that unless you had an extraordinary circumstance. There's something in these documents that is very, very important that the Department

of Justice is very, very concerned about. You would not see this in sort of a typical document custody dispute kind of a situation. There would have to be something here that was really a pressing matter. And because of the nature of the secrecy of the documents themselves, the Department of Justice is entirely hamstrung in how to discuss this thing in public. They can't really explain what they're doing here without letting the cat out of the bag, so to speak, in terms of what the documents are. Eamon Javers, our senior Washington correspondent, live in our D.C. newsroom. Eamon, thanks.

Should we get these contents, if they are released in the next minutes or hours, we'll, of course, bring them to you here, and we'll have all the news tonight on the news, 7 Eastern, right after Jim Cramer, CNBC. But right now, we're in the homestretch to the closing bell, and Sarah Eisen has that. Sarah, how are we looking? Thank you. Shep, thank you very much. Shep Smith, we'll look for a lot more analysis from you later on the news.

Let's get back to the markets because the Dow just briefly turned negative, lost all the gains. We were up 340 points at the highs of the day. Let's bring in Jeff Solomon, Cowan chairman and CEO. It is also his first interview since the TD acquisition deal was announced. We've got to talk about that, which we'll get to, Jeff. But how about this rally that's faded today? Are we in a bear market or a bull market? Yeah, it's really hard to tell. I mean, I think, you know, the market totally was oversold. Certainly in parts of the second quarter, it really felt like death and despair, right? And you've seen that the market was really technically oversold. I actually think the market is reacting

to something that's just, you know, everyone uses the word unprecedented, but I think if you break that down, it really is unprecedented. There are no precedents for the markets that we're in. If you look at the macroeconomic backdrop, if you look at the shutdown of the U.S. economy, of the global economy, the bringing back up of that economy, the amount of fiscal stimulus, the amount of monetary stimulus, and then the reversal of that so quickly. When you look at history, as every market participant does in some version, there is no precedent for the time that we're in. And so I think the markets are simply looking through to what the new normal could be. They got oversold in the second quarter and we're seeing a bounce here. Whether that continues, you know, will be

a function of the fact that we get more data. But, you know, it's not surprising given how bad the markets were. Is it surprising from your point of view, and you have a good window into the capital markets, that not really pricing in recession at this point? Yeah. So the base case is that the Fed has never really raised rates as radically as they have. Every time the Fed has been behind the curve, that's led to a recession. That's sort of everybody's base case. The difference here, though, and why markets could rally and find this soft landing narrative, is that we've actually never seen how quickly they took rates to zero and how quickly they're bringing them back. And we have like $3 trillion worth of deposits still that are earning money.

And banks are now paying interest rates on that money. And I'm a big rational expectations economist. The Fed has signaled exactly what they're going to do. Consumers are expecting a recession because they talk about it. So they're actually slowing spending already. And we're seeing that behavior already. So if you talk about it, it eventuates. And that, I think, gives... But where's the market on it? So the market is looking through that and saying that's a real possibility. I mean, the market is saying it doesn't... Just because it's always led to a recession doesn't mean it will lead to one. And even if it is one, it could be a shallow one

because we have $3 trillion worth of deposits and the consumer is going to be okay. Again, that would be the alternate narrative. And I think markets like this always climb a wall of worry, right? So if everybody is bearish, the market will find a way to break through on that, on a different narrative. And I think markets like this always climb a wall of worry, right? So if everybody is bearish, the market will find a way to break through on that on a different narrative. And right now the market is trading on that narrative. Pain trade is up certainly for the last few weeks. Yeah. So in the middle of this unprecedented period, you sold your business, Cowan, for nearly $2 billion. Why? Well, you know, first of all, the great, our new great partners

at TD came and asked. I mean, it wasn't like we were looking to do that. But the team at TD and Riaz Ahmed and the folks at TD Securities, Barit Misrani, who's the CEO, they said that they wanted to have Calendly a part of the TD family. And I would say pretty simply when a AA-rated bank walks in your door and says they love what you do and they don't do anything that you do and they want to bring all the people over and they want to build a business together as partners, like, how do you not listen to that? That's not something that happens every day.

And so we listened intently to what their game plan was. It dovetailed with where we think we can be really helpful. And I think, you know, you ain't seen nothing yet. It's kind of, that's what I... Well, you're staying on board. You're going to go be a senior executive at TD. So what does Cowan look like for the next year or so as you get this deal done? So I'll be the president of TD Cowan.

Cowan will continue to run the Cowan businesses. We haven't really laid out the organizational structure in full. We'll do that over the next few months. But it will be all about figuring out how we create the right partnership and the right economic incentives for people to continue to do what they do. And I think this is, again, one of those rare examples where two financial services firms come together and there's no overlap in businesses and very little overlap. They need you. They want to compete with the other Canadian banks on market.

And not just other Canadian banks, other North American banks, other global banks. I mean, again, when you look at the run rate, when you look at the runway, if you will, for Cowan in its current form, we're constrained by our size to some degree. There's certain businesses that we could be in or would be in if we had the financial resources. We don't. We will. And so I think if you're at Cowan, you're looking at this and saying, wow, I get to a minimum, I get to do what I'm doing really well. And I might have some extra firepower. That's pretty good. And if you're at TD, you're like, wow, we get to do what we do.

And we have some incremental firepower with our new partners at Cowen. So I like to say it's a great opportunity. We've got to make it happen. But I'm pretty excited to be a part of it, excited to be a part of the TD team. It's going to be a lot of fun. All right, Jeff. Well, thank you for joining us. We've got to cut you short.

We'll have you back on to talk biotech M&A, which has sprung to life. How about that? All of a sudden cut off a little bit by the AG. But thank you very much, CEO of Cow and Jeff Solomon. After the break, we're going to dive into Disney earnings with former NBC Entertainment co-chair Ben Silverman. His take on the price hike at Disney Plus and the service overtaking Netflix on the subscriber count. You're watching Closing Bell. The Dow is positive again. It's up 31 points. Disney is the biggest gainer. Goldman Sachs, Travelers and Chevron also adding to those gains. We'll be right back. Take a look at Disney shares in the green, although off the highs of

the session after the media giant reported earnings last night, the company increasing pricing on its streaming, hiking prices nearly 40 percent on its no ads tier for Disney Plus. Bob Chapek, speaking earlier to CNBC about the strategy. Listen. We thought that this was the perfect time to go ahead and really sort of bring up that price value equation so that we're more accurately reflecting the value that a guest or consumer or viewer gets with Disney Plus by taking up the price. Joining us now, former NBC Entertainment chairman and Propagate co-CEO Ben Silverman. Ben, good to have you. What do you make of the price hike? Can they pull it off? Well, some of the things that were pretty interesting to me were the ad sales element

of this, that Disney actually has an ad sales infrastructure, and we're seeing a lot of the streamers kind of create that component within their service. So if you don't want to pay the higher price, you can watch ads and participate in a different way. And also, I agree with what the CEO said. I totally think it's unbelievable service and has a lot of content. It has library content. It has Fox's old content. It has Disney's old content. And it's continually refreshing with new content. And the genre mix is also pretty impeccable because they also own Nat Geo, which is a super big nonfiction company

as well. So Wall Street is applauding the streaming numbers, among other things. Also, the parks business was really what drove the quarter. But on streaming, Disney total, including Hulu and ESPN, Disney Plus, overtaking Netflix and subscribers by the first time. Do you think that that is coming at the expense of Netflix? I think these are still unbelievable value propositions. As you look at the choices you have to make as a family and where you're going to spend your money, you know, having these suite of services is incredible. And Netflix offers one range of content. Disney offers another range of content. And we can't forget about Apple and Amazon, two of the biggest companies in the world that are right there investing. And so I think these are great value propositions. I look at it as a father. I look at it as the chief household officer in my house. And I love these services. And I do totally believe in Disney's brand and its suite of brands. But I'm watching as Netflix is building their own brands and creating overarching

brands under which they can put more programming. And you can't forget still the power of talent. Like talent is almost like IP for Netflix. And that's why they continually invest in it. It's true. They can raise, I will pay a lot higher prices for cars one, two, three to keep my kids distracted. So I understand that as a parent, Ben. But some of these hiccups that we've been seeing lately in streaming, how has it affected what you do?

Content and the race for content and what people are paying for it, what these companies are paying for it. Luckily, we're very much in a genre mix within our company and we do tons of nonfiction content. So we're partners with Netflix and the Untold brand, which is a sports documentary series. We have two big ones launching on August 15th, one about the America's Cup race in 1983. And then we have tons of shows on Disney that aren't the big ticket scripted shows. We have the Bear Grylls series over there through Nat Geo. And so for us in our particular, you know, spunky little independent company, we're strongly positioned for this because I think there's going to be more growth in the alternative genres. I think we've watched as documentaries have just exploded and are becoming a bigger and more important part of the mix. And they're one one hundredth of the cost of the big motion pictures yet can deliver audience and scale.

So for us and where we sit, we are in a great position. We also believe in talent and have deep standing and longstanding relationships with big talent. And those big talent are more and more important to these platforms, as is the ability to produce at cost and efficiently. And that's what we do at Propagate. When you were talking about the different streamers and their value propositions, you mentioned Disney, Netflix. I think you mentioned Apple and Amazon. You did not mention Warner Discovery.

I'm curious what you think the strategy is over there as investors have struggled to figure that out. Well, as the producers of Chopped, the number one food show in the world, we believe that they have a great mix also. And I know that I've watched a ton of their content and I'm subscribing to all of them. And I'm also looking at what Paramount Plus is doing. And just a couple of shows have driven the growth of that service as well. So I think this is just we've anticipated it. What hasn't fully happened yet is people are still subscribing to cable and adding these services at a certain point when they look at their total monthly spend, I think if you replicate the streaming services and you're willing to live without some of the live functionality of cable, no offense, cable platforms, you're going to see a way that this ends up becoming

cheaper in the long run. And I just see lots of opportunities for us as a content supplier, and I see room for all of these brands. But the real big story to me on the Disney, in addition to that kind of ad piece, which seems to be a giant revenue opportunity for all these companies, because these have been walled gardens. You know, they have been environments that the advertisers haven't been allowed into, and the advertisers need to reach audience at scale. And now that they're going to open up advertising, I think they're going to see a lot of money come into the doors that wasn't there before and increase their total revenue.

And then international. If ad spend can hold up, though, a lot of people are worried about it if we go into recession. Well, they're going from zero. So, right. You know, they had no ads. So now they're literally just anything will be incremental for them, you know, in opening that door. So I think there's going to be lots of opportunities. And then transactions, like where transactional advertising starts to happen and the ability to actually click and buy, which these services have enabled by technology and the Internet. Ben Silverman, good to get your take always on the streamers right now. Thank you, Sarah. Appreciate it from Propagate.

Here's where we stand in the markets. Up 21 points on the Dow. It is still hanging in there. The S&P 500 has turned positive. The high of the day for the S&P was up almost 50 points. And we are at the lows of the day right now. The Nasdaq was sharply higher this morning. It was up 171 points and it is now down about a half a percent as we speak.

It's technology that is weighing on the overall market, along with consumer discretionary health care, real estate, and staples. Still ahead, a top health care analyst discusses how rising litigation fears over the Zantec heartburn treatment could impact a trio of big drug makers hurting those stocks today. Up next, Wall Street is buzzing about a well-known investor taking a big stake in The New York Times. We'll bring you the details next.

What is Wall Street buzzing about today? The New York Times. Shares popping after an SEC filing revealed that activist investor Value Act took a nearly 7% stake in the media company. Leslie Picker with the story. Any idea what they want here, Leslie? Hey, sir. company. Leslie Picker with the story. Any idea what they want here, Leslie? Hey, sir. We have some idea at this point in time. Value Act revealing its stake in a 13D filing earlier today. The firm's 11 million shares, beneficially owned at an aggregate price point of about $350 million, makes Value Act among the Times' top holders.

Value Act saying in the filing that it plans to have future discussions with directors and officers of the Times about topics ranging from management to board composition and whether it makes sense for a Value Act employee to become a director there. Value Act also says it will discuss operations, capital allocation, dividend policy, financial conditions, M&A, overall business strategy, executive compensation, and corporate governance. So a large swath of topics. Bloomberg also reporting on a letter that Value Act sent to investors detailing additional plans for the company that include a more aggressive rollout of the Times' subscriber-only bundles.

Think products like The Athletic, Crosswords, Cooking, and News, potentially even Wordle. New York Times saying in a statement that it's aware of ValueAct's statement, adding, quote, as we do with other shareholders, members of our management team have had conversations with ValueAct to hear their views and share ours. The board and management team will continue to make decisions that they believe are in the best interest of the company and all company shareholders. Sarah. I feel like, yeah, I forgot that they own Wordle. I feel like they could do, they could probably do more to monetize that. It's my two cents after everyone I know plays it.

Monetize or make it harder. I don't know. Yeah, some of them are hard. I would say it's like 50-50 hard ones. Leslie, thank you. Leslie Picker. Rivian shares, take a look. Charging higher ahead of its earnings after the bell.

Up next, the key number investors need to watch for in that report, that story. Plus, energy rallies and a rising risk for some big drug makers. We'll take you inside the Market Zone next. We are now in the closing bell market zone. UBS Private Wealth Management's Allie McCartney is here to break down these crucial moments of the trading day. Welcome. We've got Julia Boorstin as well on Disney and BMO Capital Markets. Evan Seegerman on the drug makers making a big move lower today.

Allie, I'll start with you, though, on the broad market. The Dow holding the gains a little bit. S&P gave it up. NASDAQ gave it up. And then some, you you know, nothing severe but down about half a percent or so What are you telling your clients to do have the last few weeks and the bullish turn and sentiment changed anything for you? The honest truth is not particularly look it feels good. There has been a pivot in sentiment That is for sure. And, you know, the momentum, you can see it daily in the market. You saw it all of July and August. But the truth is, a mentor of mine used to say this, and it's never as true as it is now.

When it's bad, it's never as bad as it feels. And when it's good, it's never as good as it feels. So the combination of the strong jobs number, the CPI yesterday and the PPI doesn't a trend make, but it definitely makes it feel like the worst sort of the stagflation scenario is out of it and that a soft landing is more probable. in this market. And I think what it has to do is I was talking to our prime brokerage desk the other day. They're seeing gross leverage from discretionary managers at a three-year low. So we've gone from this market that was dominated by what we call Foley to FOMO, fear of losing everything, managers saying, I cannot, I cannot continue to post negative returns like this to fear of missing out. And I think that's what's driving the market. And only time and subsequent inflation prints and Federal Reserve meetings will tell us if this is sustainable, Sarah. But it sounds like you're, you get why it's all happening, but you're not quite convinced, say, that we've seen the lows

or that you should be buying back in. No, look, I wasn't convinced necessarily that the negative was as negative as it should have been. But I'm also not convinced that this is as positive as it should be. And let me tell you exactly why. So we have had a lot of great data. I just talked about some of it come in. We've also had a lot of really concerning data. So last week, the New York Fed came out with its credit card data. Biggest change in 20 years in terms of a 13% year-over-year credit card debt. That means consumers are feeling it. My public company CEOs are telling me that they're starting to see that behavior of constricting, whether that means buying smaller sizes or buying less. And when you talk about all of the financial tightening that's

gone on in this market, there's a lag effect. So we're talking about matching data that's backward looking with policy that is going to have forward implications. So we're, you know, I've said on the show before that, you know, my kids asking, are we there yet? We are not there yet, but this feels good. And this demonstrates why you need to be in the market, why time in the market is more important than timing the market. Allie McCartney, thank you. Stay with us. We're going to talk Disney now. Big, big winner in the Dow after beating Wall Street's earnings estimates thanks to stronger-than-expected streaming subscriber growth and a huge sales increase at the theme parks. Earlier today on Tech Check, CEO Bob Chapek told our Julia Boorstin,

consumer spending remains strong despite higher prices and higher gas and airline tickets. Listen. We're seeing no softening at all of our demand, and we think this bodes well. Remember that with the lead time for international travel, we haven't even seen our international travel rebound yet. So the numbers that we're posting right now are largely on our domestic audience. And once that comes back, I think that's going to put more demand into our pipeline. Julia joins us. Julia, I watched your interview. It was great. He said it like five different ways that they're not seeing any sign that demand

is slowing down. What were your takeaways? Yeah, I mean, it's so interesting. And I pressed him because he used on the earnings call this word flexibility about pricing at the park. So I asked, does that mean you're going to raise prices more? They faced some criticism for charging so much for a ticket to the parks. And he said, look, we have so much data about how people are spending at the parks, how much they want to spend and sort of the visitor trends. It sounds like maybe they'll have more tiers. They're already doing this variable pricing that has turned out to be very effective for them. So it's all about using the data and using that flexibility.

It's also something he echoed around the theatrical window of how long they're keeping films in theaters. So it seemed very bullish. And all the data points to the fact that people are going to keep spending. And it does seem like that international piece of the pie is what's fueling this long tail rebound in the parks here. Because once everyone starts traveling to the U.S. again, then you're going to see more parks traffic. And Julia, the other piece of it is obviously streaming and Wall Street,

like those numbers. What did you get on the outlook for whether the streaming growth can continue and how they're competitively positioned here with a lot of the names in the sector rising on the back of disney this this afternoon yes and remember of course that disney just announced they're going to be raising prices meaningfully raising the price of its disney plus uh service by three dollars and introducing the new ad supported disney plus at the same price as the original i pressed him on this because we did not see much growth in the north america subscriber base for Disney+. And I asked whether they're concerned about that slowing or coming to a stop entirely. And he said, no, we expect it to speed up again. And he just stressed the content, the fact that they have

this premium content they believe that's going to continue to drive people to the platform. Though over the long run, they did lower their guidance for those hot star subscribers. Their 2024 guidance is now lower for those Indian hot star subscribers to Disney Plus. And those are less valuable. So they're really pursuing profitability as they make these calculations about what content, what sports to invest in. Got it. Julia, thank you. Julia Borson. Energy is the best performing sector right now in the market as oil prices rally. Pippa Stevens, join us. Join us.

Just as Pippa, everyone's getting excited that gas prices are coming down and oil prices are coming down and we're getting inflation relief. What's the story here? That's right, Sarah. On the same day, the national average broke below $4 for the first time since March. Brent crude broke above $100 again, and that gas was up 9% at one point today. So we are seeing a return in strength in commodity prices, and that is boosting the energy sector, the leader today. And Jonathan Krinsky over at BTIG just now saying the sector has just about the most compelling setup than the majority of the market here. Now, the firm had been bearish on energy since May, but they said that it has reset. It's established a new base. And with

improving relative strength, this could be a place for investors to look. And, you know, the sector is still the best year to date, but it's down about 15 percent since the June high. And that follows a very strong earnings report. Year over year, second quarter earnings jumped 300 percent. That was the best by far out of any sector. And now analysts are raising their longer term estimates, Sarah, on names like Schlumberger, Marathon Oil and Devin. So we are seeing some some market players return to the sector. Ali, what about you? Do you recommend the sector WTI having a good week up six percent so far? Absolutely. I think you have to ignore a lot of the noise that we've seen and focused on

some of the comments that PIV actually made last hour, which have to do with the structural demand and how much it is growing for fossil fuels. So if you have a commodity that is, you know, you have the supply issues that we've seen exacerbated with OPEC, with the turmoil in Russia and Ukraine, you know that it's growing, you know the demographics of the globe are needing it more and more. You know, the policy has made it harder and harder, certainly in this country. So yes, we should be investing in green infrastructure, but it doesn't mean that the demand component is falling. And so structurally, whether it's the commodity itself, whether it's the producers, whether it's the pipelines that

serve as the toll roads, this is, you know, for the next 10 years plus, going to be a huge source of need to fuel our economy as, you know, just as you're seeing with semiconductors in terms of fueling the other economy and what's happening to that. So energy is definitely a place that we would like to be. The high dividends that you see are very important. The structural components are going to make it continue. And as we continue to rebound from the pandemic, the demand is only going to get more and more. Yeah, up more than 3% right now, up more than 6%, energy sector that is, on the week. But it's still about 15% off the recent highs. Pippa Stevens, Pippa, thank you. Take a look at some of the pharmaceutical names today. Pfizer, Sanofi, GSK, all trading lower on concerns of litigation

over their heartburn drug Zantac. Analysts coming out today with warnings over how these companies will be impacted by the looming trial. The drug was withdrawn from the market back in 2019 after the FDA said it produced high levels of a cancer-causing chemical. Joining us now is Evan Siegerman from BMO Capital Markets. I guess the trigger for some of these stock moves, Evan, has been some of the analyst warnings about just how big of losses these companies could face as a result of the litigation. What do you expect? Well, from a Pfizer perspective, I actually think the litigation risk is pretty low, right? They only marketed the drug from 2000 to 2006. And yes, I understand the potential kind of overlap with their, you know, ownership in Halion, but they marketed it over 15 years ago.

When they had the drug in hand, they did all the required checks from FDA. They didn't see any of these issues. I think you have to draw a direct conclusion that this chemical does cause cancer. We haven't seen that yet. It may cause cancer, but we don't know in any ways when it comes to litigation. You really have to show that intent. I'm not a lawyer. However, it seems that Pfizer seems to be pretty far from the potential litigation risk here. No, and consumers care about it. Anyone that's had heartburn has taken Zantac. So obviously, this is going to be key. What's the timeline here, Evan, for some of this litigation? And I know you don't cover the European companies per se.

Yeah, for sure, for sure. But this litigation will take a long time, right? I think it was just filed. And for what it's worth, this has been in the Pfizer public filings as a risk for several years now. I think it's important to know that this litigation takes time. It's, you know, lawsuits in multiple courts. And of course, then it's subject to appeal. Ultimately, Pfizer, if found liable, could opt to settle. And remember, they're on track to generate over $100 billion in revenue. So even if it's a couple hundred million in kind of litigation risk here, that's a drop in the bucket for what they're generating in sales this year alone. And given that you don't cover some of the bigger players that are

more in the crosshairs here, like a GSK, why are the projections so large? Is it because this drug is just so widely used and so widely manufactured? I think, you know, I looked at some of the commentary on some of the other analysts notes out there. Hard to say where they're getting their numbers from. I think it's probably because it is so widely used or was so widely used, and there could be a potentially large class. But again, going back to the Pfizer, their overlap, 2000 to 2006, then spun out to BI, then to Sanofi. So Sanofi is likely the one that's going to have more risk, in my view. Got it. Well, thank you very much for shedding some light on it. It's something we'll keep an eye on. Of course. Evan, appreciate it. Let's hit Rivian, set to report its quarterly results after the bell. Investors will be paying very close attention

to the EV maker's production guidance. Phil LeBeau joins us. Phil, what's the magic number here? 25,000 vehicles, Sarah. That is what the street will be looking to see if the guidance from Rivian changes for the full year production. The guidance that they set earlier this year, 25,000 vehicles. Let's see what they say about that guidance when they report their numbers. Also, what does CEO RJ Scaringe say about the supply chain issues that they faced in the first six months of the year? And then there's the reservation rate. It has been growing at a fairly steady clip. We'll see if they have any update when it comes to that.

Don't forget, we get the numbers probably within the next 15, 20 minutes or so, and then we will have the analyst call starting at 5 o'clock. Sarah, back to you. Where is the positioning of this company? There were such high hopes, Phil, when it went public, and it's been a pretty disappointing and bumpy ride since then. Well, I think it got way ahead of itself, and that's not the responsibility of the company as much as it is. Investors sat there and they said, wow, is this the next Tesla? And there are some who believe that it could eventually rival Tesla, but nobody said that they were going to do that out of the gate. But investors piled

into this stock, and that's why you had a really bumpy ride ever since shortly after the IPO. I think, what, it got up to $170 a share. Now it came down as low as $20 a share. Now it's trading close to $40. I think if they can show some stability, Sarah, if they can show that they have the production at a steady pace, they're comfortable with the supply chain, I think that that gives some support for where the stock is right now. Not sure it'll go up much from here because it's basically doubled in the last three months, but it will probably give some support. Got it. Philobo, thank you very much. We'll be looking for those Rivian numbers after the bell. Ali, as it relates to EV, I know you don't talk specific stocks, but EVs, these parts of the market that have been big beneficiaries lately from the Inflation

Reduction Act, as well as the better risk appetite that you alluded to in the FOMO trading. What do you do with them next? Because it feels like at this point, a lot of the good news is baked in. And I'm talking about pockets like an EV name or the solar names, for instance, which have really run. Yeah. So, look, I think there's still more room to move on some of the solar names, for example, because although there, you because although there has been a lot of euphoria there, we're just at the beginning of that transition. I mean, there could be decades, decades more. that are in that space are probably, while for asset managers or trader mentality, it's probably time to take your gains and go into more quality value type stocks. From a thematic perspective, there's probably years to decades still to go there.

But you bring up a good point, which is what should you be doing and how should you be investing in an environment where you have had this sentiment and pivot change? And we really think the playbook has not changed. So quality and value are still where you want to be. Again, remember what I said about, you know, the financial tightening and the distress that many low end consumers are feeling as you see these CPI numbers still being really, really challenging and sticky in the food and shelter space. So you really want to prepare for a multitude of scenarios, some of which could be positive, some of which could still be challenging. So staying hard in quality, especially as it's trading well below where it has traded in pre-pandemic recessions relative to some of the more growthier stocks

is really the place you want to be. You want to continue to be disciplined. But yeah, it may be time to take some gains in some things that you really feared wouldn't recover so well. So you're not a fan of the meme stocks, which have had a great comeback, of the ARK Innovation Fund, which has had a very strong rally, the unprofitable tech names, all of those pockets. When you say quality, that's not what you're talking about. No, because to be a fan of those, what you have to believe is that the inflation numbers that we saw absolutely were a peak and they're going to come down swiftly. Because remember, the Fed is talking tough and hawkish about managing to a 2% inflation. So while it's thrilling for us right now, strangely enough and sickly enough, that we got to 8.5%, we have a long, long way to go.

And you now have a Fed funds price in at like a little over 3, 3.5%. So you really have to believe that the soft landing scenario is coming in order to be leaning into those kind of stocks. And while I'm keeping my fingers and toes crossed that that's where we're going, I'm certainly not planning for it. Allie McCartney, it's great to have you here for The Market Zone. Thank you very much from UBS Wealth Management. As we head into the close, just want to show you what's happening.

The Dow has remained positive, up 13 points, thanks in part to Disney, which is the biggest contributor to the Dow gains right now. Not so much for the S&P 500, which has dipped red later in the day. It was up as much as almost 50 points earlier. It is going to end with a small decline, nothing severe. And that's thanks to strength in energy and financials, industrials and materials, all closing the day higher. Tech was an underperformer. That's why the Nasdaq is down six tenths of one percent. Still higher, though, for the week heading into Friday. That's it for me. I'm closing now. See you tomorrow. Now into overtime with Mike Santoli.