Closing Bell - Closing Bell: The State of the Consumer 8/20/24

Episode Date: August 20, 2024

From the open to the close, “Closing Bell” and “Closing Bell: Overtime” have you covered. From what’s driving market moves to how investors are reacting, Scott Wapner, Jon Fortt, Morgan Brennan and Michael Santoli guide listeners through each trading session and bring to you some of the biggest names in business.

All right, guys, thanks so much. Welcome to Closing Bell. I'm Scott Wapner, live from Post 9 here at the New York Stock Exchange. This make or break hour begins with streaking stocks. We do have a little bit of work to do over this final stretch. For nine up days in a row, we will see how things settle out. Of course, take a look at the scorecard with 60 minutes to go in regulation. The major averages have been lower since the start today, taking a bit of a breather ahead of the big Fed powwow out in Jackson Hole later this week. A more defensive bent today with Staples and health care, two of the better performing sectors. Tech, well, it is mixed today. Apple and Microsoft and Alphabet, they've been higher throughout. NVIDIA and Tesla, they've been giving a little bit back. So it's a bit mixed there. The VIX, well, it's back above 15, albeit slightly. Yields, they're mostly lower today across the Treasury curve. We're watching all of that. It takes us to our talk of the tape. Just how far can this rally go as the summer heads to a close and a potentially tricky fall looms? Let's ask our headliner today. Tony Pasquarello is global head of hedge fund coverage at Goldman Sachs.

He's back with us at post nine. It's good to see you. Thanks, Scott. So I'm always quoting from your notes, but it's good to see you in person. So two weeks ago, Monday, we had this panic attack. Market freaks out. We've had this incredible comeback. Are we good? Are you comfortable with where we are now? I think the bullish narrative has three pieces to it. I think the first is Q2 earnings growth. Earnings growth in general continues to print better than expected, better than feared. I think the second piece is the economy, in our view, is going to remain durable. So we forecast second half GDP growth of 2.5%. And then lastly, the Fed is on the precipice of delivering what we think is basically 200

basis points of rate cuts over the next 18 months. And so that is, I think, a very solid foundation for the bulls. Those are the big dynamics in the game. Those are favorable. So that was just what, a rumble of fear that was overdone on many accounts, whether it was positioning because of the unwind of the carry trade, plus this panic attack over the fact that we had that jobs report the prior Friday, and we said, oh my gosh, what if we're closer to a recession than we actually think? You've got it. I think the sequence was one part of data trade and the second piece was the positioning trade. I think the data trade was we had that run of disappointing U.S. activity data punctuated with 114,000 print on non-farm payrolls that flipped the switch presumably

on the SOM rule. Then you had the BOJ kind of in that context to make a move that ultimately the market rejected. That set off the positioning trade, which I think part of it was just this forced deleveraging from all corners of the market that, yes, hit the fever pitch that Monday morning with Nikkei down 12 percent and the VIX ultimately printing 65. I think, Scott, I think that was a moment in time. I think it was a lightning strike, essentially a global margin call, which, like I said, has given way to a more solid fundamental story. Is that pretty much what you're hearing from the hedge fund clients that you cover so closely, the best of the best, the biggest investors in the world? I think so. I mean, look, I think folks are still holding their breath a little bit,

given the nature of the volatility shock. But what I had to observe from my conversations on our franchise was I think the discretionary trading community, the folks we really call on and cater to, had done a nice job taking risk down in June and July. And then we're positioned to play some offense in August. We saw very good numbers last week. So they caught some of that bounce back. The non-discretionary trading communities, CTAs, vol control funds, they get a lot of attention. I think those are the heaviest hands in the down trade that selling is done. The most interesting feature of our franchise activity was the buyback story, which is a big piece of our flow. We saw it very clearly, kind of ran two times normal, essentially reached record levels. Corporate America stepped into the breach. We think that's worth about five,

six billion dollars a day right now in the heart of the open window. Could be a trillion dollars on the year. So we're back to corporates being the biggest sponsor of the market. That's what was in the note that I think I saw yesterday from your trading desk was like momentum traders plus buybacks are enough stimulus to keep stocks climbing higher. We forgot that the blackout window was there because of earnings for buybacks. And now you're gonna start hearing more and more, maybe even more so because of the upset

that we had initially in stocks. I think that's right. It was a very, in a way, it was a very conveniently timed sell-off, if you will. Not that it wasn't ugly. Of course it was. But you were in positions for corporates to act with force, which is clearly what they did. The other thing I should have mentioned is retail, who, of course, are the biggest holder of the asset class. They basically held their nerve. They held the line.

They continued to buy. And again, point to point, that has been the right judgment. What's good enough, do you think, this week out of Jackson Hole? I think it's the Fed put is alive and well and coming to a theater near you. If I'm Powell, I don't think you have a whole lot of incentive one month out from the September FOMC to paint yourself in the corner 25 versus 50. So the messaging will be we're aware that things have slowed down. We've made a lot of progress on inflation. So we're ready to act. We're going to act soon. But I think they're still in some form of data dependency. So our view is 25 at each meeting this year, September, November, December. So it's a sequential pace. Quarterly next year, one for the road in early 26. And we're sitting

here in 18 months. The funds rate is three and three-eighths, not five and three-eighths. So you don't think that Powell needs to be as dovish as he was hawkish in August of 22, when stocks were off three and a half percent that day, right? Is he not going to go as far as he did then, but in reverse? Well, I think he's, you know, he's got a heck of a hand to play now relative to then when I think inflation was still over 8%. So he was very much on the back foot. He had no aces in his cards. He did not. And again, now he can avail himself of 525 basis points as in when.

So I think we have something like 33 basis points priced for the September meeting. Again, we've got a full month of data. Most important along that path, of course, will be the payroll number on September 6th. And so I think he's right to wait to see that card turn over. If payrolls prints one hundred and fifty thousand and the unemployment rate doesn't rise, then I think the market will probably expect a price of twenty five basis point opening salvo. And that's fine for risky assets. So you're looking for two hundred basis points of cuts over what time period? Yeah. So that takes us now to the start of 26. So it's a long runway. It is a long runway. It's the nature

of adjustment cuts. Now, can everyone see that far into the future? I don't know. But the point is, the Fed knows they're unrestricted. They're going to gradually take that back if we're right. And that comes alongside this durable economy that I mentioned earlier, two and a half percent GDP growth in the second half of this year, 150,000 jobs a month down the line. Core inflation ultimately headed back to two percent. I think that core interplay between growth and the Fed, between growth and interest rates, lands in a pretty friendly place. My guess is it's 22 times that's basically in the price as we speak, but it's a good backdrop nonetheless. What about this point that Rick Reeder had made when he was last on? And I know you heard our conversation, the point that the market's full,

that all of that news about the Fed is already in. Like what possibly couldn't we know at this point? You see what the bond market has been doing as well. And so where that leaves me is despite the level set I just gave you, which again, I think fundamentally is quite favorable. It kind of leaves me thinking risk reward at this point in the marketplace isn't all that alluring. As you say, the market's done a bunch of work over the past eight or nine days. Take NVIDIA, that's a 40% move all by itself. And so I think the market's going to have to fight those two variables. The other thing I would say is I think the election is going to become a tricky variable for stocks to weigh. I think kind of figuring out what is the distribution of

outcomes here between two candidates who are basically neck and neck, but have wildly different visions of how the economy should operate and wildly different economic policies. I think that's going to be a very noisy variable for the market from now until November 5th. All right. So you mentioned NVIDIA. Take the election back to November. We still have next week NVIDIA earnings on the 28th. The importance of that day for this market now, given what the market's done and what NVIDIA has done, is what?

So I think most of the folks who come on this show have probably forgotten more about NVID Nvidia than I will ever know. But what I would say is I still think it's as high profile a stock as there is in the marketplace. It is still the number two weight in the index, rounding up to 7%. And so I think it matters hugely, particularly in a week that otherwise would probably be pretty quiet and pretty illiquid. I think it's going to be a show me story, of course, not just as it relates to revenues and net income, but what is the status of Blackwell? And I think the more important takeaway is, what does it tell us about the AI narrative regarding AI spend and AI CapEx? And I think I would say this, for much of the past two years, the AI narrative was profoundly bullish

and essentially one-way. Now you've opened up kind of the other side of the debate around the ROI, around the ROIC. And so I think the market's going to want to get a waypoint that tells you the spend is still there and companies are going to deliver that ROI sooner than later. Now we've got to show me, right? Spending's up 40 to 50 percent year on year representing exactly what you said, this new trend. But at some point, investors got to see the payoff. That's right. You can't just have hope and a prayer. That's right. And so I think the bigger setup for mega cap tech, which has been the biggest part of my framework for the past couple of years, it has been a keep your eye

on the ball story, is I think relative to the hottest moments of June or July, I think the shine is off the space a little bit. Why? Because the eye-popping nature of these beats is a little bit less than it had been the prior year and a half. I think we all know, and this is well narrated, the forward earnings premium of the 7 versus the 493 is set to narrow pretty considerably. And again, the AI narrative is a little bit more two-sided.

I still don't want to lose my, you know, lose that anchor point in these stocks. If they deliver 18%, if the Bank 7 delivers 18% earnings growth next year on top of the buyback, on top of the CapEx, I still think it's a good story. It's just a more demanding setup than it's been. Do you still see these stocks as, quote, sword and shield, as you described them several times in the past? You're able to play offense, but you're also playing defense because of the balance sheet, the CapEx, the buybacks.

In some cases now we're even talking dividends like we were not before. I do. Big picture, I do think it's still elements of sword and shield. And again, 18% earnings growth next year will feel a little bit anticlimactic relative to the fireworks of recent years,

but still well above the 493. I still think they're the biggest and the best balance sheets in the world. And like I said, they're generating an immense amount of capital. They're returning that in the form of buybacks and dividends, and they're reinvesting that on a level that no other company can touch. Do you believe in the broadening story, Mike, more substantially, that it has sustainability? And does that maybe hinge more than anything on what Powell says later this week? In a way, I think it's already taken shape. So I looked at this before we came on. There's 11 headline sectors of the market. All 11 are positive year to date.

The laggard, of course, is real estate. That's still up 5%. So I think the market's been broader than sometimes people give it credit for. Now, is it concentrated? Is it top heavy? Of course it is because mega cap tech and the other secular growths have earned that top heaviness, but I think it's been decently broad. I find it a little interesting that the eco weight S&P, the SPW made a high, a new high, a new all time high yesterday and SPX kind of off the shelf cap weighted hasn't done that. So I'm more open-minded to the idea that you can broaden within large cap. I think that's a very different judgment than I want to sell large cap. I want to sell mega cap tech to buy small cap. That's still a bridge too far. Always great to have your insight. Thanks

for coming by. Thanks, Scott. That's Tony Pasquarello of Goldman Sachs joining us right here at Post 9. Now let's bring in Liz Young-Thomas of SoFi and a CNBC contributor, Jason Snipe of Odyssey Capital Advisors as well. It's good to see you. Welcome here. Tony sounds pretty positive to me. You sound like you don't match that. I know that laugh. The data right now suggests that positivity is warranted. I think what we learned a couple weeks ago is that the market is not bulletproof.

And it makes sense to broaden out your portfolio if it's not broad enough. And I say that for a couple of reasons. Number one, the tech trade has lost a little bit of momentum. I mean, it's bounced back quite a bit. We're almost back at the highs on the S&P, obviously driven by a lot of that mega cap group. So it's bounced back a decent amount. But we do still know that those are the easiest names to sell when people get scared. So you want to make sure that you're still exposed to other things in risk assets and some of the sectors that typically do well when the environment shifts. And we know that the environment is likely to shift come September and November with the Fed. I'll play your analogy.

Yes, it may be proved that it wasn't bulletproof, but what if it has a bulletproof vest? And what if that is this still good economy, still good earnings, still hanging in consumer and rate cuts that we haven't even had yet? So rate cuts are not typically something that the market celebrates throughout the cutting cycle. We might celebrate it as they're approaching and then in the beginning of it, but then as are not typically something that the market celebrates throughout the cutting cycle. We might celebrate it as they're approaching and then in the beginning of it, but then as they continue, if the data slows down to a point that people start to get nervous, and I think we've seen that markets have gotten nervous when data comes in cooler than we expect now, which is a tone

shift. If the data slows down more than markets expect during a cutting cycle, the cuts start to get interpreted as reactionary rather than proactive. Unless they're just normalizing, right? Absolutely. You're making the point that if they've cut prior throughout history, they've done it because the economy has needed that level of cuts. And the more they've cut is because the economy's been weaker and weaker and weaker. It might be different this time, dare I say. It very well may be. And a lot about this cycle has surprised me, and I've gotten a decent amount of it wrong. So I am open to being

wrong again. But what we have to remember is that as the Fed is cutting into a weakening economy, it can get dicey. And it is tough for the market to digest that and interpret why the cuts are coming. And right now, we're so sensitive, not just to when they might start cutting. I think we've gotten comfortable with it begins in September, but the size of the cuts. I'm on the side that I don't think 50 basis points is that big of a deal because they raised on the other side when we were coming into this, they raised by 75 basis points three times in a row. So I don't think 50 basis points would be an alarm, but I think the market would be a bit alarmed by that. So I think really more so we're going to have a digestion issue as we work through this. And even if we do secure a soft landing,

the data is going to contradict at different levels. Some of it's going to be slow, some of it's going to be hot, and of it's going to be hot. And the market's going to have to react to that. And we're very reactive right now to every little piece that comes in. OK, Jason Snipe, what do you think about what both Liz and Tony Pasquarello had to say about their market views? Yeah, no, I agree with a lot what was already been said. I think that disinflationary narrative is very much intact. We got a retail sales number that was solid.

And labor is softening. So to Liz's point, I think the soft landing story is very much intact. I think as it relates to Friday and what we'll hear from Powell, I think he'll be he'll he'll tote the line. He'll be right center stage, you know, as far as his commentary. I don't think he'll be overly dovish. I definitely don't think he'll be hawkish. I mean, this has been the ultimate telegraph. Why would he have he doesn't need to double down on being overly dovish. I think he'll acknowledge the disinflationary narrative that we've all seen. I think there will be a moderate pace of cuts. I don't think there needs to be a 50 basis points cut whatsoever because I think the

data is supporting that. And then obviously I'm following the bond market, what the bond market is telling us. So that is obviously looking for cuts. And I think if we do it at a moderate pace, 25 basis points, you know, over the last three meetings of the year and then going to 2025. I think that will be effective. I think that's what the market is looking for. But, Jace, I mean, if we're at 5600 now on the S&P, what seems reasonable to you between now and the end of the year with the election looming? We've got to get through more earnings between now and then. We have to figure out this cutting cycle. And we're going to obviously watch the trajectory of both the economy and the consumer. Well, I think honestly, I think we could see another 5 percent. You know, if I turn to earnings, what we've seen already this this quarter,

you know, 95 percent of the S&P is already reported. We're at 10.8 percent earnings growth, which is very solid. And I think it continues to get revised higher going forward. So I think we could easily see 4% to 5% growth from here, which I think would be a solid return for the year. Again, it's been a great year thus far. A lot of, to your point earlier, Scott, a lot of it's been priced in in terms of monetary policy. But I do think we end higher as it relates to the price action for this year. How do you answer that question? 5,600 now. What's then? So I think the other thing that we learned in the correction

that we had a couple of weeks ago is that afterwards, the market needed good news in order to bounce back. So I think now in order to get back to those highs and surpass those highs, I think it's absolutely possible, if not probable, because we're pretty close and the momentum is here. In order to surpass them, we need that good news. And I think that good news can come in the form of what Jason just said, which is retail earnings. We had a good start with Walmart on a big lens into the consumer, which was strong. What I think we need to hear from other retailers, particularly those this week, is the same theme, that they're not worried about a

huge slowdown in consumer spending for the remainder of the year. We need to hear that guidance is at least solid, if not improving, and that we're not supposed to be worried about the consumer, because that was the thing that was going to break the whole thesis. This is good, though, right? That good news is good news again and bad news is bad news. Absolutely. Because it was very confusing. Before we had this warped view that, well, you want things to be bad because then you're

going to get Fed rate cuts sooner. And now we're just playing on an even playing field. I agree with that. And it is a more rational place to be that good news is good news and bad news is bad news. So we've got retail earnings that should help secure if we get up to those previous highs and then beyond them. And then the next big thing is that jobs report for August, which comes September 6th. How do you look at the broadening story that I that I asked Tony about?

He points out that maybe the market's a little more broad than people want to give it credit for. And that's probably true if you look at the sectors that are hitting new highs, for example, today, we're not talking about technology. We talked about financials, health care. Now, I know staples have a defensive bent like health care stocks do as well. But there are a lot of other sectors that have done pretty well. I mean, I'm looking year to date on my screen and I've got half at least that are up more than double digits. Yeah. Percentage points. Yeah. Not to mention things like gold have done record high. Right. Twenty five hundred. We were talking about Tony's. Tony's absolutely right about that. There are other places in the market where you could have made money this year and where people have made money this year.

And it's as if those places are raising their hand like, notice me, don't forget about me. And it's true. There has been a broader story. What I said earlier in the show about you want to make sure that you have exposure to the sectors that would do well as the environment shifts. So as the Fed lowers rates, if we come out of this yield curve inversion, finally, those sectors are healthcare, staples, utilities, energy, and then you do want to own the treasury curve as well. So making sure that there's an allocation there. A lot of that sounds like it's purely defensive, but in reality, it's also a dividend play. So you could even just buy a dividend ETF or get some dividend exposure

as rates are coming down. Still like the two-year? I do. They haven't started cutting yet. Favorite trade. Oh, it's going to work soon, Scott. Who says it hasn't? Jason Snipe, you have August 28th circled on your calendar as an NVIDIA shareholder? A hundred percent, Scott. I mean, and we've heard all the CapEx betting. Tony alluded to it earlier, you know, from all the hyperscalers. And I think that will ring true. It will show up in the numbers for NVIDIA.

And I think it will be. And obviously, we've seen the price action, right? How quickly the stock got bought up since the carry trade unwind, you know, in the early part of August. So for me, I think we're going to see some really solid numbers and I'm looking forward to it. Make or break for the near term for mega cap, right? Depending on what NVIDIA says or no. It's important. And even if you look at what the futures imply about how the market could for mega cap, right? Depending on what Nvidia says or no. Is that overstating it? It's important. And even if you look at what the futures imply about how the market could move that day, it's on par with Fed meetings.

It's on par with CPI data. It's on par with jobs data. So it's a big deal. It would be wrong to say it's not. Especially given the comeback from two Mondays ago. Right. It's just been remarkable. I enjoyed the conversation.

Thanks for being here. Liz, thank you. Jason Snypar, thanks to you as well. We're going to see you in just a bit. Let's send it to Pippa Stevens now for a look at the stocks moving into the close. Pippa, what do you see? Hey, Scott. Well, shares of Amherst Sports are jumping on track for the second best day since going public in February. The Finland-based parent of Wilson and Arcteryx beat revenue, with sales up 16 percent year over year, while also boosting its full-year guidance. But Bank of America is under pressure after a regulatory filing revealed Berkshire Hathaway has sold more shares. Warren Buffett's conglomerate has now shed 13.9

million shares over the last three trading days, but still has an 11.9 percent stake in the bank. Shares are down 2%. Scott? All right, Pippa. Thank you, Pippa Stevens. Back to you shortly. We're just getting started here on Closing Bell. Up next, your retail rundown.

Target, Macy's, and Nordstrom all gearing up to report this week. Number one ranked retail analyst Matthew Boss is standing by. With what to expect from those names, we're live at the New York Stock Exchange. You're watching Closing Bell on CNBC. All right, welcome back. We're entering the heart of retail earnings season. Critical reports on tap and reads on the consumer coming from Macy's, Target, Nordstrom and others over the coming days. Joining me now, the number one ranked retail analyst on the street, J.P. Morgan's Matthew Boss. Matt, welcome back. Nice to see you.

Great to be back, Scott. You feeling better about the consumer today than say you were a couple of weeks ago? You know, it's interesting because what I'd say is the fear was overblown. I think there were a number of transitory items in July that have now reversed course in August. I think that what you're really seeing from a backdrop of the consumer is it's a concentrating consumer, not a slowing consumer. Consumers concentrating around events. You have back to school coming up and the consumer is there and you're seeing traffic

accelerate and the consumer is concentrating to value. You need value at brick and mortar to offset convenience. And so the consumer shopping in a number of different ways, that's a byproduct coming out of COVID. But I think the reality is consumer spending remains stable. Yeah. So who wins best in your environment now? Yeah, I think you're going to get off price tomorrow with TJ Maxx that kicks off and shows that stability of the consumer. That when you deliver the value and you have the brands that they want in a convenient setting, the consumer is there. And I think you're going to get that compounding model coming out of off price, kicking right into earnings tomorrow. I think it's best in class brands. It's off price, kicking right into earnings tomorrow. I think it's best in class brands. It's off price. So TJ Maxx, Ross Stores, Burlington, Birkenstock in the brands, Abercrombie

within the specialty retail. So I think it's really innovation, differentiated product and value, as well as convenience on the e-commerce front. That's the playbook, in my opinion, for the second quarter, but then for the back half of the year. I mean, there's enough optimism, I think, in your mind, right, that you're raising your own numbers for the companies that you just named, correct? We are. We see beats across the board with off price. I would say it's more winners and losers within the department stores and specialty. But remember, that's been the playbook. Those are more challenged subsectors and have been for the past couple of years.

I think, as you cited in the intro, we had positive earnings out of the low end with Walmart. And so I think you're seeing signs that consumer stability is there. And like I said before, they're concentrating, not slowing on the spending front. And I know you've talked with a number of prior guests about recessionary fears. I actually think the consumer has been in a recession. I think we've seen a selective recession where the low income consumer has been under pressure and the high income consumer now with the S&P hitting new highs again I think that higher income consumer the middle income in the aspirational remains plentiful on the spending side how do we think about department stores here you know I hear

more ads and chatter about turning department stores into pickleball courts than I do as places to gather and spend money as shoppers these days. What about you? Look, it's been a subsector of retail that's been in transition. It's been in transition for probably the last five years. I do think you're reaching a point. Macy's approaching 350 doors in the last chapter, as they cited in consolidation. You're seeing brands on the wholesale front that I think were in, again, later innings in the consolidation. So I think as you think about brick and mortar relative to e-commerce, the acceleration towards convenience, towards the digital side coming out of the pandemic, was extreme.

You're seeing a normalization back where the consumer, from a convenience perspective, brick and mortar is there from a need-based and a point of sale. And so I think there's a byproduct where brick and mortar coincides with the e-commerce experience. But you have to have experiential. You have to have differentiated product. And lastly, you have to give the consumer a reason to actually visit the brick and mortar store. And that's where I come back to value. It's not good enough to be the same price as your e-commerce counterpart because you actually have to go into the store. So it's either treasure hunt, it's value or it's product that you can't get in other places. And that's what the department

stores right now are trying to figure out. That's what right now Off Price has figured out and why they're taking market share. What's the story with Lulu? Yeah, so I would say Lulu, international growth unchanged, 30% plus growth, still there on track multi-year. It's North America where you've seen the pivot. So our numbers now embed zero improvement in North America for the back half of the year. Look, they've had some execution issues. They've had sizing, they've had colors. I think the transition to the younger customer has been under play, and that has also caused some of the execution from a sizing perspective. But they need innovation and they need to continue to drive that innovation because it's a very

competitive marketplace. You have private companies, Viore, Aulo, you have other companies on that athletic space that have been challenging them for years. So execution, I've always said, would be either the continued win for Lulu or it would be the potential moderation and growth. Right now in North America, you are seeing a moderation and growth. Wow. See, I almost sense a little bit of a sentiment change in your commentary there because when I asked you that same question, or certainly a similar one, the last time we visited a few months back, you seemed pretty resolute that Lululemon was going

to be able to fix whatever issues were there. And maybe it was because of international. You weren't too, I don't know, concerned about the Viores of the world as I brought them up in some of these other names. Now I almost sense like a little bit of doubt, a little bit of doubt that they're going to get this right. Well, it's a good it's a good call out because one of the changes and as I've said, one of the key drivers in this space is innovation and differentiation. And that has been a bit of a mishap more recently. They have delayed some of their innovation on the key women's side that was a driver of the inflection and the growth reacceleration in North America. We actually flagged that about a month back, took the stock off of our best ideas and cut our growth for the back half of the year in North America. So as I said, it's execution, I think even greater than competition that would be the potential hang up for Lulu. And right now that's exactly where we stand. And so our model,

zero acceleration in growth in North America in the back cap, but with 30% opportunity, continued growth in international, this is still a double-digit revenue growth company with high 20s margin. And so it does deserve a premium multiple, but the next leg of potential acceleration for the stock is going to be tied to what that North America growth profile looks like. I'll tell you what's interesting is you use two words that seem to be relevant for Nike as well, execution and innovation or lack thereof. And that's to be relevant for Nike as well, execution and innovation, or lack thereof. And that's why I ask you the question again,

what's this company's future? Yeah, look, there's a lot of different pieces moving right now with Nike. Because you have this transition, or kind of this intersection between lifestyle and performance right now. And the problem is, is that they're falling short on both. So on the performance side, you have a lot of competition and different competition,

Hoka, on smaller brands out there. On the technical side, they have no question taking, taking share. On the lifestyle side, Nike, Nike is pivoting where you have historical franchises like Jordan, like the Dunks, which had been generating consistent double-digit growth, but the consumer is now pivoting to other brands. And so Nike is working on franchise management as well as refacing innovation. But right now, I would call it the in-between period for both. And from an execution perspective, it has absolutely not been flawless. And so the next leg is the transitional two quarters of franchise management with the potential for reacceleration of growth as we move into 2025. But it's a big if at this point.

I always enjoy our catch-ups. Matthew, thank you. We'll talk to you soon. That's Matt Boss, JP Morgan, as you see, joining us on Closing Bell. Up next, surging ad sales, Netflix shares moving higher on some serious growth in ad sales commitments. Jason Snipes back with us. He owns the name. He'll tell us how he's trading the news just after the break. We're back. Netflix shares, they're jumping after the company's ad commitment soared more than 150 percent for this year, helped in part by its deals to air key live sporting events, including the Christmas Day NFL games.

Netflix shareholder Jason Snipe is still with us. He's a CNBC contributor. What do you make of this news? Talk about a company that's hitting on all cylinders, Scott. I think, you know, as I look at a mature company that has 277 million active users, subscribers, I should say, 45% of signups are the ad-supported tier signups. 40 million are monthly active users in the ad business, and that was only 5 million last year.

So as they moved into the foray of live sports, I think it only pays the course of what they're going to continue to do moving forward. I'm very excited about this name, and I can see it traveling back to 700s, over 700 intraday. Last time it was there was October of 2021. I mean, it obviously has had a great run, but you see a little bit of a sideways. Can we throw that? Let's throw that chart back up for a minute, please, because it sort of documents this big move that the stock had. Great comeback, of course. And then a near sideways move.

Is this enough to get that needle moving further? I think so, Scott. I think as they, because listen, this NFL piece is just only the beginning. The WWE is part of the course as well and other live events. I think this is only the beginning of what they'll do as folks continue to cut the cord on analog and look to the streaming side. And then I look at the ad-supported tier, which I think is still in the early stages, password sharing as well. So I think there's a lot of leverage for them to continue to pull. Also, how they're growing globally. I think there's continued opportunity from a global perspective as well. So I do think this name has more room to grow, and that's why we continue to like it here.

How about Palo Alto? You got to like that today, up near 8%. Yeah, that was a really nice, really nice print yesterday. Beat on the top, beat on the bottom line, you know, and they raised the guidance. Now, part of that is that QRadar acquisition, which is an IBM asset on cloud security, which I think is going to be accretive to the stock going forward. Again, as it relates to cloud and cybersecurity, I mean, these are issues that are not going away anytime soon. So whether you want to play it via the ETF bug or hack or look at some of the individual names like Apollo Alto or CrowdStrike or Zscaler or whatever, Apollo Alto happens to be our favorite because I think they continue to innovate.

And if I look back at their new go-to-market strategy as it relates to this platform story, that was when the stock started to sell off a little earlier this year. But it's really starting to play out and you're starting to see that in the numbers. Were you at all tempted, lastly, by what's happened with CrowdStrike? If you like the space so much, maybe you wanted to up your exposure there. Yeah, listen, it was down 40% off of its highs. So I think CrowdStrike is another great name. I mean, you saw the reach from an enterprise perspective

and all the clients and business that they have. So it is something that we've been eyeing and looking at potentially adding into our cybersecurity portfolio. All right, Jay, we'll talk to you soon. Thank you. That's Jason Snipe, Odyssey, joining us up next. We're tracking the biggest movers as we head into the close. Pippa Stevens is back with us with the stocks that she sees moving right now. Tell us. Well, as consumers look for value, Unlimited Pasta is back at one restaurant, giving those shares a boost. All the details coming up next. All right, we're less than 15 from the closing bell. Let's get back to Pippa now for a look at the stock she's watching. Hey, Pipps.

Hey, Scott. Well, Boeing is lower after the company paused flight tests for the 777X after it found damage in a structure of one of the wide-body aircraft. The issue was discovered during scheduled maintenance, and it's not yet clear whether the grounding will impact certification and delivery for the jets slated for 2025. And Darden shares are in the green after the company announced the return of Olive Garden's never-ending pasta. The promotion is launching one month earlier than in 2023, with Raymond James saying it's in response to the more intense value

and promotional industry environment where value hooks can drive strong share gains. Scott, this is not one I'm rushing to try. All right, Pippa, thank you. That's Pippa Stevens. Coming up, shares of Eli Lilly. They are popping in today's session thanks to some positive data surrounding its weight loss drug. We'll break down the details, how it could impact the stock going forward. The bell is coming right back. We're at the closing bell market zone now. CNBC senior markets commentator Mike Santoli here to break down the crucial moments of the trading day, plus Angelica Peebles on the latest data lifting Eli Lilly shares,

and Steve Kovach looking ahead to Toll Brothers reporting in overtime today. Of course, Michael, I begin with you. Standouts to you or what? You know, when the market slows down, it probably makes sense to broaden it out and say, you know, where are we? What have we just gone through? Big picture, the underlying trend is positive, never was disturbed. This looks like a correction in a bull market.

Yeah, it's fully valued, 21 times forward earnings. But when earnings are rising and the Fed is about to ease, usually you can hold the valuation. That's not necessarily sort of an emergency at this point. Do you think we're still sensitive to this idea? We got to keep the economy on a short leash. You look at the action today. Dollar down big. Treasury yields again sagging. The two-year note yield really not up that much from the lows of a couple of weeks ago. And, you know, even oil is trading soft. So it seems like even though we're in a good news is good news market, the setup going into Jackson Hole is Fed's got to get moving at the same time the economy hangs

together. As long as that's the case, we're fine. Definitely a little more defensive tilt, though. You know, you're not seeing semis rage away to the highs or anything like that. Health care staples among the sectors that are green today. After a 10 percent rip in eight trading days, you're allowed to back away a little bit. Speaking of health care, Angelica Peebles, Eli Lilly playing a big role today, right? Yeah, that's right, Scott. Lilly shares hitting a 52-week high today after data showing that its weight loss drug cut the risk of diabetes by 94% in people with high blood sugar or prediabetes. Now, Trezepatide is already approved to treat obesity and diabetes, but this would take it a step further to actually prevent diabetes. And even before this news release, Wells Fargo

this morning naming Lilly a top pick. Analysts there saying that Lilly building a moat between manufacturing and data on the health benefits. Excuse me. We think we're at the lead. We plan to stay there. And we're competing on every axis we can think of in what is a revolution for health care. And that's the ability to maintain healthy body weight in your adult life and ward off all the serious diseases that go with being obese or overweight. Now, Scott, we'll get a full look at those results later this year. Back to you. All right, Angelica. Thank you, Angelica Peebles. To Steve Kovach now on what to expect from Toll. Tell us. Yeah, Scott, here's what to keep an eye on in this one report. A lot of the focus, of course, is going to be on mortgage rates ahead of the Fed's anticipated rate cut next month.

Toll Brothers is also a luxury home builder, of course, with homes costing in the $1 million range. So falling rates can have a big impact there. Also, Wedbush analysts said last week there's potential for more people buying homes in this category thanks to wealth-building catalysts like the recent rise in the S&P 500. As for the numbers the streets are looking for, EPS of $3.31 on revenues of $2.7 billion. We'll get those results around 4.30, Scott. All right, we'll look for you then. Thank you, Steve Kovac. All right, Mike, got a few minutes to go here. Doesn't look like we're going to go nine in a row. No. But you can't be too greedy. I mean, you don't often get to eight. Exactly. Nine's even harder. And, you know, it's harder.

And also, I was actually welcome when we end these fluky streaks just because, you know, it creates this bit of artificial suspense and maybe obscures what's really going on. The thing I lean back on is, if you look back at those prior eight-day win streaks, they tend to happen within bullish trends. It's not usually bear market rally-type activity and often out of a correction.

The fact that we've had a real broad participation on this move higher in the last couple of weeks is definitely a net positive, even though, as they say, it's a little bit defensive. You mentioned the health care working today. Well, Eli Lilly is like 13 percent of the health care ETF right now. The equal weighted health care is kind of softer than that. So you have to kind of know, you know, what you're using as a benchmark when it comes to these things. I do think it's like discretionary. It's like, OK, discretionary is great. Well, Amazon and Tesla are such a huge part of that.

Yeah, too big, exactly. Or, in fact, they're weighing it down at times. So, yeah, there's no doubt about it. I keep thinking that, not to say that you had more payback to do, but it feels like we wouldn't be too far once we rebuild toward the highs if we get there and people are kind of celebrating. There's been a little bit of FOMO in the market in the last couple of days. As the streak got to seven or eight days,

I was starting to see the leveraged semiconductor ETF, massive volumes, call option, that kind of stuff really going. The three times leveraged NVIDIA ETF, which exists, has billions of dollars in assets under management. So, I mean, it's not that far below the surface, even though we just had a good scare to sort of rekindle that type of activity.

Makes it interesting going into, you know, late August. Yeah, think about Target. Yeah. It's coming too. And after what you got from the retail sales number and then Walmart. And Lowe's, yeah. Yes, and Lowe's today.

And the hard goods stuff. And I think that that's the part of the economy we're fixated on when it comes to what could Fed rate cuts theoretically do. Where could the pressure be taken off? It is in hard goods, housing to some degree, which really the housing stocks, the homebuilder stocks have, again, they're far farther below their highs than you might think, considering we had this pretty aggressive rebound off the low. So, you know, we want cuts, but for the right reasons at the right pace.

It's been the story for a long time. And we'll cuts, but for the right reasons, at the right pace. It's been the story for a long time, and we'll see if that's something like the message we get. All right. So we got Toll coming in overtime. We got Target coming tomorrow. And then, of course, the big event, the powwow out in Jackson Hole and the big speech by the Fed chair on Friday. We'll have to see how the market reacts in the lead up to that. We'll give a little bit back today, but I'll look forward to seeing you tomorrow. Bell rings. We'll take us out red. I'll send it to O.T. with John Ford.