Closing Bell - Closing Bell: Time to Play Offense? 6/29/23

Episode Date: June 29, 2023

We are in the final stretch of the first half… so is it time for more offense in your portfolio? Requisite Capital’s Bryn Talkington gives her forecast. Plus, Inflection AI secured $1.3 billion in a new round of funding led by Microsoft and brand new investor Nvidia. The company’s CEO and co-founder Mustafa Suleyman breaks down the latest. And, Schwab’s Omar Aguilar is breaking out his second half playbook. He explains where he sees opportunity in the market right now. 

Welcome to Closing Bell. I'm Scott Wapner. This make or break hour begins with the market's momentum and why some say it is just getting started as June comes to a close. Bryn Talkington weighing in on that in just a moment as she sets us up for the second half of the year. In the meantime, your scorecard with 60 minutes to go in regulation. The major average is looking to keep a really strong month of gains going. Dow and S&P higher throughout. In fact, it's the S&P's best month since January. The Dow's bent since November. The Nasdaq working on its best first half of the year since 83, led, of course, by Nvidia, Tesla, Apple, which hit another all-time high today, closing in once again on

$3 trillion in market cap. We're going to see if it can get there and then if it can close above it. Needs to close above it for the first time ever. We'll see if it can get there and then if it can close above it. Needs to close above it for the first time ever. We'll see if it can get there. Takes us to our talk of the tape. Final stretch of the first half, whether it is time for more offense in your portfolio in tech or elsewhere. Let's ask Bryn Talkington here with me at Post 9. It's good to see you. So what's the story going to be for the second half? We've got a couple of days left in the first. Let's game it out. I think there's going to be two parts to the second half. I think, first of all, we're definitely seeing a catch-up trade in the cyclicals that had been ignored.

Right? We've talked about cruise lines, home builders. They've done really well. Financials, really financials, small caps. Energy. Your energy. We'll get there. Okay?

We'll get there. That's the last six. I think that's the last three months of the year. And so, but financials and small cap are having a really clear catch up. And so I think as a trader, that's going to be the trade over the next few months. The reason why is we're going to continue to have inflation coming down. I think by the July CPI read, we'll have a three and a half handle on CPI that all of the data says we're going into recession, all of like the LEI or PPI or manufacturing. But we all know we're not because look at cruise lines, homes,

look at Vegas. You've been thinking that we were right. You've been a don't fight the Fed person from the beginning. You said it a million times. Yes, but we were not in the camp of we're going into a recession. We are in the camp of there's a really wide range of outcomes in 2023. And so we thought that with the Fed doing the fastest rate hike in history, I think in history, at least going back to the eighties, that there were going to be cracks in the system. And I think what's, as I reflect on the first six months,

I never would have told you that tech is going to be up 35, you know, the queues are up 35%, but that's where we are. And so I think you're going to continue to see tech dominate because we're still all abuzz about AI. Oh, you do. So even though you see cyclicals picking up, you know, a little bit of the weakness that they've had, you still see tech dominating in the second half. I think on a relative basis over the next three months, I think you could see those small cap financials relatively outperform. But I don't think you're going to see tech fall off a ledge. What I do think is interesting and what you're going to have to see, especially with the AI

derivatives, we'll say outside of NVIDIA, is as Q2 earnings come out, those earnings or even the earnings guidance better keep up with that multiple expansion. And so to me, that's what will be interesting from not a broad tech, but individual securities. I think that's where you need to have a come to Jesus. Well, let's see what other mega caps pull a NVIDIA out of their hat in terms of their guidance. And maybe that's what it's going to take to not only justify some of the moves that we've seen, to your point, the multiple expansion that we've witnessed and the idea that it can keep going in the second half? So like, take that question

and kind of think about it for a second. Because most of these big companies are spenders. They're spenders. They're buying the products from NVIDIA, which from my understand, that a lot of these products are 25 to 30 times more than they typically were because there's such a demand. So Microsoft, Microsoft has the benefit of open AI, you know, and so they have

that partnership, but they're all spending. And so Salesforce is spending to create an AI narrative for their clients. And so that to me is where you want to see, do these big companies come out and say, oh, well, all of a sudden, poof, our earnings have been so exponentially gone higher. And I think absolutely not, because NVIDIA not only owns the shovels and the axes of this AI gold rush, they actually are the only hardware store in town. Well, full disclosure, too, that's your stock, right? You've been in it, you love it, and you think it's still, and you think the, I mean, it's up, what, 100 and, I don't know, 130% year to date. Valuation, you don't have a problem with at all. If you ever had a problem with NVIDIA's valuation, you never would have owned the stock.

I guess that you own Tesla too. So if you ever had a problem with that one, you wouldn't own it either. But you know what's interesting about Tesla is, remember, I bought it at 120. It had a 25 forward PE. So I think the entry point does matter. And I think NVIDIA- I know, have you seen where that multiple is expanded to? Right, it had a 25 forward PE. So I think the entry point does matter. And I think NVIDIA... I know, have you seen where that multiple is expanded to? Right, it's very expensive.

Since you bought it, it's unbelievable. No, I think Tesla's expensive, right? And so, but who am I to tell the market what price they should pay for these multiples? And that's where NVIDIA, on a 4-20-24, if that guidance comes in, they will in video have a 53 multiple. But I will say I do think China is a risk. It has to be a risk over the next few years. And Jensen has talked about it just a few months ago in Taiwan, is that if the U.S. gets into a butting heads with China,

that is the number two GDP country in the world that buys a ton of chips. Let me ask you this. So you've been, as I said, don't fight the Fed. You've said it a thousand times. You've been the most vocal, certainly one of them on our program that has suggested that. Are you fighting the Fed now based on what they're saying? You don't care what they say? Because, I mean, you know, the Fed chair yesterday with Sarah over in Portugal was like, more restriction is coming. We don't think we're restrictive enough. Bostic out of Atlanta is on the tape now saying, well, Powell sees more urgency to hike than I do. He's a very much pause, pause, pause.

I always care what the Fed is doing, by the way. It's that to have an awareness as an asset allocator. What does the market care about and not try to fight those two? Right. I don't want you want to be dogmatic as an investor. You want to be pragmatic. But what Chairman Powell said yesterday also is because we're at the end, you have to calibrate more carefully, right? Because like Tom Cruise, like Maverick, going from 9 Gs to 10 Gs, that's a big difference. And I think he's very aware of these incremental hikes. When you're already up with a five handle going to six, things can break. Why doesn't the market seem to care about anything that the Fed chair says? I think the market knows that work towards the end. Because if you look at the bond market, outside of short-term rates, the 10-year is not even close to 4%, right? So the short end

is telling you rates are high, but the long end is telling you that rates are still low. Stock market, I mean, just brushes it all off. Does it continue that way? Is it just until it starts paying attention or is it just done with the Fed? I think that the market thought that we would have more cracks in the system. And because the recession is getting pushed out further and further, then all of a sudden, hey, there's sunny skies. And so the market has adapted to that. And that's where I think that the value trade has to come back. Ultimately, as I said in the beginning, energy is the ultimate value soft landing. And that still has not come back.

And I think that's because of China. So we'll get to that in a minute. That's your darling trade, your backyard trade. We get it. And we'll get there for sure. Joe Terranova is here as well. Let's bring him in. CNBC contributor of Virtus Investment Partners. What do you make of what

Bryn suggested? Tech's still going to lead, but you're going to get a catch up from certain cyclical parts that underperformed the first half. So the favorite sectors are finally going to perform in 2023 because that's what it would be. If you think about where we were coming into the year technology and ownership of technology was very low on the priority list it was all about owning financials health care and energy so finally seeing them work halfway through 2023 or in the third calendar quarter of 2023 yeah i i would appreciate that it would help out my portfolio. But I think it's clear. I think that the message has been sent. 2023 is a year about technology. So it's going to continue to lead for the remainder of the year. Technology on December 31st, when we look back, will have

a significant outperformance relative to all the other sectors. Is the rally itself going to continue to broaden out? So other lagging cyclical sectors will do well, or at least better, but tech is still going to be the game. I think in the fourth quarter, an overall favorable market environment will pull up all sectors. All sectors, including energy? Look, the best thing you could say about energy right now is that it hasn't broken down. It hasn't broken below $65. And you have a lot of short positioning. Correct, oil hasn't. I apologize for that.

So a lot of short positioning is being built up right now as oil is vacillating on either side of $70. So it is definitely susceptible to a short covering rally. Oil is at some point in the third quarter. What kind of oil or energy related stuff do you need to own? If you think there's going to be a catch up, what do you want to own? Well, I think that you would want to own the, you could say, I don't own rig. Once again, I think it's too risky. But that's- TransOcean.

Right, TransOcean, right. And so I think what you want to do is you're still going to get a catch-up. If you just buy XLE, which is 50% Chevron and Exxon, or we own RYE, it used to be RYE, it's the equal weight, you're going to get a beta. They're all going to move pretty much in the same direction. The magnitude may be different. But I think it's important with energy is that I said at the beginning of the year, which that had been my top sector the past two years.

This year it wasn't. I said that I don't know how much capital appreciation you're going to get out of energy this year. I think you're going to get it from dividends and selling calls. But this is going to be a wonderful year to start going back into energy, because ultimately when China comes back, and trust me, Xi will stimulate that economy. That is what's holding energy down right now. And that is why the hedge funds are short and position is negative to Joe's point is because the China reopening has been incredibly anemic. At what point, Joe, do people say,

I'm tired of the fixed income trade. I'm tired of sitting in five percent money markets and it's time to get more aggressive into the stock market. Does that come at all in this calendar year? And why would it? It's occurring in every conversation I have with financial advisors for the better part of the last six to eight weeks. The question is, in the fall, we moved away from risk. We moved away from equities. We've moved towards money market funds and T-bills yielding 5 percent. And we're waiting for this pullback that hasn't come just yet. In the third quarter, if there is the historical statistical weakness that is suggested, there's your opportunity. Because on the other side of that in Q4, the strength comes back

once again, and it comes back very intensely to close out the year positive. Can I hit on something on the money markets? Yeah. I think broadly these statistics about how much money is in money markets is missing where it came from. It didn't come from equities. It came from bank deposits. And that will continue. You're from equities. It came from bank deposits. And that will continue. You're continuing to see a shift out of bank deposits, which doesn't really hurt JP Morgan or Morgan Stanley. It hurts the regionals into money markets. It is not out of equities. And everyone got scared and went into money markets that came out of bank deposits, which are still yielding like 40 basis points. But people still see enough risk in the landscape, whereas one person may say soft landing, another may say recession, which leads me to believe that the

money's not going to come out of the bank and go into the stock market all that quickly. Well, you know, you also have, what, 100 million baby boomers that are retiring, and those baby boomers are such a force of nature. And as they're living their life, they've spent the better part of the last 13 years having to have risk and earning zero percent on their cash. Trust me, they are thrilled to have a five percent money market right now as they've created that nest egg. And so I think you're going to continue to see a lot of money anchor out in that short end of the curve, not only because the baby boomers, but because of the money coming out of the regional banks. Somebody just sends me an email, says my 5% money market will soon be 5.5.

To my point, if you think that rates, even if the Fed is done, we think they're going to raise at least one more time. Let's say that that's it. They're going to stay high for a while. Rates thus remain elevated. Thus, the competitiveness of money markets to equities is still advantageous to an investor. And that might be the challenge in the near term over the next 60 to 90 days or so. But again, for that argument to be correct, you have to assume that the NASDAq and the S&P and equities themselves developed

into national Japan, that they fall apart because they are outperforming that five and a half percent that you are getting in the money market fund. Let's talk banks before we wrap up the conversation. We have the banks are up today because the stress test results. A lagging sector, as you said, Bryn, why do you think that that's going to pick up in any way, shape or form as long as you've got questions about the economy do you think that that's going to pick up in any way, shape or form, as long as you've got questions about the economy? I think it's purely just rotation. I think it's like hedge fund and algorithmic rotation because we have this softer landing. Financials have not done well, which is really the playbook. You wouldn't think they would do great going into

a late stage cycle, but they have underperformed. But I think there's going to be a ton of dispersion. I still would not be buying the regional banks. I think there's individual names like an M&T or a Cullen Frost in Texas, which have great balance sheets. But I think that if you want to play the financials, you want to stay, go individual security, and you want to stay big bank, that could actually potentially benefit. If we have a little bit more of an IPO cycle, or just a little bit more of green shoots, I think it's a little bit of a catch up, but it's only going to be in the big the big banks. You agree? Well, I mean, you know, you're talking about banks. What are they what are they offering? Savings accounts.

Savings accounts are not going to be able to match the yield that can be offered from a T-bill or for a money market fund. So I think banks are in an incredibly difficult environment, in particular as interest expenses continue to rise. Because what have they done? They've brokered deposits. So when you broker deposits, that's much different capital than the sticky capital from a true customer base that's going to stay there. Your interest expense is going to rise. I think when you think about the financials, remember Visa and MasterCard are both members of the financial sector right now. You begin there. You make the turn thereafter towards the capital markets.

You see, banks, you know, some banks make money hand over fist in a more vibrant M&A environment where you've got and IPOs for that matter. Goldman Sachs, Morgan Stanley. Right. We just had three IPOs today here. The New York Stock Exchange. I'm not saying it's a mountain, but you've got to start somewhere. And there is apparently a thaw underway, which has to be good for the banks. But that's capital markets, Scott.

That's not traditional banking. No, I'm talking about capital markets businesses for the Goldman Sachs of the world and the Morgan Stanley. So I own Morgan Stanley. Goldman Sachs is a name that I'm absolutely looking at right now. I'd look at private equity if we have a continued improving environment for risk assets. You want to look at the asset managers. You want to look at the exchanges. You'll see fund flows back into equities once again.

I think that's the areas of the financial sector you want to look at. Do I want to buy Citibank? No, I don't. I own Bank of America. It's been an absolute struggle. Brinkin can make the case for you why you should own Goldman, right? Yeah, I mean, I've old, it hasn't done well, first of all. But I want to own Goldman because it's not like a traditional bank. It doesn't care about money market rates. It cares about

M&A and activity. And so ultimately in fees, they have a ton in AI. I mean, sorry, alternative investments, not AI, alternative investments. And so I think Goldman longer term is how you want to play the reemergence of M&A, etc. But but right now we don't have much M&A. The FTC won't let that happen with Lena Kahn and also the IPOs that have been coming out. These are companies that are for the most part are all profitable or will be shortly. No one, no AI companies are come out. Let's see what happens if open AI does an IPO. That will tell you the market's bad. OK, we'll make that our last word. Thank you, Joe. We'll see what happens if OpenAI does an IPO. That will tell you the

market's bad. OK, we'll make that our last word. Bryn, thank you, Joe. We'll see in the market zone in just a little bit. Let's get to our Twitter question of the day. We want to know which AI stock will have the best second half of the year. Will it be NVIDIA, Alphabet, Microsoft or Broadcom? You can head to at CNBC closing bell on Twitter to vote. The results are coming up a little later on in the hour. We're just getting started, though. Up next, artificial intelligence startup Inflection AI raising some serious cash, led by its current backer, Microsoft, and a brand new investor as well.

The company's CEO and co-founder, Mustafa Suleiman, joins us next with the very latest. Again, he's the co-founder of DeepMind as well. And he is with us next. We're live from the New York Stock Exchange. You're watching Closing Bell on CNBC. Welcome back. Inflection AI announcing today that it secured one point three billion dollars in a new round of funding led by Microsoft and a new investor, NVIDIA. Reid Hoffman as well. Bill Gates, Eric Schmidt, also on the list of investors. Joining me now, Inflection AI CEO and co-founder,

Mustafa Suleiman, back with us here on Closing Bells. Good to see you again. It's great to be here, Scott. Good to see you again. How's it going? It's going well. A great day for you, obviously, with this raise. Tell me about it and what it does to your valuation now. It's a fantastic day for us.

I mean, it's a great honor and privilege to be backed by some of the leading investors and technologists of the last couple decades and being able to partner with microsoft and nvidia at the same time to deploy our new cluster of gpu h100s we now have the largest operational cluster of those chips in the world and that gives us a huge edge when it comes to training these large language models. So it's a very exciting time. What does it value your company at? Well, you know, I think the potential upside is enormous.

So, you know, we are very, very excited about what this can do. Personal intelligence is going to be the future interface and the way that you actually, you know, interact with many other digital services. I think it's going from personal computer to personal intelligence. And if anything, I think in the long term, the industry is currently underrating the impact of what it means to have intelligence on tap, available to everybody to turbocharge everything that you're going to do. I want you to talk to me more about how NVIDIA got into the mix on this, because, you know, for somebody who talks about AI stocks every day, which we do, it's no doubt the stock of the year. Certainly it's near the very top of the list if it's not the stock of the year for obvious reasons.

How did they get involved? How did your relationship with Jensen Wong develop into the point where they would become a new investor? I mean, they're an incredible company, 30 years in the making. with Jensen Wong develop into the point where they would become a new investor? I mean, they're an incredible company, 30 years in the making, you know, one of the leading, you know, AI engineering companies out there. And, you know, I've been friends with Jensen for a good while now. We've been cooking this up for quite a long time. Just last week, we announced that we've been collaborating together on a new cluster that we've jointly co-optimized to train some of the largest models in the world basically faster than anybody else on the planet today. So it's been an incredible technical collaboration, but they're also just an amazing partner. I mean, they're producing the best chips in the world today, and so it's just a huge honor

that they've not only invested in us, but they've joined us as a partner to co-create what is going to be, once we're operational later this year, the largest supercomputer in the world. And that's just an incredible, you know, opportunity for us to jointly put that together. We're looking at 178% year to date for shares of NVIDIA. And given your expertise, and I'm sure you're asked all the time, you know, separate hype from reality for me, Mustafa, how would you do that? What, what is just being completely overhyped and is pure speculation versus what's legit and what I can theoretically wrap my arms around? Look, I mean, here's the reality, right? Look around you today. Everything in your line of sight right now is the product of intelligence. Humans collectively,

individually have created everything that you see around you. And so the potential to take what has made us special, our intelligence, and try to automate that, paralyze it, speed it up and make it widely available to billions of people on the planet is, I think, one of the most exciting missions that we could possibly do. So I think that's very reasonable for us to think over the next 10 to 20 years, this is going to be the greatest leap forward in productivity that our species has ever known, probably more so than the industrial revolution. If it's anything like electricity, and many people have been comparing it to that, then you'll see it absolutely everywhere in every device, on every platform, in every part of your life. And so I think that, you know,

if anything, we're understating the real potential of this new wave of AI in the next couple decades. You know, we've been focused so much, I think, on the co-pilot aspect of this, what it means from a consumer standpoint. You've been tweeting a lot about the dramatic implications and the technological advancements that are going to take place in healthcare. Absolutely. I mean, this is going to touch every single industry imaginable. Wherever there is an opportunity to make something more efficient and cheaper, technology has always done that.

And with this new wave of AI, we'll just accelerate that process of making things cheaper and easier to use. And then in doing so, that will spread the technology far and wide, whether it's radiology scans or managing patient pathways. Every industry that currently has a process to optimize is suddenly going to have a tool to amplify everything that you're doing, make it cheaper, more efficient. And that is the greatest productivity boost you could hope for. I'm wondering, and others are too, what at least part of the flip side of all this positivity is. I want to read you a blog post from the staff of the FTC

today as they sort of think about competitive concerns. And I'm going to quote from their report, and I want your reaction to it if you would. Generative AI depends on a set of necessary inputs. If a single company or a handful of firms control one or several of these essential inputs, they may be able to leverage that control to dampen or distort competition in generative AI markets. And if generative AI itself becomes an increasingly critical tool, then those who control its essential inputs could wield outsized influence over a significant swath of economic activity. Do you think of it in the same way? Is it possible that firms will be able to engage in unfair competition as a result of the very advancements that you're talking about?

Look, the really exciting thing about this coming wave of AI is that even though it costs an enormous amount to deliver at the very frontier, so if you want to build the absolute best models in the world, it's incredibly expensive. But on the plus side, this is being open sourced at a rate that we have never seen in technology before. The models are getting cheaper to use, they're getting more efficient. And that means many, many, many developers, big and small, two people in their garage, as well as big companies, are all getting access to almost the cutting edge around about the same time and that's incredible for innovation it means that there are going to be a huge number of new entrants to the market and a huge

amount of competition as a result is there a danger though in that open source nature that you speak so highly of I think that you know we have to be cautious because you know anybody is going to be able to use these models and some people will be looking to use them to generate synthetic media and to intervene in our information ecosystem, pollute the waters so to speak. It reduces the barrier to entry to people who want to do harm but of course as I hope and as I see it is going to reduce the barrier to entry to people who really want to change the world for the better. And I think that's the incredible story that we should all

be focused on and not over fixate on the kind of existential catastrophic outcomes that people have been talking up in the last few months. Remind us of when your book releases, The Coming Wave, which we all can't wait to see. Yeah, thank you. The Coming Wave is out on the 5th of September, available for pre-order now. So yeah, go get a copy. Yeah, thank you. The coming wave is out on the 5th of September, available for pre-order now. So, yeah, go get a copy. Yeah, we'll talk more, I'm sure, in the lead up to that. Mustafa, it's good to see you again. Take care and congratulations on today.

Thanks so much, Scott. Great to see you. Take care. All right, Mustafa Suleyman joining us from Inflection AI. Let's get a check on some top stocks to watch as we head towards the close. Christina Partsenevalos is back with that. Christina. Thanks, Scott. Well, McCormick is lower, about 5.5% lower, despite beating earnings estimates

and hiking its outlook. Those price increases helped margins, but also contributed to a 1% drop in volumes during the quarter. Between today's drop and weakness across consumer staples this week, McCormick is headed for its worst week since May 2022. And in honor of Canada Day this Saturday, let's talk about BlackBerry. That stock is up about 6% after surprising investors with a profit. The once top of the market smartphone maker, yes, I did pull out my old classic, posted narrow losses. But the CEO, John Chedd, said the softer economy is causing longer sales cycle and hurting royalty revenue because it is now a cybersecurity company, especially some issues in China. Scott. All right. Nice day for those shares. Christina, thank you. Up next, we are trading the second

half. Schwab's Omar Aguilar is breaking out his playbook for the rest of the year. Tell us where he's seen some serious opportunities right now. We're back on Closing Bell after this. Got a tale of two markets to start the year, a sharp rebound in the growth trade and cyclical sectors falling behind. So how should investors be setting up for the second half? Let's ask Omar Aguilar, he's CEO and CIO of Schwab Asset Management back here at Post9. It's nice to see you again. So do we assume that what worked in the first half is just going to work in the second half? Is that how you're approaching it? No, it actually never works that way. Usually, especially when you see these strong, and I would probably say confusing, tale of markets, usually you should expect something

else coming in the second half. You know, the bond markets have been leading us towards, you know, a more recessionary, more negative. That's typical bond trading talking. And then, you know, equity markets seems to be a little more optimistic, thinking that we're going to skip the recession and we may just pass through everything bad, you know, that's about to happen. Oh, good. That's why we have you here. You have to tell us who's right. Who's right? Well, you know, I think what it is is, you know, we there is a theory about these rolling recessions that makes mean that both are right. It's just that we're not going to have one big recession. And in fact, the recession that we started seeing from the end of last year seems to be coming true.

And we're now in the process of having this expansion component. I think what is interesting is like if you look at the GDP, when you look at housing, when you look at consumer, everything points that the economy is so resilient. Wow. So you you pretty much ascribe to what Ed Yardeni has told us in the last handful of days. What was a rolling recession has now become a rolling expansion. You believe in that? That is that is, you you know our likely scenario there's still an on you know small probability that there will be these leading indicators that will end up to be right if you think about it out of the last seven tightening cycles of the fed since the 1950s it always end up in a recession so there has to be something different which in our, it has to be the COVID. Sorry, are you insinuating then,

if you see a rolling expansion, then that is the reason that you'd have a catch-up trade from some of those more cyclical sectors that underperformed in the first half? And that's exactly the reason why we continue to think about this barbell scenario, because cyclicals and small cap basically are the ones that are starting to just look very attractive for the second part of the year. What about technology? That's what everybody wants to know is the runaway winner in the first half. Not a lot of people saw it coming. AI seems to have changed the game in terms of investor psyche towards that space. Does that continue? Well, you know, the market usually we tend to think about there's four big drivers, the economy, earnings, sentiment and valuation.

Two of those signals, valuation and sentiment, you know, seem to be contradicting the tech trade. You think they've gotten too expensive? It's gotten too expensive. Multiples are way too expensive and it's all driven by sentiment. And you don't think that can be sustained because you don't think earnings are going to live up to it? We need a little bit more breadth. You know, if you think about it, what we have so far in that AI trade and that technology search is being driven by 10 stocks. And, you know, what we actually need to see is, you know, there are companies that are generating good flex.

Yeah, and there is good free cash flow. These companies are successful. So it's not the same, you know, as what people think about the late, you know, dot com, you know, late 90s setup. They're very different in this case. They're more sustainable. However, we need to see a little more breadth that actually continues to see the earnings grow so that we can actually believe

that trade will be sustainable. My point, though, lastly and briefly, is that it has widened out a little bit. It's not just the so-called magnificent seven and everything else. You have had a pickup lately in market breadth. Yeah, not a lot. It's just, I think we just need to start somewhere.

And I think to us, that's actually the point. I think we'd rather see the diversification go to other parts of the market rather than just stay intact. All right. It's good to see you again. We'll see you soon. Omar, thank you. Omar Aguilar, Schwab Asset Management joining us up next. We're tracking today's IPOs, three of them making their debut at the New York Stock Exchange today. We break down these new offerings just Stock Exchange today. We break down these new offerings just after the break. We're on Apple Watch, too. That stock closing in on the three trillion dollar mark once again has yet to close above that level. We're like a dollar forty cents or so, give or take away from that. We'll see what we do towards the close. We have about twenty five minutes to go. We're right back.

20 minutes to go before the closing bell. Three companies making their public debut today. Bob Pizzani has been tracking all the action. This is your kind of day, Bob. Oh, boy, I can't tell you how happy I am, Scotty. We had mixed results, though, in this latest batch of IPOs. There were three big IPOs pricing today at the NYC. The clear winner by a long shot, Savers Value Village. This is the largest for-profit thrift operator in the U.S. It priced 22.3 million shares, $18. That was well above its estimated range. It opened at 18. You see it's holding up here, $23.18. Kodiak Gas Services is a big natural gas compression company, priced 16 million shares at $16. That was below the price talk. It was 19 to 22, opened at 16. You could see that just a little bit below that opening price.

Fidelis Insurance, a big specialty insurance company, reinsurance provider as well. They priced at 14. That, too, was below the price talk of 16 to 19. It opened at $13.10. You could see it's basically right in that area right now. Savers Value Village was a hit because it ticked off an awful lot of boxes for different investors. It's profitable and growing. That always helps. Thrift is very cool with young people. And there's a whole ecology angle here with reusing old clothes. And there's a recession angle, too.

The business is growing regardless of the economy, but it would make sense they would grow even more if a recession occurred. Kodiak and Fidelis both priced below their range, but both of their industries, insurance for Fidelis and natural gas for Kodiak. They're facing tough economic outlook right now and their public peers are trading down. So it makes it difficult. It makes it understandable. Pricing was a little tougher here. The simple fact, Scott, that all three deals got done is important. That's what matters. It's a sign the IPO market is reopening after being largely closed for 18 months. But the mixed pricing today indicates we're not necessarily in an IPO bull market. And Scott, got to get away from the idea people think suddenly if we price way above the range, it's a huge success. We price below it. It's not a success. It's an

auction process The important thing is the deals are getting done and we'll see if we get some more I think we're gonna get some more in July, which is traditionally a pretty weak month for IPOs But I think people will be taking advantage of the climate. Yeah, you gotta start somewhere, right? Yeah, thaw the question is what happens with the big with the big guys that are out there with the Reddits of the world? I don't know if this is necessarily going to change their mind, but you as long as the market continues to hold up and interest rates hold up, I think there's a good chance we'll see some action. Yeah. All right. Good stuff, Bob. Thank you, Bob. Last chance to weigh in on our Twitter question. Which AI stock will have the best second half of the year?

NVIDIA, Alphabet, Microsoft or Broadcom? At CNBC closing bell to vote. The results after the break. Twitter question results. Which AI stock will have the best second half of the year? All right. NVIDIA. That's your vote. 38%. I guess that's what we're doing.

Up next, Nike. The number is hitting the tape in just a few minutes in OT a shareholder is going to weigh in with what he's watching when those results drop when we take you inside the market zone all right let's do this we're now in the closing bell market zone CNBC senior markets commentator Mike Santoli here to break down the crucial moments of the trading day. Plus Steve Kovac Apple approaching. Three trillion dollars in market cap hitting another record high

today. We'll see if we can get there Joe Terranova he is back to talk Nike earnings. Which are out in overtime today Mike Santoli begin with you the trend has been your friend yes as we wind down June. I think you can fall back on the idea

that the trend even if we do get a more substantial pullback is friendly at this point. The friend as we wind down June. I think you can fall back on the idea that the trend, even if we do get a more substantial pullback, is friendly at this point. The issue, I think, makes things tricky is that saying the economy has a bit of momentum, a recession seems far off, earnings are not collapsing. In fact, they're flattening out and rising toward the end of the year. That seemed like a maverick, unpopular position a couple of months ago. It's now something closer, I think, to a well-embraced premise a lot of people have now. I'm not saying everyone's too bullish or even bullish at all, but they're deferring to the market action, hoping for some broadening. We've gotten that. We have about two weeks left in the seasonally strong

phase of the market, even the one that dates back to the midterm elections. So you start to lose that in mid-July. Investor sentiment readings and positioning has neutralized from bears. So I think it's for somebody like, you know, I've been pushing back against the scare stories. You're left with a spot of saying, OK, now people recognize things seem OK. And how much more life is there in that dynamic of people buying in? That's the question. You said it earlier, too, the reluctance of large swaths of people still to join this party. The wall of worry is not gone, but it is shorter. That's the way I would put it. Very well put. All right, Steve Kovac, we're about a dollar or so away from $3 trillion in market cap for Apple,

which hit another all-time high today. Yeah, Scott, $190.73, that's the magic number we've been looking for all day. And like you said, it's been about a buck short of that for most of the day. But look, the more important story, I think, Scott, is the same one we've been talking about since you and I were in Cupertino earlier this month for that Vision Pro announcement. It keeps hitting all-time highs. I think that's what investors are going to care about more than a $3 trillion milestone, which, by the way, Apple has hit before. We just haven't seen Apple close

at that $3 trillion market cap. So, look, it's kind of interesting that we're having this conversation now because this is actually likely going to be a down year for Apple. The last two quarters they reported, we've seen revenue down 3% to 5%. Apple already said, or implied rather, that for the current quarter that's wrapping up tomorrow, revenue will be down another three percent or so. So it's kind of interesting to see the valuation and these all time highs keep ticking up despite a down year for Apple. And, you know, one reason behind that is that what we keep talking about is that install base, right? Over two billion, according to Apple, active installed

devices out there. And that is $2 billion opportunities for Apple to sell you more digital stuff. So that is the real key behind the valuation, Scott. Yeah, as we ramp up to that fall quarter, I guess, right, with the release of the new iPhone. Yep. And the Vision Pro is going to be next year, of course. But yes, the new iPhone cycle likely going to come in early, mid-September, as it does every year. That's always a huge catalyst. But look, we know demand for smartphones and other consumer electronics, especially those MacBooks, has been just falling off a cliff this year, hence those lower sales. So it's going to be a challenge. You're going to have to really impress with the iPhone 15 in order to have a better second half of the year.

Good stuff, Steve. Thank you. You got it. Let's talk some Nike. Joe, turn over earnings and OT stocks really been a disappointment this year. Well, the stock has been a disappointment for the better part of 2022 as as well. It's only up 10 percent over the last 52 weeks, while Lululemon is up 31 percent. Now, I think that, you know, when I've talked about Nike on halftime last several weeks, I have been very, very negative. I've been very, very cautious. But you know what? In reality is, they have a very low bar to step over tonight. Options are pricing at a 4 percent move, but we know all the negatives. And Foot Locker really kind of cleared the path in terms of negativity in May, and that's when the stock fell And Foot Locker really kind of cleared the path in terms

of negativity in May. And that's when the stock fell. So Nike went down to 102 at the beginning of June. You had a lot of analysts come out, lower price targets, JP Morgan, Wedbush, Deutsche Bank. They've all come out and do that. We know the concerns, inventory, the lack of pricing power, the absence of China growth. I wouldn't be surprised to see them exceed a very low bar this evening. We just don't know how long some of the negatives are going to last, i.e. China, and what that is going to mean. As it gets pushed out potentially further and further, it has a negative impact on the stock. It does. But I think when you think of all the negative conditions, I think China is the one that actually comes back the quickest. It does but I but I think when you think of all the negative conditions I think China's the one that

actually comes back the quick to the the quickest I'm not just sure. The discounting and the reduction of inventory when they'll be able to resolve that and again I just wonder how much of what's going on with Nike. Since the middle of

May is really a reflex reaction. To what happened with Foot Locker. That you know obviously the leading retailer and seller of Nike footwear. The other thing we've been talking about with Nike is, you know, what was a dramatic move to DTC, direct to consumer. Not that it's ending, but it's morphing sort of back to to in some ways, you know, how it was with some of these partnerships. It is. It is. But it's slow. It's a slow moving. Look, right now, if you want the momentum, if you want the growth, you're going to get that in Lululemon. So I think you could best

hope for, and what I'm hoping for as a Nike shareholder, is that you just don't see any more negative news introduced that takes the stock back to the June lows of 103. Yeah. Well, let's see what margins are doing on a retail landscape that's questionable. I've seen a lot of discounting, some inventory stuff. So we'll be paying close attention to Nike in overtime with Morgan and John. Obviously, Joe, thank you for that. As we turn our attention, Mike, back to the broad market here, as we wind down what's been a really stellar month for stocks.

For sure. And the month delivered what people were begging for, as we've been talking about, which is a little bit more of an inclusive rally. I do think you have to notice what's going on with bonds in reaction to the hotter than expected economic numbers. So, you know, we're going to close the 10-year right at 385, it looks like. That's the ceiling of this range that we've been in for a little while. So there are things that are maybe perking up and changing about the environment. But banks, I do think there was a bit of a, you know, lifting of an overhang after the stress test, even though I wouldn't have thought they were depressed for that reason.

They are releasing to the upside. They do have a play on a better economy and a longer runway before recession. So I think things are working OK today. You have like two to one positive to negative volume. But again, I keep going back to the idea of how much of that reservoir of worry have we burned up to this point? And I don't know if that's too clear going into the end of the month. You've got your soft landing, if you's too clear going into the end of the month. You've got your soft landing, if you will, things working today, financials, energy, materials. Those are the three best performing sectors.

Yeah. And consumer cyclicals are an interesting place to watch because as we've been saying, housing related and travel and other services have been good. Things like autos and core retail, not as much. So they're trying at this point to participate as well. And we just had the two-minute warning.

How closely are you going to be watching treasuries in the next, let's just call it 30 days, you know, over the month of July and how much you think that is going to dictate more than anything else, whether this rally can continue or whether the trend gets snapped? It has the potential to definitely put a restraint on things. Now, maybe a lot of it is just a little positioning flush. When we get the PCE in the morning, we'll see if that was something to be concerned about or something that acts as a source of relief. So after tomorrow, after we get through the quarter end stuff, you know, we'll see what the trend is. Right now, I think we've benefited from range-bound yield.

It's been kind of neutral. But you have to take notice that mortgage rates went above 7% as of today with this move in the 10 years. So there definitely is a push-pull when it comes to what it's going to mean for stocks. Can't wait to get into earnings, too, which we are going to be talking about fast and furious pretty soon. Yeah, it's a couple of weeks. You know, it seems between here and, as I say, the mid-July, we're going to be a little bit on our own in terms of positioning land, seasonal strength, a bit of an air pocket. But after tomorrow's inflation number, Fed's still four weeks away. All right. Special day here at the New York Stock Exchange. And we certainly want to single out Rich Rapetto. You probably know the name. I hope you know the face because he's been a fixture on this network for years talking about the exchange business.

There he is up there with Jeffrey Strecker. He's the CEO of ICE. Rich Rapetto is retiring today. After 25 years on Wall Street. He helped take the New York Stock Exchange and the NASDAQ public. He's been the number one analyst on exchanges seemingly forever. And even better than all of that, he's just a heck of a good guy. And we wish him the very best in his retirement. That does it for us.