Closing Bell - Closing Bell: Trading the Record-Setting Rally 6/14/24

Episode Date: June 14, 2024

Ritholtz Wealth Management’s Josh Brown, Solus’ Dan Greenhaus and NB Private Wealth’s Shannon Saccocia weigh in on what could be next for the market. Plus, we discuss the road ahead for the Fed with CNBC Senior Economics Correspondent Steve Liesman. And, Seema Mody drills down on the leg lower in the industrials sector. 

All right, Ty, thanks. Welcome to Closing Bell. I'm Scott Wabner, live from Post 9 here at the New York Stock Exchange. This make or break hour begins with what is next for the markets. The Fed meeting behind us. Apple shares surging this week. Earnings, well, they're still a few weeks away. So what's the most important catalyst to drive stocks? We'll ask our experts that very question over this final stretch. In the meantime, let's show you the scorecard with 60 minutes to go in regulation. NASDAQ's gone positive, actually, trying to there. As you see, it's back and forth. Industrial names, though, they are dragging the Dow lower and really have been all day long. And that's even as yields fall. Consumer confidence that was weak today. You've got some fresh concerns, I suppose, about the

economy. That's probably why small caps are underperforming the rest of the market. There's the Russell down one and three quarters percent. As for tech, well, Adobe, it's the standout after its earnings. I have to talk about Apple. How can you not? What a week, an amazing week it has been for those shares. We'll watch them over this final stretch, going for a milestone of its own. And we will watch those numbers closely. NVIDIA has turned positive.

It is up by near 2 percent. Does take us to our talk of the tape, the state of stocks and this rally. Let's ask Josh Brown where he thinks the markets are heading. He is with us live on this Friday. Josh, good to have you. Welcome. So take stock, if you will, in the week that was. We had a Fed meeting. We had Apple reach a new all time high. And we're still talking about that tech trade on full steam. What do you think? So if this week were a character on Game of Thrones, its name would be Breaker of Narratives.

Because a lot of things were shattered this week that had started to become this kind of consensus feeling around the marketplace amongst investors. And one of those things is Apple can't grow slash innovate. That narrative clearly has been broken because what Apple did and what set the stock on fire once the sell side started to actually explain this the following morning was they basically said, OK, the first round of AI tools and excitement were just based on functionality. The next round will be based on personalization. And that's why this stock went nuts this week, because Apple does privacy and personalization better than pretty much anyone else. They do it at scale and they do it profitably.

And that is what I think gave us a new leg higher for all of the AI related names, obviously NVIDIA and Apple included. And of course, this is the most important thing to the market right now. I'm not happy that it is. I'd rather it be the economy. But this is truly what moves the chains. It's the expectations of earnings from AI and the multiples we want to pay for AI stocks. That is what's in the driver's seat.

And so this week, you got a lot of good news on that front. I mean, does it does it then sort of make sense that Tony Pasquarello at Goldman is saying, you know, stick with the secular winners because they are the weapon of choice in this market? That long the highest conviction and highest quality names. You're talking about one of them, aren't you? Yeah. And let me answer your question with a question. What would you prefer? Because if you want to go against the secular winners and you want to do this value, you know, industrial rotation, you're welcome to. But now the economic data is starting to surprise the downside. It's not bad data. The economy is great, but it's surprising to the downside. It's different. Things are different now. And these stocks are not reacting positively to

that. Even consumer discretionary names that, you know, should not necessarily be reacting to every economic data point. They are, and a lot of those reactions are to the downside. You're not seeing that in the big secular technology growth trend. It's not happening there. So that's, I think, what Tony is getting at. You can make your life harder for yourself if you want to, but you don't have to.

I feel like in some respects, the market this week is, I don't know. I don't know if I want to go as far as to suggest that it's on Fed mistake watch, but I do think there's a fear that's going to creep into the market as the data comes in a little bit squirrelly, like the confidence number did today. That was ugly and it was a downright miss that we're going to start worrying that the Fed's going to stay too high for too long and that it's going to wreck the story, so to speak, that has gotten us here in the first place. So I think there is a spectrum of of Fed mistakes. I don't think it's just the big mistake and then they get everything right. So they already I mean, they've been pretty clear they're going to be data dependent. By definition, that means making a mistake. They don't want to anticipate. They want to be late. They've told us this time and time and time again. They would rather be late. They were

late to fight inflation. They're going to be late to fight disinflation or whatever is to come next. And they want you to know that that's the way they're thinking about it. They would rather be late than early. So by definition, they'll make a mistake. It's not necessarily a fatal mistake for the bull market. It doesn't have to be that way. Could have a correction if it becomes apparent that stocks are figuring something out before the Fed is. That's certainly possible.

We had two of them in calendar 2018. Two of them. You had two 17% and a 20% correction inside of one year because of a Fed mistake. That's certainly in the realm of possibility, but they can reverse themselves from a mistake as well. So this is not the thing that keeps me up at night right now is the timing of the first cut or whether or not they get to the second cut fast enough. I think there are other issues that we ought to be concerned with more so than the timing. Does NVIDIA up 166 percent year to date keep you up at night. I ask that in the context of if you talk about a correction and you look to the places where a correction would be more acute, potentially, you've got NASDAQ 100 up 17% on the year, NVIDIA is up 166%. You know, a lot of these names have done

pretty well. People question their valuations now, whether the earnings are really going to do the job for all of those stocks. And if you have a correction, why wouldn't it start with those kinds of names? Yeah, no, I think, look, I'm on record saying the biggest risk to this market is a hiccup in the AI story. I just opened up this A block by telling you the big driving force behind the entire stock market right now at an index level is the AI story. And frankly, people need to understand that that will work in reverse as well. And it doesn't matter what you're invested in, you'll be affected by it. So if there is a hiccup in the AI story. If there is some sort of massive product flop or a CFO somewhere who says,

hey, guys, there's no ROI on any of this stuff. We're going to slow down. If and when that happens, it will be a negative shock to the market. You'll see semis get smacked. You'll see the whole AI build out story come under the magnifying glass. But that hasn't happened yet, number one. And number two, I think the market understands that, but it's willing to look past that risk because of what it heard from the most important company in the world this week, Apple. And Apple's tough here. Like, I would not be racing out to buy it.

It's a 79 RSI. This is the most overbought we've seen Apple in a long time. The problem is that doesn't make it an easy sell because overbought statistically doesn't mean, oh, this is definitely reversing lower. Stocks can be overbought for a long time and keep their uptrend. Apple is earning 47% on a gross margin basis. That is the highest gross margins for this company going back 12 quarters. So they're actually getting better on on the earnings front and the gross margin front. Meanwhile, you've got a golden cross here. You've got a 50 day that just broke above the 200 day. The last time that happened was mid-May, excuse me, end of May 2023, stock rallied 25% from there. So technically, it's not a sell.

Fundamentally, it's not a sell. It's a 25 multiple. It's the lowest forward multiple since Christmas 2022. Apple, right now, you're looking at a shareholder yield of 4.1%. So I'm taking the dividend and I'm taking the buyback. So you've got that support as well. So that's what makes it tough to be out of this market. You've got the best, biggest company in the world set up beautifully, both fundamentally and technically, and the story's intact. So yes, should you worry about risk? Of course. But the big risk that I think we should be thinking about, it just hasn't materialized yet. And I don't know definitively that it will. You know, it's going for its best week since 2021.

Let's bring in Steve Kovac for more on Apple's big week. Josh is going to stay with us and then we're going to talk to some more folks on the other side of this. But, Steve, it has to be above 213.27 to notch that best week since 2021. And I have to tell you, after we were together at WWDC and then the stock had a fire lit under itself the next day, I had a couple of people ask me, did anything really significant happen at WWDC to cause a stock move like that? I'm sure you heard some of the same questions. How would you address that? Yeah, I'll tell you exactly what happened here. So investors got the AI story they were thirsting for this week on Monday. And the big reason it's because they're betting it's going

to drive more hardware upgrades because you need last year's iPhone 15 Pro or presumably the next iPhone coming in a couple of months to use Apple's AI. Now, to put these moves into context, Apple shares, like we've been saying, just lag behind big tech peers all year. And despite today's dip, it saw its best week since right now it's trending towards May 3rd, but could get to what you said back in 2021. But that's when it jumped more than 8 percent. Now, today's slip is causing some back and forth with Microsoft this week for the

most valuable company in the world. And today, NVIDIA briefly surpassed Apple in market value, and they've been kind of trading back and forth as well there. Basically, these three companies are all neck and neck for the most valuable spot here. And it's important to note that this is another thing I think that has not been appreciated, Scott. Not all of those artificial intelligence features are going to be available on day one, even if you have that new hardware. That includes the chat GPT integration, and likely others are going to be pushed into 2025 and still going to have to wait for that next iPhone model in a few months to see what it has exclusively there. And then, by the way, Scott, Microsoft next week is launching its

artificial intelligence hardware. They're calling them those co-pilot PCs. That's happening months before we see Apple's take out there in the wild. So there's kind of a hardware battle also going on the AI front between Microsoft and Apple. It's interesting, too, Steve, in that it's not like you have universal praise all over the street about the stock. Forget about WWDC, but the stock. You still have nearly a third of the analysts who cover this name with holds. Through the anthology of Apple, you haven't really had that scenario. It's been two-thirds buys.

You have almost a third at holds. That's interesting of itself. So the analyst community still needs to warm to the shares. Yeah, and not just warm to the shares. We still haven't seen it prove itself out. So we have the idea behind it. Keep in mind, everything that we saw, no one outside of Apple has been able to test it or try it or work with it. So there's no way to evaluate if these features and everything they showed us on Monday are as good as they say they're going to be. And until then, we're not going to get a grasp as to whether or not people are actually,

that's going to drive the hardware upgrades like I was talking about. So there's still a lot of questions around the nature of this artificial intelligence push that they're making. And again, like I said, some of this stuff is going to be pushed out until next year. So, you know, if you're really excited about those artificial intelligence features

and you go and buy the new iPhone in September or whenever it ends up launching, you might still have to wait another four or five months for you to actually get everything Apple already promised you. So that could factor in as well. So I think some of those folks are just waiting to see if the money follows the announcement, basically, Scott. Not to mention some of the regulatory overhang, too, that we're still talking about. Steve, I appreciate you. Steve Kovac joining us there. Let's add to the conversation now and bring in Dan Greenhouse of Solus Alternative Asset Management and Shannon Sikosha of Enby Private Wealth, also a CNBC contributor. Dan, it's good to see you. Shan, welcome. Great to have you with us. How meaningful is it, do you think, Dan, that Apple's woken up, that the stock is participating in the manner it is?

And yet again today, you know, in a somewhat unsettled market, NASDAQ's fighting for that positive territory. Yeah, listen, it's one of the largest names, one of the most important names in the market. And so seeing it break out of its trading range is obviously incredibly positive. And I think what Steve had to say about, I don't think this is a particularly difficult conversation to have. It's going to generate an upgrade cycle since you need a new phone to partake in some of these upgrades. And so if you don't have the 15, let's say,

then you're going to have to, at least by next year, start upgrading your phone. And it's important for investors to know, and many do, obviously. You've gone from obviously replacing your phone every two years to now call it four to five years. If you can shrink that down a little bit, that's going to be meaningful upside for the hardware portion of the business, which explains much of the move, if not all of it. Shan, do you want to do what people like Tony Pasquarello have urged investors to do for months now? Keep your eye on the ball. Stay with the secular winners,

the mega caps, because of all the reasons that have been articulated here. Buybacks, dividends, CapEx. You know, you get to play the sword offense. You get to play the shield. You protect yourself in an unsettled market. You kind of get everything. And that was underscored this week. And you go where the action is in AI. And Apple told you what it's going to do. There's really these two themes, Scott, that I think that investors are trying to play this year. One has been the secular AI theme, and then one has been this idea of manufacturing, reshoring, and frankly, continued strong economic growth. And Josh pointed out very astutely earlier that we are seeing a little bit of weaker economic data and maybe you're getting, you know, perhaps a breather or a side that perhaps this manufacturing assuring or this reacceleration from a manufacturing and industrial perspective is slower to move than maybe what we're seeing from an AI standpoint. I think with AI, the challenge here is that, you know, you're looking for this next leg of growth

for the economy at large. And if you're banking on AI, right now you're expecting there to be increased corporate capex, there's gonna be some cannibalization. And so I do think that there are gonna be some have and have nots in terms of technology over the course of the next couple months.

Look at what we've seen in healthcare as it relates to GLP-1s. A lot of healthcare companies really struggling as you see that bifurcation. But I think the important thing here is that if we do think that there's going to continue to be a fairly on-trend economic growth through the back half of the year, a portfolio that has some of this secular exposure along with some cyclical exposure is probably where you need to be. What outperforms over the next eight or nine weeks? Maybe it is some of the secular trends, but I do think that the cyclicals in the back half of the year are a place that you want to be allocating to if you do not have,

if you just have this concentration, if you will, in the secular AI play. Dan, how do we assess this week and what it's going to mean in terms of, you know, the Fed statement and the outlook was undeniably hawkish. Maybe the Fed chair less so. But the market was focusing pretty heavily on the so-called dot plot, the idea that we're not going to have. They don't think at this moment, at least what you glean from it, instead of three cuts, you go down to one. Three cuts in March when you got the last outlook. Now you are with this meeting down to one. Three cuts in March when you got the last outlook. Now you are, with this meeting, down to one.

Does it matter? Well, I mean, listen, in a larger sense, no. And let's just look at the performance of the market this year. We came into the year 14% lower than we are now, call it 47, 70-something on the S&P. The 10-year was lower than it is now, and we were pricing in, call it, six to seven cuts. Earnings expectations were higher.

And the market's gone up 14%. And all that stuff is reversed. And now we're forecasting, call it, one to two cuts. So on the one hand, no, I don't think it matters. On the other hand, listen, I think there's a lot of money to be made and has been made playing this theme in the futures market and in more esoteric markets than the traditional equity investor usually plays in. But I think we came into the year knowing they were not cutting six or seven times. That was a gimme. in more esoteric markets than the traditional equity investor usually plays in.

But I think we came into the year knowing they were not cutting six or seven times. That was a gimme. Are they going to cut one or two times now? I don't know. I think, gun to the head, the answer is probably one, maybe two. But either way, it doesn't really matter because all they're doing is taking the one cut that they may or may not do this year and pushing it the next year. And from a secular sense, the economy is doing fine right now. Profits are doing fine right now.

And that is ultimately why the bias for the market is higher. And that's true for non-tech names as well. I mean, we pay a lot of attention to the technology sector, but let's be clear, plenty of other sectors and industries are doing well in addition. So, you know, Josh, I'm thinking about catalysts for the market. You're not going to get earnings for a few weeks. So we've know, Josh, I'm thinking about catalysts for the market. You're not going to get earnings for a few weeks. So we've got to wait on that front. Just had a Fed meeting, so you can check that off. Just had a CPI and PPI, so you can check that off. You don't get

more reads on that for a month. I guess you'll get PCE June 28th. So you've still got to wait a couple of weeks for that. What kind of catalyst do you see to take stocks higher? I actually think what will support stocks will be this continuance of economic data finally surprising to the downside. And when I use that term, as Dan would tell you, I don't mean that it's bad data or that we're in some sort of like economic trouble. I just mean that we spent a lot of the winter being like, oh my God, another beat on jobs. What the hell? That's over now. You're going to have headline unemployment, hopefully north of 4%, not hopefully because I want to see high continuing claims or jobless spikes, but because it tells the Fed that they don't have to come back with the hawkish rhetoric

or they don't have to hold back from getting back to a more neutral rate. So I think that you don't need a catalyst. I think you just have this steady drip of inflation-related data that's, like, cool enough, right? So that's number one. But then number two, let's not pretend that the market is being run by logic or some sort of a formula. You've got a catch up trade already going on. So in the first half of the year, you had to be in the AI names.

You had to have at least an equal weight to them relative to the market, if not an overweight. If you want to keep your job this year, this is going to continue, unfortunately. And people say like, oh, is Apple worth 25 times forward earning? Okay, is the Loro Piana tennis walk suede sneaker worth $1,050 retail? No, it's not. It's terrible. But it's situational because if you live in the Hamptons, you have to have at least one pair. Otherwise, don't even bother showing up anywhere. So to those people, it is worth $1,000.50 at retail.

Think of Apple, Nvidia, etc. the same way. They have these premium multiples because they must be owned. If you're a growth manager, you don't want to be singing for your supper come Thanksgiving. Why wasn't I in these names? So no catalyst necessary, Judge. I think we can stay the course with this balance of secular growth on the AI side and cool enough economic data. That confluence hopefully should make for a nice summer. Shan, your thoughts on what Josh just said? Yeah, from a shorter term perspective, I agree with Josh. I think there's a bit of a catch up trade here. And I think the question, if you sit in the seats where many of us are and talking to clients is, did I miss it?

And I think that what is an important point is that really making sure that you understand where you want to be positioned come the end of this year. And if you know where you want to be positioned from an equity perspective by the end of this year, this summer, with the lack of volatility, Scott, we've had a 5.5% max drawdown. We've had one day over 2% move in the S&P 500. That's really low volatility. So this summer is going to give you the opportunity if you feel like you've missed it. Did I miss it? Did I miss it? Did I miss it? There might be that opportunity. But think about where you want to be in equities in an environment where you're seeing decelerating inflation, but still reasonable growth. And the fact that earnings are continuing to grow. If you look at

the S&P 500, you want to make sure that wherever you think you want to end up at the end of the year, that you focus on that and worry a little bit less on this path and what happens on a day-to-day basis, because it could be a little bumpy as we wait for more microdata. I mean, Josh sort of makes the point that... I gotta be honest, Josh lost me a lot of shoes. I have not been able to think clearly since then. Did he get you back with the idea that, I think he puts forth that the Fed's going to cut one way or the other for either the right or the wrong reasons. You know, their hands may be forced to cut if you start to have the unemployment rate go up. You have a much softer economy and thus they're going

to preemptively cut before it gets really messy or they're able to cut because the inflation data is is good enough. You say we don't need cuts, but you think we're going to get cuts. Sure. And as long as the market believes that we're going to get cuts this year, then it's hard to be negative. Well, I would— I feel like that's kind of summing up what Josh was saying. Yeah, no, I would just pivot off that a little bit and say as long as the economy continues to grow and expand and profits are growing, that's more important than the level of interest rates. And as we've seen, the Fed has left interest rates north of 5% now

for several quarters, and the stock market has continued to grind higher. Even if you look at the equal weight index, which will flatten out, so to speak, that large tech heavyweight, you're still having an average year this year with interest rates at these elevated levels. So I don't think it's the interest rate itself necessarily that matters so much as it is the economy. But to that point, to build on what Josh said and what you summarized, yeah, if you start getting rate reductions for the right reasons, to borrow a phrase from The Bachelorette, i.e. the economy continues to grow, but inflation has normalized to a degree that you can begin to lower interest rates. The question for investors is not whether the market is going to go higher, because I think the answer in that is going to be yes.

The question is whether or not that is the catalyst for a broadening out, i.e., for much of the 2010s, we spent our time on the network coming on here and saying, well, I'm going to pay up for growth where it is because there's growth nowhere to be found. It's how companies like Whole Foods were trading at exceptional valuations during that period. And today, you're having these names that are driving 40, 50, 60% revenue EPS growth, attracting a lot of flows and attention. So they've had a lot of growth when everyone else hasn't. As rates start to come down, and as the economy continues to broaden, or I should say, as the economy continues to grow, does the rally broaden out from there? Is that

your catalyst to say, okay, I've realized my gains in NVIDIA. The real gains in Apple aren't going to come for two years because I don't really need the next phone. The real benefits are going to come two phones from now. Maybe I'm going to start looking at a Caesars or some, I'm picking random names here. That's the interesting conversation, I think, for the back half of the year. If you start to get rate reductions, if tax policy, because the election is going to be a thing as well, if tax policy is going to start to shift in a more favorable direction for investors, do you start to see those other sectors and industries start to participate in this rally to a greater degree?

We'll leave it there, Dan. Thank you. Thank you. Thanks, Josh. Thanks to you as well. Good weekend, everybody. See everybody soon. Let's send it to Christina Partanoboulos now for a look at the biggest names moving into this Friday close. Christina. Let's start with Shopify. The stock's been on a tear lately, up about 14 of the last 15 days, as it really tries to claw back its way from a sell-off after a disappointing first quarter.

Results, Evercore ISI believes the recent stock drop is a good entry point to get into this name because of the e-commerce's growing addressable market. I could say shares are up almost 5%, still off the 52-week high of $91.50. Cloud security company Zscaler moving higher after an upgrade from JP Morgan. The bank believes Zscaler is trading on a discount, much like we saw at Shopify, and called it a best-of-breed company.

But still has a lot of ground to make up. The stock is off by 17% so far this year. You can see shares up almost 2% right now. Scott. All right. Christina, thanks. Back to you in a few. Christina Partsenevelos.

We're just getting started here on Closing Bell. Up next, the road ahead for the Fed. Cleveland Fed President Mester weighing in on potential rate cuts. And now, Chicago's Goolsby just wrapping up a fireside chat moments ago. We're going to give you the headlines and the highlights and discuss what it might signal for Chair Powell's next move just after the break, live at the New York Stock Exchange. You're watching Closing Bell on CNBC. We are back. Chicago Fed President Austin Goolsbee saying last hour that this week's CPI data brought him, quote, relief, even though more progress is still needed on inflation, and that he would feel, quote, very good to see a few more months of data like

this one. For more, let's bring in CNBC senior economics reporter Steve Leisman. Steve, it's good to have you on. After a really important week, obviously, how would you sum up, you know, how, what the takeaway should be? You had a statement and an outlook that was hawkish. I didn't think the Fed chair himself was hawkish at all. Yeah, I mean, I thought overall the Fed was a lot remained spooked by the first three months of inflation and was unwilling at this point to say the couple better months that we've had have really offset that. And I think it's because it's a 3-2 score right here. It has been an amazing week, guys. I don't know if you have that chart of the past seven days of the two-year.

No, but it's worth kind of going through it, Scott, to remember what we've been through. It looks like sort of a bad scene from the Mesaas, from the Roadrunner and the Coyote, right? So that surge in yields on the left side, that's your payrolls. Then it plunges on the CPI, comes back as the market overall judges the Fed to be kind of hawkish. Then it plunges again when you have the PPI. So overall, we're down about 21 basis points on the week. It was a good week for the Dove, Scott. Overall, it was a good week if you held in U.S. bonds, both of the two or the 10-year tenors right there. And I think the market is a little bit ahead of the Fed here when it says,

you know what, we are extrapolating from this data that inflation is going to come down and you're going to be able or have to cut come around September. Well, that's the thing. I wonder if now a lot of the conversation, too, Steve, is going to, at least in the market, is going to start becoming too high for too long. Is the Fed going to wait too long to actually cut rates in the face of some squirrely data of late on the economy? It's not like every economic read we've had of late has been really strong. I'll take consumer confidence today, which was decidedly weak. I think that there are now

reasons to be somewhat concerned. In fact, Goolsbee was just talking about that. He was just saying that he's seeing certain pain in the economy. He was speaking out in Iowa, talked about pain in the agricultural sector, talked about rise in delinquencies. There he is saying what you said, that inflation was very good. He believes we can avoid recession here. But there is some concern out there. The unemployment rate was one of those. The jobless claim surge was another.

There is reason to think about it. I'm not ready to write off the expansion here. But maybe we are indeed, Scott, a year after the Fed hit that peak rate of 540, beginning to see the lags from monetary policy start to hit the economy. And there's going to be a time for the Fed to move. And there is reason to worry the Fed is going to be late here. That's why I pointed out, Scott, I don't know if you remember when we were talking to Gundlach earlier this week, which was a great interview on your part. But I sort of said the Fed sounded a bit like a groundhog that had come out of its hole in March and saw its shadow and declared six more months of inflation. And I think the market is more like, hey, it's kind of warm out. It's kind of sunny.

It's a summer weekend. I'm ready for the beach here. I mean, Gundlach agreed with every point you made, by the way, once you came out of the room. And the Fed chair himself talked about the two sided risks going too early versus staying too long. Mester this morning told you as much, too, but really focusing on the idea of cutting too late. Right. Yeah, she had a lot about that. It's kind of interesting. Loretta Mester was maybe best known in the day as a hawk, and she's maybe a little bit more on the dovish side right now.

I think she is concerned about the lags. Look, Scott, you either think monetary policy works or it doesn't. If you don't think it works, I'm not sure as a central banker you're in the right business. These guys have to rely upon the fact that they believe they're restrictive and inflation is going to come down. The economy is going to soften and you're going to get the results on inflation. Goolsbee declared we are going to hit our 2% target. It's going to be tough for them to do that, but they have to believe in what they're doing here. And I think the market believes in it. What is very interesting, Scott, I don't know if we're going to talk about this today, but maybe the next couple

of weeks we might be on, depending on what happens to the data, talking about what you were mentioning before, the Fed mistake trade. Right. At some point, you start to see the 10 year yield decline because the market becomes concerned that the Fed is too late and driving the economy into recession. I'm not so sure that we haven't already started to see the early workings of that. And that's why I bring it up when you look at 420 on the 10-year versus where it was. I got to run, Steve, but I know we're going to have this conversation a lot more in the days ahead. Good weekend to you. Thanks.

Excuse me, that's for Steve Leisman. Yeah, you as well. Thanks, Steve. Up next, trading the record-breaking rally. Miller Family Offices, John Spalazzani. He's back with us to break down his outlook for stocks and the biggest opportunities that he is seeing right now. Closing bell is coming right back. We are back.

The S&P and NASDAQ both hovering near record highs for yet another day on Wall Street. The NASDAQ trying now for its fifth record close in a row. Quite a streak. Both averages now on pace for a winning week. Here to discuss what is next for stocks, John Spallanzani of the Miller family office here at Post 9. Welcome back. Hey, thanks, Scott. So you're still bullish? Still bullish, yeah. That's what I gleaned from your notes. We're in a bull market, therefore we're bullish. It's pretty simple, right? Yeah, we try to keep it simple.

There's got to be more nuance than that, no? No, I think what we saw coming into the year, people were off sides, obviously. They didn't believe in the AI story. They front ran a recession that never took place. As Peter Lynch says, more money is lost waiting for a recession than actually in the recession itself. So I think that's what we had. And now we see that the data is normalizing. And the Fed is hopefully going to normalize rates soon,

even though they said that they weren't going to be too fast on the trigger. OK, so you said you use the word hopefully. Yeah. So are you worried? I just had a conversation with Leisman. I know you heard it. Yeah. Are you worried about the Fed staying too high for too long and making a mistake? Well, we said I think I said it with you a while back, but we we don't want to have a soft landing, which the market is now discounted, turn into a crash landing, which is what we could if they stay higher for too long. Obviously, they're higher for longer because they made a huge mistake when they said inflation was transitory. So they've had to walk that back and they're still trying to walk that back. But yet we see the inflation has really come back to where it was.

He actually mentioned 2019, and I pulled some data from 2019 about PCE, inflation and unemployment, where it was back in 2019 prior to the COVID pandemic. And really it's kind of back in that range where we were between 2017 and 2019, let's just say. So basically everything is normalized except the Fed. So we're not asking, we're not making rate the Fed. So we're not making rate cuts

to ease. We're actually making rate cuts to normalize. And we have the Bank of Canada cutting rates. We have the ECB cutting rates. We have the Swiss National Bank cutting rates. And the Fed is doing nothing. So them doing nothing puts a lot of uncertainty into global markets, not to mention what we saw in France today, Macron, as well as the markets over there. And after Powell's press conference, what happened? Dollar-Yuan went back towards 160, the euro weakened. And if we look at yield curves around the globe, yields are still up rather than down, which is where they should be going right now.

Is that why you guys continue to lean into mega cap tech, whether it's NVIDIA, Meta, Microsoft, Amazon, which you've been adding to? Most of those names on your list, you've been adding to over the last month. No, we've had those names. We haven't added to them over the last month. NVIDIA is a huge move. Last time we were on May 2nd, I think it was 800. Now it's 1200. Split adjusted, it's 120. So those trends i mean you know people say why is the video got so much well earnings went from two dollars and fifty cents in talking split adjusted two dollars and fifty cents and twenty three and they're expected to do thirty seven dollars in twenty six

that's a huge moves obviously the stock is that a huge move they have a huge mode a huge stack and a eyes a secular trend that you know people call it the next electricity, whatever. Even Eric Schmidt said, we haven't seen anything yet in terms of AI. So, you know, those are big secular trends, not to mention the government printed $5 trillion. So all that money went into the biggest beautiful, right? The big stocks, big balance sheets, big moats, big

everything. And they were kind of the advantage And they took advantage of all that cash. Yet we still see regional banks, KRE still under 50. We see Russell struggling today. Why? Because they need cuts. And we also saw, just coincidentally, Caterpillar, some industrials and materialists, start to quake a little bit because the Fed was so hawkish. Well, people see you and they think two things. Amazon, generally speaking, and Bitcoin. So what's up with Bitcoin? Like, OK, so it goes over 70 and now it's backed off. If it's such a barometer of risk in some respects

and it's so tied to the Nasdaq in some respect, I mean, that's what people said. Why is it not up with the Nasdaq now? I think a lot of people got excited about the ETFs. All those flows came in. That's why it went over $75,000. Now we see a little bit push-pull. All the energy that AEI is going to need. How much energy are they going to draw away from the Bitcoin miners? Who's going to mine the Bitcoin?

You know, obviously, Bernstein just came out today. They said they have a million-dollar price target on Bitcoin in 2033. I think Carl sent that out and said it as well. You know, MSTR, they have an 80% higher bogey on that. So they expect the stock to go up 80%. And I think they have 2026 or 2027, they have Bitcoin, you know, 200,000 plus. So. All right. We'll leave it there. All right. John Spinozzani, thank you, man. Be happy. I am. It's a bull market. We should be happy. It's a bull market somewhere. That's right. Heard that before. All right. Up next, we are tracking the biggest movers as we head into the close. Christina Partsenevalos, always happy standing by. I am always happy.

But I'm going to start with a negative because one retailer saying we're in, quote, the worst housing market in 30 years. Well, another expects a big earnings bump thanks to Monopoly Go. Alex, we'll get all of that after this break. Happily. Well, we're less than 15 minutes before the closing bell on this Friday. Back to Christina now for a look at the stocks that she is watching. Tell us what you see. Well, Monopoly Go, it's not getting the credit it deserves. That's what Bank of America analysts think right now, arguing the digital game will provide more profit upside for Hasbro. And they believe the release of Transformers 1 in the second half of this year will also be a driver for an earnings

rebound in 2024 as well as 2025, which is why they're upgrading Hasbro to a buy with a price target of 80 bucks. And why you're seeing shares up 6% today. A rebound, though, wasn't in the cards for RH. The luxury retailer reported a much wider loss per share in Q1 than expected. But management said they are, quote, investing aggressively in the business during, quote, the worst housing market in 30 years. That's what you really want to hear. Shares down 17% right now. Scott. All right.

Christina, thanks so much. Thanks. That is Christina Partsinella. Still ahead, industrials feeling some pain this week. In today's session, too, we drill down on the key name that's weighing on that sector. What it might mean for the space in the months ahead market zone. CNBC Senior Markets Commentator Mike Santoli here to break down the crucial moments of this trading day. Plus, Phil LeBeau with the latest on the airlines and Seema Modi on some big movers in the industrial space today and this week. First, though, Mike Santoli, your great insight for this week, your takeaway for all of us is what? I guess you'd say winning ugly. You had multiple all-time highs in the S&P 500, but kind of pleasing nobody along the way just because of all that's not working.

Even today, you've got banks and industrials down 1%, consumer cyclicals as well. So kind of doing just enough. The high conviction areas of the market are pretty narrow, but they're very strong. And I think that that continues to work for the moment. It's not as if the rest of the market is really falling apart. Like the equal weighted S&P is down, you know, six tenths of a percent on the week or something. But it shows you that the market's unwilling to jump to that point where it's just going to assume we're back in resilient economy, Fed going to cut and celebrate this down move we've had in yield. So kind of a churn state underneath. June, late June, sometimes a little bit spotty

until you get into good seasonality in July. Phil LeBeau, Boeing's down 2%. What's going on? You've got Boeing issues. You've got airline issues, Scott. We'll get to Boeing in just a bit. Let's start first off with the airlines, because a couple of headlines involving Southwest has put a little bit of pressure on the airline stock today. But keep in mind, all of the airlines are down here. So that's part of the reason why Southwest shares are under a little bit of pressure. The FAA is now investigating a couple of incidents involving Southwest flights. Now, these got some attention earlier today when the headlines came out about them.

First one was in April, an aborted landing in Hawaii. The second one happened in May. Dutch roll during a flight in California. Dutch roll is very uncommon in a commercial flight. Imagine the tail going sideways and up and down at the same time. Caused some damage to the fuselage. By the way, the NTSB is also investigating what may have happened with that flight. As for Boeing, it's under a little bit of pressure again as people continue to say, where is the bottom here? The latest is that you have got the investigation into why some counterfeit titanium made it into Boeing planes. Airbus planes was at Spirit Aerosystems, their main supplier.

That's just one of those headlines, Scott, that people look at and say, what next? By the way, Boeing CEOs on Capitol Hill next week will be testifying on Tuesday. More questions, obviously, about quality control at Boeing. I think that's what, you know, the bottom line is. Phil, thank you. That's Phil LeBeau. Let's send it to Seema Modi, who's looking more broadly at the industrials. Obviously, this name not helping that space. Yeah, exactly, Scott. Industrial supplier MSC delivering a Q3 profit warning that sent a number of construction names down with it, including Fastenal and Ingersoll Rand, Caterpillar as well. It's coinciding with steelmaker Nucor, which surprised the street

this morning with a Q3 profit warning amid sluggish sales and lower prices. The price of steel is certainly not helping the steelmakers. That commodity now down another 11% this year. Analysts blaming China for injecting excess inventory into the market. And J.P. Morgan just this week lowered its price target on Nucor to $180 from $190. And you'll see the stock trading just below that. So those two catalysts behind the underperformance in industrials today, Scott. All right. Good stuff, Seema. Thank you. Appreciate that. You just got the two-minute

warning. Mike Santoli's back with us now. Seema used the word catalyst. I'm thinking about catalyst for stocks here on out. PCs, not for a couple of weeks. Earnings, not till after that. I guess we have FedSpeak to go on. We do have FedSpeak. And the first wave of FedSpeak after a meeting actually has plenty of relevance in terms of what they want to push back on, recharacterize or emphasize. It does matter. I do think that the market over the last couple of days has come around to the idea that not too much changed about the Fed stance, even though markets getting a little impatient to see a clearer window toward potential ease. At this point, I think we can live with it, with longer term yields. Coming in a little bit the industrials move down is interesting though because that was one of these little clusters. Of high fundamental conviction. You did have some of those names that were playing off this massive capex boom. I mean fast now even after this move down to up 40% in the last year. So I think the idea that people got a little too comfortable with raising earnings estimates and then having this little bit of a jolt. It's a correction in a very strong theme, not necessarily something that says the

economy's in trouble. All roads go through technology right now. Still do. I mean, the breakout in Apple, obviously, we're talking about that. It's very significant. But the move in semis, it's just kind of white hot at this point. You have to be careful. There's been a ton of net inflows in the ETFs, in the semiconductor ETFs. Apple looking overbought. So it's not about standing in the way of them or getting out of them. It's about managing your expectations about how much more you can get out of them in the short term. I'll see you on the other side of the weekend. Good Father's Day to you.

Thank you. All of you, of course. Bell rings. I have a mixed market that we'll go out on. I'll send it in overtime. I'm John Poole.