Closing Bell - Closing Bell: The Post-Powell Playbook 8/25/23

Episode Date: August 25, 2023

Stocks popped in the final hour of trade following Powell’s highly anticipated Jackson Hole speech. Professor Jeremy Siegel, Shannon Saccocia of NB Private Wealth and CNBC senior market commentator Mike Santoli give their forecasts for stocks. Plus, star analyst Dan Ives is weighing on Tesla’s strong year and what he thinks the next big catalyst for that stock may be. And, Sycamore Tree Capital is flagging some alternate opportunities for investors amid all the uncertainty in stocks. 

Boy does it Kelly thanks so much welcome to Closing Bill I'm Scott Wapner front and center this hour the post pal post NVIDIA state of stocks and what comes next for a market that's already on edge here's your scorecard with 60 minutes to go in regulation and take a look at that market suddenly awakening major averages have been all over the map following that Jackson Hole speech but now the Dow is up near 1%. S&P 500 kicking into gear to 4415. The Nasdaq is outperforming today. It's up better than 1%. Small caps playing along to Boeing, one of the Dow's top performers today, along with Salesforce. It reports earnings next week. As for tech overall, not much going for much of the day for the Nasdaq, though, as I just said, we do have a little bit of a pickup here as we enter the final hour. We're at the highs of the day. We've been dragged a bit by NVIDIA. It's down. Apple and Microsoft, however, are offsetting that. Both of those stocks are higher sector wise energy utilities. They've been bright spots throughout the day. Yields a big part of the story, too. I want to show you what yields are doing as well, because we've had a bit of a reversal. They were down and then they started to rise. 424 is the yield on the 10 year.

All of that, of course, happening in the wake of the Fed chair's big speech out. Jackson Hole takes us to our talk to the tape. Whether there's still modest correction for stocks needs to go much further or not. Let's ask our special guest on this Friday, Wharton School professor Jeremy Siegel. He joins us once again. You know, you've been with us on a bunch of Fridays, professor, which I love because it gives us a chance to kind of sum up what's happened in this stretch ahead of us. And today, of course, it's all about the Fed chair. What'd you make of the speech, first and foremost?

And what do you think this market reaction now says about it? Well, first of all, there was really nothing new that he said in the July FOMC meeting. In fact, I was disappointed because what's happened in the market, as we all know, is that yields have risen, real yields have risen, real growth has risen, and the reason that real growth has risen is because productivity has been so strong. He didn't address any of that. He seems almost stuck in that mode. Real growth is higher.

That means more workers. That's more pressure on wages. That means we might have to go higher, and that's not the story. The story is we're getting real growth higher because we're getting go higher. And that's not the story. The story is we're getting a real growth higher because we're getting productivity higher. In fact, the labor market is slowing down. I mean, expectations for next Friday are, what, about 160. You know, less than half what we had last year. So in some ways, I don't think he really addressed what the market has been seeing over the last few weeks. That's why I said I think some people got a little bit nervous at

the beginning. The market sold off. Now they said, hey, you know what? There's nothing new. We're going to gain back what we worried about yesterday. Market down 300, now up 300. I got to be honest with you, Professor. You know, I heard and, you know, I don't know, maybe I was hearing the wrong thing. I heard a Fed chair who suggested that maybe the bar is a little higher to to actually do more than some others would like to believe. And I say that because of these words, quote, uncertain about the lags might be significant further drag in the pipeline. He also mentioned the risks of doing too much. That tells me that they're not quite sure what's yet to come, and they're going to be real, real careful,

because they don't want to mess it up. They don't want to snatch defeat from the jaws of victory. I think you're right there. And in fact, we detected that, as you and I I had talked about after the July FOMC meeting. He became much more two sided. He became much more aware that there are downside risks. He I think he heard from two or three voting FOMC members that are saying, you know, we have done enough. I think he looks at rising delinquencies in credit cards. We've been hearing that on some of the earnings calls.

He looks at other, you know, what's happened to mortgage rates at nearly 7.5%, so that he mentioned that little pickup in housing. We don't know how long that's going to last. So I think that is on his mind, how, you know, even though his orientation has been, you know, we may have to do another quarter point. Probably we're going to bypass September. We're going to look at things and see how things are going to be on the for the November meeting. Is that is that the most you see happening? One more hike and perhaps that's in the fall. Is there a chance that they are actually is there a chance they're actually done? Is there a chance they're actually done?

There's a chance that they're done. And unless the inflation news turns dramatically worse, and the only way we can really do that, if the dollar goes way down, which it's been going up, if oil keeps on going up to 100, 110, 120, although they're supposed to ignore, you know, food and oil as being more temporary. If commodity prices begin rising, which they really haven't. Now, those have stabilized, to be sure. But we're not seeing the inflation in those components and housing, particularly that we saw in 2021 and 2020 and 2021. So unless those things happening

of which there's no sign, it's got to be at most one and done. And if there's a little bit more of that downside risk and saying we can hold off, then it's done and done. Wow. What about the correction?

Is it done, right? We're down, what? I don't know, 4% or so on the S&P from the recent high. Yeah. Do we have to go you know much further lower or what's your guess you know september for for decades had been the worst month of the year and then when all that used to get published i published a lot of that in my in my book everyone said well then we better also in august if september is the worst month. And then August became a tough month, especially second half of August. And I think that is being challenged.

And of course, the higher real interest rates are certainly challenging the stocks at the same time. But I don't see any major crack. I mean, it may have a few more percent to go. Could it dip into correction territory? Possibly with some really weak news, but that is about all. After that, we have September, October, choppy months, news months, November, December, usually being much better year ending on an upturn. So I think for the rest of the year,

we're stable to upward and we have the 15 to 20 percent rise. And if he doesn't raise it anymore and says inflation falling, you know, it could be 20, 25 percent for the for the full year. Wow. Big call. Let's broaden the conversation, too, if we could, Professor, and bring in CNBC senior markets commentator Mike Santoli and Shannon Sikosha of NB Private Wealth. Shannon, of course, a CNBC contributor as well. You know, Mike, I had them rustle you up. I know you're getting ready for your special, but I wanted your opinion here. I mean, it's been an interesting move in the market. Didn't really know which way it wanted to go. Got a little bit of a ramp here as the day goes further. Yields are up and stocks are up. What does it tell you? Yeah, yields are up,

although minimally, I think they're not taking off, which was maybe going to be the real Achilles heel of the stock market if for whatever reason, and I don't think it should have, if the bond market took Powell's comments as somehow being very incrementally hawkish beyond what was expected. So that being said, I think the stock market is sort of tacking back toward neutral. The high for the week is, I think, 4460. The low is 4360. We're 50 points above and 50 points below. We're right in the middle, taking back yesterday's decline.

So I still think you can say this is an indecisive market. We don't know if this pullback has kind of fulfilled everything it has had to from the highs in terms of, you know, resetting valuations and expectations and things like that. But I do think that it showed you there was nothing today with Jay Powell, as you allude to, using the word the phrase proceed carefully twice. That changes the general premise of the Fed policy this year, which is a patient Fed that's just about done. We can argue about whether it's going to be a quarter. It's not going to be in September.

It might be later. But so what? They've done five and a quarter already. The one year Treasury bill yield is at five, four, suggesting we already kind of priced in rates around this level for the next year. So to me, nothing much changed on that front. The big question is, what do we make of this economic acceleration late in the cycle and whether it can continue or whether it's going to cause imbalances

or whether it's going to get long rates up to a point that the market and the economy can't stomach? We're still going to be debating that next week. But in the meantime, you know, the market had taken account of most of what Powell was going to say today. You know, Shan, I heard some on the network earlier suggest that we were 0 for 2 this week in terms of NVIDIA and the Fed chair. Not that NVIDIA didn't knock the cover off the ball, but the reaction didn't exactly suggest that the report, you know, was something to really build on because the stock had already done a lot. And then when the market was down earlier, it was like, well, Powell was more hawkish than we thought.

When the reality is, if you now have the ability to step back and look what happened this week, Nvidia did knock the cover off the ball, didn't do anything to upset the story there. And Powell maybe wasn't as hawkish as some actually feared. And we have something at least we can take away that wasn't horrible. Well, how could you not fear Powell's address here at Jackson Hole, given what we experienced last year, Scott? I think those of us are scarred still from that a year later. I think one of the things to think about is that you're right. We didn't get as hawkish, perhaps, a statement from Powell as we might have expected. And to the professor's're right. We didn't get as hawkish, perhaps, a statement from Powell

as we might have expected. And to the professor's point, we also didn't hear some of the things that I would have anticipated hearing. I know the professor, you know, would have liked to hear more about productivity. I would have liked him to acknowledge the fact that we're seeing a reacceleration in food and energy prices, because frankly, although that isn't in core, that's an important component of consumer spending. And the consumer is clearly continuing to drive the strength in the U.S. economy. If you look at what happened this week in terms of what the Fed expectations are, we're really looking at a period now over the next four weeks or so where the market is going

to be very much focused on economic data, data dependency, and what happens next. And Scott, to your point, you know, we're down to, we're incrementally up to about 20% chance of a Fed hike in September, about 50% in November. I would counter that those aren't nearly as important as understanding what the policy in 24 is going to look like. And what we saw after the meeting today was we saw that the expectations for rate cuts in the second half of next year came down after the meeting today. And I think that's an important piece. What does higher for longer mean? How does that get priced into equities and the multiples that we're paying for stocks today? That's really where the narrative is going to start to shift. I think we're past either September or November and really looking into 24 now for policy.

So, Professor, on the NVIDIA question, what did the reaction to it suggest to you, if anything, about whether tech in general had just gotten too far ahead of itself, whether it actually needs to cool off, that valuations in that part of the market are just too high. And we need to come back to earth a little bit. Well, Scott, let me tell you, in all the years I have never seen a firm beat as decisively as it did now and go down in price. I mean, jump down the announcement, but then go down in price, which means there's never been a case where the whisper number or that expectation was so much above Wall Street's official estimates. That's the big warning. Everyone just AI the words get overexcited.

Listen, I saw it in the Internet stocks in 1999. We saw it three years ago when you put Bitcoin or crypto on your name or blockchain on your name. Again, when something catch fires, the expectations explode. That's the danger. Even when you blow the cover off the ball, your stock doesn't go up. That's the danger. But the rest of the stocks outside of that group, I think no general overvaluation. We can still get gains this year. Mike, what's your takeaway here a few days after they reported in what was billed to be not only the most important earnings report this week, but maybe one of the ones, maybe the one of the most important we've seen in quite some time. Yeah, I mean, when you talk about that part of the market,

I think NVIDIA alone is that part of the market in many respects. Just in terms of the head start, people have given credit for it having in AI, the degree of market cap it's added, the growth, everything else, it's pretty singular. I see Microsoft trading 10%, 11% below its July high. It shows you that it was not moving step for step with NVIDIA. So the fact that NVIDIA, you know, front loaded a lot of the excitement, more or less priced it in, there's no shame in sort of hovering around a $1.1 trillion valuation and waiting for it to grow into it for a little while, just because you didn't get that market-wide push higher

that we got three months ago, I don't think is really a negative verdict on the company or the positioning of the overall market. Again, this pullback has done some of what a pullback is supposed to do. I just don't know if it's done at all. If we hit the low for this little choppy period, then probably the rebound off it isn't all that exciting or all that spring loaded because you didn't really build up a lot of the kind of oversold conditions and get valuation super cheap. But maybe we did enough for that to be it. And we got through NVIDIA without broader pain, if nothing else. Professor, can stocks like tech go up if rates remain even where they are? Let's not even take into consideration whether they hike again or not.

If they remain elevated now for a while, and since the beginning of earnings season, we're talking about a 50 basis point or so move higher in the 10 year. So if this remains the case, do stocks generally and then specifically, does tech have a problem? Tech has a problem if it can't grow faster. I mean, you know, when, you know, Nasdaq is going at 30 times earnings, the value stocks are going at 15 times. That's a two to one ratio. You're building in five, six, seven percent% higher in general earnings growth. For NVIDIA, you're building in 15%, 20% for how many years? I mean, that's the main thing.

If your earnings growth is growing faster than the increase in that discount rate, then you still can go up. NVIDIA is a very, very special company right now, and AI has the promise to transform the economy. That magic is still going to be in that stock. You know, when it went down actually today, I was saying, you know, maybe I'm tempted to buy it when all the price targets are so much higher. Hey, Shan, you know, coming off Jackson Hole, I'm looking at a headline here from Christine Lagarde, the ECB president. Do we care about at this point what other central banks are doing and what other central bankers are saying?

She says ECB to set rates as high as necessary for inflation. OK, they'll they'll do whatever they have to do, I guess, to keep inflation under control. Do we care as as investors here? Yeah, I think we need to care, Scott. I mean, I think we need to care as it obviously affects yields here in the United States based on, you know, kind of relative yields and what's available. There's been significant movement in the currency market. You know, we have the Bank of Japan really engaged, if you will, from a currency perspective in a way that they really haven't ever been. And so there's a lot of policy questions there. I think most importantly, though, is just trying to determine, you know, where's that tipping point?

Where's that inflection point where valuations are so high here in the United States that regardless of kind of incrementally tougher conditions in a place like Europe, you know, when do you make that choice to increase your allocations there? And certainly as it relates to the strength, the relative weakness of the dollar. And so all of these things, we have to be, we have to understand that we're entering into a period, Scott, where we're not going to see as much sort of collusion, if you will, in the nicest way of saying it, between central banks. We're going to start to see divergence in policy. And that has a lot of implications if you're allocating, whether it's in the United States or outside of the United States, and also between equities and credit. Mike, tease us a little bit, taking stock

tonight with Josh. I'm going to let you go prepare for that. I'm going to see you in Market Zone, of course, but just give us an idea of what this week has left you guys with to chew around. Well, we have a long-time NVIDIA shareholder. We're going to get Josh's take on exactly how that stock has traded, but also trying to sift through the week's news and look ahead to next week and tell you what you should be more concerned about and what you can dismiss, maybe move off your pile of worries that are not a big deal.

We'll do that in game show form. All right. Well, we'll look forward to that. All right. That's Mike Santoli. We'll see him later. Professor, and lastly to you before I let you go, I'd like your last thought.

I mean, you know, now we get NVIDIA out of the way, get Jackson Hole out of the way. We do have a bit of an air pocket of news. We don't think the Fed's going to do anything in September, though, though you never know. But we do enter what you've already suggested is a historically treacherous time for stocks. Yeah. But but as Mike said, next week is actually a huge news week. You know, we get the caseSHO or Home Price Index. We get the money supply.

We, of course, get the Friday payrolls. We get the JOLTS report. These are things, of course, that Powell has quoted. We get the second estimate of GDP. We get revisions. I can keep on going on. I won't. But you're right.

We had a gap for about 10 days on important data. Next week could shape what's going to happen in September. Well, you've made good points as always. Professor, I appreciate the time as always. Shannon, we'll see you soon as well. Shannon Sekosha, and you'll see Mike a little later on in the market zone, of course. Let's get to our question of the day. We want to know what you think. How many more times will the Fed hike rates this year? Once, twice or none at all? Head to at CNBC closing bell on X, formerly known as Twitter to vote. The results are coming up a little later on in this hour. In the meantime, a check on some top stocks to watch from Christina Partsenevelis. Christina. Thank you, Scott. Well, shares of a firm are jumping today

after reporting earnings this morning. We had a revenue and profit beat well past expectations, and this is a buy now, pay later firm. They also improved their full year outlook. Of note, the company's CEO said gross merchandise volume is growing despite the headwinds of inflation. And to your question, higher interest rates. Shares, though, are up a whopping 30%. But definitely a different story today for shares of Hawaiian Electric, which are plunging after news that the Maui County is suing the company for damages related to the island's wildfires that have left at least 115 people dead. The suit alleges Hawaiian Electric left its power lines energized despite warnings of high fire risk.

The company tells NBC News it's disappointed the county chose such a litigious path. Shares are down almost 20 percent, trading at $9.51. Scott? All right, Christina, thank you. We'll see you in just a bit. We're just getting started right here on Closing Bell. Up next, trading Tesla. That stock has had a steady run higher this year, up more than 90 percent.

How about that? Star analyst Dan Ives now out with a new note on the EV maker. He's drilling down on what he says could be its next big growth catalyst as well. He'll join me right after this break live for the New York Stock Exchange. As I just said, you're watching Closing Bell on CNBC. Shares of Tesla are higher following a new bullish call from Wedbush's Dan Ives. He estimates Tesla's supercharger business will be worth $20 billion by 2030 and make up as much as 6% of the EV maker's total revenues. He joins me now. It's good to see you. Why did you feel compelled to write this story today?

Yeah, I was really putting pen to paper and really doing the modeling from everything we've done over the last four to five weeks. I mean, you've talked about it when it came out for GM others, the 313 area code going to Tesla. Now we're trying to model it out. I mean, and I think for investors, it's very helpful. We think conservatively 10 to 20 billion per year. I think it's probably on the latter part by the end of the decade. I think it's significant. This is the next stage of monetization for the Tesla ecosystem. Yeah. How do you get to those numbers? And that's really going on our and we have a whole model putting out the percent of overall evs that ultimately are going to be using the charging stations what they're going to be charging per

kilowatt hour and then the important things guys that you know most of the bears will say well today everyone just charges at home or they charge at their office but it's also looking at now down the road how many are going to be using these charging stations and when you you look right now, they're going to be the only game in town. That's why you have GM4 and others going towards Tesla. And I think today it's superchargers. Next is going to be batteries. And then eventually FSD AI. This speaks to our thesis similar to Apple on the services side.

This is just the early stages of Musk and Tesla monetizing. Where are we on the roadmap of price cuts in terms of Tesla, which Elon Musk has clearly, clearly moved to put, you know, growth ahead of profitability? Yeah, and I think that's been the right poker move. And I think it's paid off significantly, especially in China. I think now 95, 96 percent%, 96% of those cuts, we think, are in the rear of the American. And I think you saw maybe some overreaction last week, and you've definitely seen a rebound, as I think more investors are recognizing that. But right now, margins suffering at the cost of units. Now, I think that troughs over the next quarter or two and starts to rebound into next year.

And that's the yin-yang that they're going to strike. But ultimately, it continues to be Tesla's world and everyone else's paying rent in terms of overall EVs. And I think that's becoming clearer and clearer. So in terms of the stock, it's up 10 percent this week. It's down 10 percent over a month. And the reason, you know, I'm trying to get the correlation here between it and the Nasdaq. If the Nasdaq continues to have some trouble and tech, big tech in general, pulls back, this stock is going to be susceptible to that as well. Don't you think? Of course. Yeah. I mean, we continue to view Tesla as a disruptive technology company, not an auto player. Right. But it's our view going the second half of the year. I think tech stocks rip hot.

I mean, it's my view that the new tech bull market has already begun. I think growth is going to exceed street expectations. And I think what we saw with NVIDIA, that's just the appetizer to what we're going to see with this trillion-dollar tidal wave of spend over the coming years for players across the tech ecosystem. I know. But man, these stocks are already up like five years worth in six, eight months.

I mean, there are even with the pullback we've seen, a lot of these stocks are up minimum 30 to 35 percent. We can't just continue to suggest that they're going to, in your words, rip higher to no end, are we? But it comes down to growth. And everything we see from growth across software, across chips, I think ultimately numbers, especially going into next year, accelerate 15%, 20% beyond where the streets model. And I think this is a 1995 moment, not a 1999, 2000 moment. I think star of the internet,

and I think we are seeing the biggest transformation to TAC that we've seen in 30 years. And that's why our view across the board, this is just a pause. It's halftime of the Super Bowl rally that we're going to see in TAC going into the next two to three years. I know, but at some point the air gets a little thin, no? I mean, look at NVIDIA. I mean, I know it's not, you don't cover it specifically like you do Apple, which people know. But, you know, it's up 200 percent this year. It was up 50 percent in three months. And now it's having its pause, pullback, whatever you're going to characterize that as. I mean, what do you want these stocks to go up 60 and 70 percent for the year?

Well, I mean, my view is way overcorrected last year well i mean my view is first of all way over corrected last year i mean that's our opinion and i think now investors more and more going to 2024 2025 looking at some a cycle that we haven't seen in 30 years now of course rates as you asked the professor that's clearly going to be a headwind. But when I look across tech, when I look across software, cybersecurity, chips, I view this as a time where we view it as the star of a new tech bull market, not the time where we're hiding because of valuations. I think these stocks grow into their valuations over the coming years. Okay, we'll leave it there. Dan Ives, thank you. I appreciate it very much. We'll see you soon. Thank you. All right. Up next, raising the red flag. Sycamore Tree Capital's Marco Cotta is still bracing for a recession.

He is flagging, though, alternative opportunities for your money amid this uncertainty. Joins me after the break and later Instacart heading for its public market debut. Learning more details now about that company's S1 filing, what it could mean for the IPO market in general. Closing Bell, right back. We're back on Closing Bell, the S&P 500 trying to snap its longest weekly losing streak of the year on the back of Fed Chair Powell's speech out in Jackson Hole. But our next guest says that stocks aren't going to add much value to investors' portfolios from here.

Let's bring in Mark Okada of Sycamore Tree Capital Partners. Welcome back. It's good to see you. Hey, Scott. How are you? I'm good, thanks. So let's deal with the Fed Chair's speech first. What do you make of it? And what do you make of the reaction here as we head towards the close in the stock market?

Well, I guess in and digesting all the things he said, which wasn't much, there really wasn't anything new there. I guess the missed opportunity that I kind of see is that he could have been a little more hawkish than he was. We certainly have had a run of very strong economic numbers, which I think put this sort of no-landing scenario on the table for everyone. I'm not in that scenario. I do believe in the lag scenario. We are still in the recession camp.

And so, you know, I think what he said was we're navigating by the stars under cloudy skies. That doesn't feel very comforting to me as far as where we're going and how we get out of the situation of pretty persistent inflation. And so I think he's set it up that there certainly isn't rate cuts in the near-term future for anyone. We're basically going to be either here or higher. And I think that was a strong message that I heard. And from that standpoint, I think he's paying attention to

what's happened to the 10-year in the last couple of weeks. It's moved pretty hard. Yeah. I mean, the 10-year has done some of the Fed chair's work for him, perhaps. Yes. Why do you sound like you're in the half- camp rather than the half full? You say inflation is, in your word, persistent. Others would say it's declining quite rapidly. Well, I mean, he talked about the four contributors to PCE and the part that's going sideways is half of it. So I think that in order to get that down, the lag effects of the move in rates, the massive move in rates they've already done, will take time. And so I think that's what's coming. The reality of that hasn't really

happened. I think the banks are feeling it. The banks are saying, you know, a trillion, 1.3 trillion of CRE debt coming due in the next year, 18 months. They've got over a half a trillion dollars of mark-to-market losses in their securities portfolios. So I think as that trickles through the economy and slows things down, you're going to see this sort of no landing scenario kind of evaporate, I think. And we're going to have something that looks much more like a traditional cycle. And as far as the outlook on stocks and how bearish I guess I sound, per se, we're not super bearish on the equity market, per se. We just don't see it as a relative value versus

a lot of the other things you can invest in right now, especially in credit. I mean we're having a great year, we're making good money in the credit portfolios and we're not taking a ton of risk. We're making seven, eight, nine, ten percent in the portfolios and we like that. I'd rather own that than, I don't know, NVIDIA at whatever the stupid multiple is. Well, I mean, you are kind of talking your book, but that's okay. You're a credit guy.

I mean, I get it. I get it. I get you guys are a credit shop, right? Yeah, exactly. But, I mean, let's be rational be let's be like rational about it. OK. Triple A CLO debt. Triple A. That means it is safer than the U.S. government. It's yielding six and a half percent. What's wrong with that? I mean, I am not I'm not selling anything to anybody.

I'm just basically stating the facts about the relative value of things. And honestly, it's like when you think about what's happening within the treasury market and the rates we're seeing, I think it's kind of hard to paint a picture where they go down anytime soon. So why not own some of that, too? Fixed income feels like a much better place to be than equities just in general. Look, I totally hear you. It makes perfect sense, right? I mean, you've got to manage your risk and you want to be able to sleep at night and you can forego some of the volatility in the equity market to know that maybe you'll return a little bit less, but you'll feel a lot better and you'll still have decent returns, whether it's in certain parts of the

credit universe or in cash. I totally get that um in terms of where rates are going from here do you feel like the fed is done or are they done hiking yes i absolutely think that they've kind of overcooked this thing with with getting into the banking system and setting up a nim problem for almost every regional bank in the country, which means a profitability problem. But also this digestion of what's going to come down from a regulatory standpoint across the banks is not going to be positive. So I think the credit impulse coming out of the banking system continues to slow the economy. I think that that does some of their job.

They don't have to raise more rates. And I think what we said earlier about, you know, why is the 10-year up 60, 70, 80 basis points in the last six months? Because the economy is pretty good. I'm not sure. I think there's some supply dynamics there. There's also, well, look, there's a trillion dollars of net borrowing coming out of the Fed, out of the Treasury in this quarter. That's a lot of supply. And you have a time when the BOE, the Bank of Japan is maybe pivoting.

You've got China certainly not leaning in. I think there's other reasons why the tenure has moved. And I think they're paying attention to that, that the term premium is pretty positive. And, you know, that's something that I think we've got to be mindful of or at least watching. Sure. Let me ask you this. What happens if inflation continues to come down, right? It's just north of 3%. It's come down a long way in the last year he's four over four well i know you're thinking of core i i hear you on the core too and i know that's what they they care more than anything about but what happens if the economy is is able to say uh stay stronger for longer

than you think and inflation comes down at a similar clip to which it's already come down. And that enables the Fed to cut rates, not because the economy's dramatically bad that it dictates they have to, but because they can, because they actually have mission accomplished. They've achieved the goal. I'm thinking about the Larry Bird, Michael Jordan commercial where they're fighting over their happy meal. And he's going off the backboard, through the window, over the backboard, nothing but net. I think that's a really tough scenario that you've laid out to actually happen.

But what happened in that commercial? I remember that commercial. What happened? The ball went in, right? That's right. It did. It did. But they're selling hamburgers, not the economy. So I'm not really sure that that's the right sort of thing to be banking on, honestly. And especially when you have other alternatives where you can make decent money without that sort of valuation worry. And yeah, sure, I'm a credit guy, which means that I see the glass half empty all the time.

But what's in my glass is pretty good. I'm really enjoying drinking it right now. So it's certainly an interesting time. I think as we start to see the weakness come into the economy, we'll see where that goes. I don't think rate cuts are in the cards anytime soon. All right. We'll leave it there. I always appreciate our conversations. We should have them more often, too. Well, thanks for having me. And thoughts and prayers out to our friends in Maui. So good to see you, Scott. Yeah, you as well. Mark, you be well.

All right. Up next, we are tracking the biggest movers as we head into the close. Christina Partsenevelos is standing by with that, Christina. Well, with NVIDIA setting the earnings bar so high, does that mean other chip makers will fail to impress? They can't do the same? We discuss next. All right, we got 15 to go before the closing bell. The Dow is still up near 300 points. Christina Partsenevalos is back with a look at the key stocks that she is watching.

Christina. Well, let's talk about Marvell Technology. It had a tough act to follow after NVIDIA's earnings, and it didn't impress investors after reporting a drop in second quarter earnings and revenue, which did also include a drop in data center sales. You had Morgan Stanley that cut the company's price target. Morningstar downgraded the firm to hold from buy. Marvell's shares are down about 6% right now,

one of the worst performers on the Nasdaq. But we will have the Marvell Technologies CEO coming up on closing bell overtime in just a bit. You can see just at 4 p.m., Matt Murphy. Switching gears, HR software provider Workday posted an upbeat outlook that had analysts raising their price targets, citing promise from what else? Artificial intelligence. Mizuho bumped their price target to $2.60 from $2.50, as an example. Workday management did attribute the increase in 2024 subscription revenue guidance to early renewals by customers

and, quote, tremendous growth within its budgeting business. Shares are up almost 6 percent right now. Happy Friday, Scott. Tremendous. Christina, you too. Enjoy the weekend. We'll see you on the other side. Last chance to weigh in on our Twitter. Well, our question of the day, our X question of the day. Can we call it that? How many more times will the Fed hike rates this year? One, two or none? Head to at CNBCBail on X. The results after the break. All right, the results of our question of the day.

We want to know how many more times do you think the Fed will hike rates this year? One, two, or none? The winner, one. 39% of the vote. It was actually kind of close. Got a lot of, you know, interesting, or none. The winner? One. 39% of the vote. It was actually kind of close. Got a lot of, you know, interesting. All right. None did get almost 30.

Nice split. Boeing shares soaring. We'll tell you what's behind that move. In the market zone. It's coming up next. All right. We're in the market zone, closing bell market zone. CNBC Senior Markets Commentator Mike Santoli, here to break down the crucial moments of the trading day.

Plus, Phil LeBeau on Boeing's bounce back. Steve Kovac on Instacart, filing for its market debut within the last hour or so. Mike Santoli, you first sum up this day and maybe even this week. I think today is at least a little bit of an exhale, mostly because yesterday's downside reversal was seen as so potentially ominous. It was one of those things that really does kind of demoralize people who've been betting on the fact that we might be able to buy this dip. And today, more or less unwound most of it. So I think at least it was an absence of a new negative in the markets today. And also a roughly as expected message from J-PAL

in Jackson Hole. You know, bond yields are where they are. They've been a challenge for the equity market, but they haven't burst higher for, you know, in the last couple of days. I think all that together, you know, leaves the S&P 500 up a little for the week and in the middle of its weekly range and still kind of in wait and see mode. Seasonally defensive, but otherwise not really showing too much stress just yet. All right, Philip. Boeing was down about three percent or so yesterday, at least at one point on, you know, concerns about the 737 max again. And now we see a reversal higher by about 3%. What's the bounce back due to? Well, it's a report that came out earlier today from Bloomberg saying that Boeing is preparing to resume deliveries to China.

And remember, when you're talking about the 737 MAX, as you take a look at shares of Boeing, this is the reason why the stock moved higher. If they could start resuming deliveries there, it would have huge implications for the company. When you look at Boeing and China, remember, deliveries largely suspended since 2019, and especially with the 737 MAX. There have been a few deliveries outside of the MAX, but the MAX flights, they were suspended until earlier this year when Chinese Airlines resumed flying that aircraft, there are 85 MAX planes that are built awaiting delivery in the Seattle area. The question is when that actually takes place. As you take a look at shares of Boeing and Airbus, remember how important China is. Scott, the bottom line is this. The Chinese airlines need more planes.

They need new airplanes and they have MAXs on order. It's just a question of when the geopolitics align and China says to the U.S., OK, we'll let our airlines start to take these planes again. All right, Phil, good stuff. Thank you, Phil LeBeau. Now to Steve Kovach. Instacart filing within the last hour or so for an IPO. What do we know? Yeah, Scott, tech IPOs, they're coming back. We had Arm, the chip designer, earlier this week, and now here's Instacart. They're filing today to go public under the NASDAQ, under the ticker CART, C-A-R-T. Some highlights from the S1 filing. 2022 revenue, $2.55 billion.

That's up 39% from the year before. And net income, it is a profitable company, $428 million in net income for 2022. And ad revenue, this is a relatively new business for Instacart. In 2022, that was $740 million. That was up 29% from the year before. Now, the company, though, has seen its private valuation slashed multiple times last year. It was $39 billion at the beginning of 22. It went down to $24 billion after that. And reportedly, even more than that, the information reported late last year, the valuation privately for Instacart was $10 billion. Now, CEO Fiji Simo, in a letter to potential investors in this filing, highlighting the potential market, saying groceries, that's a $1 trillion industry,

and only 12% of that happens from online orders, says that could double over time. And as for that valuation, Scott, we'll see where they price, but $10 billion is quite a haircut for that company. Yeah, no doubt about that. The sign of the times. Mike Santoli, baby steps for IPOs, better than no steps at all. No, for sure. And these are exactly the sorts of deals

that you would expect to see beyond the front edge of a reawakened IPO market, which means a very mature private company like Instacart, where you actually have scale and there's been some profitable quarters. And you also have probably an investor base that's very much ready to have this go to the next phase of the public company. Then Arm, obviously, was a public company before, owned by SoftBank, has anchor investors, kind of an industry standard in a sweet spot, arguably, of some of what's going on in tech. So those are the easy sells, and they will probably get out there, and maybe with any luck, with some rational initial pricing, because that's the other thing you want to look for when deals are starting to pick up again,

is whether, in fact, the bankers, the underwriters want to make sure that they get out there with a decent valuation cushion. So we'll see if that's the way it plays. All right. Our thanks to Steve Kovach, of course, as well. All right, Mike, we said you got this big special tonight, Taking Stock. It's with you and Josh. And you've got to look ahead, too. Forget about looking back. Let's look ahead. Salesforce earnings next week. You got some important data on the calendar for sure as well. Yeah. Salesforce, definitely an interesting input in terms of the, you know, the leopard trying to change its spots to AI.

We'll see if that works. Jobs number at the end of next week. PC seemed to get previewed today, but we see how the bond market absorbs all of those things. I think the other piece of it is, you know, we haven't seen a real rush to the defensive parts of the market. Even though we've been choppy, we've been volatile, we've been down 5 percent, it's not about buying safe haven sectors. Cyclical's still hanging in there OK. Even though the credit markets don't always see bad stuff coming, they've been relatively calm. So, you know, whether it's another shoe to drop next week or beyond is a question. But for now, it has still remained in the somewhat routine pullback

zone. We'll see if we can keep it there. Yeah, we've got to see where tech shakes out. Let's see what NVIDIA does next week. We said Tesla was up 10 percent this week as well. So keep an eye there. Mike, good luck tonight. Go get them. That's Mike Santoli again. Josh Brown taking stock this evening. You don't want to miss that. Bell's ringing. We're going out green and it's green across the board. Have a great weekend, everybody. I'll see you on the other side in the OC with John Ford.