Closing Bell - Closing Bell: The Fate of the Rally 11/7/23

Episode Date: November 7, 2023

Is the rally too extended to continue or is it just getting started? Cameron Dawson from NewEdge and NB Private Wealth’s Shannon Saccocia give their forecasts. Plus, Jim Stewart – who wrote the book on Disney – breaks down what he’s watching ahead of that company’s earnings. And, Goldman Sachs Private Wealth’s Sara Naison-Tarajano discusses her year-end playbook. 

All right, guys, thanks so much. Welcome to Closing Bell. I'm Scott Wapner, live from Post 9 here at the New York Stock Exchange. This make or break hour begins with the Nasdaq going for its longest winning streak in two years as mega cap tech bounces back in a big way. Your scorecard was 60 minutes to go and regulation looks like that. The majors, all three of them are in the green today. Russell's given some back yet again, a third of a percent. Want to zero in on tech, though. Apple back above 180. Most of the other big names also continuing their remarkable run. I'm going to show you the gains in a week for mega cap tech in just a moment. But look at these yet again today, at least one percent across the board. Amazon a little better than that. Oil, well, that's a big story today, too. Crude breaks below $80 a barrel, and that's led to large declines in many energy stocks today.

There it is, $77. Energy is the worst performing sector in the S&P today, along with materials. So a bad day there. As for rates, the curve, well, it's mixed. The short end declining once again, and that is obviously helping the tech trade, as we just showed you. Takes us to our talk of the tape. The fate of this rally, whether it's too extended to continue or whether it's just getting started. Opinions differ on that question, as you know. So let's ask Cameron Dawson, chief investment officer for

New Edge Wealth. She's right back with us at Post 9. What a difference. Good to see you again. What a difference a week makes. Yeah, we're thinking that, you know, the whole thing's in danger of breaking down. And I know you're laughing because it's kind of remarkable the turnaround that we've seen. Last week, we went four for four on everything that had to happen for the Bulls did. And here we are. What now? Yeah, we went from that very deeply oversold level back a couple of Fridays ago to now being not quite overbought yet, but getting close to that

territory. We think we're in a really important pivotal point for the S&P. You're right about to hit 4,400. That's your 100-day moving average. That's also the downsloping line that we've been in the sort of mini downtrend since August. If we get above that 4,400, I think the question is, does that spark a chase rally into year end, kind of give the green light to have that proper Santa Claus rally? Okay, so you're not convinced yet? No, no. I think we really have to judge it as we hit that resistance.

It is interesting to see things like small caps and high beta sit out today. Those have been areas that, in order to see a more sustained rally, we would like to see them participate. I mean, they participated last week. They're up like 8% a week or more, like 10% in one week. And yet we're seeing things like cyclicals show signs of weakness, the materials, energy, industrials not really participating.

So we're back to a very narrow market, but it's narrow markets and things that can pull us higher because it's tech, it's communication services. These are huge weights in the index. But I know, but why? See, I asked this question earlier too. Why would you take the risk of owning a cyclical stock in an environment where the economy is obviously slowing,

rates are still elevated, when you can say, okay, I'll go mega tech. I'll just go down the mega cap valuation spectrum to a meta maybe or a Google alphabet rather than take the risk on an industrial name because it's so cyclically tied to the economy? I think it is a very good point. In late cycle, we typically see large cap growth outperform. It's so prototypical of being late cycle. I think the risk that you have going into 2024 is that if those areas are crowded, if expectations are high, do you see a leadership rotation?

But I think through the end of the year, why would you sell your mega cap? Because, A, you want to show that you own it for window dressing at the end of the year. But, B, why would you take the tax gain today? Well, Jonathan Krinsky of BTIG is a technician, and we talk to him often. He has a note. He's talking about this 9% move in eight sessions out of the Nasdaq. Remember, today we're going for eight in a row, which would be the longest streak in some two years. He says he expects the rally to fizzle within the next day or two, if not today.

It certainly doesn't look like it's ready to fizzle. What do you think? Look, I think, again, it's that forty four hundred level. If we can break through that, then that could be the thing that pulls positioning to be from what is now neutral to being overweight. Positioning helps and seasonality helps. That's if you're a bull, what you have to count on. If we don't break through forty four hundred, then we're continuing in this sideways chop. You kind of go through this churn period yet again. One week. I said I was going to mention these gains. Apple up six and a half percent in a week. Microsoft seven. Alphabet six. Amazon seven and a half. Nvidia reports earnings ahead. That's going to be an interesting moment. That stock's up 13 percent.

Meta's up six and a half percent in a week. And Tesla, which had broken down, has now rallied back almost 10 percent. Those moves are astounding, which is why some people take pause. Others, as I suggest, look at that and say that the end of year rally is totally intact. Why wouldn't? Rates have come down and we think the Fed's done. The amount by which the 10-year note yield came down was like 50 basis points in a few days, it feels like. Yeah. And that was an area where we were deeply oversold in bonds. Now we're back at support. I think just as 4,400 is important for the S&P, 4.5% is really important for the 10-year treasury. And if it breaks down, maybe that gives you even more room to be able to relieve multiples. They're

sitting now at about 18.5 times for the S&P. So maybe you can get up to 19 times. I think the other important point is that tech is now back at a relative high versus the market. So for all of our consternation about interest rates and valuations, tech has not cared at all and is now at a new relative high compared to even above where we were in July. If you think that a soft landing is possible, or maybe probable, would you buy the two-year, or would you buy the Russell? Oh, I'd buy the Russell. You would?

Yeah, I think. Because there's greater value in the Russell if you think that we're gonna have a soft landing. If you think we're having a soft landing, it means that the recession risk that is somewhat priced into the Russell is overpriced, that valuations of the Russell are trading at a major discount, and that if you have a soft landing, maybe you get a little

bit of Fed support. Maybe you get those hoped-for interest rate cuts, and that would help liquidity, which would take some of the pressure off of small-cap balance sheets. So would you only buy the two-year or only buy bonds if you think we're going into a recession? You would buy the two-year if you're going to a recession, and if you wanted to add even more bets on going into recession, yes, you would extend duration buying the 10 year. But what if you just think that rates are going to continue to come down, but we're not going to go into a recession? Well, that's when equities would do the best. Well, can't you have bonds rally and equities rally? Certainly. We had multiple decades of both at the same time. Yeah, very possible. Yes,

most definitely. And I think that that's the Goldilocks scenario for equities, which is that you not only get resilient earnings because you're not going into recession, but you also get support from the Fed, which helps keeps multiples higher. We have the CNBC Generation Lab poll. One of the questions, money and youth in the USA, stock market, good place to build wealth or invest? Two-thirds. Two-thirds say yes. 63% versus 37%. Given everything that we've gone through over the last few years, what do you make of the results? How wildly different would that have been after the tech bubble burst, where you had a big, huge bubble that brought a lot of retail into the market, and that kept people out of markets for almost a generation, for decades.

This is very different. We had bubbles in certain areas. We certainly saw it over the course of 20 and 21, but people are still clamoring and have open-mindedness to risk. I wonder what the responses would be if you asked this question before October of last year with the October lows. I wonder what the respondents would be when you're at such a dislocated feel of the market. Now we've rallied back, so maybe that's what you get. Let's bring in Shannon Sikosha, also a CNBC contributor and of NB Private Wealth.

Welcome back. Thanks, Scott. What are your thoughts on where we are? Well, I think one of the things that we've talked about a lot over the past several months has been the valuation, and Cameron just did a great job of laying out the valuation and the market is. But if you think about the rest of the market outside of the Magnificent Seven, we certainly are seeing more attractive valuations. But I would even say within the Magnificent Seven, one of the things that I think is important for people to understand is that a lot of us come on these types of programs.

We talk about quality. We talk about free cash flow. We talk about balance sheets. The Magnificent Seven have strong balance sheets, free cash flow, competitive edge, competitive advantage. They don't have quality? No, and they have quality. No, they are absolutely they typify quality in many cases. However, I think what we're looking, and again, the valuations themselves, not overly, they're not overvalued.

They're reasonable in some ways. Reasonable, okay. For some of the names. However, I think the challenge is... What did you do with Shannon Sikosa? Are you sure? Are you the same person I've been talking to over the last few weeks? But I think the argument, however, is that for us, if you're talking about a rally to be sustained, these stocks cannot be the only leaders of that market.

There needs to be more breadth. And if you look underneath that, these names may always trade at a premium. And we could argue till the cows come home about what the appropriate premium for these stocks to trade at is. More importantly, they are, however, vulnerable and susceptible to multiple compression, unlike many other parts of the market. So you talked about cyclicals. I don't know if you have to go deep cyclical. You can just go to other parts of the tech sector. You could go to other parts of industrials that have more of a tech bent, that aren't quite as heavy cyclical, to get that potential cushion or margin of safety from the multiple compression that I think that these stocks potentially have as a risk. I think most people would agree with that.

At some point, you can't ride the Magnificent Seven only and expect stocks to go up. And you can't be complacent about the cyclicality of the Magnificent Seven themselves. We saw what happened to Meta last year. Advertising businesses, they're very cyclical. That's what Meta is in. That's what Google is in. Look at Amazon. It is a cyclical consumer business that has a huge transportation network. That is cyclical. Apple, that's a cyclical business. The thing is that they have better balance sheets and they have less cyclicality than other parts of the market. But if you have a recession, it's not as if they will be completely unscathed. And I think another great point is about we talk about the ability of these companies to grow at the top line, that they have these secular tailwinds. But all of the

companies that they sell to may not have those secular tailwinds next year if we fall into a deeper contraction. I don't necessarily think that we're going towards a recession, but an economic slowdown, that top line will be at risk because their consumers, their customers may be spending less. And we have seen enterprise spending at the beginning of this year, we were all talking about it declining. But we've actually seen that being buoyed by cybersecurity, for instance, and some specific software outlays that companies have been unwilling or, you know, haven't wanted to necessarily cut. So that's helped the top line for these companies, even when some of their customers may have been feeling a bit more austere in terms of their cap-ass. Okay, let's dissect, if you will will these other areas of the market as we move away from tech and we're thinking about okay when is the rest of the market going to pull its own weight and energy we're sector in the quarter down a lot today people are still talking about

supply and demand imbalances that are going to keep oil going up, even though it's below $80 today and that these stocks are going to do well. When do we feel comfortable buying energy? Do you have to make a definitive statement, OK, we're not going to have a recession? Well, we liked energy as that inflation hedge. And the one challenge that is that it tried to break above that November 2022 high and just ultimately failed. So from a technical perspective, that was a really sharp, bad sign. I think that what we're trying to balance now with energy is how much if we don't have a recession, are demand estimates too low? And then how much is the supply overhang from Saudi having a lot of excess capacity that it's not using, keeping that downward pressure on prices?

What about financials? When do I want to buy financials, Jen? Well, the yield curve is certainly not all that supportive right now. I think that you're looking at, there's two sets of financials, right? There's those that are able to grow net interest income. That certainly gets easier with a more normalized yield curve. However- Re-steepening yield curve better for financials, right?

Exactly. But that's going to be a long time coming, right? This reversion is taking some time. On the flip side of that, you get more volatility. You get a potential opening up, if you will, of capital markets next year. You start to see more movement in terms of capital market activity. Exchanges, for instance, probably a better place to be. Non-bank financials look a lot more attractive. I still think that regional banks are going to be a challenge. And you talked about small cap, right? That's a big part of that universe. That's the biggest part of the universe. So if you think about that, you have to have some strength or some satisfactory outlook for regional banks in order to get a meaningful bounce and a sustained bounce in small cap stocks.

And then I would say, well, materials. Is anybody going to run out here and say buy materials when there are still questions about the recovery in China? In other words, it's harder to make the case for all of these other sectors. Is it not? What am I going to say? Discretionary? Don't hang on Amazon and Tesla.

Look at everybody else. Are you worried about the consumer? You have to make all of these leaps to say, well, we're definitely not going to have a recession in your mind to think that these are buys, no? Yeah. And I think that's why tech is playing this middle ground, because then if you're thinking about, oh, I might be worried about a recession, health care and utilities and staples are still doing terribly themselves. And so it really gives you only those with idiosyncratic growth stories that are doing well right now. Why can't that continue then, Shan? In other words,

why would we be in any different environment than watching these seven stocks run up? And if you're in them, you're in the right place. If you're in the others, you've had a miserable year. Well, I think that can be sustained, at least in the short term. I mean, I think that's the challenge here is that we are looking at all of the underlying opportunities and saying, great, there are definitely ways that we can be active, we can be strong security selectors, we can think about some of the sub-industries that haven't participated. The reality is that over the next six weeks or so,

capital is going to flow to a place where it feels comfortable coming in and positioning for the beginning of the year. And I think there is a lot of uncertainty, particularly in the first three or four months of next year, in terms of what's going to happen with the economy, that it's difficult to hop on the cyclical bandwagon. And the bigger piece of this is you're not necessarily being rewarded for some of the companies that are continuing to execute. Well, you talked about energy. I don't want to beat a dead horse. But you look at the shareholder value that's being delivered.

You look at the way that these companies are thinking about CapEx and discipline. This is the reason why the sector was uninvestable prior to 2020. Now they're still not being rewarded for all of the discipline. So it seems like even those companies that are executing really well and are actually showing that they can have sustained margin improvement going into 2024 with a secular tailwind, a secular headwind, excuse me, are not being rewarded in the market. I think part of my point is that I'm not sure that people, you know, the talk is that positioning is going to lead the market higher into the end of the year. I don't necessarily think that's positioning into 2024.

I think that's just trying to position into the end of 2023 because nobody knows what's going to happen next year in terms of a recession. Is the Fed done? When do they cut? What's going to happen in the Middle East, the election, you know, all these things that we need to consider. And remember how hard it was to make the call that you would want to be overweight tech this year, with yields continuing to rise and the fact that growth has been stronger. It's not as if we've been in a super scarce growth environment. So I think we have to have open minds of the pain trade. And the pain trade into the end of the year might be that what has worked will continue to work.

But then that could set up for some very violent and powerful leadership rotations into 24. That's like the counterintuitive trade. I think that's a good way that you put that coming into the year. Positioning was, well, tech had such a miserable 2022 that there's no way it's going to bounce back. And of course, that's where all the action was. So maybe it is the inverse reaction that's going to lead some of these other sectors higher. Yeah. And instead, the pain trade this year has been in the long treasury. I mean, that's been the most painful trade. And so at what point do you see people taking cash and worrying about reinvestment risk and having to put it somewhere? And I think the expectation is, is that similar to what we saw in a low interest rate, low growth environment, everybody funnels that back into equity, Scott. I think the play here may be some of this cash does not end up back in the equity market.

We don't get that pronounced rotation in the first half of the year because people are rotating to longer duration instead. Yeah. We'll see what happens with the data, too. The CPI is, what, a week away? Next, I think a week from tomorrow, a week from today, something like that. And that'll play a big role, too, as you get more Fed speak. Thank you very much. Good to catch up with you both again.

Cameron, Shannon, thank you very much. All right, let's get to our question of the day. We want to know, with oil breaking below its 200-day moving average and the sector now the worst performing this quarter, would you buy energy stocks today? You can head to AskCBCClosingBell on X to vote. The results are coming up a little later on in the hour. In the meantime, a check on some top stocks to watch as we head into the close. Christina Partsenevalos joins once again with that. Christina. Thanks, Scott. Cloud-based platform

Datadog posting its best day ever after strong earnings results. They also posted their biggest quarterly revenue beat in a year. And profitability is also improving. This stock, though, is still about 12 percent off its recent high, but that positive report is helping the sector. You've got Snowflake on your screen up 10%, MongoDB up 11%, and I've got to mention Alteryx, too. That company posted their earnings beat just yesterday evening. Shares are up 18%. The sector as a whole higher on the notion of maybe an expected rebound in cloud spending. Switching gears to Global Foundry, shares are up about almost 5% right now, even though the company did issue soft Q4 revenue guidance.

What investors are focused on is the profit outlook that's improving, which could be a sign that the slump in the industry, especially within smartphones and PCs, is easing, which is something we already heard from Intel, Qualcomm, and AMD. Scott? All right, Christina, we'll see you in just a bit,, Qualcomm and AMD. Scott. All right, Christina, we'll see in just a bit because we're just getting started here. Up next, countdown to Disney, the media giant reporting its earnings in overtime tomorrow. We'll hear

now from Jim Stewart. He wrote the book on Disney about what he is expecting from that crucial report. We're live from the New York Stock Exchange. You're watching Closing Bell on CNBC. Welcome back. Disney earnings, they're scheduled to be released tomorrow and over time, investors waiting to see if the results will echo Paramount and Roku's strong reports. Joining me now to discuss New York Times columnist and CNBC contributor Jim Stewart, who literally wrote the book on the company. It's good to see you. Welcome to Closing Bell. Yeah, good to be with you. All right. So if we assess where we are in this turnaround story, if you had to say the inning, what would you say? Oh, I think maybe six or something. You know, we're we're a long way from the finish line here. And there's something, you know, this really weird thing is going on at the moment,

which is the writer's strike, which finally settled, and the Screen Actors Guild, which is still not settled. And that has thrown a wrench into getting much predictability out of these current results. What do you make of Hugh Johnson coming in as CFO? It's obviously not lost on anybody who's followed, you know, him and Nelson Peltz, who obviously is big in the stock, that he was at Pepsi when Nelson had his thing with Indra Nooyi and Pepsi there. Is this a coincidence that he's at Disney now? How do you assess that whole thing? Well, I'm sure that on his resume was a big plus. I don't know him personally. I hear,

you know, very positive things. PepsiCo results have been, you know, quite impressive. He's very experienced and he's been in the thick of things in a health situation like this. So he has, you know, kind of unique credentials uh on the positive side i i will say and also i think he's going to hopefully bring some stability here there's been a lot of upheaval at the top of disney which i don't need to tell you or most of your viewers about starting with bob iber coming back and then all the lieutenants of chapek getting ousted and realignment getting rid of the previous CFO for whatever reason. So there's been a lot of turmoil.

Hopefully he will bring some stability to this, which I think will be very good for shareholders. That said, Disney has a very, very unique culture, and it's very top-driven, and it's very bureaucratic, very hierarchical. It has not always been easy for an outsider to come in there and readily adapt. So that's the one asterisk I would put over his arrival. Well, you know, as we think about, you know, Iger's successor, you know, we've already seen this go bad once. And you talk about, you know, culture. It probably, you know, I think you would agree needs to be somebody with

understanding of the creative side and how hard it is for an outsider to come in. So do you think now firmly that the successor to Bob Iger is inside? Well, I would think, look, it's hazardous to guess, but I would think yes. They have never, not since they brought in Michael Eisner all those years ago, have they brought in someone who was not steeped in that Disney culture. Going all the way back to the tradition that the CEO has to dress up as a theme park character and work in the parks, as I have to say I did when I was working on my book. But that aside, yeah, I think it has to be somebody from inside the company. And that's another thing about the Peltz issue.

You know, Peltz came in once. He said, let's do some cost cutting. Disney pretty much agreed they would do it all. He went away. Then the stock kept going down. So now he's unhappy. But I still have yet to hear from Peltz. What fundamentally does he see as a solution to the the reasons the stock is down

i i have yet to hear that message now maybe he has a plan maybe he has some solution to the streaming of quagmire that all these companies are in but i have yet to hear it but what's the harm for for disney putting him on the board i mean at this point and now the fact that he controls the Perlmutter stake, so he has a lot more heft than he did before. Is there really a great harm? I mean, you game these things out pretty well. You know, A, what's the harm? And B, what do you think happens? Well, there is potential harm. You know, is he going to be a team player on that board? I wouldn't want to make any guesses about that. You know, is he going to be a team player on that board? I wouldn't want to make any guesses about that. You know, certainly there are board members and there are board members.

Some are much more influential. He could be marginalized. He could be on the board. They could listen to him politely and then, you know, do whatever they want to do. But I think the main risk when you have someone who has an agenda that's distinct from what the company leadership has, is the risk of information getting out of the boardroom. And that is a really serious issue here. It's, you know, there are leaks and there are leaks. They're very hard to know where they're coming from.

Strategic leaks here and there. That is the last thing Disney needs right now. Sure, but how could his agenda be so different if his agenda the first time seemed to be exactly what the doctor ordered? Because that's what Bob Iger announced that the company was doing. And that's when he dropped his proxy fight. Look, having somebody in there wants to raise the stock price. You know, I don't see that that's necessarily bad for shareholders.

All I'm saying is, you know, are they looking at long term, looking for short term results? Is he really investing for the long term future, which is what Iger claims that he's doing with this whole pivot to streaming. So they may have a very different agenda from many of many Disney investors. What's your take on ESPN? What's what's the game here? Where does this go? Well, you know, they've reorganized and they've created this new sports division, which looks to me like they're trying to set up the sports operations for what Iger has said, a willingness to sell, take a partner, make a strategic alliance here. They've got to do something about ESPN. I mean, sports, everybody wants sports. Sports is now seen as the key to the churn problem in the streaming world.

If you're a sports fan, there is always an event on the horizon that you want to see in real time. It's not like you're going to watch White Lotus and it's over, then you've got your subscription. You know, there's always another sporting event. So I agree that streaming is an incredibly important component to stopping churn. Now, Disney has a lot of the rights to sports, but they're locked up still in the cable universe, which is slowly but surely disintegrating. At some point, Disney's going to have to take ESPN to streaming, which is what they said they were going to do. The problem is they can't replicate the revenue

they've gotten from the old cable model. Meanwhile, everybody wants sports. The bidding on these things, I predict, is going to be insane. The NBA is coming up pretty soon. I've been hearing, everybody wants that. The NBA is going to really cash in. I think we're all going to be shocked at how high the bidding goes for these rides. And that's a problem for ESPN because the cost structure is going up as the revenue stream is declining. Yeah. It'll be interesting to see what happens starting tomorrow with those results in overtime. And we'll interview exclusively, I think Julia Boorstin is, Bob Iger after the

results come out. Jim, we'll talk to you soon. I'm sure of that. Thank you. Thank you. All right. Jim Stewart, New York Times. By the way, they'd interview four o'clock Eastern tomorrow in overtime. Up next, navigating the volatility. We're breaking out Goldman Sachs' private playbook where they're telling clients to put their money as we head into the end of the year. That's after this break. Closing bell right back. All right, stocks are higher again today. S&P Nasdaq on pace for their longest winning streak in about two years. My next guest says now's the time to stay invested in equities while also adding exposure to fixed income.

Joining me now, Post 9, Sarah Nason-Tarahano of Goldman Sachs Private Wealth. Welcome. It's good to see you. Thanks so much for having me. All right. So you're positive on the markets because a lot of people are so negative. What are they missing? Listen, I am positive on the markets. Obviously, we've got a lot going on from a geopolitical perspective, from a rate perspective. But, you know, I run the global family office business at Goldman Sachs.

And I think one thing to keep in mind is that we're working with clients who are long-term investors. We're not, you know, working with clients who are answering to a board of directors or thinking about sort of daily market, you know, NAV moves. And therefore, if you can really think long-term about the market, you know, we were advising clients on this, you know, kind of post-summer 10% correction, anytime you see a correction close to 10% is when you want to be getting longer, especially when you are a long-term holder of equities, which our family office and private clients typically are. The flip side of that is now that we've had this big rally in the span of a week. So how does that factor into the way I should be thinking?

We've spoken, obviously, with your colleague, Tony Pasquarello, on numerous occasions, most recently suggested the path of least resistance was higher. Well, now what? We've had this pretty substantial move. Yeah, look, I still think you've got the seasonality impact of November and December. You know, we see corporate buybacks, you know, $5 billion a day of corporate buybacks up until december 8th um and then you know we've got potentially a perfect storm i don't want to say it thinking about you know a soft landing if we think the fed is done which i do that's positive for equities clearly if we think inflation can stay under control which i tend to think it can If we think the economic data is strong, but not so strong, and, you know,

payroll and wages are sort of at the right place to keep things at a moderate growth level, then I think that positions us really well for equities. Would you then say you want to move broadly from just mega cap tech? I mean, if you are inflation is going to be lower than maybe people think the economy is going to still be more resilient than people think. Does that make the case for some of these other cyclical areas or not? You're kind of shaking your head like you're not willing to kind of go that far. Yeah, I'm probably not willing to go that far yet. And I think it's more for us about just staying long index exposure in U.S. equities and really focusing, if you're going to do single stock work, on companies with strong balance sheet, you know, durable earnings,

growth, stable margins. You have to keep in mind that even though, you know, we don't think the Fed is going to hike again, we are in a rates higher for longer market. And we have to think about that impact on equities. We still favor U.S. equities, by the way. U.S. preeminence is a big theme for us. Our investment strategy group has had a fantastic call on that. I continue to have that view. But I also think we don't have to be quite as precise if you're talking about clients that hold stocks for years and sometimes decades and generations. So it's OK if you don't get the timing perfect. But you're not willing to go say that, you know, the Fed, having been our foe, so to speak, by this

regime they've been on, is not yet your friend. They're not going to cut because a lot of times you could say, well, we think the Fed's not only done, but they're going to cut, want to get ahead of that. If the Fed, you know, is the game in town that matters most, higher for longer still means it could be a challenge with rates elevated. Yeah, look, I think, you know, not quite our friend, but not our enemy either is how I would put it. And I think what I would say about that is, you know, our house view, which I agree with, is we're going to see cuts in Q4 2004. And so actually an interesting topic. We've been having a lot of conversations with clients about fixed income. As you can imagine, we have been super short duration.

I mean, it's hard to compete with Treasury's six months at five and a half percent. But if you have the view that the Fed is not going to continue to hike and that actually we're going to cut in Q4 24, then you want to start thinking about extending your duration a little bit. And three to five years is where we sort of think that sweet spot is with clients. And one nice thing about our client base, particularly family offices, these guys are long private assets. They're long equity portfolios and portfolios that spit out cash dividends. So you don't have to rebalance to allocate new money. And that's, you know, kind of a lot of freedom to take that new capital and think about adding a little duration to the portfolio.

I also hear from many investors who are either, you know, billionaire investors, either family office money or hedge funds, private credit is hot. It's a big theme. And, you know, one thing to keep in mind. So we published a global family office survey in 2023. We did the same survey in 21. Our clients are historically under allocated to private credit. They have a 3% allocation to private credit. This is not surprising. There are a couple of factors. We come out of an incredibly low interest rate environment for the last decade. Yeah. Why not be in stocks? Right. But U.S. taxpayers also have to

pay ordinary income in private credit. But today, I actually think private credit is really interesting because you're looking at double digit returns and you've got a client base that is quite overweight equities, private equity alternatives. I think there's a real space in the portfolio for private credit, particularly in direct lending. Those double digit returns are still interesting after tax. You're higher on the cap stack. You typically have better covenants. There's a lot of things that make private credit interesting. Talked a lot about that yesterday with Mark Lazzari. Yes, I saw that. Great to meet you. Welcome to our show. Thank you so much.

Look forward to doing it again. Such a pleasure. It's our pleasure. Sarah Naysa Tarahano, again, Goldman Sachs, joining us right here, Post 9. Up next, we are tracking the biggest movers as we head into the close. Christina Partsinevalos is standing by once again with that. Christina? Well, we've got a 20% quarterly dividend increase and an updated 2024 outlook driving one home builder stock higher. An online travel agency also jumping 12%. I'll reveal those names and more after the break. We're about 15 from the closing bell. Christina Partsenevelos is back with the stock she is watching. Christina?

I'm watching TripAdvisor right now. It's up after reporting what Bernstein calls a, quote, fairly clean income statement beat. Shares are up 11.5%. The beat was driven by its branded hotel segment and its V8er business, which offers bookable experiences. Bookings are actually up 33% in that category. Despite the soft guide for Q4 analysts at BTIG point to profitability for Vietor as well as The Fork, which is a restaurant booking app, in 2024, a year ahead of what they anticipated. So there's some improvement in both those categories and they weren't expecting that. Switching gears, shares of home construction firm D.R. Horton up about three, over 3%. They not only beat earnings, but they raised their dividend

or their quarterly dividend to 30 cents a share and announced a $1.5 billion share buyback program for 2024, but they also are forecasting better revenue for next year due to low supply and favorable demographics supporting housing demand, AKA people like me who want to buy a home but are stalling due to rates. Scott. All right. Thanks, a.k.a. people like me who want to buy a home but are stalling due to rates. Scott.

All right. Thanks, Christina. Thanks. Last chance now to weigh in on our question of the day. We asked, with oil breaking below its 200-day moving average, below $80 a barrel, the sector now one of the worst performing this quarter, would you buy energy stocks today? Head to at CNBC closing bell on X. The results are coming just after this break. To the results of our question of the day. Now we ask with oil breaking below 200 day, it's 200 day moving average. The sector now the worst performing this quarter.

Would you buy energy stocks today? The majority of you said yes. More than half. Fifty two. Forty eight. Much more on that move in energy just after this break. Plus Robin Hood reporting results in just a few moments. We'll bring you a rundown of what to watch for when we take you inside the market zone.

All right, we're in the closing bell market zone now. CNBC Senior Markets Commentator Mike Santoli here to break down the crucial moments of this trading day. Plus, Pippa Stevens digging into the slide in crude oil and the slide in energy stocks. Kate Rooney on what to watch for from Robinhood when it reports in overtime tonight. Mike, you first. What's on your mind? Market just regrouping in a pretty painless way these past couple of days. We were overbought coming into the week. And instead of just broadly pulling back, it's kind of just shuffling along and allowing itself to cool off, not going out of its way to look for things to react to in a news tape that's not particularly rich with new macro input. So I feel like a lot of people wanting to kind of grade on a pretty tough curve this rally and say, oh, it's only the big caps again.

And oh, we're not really breaking any new ground here. And aren't we vulnerable to another bout of higher yields? And I think that, you know, you had three months to have that kind of get into the market, all those concerns. And now markets about, you know, trying to prove that we have a decent low in there. And nothing happened this week is changing. You watching 4,400? Sure. As many are on the S&P? Definitely.

It's definitely the hurdle right above us. It's at a technical area that repelled rallies in October. So all that stuff makes a lot of sense. We can't take anything for granted here. But I do think that so far it's not doing anything to discourage somebody who thinks that we might have had yet another late October low put in. I mean, even the Russell, if you look at the incredible run that it had a week ago. So yesterday, what did it give back? One and a third percent.

Today, there's no follow through. Now, it's not doing anything, but it's not continuing a slide either. Not much. And look, it's not going to be the leadership of this market. We may still continue to have an uneven market. We're not going to get free of this sort of late cycle mood that we've been in for a while. But that said, if it's not kind of making new lows, if the regional banks aren't looking overly stressed again, then things seem like they're in a more comfortable spot. Yeah, oil stressed. I mean, it certainly looks at PIPA right below the 200-day moving average, below $80. Energy stocks, one of the worst performing sectors today. What do you make of this?

That's right, Scott. Oil falling more than 4%, hitting the lowest level since July. And as you said, falling below its 200-day moving average for the first time in four months. And it really does seem to be that data out of China that was the catalyst for today's drop. While imports were up on a month-over-month and year-over-year basis, traders are focusing on that export data, which did slow at a faster-than-month and year-over-year basis. Traders are focusing on that export data, which did slow at a faster-than-expected rate, suggesting that perhaps the demand for refined products is weaker than the traders were expecting.

China has been taking advantage of very strong pricing for products by importing crude, refining it, and then exporting those products. And so if there is a drop-off in that, what does that say about global demand? And as you said, energy stocks are following oil lower. It is by far the worst group today. And actually, in a sort of surprising sense, the oil field services names are the biggest lagger today, which is surprising in that they don't typically have as much of a correlation with commodity prices as, say, the XOP or the integrated players. But with the majority of

earnings behind us now, energy is one of just three sectors that is actually set to decline year over year, with earnings down about 38 percent. But looking under the hood, we have a chart showing what it looks like on a subsector basis. And it is actually those oil field services that are holding up better than expected, thanks to an increase in offshore and international drilling. The XOP companies, the upstream production, oil production and exploration companies struggling a little bit

more as well as the integrated. But certainly, Scott, right across the board today for energy stocks. Yeah, appreciate that, Pippa. Thank you. Pippa Stevens, Mike, I'll go to you on that. Classic slowdown fear trade? Largely. I mean, obviously, production has picked up quite a bit. And it does seem as if we're in a little bit of a consumption hangover in general in the immediate period. Also, it's always a good test for exactly how much sort of geopolitical or speculative action there is in the price. And so as we get weeks beyond the shock event in the Middle East, you see some of that bleed away. And I think whatever the causes of it in the immediate moment, you broaden it out to say it's just not a bad thing macroeconomically. It's a good thing to refresh consumer buying power.

And, you know, crude got here in 2007. We should not be worried about the price of energy. So, Kate Rooney, I feel like we only talk about Robinhood once every three months. And here we are again, because we're going to be talking about earnings. The stock is under $10. Now, I'm thinking about what Bitcoin has done. And how should we think about this here? It's interesting, Scott. The narrative around Robinhood has really changed from the GameStop era. Now it's all about rising rates. That's changed Robinhood's finances dramatically. We're going to expect net interest income now to make up a much bigger portion of their top line.

Trading activity remains muted. Analysts are expecting lower transaction-based revenue for the brokerage firm. Streets looking for $252 million in net interest revenue. That would represent more than half of total revenue. Options revenue also expected to eclipse crypto and even equities revenue. The company reported a surprise profit last quarter, but that was overshadowed by a drop in monthly active users. Analysts are expecting 10.8 monthly active users this quarter. It's going to be flat from last quarter, at least that's what they expect. On the call,

look for any commentary around the rate environment. Cost cutting as well, that's been key for some of those high growth pandemic darlings. And then consumer credit companies have been moving into credit cards with a recent acquisition. Those numbers coming up soon, Scott. Yeah. All right. We'll see you in overtime. Kay Rooney, thank you. You know, Mike, it just sort of makes me think of that poll that we did, you know, of 18 to 34 year olds. Two thirds say build wealth through the stock market.

It's no wonder why there are companies like Robinhood trying to capitalize on younger investors. Yeah, the question is, did Robinhood's particular moment sort of pass them by? The innovation, if you want to call it that, of free equity trading has not really been friendly to the overall industry, or at least Robinhood. Clearly, they have a model that way they can kind of survive the market cap at this point under nine billion dollars. They have a ton of cash, you know, so they're going to be around to try new things. And I do think younger people at least got the lesson that, you know, there are ways to participate in markets that are either more or less aggressive. And over time, you know, you can find your way, find your way through it.

I don't know, maybe a third of 18 to 34 year olds saying, no, I don't think the stock market is a way to wealth. This is another way to slice the news. I was actually kind of surprised that two-thirds said, yeah, it was. But that's neither here nor there. Utilities, I'm just looking at those today. You know, yields down, at least on the front end of the curve. Utilities, weak sector today, down three quarters of one percent as there's been some talk of late that after the destruction that we saw that, OK, this now goodbye. They got a break, you know, as a lot of the laggards did get picked up. I don't know what

the story you're really chasing when it comes to utilities is at this point. We do get some relief, though, across the curve in treasuries. It did seem as if yesterday, a little bit of a mechanical lift back in yields related to a lot of that corporate debt issue. And so that's been something that stayed out of the market's way at least for today. Well, not the prettiest day. I mean, let's be honest. But nonetheless, the three majors are green. And that's how we're going to go out. And the Nasdaq's got its longest winning streak in two years, eight in a row. I'll see you tomorrow, O2, now with Morgan.