Closing Bell - Closing Bell: Time to Buy? 8/8/24

Episode Date: August 8, 2024

Is it time to buy the dip or prepare for more intense volatility? Sofi’s Liz Young, JP Morgan Asset Management’s Gabriela Santos and Lauren Goodwin from New York Life Investments break down what they are forecasting. Plus, Plexo Capital’s Lo Toney reveals how he is navigating the tech trade right now. And, we tell you what to watch from Expedia and Take Two numbers in Overtime. 

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 this rally back and whether you can really believe in it. We'll ask our experts over this final stretch, another strong day for stocks. Show you the scorecard here with 60 minutes to go in regulation. We're sharply higher across the board. We can call it the highs of the day. We're just about that right now. Some relief from the labor market today is the reason why jobless claims came in lighter than expected. And that eased some of the concerns about the state of the U.S. economy.

Yields moving higher today, the 10 years back at 4%. All of that suggestive of some kind of relief. There it is, $3.99. We'll call it $4. All S&P sectors positive on the day as well. Gains are fairly even across the board. So it's a nice, broad day of gains. MegaCap Tech among the spaces that are jumping today. We'll show you some of the names there. Apple, Amazon, Nvidia among them. Nvidia up near 6%. Financial

stocks having a pretty good showing as well. We can show you some of those. JP Morgan, Goldman and Morgan Stanley, the big winners. Some other single stock standouts include Palantir on the back of its earnings and guidance. Eli Lilly is popping after its own results today. There's that stock, good for almost 10%. And how about Under Armour? We don't talk about it all that often. There is reason to today, though. Up more than 19%. That's the best day since 2018.

And that's after turning a surprise profit. It takes us to our talk of the tape, the state of the markets, whether it is time to buy the dip or prepare for more intense volatility ahead. Let's ask our panel. Liz Young-Thomas is SoFi's head of investment strategy. Gabriela Santos is chief market strategist for J.P. Morgan Asset Management.

And Lauren Goodwin, portfolio strategist with New York Life Investments. Ladies, good to have you all here on Post 9. Is the worst over, Liz? Was that it? Was Monday just one of those panic attacks and we've left it in the rear view? I think it was a panic attack. I don't think it's over.

I think this yen thing will resurface again. What we learned this week and what we're learning today is that I think this is the bounce people expected to see on Tuesday. And we tried a couple times. We tried on Tuesday. We tried on Wednesday.

Intraday, we got pretty high and then we gave it all back by the end of the day. So this is the bounce people were waiting for. So now what we've learned is that we're not going to bounce just for bouncing sake. We need good news in order to move forward and in order to prove that the rally is durable. So today we got some good news. But the interesting part about what happened today is that it was just on that initial jobless claims data. In the trailing one year period, this is the biggest move we've had on initial jobless claims data. Suddenly it's important. So that tells me we are even more sensitive to all of the data that's coming in, which also tells me that we're going to see more volatility as we get data that might conflict.

You could though, Gabriela, say this whole thing really started with one data point, which was overblown, the labor report on last Friday. And then everybody said, oh, my gosh, the labor market's falling apart. We might be closer to a recession than we thought. Fed's going to cut too late. None of it's going to matter because we're going into a recession. Time to sell stocks. And then you put Japan on top of it and you had a Sunday of madness on Monday morning. That's right. And I think, as you describe it, the combination of factors. Right. Some of them are fundamental. If we think back, July 11th with the June CPI, that was softer than expected, followed by some additional softer data prints culminating with the jobs report last Friday. In addition to that, you also had some good but not great mega cap tech earnings that disappointed high expectations. And then you

had this really powerful unwind of the carry, the yen specifically carry trade as you had those interest rate differentials collapse and the volatility double in the yen. So I think it's a combination of factors, some fundamental that were embers and then some technical that really threw fuel in the fire. So in terms of if is the worst behind us, it depends not just on the data, but also how far along we are in that unwind of the carry trade, concentrated positioning and an unwind of momentum. It's pretty remarkable, Lauren, the comeback that we've had because it felt so awful on Monday morning and it was such a dramatic sell-off. Week to date, the NASDAQ is almost positive.

The S&P is almost positive. The Dow is almost positive. We're less than 1% down on the week for those majors. Now the Russell is 1.3% negative on the week. But that. Now the Russell is one and a third percent negative on the week. But that tells you the story of the rebound. Do you believe in it or not? I do believe in the rebound because, as you know, I do expect we're slowing towards recession. But the indicators that we use to determine that we're there simply have not been met. We're looking at unemployment claims above the 260 level. That hasn't happened.

We would need to see earnings growth deteriorate where we've had really, frankly, remarkable stability. And so the macro data just doesn't support a story where you see consistent downturns in the U.S. equity market. Now, I think it's very important, though, that the market narrative with that jobs report on Friday has fundamentally changed. That was the jobs report that told us that we don't need to worry about overheating and inflation anymore. And it's a broader deterioration in the labor market that really matters for market activity moving forward. And so bad news is now bad news. Good news is now good news. And I completely agree with Liz that we are likely to get whipsawed around on data until the market resets.

And again, I believe that that's when we move closer to recession. You, too, many people hit the nail on the head when you talk about earnings growth. And coming out of the season, earnings growth was 11 percent. So we're going to decide to sell stocks and say that we're going to have this massive drawdown in stocks with earnings growth of 11 percent, and then you put on top of that the Fed's going to cut rates? You need to be negative? So earnings growth for the second quarter has undoubtedly been stronger than people expected, and I think that's good. I don't think anybody was worried about the second quarter. The guidance hasn't been great, and the estimates for the third quarter have come down

considerably, and that's where the concerns are coming in. So the way that I would see this playing out, and right now I think where we are in the situation from a macro perspective is we are right on the cusp. I think I put in my notes this is like game seven. We are at the cusp of if things stay exactly as they are, we're okay. But we have to find out if they're going to tip over into dangerous territory. And I think the labor market is the most important piece of that. If labor deteriorates faster than people think it will, faster than consumers think it will, that's what makes people nervous. Well, faster than the Fed thinks it will, because as you heard, it's already there, already there. Well, I mean, you heard only a week ago that the Fed chair himself described the labor market as simply normalizing.

Yeah. They're in a good place that he's not overly concerned about where the economy is. And that was before Friday's data. And the normalizing piece of it that I think he's referring to is that we are back to a ratio of one point two jobs open to unemployed persons, which is where we were before the pandemic. So that's more balanced. The unemployment rate right now is already above where their year-end forecast is. So we have to expect that in September, when we get the next summary of economic predictions or projections from them, that forecast will go up. So it's already cooler than they thought. So if the labor market continues to cool and consumers get nervous, they pull back on their spending. That affects corporate profits. And then you see margin compression. That doesn't mean that we're going to have this big contraction or a big recession, but it does affect earnings down the road. There's a run on effect to learn of a sell

off in the stock market affecting consumer sentiment and psyche and spending. So you can't afford to have a big upset, a prolonged anyway, in the market because of the impacts that it would have on the economy itself. That's right. And I think it's such an important point because we often think of the economy leading the market. And that is, for the most part, true. But we have an environment where the bifurcation we've seen in the consumer, where lower income consumers are struggling, delinquency rates are rising, and upper income consumers are still spending quite well. Why is that happening? It's happening at least in part because equity returns over the last few

years have been very good and people are earning interest income. Now, they're not spending their interest income, but it's giving them confidence. Money markets have been a boon too. Exactly. At 5%, if you have had a lot of money in cash, you've made a lot of money on that cash. Exactly. And what we found in our research is that a five percent deterioration in the equity market can lead, if sustained, can lead to a half percent decline in consumer spending off annualized off of that GDP number. That's a meaningful difference. And so a meaningful risk to the economy at this point is actually a pullback in the equity market. But there's a lot of Gabriella could happen, might happen, worried it could happen,

cautious it could happen. That's been going on for the better part of a year. And a lot of the concerns just haven't happened. We've we Atlanta Fed GDP is at 2.9%. That was as of yesterday. Again, not that the Fed hasn't been wrong on things. So I know when I say, well, the Fed says this, people say, yeah, but they were wrong on the trajectory of inflation at the beginning. Fine, give them that.

They were wrong. But they don't today seem overly concerned at all about where the economy is. The GDP numbers would suggest that not having concern is warranted. The labor market still did more than 100,000 jobs. We're nowhere near, it seems, of economic calamity. Exactly. And I think the levels are still good. The economic and the earnings growth rates are good. But we did learn three things. There are minor changes.

I think a lot of the technicals are kind of exploding the magnitude of the moves. But there were three things we learned. Number one, the delta. Clearly, economic momentum is slowing, including in the labor market. So for a Fed that's very concerned about risk management, that means to them they should normalize policy a little bit faster. So we do think it's right for the market to price in 100 basis points of cuts this year, 100 next year. So the number one thing is to increase duration. And we saw last week huge inflows into intermediate duration fixed income from people that have been sitting in cash. Second thing we learned, if the momentum is slowing, that does mean recession risk goes up.

It's easier to tip into a recession. So that's why we've been saying for a while it's too early for the small cap and the low-quality cyclical trade. And number three, what we learned is expectations matter again, which means that even though the growth rate for mega cap tech is great, all right, but expectations are high, positioning is concentrated, and you can get powerful unwinds. So that goes back to the theme of broadening exposure in the market. When you say that, though, you know, you suggest, too, I'm looking at the notes that you gave our

production team today, diversify away from what's working, and you talk about the Mag 7 being included in that. And I think it's exactly. And I think we have talked about this for a while, right? These magnificent seven companies were presenting a third of the equity market. Great. Their earnings were also going up, but those represent a quarter of the market. So I think it makes sense to expect a little bit more, A, dispersion within that group and active trading within it. Number two, just a little bit, a period of a certain constant correction or even slower upward climb for them from here and a catch up from other sectors. And we saw that in action, right? We had an eight and

a half percent correction in the market since mid-July, except those high expectation MAG7 stocks were down 14 and the rest of the market was down four. So that really speaks to the need for actually broadening out exposure because you get whipsawed really, really badly otherwise. How are you thinking about sector sort, where you really should be leaning in, if anywhere, and where you should maybe be stepping back? I just completely agree with the points that Gabriella is making around portfolio construction. I think the number one thing is not to sell on days like Monday when you lock in your losses and essentially move into cash when effectively, I believe, investors, as the Fed is moving to cut rates, should be doing exactly the opposite.

And so I agree with adding duration. The way that we're tackling that is looking at short duration in credit, like high yield, for example, because it's an environment where capturing higher rates can be very attractive, but using the municipal curve to add longer duration exposure where infrastructure and other areas are particularly effective. In equity, the reality over the sort of soft landing last year, adding exposure to international, et cetera, diversified global cycle, these are ideas that are attractive. But when you see a global market that is starting to lean risk off,

that diversification doesn't particularly help you. And so the U.S., I believe, for the next six months is likely to be the place to be on balance. How, Liz, are you thinking about this? Your constituency, I suppose, given SoFi, skews a little younger. Your cohort of investor class is a little younger, I'm suggesting. So what's the message to that investor base today? Yeah. So, yeah. So 65-ish percent of our investors are between the ages of 20 and 40. So definitely skews younger. Obviously, that also means they have a longer time horizon and they can withstand more of those bumps. However, the research that we've done shows that we know that they are also overweight, a lot of that Mag 7, a lot of the headline makers. So there have been so many conversations and things about research that we've done, questions we've asked them, have you diversified? And people are more interested.

It happened over the last year or so, more interested in the stuff that they weren't interested in before, suddenly wondering, how do I buy gold? How do I buy treasuries? And that's a good sign. And even after the volatility that we saw in 2022, surveys told us that they were still planning on investing more in 2023. So all of this consternation about younger investors, when they go through a period of volatility, are going to stop investing and pull out of the market, I don't think is all that accurate. But there is still a lot to be said for making sure that they're diversified into sectors. And if it's names, that's fine. But sectors that are going to do well in an environment like I think we're going to see in fall, which has a lot to do with the yield curve.

So I talk about the yield curve a lot. I mean, today we're only inverted about five or six basis points. That's the shallowest it's been this whole cycle. This week is the shallowest it's been. Sure, on Monday we de-inverted for a short period of time. So for this entire week, it's the shallowest inversion that we've seen. And during those periods, which is a bull steepening period, you want to have sectors like utilities, staples, energy and health care. And you do want to diversify away from a lot of the headline making sectors that we talk about so much. So I think what's interesting, Gabrielle,

is you say industrials are a good place to be. So you can't be too worried about the trajectory of the economy if you're talking about industrial stocks and things that are more cyclically natured like that. And I think that's where it's important to just clarify. There's so many things within industrials, right? Some of them still very cyclical, low quality, very geared to the manufacturing cycle, which we don't think is picking up quite yet. But there's also growth within the industrial sector. And that's where diversify away from the Mag7 doesn't necessarily just mean bicycle companies. It means look for growth elsewhere.

And within industrials are some really, really interesting themes, part of it related to artificial intelligence, related to the energy transition, so companies that provide the electrical equipment needed, for example, or the HVAC systems to cool down all of the energy that data centers consume. So it's more of a growth tilt there. And I would add to that health care as well. It has defensive characteristics plus growth characteristics in certain areas related to the GLP-1 revolution plus the AI adoption and discovery of new treatments. Is don't fight the Fed different this time because we're worried about cuts coming for the wrong reason or the, Gabriela says we're getting 100 basis points of cuts.

I don't know what your own projection is, but you have had since 2009 a don't fight the Fed mentality as an investor. Why does that need to change today? I don't think it should change today. And in fact, as we look, you know, likely a few, just a few weeks ahead of the Fed's first rate cut. And frankly, hopefully for all of us, that doesn't come sooner. I think the bar for that is incredibly high. But let's say September 18th is our day. That is the number one thing that that means, we've been talking about adding duration, is moving out of cash. And that's been a really challenging story to tell over the course of the year when cash gets you 5% or higher.

That has already started to come down. And so the opportunity for investors to, whether it's lock into higher rates, rotate into sectors that make more sense in the late part of a late cycle, that opportunity will start to move into the rear view mirror. And so these up and down days that I think we're very liable to see over the next few weeks are a good opportunity to start make the transitions that we're talking about today. So this is a great point you make, because let's just say you got into a six month money market at 5%, and now it's coming to maturity. And you look at a picture that says rates are going to continue to come down. What am I supposed to do with that cash?

Do I roll it into a lower interest rate CD, another money market? Do I go into fixed income? Do I say this is a great buy because the Fed's going to be cutting interest rates? And I know what I've always heard. Don't fight that. What do I do? I think it's all about what that cash is for. If it's for a liquidity need six months from now, cash is the right instrument. But if it's meant to be for a long term goal for multiple years, then it's time to invest that cash. Part of it is increasing a little bit duration, whether it's securitized debt, corporate debt, just to lock in that income. Because six months

from now, we don't think cash rates will be at 5% anymore. They can be at 4%. 12 months from now, they can be at 3%. So there's that reinvestment risk versus locking in, for example, U.S. aggregate yield of 4.6% for longer and getting some protection. If the goal is growth and there's still scope to dial up the risk in portfolios, then we think equities are still a good place to be, albeit not as concentrated as a passive index would have you. How, Liz, would you would you address that? I feel like there's a fair amount of people who, you know, maybe they're in longer term money markets and things of the like. But, you know, let's just say you're in a six month, for example, and it's maturing now. Yeah. What do you do? Yeah. Well, I mean, if I make the assumption

that somebody is in a money market because the yield, the interest was attractive. Sure. I think that's the right assumption. Then I assume that they still want income and yield that's attractive, but perhaps some upside if we're saying that the yield is going to go away. So first of all, I think you do it gradually, especially because everything that we've just said is we know that volatility is, we're probably more ripe for volatility in these next few months than we were three or four months ago. So you do it gradually.

I think in the equity market, you focus on dividend paying stocks because you're still going to get that yield. And many of the sectors where dividend paying stocks are concentrated are not the ones that led that really strong rally coming into the second half of this year. So the rotation that I think we're talking about, too, at least the one that I know I'm focusing on in sectors, does skew towards those dividend paying stocks. And then the other parts of it, I think I'd still buy the treasury curve. I know I've been saying that for a long time, but I would still buy the treasury curve. It's not un-inverted yet. And you can buy the two-year, it's going to keep going down as soon as they start cutting rates.

All right. The last point, Lauren, is you say put some of that money in international stocks, correct? Don't ignore? Look, I think that most, well, not I think, I know that most investors are chronically underinvested in international equity. So from a structural basis, I don't love a structural underweight. But again, I do think that as the economy slows globally, the U.S., frankly, both in equity and in bonds, has historically been the place to be. And so we're pausing on adding incremental overweight at this time on international equity. All right. Ladies, we're going to leave it there. I appreciate everybody being here at Post 9. We'll see everybody soon. Lauren, Gabriella, and Liz Young-Thomas here at Post 9. Let's send it to Seema Modi now for a look at the biggest names moving into the close. Tell us what you see.

Scott, 39 minutes left in trade. Shares of Bumble are tanking the dating app provider that targets millennial women is having its worst day ever after posting disappointing revenue guidance for the third quarter. The results likely fueling investor concerns about competition and demand in general for online dating and users' willingness to pay a premium for the company's features. Look at the stock down 30%. Now, another stock having its worst day ever is JFrog. Shares of the software supply chain company are plummeting after the company cut its full-year guidance

and reported mixed quarterly results. Shares down 28%, Scott. All right, Seema, appreciate that. Seema Modi. We're getting some breaking news out of Delta. Steve Kovach has that for us. What is this, Steve? Hey there, Scott. Yeah, Delta just put out a new AK filing with some more details,

financial details, rather, of the impact of that CrowdStrike outage. First, let me go over some of the numbers in here. They're saying the direct revenue impact estimated for the September quarter is going to be $380 million, plus other expenses of $170 million. So that's pretty much in line with about $500 or so million that CEO Ed Bastian had claimed was caused by the outage. On top of that, we got another letter from Delta's attorney in this case. That's David Boyd is a very famous name that I'm sure we all know. In this letter, kind of pushing back at what CrowdStrike's attorney said over the weekend.

I'll read you part of this quote. There is no basis, none to suggest that Delta was in any way responsible for the faulty software that crashed systems around the world, including Delta's. Later, he goes on to write their efforts were hindered by CrowdStrike's failure to promptly provide an automatic solution or the information needed to facilitate those efforts. Also pushing back on some of the other claims that CrowdStrike, and by the way, Microsoft had similar claims against Delta in a letter earlier this week, such as when CrowdStrike CEO reached out to Delta CEO Ed Bastian and didn't receive a response. In this letter, Boise is saying, well, Delta kind of lost confidence by that time. It was a few days after the initial incident. And then also casting doubt on CrowdStrike's claim that it's only liable based on their contract for single-digit millions based on this incident. Boies saying here it's gross negligence or willful negligence potentially that could lead up to even more damages than just those single

digit millions. There's a lot in this, but those are the high points there, Scott. Okay. We appreciate the update to be continued as this saga continues as well. Steve, thank you. That's Steve Kovach. We're just getting started here on Closing Bell. Up next, tech trying to claw back some more of those losses in today's session, doing a good job of it too. So what could be in store for that sector in the months ahead? Flexo Capital's Lowe Tony back with his outlook for the space and where he thinks valuations could be heading from here. It's after the break. We're back now with a news alert from Richmond Fed President Tom Barkin.

CNBC Senior Economics Correspondent Steve Leisman has the headlines for us. What's he saying, Steve? Hey, Scott, just a warning before I give you these headlines. If you're looking for a Fed official whose hair is on fire, who's itching to cut rates right now, you got the wrong guy. Federal Reserve Richmond President Tom Barkin, cool as a cucumber, whose hair is on fire, who's itching to cut rates right now. You got the wrong guy. Federal Reserve Richmond President Tom Barkin, cool as a cucumber, saying there's a narrow path right now. Risks are on the table for both sides of the dual mandate, both inflation and the employment side.

He says the economy is healthy. There's time to figure out if this is a normalizing economy that will allow you to normalize rates over time. He goes on to say it doesn't work to lean too far in one direction and then have to overcorrect in the other. So he's going to take his time. He says we're closing in on normal numbers for inflation and unemployment. It makes sense to me, he says, to take the time and see what we learn over the next seven weeks between meetings, kind of foreclosing the idea that some people were crazy about earlier this month or this week about an emergency cut. He said firms has decided to cut back on hiring, but his contacts say he's not hearing about firing. Job growth has settled down, but the economy is still adding jobs.

He made headlines on Friday, you'll remember, when he said, hey, $114,000, that's not too bad, even while the market freaked out about it. Consumers, he said, are still spending, but they are choosing to do things like trading down. So, Scott, I'll leave it there. I was still listening to him. I'll come back with any more headlines. But he is decidedly a cool cucumber when it comes to cutting rates. Can I just ask you quickly, just because the headlines that you gave where you started off and he talks about the risks being on on both sides and clearly still focusing on the inflation picture it it sounds a little off sides to what we heard from the the fed chair last

wednesday um even incrementally uh maybe they're in a little bit of a different place am i reading that wrong how would you assess that you could you could read it that way scott i read it a little bit more in line with what powell was saying but a little bit more cautious in the sense that, hey, I'm looking at this. I think we could make a case to cut, but I want to be darn sure it's the right case. That's the way I hear Barkin. It's also because I know Barkin a little bit and how he talks and I know how cautious he is. I know how he has his ear to businesses and keeps talking to them. So so he's he's probably going to be in line. He's a voter this year this year with a Fed that

wants to cut. But he's not out there saying, look, it's so obvious I still got a half a point problem on inflation. So we still need to be heading down. And I think it's important to read that that comment where he says we want to make sure we don't go one way and then have to over correct the other way. That's a that's a concern on the mind of other Fed officials as well. Yeah. All right. That's good insight. I appreciate that, Steve Leisman. Thank you. Sure, Scott. Our senior economics correspondent. Tech is seeing a nice bounce today. The Nasdaq's up nearly 3%. Chips are leading the charge back. NVIDIA and Broadcom, among those names,

seeing pretty strong gains today. Meta and Apple also moving higher. So can the momentum for the sector continue despite a tumultuous start to the week? Joining me now is Lo Tony of Plexo Capital. He's a CNBC contributor. It's good to see you. Welcome back. Thanks for having me back. I mean, it's been a tumultuous, you know, six weeks, five and a half weeks, really, because July wasn't good to that that trade at all just what do you make of where we've corrected two for some of these mega cap names well everyone was taking a look at where earnings are playing out there's so much enthusiasm around ai and as we continue to see more data and proof points around not only the experimentation which a lot of companies almost need to do as a way to make sure that they don't get blindsided,

but we're now starting to also see the deployment of AI, not only in companies that we would expect to see, like the Microsofts, the Alphabets of the world, but we're starting to see other companies integrate the technology and moving away from pure experimentation to actual deployment into more efficiencies in their operations and better experiences on the front end, the user experience side. Are we now going to scrutinize the spending on AI in ways that we hadn't in prior quarters?

Because that feels like what's taken place after these most recent earnings reports. Yeah, I think that's next. And that's the logical step. I think, you know, everyone has been talking so much about it without giving anyone that retail especially, but even the analysts, the ability to kind of peel the onion back a little bit and understand what's really happening inside of these companies. Now, when I talk to to my network who have now, a lot of them have moved on to senior positions within, you know, CTOs and CIOs of big companies, what I'm hearing is that initially, especially the early part of this year, latter part of 23, again, a lot of it was experimentation because no one wanted to be caught blindsided. Now, when I'm returning back to them,

they're saying, hey, Lo, you know what? We're actually now starting to deploy some of this and we're feeling really good about the results that we're seeing. So I think we'll, again, begin to see more and more proof points. I think we'll see the analysts prying in and I think we'll see the companies that are actually benefiting be willing to start to show the fruits of that labor. Do you think through the tumult in the space most recently that valuations have corrected to a more reasonable place, or do you feel like that has more room to go? We are across the board, you know, much lower than we were on a 10-year historical basis, let's say, for the forward PEs of all of the names. Yeah, you know, I think, look, here's the challenge.

The companies that comprise the bulk of the market cap are the Magnificent Seven. And if you look at those companies, since there are very few pure play opportunities, the Magnificent Seven is going to get most of the attention because that's where people feel the benefits will accrue. And so those are always going to outpace. I think people are looking for these earnings to catch up a little bit and even just take a breather. I mean, these these companies are taking on so much investor interest, rightfully so, because, again, I always like to say these opportunities are so large and often we underestimate how large they actually are and how quickly we can get there. And we're moving very fast on AI. And this opportunity looks really large. Let me lastly ask you before you go,

I mean, the bankers and market players would have you believe that the capital markets, I mean, IPOs and deals and things of the like, especially IPOs, are close to returning, maybe not to full normal, but in a much, much better place than they've been for the better part of the last couple of years. You're on the front lines of this, too, based on the companies that you've deployed capital to. What do you see? Yeah, so I remember we had a conversation about this last year, and I was a little bearish on the market that you've deployed capital to? What do you see? Yeah, so I remember we had a conversation about this last year, and I was a little bearish on it. The market for IPOs fully coming back this year. I remain firm on that.

But look, we have seen some great companies come out. The bar has increased. The challenge that we face is that the pipeline includes some great names that everyone wants to see come out, most notably Stripe. But there are other great companies in as well. Turo is a great example. I worked with Andre, the CEO at eBay, and I love these marketplace models because they seem to persist over time without the burden of the capital investment, the world's largest auto

rental without having to actually own that equipment. I think we'll see more come out in the year 25. Here's why. We have so many in the pipeline that raised money, so many companies private in the pipeline that raised money at significantly higher valuations than were justified. And a lot of those companies need time to grow into those valuations so that they can provide a good return for their investors. It's good to talk to you as always, Lo. We'll see you soon. Thanks for having me. All right. That's Plexo's Lo Tony joining us once again here on Closing Bell. Up next, believe the bounce stocks are rallying again in today's session. But can the comeback really be sustained? That's a key question. We will discuss that with

HSBC's Max Kettner. Here he is. We'll do it just after the break. We're staging another rebound today. The major averages now are further clawing back more of this week's losses. But will this latest bounce have any staying power? Let's ask Max Kettner. He's HSBC's global research chief multi-asset strategist. Welcome back. Thank you. What do you think? Staying power or not? Absolutely. I do think so.

I think, you know, we're still sort of waiting for the absolute definitive buying signal. So some of our shorter term signals are still only at sort of neutral levels so really what we're trying to do is we're trying to absolutely nail the timing and let's be honest when we look at for example next week's retail sales data it's pretty binary right if we get for example a little bit of a downside surprise maybe we get another setback and that's the absolute low then perhaps yeah but if we look at a three to six month horizon a bit of a longer term horizon through maybe just one or two weeks then in fact i would say you know i think what you guys were just discussing uh before about you know

some of the fed being still cool as a cucumber i think that is exactly what we need right now because the data in fact are not really warranting that kind of panic that the market has been displaying for most of this week. Even the high frequency data, we see things like the staffing index. So weekly labor market data have turned a bit higher. Weekly retail sales data have turned a bit higher. So even all of that is pretty good. There's no real sign of an imminent collapse or an imminent recession. Do you think this whole thing was an overreaction?

Absolutely. I do think so. I think when we look, for example, at, you know, what that's driven, I think really it was largely sort of what we describe as a triple whammy, where you had, you know, essentially the Bank of Japan is unwind of the global carry trade, where you had, you know, essentially the Bank of Japan, this unwind of the global carry trade, where you've got a bit of rotation out of tech, out of AI, a couple of names last week during the earnings season not being as fantastic as we had all hoped for. And then, of course, you had these recession concerns and the Sarm rule being triggered. This is everyone what's so obsessed about. And all of that, of course, then those three things hitting in August in very pretty poor liquidity conditions. So to me,

I think we could be waking up in a month and sort of think, wow, that was a bad dream, but nothing more than that. But how do you know that the unwind, if you want to call it that, of positioning relative to Japan has run its course. Yeah, I think part of the part of the picture that we can track is when we look at the Japanese yen and we look against sort of typical cross asset drivers or frankly, just against yield differentials. When we look at years against Japan rate differentials, clearly what's been happening since April, we've seen an unusual and pretty unjustified gap between the two opening up. So the yen was depreciating further, even though, you know, the yield differential was already heading the other way around. And that gap is really starting to close almost entirely. I think as soon as that has been closed entirely, I think

that's a pretty good basis for saying, hey, you know what? Now there's no more sort of big, big divergence there. There's no more big exuberance there. That's probably then pretty close to the end of the unwind of that carry trade. All right. We'll leave it there. Max, thank you. We'll see you soon. Max Kettner, once again, up next. We're tracking the biggest movers as we head into the close today. Seema Modi is standing by for us once again. Hi, Seema. And Scott, obesity drug stocks are breaking out yet again. We're going to tell you why after this short break. Less than 15 from the closing bell. Back to Seema Modi now for the stocks that she's watching. Tell us what you see.

Scott, Eli Lilly shares are on track for their biggest intraday gain of the year following blowout results of the company's obesity drug. And according to the company, 50 percent of employers now are offering anti-obesity medication coverage, thereby increasing demand. That day is coming where this will be universally covered. We're not there yet, but I think over the coming months and years. Looking at shares up about 9% on the day. Switching to Dutch Bros, sinking more than 20% after the coffee chain said it expects new store openings for the year to range between 150 and 165. That came in much lower than what the company's range and also overshadowed a top and bottom line beat

for the quarter. Stock down 20%. Don't miss our exclusive interview with Dutch Bros CEO Christine Barone tonight on Mad Money. Scott? Won't miss that. Seema, thank you very much. That's Seema Modi. Still ahead, navigating the travel trade. Expedia is higher ahead of its earnings in over time. We'll tell you what to watch for in that stocks report, what it might mean for the rest of the space. The bell coming right back. Getting some more headlines now from Richmond Fed President Tom Barkin. Let's go back to Steve Leisman with what he's saying now, Steve. Hey, Scott, remember I told you he was pretty cool about things. Well, check these out. He said it doesn't feel like there's been some cataclysmic event talking talking about the market movements over the past couple weeks.

He notes that markets have come back to the FOMC and their view of the outlook for rates rather than the other way around. And I can back that up, Scott, telling you that the chance of a 50 is now 56 to 44. You remember we were talking about odds on of 90 or 80 percent of 250s in a row. That's not the way the market is priced any longer. He says it's hard to make the case that something monumental has happened on the equity side. Making note of what's happening today, of course, and over the past week here. Scott, the calming of markets and, of course, the rally today.

Back to you. All right. Good update, Steve. Thank you very much for that, Steve Leisman. Up next, Expedia and Take-Two reporting in OT. We're going to run you through the key metrics to watch out for when we take you inside the Market Zone next. We're now in the closing bell Market Zone. CNBC Senior Markets Commentator Mike Santoli

is here to break down these crucial moments of the trading day. Plus, Steve Kovac sets us up for results from take two interactive. And Sima Modi running through the key numbers ahead of Expedia earnings. Coming in overtime, Mike, turn to you first. Yesterday we faded. Today we held. In fact, the prior two days we faded from exactly just about the same levels. And today we have held the highs in the S&P the last three days, 53.12, 53.30, 53.28.

So we're basically closing near the highs. We lost 1% or 2% off that the past two days. Incrementally positive, higher lows each day. So the market hasn't done anything in the last couple of days to become incrementally worrisome. It's essentially said, OK, we're kind of churning around above the lows, trying to figure out it's not a furious buying response, but it's enough. Do I think it suggests that a lot of that really intense, urgent liquidation dynamic has passed. I don't believe really in all clears. We didn't really get, you know, an obvious setup that says this is a mega low. But better than nothing and certainly responding to some firmer economic data absolutely remains the case that good news remains good news.

You heard Barkin with Leisman, you know, bringing us the headlines. Leisman describing him as cool as a cucumber. No 50, what, an interim move? Yeah. No. Pretty easy to say now. Maybe on Monday morning it seemed like you might have had to entertain it. But I do think that makes sense.

I mean, the Fed is not going to move at the speed and just that acutely responsive to short-term market moves. We didn't see a lot in the way of stress in the money markets and all this stuff they've watched. But on the other hand, there's a lot of debate as to what they should be doing and whether they've waited too long. Oh, sure. Whether they've already waited too long. For certain. Back to you in a second. Steve Kovach on Take Two Interactive. Tell us what to look out for yeah scott this is still all about grand theft auto 6 and that launch is likely going to be the biggest entertainment product ever now last quarter they narrowed next year's launch window to fall of 2025 previously they just gave the full calendar year so pay attention for a more detailed launch window for next year or if it slips into 2026, just buckle up and watch out.

Take-Two is also going to Hollywood. Tomorrow, Borderlands hits theaters. That's based on another video game that Take-Two publishes. Hollywood, of course, has been obsessed lately with video game IP. That Super Mario Brothers movie last year made a ton of money for a parent company, Universal, and Nintendo last year. So keep an eye out for any commentary on what they expect out of Borderlands, Scott. All right, appreciate that, Steve Kovac. Well, Sima Modi, your space this week has been tumultuous, to say the least,

and we're going to get another company after the bell here. Yeah, that's exactly right, Scott. Expedia shares have fallen about 23% this year on concerns around the tough backdrop, competition with Airbnb, booking holdings, and weakness in Vrbo. That's its short-term rental business. It follows several disappointing earnings reports, including from Airbnb and the hotel operators Marriott and Hyatt, issuing weak guidance. Now, this is the first quarter under new CEO Ariane Gorin.

Investors will want to better understand her vision for Expedia. How do you grow a business given a somewhat tough backdrop with Americans thinking twice about where they travel and how much they spend? So comments on spending and also overall pricing will be key, Scott. All right, Seema, we'll see you in a little bit. Thank you, Seema Modi, with that. I mean, Michael, the evenness of the move today is impressive. If you say as a sector, tech up 3 percent, industrials a little more than 2, health care a little more than 2, discretionary about 2, comm services a little more than 2, energy about 2. It's really spread evenly. Yeah. And the breadth has been, you know,

about 4 to 1 to the positive side for the New York Stock Exchange, a little bit less than that for the Nasdaq. So it did seem as if after a couple of days of, yeah, choppy but not alarming action, you allow exposures to go up. You kind of rebuild whatever allocation you might have had. Now, again, you know, we have a lot to prove with this to say that this is more than just a bounce. At this point, you're still 6% down from the highs on the S&P 500, a little bit more than that. Semis, again, I mentioned midday, up almost 7% today. So we'll see if that builds into anything or if that's just a twitch higher. Every economic read is going to take on greater

significance from here on out. We'll mark it here. We're going to go green, obviously, across the board. Dow's going to be closer to highs. I mean, we're 700 points higher. S&P 500's going to go out with a gain of shy of 2.5%, but we're strong across the board. We'll see what tomorrow brings. Key earnings and OT with Morgan and Don.