Closing Bell - Closing Bell: Stocks Set to Sizzle or Stink? 8/31/23

Episode Date: August 31, 2023

Is there enough staying power to sustain the recent rally? Goldman Sachs’ Tony Pasquariello gives his forecast on this final day of August. Plus, top chip analyst Stacy Rasgon previews Broadcom’s earnings after the bell and weighs in on the state of the sector amid the AI boom. And, Lululemon is also reporting in Overtime. Shareholder Joe Terranova tells us what he is expecting from the name and what it could mean for the rest of the retail space. 

Welcome to Closing Bell. I'm Scott Wapner, live from Post 9 here at the New York Stock Exchange. And this make or break hour begins with a question on everyone's mind. Will September sizzle or stink for stocks? History suggests the latter, but what about the market's newfound momentum? That's key. We'll discuss with Goldman's Tony Pasquarello in just a moment. First, though, your scorecard with 60 minutes to go in regulation. The Fed's favorite inflation read the PCE. Well, it came in just right, which sent yields lower and stocks higher, at least initially. The Dow's been in a fight all day long to stay positive. It's having a little bit of a tough time now. It was getting a nice lift from those Salesforce earnings, though. And speaking of tech

and those AI plays, Nasdaq's been the strongest of the three majors for most of the session. It's still green, as you saw. There's Alphabet, Amazon. And how about Broadcom? They're outperforming today. It reports Broadcom does those earnings in overtime. We'll have a preview coming up for you. Takes us to our talk of the tape. The rally back in stocks over the past couple of weeks, whether there's enough staying power now to sustain that move. Let's ask Tony Pasquarello. He is Goldman's head of hedge fund client coverage. Joins me back here at Post 9. It's good to see you again.

Thanks, Scott. So have the bulls wrestled back the momentum that seemingly was lost just a couple weeks ago? S&P up five days in a row, subject to the next hour, or just a percent or two from all-time highs. I would say the momentum is back in favor of the bulls. It's been kind of an interesting month. I think, as you said, a tale of the bulls. It's been kind of an interesting month. I think, as you said, a tale of two different months. Those first three weeks,

I think we felt the pinch of higher interest rates along the entire curve. I also think the market started to wring its hands around the trajectory of Chinese GDP growth. As you flash forward to today, I think we're breathing a little bit easier on both of those narratives. I'm not sure they're fully gone from the equation, but I do think in the end, the story of late August has been the story all year, which is the market strength has been driven by the ongoing durability of the U.S. economy. Big card comes over tomorrow. And of course, the supremacy of U.S. tech. And so I still think those are the two big variables in the equation that the bulls have on their side. Let's take a few of those things. So consumer, no concerns that the consumer is about to crack in any meaningful way?

I think there's two headwinds coming at us. One is the resumption of student debt, and the other is kind of the ongoing drawdown of excess savings, particularly down the income strata. That said, let's think about this. Over the past couple of weeks, Walmart, Home Depot, Target, Visa, they've all basically told us the consumer's fine from a macro perspective. Now, there's other data points against that. We saw one this morning, Dollar General. Then you look at the government data, you look at personal spending this morning, you look at retail sales earlier in the month.

I think the big ball for the consumer is if we're right and the unemployment number tomorrow is 3.5% and we continue to generate kind of above trend wage gains, I think one can only go so far with worrying about the U.S. consumer. Yeah. How about yields, right? That's the big equation, right? That still matters more than anything in terms of what we're going to do in September. Is that right? I think that's right. It's been a really interesting sequence because if you think about May, June, July, when the market, when the equity market really found that upside convexity, in a way, it was kind of impervious to the move higher in yields.

Again, that cat and mouse game changed in the month of August, and you could just kind of feel it on the front of the month when U.S. rates moved higher along the curve and introduced an element of turbulence or impingement on the equity market. You get slightly cooler data, the bond market settles in, and the stock market moves higher. It's very reflexive in that regard. Again, my guess is rates will be here or higher for a while longer. I think the fundamental driver of

higher rates has been good growth data, point to point. And again, I think that's on net positive for the equity market, even if on a given day or a given week, again, it introduces an element of turbulence. But softening data over the period of the next month is a good thing for stocks. I don't want to say it's not necessarily bad news, but a little bit softer economic data is exactly what the Fed's hoping for and perhaps what investors think they need to believe in this Fed being done narrative a little bit further. So I think we should, I'll take the labor market as an example. I don't think we're rooting for uniformly bad nor good news.

I think if we walk out of the office tomorrow and then the news of the week is basically job openings down, quit rate down, wages well behaved, without job loss, say 149,000 jobs are printed tomorrow. That's our forecast. Three and a half percent unemployment rate. I think the composite, I think that's a very tidy story for the Fed. I think that's a good story for the Bulls. Are you a believer in the earnings story? Speaking of stories, I mean, you know, the estimates at this point are like this third quarter is the turnaround quarter. You incrementally go positive, and then fourth quarter follows through further, and then you make a real good turn into 24.

Does that make sense? Our call as a house is 224 for this year, which is plus a percent, not that interesting. And then 237 for next year, plus 5%. We agree the sequence of basically the year is Q2 marked the low in earnings. And in the end, earnings came out better than we expected. So given, I'm sure we'll talk about this, given what a large share of the equation MegaCap Tech represents, given what we've seen from those top seven companies. I think if I'm going to bet, I'm going to take the over on 224 and 237.

You were as wowed as anybody on NVIDIA's results, weren't you? Well, I think the AI theme is interesting, right? Because if we were sitting here three or four months ago, it felt like a new world had been revealed. Okay, the market picked that up. It became prosecuted very clearly in NVIDIA, in Microsoft, in Google. So today, it's a more well-known variable. But again, I think if this is the early innings of a secular shift, that is our view. I think that's the view of most people. As the great Sandro Camilla would say, these things don't go on for just 10 months. NVIDIA bottomed in October. Chat GPT was announced in November. So again, big ball,

long run. I do think it's early innings. And again, the companies at the top of the index have the most leverage to that theme. Are we going to be talking about the so-called Magnificent 7 and then the S&P 493 on the other side of that? And it's going to be those diverging gains yet again? That would be my bet. If I had to pick something to invest on around for the last four months of the year, if I had to make one bid and push the chips forward, for me, it would be mega cap tech. Those are the freight trains. I don't want to stand in front of them.

They're doing everything right. And you've noted, look at local price action in NVIDIA, in Google, Microsoft, Apple. They're all kind of making the hook higher. I wouldn't fight that. We talked about it before I got on. Go back to the end of 08. NASDAQ's up in 14 of 15 years. Again, I'm not gonna fight the freight train. And the reason why the freight train keeps rolling along

has to do with more than just rates being low over that extended period of time. Balance sheets look better than most any other companies. The tried and true growth. that extended period of time. Balance sheets look better than most any other companies. The tried and true growth. Is that why you don't mind paying the multiples that are a little higher than the other stocks in the market? I think it's hiding in plain sight. And you said it's the best balance sheets in the world, the returning capital. They're generating above-trend earnings growth. Again, they have convexity to the newest, most interesting theme in the marketplace.

And NVIDIA is cheaper today than it was before it made this big run. Talked to a lot of hedge funds, obviously, and the hedge fund running the hedge fund coverage over at Goldman. What's the deal on the idea that MegaCap is, according to some, still under-owned? Now, I've had pushback from others on that. What's the case? Well, I'd say this. Again, NVIDIA is a very good, I think, representation of the theme, which is when we're going into earnings last week, if you asked our people who know flows and positioning technicals best, they'd say, hey, out of 10, the ownership level's at 10. So they delivered spectacular results. The stock spent a day or two kind of distributing that. And here we are making a higher high. So I do think these stocks are well-owned. I do think

the themes are well-known, but it just doesn't arrest the fundamental strength of the earnings growth. And again, if you're going to bet anywhere in the world, can you find a better option than the top of the S&P 500? What do you think is more important to the market's trajectory, Apple or NVIDIA? I think in the end, it's probably Apple. I mean, it shoulders the most market cap weight definition. Just simply because it's close to $3 trillion in market cap, it's going to have a more important position. You know where I'm getting. It's kind of a loaded question. The fact that all of the hype has been around NVIDIA. And in many respects, it's reflected where sentiment is overall in the market,

maybe even more so than Apple. In the context of your earlier question about AI, again, the market is attached to Google, it's attached to Microsoft, of course it's attached to NVIDIA. When you think about kind of the raw materials for AI, what does it require? It requires data and it requires CapEx.

Okay, who can do that and who has it turn the card over? I think Apple's the biggest one who have yet to tell us where the leverage is. And I find that to be attractive. So NVIDIA has kind of kept the narrative intact of where this is all going, right, with this transformative technology. And then Apple, and look, they're going to roll out their new phone in a couple weeks, we presume, based on the invitation that they send out. That has the possibility then of taking up the story in some respects and maybe taking NVIDIA off the hook for a minute. It's funny. I mean, this was the Q1 result for NVIDIA and then Q2, which kind of blew our mind, a billion here, a billion there. Apple's generated about a billion dollars of revenue a day, just to give you a scale for kind of the immensity of their footprint.

And so, again, if it came to a choice, God bless America, we have both of these stocks at the top of our index. But if it came to a choice, I think from here, Apple will need to carry the load. Just quickly before I let you go, are we at risk of some more consolidation in the market before you think there's that still push higher between now and the end of the year? I think it's certainly possible. August seasonals tend to be tricky. September seasonals tend to be the worst of the year. Again, I think this China variable and the interest rate variable will be with us for a while longer. So could the market need to do some work in the way it did in the month of August? For sure. Then we get through those seasonals. We'll be talking about year-end seasonals, which classically are very powerful for NASDAQ. We'll be talking about them with you.

I'm certain of that. Tony, it's good to see you. Thanks, Scott. Tony Pasquarello, Goldman Sachs. Let's now bring in Joe Terranova of Virtus Investment Partners and Nicole Webb of Wealth Enhancement Group. Joe, a CNBC contributor. It's good to have both of you with us. Nicole, what do you make of what Tony said? What's your own prediction as we turn the calendar here and we start thinking about the fall? Yeah. You know, we are having a lot of conversations at our firm about changing our year-end expectations. And a lot of it has to do with the freight train that Tony spoke of. You know, two months ago, as we started to see the 10-year tick higher,

a lot of pressure on duration assets, a little bit of curiosity around if inflation on the back half of the year around goods prices increasing, you know, could be problematic, yet good for maybe a value trade. And now we're looking at it going, you know, the JOLTS data

and where we're seeing some of this moderation around inflation, a little bit of slippiness around the consumer, meaning we're slipping into an area of the savings are in question and that confidence in spending. And so the mega tech trade looks strong to us going into the end of the year. And a lot of it is the application of AI and the spending frenzy that's going to go along with it. Yeah. Joe, I feel like you and Tony see eye to eye on a lot of this market view. Yeah. I feel like I should just get up and go enjoy Labor Day weekend because everything Tony said, I'm basically just going to repeat it now. I believe that he's spot on. Look, I think what we've done here over the last 11 days is really build a nice cushion. So let's just say for a second,

September turns out to be awful and yields are out of control. Well, we already went down to 4335 for the S&P 500 on August 18th. We've got a nice bounce here. We're up about 200 handles from that. So I feel as though we've built a cushion and we can just survive through September with nothing more than a garden variety correction overall. That's the downside that you think about. On the upside, you have a much faster snapback than we normally see during a seasonal period. And it's being led once again by where the leadership has been for the entirety of 2023. And that's the mega caps and technology. But Joe, are we going to be OK? Are we going to feel fine with getting back to where we were

before, i.e. a so-called top heavy market where we're just content with the fact that this is the way it's going to be for at least the near term? You know, what's interesting is, is I went back. Look, we're coming up on the end of the unofficial summer season. So if you go back to Memorial Day, take the Friday, May 26th, and do a measurement of the various indexes. So the S&P was up about 7.3 percent. Well, the Nasdaq's up 8 percent. And guess what? Small caps are right there with the S&P 500. They're up 7.3 percent, whether you look at the Russell 2000 or whether you look at the S&P 600. Consumer discretionary, very strong. Energy, up 12 percent since May 26. Industrials, up 10 percent since May 26. So, Scott, you can't dismiss that there has been a

little bit of a broadening out. The percentage of S&P 500 companies above their 200 day moving average around Memorial Day was running at 44 percent. That's up to 60 percent now. So, yeah, it's been about technology. It's been about mega caps. But we do have to acknowledge there has been a degree of broadening out. And the recent earnings for consumer discretionary were remarkably strong. Yeah. Nicole, to what degree do you need a chase to push this market much higher from, you know, where it's been been trading around? I look at a stat that Bespoke had out and it's fairly telling about the non-believers, if you will, that individual investors still aren't buying this market. The weekly AAII poll showed little rebound in bullish sentiment overall.

And I can speak directly to that. Our firm works with individuals and families, and they are still hesitant to enter the market. And there was this sentiment over the last three months that hedge funds were going to come back. October was going to be incredibly volatile. You were going to see profit taking. You were going to move into short duration, collect the fives, sit still through year end. And it's not that. The consensus has moved towards the recession is not in sight. And also to the fact that even if the consumer starts to weaken, there's enough growth to offset it. That is the story. The story is we were so worried about the slipping of the consumer in regards to their ability to spend due to rates.

But what we're seeing on the other side of this is the Fed lucked out. All of a sudden, AI came into play and the adaptation across all industries and the enterprise level spending is going to go into that will offset what we're seeing or fearing in consumer weakness in the first half of next year. And that is where investors need to be moving into this market. And I wouldn't say it's a chase. It's a not missing out on the fact that we are in a secular bull market and it's going to be choppy. Anytime you see pressure on that 10 year, meaning it heads up again, we'll probably have more buying opportunities across the board. But that's 493 other companies you spoke to. Well, that's where you're going to see productivity and spend that was accelerated during COVID. And then obviously the spend across AI in forward years.

But you buy now because the market's already looking ahead. Joe, what happens if the consumer does start to roll over? I mean, manufacturing is still no good. What about that? What if it happens? What if some of these stories that we're hearing from retailers, you know, I guess especially on the apparel side, but what happens if it becomes more pervasive? Well, I expect that actually the consumer will weaken. And I think if the economy were to grow a little bit hotter than where we are right now and if the consumer were to maintain this level of spending, I think that reintroduces the Federal Reserve, to use the analogy, if the market is a pitcher and the Federal Reserve is the umpire, they tighten

the strike zone once again. And you're thinking about more rate hikes. So I think the base case has to be, yeah, the consumer is going to weaken. I think that's going to put the Federal Reserve in a position where they're keeping those strike zone a little bit wider. They're not adversarial. And I never bought into the premise of rate cuts, Scott. I don't think your belief on why markets should rally or why you should be invested is because the Fed at some point is going to cut rates. If, in fact, they hit the inflation target at 2 percent, then yes, there's justification for saying, OK, the Federal Reserve is going to cut rates. But I think in the totality of it all, the consumer weakening isn't necessarily a bad thing for risk assets. And it's somewhat expected. Nicole, what's one unloved part of the market that you think could surprise us in the fall?

Banks. I mean, the likes of your J.P. Morgan's and your Goldman Sachs. I think when you look at J.P. Morgan's been on our radar over the last couple of weeks, when you look at trading at nine times with a two point six percent dividend, we think that's a strong buy. And so, you know, we think they've been a bit unjustly punished by the regional bank story and a little bit of the fragility of the interest rate environment. But for us, that's one area that that we keep a keen eye on right now. Guys, we'll leave it there. Nicole, thank you, Joey, as well. We'll see you in the zone. By the way, market zone, Joe Turnover coming back. Let's get to our question of the day. We want to know, will stocks resume their pullback in September or finish higher than today's close? You can head to at CNBC closing bell on X to vote the results a little later on in the hour.

Let's get a check now on some top stocks to watch with Christina Partsenevelos as we head into the close. Christina. Thanks, Scott. Let's talk about Okta having its best day of the year after earnings and guidance surpassed analysts' expectations. You can see shares are up over 12 percent. There's a number of analysts on Wall Street right now raising their price targets on the software name, including Evercore. Analysts over there upgrading Okta to inline from underperformed, saying the business seems to be stabilizing and its risk reward is more balanced at current levels.

Meanwhile, Palantir shares are lower after Morgan Stanley actually downgraded the stock to underweight with a price target upgrade, though, to $9 a share. Analysts are saying fundamentals are pretty much mismatched with the enthusiasm over artificial intelligence, especially since they expect delays with how quickly Palantir's AI platform will contribute to revenue. In other words, cashing in on AI isn't as easy as promised. Shares down over 8%. Not for everybody. Christina, thanks. We'll see you in a bit. We're just getting started here. Up next, countdown to Broadcom. We've got top chip analyst Stacey Raskin back with us. He's flagging the top three things he is watching.

When those numbers hit the tape in just a bit. We are live from the New York Stock Exchange and you're watching Closing Bell on CNBC. Welcome back to Closing Bell Broadcom set to report after the bell, the latest company to reveal just how much the artificial intelligence frenzy has boosted its financials. For more on what to watch, let's bring in Bernstein's top chip analyst, Stacey Raskin. He has an outperform rating. Eight hundred seventy five dollars is his price target. It's nice to see you. Welcome back. Good to be back. All right. So the stocks run a lot. So how good do these how good do these results have to be? I think I think they'll be good. And I think people will be looking for three things. You mentioned the first one, artificial intelligence.

They've given some numbers for revenue. And by the way, I should say in my coverage, there's only two companies that are releasing actual revenue from AI. It's NVIDIA and Broadcom. Broadcom is chip designed for like custom chips for the hyperscalers for AI as well as networking. They said last quarter it would be 15% of the revenue this year going to 25% of their semiconductor revenue next year. So I think people were looking to see just in the wake of NVIDIA and Marvell and some of the others like do they take that number up? The second thing that people were looking for is the rest of the semiconductor business and it's kind of interesting. It's been very

strong. People are obviously worried about sustainability but if they're right on the AI side the non-AI piece of their semi-business could shrink double digits next year and they could still grow the overall semiconductor segment on the AI strength. So people are looking for their commentary and outlook on that. And then the third thing is VMware. So they're trying to buy VMware. It will take their software mix to close to 50 percent of revenue. I think things are actually looking pretty positive. They got UK and EU approval on the HSR deadline in the US expired. We're just waiting on China. In the meantime, they raised permanent financing for it. They seem pretty confident. They've been saying closed by the end of the fiscal year, which is end of October. So any updates on that will be will

be good. But I mean, VMware is hugely accretive that they can get it done. And that's not in the numbers right now. I think it's a material source of potential upside if they can if they can actually show that they can get it done. Sounds that's not in the numbers right now. I think it's a material source of potential upside if they can actually show that they can get it done. Sounds like you're sort of saying like these other sectors that are not AI, you know, weakness, any weakness in wireless or weakness related to China don't matter as much as they otherwise would because of the hype and story around AI. Yeah, I don't think it's hype. For them, it's actually real revenue. So it's billions of dollars of real revenue. But it is. I actually don't expect their other businesses to roll. But if they do, the AI piece provides a really significant buffer. Literally, the non-AI

stuff could fall double 10% plus next year, year over year. And if they're right about the mix of the AI in terms of the percentage and where it's going, the semiconductor segment would be fine. And in fact, if you look at least at the sell side consensus numbers, they only have a little bit of growth next year. So if you sort of think about it, the numbers are probably already implicitly modeling like a downturn in the rest of the business, which may not actually happen. They've been really, really good around managing the cycle like through COVID for their products. The numbers actually look at the street the street numbers and they actually look reasonably conservative then even more so if they can manage to close vmware because which is massively accretive it's not the numbers at all i i read an article you know at least one article in

preparing for this where i where i saw it said broadcom has a tough act to follow after NVIDIA. I guess the implication being that, you know, NVIDIA knocked the cover off the ball so much the ball, like, blew up. Does that mean that Broadcom really has to post something extraordinary to let everybody know that it has that kind of potential that NVIDIA already proved to us that i guess it does i don't think so because look like in the video results as well and we're massive right and and you're kind of right it's like almost too good was almost as much of a problem is not good enough for them i don't think broadcom needs to worry about that the the ai piece is material for them but it's it's not you know data centers, 80% of NVIDIA's revenue, something like that. For Broadcom, right now, AI is 15% of semis, and semis is, you know, 80% of their total, and going to 50% of their total if they close VMware. It's a smaller piece, but it's a nice

sort of, like, buffer to augment the rest of the business. I don't think anybody was expecting the kind of blowout. You have to remember, with NVIDIA, everybody was expecting a blowout result, so it had to be good. They did even better than that. I don't think people were expecting any kind of super blowout from Broadcom. You reminded us this week as well about the haves and the have-nots, and that's with your Texas Instruments downgrade to underperform. Can you expand on that a little bit? These companies that are in the wheelhouse, the so-called picks and shovels,

et cetera, of AI and where it's going to be relative to where everybody else is. And the challenge that those companies have, not only from a business standpoint, but articulating what they're doing to make themselves feel as sexy as some of these companies we can't talk enough about. You've got to remember ti doesn't care at all about uh sounding sexy in fact they would prefer to be boring they want to be boring and the downgrade actually had nothing to do with ai um ti is embarking on a very significant capital investment phase i'm in multi multi years um i didn't even change anything like my numbers

i didn't change my numbers or my target price. I'm low on the street. What's going on there is the street is completely mismodeling the impact of that investment program. And I was tired of looking at it. I'm not blaming the company. Like I totally get why TI is doing it. They literally have a 10 to 15 year investment horizon. I bet in 10 or 15 years, we'll look back and we'll all be thrilled that they do it. I hope to be retired in 15 years. I'll be getting to that point. Most other companies and certainly most investors don't have it that long. And the numbers on the street, they're just wrong. They're clearly wrong. I don't know why, but they're clearly wrong. The companies

told us like they've been 100 percent transparent on how to model it. Like the street just doesn't want to do that. I'm trying to force, it's like a forcing function. I'm trying to get everybody else in the investment to pay attention to what's going on there. But I'm not blaming TI. It's probably doing the right thing on a 10 or 15 year horizon. Lastly, you know, I read something else from,

I think it was Wolf this week that suggested that, you know, the lack of big follow-through from that beat by NVIDIA was suggestive to them that maybe chips have topped. Share any of that concern at all. I think in general, you know, chips have been very strong year to date. Right. And it's because of the point in the cycle, it's been all multiple expansion. The increase in sector multiples off the bottom from Trough to peak has been pretty historic. I mean, they doubled. I think the socks was it. I know where it is right now, but not that long ago, it was something like 28

times earnings. If you took out the AI stocks, it was like 24 times earnings. You had to go well before the financial crisis to see peak multiples at that level. And so my take going into earnings was you need, companies need earnings upside. It's harder to bet on multiple expansion. What happened with NVIDIA, by the way, is we had a ton of earnings upside. We're seeing multiple compression now. Right. With NVIDIA, maybe it's almost just like like too much in the near term. But in general, the stocks themselves get more on the cycle like we need a return to earnings upside. It really depends on where you're playing. Some in markets have bottomed. Some are just starting to roll. It's like a very sort of like extended cycle, depending on where you are.

Interesting. We'll talk to you soon, Stacey. Thank you, as always. All right. Good to be here. Stacey Raskin joining us once again. Up next is the IPO drought ending. Well, the space has been showing some signs of life lately. And now Sixth Street's Alan Waxman giving his 2024 forecast for that space. It's a rare TV interview. In fact, we'll tell you what he said just after this break. Closing Bell, we'll be right back. Welcome back to Closing Bell. IPOs have had a rough run recently. There might just be light, though, at the end of that tunnel. Leslie Picker joins us now with some highlights

from the latest Delivering Alpha newsletter. I mean, Leslie, we've heard about some. Yes. We're waiting for a lot more. What's the story? Yeah, the question is whether the some that we've heard about is kind of idiosyncratic or the beginning of something big. Now, I sat down with Alan Waxman, the CEO and co-founder of Sixth Street for today's newsletter. His firm has a sizable presence in growth investing, having made billion-dollar-plus investments in Spotify and Airbnb before each of those went public. So I asked Waxman where we are in the IPO cycle and whether he expects that window

to open soon. He said we're in the seventh inning of the cycle. We've already started to see a real pickup in our pipeline as people, ultimately, commerce has to go. You can only extend the runway for so long. And ultimately there are growth opportunities out there. And I think people are starting to look for capital and picking their heads up. And obviously having the IPO market open a little bit, a little bit of a small crack that obviously helps and sort of gets commerce moving again. And our expectation is for 2024, volumes will be higher.

I don't want to say much higher. It's hard to call right now, but I would say materially higher than they were in 2023. This year, the challenge was that startups, quote, withheld from looking for new capital because the valuations aren't quite where they were in 2021. But he adds at some point, they'll have to come back for more financing. For more of Waxman's thoughts, including whether a private credit industry is in a bubble and whether we're out of the woods from a recession,

you can subscribe to our newsletter using the QR code on your screen. You can see access to the full interview, Scott. Yeah, Leslie, I mean, you've got to believe, too, the venture community, which has been extraordinarily patient because they've had no choice, is going to be looking for the exits. As soon as the environment turns well enough that they can get some of these companies to go public. Absolutely. That's a key component here. I mean, they want to have these companies exit. Of course,

they want to do so at a decent valuation, at least up from where they invested. The challenge that's been kind of the case over the last 18 months or so is that a lot of companies looking to go public, we're going to have to face doing so at a down round, which kind of creates all sorts of complicated things. A lot of these companies have structure. They have liquidation preferences, ratchets, which sometimes make the venture capitalists whole, but they dilute other shareholders. So it can get a little messy if you're looking at a down round. So the prospect of higher valuations for some of these companies as they look into maybe Q4, Q1 should bring more to the table. And then, of course, as we look at Instacart,

Arm and some of the others that are readying their deals, if those perform well and get pretty decent valuations, that should open up the window a little bit more for others looking to kind of come down the pike, especially if the buy side is sitting on some nice profits from some of these upcoming deals. Yeah, I got to believe that. Leslie, thank you. Leslie Picker. Up next, we are tracking the biggest movers as we head towards the close. Christina Partsenevelos is standing by with that. Christina. Amazon and Shopify, first foes, now friends. I'll explain what that means for Shopify shares next. All right, we're 20 out from the close.

Let's get back to Christina Partsenevelis now for a look at the stock she's watching. Christina? Well, UBS right now is trading at an all-time high after more than doubling estimates for net profit in the first quarterly report since completing its takeover of Credit Suisse. There are also cost cuts ahead, unfortunately, for those working there, with UBS saying it expects 3,000 jobs to be cut over the next few years as a result of the integration and restructuring of Credit Suisse. Shares right now are about 5.5% higher. And Shopify is jumping as the Canadian e-commerce giant strikes a deal with Amazon to offer its Buy with Prime program to merchants. This will allow U.S.-based Shopify merchants to add the Prime logo

and offer Amazon's quick delivery options on their storefronts. The deal, though, comes a year, almost to the day, after Amazon unveiled the service and Shopify warned users not to use it since it violated its terms of service. I guess that's not the case anymore. They've become friends. Shopify up 11%. Nice game there. Christina, thank you. As always, it's the last chance to weigh in on our Twitter

question or our X question of the day. We asked, will stocks resume their pullback in September or finish higher than today's close? You can head to at CNBC closing bell on X, the results after the break. The results of our question of the day. We asked, will stocks resume their pullback in September or finish higher than today's close? And the majority of you said finish higher. More than half. 54.1. Up next, Lululemon among the names reporting in overtime tonight.

We've got a full rundown of what to look out for when those numbers hit. Plus, we hear from a shareholder with the key takeaways he'll be listening for on the call. That and much more when we take you inside the Market Zone. We're now in the closing bell Market Zone. CNBC Senior Markets Commentator Mike Santoli here to break down the crucial moments of the trading day. Plus, we are on earnings watch. Courtney Reagan on what to expect out of Lululemon after the bell. Lulu and Broadcom shareholder Joe Terranova back as well to tell us how he is playing both stocks. Mike, I turn to you as we turn the page on an interesting month, a tale of two months in many

regards. And what do you think that means for where we go from here? You know, I was just looking back six weeks ago. Let's call it July 17th. The S&P was exactly at this level. We went down from there, of course, 4,500 and change and then back up in a round trip. Since then, the 10-year Treasury yield is up, call it 25 basis points from that point. Crude oil up about 10 bucks, but also forward S&P 500 consensus earnings are up maybe 3 or 4 percent and I think crucially individual investor bullishness has been basically cut in half. So you saw basically a 2 to 1 bull to bear ratio on the AAI poll back then. Now you have more bears

than bulls just slightly in the latest poll. So it makes sense that we're here. It doesn't mean it's an all clear though. I do still feel as if we've been feeding off of a pretty nice little run in some of the secondary economic data. The bond market rallied almost surprisingly on the fact we got a benign jolt and and even the ADP number. So the question is, are those things going to trump a hot jobs number? I don't know. But I think it's sort of the pullback did most of the job it's supposed to do. I don't know, though, that it means that it really set us up to launch much higher from here directly. Our poll was pretty split, as you saw, even though more people think we'll finish higher in September than where we're going to close. I looked at that poll and I said, why not both?

You know, you can have some more of a poll back in September. You can have a little bit more of a test to see if that was real as we bottomed above 4,300 or thereabouts. And then, you know, maybe finish higher. But, you know, that's not a call. It's just I don't think they're mutually exclusive. All right, Courtney Reagan. Boy, apparel, you know, has been such a question mark. And I'd say more bad stories than good ones lately. So what does that mean for what Lulu might say?

Yeah, I think that's true, probably more bad than good. But Lulu's kind of in a league of its own. I mean, it has a really strong history of outperforming expectations. Investors seem to think it'll happen again today by the price action. Bank of America sees potential upside for both sales and margins, even with consensus expectations pretty lofty for both. Comparable sales forecast to grow more than 12 percent, with operating margins more than 21 percent. The firm expects,

quote, balanced growth across products, genders and channels. International for Lululemon also still expected to drive growth. And that's even in China. It's about 12 percent of sales right now. And China generally has been weak for some retailers with this spotty recovery, although Abercrombie was another apparel retailer that did see strength in that region. Lulu's underpenetrated there compared to other athletic brands. It grew 79 percent in the first quarter, so still runway for growth there. And it's expected to do fairly well. Yeah. Well, we shall see. Courtney Reagan, thank you so much. Mentioned Joe Terranova here as well. He's a shareholder in Lulu.

What's your expectation here? I think a lot rides on how strong the demand is going to be from China and international. We've always expected that Lulu, the ability to expand the story beyond DTC, expand the story beyond the high-end consumer here in the United States, resided itself in international, in particular for China. So China's going to be a focus for me. It's a company that has been incredibly consistent in delivering revenue growth, 12 consecutive quarters,

options market kind of pricing at a 5% move one way or the other. But I think the potential is there for a beaten race. You really want to be hanging your hat? Not you, but, you know, expectations or investors hanging your hat on what's going on in China right now? Well, I think that's but I think that can be the surprise for this company because it's the distinction between other retailers. Why would Lulu stand out with strong growth, strong demand from China, while other retailers have signaled they haven't? Well, if in fact that's what they deliver, that's why you want to pay a premium for this high-end retailer. 52-week high is almost $3.95.

Yeah. It's not that far away, Joe. No, not that far away at all. And looking back, November of 2021's high is $4.85. So that's another milestone that potentially this stock. Although it's had a real hard time kind of cracking above 400 for a while right now. And in fact, it's a very unusual chart in that it's hugged that area in the 380s or something for a little while. I think it's because, you know, long-term story completely unchanged in terms of why it does

merit the premium, the fact that they have a lot of runway to expand. You know, they're adding 10% of store count per year, of course, in addition to what they do online. But, you know, it trades now at a slight premium to Nike, which is, you know, not new, but it's returned to a premium. That's because Nike's been so weak, not because Lulu's gotten that much more expensive. I mean, Nike coming off that historic losing streak, and it's maybe reversed it a little bit, but not all that much.

That's just a nasty-looking chart. Let me turn you guys to Broadcom. You know, Mike, the stock, we saw what happened with NVIDIA. Sure. The stock ran a lot into the number. We're seeing the same stories, you know, unfold here. Broadcom's up almost 8% this week, or at least in one week. Yes. here broad comes up more almost eight percent this week or at least in one week yes well the latest little spurt notwithstanding i think that the the distinction between this and like an

nvidia is that it started from a position of being you know considered not that much of a growth player so this is almost just a growth kicker to what had been a very slow and steady, reliable value play within semis. So it's really just adding that extra little bit of juice to the story. You know, whether it's deserved every penny of it right to this point or not is a question. But I think the combination of it being a very good operator, a good strategic acquirer, and all that is still underway, I think helps people get comfortable with it. I also did note that the consensus sell-side price target is under where it's trading right now. It's like 917. So it's almost as if this bump in the stock has taken the street by surprise because they were used to slow, steady, boring Broadcom. Joe, Stacey Raskin on

with us earlier is like, this is totally legit AI play. 100%. They're already realizing it now, too. He sort of pushed back on this notion that at least part of what they're seeing is quote unquote hype. He said it's real. Absolutely. I believe it is real.

And management has spoken towards the ability for AI sales to potentially double. To Mike's point, and it's a strong one, it really was a forgotten semiconductor name. Why? Because it had the dividend yield, it was reasonably valued, and it didn't really offer you the type of revenue growth that you would see in, let's say, an NVIDIA or a Marvell.

So it was kind of forgotten. And then here comes AI, the introduction to AI. Just a quick note on this stock. This stock has a remarkable streak going. Ten consecutive quarters, the stock has been higher the day after earnings. Remarkable streak. Let's see if we can make it 11. I'm sure it's going to be the one that we miss on.

But the stock is trading near its all-time high. And I do think it has the ability here to continue to move further higher. Mike, what should we think about this? I was going to say I thought you were going to mention a different streak, which Bespoke just put something out about, which is 12 straight quarters of what they call a triple play, right, where you beat on earnings and revenue and then also raise guidance, which is a record or at least ties a record.

So, you know, again, you'll see maybe we've, again, gotten the eyes a little bit too big going into it. But, you know, it doesn't seem like it's reached kind of valuation escape velocities. We'll see what happens. So another one of those questions, though, you know, they dare I say they better raise guidance or the guidance better because NVIDIA reset the game for a lot of these companies whether they like it or not yes well that's true and you know maybe we'll get reminded that a very large percentage of broadcom and we knew it all along until the last eight months was kind of slow steady basic stuff even on the software side you know let's let's remember that as well so yeah i mean it's it's not reallyVIDIA, but again, it's sort of more catching up or getting a little bit of an extra, you know, gearing on AI that it didn't have before.

You also have the VMware acquisition, $61 billion. Hopefully that closes the end of October. So you want the confidence from management on whether that in fact is going to be the case. But I think we need to go back and refresh this negative reaction for nvidia yes over the course of for a moment maybe a 20 yeah over of course 24 48 hours yeah negative reaction but nvidia is pressing right against 500 once again i think the alt the high was somewhere around 502 so was it really that bad of a reaction not so sure i mean the stock put in a new closing high this week in the last couple of days, not on an intraday basis, but as you said, it's like 502. Yeah.

I mean, look, I've been looking at a lot of the work, you know, aside from the fundamental story, which everybody's embraced. I think the big question is, can it be exactly that easy that the $1.2 trillion stock that everyone has decided is the main way to play this long-term trend is exactly the best and main way to play the long-term trend. It doesn't make you doubt it along the way. I mean, we'll see. Maybe it can go for a while like this. I know the 500 strike for the NVIDIA options is this massive, massive clustering of exposure.

So it's got a little magnetism in that direction. Perhaps a lot of it expires tomorrow. Hey, let's not forget about Okta and CrowdStrike and CRM, which all had good earnings, all had good guidance. All of those stocks were up quite nicely today. It just underscores, I suppose, Mike, that tech earnings have been good. They've been largely good. You don't want to stick out like a sore thumb and deliver a dud. They've been pretty good. I mean, want to stick out like a sore thumb and deliver a dud. They've been pretty good. I mean, obviously, there's distinctions among all those.

Your Octas and your CrowdStrikes have had definite resets in terms of the stock price and expectations. And reinforcing the idea that even if the pie is not growing as fast, it's still mainly growing. And you have some winners like this. I think CRM is more interesting as an operating story. Everyone is pretty happy that they're going to be throwing off a lot more free cash than they were before. I appreciate it. Joe Cernan, thank you.

Mike, thank you as well. What a month. We're closing it up. It will go out negative today, but boy, it's a tale of two months for sure.