Closing Bell - Closing Bell: The Fate of the Rally 6/15/23

Episode Date: June 15, 2023

: The fate of the rally looked a little dicey 24 hours ago. But now, not so much. So, what does all of it mean for where your money goes from here? Sofi’s Liz Young gives her expert market take. Plus, we drill down on Cava’s big market debut and what it might mean for the IPO market this year. And, top technician Ryan Detrick sees a big rally into the end of July. He makes his bull case.

Well, we've got a big hour ahead. Welcome to Closing Bell. I'm Scott Walker, live from Post 9 at the New York Stock Exchange. This make-or-break hour begins with this post-Fed bounce for stocks. It's a big one. And why not even J-PAL's hawk talk was enough to derail the rally? At least not yet. Here's your scorecard with 60 minutes to go in regulation. Dow, well, it's up 500 points right now. It was up about 400 for most of the day. Having a nice little move here as the final hour of trade begins. It's pacing for its seventh up day out of the past eight. S&P 500 trading above 4,400, been up five weeks in a row now. And Nasdaq up as well. Yields falling. Apple trading near its

all-time high as well. It does lead us to our talk of the tape, the fate of this rally, which 24 hours ago, let's be honest, it looks a little dicey for a little bit, at least. Now, not so much. So what does all of it mean for where your money goes from here? Let's ask Liz Young, SoFi's head of investment strategy. Welcome back. It's nice to see you. Thank you. What's this about? What's this about today? Now, 500 points almost. Heck of a rally. So this is, I think, maybe something along the lines of do as I do, not as I say,

right? The Fed told us yesterday we're going to hike two more times. The inflation fight is not over. We had the terminal rate expectation move up by 50 basis points with an inflation expectation that only moved up 30 basis points, which sends the message that it's not tight enough yet. We haven't tightened it enough yet. We need to make things more restrictive. The market, in theory, should not like that. But what their action said was we're going to pause. Frankly, I'm not sold that they're going to hike again. I don't know that they're going to be able to. I do think that there's going to be some kind of reckoning with the liquidity issues that are about to hit the market in a lot of different ways. I don't know that they're going to have the clearance to do it again. The interesting part is that the market just keeps to push it out, right? It says, all right,

we believe you might do it one more time. We thought maybe July. Now we think September. So it's possible that we just keep pushing that out into the future and it never happens. I think the big issue here is that the market and the Fed still disagree. And at some point, one of them or both of them is going to be wrong. And I think that's going to be a painful thing. I mean, you're not alone. Many of the notes out today from Wall Street firms said maybe one more. Only Citi, I think, had two. Gunlock yesterday with us post Powell said they're done also.

Do we have that, guys? Can we listen to that, Gunlock? I don't believe the Fed's going to raise rates again. I think Jay Powell has a really difficult job right now, because as Steve is correctly pointing out, I think he realizes that we're at a turning point potentially on the inflation situation and on the economy. And yet there are people that are dedicated to these lagging indicators like unemployment, labor market, and certainly looking at core CPI. Well, it lags. It just does.

I mean, the point here is that they're done. They're not going to hike. It doesn't matter what they say. I mean, that's what the market is saying today. It has to be. Right. Right? Yeah. I saw that interview live with Jeffrey, and I actually agree with pretty much everything he said. I think, you know, the bull case right now is that inflation has come down in a pretty linear fashion. And you could sit there and say, you know what, it's less than half of what it was at its peak last June. And that's a good thing, right? Pricing pressure is down. That's a good thing for consumers. You could also sit here and say, yes,

but it's still twice what the target is, which means that the job is not done. And you have to then ask yourself, even if they're done hiking, if you believe that we're in this hire for longer regime, if we sit above 5% Fed funds rate for a really long time, can, number one, can capital sustain that? Can businesses get capital in that environment? We're already hearing that small and mid-sized businesses cannot as much as they used to be able to. You've got liquidity pulled out. And if you just chart liquidity over what typically happens in the stock market, particularly in tech stocks, you see it follow the way down. And there's a huge divergence right now. You've got tech stocks rallying. You've got the market rallying.

Liquidity expected to fall pretty precipitously over the coming months. So one of those two lines has to meet, right? And the liquidity one is probably not going to come up. You think we're going to have a recession? What's your base case call on that? If I had to answer that in one word, yes. Okay, so you also agree with Dunlop on that point too. Yes. Well, and look, history is limited in its usefulness because obviously the environment is different.

The market makeup is different today than it was 50 years ago. But things like a hiking cycle, particularly one that's this steep, yield curve inversion that's this deep and this prolonged, rarely if maybe one time in the mid-90s have they've always been followed by recession. Well, he's like the data that we've gotten lately, right? Leading economic indicators are all ugly. Yep. It's, I mean, if not for the resiliency of the consumer, who knows where we'd be right now, right? And he's right. I mean, the leading indicators are pretty ugly, right? And then you look at things like PMIs that have been in contraction for a long time, services PMI just now teetering on that edge again of expansion and contraction.

But if you're talking about the consumer, the consumer is very much what's affecting me today, right? And we're going to get a consumer sentiment read tomorrow. I think it's going to be pretty hot. I mean, look at the retail number today. Over the last month, you've got inflation coming down. The market is up. People aren't losing their jobs. If you're a consumer, you're probably feeling pretty good.

I think the rally can go on in the short term. But the reality is that this probably doesn't end well. We've never seen it end well. It's just that the ending doesn't seem to be around the corner. Would you go as far as to say that the bulls are in charge for the time being? That they've wrestled the market away from the bears. We're 20 plus percent off the low. And now the bulls can keep this going for a little while. I think they can keep it going. I mean,

even just today is proof of that. Momentum has been a really powerful thing. Sentiment has been a really powerful thing. And if there's no big reason to stop yet, then it can keep going for a while. And, you know, the FOMO trade obviously is driving a lot of this. I don't necessarily think it's going to be sustainable. Right. And I I think everybody knows I didn't necessarily buy into this rally. I certainly didn't call the rally this year, but it can keep going as long as the wind is blowing in that direction and until something stops it. You know, I'm looking at what's working today, and it is virtually everything. Every sector in the S&P but one, that's discretionary, is up more than 1% today.

As we add in Joe Terranova, of course, CNBC contributor, Avertis Investment Partners as well. What do you make of this? Is this the market just says it doesn't matter what the Fed says, we don't believe it? I don't know if it's the market. I think a lot of this, and I talk about this all the time, I think this is non-discretionary rules-based funds that are buying the market. You go back two weeks ago to June 1st. We sat here on the show.

We spoke about three consecutive closes, about 4,200 for the S&P. That was the first time that we had done that since August of 2022. We asked the question, what follows thereafter? And what has followed is a very strong technical breakout. Look at the price action today. I believe Apple, check me on this, but I'm sitting here on set with you. I think Apple's made a new all-time high intraday already. And I think Microsoft's within a dollar of doing the same thing. So you have a very tenacious, powerful, momentum-driven rally. And I think the resolution to that probably comes at the end of quarter. But Powell did his best yesterday to

try and cut off and choke off the momentum. And he did for a moment when he rolled out the projections, which aren't predictions, by the way, and maybe the market got a little ahead of itself in assuming that because they had made, you know, they revealed the dot plot as they do once a quarter, the market took it as a prediction rather than a guess. And they know how the Fed's been with the guesses at this point. Yeah, I think either way you look at monetary policy right now, the words that I would use would be neutral monetary policy. I think that's where we're at. I think we've gone from a hawkish monetary policy to an environment where they could lean one way, they could lean the other way. And whichever direction they lean, they probably wash it away

at some point in the near term. So if they raise 25 basis points in July, I wouldn't be surprised if they took back the 25 basis points in the next six to nine months. I don't think what we're about to witness is that you'll restart raising interest rates. And then a pattern evolves where you have multiple meetings where you're raising rates once again. I understand. But if you if you just suggest that you think we're in neutral, your words, neutral policy zone, then you don't believe the Fed either. Oh, no. The real you can't. Well, the real Fed funds rate is positive. It's been positive for now two consecutive meetings. And that's something that's a dramatic reversal from where it was one year ago when that was negative five to six hundred basis points. So the Federal Reserve has caught up. Yeah, but you you you cannot think that we're neutral now, which has the more positive bias

than still think that we're you know, we're not we need to get in a more aggressive zone. You can't believe that what, then, if you think that. You're suggesting that the Fed's done by saying we're neutral. They're done now. I am strongly of the belief that the Federal Reserve is done based on what I see within markets, not based upon what I'm hearing from the Federal Reserve. Because for the better part of the last several years, I feel as though the Federal Reserve has been very inconsistent in their communications and in their actions.

They've said a lot of things and done the complete opposite. And I think we're at a point where there is a little bit of a loss of credibility for the Federal Reserve. And their overall impact on markets, I think, is going to be less. The days of 50 basis point, 75 basis point hikes, those are in the rearview mirror. 25 basis points doesn't concern me that much. Well, one may not concern Joe that much, but the point being is if they follow through on where many of them see this going, it's going to be

more than 125. And in some cases, according to a fair amount of Fed members, it could be three. Now the market's like, no way. No way. Yeah. Well, and I think there's this illusion that the fact that they paused yesterday and maybe are going to end this hiking cycle is that somehow there's more certainty now about what's going to happen in the future. I think the uncertainty actually got greater in this because I was surprised that we had a unanimous vote yesterday. I think we're going to start to see FOMC meetings without unanimous votes, and it's going to get tougher and tougher to try to predict what they're going to do. That's going to get messier, right? Because Powell wants to keep everybody together. The last thing,

he doesn't need dissents to come into the picture. But let me ask you this. As I mentioned, the broad-based move today in what has been a more broad-based move of late, right? The knock on the market for many, many, many months here has been, you know, it's too top-heavy, it's 10 stocks, and the S&P 490 is terrible. Right. And the 10 are amazing. Yeah. But today, comm services, okay, 1.75%.

But financials, 1.3%. Utilities, 1.2%. Energy, 1. But financials, one point three. Utilities, one point two. Energy, one point five. Industrials, one point six. Health care, one point six. Staples, one percent. Yep. Everything is working today.

Discretionary is just a little bit lighter than the others. Yep. To make you feel better about the state of the market itself. Sure. I mean, I was basically one of the loudest that said this can't work this way. This is a fragile rally because it's only held up by seven or eight stocks. Of course, I want to see broadening out. And I think that's a very good sign. And when it started really with fervor last week, you had small caps participating, you had other sectors

participating. That was great. And I think that that's something that shows that there's buying appetite in investors. I think it could also be something that is short lived from a valuation perspective. So what I think a lot of this has done is it's it's pulled some of the bears onto the bull side or pulled people onto the side that said, OK, you know what? Maybe I'm not positioned if I'm wrong. I'm not positioned to be wrong, right? I'm positioned for this to go down. I'm not positioned for it to go up. So I'm convinced to buy something. What do I buy? I'm probably not going to buy the thing that's already rallied 50%. I'm going to go in and buy the stuff that hasn't participated yet. So there could be some of that, right? If this ends up being a broad-based move,

if this ends up being us averting recession and the Fed pulls this off, maybe there's some people that have sort of contemplated whether or not the bull case makes sense long term. Right, Joe, that's the last thing the bears want. Last thing the bears would want to see. Right. Because it Liz said it perfectly. Awfully hard to be, you know, continuously bearish when the market is now starting to show those signs of okay maybe it's actually getting a little bit better internally yeah it almost in a certain extent feels parabolic but if you are bearish let's keep in mind the following things first of all you're coming up on the end of the quarter so if you're running a multi-asset strategy in a portfolio, you're going to need

to rebalance because you have the S&P up 7% on the quarter, NASDAQ up 14%, Europe up 12%. But you have treasuries down, high yield investment grade immunities up probably 50 basis points. You're going to reallocate out of equities into taxable fixed income and treasuries. And that's a multi-billion dollar rebalance that's going to happen at the end of the quarter. You also have the probability of the July through September time period being the weakest quarter of 2023. So that's your time window, I believe, because I think on the other side of that, we are going to have a very sharp snapback and maintain the overall trend of 2023. And I believe largely a lot of that's going to be rooted in a strong earnings recovery. What's also interesting, too, real quick,

I think about today is that even in what is a very, very broad base move, the NASDAQ from a percentage standpoint is still the outperformer. It's up 1.5%. Yeah. Well, my system is kind of reflecting exactly what we're showing here. You got my point. NASDAQ's still having a very strong day. Yep. That implies that you can have a broad-based move without having a lot of tech selling, right? Sure. If you don't have to get a rotation out of tech into other areas of the market, you can still have tech be strong and still have money. Maybe it's coming from the sidelines. Maybe it's coming from bonds.

Maybe it's coming from wherever. And a lot of things can work at the same time. What do you think about that? Because as Joe said, Apple with new high again today. Yep. And that would be more characteristic of early cycle market behavior, right? If we're in an early expansion, you would see cyclicals take part, you'd see smaller stocks take part, but you'd

also see the economic data look a lot different than it does right now. So I am not sold yet. I maintain that I don't think this ends well, but that this rally, and frankly, a rally in stocks that need liquidity in order to drive valuations up like this. This is pretty late cycle characteristics. So it's still something that I'm not convinced that we're out of late cycle. And it's just that transition. You have to respect the cycle. How do you transition from late cycle back to early cycle without some kind of contraction that shakes the tree? My system was like a smidge slower than what the

real time is that we're showing on the screen. But nonetheless, the Nasdaq is right there today. So for those who are saying, well, if you're going to have all of these deeper cyclical areas of the market, most tied to the sensitivity of the economy come along, well, maybe that's what sort of cools off the tech trade. That's not what you're seeing today. Apple 186.28, new all-time high, as you mentioned. Yeah, and I think a lot of that is index-related, given the market cap waiting for Apple and Microsoft. So it's a very broad-based rally. Natural gas is even up 8% today, Scott, down 75% in the last year. Natural gas having a short-covering rally as well. So it's broad-based. It's what you want. It is technical in its nature, though. I have to emphasize that. It's not as if in the last two weeks we've had this overwhelming reporting of earnings that we're now reacting to.

This is technical forces. OK, Joe, we'll see you back in the zone. Liz, thank you. We'll see you soon. Liz Young. So far, of course, let's get to our Twitter question of the day. We want to know, will the S&P be higher or lower by the next Fed meeting? It's late July. You can head to at CNBC closing bell on Twitter. We got the results coming up

a little later on in the hour. In the meantime, let's get a check on some top stocks to watch as we head into the close. Christina Partsenevalos is in San Francisco with that for us. Christina.

I am. So I'll focus on some tech for a bit. Tesla trading near the flat line after snapping its longest winning streak on record yesterday. We've got other EV stocks that are actually firmly in positive territory right now. You've got names like Polster, Lucid. Lucid's up almost 4 percent at the moment. And this comes as Chinese players like Xpeng and NIO rally on demand optimism. So Xpeng is also rolling out its own self-driving technology, and that's going to

rival Tesla. Both of those stocks we can see are up right now. You can see NIO up over 8 percent, but more than 20 percent just in the last week or so. And we've got to talk about SoFi because it's on pace to snap its longest winning streak ever. Oppenheimer is downgrading the stock to perform, citing its valuation after the stock had been roughly doubled just in the last month or so. Shares are down about 2.5 percent. However, BTIG just yesterday said they like the name because of all the student loan payments that need to be repaid. All right. Good stuff, Christina. Thank you. We'll see in just a bit. Christina Partsenevelos, we're just getting started, of course, up next, shopping through the uncertainty. Number one retail analyst Matthew Boss is back right here at Post 9. He'll break down the consumer resilience, flag some possible risk for the sector as well. And we're getting

you set up for Adobe earnings. We do have a shareholder standing by with what he'll be watching when those numbers hit the tape in OT. Nice move this quarter. Nice move today. Almost 3 percent were live from the New York Stock Exchange. And you're watching Closing Bell on CNBC. We're back. Retail sales getting a boost in May, showing yet another sign of consumer resilience. My next guest says while the retail landscape is showing signs of opportunity, there could be some downside risk for the sector once student loan payments resume. Joining me now at Post 9 is the top retail analyst on Wall Street, Matthew Boss of J Morgan. He also covers leisure. Welcome back. It's good to see you. Good to see you too. So let me get your first reaction. Retail sales, were you surprised? No, it was encouraging. So

we've been surprised. We've been on the show and we've been talking about the tale of two halves. And I think that's what you're starting to see play out, meaning I think you've seen the low watermark in retail sales. That was your first quarter. That's where you were still going up against a better consumer backdrop a year ago. And you pulled $25 billion of government assistance from this consumer. You cut their food stamps and their tax refunds were down double digits. So when you say that the tale of two halves, are you talking about the high-end versus lower-end consumer, or are you talking about time frame of what we could do and then what we might not do? Both. So front half of the year, still had headwinds.

Back half of the year, you have easier comparisons. Gas prices down 30% year over year. On top of that, you have supply chains that are normalized, and you have a wealth creation. Look, S&P at 4,400. I mean, you look at the high end, there's some real wealth creation now over the last five years, but also by income demographics. So as we talk about the high end relative to the low end, the low end right now, in my opinion, is normalizing.

So they still have a job. The unemployment rate is solid right now. Their wages are up 20 percent relative to 2019. But you took money out of their pocket. That could take a quarter or two to normalize. That's why I think back half of the year, the tailwinds will now outweigh the headwinds with student loans, as you cited, one of the wild cards to walk. But how do you then explain why, for example, Estee Lauder hasn't done well, which is as high end as you can talk about? And then some of the other brands, too, that are within that realm. The name is some spacing on the name, the Versace

and Michael Kors. You know what I'm talking about? Yes, Capri. What's up with that? So I think what you have, again, if you look at trends on a four-year basis, so we look at the Chase credit card data, it's been remarkably resilient. And I think that's the underlying trend. But on a one-year basis, as you look at retail sales, the last three straight months, you have seen moderation. And those, in my opinion, are tied to the normalizing headwinds versus tailwinds and the wallet share analysis that we published earlier this week that points to that low watermark being the first quarter of this year, second quarter comparisons ease, and back half of the year and into 24, the tailwinds actually outweigh the headwinds for the consumer. The student loan, by the way, you have an overweight on Capri. So you're not concerned enough to think about your rating or estimates

or anything? No, I think the handbags and accessory space, look over a 20-year period, you have very consistent top-line growth of mid-single digits. And at this valuation for both Tapestry and Capri, I think as you think about the consumer backdrop, it's conducive for discretionary purchasing as we look forward. I was alluding to the 36% downside this year to date for Capri. Student loan resumption, the payment resumption, just as back to school is going to get hot and heavy. How much of a problem is that going to be? So you've got a $30 billion swing in inflows versus outflows to the negative in March and April. Tax refunds is a $10 billion outflow. So the situation going forward is still in positive territory relative to what the consumer faced in March and April. But it is an incremental

headwind. Now, the question is gas prices. That's a $40 billion tailwind. I mean, last year in the second quarter, gas prices ratcheted higher by 50% from the start to end, and you are cycling the lowest consumer sentiment in the history of the reading last year in June. Of your overweight rankings, the best stock on your list is what today? We spent a couple days this week with Lululemon. I think the growth there is still underappreciated, still early innings. I think you want to be tied to health and wellness as well as casual. That total addressable market is still growing.

And I think the other side of this is value and convenience. So we like Dollar General. We like TJ Maxx. I think both of those fit into this value convenience. And you want broad retail demographics, meaning you want the broadest swath to capture not only that low end when it turns, meaning tied to the better employment backdrop, but you also want that higher income customer that still has the dollars. Good to see you, as always. Yeah. Matthew Boss, J.P. Morgan right here at Post 9. Up next, are the bulls really back in charge? Top technician Ryan Dietrich is flagging a big rally into the end of July.

He's going to break down the charts, make his case for you next. As we head to break, a check on shares of Kava today. It is the first day of trade for that company. And look at that. We're going to drill down on that first day of trade. It's a big one up better than 100 percent as we speak. Closing bell backward. Welcome back to market surge could continue into July, says our next guest. And he has the charts to prove it. So he thinks. Ryan Dietrich, chief market strategist, Carson Group. Welcome. It's good to see you. Thanks for having me back. Appreciate it. All right. So we

got a nice little move here, right? Near 500 on the Dow. Looked a little dicey yesterday after Chair Powell spoke. Why do you think this has a lot of legs? Yeah, it's amazing. And I was on three weeks ago. We talked about the idea of this surprise summer rally. And you think about it, Scott. I mean, the economy is not going into recession. This rally started. We had that good job sprint, the realization that things are going to broaden out. Everyone talks about only five stocks going up, seven stocks. It's not.

Literally today, we could see a new all-time high on the S&P 500 advanced decline line. Keep this simple. It's how many stocks go up versus down. Breath leads price. A new high there likely says this upward trend we've been in. We've been overweight equities, Carson Investment Research, since late December. People thought we were crazy when we said that. Fortunately, it's playing out. We still think there's a lot left in the tank here. What kind of target do you have in mind for the

S&P, which, as we said, is holding nicely above 4,400 as I look at the board over here, 4,433? Yeah, you're right. I mean, we came into this year saying we could have about a 15% gain. I'm fully aware that's right where we are right now. Now, you know, we are still overweight. Like I said, we don't necessarily have a new target, but we have new all-time highs. I know it sounds like a white ways away.

It's not that far away. One quick one, Scott. We had a new 52-week high this week. We know that on the S&P, right? Over a year without a new high. Here's where this matters to the listeners. Fifteen times when you go at least a year without a 52-week high, one year later, the S&P is higher 15 times, up over 17% on average. It's just one number. I get it. But we're making new highs now, 52-week highs. That is bullish. And we'd be a buyer of any weakness still.

I mean, you're throwing a lot of stuff at me. Did you just say that you think new highs on the S&P in terms of all-time highs are in the cards? Yeah, we do. Absolutely. I mean, we're not that far away with the way this rally is going. We think before this year is over, it's quite possible. With all this news we keep having, the consumer's strong, inflation back, the Fed is likely done. We see that. Now, there's worries, too, believe me. But we've me. But we've been saying you don't sound like you have any. What do you mean there's worries that you don't sound like you have any worries? I've got some worries. We can go that route. I mean, you know, you think about we are stretched near term. I mean, you know, the worries that people talk about globally and some of the concerns. But I'll tell you, my biggest worry is this.

People still are not embracing this new bull market. I know people say up 20% is a new bull market. We've been saying it's a new bull market for a while. I think a lot of people are still underinvested, right? A lot of people are still doubting. Yeah, the Barron's cover. We see those near-term potential worries, but just look what the market is telling us. High beta is drastically outperforming low beta. What does that mean? That's usually a risk on sign. Again, signs to say a new high, which really isn't that far away for the S&P, is likely this year, in our opinion here. Well, we shall see. And we'll have you back to debate you on that. Ryan, thank you. Appreciate it. Thank you. Ryan Dietrich. When we return, markets rallying, as you know by now, on the heels of the latest Fed move.

Is a July hike in the cards? The Wall Street Journal's Nick Timoros is with us next to discuss. Closing bells back in two. Well, we have a nice rally on our hands today, as you know, as investors bet the Federal Reserve is close to done raising interest rates, if not done. Nick Timoros of The Wall Street Journal with us now, the day after, the big day after. It's good to have you. I'm so happy to have you today. As we're in the midst of this rally,

yesterday we weren't exactly sure where the market was going to go. Were you surprised yourself in the room when you heard the projections revealed of at least two more hikes and Fed funds going to 5.6? Not a lot, Scott. I mean, obviously, the expectation was that the median projection for interest rates would go up by one tick and it went up by two. But, you know, I think people are still digesting what it all means. I think the July decision, just as, you know, coming out of the May meeting, there was a high bar to go in June. Coming out of the June meeting, it feels like there is a high bar to skip again, right?

This idea of spacing out the increases and looking at three months of data as opposed to six weeks of data. I think it could be a little bit confusing in the weeks ahead, because if we get, say, softer inflation data and people say, well, you didn't hike at the last meeting when the inflation data looked worse. Why are you hiking now? So they're trying to space this out a little bit. And I think that was sort of the main takeaway from yesterday. I'm going to ask you a question that I'm sure you've been asked already 500 times between last night and this interview.

Do you think the Fed's done? It's hard to say. I mean, you tell me what happens in the economy, Scott. If we keep going like we've been going the last few weeks, then no. And I mean, that was clear yesterday. But, you know, things could still go wrong, of course. I think it's hard but not impossible to come up with a list of reasons why the Fed wouldn't go in July. Weak payrolls, some unanticipated shock, much more severe banking stress. But it's easier to come up with reasons for them to go again in July, really based off of the communications and the projections that they put forward yesterday. And the fact that there just isn't that much hard economic data that we're going to get between now and the July meeting. What do you think is going through Powell's mind right now?

He said what he did yesterday. He certainly sounded very hawkish. And he looks up and he sees the Dow up 500 points. And he sees a strong rally across the board. And he sees rates falling. What do you think he's thinking? Well, let's go back and compare to where we were right after the May meeting, right, Scott? Because after the May meeting, you had real concerns about banks. You had the market pricing and cuts, including like a 20% chance of a cut at the June meeting, which was crazy. So it's a different picture today, at least on the credit side and in the bond market, where you're not pricing in cuts very much for the rest of the year. That's different from May.

I think Powell also has company with other Fed chairs when they stopped or got close to the end of raising interest rates. In 2000, the market went up after the Fed was done. In 2006, the market went higher after the Fed was done. It didn't stay at those levels forever, right? You know, the whole point of monetary policy tightening is to slow the economy down. And I think the Fed has been pretty clear here that they see this battle against inflation as a longer process than something that you're just going to be able to achieve in a day or a week or a month. Do you think he's intent on

breaking something? And would he push it as far as to do that in order to achieve whatever his stated goal is? I don't know. I don't know if that's the right way to think about it. Is he intent on breaking something? I think, you know, the history shows that you don't try to break the thing that breaks, right? You don't know what's going to go wrong. Nobody was really paying that much attention to risks in the U.S. regional bank sector before the Silicon Valley bank failure. Everybody was focused on private credit, open net bond funds, you know, the treasury market. The focus really wasn't on regional banks. So I think that's the danger here is once you get rates

up to where the Fed has gotten them and then you begin to hold them there and more debt comes due, then you begin to find out what you weren't really worrying about that maybe you should have been worrying about. Yeah, we'll leave it there. I appreciate it. As I said, it's great having you, Nick. We'll see you soon. Nick Timoros, Wall Street Journal. We do have a news alert, by the way, on Goldman Sachs. Leslie Picker joining us with those details. Leslie. Hey, Scott. Yes, this relates to the various investigations surrounding Silicon Valley Bank. If you recall, Goldman Sachs disclosed in regulatory filings a few weeks ago that various

governmental bodies were in touch with the firm as part of a broader probe into the downfall of Silicon Valley Bank. The Wall Street Journal reporting a short while ago that the Fed and the SEC are investigating and the Justice Department has subpoenaed Goldman as part of its investigation into SVB. The Journal cites people familiar with the matter for those details. They see that the crux of Goldman's involvement stems from an attempted capital raise that took place right before the bank failed. The Journal reporting that regulators are looking into whether Goldman's investment banking side and trading division were communicating about the portfolio sale, which isn't typically allowed. Now, I haven't been able to confirm the specific details about the investigation and which agencies are doing it.

But a spokesman for Goldman says that the firm told SVB in writing that it would not act as an advisor on the sale and urged SVB to hire a third party financial advisor was more interested in the portfolio of securities that were for sale. Goldman has said in its 10Q that it's cooperating with investigation with the investigations and SEC spokesperson said they do not comment on the existence or non-existence of a possible investigation. And we have reached out to both the DOJ and Fed, but we have not yet heard back, Scott. Okay. Leslie, thank you. Leslie Picker. It's the last chance to weigh in on our Twitter question. We asked, will the S&P be higher or lower by next Fed meeting? Head to at CNBC closing bell on Twitter. The results now of our Twitter question, we asked, will the S&P be higher or lower by the next Fed meeting in late July? The majority of you said higher. Yeah, by 62 percent,

in fact. Up next, we're less than an hour away from Lyft's annual shareholder meeting, a rundown of what to watch, how it could impact the stock, which has just had a dreadful, a dreadful run. When we take you inside the Market Zone. We're now in the closing bell Market Zone. CNBC Senior Markets Correspondent Bob Pisani is here to break down the crucial moments of the trading day. Joe Terranova is back ahead of Adobe Earnings in OT. Deirdre Bosa with what to watch when Lyft shareholders meeting kicks off. Bob, you first. You want to do CAVA? Yeah.

IPO mania. I think that this CAVA thing is very relevant from a macro perspective, not a micro perspective. Look, you have a hard time justifying that. We're talking 17 to 19 dollars to price this on Monday. They price it at 22. It opens at 42. Here it is right behind us. Forty three dollars right now. How do you explain a hundred percent increase in a day? In fact, more than that was 17 to 19 on Monday. You can say, okay, there's a lot of kava fans out there. I'm sorry, that doesn't do it. There is IPO drought, and there is a huge interest,

and I think this is indicative of the macro environment, the demand in general. I don't think this is so much a kava story. Joe, you know, restaurants have been terrible investments long-term. All right, fine. Chipotle is a winner. Okay, Shake Shack, Sweetgreen, not great investments. You're saying that this is because the macro is getting better? I think it's hard to say. The world suddenly discovered that Kava is this fabulous investor. I think Kava is a great company. It's got growth prospects,

but 100% on the one day? Well, it's not even profitable. Yes, it has. I think it's very likely going to be profitable. I know, but it's not. I know, but it's not. But not today. I agree with your point. That's my point. It's a macro game here. The drought has been so great and the demand is so high for new IPOs and new stock. That's indicative of a strong macro environment. And look what we're doing here today. Look, I'm loving the fact that IPO ETF leads. It's been a disaster last year. It's leading.

Transports are leading today. Banks are leading. Tesla's down two days in a row. After being up for 13 and adding $200 billion in market cap. Even NVIDIA's down today. AMD is down today. Apple new high. Other things are moving on the up.

We're starting to see a little broader market. You're standing there staring at me. No, no, no, no. I'm watching. I'm seeing if Microsoft is getting aware. You are like on a up. We're starting to see a little broader market. You're standing there staring at me. No, no, no, no. I'm watching. I'm seeing if Microsoft is getting aware. You were like on a roll. You're on a roll. I feel strongly because finally we've got some real energy here. You feel strongly? Buying interest. Buying interest. I see. Finally, that's what I want. I want somebody to show some enthusiasm. Now we're getting it. A lot of the buying interest, though, is technical. Look at Meta today. Meta's up another 3.16%. You've got Microsoft rallying as well. So it's technical in its nature. It's to be applauded. It's a breakout. I think you've got a lot of people that are still caught on the wrong side

of the market, underinvested. How do you feel in your four and three quarter money market fund today? That's a very good point. So I made fun of my mother three months ago calling me from the bank saying, I'm pulling money out of my savings fund. You said four and a half percent, I think. She was investing four and a half percent, buying one year treasuries at four and a half percent. I remember that day. Pull out money out of the stock market, pull it out of her savings account. So it's a very good point. The bulls believe that the people left are going to be the source for the further fuel in the market. Here's my problem with that. The bearish levels are going down. Look at the Bank of America fund manager survey.

Less people, lower levels of cash. The AAII survey, the weekly sentiment survey, bullishness levels are going way up. The number of people who are going to get dragged back in the market, I think, is getting smaller at this point. So I agree with your point. It's getting harder to make that argument. But then it becomes a handoff from technical forces to fundamental forces. Do we come out of the current earnings recession?

Do we have a V-shaped snapback? Can we reach and achieve the double-digit earnings growth at the end of the year? Now you've got fundamentals in play. Do you want to ask him about Adobe since he's asking you about the market? I can just bail. Go ahead. Adobe and OT, what do you think here? Classic example of momentum in play. What do you see? Do you see the 699 high from November of 2021? What do you see? The 274 low from September of 2022. Here's what I know with very strong conviction. You will have at least a 5% to 6% move in this stock post earnings.

Why? That's what the options market is telling you. And because we've built up such an extreme amount of high expectations. Fundamentally, you need to see the return of revenue growth. Revenue growth is half of what it was. Correct. Right? In the last 12 months, revenue growth has been 8% over the prior 36 months.

It was 16%. So the revenue growth has to come back again. Now, here's the good news. Generative AI, is Adobe going to participate? Unquestionably, they will. And they have this embedded platform in which 90% of Fortune 100 companies are utilizing their digital solution products. So the integration into AI is very easy once they utilize the subscriptions. The problem is the revenue contribution in the next 12 months, single digits. All I can tell you is I'm a Photoshop guy for 20 years. I'm paying

Adobe $10 a month for the rest of my life. That's all I know. All right. Hold your thought. All right. Deirdre Bosa is following Lyft's shareholder meeting when that kicks off. D. Scott, what's the word you use before the break? Dreadful returns. I think that might even be an understatement since that company went public in 2019 at 72 bucks a share. It has dropped some 85 percent in market value. It's losing market share to Uber. Its founders are no longer running the day to day. So the new CEO, David Risher, he has a lot at stake, a lot to prove to Wall Street at this upcoming shareholders meeting. And even, Scott, you still have people talking about whether Lyft could be an acquisition target because it has fallen so much.

The key question, though, is who would take it? This is a company that is still losing money as well as losing market share. I guess the question is, is it content at some point being a distant number two to Uber? Because it seems it seems just not that plausible that you could see a scenario in which they could catch up in any significant way. And I'm even thinking about investors who watch the stock prices go in very different directions. Yes, and that's the key point. I mean, this isn't just a Lyft problem. This is a ride-sharing problem.

I should note that Uber stock is also below its IPO price. But for Lyft, the problem is particularly acute. Is it content to remain in number two? Yes. In fact, the new CEO told. Is it content to remain in number two? Yes. In fact, the new CEO told me there's strength in being in number two in his first interview when he took over the job. But, I mean, there's even more problems to fix because it has just fallen so behind. It's going to have to win market share back. And I guess the question is, could it actually regain a bigger position with someone else, with a Waymo, with a Cruise?

Would that ever be allowed to happen? So maybe that's one possibility for shareholders who'd like to recoup some value. All right, Dee, thanks so much. Deirdre Bosa following Lyft. There's the two-minute warning. As we approach the close, Bob, we're holding on to a 400-point gain. And you talked about how broad-based this move is today. So many of the sectors out of the S&P, 1, 2, 3, 4, 5, 6 of them are above 1% gains on the day, and the others that aren, one, two, three, four, five, six of them are above 1% gains on the day. And the others that aren't are pretty close. Yeah, we want to see the broadening out. We want to see tech slow down a little bit. We want to see consumer discretionary even slow

down a little. We want to see consumer staples stronger. Health care has had a horrible month, notwithstanding what happened with UnitedHealth, even leaving them out, what happened to them yesterday. So broadening out is important. We want to see some more new highs. We only got about 40 today. Let's see that happen. The problem the stock market has now is the soft landing scenario is getting stretched. 19 times forward earnings next four quarters. That is not a recessionary multiple.

That's an expansionary multiple. Now the market has to argue we don't have any recession. I got something I want to bring up because I want your perspective on this, which somebody just sent me. Money markets saw their first outflows in the week ended June 14th since April 19th. Another positive sign. Right there. That's what I want to do.

My mother, I'm calling my mother now. Mom, what do you think? Seriously, but that's been one of the headwinds for the bulls has been there are still alternatives to stocks. In order to take another big leg up in the market, you need money to come from somewhere to go in equities. Exactly right. So it's going to come from money markets and maybe those people who are sitting in all of those short-term treasury ETFs

that have had oceans of inflows so far this year. There's your source of funds to see the market go higher. All right. So you hear the bell's going to start ringing in just a moment. The Dow is holding on to its 400-point gain in what is a nice bounce back from how things looked post-fed yesterday. And S&P up better than 50 points right now. Well over 4,400, 4,425. There is the bell.

I'll send it into overtime with Morgan and John.