Closing Bell - Closing Bell: Tech Trade in Trouble? 10/25/23

Episode Date: October 25, 2023

Is the much-talked about tech trade in some serious trouble or not? Malcolm Ethridge of CIC Wealth owns several big tech names and he gives his take on the Nasdaq sell-off. Meta shareholder Nicole Webb of Wealth Enchancement Group’s Nicole Webb breaks down what she is watching when that report hits after the bell. And, Gabelli Funds’ Kevin Dreyer is flagging some key under-the-radar stock plays that he is calling “underfollowed and unloved.”

All right, Kelly, thanks so much. Welcome to Closing Bell. I'm Scott Wapner, live today for the Schwab Impact Conference right here in Philadelphia, where thousands of financial industry insiders have gathered, including the co-CIO of Gabelli Funds, Kevin Dreyer. He'll join us in just a little bit with his outlook for the markets, the best way to play them in the months ahead. In your meantime, the scorecard with 60 minutes to go in regulation and the release of the most, at least one of the most anticipated earnings reports of the season. Meta, there's the stock. It's down today.

What a struggle it is for tech today after those results from Alphabet. That stock is suffering through its worst day in at least a year. Microsoft, the only mega cap tech stock in the green. And even that's not up that much tell you what without it though the dow would look a lot weaker than it currently does and speaking of industrials boeing the big drag today after cutting its delivery numbers as for interest rates very much the story to the 10-year initially slipping but take a look at it now because it's moving back towards five percent 4.95 that's the highest level of the session today.

It does take us to our talk of the tape in this final stretch. Is the much-talked-about tech trade in some serious trouble or not? Let's ask someone who counts many of those stocks as his key holdings, Malcolm Etheridge with CIC Wealthy joins me right here on our setup at Impax. Good to see you. Good to see you. Good to see you. Now, are you going to tell me that's why I sold alphabet Scott months ago? What do you make of what's happening in tech today?

And as we ask that question at the very top, is this trade now in some serious trouble? Yeah. So I know it might surprise you to hear me say it since you beat me up so bad the last time I saw you on selling that alphabet holding. But I actually think what's happening in that name is a little overblown I think that realistically the little bit of give back they had in the cloud computing space really shouldn't matter in comparison to their core business which is search right and so the fact that the market has penalized them for coming up short in cloud doesn't make a ton of sense all right so Stephanie link sees the pullback, as she said, on halftime as she buys the stock,

right? It's a central question to the question I asked you, or central answer. Is the tech trade in trouble? Well, it is if it continues to go down and there are no buyers. The question is, people are going to buy the dip, and then that's going to hold up this trade despite what is an ugly day. I think people are going to buy the dip and then that's going to hold up this trade despite what is an ugly day. I think people are going to buy the dip just as a natural reaction because that's what we've been doing all along. And you also have the folks that were just kind of on the outside looking in in the first half of the year. As far as tech is concerned, they rotated out in 2022 because that wasn't the trade in favor last year. So there's going to be some dip buying trying to make up for lost time. But I don't think that it's going to make enough of a difference i think that amazon is really what's going to make all of

the difference when they report uh tomorrow that's going to tell us whether mega cap tech hangs in there and we can turn the corner as you said microsoft is doing everything they can to try and help out here but really it looks like just the least dirty sock in the hamper right now yeah for a market that's why do you say amazon is the key to the whole thing? Well, because Amazon has the power to step in and reinforce what we've heard from both Microsoft in the cloud computing space, as well as Netflix in the digital advertising space, right? People don't really think about Amazon as a powerhouse in digital advertising, but they're in third place globally, right behind Meta and Alphabet.

And so I think them telling us that they have positive numbers to report as far as digital advertising is concerned could be the thing that turns the corner there. See, I thought you were going to say Apple holds the key. I mean, it's the biggest stock in the market. Now, it doesn't report this week, but there's, you know, there've been numerous announcements around the stock.

First you had, you know, the issues in China. Is Huawei taking market share? Then they announced yesterday a new event for Max. Then we hear today about raising prices. How much does Apple hold sway at this moment in where MegaCap goes? Because that stock chart hasn't looked good either. It feels like the market has already turned its back on Apple, right? You mentioned they have a China problem, right?

That's 20% or so of their revenue. And then they also have a problem of diversifying their revenue mix, right? They have to get away from the 50 plus percent that is the iPhone. But I think the market has already kind of baked that in and is now looking for another lead horse, which it looks like Microsoft is trying to take the helm as. And so as far as Apple is concerned, I think really as long as they don't come out and disappoint too much, we're already expecting another quarter of disappointing revenue numbers. I think as long as they don't come out and disappoint too much, we're already expecting another quarter of disappointing revenue numbers. I think as long as they don't come out next week and disappoint too badly, the market's already kind of baked that in. I think really Amazon is where the focus is going to be since Alphabet has kind of disappointed slightly.

I don't want to gloss over Microsoft at all because it is the only mega cap tech stock that is currently green and you do own that. So how do we feel about this one now, given what their results were relative to what Alphabet delivered? You saw the re-acceleration in cloud growth for the first time in a couple of years. And we forgot all about cloud, right? Last year was all we could talk about and this year we kind of forgot about it, right? And I think that Microsoft's story is compelling in the sense that they're now

talking about marrying the cloud business with their AI capabilities in Azure and that is what is leading to more enterprise sales near term right so you have a lot of people trying out what they've brought to market so far and they haven't really hit their stride as far as charging for it which is a big deal for them now you don't own meta i don't but now i feel like the pressure is ratcheted up i i love what joe terranova said earlier today that the magnificent seven at least in the current market has become the magnificent five tesla reported earnings that stock has not traded well at all now we we have Alphabet down, as I see it here, near 10%. It's one of the biggest declines we've seen for that stock

in a year. We cannot afford to keep chipping away at the Magnificent Seven and say, well, now there's only five that are good. Well, now there's only four, because these have in large part held up the market in the absence of a lot of other stocks. Yeah, I think that's a very good case. I think that's a very good case. I think that we're running out of ways to explain away why the S&P is still doing well, right? We always say, well, if you strip out those seven, then the S&P is only what, up 1% or so for the year.

You're taking away more and more of that firepower because if you take away meta, you also take away all of the return it brought to the table through the year. You take away alphabet, you take away 50% or so year to date, even with the give back. And so you're right. As you start to chip that away, you start to lose a lot of that argument. But I will say in the defense of Alphabet, they're probably now fairly valued where we were worried about all these tech companies being,

you know, average one of the magnificent seven is 30 or so percent, 30 or so times. Yeah. They're somewhere like 20. And so maybe it's now fairly priced and it is a time to pay attention. Oh, okay. I hear where this is going. So are you stating the case here that you're going to be coming back on with me and telling me that you bought the dip in Alphabet? No, I'm not. So I said that I was selling it on the face that they were getting left behind in the

AI conversation. They were going to give back a lot as far as search is concerned. And if you pay attention, Satya Nadella said, I want to make alphabet dance, right? If you pay attention to the numbers that they reported, they reported a 10% growth rate in their search and news business. That wasn't lost on me. That's a really big deal because every one percentage point that they can gain in market share away from Google

is $2 billion estimated in revenue that they take away from their chief competitor. That's a really big deal to me. So I still don't think that from that perspective, right, 90 plus percent of their business model is search. I just don't think that they can get away from cannibalizing their business, chasing the AI narrative. You know what the interesting thing on that note is as well, is that if anything, what happens today is at least, at the very least, from a narrative standpoint, Microsoft continues to distance itself from Alphabet, right? What was it? Three whole points of Microsoft's growth came from AI, right? So that's just another reason for people to say, you see, that's the leader. The one that's down 10% today is the laggard.

They had the opportunity to lead, and now they're going to trail. Here's the thing that really jumped out to me in that report. Amy Hood this morning said something to the effect of the 11,000, I think, is the number of customers they had in the Azure business that were using their AI, co-pilot enabled Cloud business, that number is now 18,000 one quarter later. So with that level of growth, that's where I see the trend line going for Microsoft.

It's in that enterprise Cloud enabled by AI, and I think November 1st, they're rolling out all the co-pilots, they're going to start charging $30 per seat for. Right. That's why regardless of what happens in the broader market, as far as AI is concerned, Microsoft is the number one true winner, save for maybe NVIDIA.

Yeah. Well, because they have the ability to already monetize something that many people can't quantify at all because it's such into the distant future. Now, there is another issue for the markets, which I want to bring in Lauren Goodwin today from New York Life Investments to join the conversation as well. And Lauren, it's good to have you with us. I mean, this is like the bull's worst nightmare today. Not only is mega cap tech selling off hard, but interest rates are going back up. We can't have that. The 10-year is going back towards 5% as we speak.

What the market price activity has done today is confirm two trends that we're seeing make a big difference in a winning investment strategy for this period. The first is that there's really no clear macroeconomic narrative. And that means equity market leadership has been and is going to continue to give and take it away. That means that stock picking quality earnings are high focus for us at this time. The second thing that's happening or that we're seeing is that the dynamic in technology is pointing to the reality that we're likely over the next 12 months to have to see a broadening exposure to some of the trends that have lifted technology this year, artificial intelligence. So that means digital infrastructure. It might mean the small and medium sized growth companies that are profitable, that are adding to this space, as opposed to relying just on the top seven companies, as you've been discussing. Do you personally think that the tech

trade, Lauren, is in trouble more broadly? I think it's in trouble for the specific seven companies that have done so well this year, not because these aren't quality companies printing quality earnings, but because their valuations have already risen so high. Now, do these top tech companies see the sell off and bring the market down with them? I don't think that that's the story that's going to lead the market back into bear market territory. I think that comes when we see recession come. And in that circumstance, it's not likely to be the top seven companies that are really struggling. It's instead the market that struggles with a broader narrative around where the economy is headed from here. And so the type of weakness that we've been seeing in the past couple of days, I think, is the market digesting earnings rather than a clear market signal. You know, Malcolm, we've gotten a little relief, we thought, on rates up until today. And up until, you know, this very moment is where we're, you know, five basis points or whatever back to 5% on the 10-year. How problematic is this?

Yeah, I actually think it's a real problem. Like back in July, I think, late July, I was saying that we should probably be bracing for impact more than we're preparing for a soft landing, right? We wanted to applaud a soft landing. And I think the bond market is finally agreeing with me. So I was a little bit early maybe in saying that, but what we're seeing happening now in the fixed income market and the curve steepening, it basically is un-inverting the yield curve, it's disinverting the yield curve, but it's not doing it in the way we want it to happen. We would want the Fed to be cutting short-term rates to bring it down organically.

And instead, yields are spiking really fast overnight, which is not a recipe for soft landing. Lauren, are we watching the chances for a late-year rally literally evaporate before our eyes, given what's happening with the Nasdaq and then in the bond market? I think what's happening in the bond market is particularly important in answering that question. The reality for the equity market is that, again, we're not likely to see a big bear market sell off unless we're getting closer to recession. And as you know, that's been our call throughout the year. We've been dogged in it. And what we're seeing in the bond market is yields moving higher because the market is agreeing with the Fed that rates are going to have to be higher for longer. That is

tightening market financial conditions. That is really challenging for borrowers, for economic activity. And so while it's only the latest in what has been a year long trend in slowing economic conditions I do think it makes a material difference and it is likely to sort of chart the path of markets moving forward. You know the other idea Lauren is the more that bonds get cheaper and yields go up they still present to many an opportunity that exists that's just better risk return than going into stocks. And, you know, if you take cash, this is obviously attractive in that environment. You know, if the prospect of yields continuing to go up means bonds are going to get cheaper to some, they're going to say, well, that's where the better value is today.

It's a really challenging task for investors to get back into the market or to think about how to enter the market given the cross-currents that we're seeing. And while, yes, there's much to gain from sitting in cash at near 5% value, there are higher yields elsewhere, as you're pointing out. And so for an investor that's looking to get off of the sidelines, there are a couple of things that we're thinking very carefully about. The first is, where have there been structural changes in the market in the past couple of years that present potentially some more resilience in the economy? You and I have talked in the past about high-yield bonds, typically not what you hold if you're worried about recession, but we see in the high-quality segment of high yield as an example, an opportunity to potentially see some

more resilience than we typically have in the past. And for investors that are looking to get in because there's potentially more of a duration opportunity, there we see opportunity in the municipal yield curve where we haven't seen as much inversion, disinversion activity. And that sort of duration barbell is potentially quite attractive. Yeah. What about other areas of the market? We spend so much time talking about Malcolm technology and for obvious reasons it's the biggest sector out of the S&P. Discretionary, very weak today. There are concerns about what's happening with the consumer. What about staples for example? Let's talk about investment ideas beyond what seems to take the the day in the conversation

every day. Yeah, well, if you'll allow me, I think there's even opportunities within tech other than the Magnificent 7 or the S&P 7. You've got a microphone on. The stage is yours. You're here at Impact. I will allow you. I think about a company like Spotify, which I own. It got whacked back in July because they announced a price hike and the market didn't like that. I bought more at $ 140 where it fell. And I'm glad today that I did because the market rewarded them now for these positive numbers. Daniel Leck basically told us in July, I think by Q4, you can expect us to actually turn a corner, right-sizing the company, getting away from

over-investing into the podcasting business and cutting headcount and such. And the numbers they just reported a couple of days ago bear that out. Right. So if you think about a company like that, that isn't part of the Magnificent Seven, still is tech, but deserves some respect, I think. Yeah. Lauren, what about other areas outside of, you know, where Malcolm sees some opportunity and is, you know, not afraid to step in? But what else is out there that looks decent? Well, look, as you pointed out, there's been some more defensive tenor to the market in the past couple of days with consumer discretionary and high beta looking a little weaker, utilities and staples looking a little bit stronger. But I'd caution investors not to take the bite too quickly when it comes to market leadership, because, again, the macro signals here are really mixed. And so, as you're both pointing out, good old boring quality is

likely to be where the winners and losers come from for the next few months. And that means looking at interest coverage. It means looking at quality earnings. It means that really reading the day-to-day signals of how these companies are performing, how they're passing costs on to consumers, more than what the macro environment is going to give them. You know, what about, Lauren, D.C. risk? We just had the election for the speaker. A hardline conservative win the speaker of the House. We are going to be talking about government shutdown again as the calendar turns into November. I don't hear very many people talking about the risk of a real legitimate and longstanding government shutdown

and what the impact that could be on the markets, not even considering what's taking place geopolitically over in the Middle East. Well, when it comes to the near term impact of a government shutdown, we know that the longer the government has segmented closures, the more challenging it can be for a consumer that's already stressed by higher inflation, already stressed by higher borrowing costs. But when we look to the next 12 months, because we're just entering into the 2024 election cycle, we're really concerned about the conversation around fiscal sustainability moving forward. That's not to say that fiscal sustainability is a problem today, because as much as both

sides of the government have been spending, nominal growth has been high, which can help to sweep some of that under the rug. But there's a real conversation around which types of programs, which we know impact sector winners and losers, are going to be seeing their light in the sun over the next year. That's again, that's going to be a under the macro surface earnings quality type of story, but it's one that's going to start playing out, I think, very soon. Malcolm, I'm going to let you answer that same question. Events that may have an impact on the market that, you know, to some degree, surprisingly, have not. Middle East, and again, the prospects of a government shutdown, drama in D.C.,

what has been a rather chaotic period down there. We finally at least have a Speaker of the House. I'm going to go back to the economy, because tomorrow's GDP number scares me a little bit, right? I'm seeing economists' estimates that it could be a 4.5% increase over last quarter, which flies in the face of a Fed that is saying that it wants to be able to bring spending down, get the consumer to chill out and stop spending. But the consumer is still going, right? Which means that, yes, we probably won't get that hike that everybody has decided we won't

get at the end of the next week. But we might in December or we might in January, which could really make a difference, right. I heard you ask the question yesterday, are we closer to four or are we closer to six as far as the rate hikes? I'm concerned that the Fed could have to hike again, which could push us closer to 600 basis points, not coming in the right direction. Yeah. I appreciate you being here. It's good to see you. Malcolm Etheridge here at Impact. And Lauren, we'll see you soon. I'm sure of that. We'll see you back at the New York Stock Exchange. Let's get to our question of the day now.

We want to know, is the tech trade in trouble? Do you think it is? Head to at CNBC closing bell on X to vote. The results are coming up a little later on this hour. In the meantime, a check on some top stocks to watch as we head into the close. Christina Partsenevelos is here with that. Hi, Christina. Hi, Scott.

Well, let's start with shares of a firm dropping today after Compass Point downgraded the stock. Paris-listed payments company Worldline slashed its outlook, blaming a pullback in overall discretionary spending. That's sending other fintech stocks lower right now. You've got PayPal shares down nearly almost 5 percent, 4.5 percent. Blockdown closer to 9. A firm you can see that drop is down 15% right now. Switching gears, more red. Shares of Texas Instruments hitting a 52-week load today after a weak Q4 forecast in their earnings report last night. The company makes analog and processing chips. And they warned that although they saw growth in the auto sector, even with the UAW

strikes, they were still hit by weakness in industrials as well as China. Numerous analysts did lower their price targets for Texas, and that's why shares are down almost 4 percent. Scott. All right, Christina, appreciate that very much. Christina Partsinello. We're just getting started here at Impact. Up next, counting down to meta, the social media giant reporting after the bell this evening. A crucial report coming amid a very ugly day for the NASDAQ.

We'll hear from a shareholder with what she'll be watching when those numbers do hit the tape. We are live from Philadelphia. We're back right after this. All right, we're back in Philadelphia. NASDAQ, S&P both sinking today after Alphabet missed analyst estimates. It's led to a broader tech sell-off today. So how might MetaFair, as it gives gears up to report earnings after the bell, here with what she'll be watching, Meta shareholder Nicole Webb of Wealth Enhancement Group.

You know, Nicole, from the notes that I've read today on your Meta position, it sounds like you're not a very thrilled shareholder. Am I right? I would say I am a cautious shareholder. There's certainly going to be a ripple effect across technology in the coming weeks. When it comes to meta specifically, though, Scott, when we are looking at meta in the rear view lens, we expect to hear that ad revenue last quarter looked good. Very similar story to what we heard from Alphabet, that layering AI has become incredibly efficient in helping to target audiences. It's

increased to lower expense, higher revenue in the ad department. However, it's hard to look through the lawsuit pending on algorithms and the effect on children that we've seen filed in 41 states. And so when we think about taking the existing modeling, layering AI on top of it, that gets called into question. And so what we have to start looking for then is below the surface, meaning the lesser talked about parts of meta. Can we monetize WhatsApp? Can you monetize chat through large language models? Is augmented reality or

glass is something that is less than 20 years into the future? And so we really are calling into question where meta goes from here in light of some of these recent calls out against the algorithms and how they affect families. I know, but but the stock is up better than 100 percent right here to date. What's there to be so cautious about? I mean, it's not like we haven't had regulatory bluster around this company specifically and the entire mega cap universe for the last number of years. And it, for the most part, has never impacted any of these stocks in any meaningful manner. Yeah, and you're right. And, you know, it goes back to can this time really be different? And perhaps it's a bit of bias to the experience of these magnificent technology companies.

And look, Scott, I've been on the record with you saying, you know, I believe mega technology is a freight train and it is going to stay in momentum. When it comes to meta specifically, we do have to pay attention to what has kind of been really below the surface and is being pulled forward. And we do believe it's meaningful. At the same time, we also know that they have a history of not walking the tightrope well in terms of innovation while remaining disciplined and spent. And so when we think about layering on subscription services or heightening user efficiency, we start to then think about what type of real revenue are we creating there? And is it enough to say that what has been priced in from layering AI on top of existing models, assuming existing models can continue and that the penetration remains as sticky as it is today, we really do start to call that into question. So again, look at those last 12 months.

Look at where the stock sits. Look at the other 490 companies. I know you saw my notes on that, too. This is where we just go, okay, well, if we have a neutral position on meta, I'm not saying we're running for the hills, but at the same time, if we're going to think about deploying cash outside of Treasuries today, is it into meta? And that is where our firm is saying no. Right. But I mean, you a little bit ago called mega cap tech a freight train. I think that's the words you used. I mean, some are wondering whether there was just a

derailment today in this trade broadly. Are you in that camp? I'm not in that camp, actually. So I would just go back to not all megatech companies are created equally. The softness around the response to Alphabet stock today and the pullback there, I would say, is more this competition narrative in cloud, Microsoft versus Google. When I think about Alphabet, I tend to hone in on the fact that I, and I speak not broadly on behalf of the firm here, but for myself, believe that YouTube is the leading media company in the world. When you think about the number of subscribers to Netflix,

where Netflix has an actual cost to the production of what we watch, versus a YouTube where we have this expected experience of ad, we know about layering AI on top of that, and the cost of the content is at the expense of someone else, and we have hundreds of millions more subscribers to YouTube. This is where I think we are a little hyper-focused on some of the technologies of the past and getting behind ourselves and thinking about where the applications of new technologies will create expansion of business as we know it today.

And not just in the sense of of going downstream all right we'll leave it there as we approach the bottom of the hour here stocks uh suffering a considerable sell-off today especially tech nicole thank you we'll see you soon that's nicole webb joining us here on closing bell up next some under the radar stock plays beyond the mega cap space well everybody's been watching that our Our next guest, well, he's been betting on some key names he calls underfollowed and unloved. He'll tell us what they are next live from Schwab Impact here in Philadelphia. Welcome back to Closing Bell live today from the Schwab Impact Conference here in Philadelphia. NASDAQq and s p 500 both hitting their lowest levels now in

nearly five months today being dragged down by big tech and that after alphabet's earnings our next guest though finding some under the radar opportunities outside of the mega caps kevin dreyer is the co-cio of gabelli funds joins us right here live it's good to see you good to see you so there are opportunities outside of mega cap tell me where i know who would think it um so yeah i mean if you look outside of those uh that magnificent seven uh the market really hasn't done anything this year i mean almost all the returns been from that and even despite that pullback today so we like companies with pricing power especially to deal with inflation and certain areas like live events and sports are terrific.

I mean, a lot of these other areas, though, are cheaper for a reason, right? Many are more cyclical, more at risk. I'm taking small caps, for example. Small caps have gotten crushed. And for obvious reasons. I mean, if you're worried about a more dramatic economic slowdown, you're going to see the most acute pain in small and mid-cap stocks. So why is now the time to look at those, even as we still have serious questions about the trajectory of the economy? Yeah, well, we're bottom-up investors, as you know, so we're not buying the whole market,

even of small-cap stocks. We're buying specific names. And companies like Atlanta Braves Holdings, which, as I said, it's painful for me to talk about baseball today as a Philadelphia Phillies fan. But B-A-T-R-A and K stocks at 35 to 38. You know, the value of that company is really in the sports team, which isn't going to be affected much at all by interest rates or the economy.

And it was just split off from Liberty Media and very likely to be probably sold in the next year or two with a value of probably mid-50s or even higher. When was the last time you added a stock to your portfolio? Oh, we add stocks all the time. Yeah, we're adding stocks constantly. We've got over 30 analysts who are scouring the world, and especially when markets come in like this, we like to let volatility serve us and, you know, and add to initiate new positions. Do you feel like volatility is going to pick up even more? I mean, you obviously, though you're a bottoms up investor, you have to have a bigger view about what's happening

relative to interest rates, whether you think there's going to be a greater upset in the stock market, whether we were primed for an end of year run that is now not going to happen. How would you assess all of that? Yeah, I mean, look, interest rates with a 10 year near 5%, I mean, that's competitive for a lot of stocks. So stocks have competition now, which is probably a good thing. The question is how much is that priced in to specific names? And I'd say we're probably in the rates

are going to be higher for longer camp. Inflation's come way down, but there are signs of it ticking back up. We've got a lot of strikes going on, labor negotiations. So wages will probably still go up and that part of inflation might be sticky. And that's why, again, pricing power is very important for us when we look for new names. Does higher for longer also mean then that some of the stocks that you've been looking at from the bottom up may have further to go to the downside before they become even more attractive

if just we're gonna be in a higher rate environment that obviously leads to the possibility of more volatility. Sure, but I would say that how we'd look at it is I'd look at a company like Bellring Brands, for instance, BRBR. BRBR is the ticker. So they make Premier Protein, protein shakes, sells for two to three dollars depending on the pack size.

They just grew 20% last quarter. The whole food industry is struggling with volume growth because they've raised prices so much to cover cost inflation, so volumes are negative. This company is growing 20% right now. They just expanded capacity, so they've got a great runway of growth. About two-thirds of their sales are through only Costco and Walmart. So really just two retailers that have got a lot of distribution opportunity. And it was IPO-ed out of Post Holdings and then spun off almost two years ago. So that's another company that could be very likely to be sold. I think it would be very attractive. It's one of those bigger food or beverage companies, for instance. So if rates go from 5% to 6%, will that be a negative? Yes, but I don't think it's gonna change the business

of Bellring Brands, and if anything, it's gonna, you know, consumers looking for value-oriented, you know, on-the-go nutrition alternatives. How do names like Deere and Caterpillar fit into that paradigm that you described? Because they are among the top holdings for the Gabelli Asset Fund, at least according to latest filings.

Yeah, no, so we followed the agricultural ecosystem for a long time. I think on a longer term basis, it's got a great runway. We've got a growing global population. They're selling equipment into farmers. They're looking at precision ag and doing other things to be more value add. So I think it's a great long term story. But in the near term, yes, as rates go up, that makes the financing of equipment a little more challenging. Yeah. Appreciate you being here. Thanks for catching up with us. Kevin Dreyer joining us from the Gabelli Funds, as we said, here in Philadelphia. Up next, Apple price hikes the tech giant, upping the cost of some of its key services today. We have the details how it might impact that stock as well. Just after the break, Closing Bell. We'll be right back. All right. We're 15 minutes or so

from the closing bell. Apple now hiking some prices on its subscription services, including Apple TV Plus. Our Steve Kovach is here with those details. Hey, Steve. Hey, Scott. Yeah. Apple raising prices again for some of those services. Apple TV Plus among them. Apple TV, by the way, got its second price increase within just the last year, going from $4.99 a month to $6.99 and to $9.99 today. That's not all, though. Apple One, that's the bundle of Apple services like iCloud and fitness classes, also got more expensive, plus increases for Apple Arcade, that's the gaming service, and Apple News. Apple needs services to grow faster as it faces falling demand for this iPhone 15 lineup. But those

subscriptions for Apple's own services are only a small piece of the puzzle. Apple makes money by taking a cut of digital subscriptions made through third-party apps in the App Store. Last quarter, Apple said it had one billion of those subscriptions. Big earnings report coming up a week from tomorrow, Scott. So we're expecting Apple to deliver its full fiscal year of declining sales services more important than ever, Scott. You know, and maybe, Steve, more questions than ever, too, for Tim Cook and the folks there on the earnings call in terms of where is demand for the 15, as you mentioned? What's happening in China, right, between some of the regulatory issues that have that have gone over there where's market share relative to huawei now you have another event on the calendar regarding i think it's the mac so there's just

a lot of cross currents around this name yeah there there are two important things you just mentioned there the huawei piece is super interesting because apple had benefited for years when Huawei just wasn't making phones due to those restrictions they had from the United States and you know Apple spent those years bragging about how many switchers it got moving from Android to iPhone and now we're starting to see some evidence at least that is going the other way now that that Chinese brand is back and then to talk about the Mac we're expecting new Macs next quarter but frankly the

Mac business is just really sinking over the last couple of quarters. After the big boom we saw in those first couple of years of the pandemic, we're expecting a new desktop version, the iMac, coming out next week. And if that is the case, I doubt that's going to be enough to move the needle. We're going to have to wait until next year for that new M3 chip, plus more competition, of course, from Qualcomm and NVIDIA getting into the space too, Scott. Yeah, all good points. I appreciate that, Steve. Thank you, Steve Kovac. Last chance to weigh in now on our question of the day. Speaking of tech, is this trade in big trouble? Head to

at CNBC closing bell on X. The results are coming just after this break. Question of the day results we asked, is the tech trade in some serious trouble? The majority of you said, oh, yes, it is. Although, to be fair, we'll call it a split. 50.2, 49.8, which means Mike Santoli settles it next with his last word. Also up next, your earnings rundown. IBM Meta just moments away from reporting in overtime. We'll break down the key metrics and the themes that you need to be watching. That and much more when we take you in the Market Zone. We're now in the closing bell Market Zone.

CNBC Senior Markets Commentator Mike Santoli with me here in Philadelphia to break down the crucial moments of the trading day. Plus, we're watching two major earnings reports in overtime tonight. Christina Partsenevelos, back for What to Watch For with IBM. Julia Borsten is here with What to Watch for Meta. Mike Santelli, I begin with you. What I said to a guest earlier today, this is like the bull's worst nightmare today. Mega cap trades down real hard and rates start going back up yeah in a sense there's definitely a little bit of residual hope that that would be the rescue package which would be uh earnings come in okay we these are our favorite

stocks they ratify our faith in them uh didn't quite work out their way i would say uh there's also that old like saying about writing like kill your dar, right? Whatever you're kind of holding to, you think is very precious, you have to have a challenge. That's the process that's going on. What I find interesting is everything that's kind of coming together. The indexes are checking back on these first quarter levels, right?

This is the high from February 2nd. We had that very exuberant start of the year rally. That was right under 4,200. The equity index futures, the S&P futures, have bounced off the 4200 round number a couple times today. Now that's at a premium to the cash. Equal weight undercut the March. So basically, you really believe in a soft landing?

You really believe that these stocks needed to be up here? One thing I'll say about the Google reaction, though, is this is a $105 stock six months ago. It ramps to $140. It doesn't really pull back at all. And it took it all at once. And now it's at $125. There's no real shame in that to be at that level. But obviously, people were complacent about what those numbers were going to be. You know, Amazon hasn't gotten talked about a lot today, it reports tomorrow of course so everything else is taking the air out of the room down five and a half percent

yeah going into that number just catches your attention and when you look at why is discretionary so weak today well Tesla's been weak trading awful and then Amazon too and it's interesting that that was the markets interpretation maybe of the Google Cloud shortfall, which was to say not Google ceding market share to everybody else, but just that Microsoft may be outperformed. So we'll see. I mean, look, the setup matters more than anything when it comes to the reactions to these reports. It's been mixed.

Microsoft hanging in there. But it's very much a protect yourself type market because the top three upside contributors to the S&P, Microsoft, UnitedHealth and Waste Management. That's called defense right there. Yeah, exactly right. And Christina Partsenevelis, speaking of tech, but different tech, IBM earnings in overtime. What do we expect? Yeah, well, Wall Street pretty much lacks a clear consensus when it comes to IBM. All analysts agree that the surging U.S. dollar is going to add incremental headwinds to revenues in Q3 and this current quarter, a problem we also saw last quarter. But they can't seem to agree on the growth trajectory for IBM's software and consulting business.

Both of those two businesses contribute roughly 75 percent of total revenues. Bernstein says IBM should see extra revenue from Aptio, a software firm that helps managers or businesses manage IT spends. IBM acquired it in early August, so that's going to be a positive for software. But UBS points out that another software division, Red Hat, is expected to decelerate 10% year-over-year. They lowered their software estimates for IBM, which is a negative. Expect additional commentary about customers for WatsonX, an AI studio that helps developers build generative AI models. It just launched in July.

Lastly, consulting competitor Accenture was cautious in their recent earnings report, warning of slower decision-making from companies. Morgan Stanley worries the same demand weakness could hit IBM. So key metrics to watch tonight, or I should say in the next hour or 20 minutes. Will IBM stick with its full- growth of 3 to 5 percent and free cash flow of 10.5 billion? Luckily for those current stockholders right now, this is a defensive name with 60 percent of revenues reoccurring and an almost 5 percent dividend yield. Scott. All right. We'll see you in OT when those results come out. Christina Partsenevelis,

thank you very much. And speaking of results in OT, Julia Boorstin, and then there is Meta. I'm wondering how many times we are going to hear efficiency out of Mark Zuckerberg, because that's been a winning strategy for him in that stock, hasn't it? It has indeed. Now, we do have to note Meta shares are down about 4% today going into the close, but the stock is still up nearly 150% in the past 12 months. And this is because analysts and investors expect the company to accelerate its revenue growth. Projecting Meta's revenue growth rate will reach 21% in the third quarter, up from 11% in Q2. And this would be its fastest rate in two years if it hits that expectation. Now, Meta is expected to benefit from AI, improving ad creation, targeting and measurement,

better monetization of reels, tapping into the opportunity to use Messenger and WhatsApp to drive ad revenue, plus an overall stabilizing and now growing ad market. So we're going to have to see what Meta says about its expenses. And yes, this self-proclaimed year of efficiency. Plus, we'll be listening for more about costs around its Reality Labs division with a new headset out this fall. Scott, despite Met, I turn back to you. We're going to have the two-minute warning in just a second. I also think interesting today, the NASDAQ is going to end up closing close to its lows. These mega cap techs that are selling off hard are not being bought yet. Not yet, no. No, that's right. No, we have to have a more proper test at this point. The destabilization coming out of the bond market. Is got everybody a little bit hesitant I think. To just sort

of add some risk you know we we talked about. How I talked about earlier the ten you had a hard time getting up and through five percent. But on the pullback. We never even touched for a. Four eight. Was the high from the first part of

this month my point is. That uptrend is in place until. If you know it falls apart. Bill Ackman closes his short. We thought that was going to be the bell ring. Maybe not. So all that stuff together does put in a challenge to exactly what people consider a bargain to buy a dip.

Meta, of course, it's going to go out at $300. $300 a share is where it completely fell apart in early 2022, and it fought its way back up there. So I do think that you are at these decision points for a lot of these names. A lot of them, again, have a lot of profits in them to be taken. Still don't think that the leadership has been busted altogether. It is a very fickle market as well. I mean, let's be honest.

Meta comes out with a good report. Amazon comes out with a good report. We may have a complete reversal of the kind of carnage that we're seeing today. That's absolutely right. And I think it's low conviction because the macro is moving fast. These stocks are up a ton. We don't really know what got priced in. And that's where it leaves you.

I mean, just look at Alphabet today. A consensus comfortable long yesterday gets taken apart. Let's see where we wake up tomorrow, though ten year right now at four ninety four. That's going to dictate as you know a lot of the action to to see what happens. Yeah the curve right GDP out so there's a lot to consider. There's the bells- and

there's not much to cheer about today that is for certain especially if you're invested. In those mega cap tech names Nasdaq just going out with a near two and a half percent decline. Does it for us. See you back home tomorrow.