Closing Bell - Closing Bell: The Buy the Dip Binge 9/8/23

Episode Date: September 8, 2023

Is the buy the dip binge still alive? Solus’ Dan Greenhaus and Veritas’ Greg Branch give their expert opinions. Plus, Rashaun Williams of Manhattan Venture Partners sets the table as we await next week’s ARM debut – plus the other big names in the pipeline. And, Jessica Inskip from OptionsPlay breaks down the key levels to watch. 

Welcome to Closing Bell. I'm Scott Wobner, live for Post 9 here at the New York Stock Exchange. This make or break hour begins with a tough week for two tech giants and whether Apple and Nvidia's recent pain will spread to other mega caps or not. Both stocks down about 5% this week, dragging the Nasdaq lower. Here's your scorecard with 60 minutes to go in regulation. The major averages, including the Nasdaq, well, they were up modestly for most of the day. You can see it's evaporating at this final hour begins. NASDAQ, in fact, has now gone negative. The Russell is there as well.

It's been tough sledding over the past five days. Tech as a sector down about 2% on the week. Lots of talk about interest rates, of course, lately. Today, though, they've been mostly quiet as investors assess the current state of the economy, which clearly remains pretty strong. Brings us to our talk of the tape. The buy the dip binge that has kept this market more resilient than some had expected. Is it still alive and will it keep September from getting any messier? Two key questions. Let's ask Dan Greenhouse. He is chief strategist for Solus Alternative Asset Management here with us at Post

Nine. You know, we see the Nasdaq. It's sort of rolled over a little bit. It didn't even get that strong today. Apple and Nvidia are still having some problems. How significant do you think that is? Listen, I think obviously this is the big debate right now, but I think it clearly for me, when you look through the index, everybody's down. But the bulk of the damage is being done by Apple, which is, as everybody knows by now, largely worries about China, overblown or not. NVIDIA, the entire semi space, there's a couple of tech conferences across the street. The semiconductors are speaking everywhere, reiterating that there's weakness, particularly out of China. So NVIDIA is getting caught up in that. Plus the valuation.

Broadcom's down this week. The SMH is down near 4%. Taiwan Semi's down near 4%. Your point's well taken about what's happening in chips. Yeah, but then at the same time, when you dig through the index, through the tech stocks, you note like the cybersecurity names are still doing super well. Old tech like IBM and Cisco, Oracle is basically at a high. I'm obviously not advocating for them fundamentally, but there are these other names across the index. The software space like Adobe is sitting close to a high. There's pockets of strength that are offsetting some of the weakness for these idiosyncratic issues.

Are we in a buy the dip as I raised this question at the top? Are we still in that environment, which is the thing that has kept the market as resilient as it's been? There was some talk that that sort of the flavor of the market had changed to sell the rip. If you're going to get any rip, you're going to sell it. What do you think about that? No, I think it's still a buy the dip mentality. At the end of the day, what you're dealing with in a broad market standpoint is earlier in the year, you're looking out towards the trough and earnings, which now seems almost surely to be the case here in the second quarter, an economy that's continuously proved resilient and now actually appears to be expanding. Q3 GDP is probably going to be stronger than Q2, which itself is stronger than Q1.

And so until something fundamentally changes on that front, I don't know why the bias for stocks isn't going to be higher. Well, Greg Branch is going to join us momentarily. He's going to make the case, as he has for months. And we'll debate it when he comes on. This idea that, well, next week you get CPI, you get PPI, so you get more critical inflation data, a lot of focus on the Fed. You got a meeting in a couple of weeks. So they're going to key off of that. You think they're done or not?

I don't know. On the CPI, I will say, I mentioned this last time, it bears repeating. I don't think people are aware that next week, well, we're closer now, so they might be more aware, but next week's going to be a pretty hot headline number. The headline inflation rate's probably going to be higher for the second month in a row. And through the remainder of the year, some of the things that have brought down inflation, like the airline fares and health insurance, are probably going to start working against you. And so I think you're going to have some stability in the CPI, so to speak. For all year long, I've been saying my target for the end of the year was 2. a half to three and a half for the CPI. That's almost surely going to be accurate,

although probably closer to the higher end of that range. As for the Fed, are they done? I mean, listen, I think they certainly want to be done. But the stickiness in inflation that I just articulated, the jobless claims number that fell back down to 200, the strength you see throughout the economy, I mean, certainly they're not cutting anytime soon, but they might feel it necessary sometime later this year, or at least pressure to maybe, to maybe do one more. Two of the three key inflation sort of gauges, there's like three critical parts to this story. And two of them have really gone in the right direction. Goods inflation is not even close to what it was. Housing services inflation has seems to certainly have peaked. Oh, sure. And is and is coming down. It's non-housing services

that have remained a bit sticky, probably more sticky than the Fed would like. And that's where they maybe need to lean on things more. But at least two of the key three things are going in the right direction. Are we appreciating that enough? Well, yes, I think people recognize, listen, you're past the peak and close to the bottom are two different things, obviously. And I want to say two things. The first on the on the apart on the rent side of things, there's two publicly traded companies, Invitation Homes and American Homes for Rent, INVH and AMH. These are publicly traded single family rental firms. They own 80, 50,000, lots of homes. They're still printing rent numbers in the seven, seven and a half, 8% range. Now, obviously that's not all of the housing market, all of the rental

market, but it's a microcosm of it. And that's still pretty healthy. And with respect to the Fed and everything else is as investors, why this matters, of course, is because if they're going to keep raising rates, you're going to keep leaning on the economy. And there's a great debate right now. I'm not even positive it's still a debate, but a great discussion around whether inflation has fallen from, call it, 9 to 4, because of the Fed or despite the Fed. And the answer to that question and the discussion around it is really important for investors because if the Fed caused inflation... It's even fallen closer to three, I mean, at this point. Well, sure. I mean, the next number will be 3.7, but whatever. Yes,

three to 4%. But if it has fallen from nine to three or nine to four because of the Fed, then monetary policy is having an effect. They don't have to really do very much. Stocks can rally. However, if it's fallen from nine to three for what we'll just simplistically call transitory reasons, monetary policy hasn't really yet had an effect on the economy. And they might feel they need to do perhaps a lot more, two, three, maybe four more hikes. And this is a debate I think Lee Koopman, Lee was on Squawk the other day arguing that the 10-year should be much higher. This plays into that line of thinking. That's sort of outlier perspective, though, thinking that the Fed's going to do all that much. I mean, they've had more people come out this week, suggest that they can be,

they use the word patient, they can be more patient or that rates are high enough. Now, they're not all voting members who are the ones coming out. And it's important to make the distinction between the two, because if you have a vote at the table, it matters more than if you don't. But they are all in the room. That's fine. But if you're not voting, it's a clear distinction that needs to be made. Now, on that note, let's bring in the aforementioned Greg Branch of the Veritas Financial Group. He's also a CNBC contributor. I mentioned you earlier, Greg, because in the face of some of these good stories that we continue to talk about, you remain negative. You don't

believe that earnings have troughed this quarter. You don't believe. That earnings have troughed. This quarter you don't believe in the estimates. That are coming down the pike that suggests that we're gonna start trending higher this quarter. And in the subsequent quarters after that you think growth is weaker than

we would. Want to believe as well and that's principally why you remain negative did I articulate that okay. Pretty well Scott. So so there's a couple of things that that I would probably disagree with. I think if you look at the very nature of spending and inflation, it'd be hard to say

that it was not because of monetary policy. And so when we look at what was spent in July, about $140 billion, $100 billion of that was services, $40 billion of that was goods. When we listened to the retailers, they talked about a stretched consumer spending less on discretionary items across the board. Whether you're talking about Lowe's and Home Depot or Macy's or Chewy, everyone, almost to a store, talked about how the consumer was weakening. And that can only be a result of monetary policy. If it was transitory, we wouldn't see that kind of impact but where that leaves us with that hundred billion of spending on services is we know that services spending and inflation in that those areas are driven by wage growth and as long as we're going to continue to have a very

tight labor market i think the fed's been very unabashed about this is that we need to get to around a four and a half percent unemployment weight for that to really abate. And as long as we're going to see historically low job ads on a weekly basis, I think it's going to be very hard for us to reach that next level down in terms of inflation. And so, yes, I don't. Yeah, I'm sorry. Please finish my bad. Go ahead. No, no, Scott. So very quickly. So, yes, I do believe that the consensus numbers are high. I would disagree That we've reached a trough in earnings yes this quarter was better. We projected negative seven

percent we came in at negative four percent. But we have had three quarters of earnings contractions. In a row now. And I find it hard to believe that post five hundred bits of of fed action probably more. With the direction of earnings. With

with the consumer balance sheet where it is, that we don't have further demand destruction, which in fact the Fed needs, which implies that earnings are going to go lower. But you continue to imply as well, or just directly say that the Fed's going to do a lot more than people are willing to admit. You had what was a way outlier terminal rate of north of 6 percent, 6.25, as a matter of fact. What leads you to believe that the Fed is going to do that when to a person they've come out, certainly publicly, many, and use that word patience, and some suggest that rates are already high enough,

that they don't need to do any more. Why do you continue to believe that, as I told, you know, you guys a few moments ago, those key metrics of inflation have come down and continue to come down? And on top of it, you suggest the economy is weaker than we want to believe that they're going to continue to push it all the way to the floor until something cracks. It is a delicate argument, and I appreciate you recognizing that some of the things might appear to be odds with each other. Perhaps, perhaps. Let me lay it out. So on the one hand, let's distinguish between people in the Fed. Whether you're talking about Bullard or Mary Daly, they have not actually said we're done.

And they may have said, yes, we're going to wait and see and take that approach, but they haven't said that we're done and they may have said yes we're going to wait see and take that approach but they haven't said that we're done and and i doubt that they are because at the end of the day what we see is that we've reached a certain point that we've kind of plateaued at i mean the inflation numbers have ticked back up and yes some of that is probably base effect but uh what we've seen is that it that just about every category has been growing 20 to 30 basis points or north of that for the last six or seven months. And so while we're continuing to grow that way. But. Not correct but twenty to thirty basis points a month obviously annualizes out to call a two and a half three percent or so inflation. That is obviously meaningfully less than the seven the eighth the

nine percent inflation that we've had. And we can quibble about how much more the fed has to do. To get down there and that's a that's a worthwhile discussion. But I guess the question becomes is your argument for meaningfully lower stock prices and less earnings expectations based on the extra call it two or three Fed rate hikes that will be necessary to bring that last inflation out of the system. No it's based on the combination of the fact that we haven't seen the full impact of the 500 basis points that they've already done as well as the fact that i think that they'll do more whether i think they need to do more or not is a separate argument but i do think that they believe that

they need to do more and i believe that they will yeah i mean i would add i listen greg mentioned earlier about how this is death the inflation that's come down is definitely a result of the federal reserve you know again we're going to leave that conversation for another day because earlier about how the inflation that's come down is definitely a result of the Federal Reserve. Again, we're going to leave that conversation for another day because it's super boring, and we're going to lose the audience. What I will say as a pushback on the retailer comment is I'll just point to Visa and MasterCard, two companies that reported not that long ago and had more or less nothing but extremely positive things to say about the consumer. There's obviously issues. You heard it from Walmart and a couple of other retailers. About the the hundred thousand plus income.

Are earner who's now increasingly shopping at Walmart et cetera et cetera. And we know there are issues with basket. But a visa who touches everybody in every sector. Is telling me that they're not seeing a

meaningful change in consumer behavior. I'm going to lean on them and think that for now actually. Look pretty good. Let me point out an even broader measure. If we take a look at the uh fed the i think it's the st louis fed um publishes the delinquency rates across all credit cards which would be even broader than the decent mastercard for uh quarterly and in this quarter we're almost double the delinquency rate that we were

at three quarters ago it went from 1.55 to 2.77. 2.77. Greg, what was that relative to like five years ago or 10 years ago? The level itself is not really the issue. What I'm saying is that we've seen accelerating delinquencies. And if you don't think that that's troublesome, that is certainly your right. But seeing it double in that short of a time, I think forbids that the consumer is quite strained. You know, the other thing I find interesting about your market perspective,

and I'd like you to defend it as well, because I think it is specifically right now it's important to hear it. You look at mega cap tech and I'm looking at the notes that you gave our producer and you think that NVIDIA's pullback is likely temporary which suggests to me the question i asked at the very top of the show whether by the dip is still intact you must believe it is if you think that pullback is temporary and that if mega cap tech is still where that money is going to go on any kind of dip how do you expect the overall market to take a bigger drop? Well, I think this is easy to marry because I expect breadth to narrow, Scott, just as we saw in 2022. So can we reach my 3800 target, which is next year's 225 in earnings times 18 times and still have winners that far eclipse that? Of course we can. And so I think we'll see, once again,

historically narrow breadth around names that are powered by strong secular tailwinds that put up margin expansion, or at least protected margins, and that show a strong relative earnings growth. Going back to our argument about the retail sector, that's exactly what we saw in the retail sector, where we saw Amber Crombie and Fitch

go from 0% margins to 9% margins, where we saw Lowe's, because of their development in the pro sector, see margin expansion and therefore look a lot better than Home Depot, who forecast a 7 to 15 percent contraction. And so, yeah, while most of retail was a wasteland, we saw breadth narrow around those names that showed some performance and execution expertise and that they were going to defend those three categories but i think we'll see the same but breath was narrow for the first six months of this year give or take towards those mega cap tech names and lo and behold what happened the s&p was up 15 the nasdaq was up even more which is the whole reason we're

even here yeah and i and I think about. Go where because and I was an analyst as I think you know that Scott I was like to look back and see. You know where I went wrong in my analysis and I think that that there were two things behind that right. The first is is we

failed to recognize release I failed to recognize. The tremendous amount of stimulus. That was put into the economy in the first and second quarters. And how that recognize the tremendous amount of stimulus that was put into the economy in the first and second quarters and how that postponed the deterioration of the consumer balance sheet. And that's what allowed us to see consumer spending of 150 billion or so in July. So I think that that's one of the factors that we probably overlooked. You know, the second factor

in terms of breadth and these tailwinds is that we really had something of a relief rally. Right. We were all relieved that, you know, that they reached a budget deal. We were all relieved because people started to declare the fight with inflation over, particularly when no one was talking about base effect lapping that nine point one percent. When we saw inflation go down to three percent, course because we were lapping nine percent um so so i think that we saw a breadth narrow to some degree because of that scott because we thought all these battles were over and now it's just a risk on trade and it's time to buy quality assets no i think we were more relieved i mean i think we were more relieved because we realized everybody realized that the economy was in fact for whatever reason

and certainly a large part due to what you just suggested that the economy was just much stronger than people expected it to be even now and that the consumer you know dan their consumer balance sheets may not be what they were 18 months ago uh but they still seem to be pretty decent yeah no and and it's easy to say hey this retailer and that retailer and this apparel company said things are getting really bad, but I can point to others that said they're not. Yeah. And listen, Greg is right. Rate of change matters.

Direction of change matters. And I don't want to dismiss the rise in delinquencies and the trouble that people are having. It's real and it's moving in the quote-unquote wrong direction. But at the end of the day, with housing prices where they are they are with stock prices where they are consumer balance sheets are very strong The labor market remains on balance although there are signs of weakening pretty strong and so for the immediate future when you have The strong economic tailwinds that we've had for the next quarter at least you're gonna have a strong GDP number the issue going forward And really where you need to hang your hat the student loan payment

Resumption is something that we it it's hard to quantify, but it's a thing we've already seen. Student loan payments this past August were a couple hundred million dollars larger than August 2019. People are clearly rushing to either make their payments or pay down their loans in front of the accruing interest. So there are things about which we need to worry. But until I see a deterioration in the labor market, the bias, again, this isn't rocket science. If the economy is not going to get worse and earnings are going to improve, then the bias for stocks is higher.

So, Greg, lastly to you, give you the last word. Areas of the market that you actually like right now, I mean, energy has certainly woken up. Energy stocks have, as have oil prices. What about that. So looking and I think you know what my parameters are. For where I would seek safe

haven- in the equity markets and not define the three characteristics right- defensible margins for margin expansion secular tailwinds and relative earnings growth. Energy is poised to have some relative earnings growth after

the commodities have somewhat. Botted out earlier this year. So I certainly wouldn't be dismissive of that view. But, you know, I think that the cybersecurity sector you guys talked about earlier shows a strong, strong signals of continued demand, relatively strong demand compared to other quarters. And I think we've seen that across the board despite a short term Palo Alto scare. So so that's a that's a category health care services have demonstrated the

surprising ability to pass cost rising costs and rising labor costs on almost in full. So I think we'll continue to see significant earnings expansion there despite the macro environment that I'm expecting. And at the end of the day, I also agree. If I am wrong and this is an earnings trough, then mathematically I'm going to be wrong on my target. And so my target's based on 225 next year, which bakes in a significant amount of

earnings deceleration. And if I'm wrong on that, I'm going to be wrong on my target. Yeah. Well, we'll see. Always appreciate you coming on, sharing your views, defending them and debating. That's what makes a market, as they say. We'll talk to you soon. Greg Branch, thank you. Dan Greenhouse to you as well. Thanks, guys. Our question of the day, we want to know, will the Nasdaq, we're just talking about it, finish the month of September positive or negative? You can head to at CNBC closing bell on X to vote. We'll share the results later on in the hour. Check on now on some top stocks to watch as we head into the

close on this Friday. Christina Partsinevelos is here with that. Christina. Well, Scott, since you mentioned chips, I wanted to bring up Intel shares. They're down about a half a percent lower today after being the only bright spot within the chip sector just over the last few days. And normally I don't get to say that very often. Intel is only 2% away from its one-year high, and just over the last three months, it's seen higher gains than, yes, NVIDIA, AMD, and the SOX index that you're seeing on your screen right there. Why is this happening with Intel? Well, if the United States government increases export restrictions to China, then Intel could become the new, quote, domestic semi-winner, since it's

building out its foundry business here on U.S. soil. I was chatting earlier with a managing director at Mizuho, and he told me Intel ownership is pretty low right now, which means money managers won't want to be underweight this name if it keeps breaking out higher, which could make a new bull case for Intel. Shares of cloud data provider Snowflake are about three and a half percent higher after analysts at D. at DA Davidson rated it a buy. They like Snow's expansion into the machine learning space and its growth rates. That's why shares are up today. Scott.

All right, Christina, we'll see you in just a bit. Christina Partsinevelis. We're just getting started here on Closing Bell. Up next, an IPO comeback. VC investor Rashawn Williams sets the table as we await next week's big ARM debut. Plus, the other big names that are in the pipeline. We're live from the New York Stock Exchange. You're watching Closing Bell on CNBC.

I definitely do feel better about the capital markets. And if you ask me to kind of look ahead, you know, over the course of the next few months, especially if ARM and some of these other IPOs, you know, go well, I think you're going to see a meaningful increase in activity. That was Goldman Sachs CEO David Solomon calling for a revival of sorts in capital markets activity on the heels of chip designer ARM's upcoming IPO, which, according to the FT, is at least five times oversubscribed. Joining us now, Rashaun Williams of Manhattan Venture Partners. Good to see you again. Welcome back. Hey, thanks for having me, Scott. So we'll get to Arm specifically in a moment,

but you heard David Solomon. He feels pretty good, better at least, he said, about the overall market. Do you? Yeah, I do. And I guess the best quote I can give you is, delayed does not mean denied. I mean, we've been sitting here waiting, all of the tech investors, all of the venture capitalists. And we all believe there's a trade for every season. And right now, the trade is the multiple expansion trade. We were in the risk-off season. Then we entered into the smart money trade where you're buying distressed assets, great assets at distressed prices. Now everyone's expecting multiples to expand.

So everyone's jumping into the pool. That's why you see five times oversubscribed deals that are being pre-sold before they even launched. And then we'll normalize back into a kind of chasing normalized earnings growth when the economy kind of settles in and everything starts going up for at least a year or two. He couched his optimism at least somewhat on the idea, as he said, that, you know, assuming ARM goes well, right? The industry needs it to go well. What do you think is really riding on that IPO, given the size, the nature of the demand that's around it? And just it's so big at a time where there's been absolutely no activity.

Yeah, I think a lot is riding on it. And then, look, this is right on brand for SoftBank, right? It's a massive deal, massive multiples to earnings, super oversubscribed type deal. We haven't seen these types of books in a while. But it's one of those deals where when you have a company selling a business that they own completely, they can control the amount of shares that are listed. They can control the books. They can control the valuation and everything. So one of those manufactured IPOs. And I think they're going to do it right because so much is riding on it. And I think it's an open floodgates for everyone else. So who else should we have our eyes on? Like the Epic Games,

the Stripes, the companies that you keep hearing about are in the proverbial pipeline. But we really don't know what the status is of how they're looking at the current environment, nor do we know how they see the calendar right now. Yeah, I think you mentioned some of the names that I like, but I'll tell you one that's my actual favorite, Toro. A lot of people don't talk about Toro. We obviously see that they announced today that they're getting ready to tap the market again. Everyone sees what's going on with Instacart. That's a highly anticipated transaction. Epic Games, which owns fortnight anyone with kids will tell you how exciting that is to everybody one of the most profitable monster businesses in

the private market right now but also don't forget about stripe i'll give you two names that you probably haven't heard anybody throw out there too noble fitness apparel company therabody percussion gun um these are two companies that are growing like wildfire in the private market. Everyone's talking about them dominating their industry. They're going to list as soon as public sentiment for consumer-facing businesses starts to improve. Are you guys investors in those? Personal investor in some of them. VC Fund is invested in Instacart.

And, of course, Toro, one of my all-time favorites. Okay, got you there. And you mentioned multiple expansion earlier, which in many respects is why we're here in the first place when we talk about names like Apple and Microsoft, NVIDIA, and on and on and on. And the reason why the NASDAQ has had such a great year, it's been largely on, if not exclusively on, multiple expansion. Now the earnings have to put up or shut up, right?

And do you think they will? Well, you know, it's not just about earnings in this situation. I think that's the moral of the story in this type of economy. But when you deal with multiples, if you think about cybersecurity, for example, cybersecurity multiples were 15 times all the way to 90 times revenue two years ago. Now they've collapsed down to call it five times to 20 times. So when you put more water in the ocean, all ships rise, right? So even the ones that miss earnings on a quarterly basis will still rise and do well. But of course, the ones that hit earnings, the ones that are growing the fastest are going to be the darlings and the sweetheart of everyone's portfolio.

We'll talk to you soon. Always enjoy it, Rashaun. Thank you. Thanks for having me. All right. That's Rashaun Williams joining us from Manhattan Ventures up next, searching for opportunities. We'll find out where T. Rowe Price's Sebastian Page is seeing strength as we head into the end of the year. If he's seeing any at all, it's been pretty negative on the market. And don't forget to register for CNBC's Delivering Alpha conference. I'll be there with some can't miss interviews, including a sit down with Pershing Square's Bill Ackman. That's on September 28th right here in New York City. You can scan the QR code to get your tickets.

Closing bell back in just a couple of minutes. Energy stocks on the chair this week. Oil prices approaching $90 a barrel. Brent got over that level this week. Our next guest says now is the time to put your money into stocks exposed to real assets like energy spring in sebastian page zero price welcome back thank you scott

every time you come on all i can think about is your commentary from many months ago where you describe yourself as a reluctant bear i see some notes from you today that suggest you are a changed man. Am I making too much out of that? You explain it for yourself, but you don't seem to me from what I read to be as negative as you've been. I wouldn't say a changed man, Scott, but our thinking has evolved this year. You know, we were underweight, Scott. We were underweight all of 2022 stocks versus bonds.

And I've told you I've been a reluctant bear this year. And we've incrementally added to stocks such that we're now a percent away from our neutral weights. Now, I understand that's a boring stance to take on TV, Scott, neutral. You know, when my dentist asks me for investment advice, I tell them, stay invested, stay diversified. I do think there are opportunities under the hood. So long story short, still reluctant, less reluctant than we've been. It's a very sort of barbell environment in terms of the data that we look at. Why still reluctant? Why? You know, we still have to feel the full effects of over 500 basis points of Fed hikes in the economy. Illustrative of that is the fact that the yield curve has been inverted massively for a long

period of time. And, you know, I could go on. But, Scott, at the end of the day, we have a very compressed equity risk premium. You were just talking earlier about multiple expansion. The equity risk premium is as compressed as it's been over 20 years. So it's just hard, even though growth is surprising on the upside. Global growth is not. China is not doing well. Europe, Germany not doing well. It's just hard to convince yourself to actually go long stocks here.

I know. But if you convinced yourself to not be in the game, you missed out on already a lot this year. That the moral of this whole story might be then that maybe this time is different that all of the negativity and the good reasons around the negative reasons to have that perspective and point of view on the market are all you know legit in normal times but these have been abnormal times and thus you've had an abnormal market in the face of the 500 basis points you just mentioned. Yeah, absolutely abnormal times because we're normalizing from 10 percent nominal growth, then followed by 9 percent nominal growth in 22. So there's this big covid distortions unwinding, which we've been talking about for a while, but it's really distorted a lot of the data.

And Scott, the bears, and I've been one, we've been talking about rates of changes and macro dashboards flashing red, and you have shakiness in the regional banking sector. Look, Scott, let's just do a thought experiment. Suppose you fell into a coma in February of last year right after buying puts. And I tell you, the Fed hiked by five hundred and fifty basis points. We have a war that's still ongoing and we've

had the three biggest number two, number three, number four largest bank failures in history. You wake up from your coma, you would think your puts would be in the money. You would think the market would be down. And it's not down in great part because of the massive amount of liquidity and cash that is still sloshing in the system and the clean balance sheets that we had going into this. So why doesn't that supersede everything, Sebastian? That's what I'm trying to get at. Maybe the story isn't as complicated as people have tried to make it from the beginning, right? The amount of liquidity that was pumped into this system around the pandemic and even on the very backside of it were so powerful that it put the patient if we're gonna use that analogy in such a high state that even as it's come down off of it it's still

pretty darn healthy look growth is coming down inflation in my mind is showing upside risk there's a narrative that we've sort of defeated inflation. I think the narrative is getting shakier. But I go back to lag the fact of massive rate hikes. And if we get sticky inflation, it keeps the Fed in play. And you've seen long rates start to come up last couple of months. You've seen the pressure it puts on multiples. There is shakiness in the system. Again, Scott, I've not been in it. We don't invest in the way that you go 100% cash and you stay out of the market. It's not the way long-term asset allocators like us invest.

I think the debate becomes not being invested versus not being all the way to cash, but really how you balance your portfolio. I do think there are lots of opportunities under the hood. Play relative valuation opportunities in energy stocks, in REITs, in credit. We don't expect more than 3.5% default rate for the next 12 months. So you can allocate for opportunities looking a year out in a way that you stay neutral at the top or close to neutral.

So you think this this move in energy is legit and has legs and people should actually be allocating more capital to that? And where should that capital come from? Should it come from mega cap, which is at least some parts of it have looked a little shaky lately? Where should you be taking the money from and putting it to where you think you should so it's a great question because we've been doing that for a few months we allocate to a diversified portfolio of real assets in our asset allocation portfolios so it has energy stocks but it also has other commodities metals and mining stocks and even REITs so we've been doing that taking taking some from our cash buffer that we've had.

So if you think about it, you missed the rally. You can chase the momentum, wait for a dip, or go into markets that haven't participated. So we've taken some of our cash to do that. We've also moderated some of our overweight positions in other areas, such as emerging markets, where we're getting increasingly worried about the situation in China, short-term and long-term. So, Scott, short answer from cash, a little bit from emerging markets. We've been taking this position for a couple months. I do think, to your question, the $90 oil prices, I think that that has legs. It's a supply issue. Saudi Arabia has implemented cuts. And also you have some demand that's still there with,

you know, Atlanta Fed GDP now over 5%. So combine the two and I think it has legs. All right, Sebastian, appreciate it very much. Enjoy the weekend. We'll see you soon. That's Sebastian Page. Thank you. Up next, we're tracking the biggest movers as we head into the close. Christina Partsenevelos is back with that. Christina? Well, it sounds bananas, but air taxis are one step closer to taking flight, and Cathie Wood's fund wants a piece of that pie.

I'll explain next. All right, 15 before the close on this Friday. Christina Partsenevelos back with us with the stock she is watching. Hi, Christina. Hi, Scott. Well, shares of luxury home goods retailer RH are falling after Q3 guidance fell short of expectations. The CEO warning in a letter to shareholders that they, quote, continue to expect the luxury housing market and broader economy to remain challenging throughout this year and into next year.

Shares are down almost 16% right now. Cathie Wood's ARK Invest continues to snap up shares of flying taxi company Archer Aviation. ARK Invest snapped up shares on Tuesday as well as Thursday of this week, making Archer its 25th biggest holding in the fund. The company went public in 2021, and just a few weeks ago received clearance

from the Federal Aviation Administration to begin test flights. Shares are up over 6% right now, over 240% higher on the year. And Scott, I was going to tell you an airplane pun, but I thought it would just fly over your head, so do it. Maybe next time. Maybe. Maybe next time.

Christina, thank you. Thanks. Christina Parts and Avalos. Last chance to weigh in on our question of the day. Will the NASDAQ finish the month of September positive or negative? Head to at CNBC closing bell on X. The results are right after this break. The results of our question of the day.

Will the Nasdaq finish the month of September positive or negative? The majority of you said negative. 54 percent. A smidge more than that. Up next, outage, outrage, square under pressure, falling more than that up next outage outrage square under pressure falling more than 5% today we'll break down the details when we take you inside the market zone we're now in the closing bell market zone CNBC senior markets commentator Mike Santoli is here to break down the crucial moments of this trading day plus options plays Jessica in skip on the key levels to watch after this

week's decline and Kate Rooney on the sell-off in block shares with Mike I begin with you uh no conviction on real yeah on on either side really I guess is the takeaway today it is uh and to a degree this week too it's kind ofruffled, but also not a lot of enthusiasm. There's not really a lot of momentum in the market either way. I think if you would pull out one theme is that the market's trying to differentiate still. Even though you've had the very much kind of eye-catching declines in the Apples and NVIDIAs this week, software has been strong. So you look at month-to- Salesforce and Microsoft and Adobe and those are actually kind of holding up better. So I think you have a little bit of a give and take there.

A lot of fixation on the things that could break out and start to cause a little more disturbance, which would be yields, the dollar and oil and all of them kind of pushing, pushing, pushing, but not quite getting to that true scary level. So we'll see. It still does feel like we have this sort of reset, this late summer reset of expectations, evaluations, trying to get the market in a more defensive position. And I think it has been to a large degree. Massive flows into money market funds. You're not really seeing investors really jump on this dip. But on the other hand, not a lot of selling to be done either after about six weeks of no progress

in the S&P. That's the question we asked at the very top of the show, this dip buying, whether it still exists. Now, the Nasdaq is going to be a good test for that. Certainly, Apple and Nvidia will be really good tests to watch over the next week or so to see if buyers come in. Yes. And what happened in August was, you know, it was a good solid two, three weeks of mostly downside action. The market did get technically oversold. You did start to get a little more intensity to the to the pullback. And you finally did find some some buying there. So we'll see. I mean, we have the CPI next week. It does feel as if people are kind of reserving judgment on the macro until we see progress on the inflation front

or not. All right, Jessica and Skip, what levels are we supposed to watch now? Yeah. So, you know, it is definitely a challenging month for September. The average returns are down 1.16 percent. And that's as of 1928. Now, that can cause some fears, especially if we're coming up to those oil levels and energy and yields like Mike was saying. However, if you pair that with over a 10% gain from January to August, in addition to where we are in the presidential cycle, we actually, from a seasonality perspective, are set up for a much better quarter four. So from levels that you need to watch, starting with the S&P 500, the support to defend the major one is 43.25. I want us to close above 44.55, which is that 13 weekly moving average. We're having a hard time and teetering

on that right now. However, the main defense line is that August 15th high at 43.25 and then strong resistance 45.45 to about 45.93. But what's so important about all of the major indices right now that I want to bring to everyone's attention is this resistance line that we're overcoming and we're repeating is the January 22 highs support level. And that's why it is so difficult to overcome. And I expect this retraction, but better levels and more expansion, if you will, especially with the productivity and AI as we get into post-September. Let me ask you quickly about NASDAQ, looking at a bunch of names that are green. But the problem is, is that over this week, NVIDIA is down more than 6 percent. Apple's down 6 percent

as well. How closely are you watching those two stocks in particular? More importantly, Apple, because of the large amount that it makes up of all of the major indices. But it's coming to its 26 moving average. 175 is my strong support line for Apple. But more importantly, if you think about the grander scheme of things from a tech perspective, when we had COVID and we had all of the overhiring, the person that did not do that was Apple. There is good management. There's good structure. So when we see these issues coming in from China, the management and the structural resiliency that we find within that company has more resilience than others.

So I think that is of note. I would absolutely buy the dip at this point. OK, it's good to have you. Thank you. Enjoy the weekend. OK, Rooney, to you. Block, the former Square, is down 5 percent. What's going on? Yeah, so, Scott, Block has seen some major outages. It's been a tough 24 hours or so for that company. Some businesses were unable to access their accounts or process payments. So these are small businesses on what they still call the Square side of that business. There was a systems outage within Square. Users also reported outages on Square's Cash app. That's the Venmo competitor, a company spokesperson,

telling me that the issues have now been resolved. They say things are back online and, quote, as we continue to get all functionality back up and running, we're investigating what improvements need to happen to prevent these situations. In the future, they're also issuing an apology there to businesses. It is hitting shares of Jack Dorsey's payment company today. It's been down about 5% or so amid some of these issues. Outages, not great for attracting those merchants onto Square's business, especially when you see more competition. You've got PayPal adding into it. Some of the banks also going after the small business payment sector. So not great for the competition and competitive edge there for Square.

Yeah, all right. Thank you to Kate Rooney. You sort of heard the sound effect. You had the two minute warning. We're below that now, about 90 seconds till the close. Apple's big event next week. Just given where the shares are right now, that's going to be real interesting. It would seem to have lowered the bar. You know, there's not a lot of of a theme in terms of how it trades before and after these events necessarily, but it seems like it got a little bit de-risked, assuming there's not sort of worst case China policy scenario right there. And the other way to think about the influence of Apple and Nvidia is not so much their impact on the index, but when people are feeling better about the market and, you know, maybe this pullback runs

its course, they will usually play along to the upside just because that's what happens. The big seven winners are difficult to kind of keep out of a market that's that's feeling a little more healthy. So we'll see if that ends up being a catalyst or just, you know, another excuse to obsess over the fact that this has not been a growth story in a very long time. You said we're going to get data, CPI, PPI. There's some consumer stuff coming down the pike next week, too. We're still a week out from a Fed meeting, which we really don't expect much. Yeah, at this point, a lot of the suspense has been drained away from that particular meeting. That's why it's all about the long end of the Treasury curve,

to see, in fact, if that's where some of the de facto tightening takes place. All right, good weekend to you. Good weekend to everybody watching as well. There's the bell. That's that kind of, I mean, the Dow had a nice little move here into the close. We're up 80-some-odd points. That's the P positive.

We'll watch it settle. Have a great weekend.