Closing Bell - Closing Bell: The Future of the Rally 7/28/23

Episode Date: July 28, 2023

Is there enough momentum in earnings so far to keep the rally intact? Wharton Professor Jeremy Siegel gives his expert market take and debates with Veritas’ Greg Branch who has firmly remained in the bear camp. Plus, Capital Wealth Planning’s Kevin Simpson is changing up his portfolio this earnings season. He reveals his latest moves. And, JP Morgan’s top technician Jason Hunter is putting his bear case on ice. He explains why.

Thank you. Welcome to Closing Bell. I'm Scott Wapner live from Post 9 here at the New York Stock Exchange. We're going to be joined momentarily by Professor Jeremy Siegel of the Wharton School for a look at where this rally can go from here. And that's where this make or break hour begins with stocks on the move yet again. The Dow might have given up its 13 day win streak yesterday. Not its momentum, though. It's rising again. Verizon, P&G, Boeing among the best gainers today. The S&P 500, just like the Dow, looking for its third straight week of gains. And that's after the Fed's favorite read on inflation came in largely in line with expectations. As a result, interest rates mostly lower. And that, to nobody's surprise, is helping the Nasdaq to a strong day.

Apple and Amazon, of course, set to report their earnings next week. Both stocks. There you see them higher in today's session. It leads us to our talk of the tape. Whether there's enough momentum in earnings so far to keep this rally intact. Let's ask Professor Jeremy Siegel of the Wharton School. He is live with us once again. Professor, it's nice to see you again. Good afternoon, Scott. We heading towards new highs, Professor?

I think so. I mean, this is such a strong market. You know, you hear the guidance from the firms that was so tentative, you know, in the first and second quarter. A lot of it is so much more confidence. The internals are improving. It's broadening out the ECI, you know, that that employment cost measure that Chairman Powell mentioned a couple of days ago came in below expectations as well as the others.

You know, Goldilocks, lower, lower inflation and stronger economy and good guidance and good profits. What's to stop this market now? I don't know. Jay Powell and company, maybe you think they're done? I'm not sure that they're done, but what I'm pleased about is that he acknowledges that there are two sided risks that he's going to every meeting is a live meeting. There's no preconceived motion about whether they're going to go up or down. They're going to look at the data, which is something that, you know, I've urged for quite a while. You know, frankly, as you know, I was very, when I saw the money supply go down, decelerate by the greatest amount in history, I was concerned. I wanted, I was worried about what was going to become of the economy in the second half. And I'll tell you, the first half, I don't know anyone who thought that the first half would grow faster than 2 percent.

I would look back in my records. Even the Fed was way below that in its estimate. So inflation coming down, stronger economy. I don't see this stopping anytime soon. Do you think that the Fed is looking at the right thing? I mean, there are some who suggest that they're fixated on on lagging indicators and not enough on what's actually taking place on the inflation front. The danger, of course, being that they end up going too far as a result. You share those concerns. Well, I did a lot earlier on. You know, I still have trouble with this year over year because it's 11 months of old data and then one month of the new data. And we all know how lagged

the housing indicator, which was, you know, still recording increases every month, even though it's gone down year over year. But I think now the Fed gets that and they realize that there are a lot of lags in that system and that they have to look at that forward looking indicator. So I'm less worried about that now than I was three or even six months ago. The bears would say, and we're going to talk to one in a minute, by the way, and we're going to have a debate. But they would say that, you know, the bulls will come up with any excuse to justify valuations which are stretched. They're stretched far past historical averages. And given the environment we're in, where earnings are still not great, better than feared isn't good enough to justify valuations here. How would you respond to that? Well, you know, the S&P is selling about 20 times next 12 months.

You know, my research shows that that's about average. I mean, the tech stocks are 30. The value stocks, the cyclical stocks, so fearful that inflation are 14, 15, 16. That's extremely reasonable. So, you know, yeah, you could argue that the tech tech stocks maybe a little bit over their skis and in terms of how far they've gone. And, you know, I would prefer the value stocks out of the long run. But when I look at this market as a whole, I do not see any significant overvaluation. You know, I think back in the dot-com bubble where the S&P was selling over 30 times earnings in a much higher interest rate environment

than we have today. That was scary. I don't regard today's valuations as scary. Do you think there's going to be a bit of a catch-up trade from those who say, okay, technology stocks and comm services stocks have done a lot. The valuations have expanded. Multiples have expanded.

Obviously, they're a lot richer than they were at the beginning of the year. And if we truly are going to have a soft or no landing, the better plays are going to be in those value stocks you cite. Yeah, well, you know, one thing I've learned to appreciate is trends. And most certainly we have a trend of those tech stocks, the Magnificent Seven, if you want, being very strong. And trends go much further than we expect and honestly much further than they deserve to go. So I'm not going to say, you know, like next week or next month, we're going to see that catch up trade because, you know, we had one bad day a week ago where tech really sold off and boy, they've regained their. And that's usually what happened.

Little cracks appear, but the trend continued. This trend of strong tech relative to the others, even though the arguments that you make are good about widening out with a better economy, you know, it could happen for another three or six months before we see a reversal. But long run, I would agree. Those stocks pose more risk and lower longer term returns. Wow. I mean, three to six more months of gains for tech that doesn't, you know, start to get into the super frothy territory of valuations. As I said, you know, Apple reports get into the super frothy territory of valuations. As I said,

you know, Apple reports next week it's 31 or 32 times. And a lot of these stocks are far ahead of where they started the year, Professor. Right. And they were certainly, you know, quite depressed at the end of last year. Again, I'm not I'm not saying that's happened, but I'm old enough to remember 1998, 1999, the S&P technology stocks, which contained only one internet stock, which was AOL, which was actually making money. But the technology sector was selling at 80 to 90 times earnings. So what we have today is almost peanuts in comparison to some of history. Again, I don't think we're going back there because I think people learned their lesson.

That was a disaster. I'm just telling you how far trends can run before they reverse and how hard it is to predict when they are going to reverse. Well, let's bring in CNBC contributor Gregory Branch from Veritas Financial Group, the aforementioned bear bear at a time where the professor says this is Goldilocks. This is Goldilocks, Greg Branch. Why don't you think it is? Professor Scott, good to see you. I think it's the exact opposite of Goldilocks. And I think you've heard me position it this way before, Scott. The economy is strong enough that the Fed is at least attentive, at least on watch, at least didn't say we're done. And they can't, but not strong enough to justify the earnings estimates.

And so here's here's something that that I was too optimistic about. Remember coming into this quarter and as the professor said, there have been some nice upside surprises, but on average, it's a 9% contraction in earnings right now for this quarter, with 20% of the S&P reporting. I was at around 5%, thinking that all that stimulus that we supplied in the first five months of this year was going to result in a better quarter than consensus expected at negative 7 percent, just like we saw in the first quarter. And so I was way off and consensus is way off. If this is where we end this quarter at negative 9 percent, a 9 percent contraction in earnings. How do we get from there to a flat third quarter? How do we get from there to a 8% earnings growth fourth quarter or 245 in 2024. I just don't see any probabilities

that I can assign to that, Scott. And if that's the case, then I make a mathematical calculation. I'm going to quibble with the professor saying 19 is about average. The professor knows that while 19 is probably reasonable, 10-year average is 17 times. And at 17 times 225, we're looking at 3,800. That's what the math says to me. Professor, your response is what? Well, there's a couple of things. First of all, you know, far out earnings are always too high. If you take a look at history, they start too high and they start going down. What is really amazing to me is 2024 earnings have remained virtually the same as they were three, four months ago, which is

actually going up relative to their average performance. Also, it's my belief that if you take a look at long-term trends of P.E. ratios, they're higher today. I don't think 17 is the right PE ratio to apply to a market. I think it's really 19 to 20. And for the growth stocks higher, I'm not saying it's 30. I think it's probably closer to 25, 26, depending on which stock you're talking about. But I think that I would do 20. And you're right, 20 times 240 is what, 4,800 on the S&P, and yeah, we're not there yet, but we're certainly, that doesn't spell a decline for next year. Greg? Well, at least we know where we differ. You know, I think that those are those are slightly aggressive estimates. You know, I think I think Paul Volcker is is looking down on us, professor, and probably

shaking his head that we are trembling at the Fed proposing and likely to do more here. I know that you're probably not of that opinion. I am. And I reference our all of our mentor Volcker in that. Remember, in order for him to step out the last great place we saw he took interest rates to near twenty percent he induced two recessions because the lesson learned from those vocal years was that if you don't look apply consistent enough and extreme enough pressure inflations going to be rejected by but but you're acting as though but you're acting as though all inflation is going to rear its head again. But you're acting as though all

inflation is created equal. And the inflation that was caused in the 70s is far different from the inflation that we're witnessing today. I guess my question to you, Greg, would be, and I don't ask it in a way to be snarky in any way, and that's certainly not my intention. And I have the greatest amount of respect for you. You know that. But how long are you willing to be wrong? The same arguments I hear repeatedly when you come on are the ones that have fallen by the wayside as the stock market is up 20 percent. The S&P 500 is up 20 percent this year. And if you quibble with me and you say, well, that's because the Magnificent Seven are carrying the whole boat. I would say, well, the equal weight S&P 500 is up nine and a half percent. So it's not just the mega cap stocks anymore. Maybe at one time it was, but this is a more broad rally than it was.

And I'm just curious as to how you're able to maintain this level of resolve you have in the face of what is undoubtedly a different story that's playing out in the market. Well, there's three reasons why, Scott. And I certainly don't mind a challenge. And for sure, I'm wrong right now. Number one, I think there are definitely durations during which the market departs from its fundamentals. You know, we just did the math. If you believe in 19 times multiple is appropriate, that's what you believe. But if we're both at 225 or so around that, and we apply a 17 times multiple,

that tells us where it needs to be. So I can change my posture when I can change my math, number one. Number two, let's not forget, Scott, you and I have been doing this together now since early 2022. And I think we both admit that you asked me some of these questions during 2022. And I said, Scott, I don't know how long that this July 8th, August rally is going to last, but it's short lived. And that's what I think about this rally for now. Again, when I hear something different or say see something different factually that would have me change my mind, then I will. Well, the facts have changed, though. The facts have changed, though, haven't they? I mean, the Fed's closer to the end. I think we I think we can intellectually admit that. And the economy and I know we can admit that the economy is far better today than

you thought it would be back when we started having these conversations, that the consumer has shown a heck of a lot more resolve than you thought they would, and that earnings, despite the fact that you point out that they're still disappointing to you, they're way better than you expected them to be to this point. I know it. Well, let me clarify two things. Number one, they're not disappointing to me. They're just negative 9%. And so you decide how you feel about negative nine percent. And you decide whether or not you feel like we can get from negative nine percent this quarter to flat next quarter. That seems unlikely to me. So that's that's the first thing that I would I would quibble with.

The second thing I'd quibble with is, yes, we are closer to the end of the hiking cycle. I would agree with that. But I think what all three of us can also agree with is that we are much more towards the beginning of feeling the impact of what the Fed has done. I think we sometimes lose sight of that. It's not just about saying they're going to raise interest rates. Typically, the impact is fully felt 12 to 18 months after the raise. And so we're only in the beginning innings of feeling that 500 basis points. And, you know, I think it's going to be 625. I've I've made that I've maintained that since October. So so that's that's why I still maintain this posture, Scott. Professor, too soon to declare victory. That's the message I hear from Greg. What do you think about that?

And I hear that. And I've been talking about the long and variable lags. Actually, the tightening, you know, the pivot was November of 2021, even though the first increase wasn't until March. And we're now more than 18 months from that pivot when long rates started really going up. And yeah, I'm surprised how well the economy has withstood these higher rates, which shows me there's a lot more fundamental optimism about strength. Take a look at consumer sentiment recently, how that's gone up. You know, jobless claims, which were going up in May and June, have now collapsed back down. Wow. I mean, yeah. I mean, it's opened my eyes. And, you know, as I pointed out before, you know, Lord Gaines once said, when the facts change,

I change my opinion. What do you do, sir? And like, yeah, I was fearful. I was fearful like you were, Greg. But then I began looking at these facts and say, hey, there's a lot more fundamental strength and we have to take that into account when we project what's going to happen both for the economy and for the markets. Greg, I'm going to give you the last word. I'll just ask you to do it briefly if you could. No problem. So I agree with what you said, Professor, and I am always challenging my own assumption. One of the things that I saw in GDP that was encouraging is to see business spending tick up again. So business spending went from nearly flat in the first quarter to 7.7 percent in the second quarter. And while I'm still processing that, I don't think it can save us from what is about to happen to the consumer.

We had passed a trillion in credit card debt. Credit fell off a cliff. We expected to add 20 billion. We added seven. The underwriting standards are still tightening. We just haven't felt the full impact of that 500 basis points yet. Gentlemen, to be continued. Enjoy the weekend. We'll talk to both of you soon. Professor, thank you. Gregory Branch, you as well. Let's get to our Twitter question of the day. We want to know who do you think is right on the market, Professor Siegel the bull or Gregory Branch the bear? You can head to at CNBC closing bell on Twitter to vote the results later on in the hour. We do have breaking news, though, on the autos. Phil LeBeau, who else with the details, Phil? Hey, Scott, take a look at the largest automakers in terms of sales

here in the United States. Why are we showing you this? Because the Department of Transportation has just put out proposed rules to increase the fuel economy standards in the United States between 2027 and 2032. We already know what the standards are going to be up through 26. What are they going to be through 27 to 32? Goes up to 54 miles per gallon. That's the fleet-wide average for automakers.

And then you see all the way up to just under 60 miles per gallon. That's the fleet-wide average for automakers. And then you see all the way up to just under 60 miles per gallon. That has to be the average that is going to be expected by 2032. This is a proposal at this point, Scott. 60 days from now, we'll see what the comments are on this, and then we'll see if it gets put into law as the DOT wants us to dramatically increase fuel economy in this country. All right, Phil, we appreciate that. Just noting as well, Ford shares down after earnings yesterday, about 3.5%. Phil LeBeau, thank you. Let's get a check on some top stocks to watch now as we head towards the close.

Christina Partsenevelos is here with that. Christina. Well, it seems more people are turning to Roku to stream videos. The channel grew 50% year over year in Q2, although they didn't give us an actual number. Roku is having its best day since 2019 after posting a smaller than expected loss on higher revenue. The company has been cutting staff to lower costs, so that's helping margins. The strong revenue guidance is another sign of a pickup in digital ad sales. That's why shares are up, look at that, 29%. And Scott, it's Friday, right? So twisted tea, anyone? Boston beer seeing strong growth in that liquor category. By the way, that sweet tea, they even have a whiskey version that's 65 proof in my diving into the research for that.

But that category offsetting challenges in the hard seltzer category shares soaring after the brewer smashed earnings estimates and reaffirmed its full year earnings guidance. Shares up 17.5%. Twisted. All right. Christina, thank you. You enjoy. It's almost 5 o'clock somewhere. All right, we're getting started just now. Up next, five-star stock picks, capital wealth planning's Kevin Simpson

is changing up his portfolio this earnings season. He's going to reveal his latest trades. He'll do it just after the break. We're live from the New York Stock Exchange. You're watching Closing Bell on CNBC. Welcome back to Closing Bell. We're roughly halfway through second quarter earnings. Results have been mostly better than expected with growing expectations of a rebound into 2024. Our next guest is using this reporting season to make some changes in his portfolio.

Joining me now right here post night, Kevin Simpson of Capital Wealth Planning. Good to see you again. We'll talk about the market more broadly in a minute, but I want to get to the moves first. You bought Freeport-McMoran. That's sort of your headliner new buy. Pretty exciting, huh? Well, I mean, you must be bullish in the market now, or certainly bullish on the economy, because if you weren't, why would you buy Freeport?

Yeah, I think there's going to be a rebound in copper. You know, we want to look for things when they're down. They posted earnings, which we thought were pretty good this week, Scott, and it sold off 5%. So we're looking at a company that's cleaning up its balance sheet. It's definitely going to be a beneficiary if there are some stimulus in China or if it does reopen at some point. It's a dividend a little bit lower than I typically look for, sub 1%. But over the past three years, they've been increasing that at about a 44% clip. Nine times EBITDA, I think there's an

opportunity there to take a position in a little bit of a commodity play. More copper than gold. Are you still as cautious, if not just negative on the market as you've been? I'm always cautious, no matter what happens. I know you're cautious, but you've been negative. You've been tilted negative on the market. Yeah. I think- Does this say anything this buy about your your opinion sort of changing? Yeah, I think as we get to the end of the Fed heightening cycle, we have to take the reality that the consumer has been so strong into account and expect that we're not going to see those October lows retested. So I don't know that the market has a whole lot to

go in terms of its broader appeal. But even if we do have that catch-up trade then stocks like Freeport and some of the others that we've been piling into Could be beneficiaries because they haven't done anything. Is that why you bought more coca-cola? Yeah, you know again like the anti-tech trade we were talking about a month and a half ago the last time they had earnings The stock sold off 10% and we thought with Pepsi's good earnings last week that we'd see a follow through with Coca-Cola. And we did. They beat on top line, bottom line. They increased sales for the year in terms of their estimates. And what's great about Coca-Cola is not only did they raise their margins, they also raised sales. Checks off all the boxes. So you wrote calls on Microsoftrosoft and and ups um to hedge

positions that you you have in both of those stocks yeah you know there's been a lack of volatility although it's an absence of volatility in the broader markets but ups heading into what became a good outcome crisis averted yeah exactly but vol was picking up before then so we're able to get really good premiums same with mic Microsoft and Apple. You've got opportunities within tech where you've got higher premiums heading into earnings. And in both cases, they turned out to be really good option trades. Microsoft is interesting, isn't it? I mean, it's so much representative of the sort of psyche of where the market is. You know, earnings, I'm not going to suggest that they were disappointing, but, you know, the stock obviously didn't have a great reaction to it. And yet their stock's only down one point four percent on the week. And as you just saw on the board,

there is all of our viewers are looking at it now. It's up two and a half percent on the day. So there's there's still this idea of buying these names on any sort of dip. Yeah, I think we're going to continue to see that because people want to be in them. I continue to trim them. I continue to write calls on them. but I'm sure as heck not selling out of them. I think the multiples are a little bit stretched, but the opportunity for the catch-up trade to me is real. And even if the market stays flat or even it went down a little bit and those names that maybe were ahead of their skis came down and the rest of the market goes up, certainly that would be good for me and my style box because there's a lot of value names that haven't had a pulse in the past six, seven, eight months.

Give me some more details on UPS, if you will. We just briefly mentioned it in passing. Obviously, the strike, we're worried about it. It's not going to take place because of that agreement that we reached. The stock's up 7% in a month. It was a great job by UPS. It was an awesome job by the Teamsters, and it's great for the economy and for all of us. The stock has increased its dividend by 16% on average for the past five years. That's what I'm

looking for. I want companies that can increase their dividends because their share price will be reflective of that earnings growth. So if they've got earnings growth, dividend growth, it's a hedge against inflation, and ultimately the stock price will go up over time. Do you own any financials? We own Goldman Sachs and JP Morgan, and Visa, depending upon where you want to put it. How do you think about dividends as it relates to some of the banks? You know, we've got these new capital requirements. We're thinking about what that's going to mean down the road for dividends and the like. How do you think about it?

Yeah. So we knew that the regulations were going to hurt financials across the board, and you've got to put that into their profit margins. But we didn't want the traditional financials. So looking at Visa, you're not really exposed to that. Goldman Sachs, someday there might be M&A, there might be an IPO again. Who knows? Goldman Sachs seems to continue to trade up even in the absence of it. And I think smart to get away from a lot of the retail business that really wasn't their core, you know, Goldman being Goldman. JP Morgan, you know, just what an unstoppable force in the space, a beneficiary of the regional banking crisis, rock solid dividend, dividend growth, share buybacks. I mean, those are the names that we like. And we talk about multiples. They have really low multiples. And that's a good thing.

What about energy? What's your exposure look like in energy? As some say, that's primed for a catch-up trade. You've got five straight weeks of gains now for oil. You know, we're back at 80 bucks. Maybe that's going to be better for energy stocks. What do you think? We've been saying that for month after month after month. Maybe this is the moment. It finally happened a little bit for the past 30 days. You talked about a catch-up trade. We own Chevron, Marathon Petroleum, and SLB, the old Schlumberger, all of which have had great months. And to remind some folks, because we do operate on the Gregarion calendar, we're measured by the calendar year, they were awesome trades for 2022. They've been lousy in 2023. But if energy is over $60 a barrel, they make money. They're committed to shareholders.

We're seeing WTI up closer to 80. I think it's a great place to be invested for now because of the free cash flow, the dividends, and the share buybacks. All right. Take care. We'll see you soon. Thank you. All right. Kevin Simpson joining us here post-9.

Up next, J.P. Morgan speaking of their top technician, Jason Hunter. He's back. Why he's putting his bearish view on ice. Speaking of bears who are capitulating, what it might mean for the broader market in the back half of the year. We'll explain after this break. Closing Bell, right back. Welcome back to Closing Bell.

The S&P 500 staging an impressive comeback today on track to close with its biggest move of the month. Let's get the next key levels to watch now from Jason Hunter, head of technical strategy at J.P. Morgan. He joins us by the phone. So we sold this as you put your bearish view on ice. Tell us more. Yeah, so the last time I was on, we were talking about this 4,200 inflection that was acting a bit like a bifurcation where the market had rejected it several times through the year so far um and our view was that the market was able to sustain above 4200 and the leadership started to broaden out then we would have to take a step back from a bearish view uh kind of a live to fight another day type mentality uh and wait for the stars to align from the chart reading side um and that would line up with what we think is a macro fundamental back

drop that's that's not that healthy for the market. So for the time being, more of a neutral type position and waiting for the market to decelerate and form a new top pattern before we can really press that bearish view again. But do you think the rally's intact, I guess? That the trend is intact and that, I mean, there are some making calls that we're going to hit new highs in the next, I don't know, we're not that far away now. That's right. I mean, the market's bumping into the underside of a channel that's defined the rally from the lows back in September, October of last year, and that's roughly 4,600.

It's showing some signs of deceleration, but as we wrote in our note last week and into this week, that until we see that deceleration form a more convincing distribution pattern, it's too early to get aggressively negative again. So as you said, the market's trending until it isn't. It's starting to get overbought. Sentiment's starting to get frothy, but that could persist. So we don't want to be early with getting bearish again, particularly since we were wrong coming into the summer months. We'll wait for that distribution pattern to form, you know, keeping in mind that seasonality starts to turn negative in September and October. So we'll look for that deceleration

to form a top pattern, but not move until we see that those facts come into evidence. You want to just explain that a little bit more when you say, you know, the market's overbought, which people hear all the time. And as you obviously and rightfully suggest, markets can stay overbought for some period of time. Do you have any sort of idea of how long you'd be willing to accept that this could go? So I think there's two things number one as you said you equity markets tend to trade asymmetrically uh... so bottoms or you know they play or an event uh... our process

uh... oversold conditions resolved very quickly read at these b shape bottoms position pointed out as we've said uh... overbought conditions to persist for a while so we we don't paid over bought conditions are both sentiment you wait for that to then translate into deceleration of the trend, which then forms a distribution pattern. And like I said, it's a process. It takes time to develop. We're seeing maybe the early stages of that. You know, then the question is, well, how long do overbought conditions persist? That's variable.

That's as long as the fundamentals allow them allow them to and if we look at the the fundamental economic data high-frequency level of the data starting in mid-may uh... at for the most part the at economist expectations you look at the jp morgan u s economics pride date index it it's been a one-way street since mid-may much toward this you know this may where that's ultimately what stopped about a bar our bearish view it allowed the market to push above 4200 and the participation abroad now small

caps start to participate um if the data starts to miss you know it's like saying water is wet i get it but that's really probably what's going to be required uh for for this to form into a distribution pattern and turn the corner jason appreciate it very much we'll talk to you soon all right thank you so much for joining us from. Morgan. Up next, we're tracking the biggest movers as we head into the close on this Friday. Christina Partsenevalos, of course, is standing by with that. Christina, you don't make friends with salad. Sweetgreen seeing weak sales in its latest report. Can you reference which show I was just talking about? And a downgrade with wing stock. Peckish, anyone?

Details next. Lots of food. All right, we're 20 minutes away from the close. Christina Partsenevel is standing by with the stock she's watching. Christina. Shout out to all our viewers that got my Simpsons reference there. But let's talk about Wedbush feeling mild about Wingstop, downgrading the stock to neutral and cutting its price target to $185 from $240.

Analysts are citing, what, the rise in chicken wings and the potential for franchisees to hike menu prices in response. And that could hurt transaction growth. Shares are down over 8% right now. And sadly, things don't look that much better at Sweetgreen, with the salad chain posting weak sales, but hoping to turn a profit for the first time by 2024. Shares, though, are down over 9% right now, but still up more than 60% so far in 2023. So maybe you do win friends with salad. Maybe you do. Or twisted tea. That might be the way to go.

32.5%, the whiskey version. 32.5% alcohol level. Enjoy. Bottoms up. No, I'm still working. I'm coming on the show in 10 minutes. Okay. Whatever you say. Christina Partsenevelos, thank you very much.

Last chance to weigh in on our Twitter question. We asked who was right on the markets, Professor Siegel, the bull, or Gregory Branch, the bear? Head to at CNBC Closing Bell on Twitter. The results are right after this break. The results of the Twitter question we asked, who's right on the markets, Professor Siegel, the bull, or Gregory Branch, the bear? The majority of you said Professor Siegel of the Wharton School, the great city of Philadelphia. Sixty-nine percent. As a matter of fact, 30.

Greg Branch. Up next, when everyone was focused on the Dow's win streak, there was actually another record run that could be crucial to the market. We explain coming up when we take you where else. The Friday edition of the Market Zone. We're now in the closing bell Market Zone. The Wall Street Journal's Gunjan Banerjee is here to break down the crucial moments of the trading day for us. And Christina Partsenevalos looking ahead to the rush of fintech names reporting next week. Gunjian, it's good to see you. I'm looking at the S&P up 1% on the week. And I guess the bottom line is nothing that happened this week, whether

it was the Fed or earnings or anything else, upset the story or the road that this market appears to be on. That's right, Scott. My big takeaway from this week is people are really fully embracing this soft landing thesis that's been percolating all year, but it's been turbocharged this week among individual investors, institutional investors. We're seeing the Fed come around

to this idea of a soft landing and saying that they think a recession could be avoided. One warning sign, though, is I was looking at some Deutsche Bank data recently, which showed that eight of the past 11 hiking cycles were met with a recession. However, they usually didn't arrive until around two years after the Fed started raising interest rates. So watch out for 2024. Yeah, but I mean, the market is still suggesting that the Fed might not be quite done yet. Right. You know, a lot of investors I've been talking with do think that the Fed just hiked interest rates for the last time. And it's kind of interesting because one thing we've seen

throughout this year is that this mantra of don't fight the Fed, it hasn't worked. People have fought the Fed. They've piled into some of the riskiest assets and they've been rewarded handsomely. I think some of the recent market actions suggest that people are looking past the Fed, looking past rising bond yields and are just more focused on individual corporate results at the moment. Well, the Nasdaq's been the epicenter of where the action's been, obviously. And next week, we're going to get Apple and Amazon. And I'm wondering what you think that's going to do to answer the question of whether this rally is about to take its next leg or not. That's the big question. We have Apple earnings. We have Amazon earnings. We have the jobs report. There's a ton to watch next week. And I think those two companies are especially important to watch because everyone is hanging on to what these tech executives are saying about AI, about cash flow,

about their businesses, because they've really staged this incredible rebound this year after, of course, an awful 2022. You do say that you expect the individual names to see the quote-unquote more explosive moves in the market rather at this point than the averages themselves? So I think that's what some of this recent market action suggests. One measure of implied correlations among S&P 500 stocks has fallen to some of the lowest levels since 2006. So that tells you that in the options market, people are betting on bigger moves for single stocks relative to the broader index. And again, that's what we've seen this week, where we've seen meta jump 5 percent, Royal Caribbean shares pop. All these stocks staging

these mammoth moves while index volatility has been pretty low. And this index suggests that traders are betting on that to continue in coming months. All right. You'll stay with us and we'll talk to you before the end of the program. Phil LeBeau is taking a look at the moves in Ford and Lucid. And Phil, on the phone, they're going in opposite directions today. It's all about electric vehicles, Scott. And Ford's getting hit with a double whammy when it comes to EVs. Yesterday afternoon, they disclosed that they're going to be spending at least $1.5 billion more this year with their EVs, while at the same time slowing down production. And that's too much for the investors at this point.

That's why the stock is getting hit by more than 4% today. Is that making people think twice about specific EV names, those companies that are just building EVs? No. In fact, all of them, whether it's Tesla, Rivian, Fisker, Lucid, they're all higher. What does it tell you, though, Phil, when, you know, Ford raises its guidance, the outlook was pretty good, at least for traditional vehicles, and the stock goes down three and a half percent. As to where investor expectations and hopes have gone as it relates to EV and somebody to pose a credible challenge to Tesla? They're not seeing it right now. And the question becomes, who will pose that credible challenge? Look,

is it possible that Ford at some point really does become a true competitor to Tesla in terms of volume, really significant volume. Yeah, it's possible. Nobody's saying that's not going to happen or couldn't happen. But what they're saying is it's not happening anytime soon. Not with Ford, not with GM, not with any of the established automakers. That may change in the next couple of years. But right now, investors don't think so. The wonderful C, you know,, obviously Jim Farley, the CEO, is hoping that you'll get a similar reaction to, let's say, the F-150 Lightning that Elon Musk has gotten as he's cut prices multiple times on his Tesla vehicles because sales have picked up. He's been willing

to sacrifice profitability because he's fixated on growth. And I wonder what the psyche is going to be over at Ford if those sales of the Lightning, for example, don't pick up. Great question. They are counting on the price cuts of up 17% or $10,000 at the highest amount cut. They're counting on that to circulate sales, to really get the sales going. If it doesn't happen, then they're going to say, OK, well, this first generation didn't work. The next generation, they've got more generations to come on the lightning. And they fully admit that they expect to do much better if they produce future generations of lightning. Bill, appreciate it very much. Enjoy

the weekend. That's Phil LeBeau. And news alert now on Live Nation from Julia Borsten. Julia, what do we know here? Well, Live Nation shares declining after Politico reported that the Department of Justice could file an antitrust lawsuit against the company and its subsidiary Ticketmaster by the end of the year. The stock is now down over 7 percent on this report. This lawsuit would be on claims that the entertainment giant is abusing its power over the live music industry, according to Politico. I've just moments ago reached out to Live Nation for comment on this. I've not heard back yet. It is worth noting, Scott, that just yesterday, Live Nation reported quarterly earnings that were far above expectations

on the heels of really a meaningful, very significant growth of the live concert business. Back over here. Yeah, I mean, what a reaction. You could see that story playing out, Julia, today in the market for sure. Live Nation reaching a high today of $171.74 to what is now a low on the session of $81. So we'll continue to watch that story. Julia Borsten reporting there. Christina Partsanovalos, we turn our attention to fintech next week. Apple and Amazon are getting all the talk, but there's some interesting companies reporting there too.

Talk to us. Yeah, there's been a run-up on a lot of these fintech names at the moment on the notion that there's going to be refinancing for student loans. Let's talk about SoFi. Their earnings are out next Monday. Investors expecting deposits and loan growth across the board. But JP Morgan believes that increases in student loan refinancing might be an exaggerated benefit. Secondly, they're worried about loan write-offs since they've been growing since last year. Lastly, you've got treasury yields that we know have increased. So SoFi's fair value discount

rate goes up, resulting in a negative adjustment. So that's why Bank of America sees limited upside. But the stock has literally doubled year to date. It's up 106 percent. Now let's talk about PayPal. The main issue with PayPal is competition, especially as Apple Pay gains market share. Its closest rival as well is Block, which operates Payment Processor Square. You can really see the difference, though, between PayPal and Block just year to date. PayPal up, what, 3%, a little over 3%, versus Block, 25%. Block's earnings are out next Wednesday. Barclays is positive on that name, suggesting the lower hiring trends will help with expenses and margin expansion. But overall, there is a little concern about, for a lot of these fintech names, just the over-leveraged consumer and what that means for discretionary spending going forward. Yeah, so far, so good on the consumer. We'll see how

long that lasts, and maybe we'll get some answers next week. Christina Partsenevelos, thank you once again. Appreciate it. Back to Gunjan Banerjee. And I guess as we are going to be fixated, and I know we will be on Apple and Amazon, there is that concern about, you know, whether you're going to get a real catch-up trade, whether, you know, some of these lagging areas of the market. We could take oil, for example. Guys, let's throw up oil if we might, because we're working on a five-week win streak for the price of crude, which got all the way down in the 60s. And now we're back at $80 a barrel, Gungeon. And whether these energy stocks, which got all the way down in the 60s. And now we're back at $80 a barrel, Gunjan, and whether these energy stocks, which had such a great 2022 and such a bad 2023,

are going to stage some kind of move of a catch-up trade. Scott, I do think we're starting to see signs of that. You know, all eyes are on tech as they often are. Tech stocks have definitely stolen the show and they will continue to do so next week. But I do think we are starting to see signs that this rally is broadening. And this optimism isn't just in the stock market. In the options market, the cost of protection, stock insurance, that's some of the lowest levels of the past decade. People have piled into some of the riskiest corporate bonds. So that tells you investors across asset classes are pretty sanguine about how the economy is doing,

how things are going. And I'm going to be watching next week. Do we start to see more signs of those animal spirits grow? You know, are we going to see the IPO market heat up a little bit more? Are we going to start to see signs of optimism spreading to other corners of the market? Well, speaking of asset classes and different ones, treasuries, we're going to be watching interest rates, too.

Remember, the Dow was on this 13-day win streak going for 14. Looked like that was going to be the case until you had to move higher in yields yesterday. Now they backed off today, Gunjan, and perhaps that's one reason why the Nasdaq is outperforming so dramatically today. If we can show that, too, has been up about 2 percent. There it is, just shy of that for much of the day. And we need to keep our eyes focused there as well. Absolutely. And I mean, heading into the closing bell, the S&P 500 is now on track for I think its 19th move of less than 1 percent. That's the longest streak since November 2021.

So let's keep an eye on that and whether that continues next week as well. We will, Gunjan. I appreciate you being with us very much. Guys, let's show Apple, too, as we count down towards the close here. And we look at Apple, which last check was heading towards $200 a share. Been a pretty good week for mega cap tech, even Microsoft, which I suppose you could say was a bit of a disappointment. That stock, as I pointed out earlier, because of that move today, still only down about 1.4 percent on the week. All eyes will be on Apple and Amazon as well. Mega cap tech wrapping it up. We're wrapping it up now. Have a great weekend. That does it for us. I'll send it into overtime with Morgan and John.