Closing Bell - Closing Bell: Why Can’t the Bulls Take Control? 8/11/23

Episode Date: August 11, 2023

Hightower’s Stephanie Link weighs in on where the fed goes from here and what this earnings season might mean for your money. Plus, star analyst Dan Ives explains how he is navigating the pullback in tech… and why he thinks it will be short lived. And, market expert Mike Santoli weighs in on the week’s wild market action. 

Happy Friday, everybody, and welcome to Closing Bell. I am Brian Sullivan, in for Scott Wapner. And this make-or-break hour begins with stocks kind of at a crossroad. The Dow, the S&P, and the Nasdaq all kind of not doing a whole lot of much, although the Dow is up about four-tenths of 1%. More importantly, we had new data this morning showing a pickup in inflation, raising some questions about where the Federal Reserve goes from here. Now, overall, more than 90% of companies, they have reported their earnings so far,

with nearly 80% beating expectations. Which kind of brings us to our talk of the tape at the top of the hour. Why can't the bulls take more control? For that, let's welcome in Stephanie Link, Hightower Chief Investment Strategist, CNBC contributor, and a pretty good golfer, I'm told. Not so much. Good to have you on. Okay, so how do you read the inflation data?

And did it change any of your expectations about rates, the Fed, the market, anything? It didn't change my thoughts. We are making progress, though, Brian, on the numbers, right? I mean, if you look at the core CPI at 4.7% year over year, I mean, that was 6.6% at its peak. So we're certainly making progress. The problem is that rents are still really sticky. 90% of the CPI was shelter. Yeah, and it increased month over month to 0.5 from 0.4.

So I think the numbers getting to 2% of where the Fed wants us to get to for CPI, we're a long ways off. And then you look at, by the way, you follow energy really close, right? Look at the PPI numbers today, right? And you actually saw an acceleration month over month in the headline number. And that's not even including the 24% gain in energy prices from the June lows. So I think next month, the next couple of months, you're going to see elevated PPI numbers. And then you add in the economy, which is a real bright spot. I mean, nobody thought we were going to see GDP accelerate each quarter this year.

Everyone said at the beginning of the year that first quarter was going to be peak in GDP. It wasn't. It was 2 percent in the first quarter, 2.4 in the second. And the Atlanta Fed GDP now has it quarter, 2.4 in the second. And the Atlanta Fed GDP now has it at 4.1% in the third. I think that number is going to come down, Brian. It's not going to be four. Won't the CPI and the PPI and all the other PIs, Magnum, whatever you want to talk about, won't they eventually meet the law of large numbers where they're not going to grow anymore because they've grown so much? And you could say, well, inflation rate is coming down, but it's only because it went so high.

And even if it tapers off, that's still troubling. I'm sure you've been to the grocery store lately. Yes, no, I know. It's not pleasant. Prices are still high and you have an economy that's hanging in there, which is going to lead to increased inflation going forward. And so to me, I just don't think the story is over.

So you asked about the Fed and my views and that sort of thing. I don't know if they're going to go in September. They probably may pause, right? But it's still on the table. And the point being is rates are going to remain high for a longer period of time. They're not going to ease anytime soon. They didn't just spend a year and a half trying to get this under control. And they don't even have it under control only to turn around and ease. And so, by the way, I mean, you look at another bright spot. Not only is the economy doing well, it's leading to decent earnings. You highlighted that at the top, that 80 percent of companies are beating and the market's broadening. So that's what's different in the last couple of weeks. That's encouraging.

OK, so a big part of inflation is obviously wage gains. And we being capitalists want everyone to make as much money as she or he deserves. Absolutely. Good for them. But they will they will go toward inflation. Example and a stock you like. And we were talking about it before the show. UPS, big new deal with the Teamsters Union. A UPS driver with some tenure will make one hundred and seventy thousand dollars a year with benefits. Good for them. By the way, I love my UPS driver. Every time he shows up, something cool comes to my house. And that's because the economy is doing well. Yes. And I thought, well, this can't be a stock you like because that's a huge cost increase for UPS. But you do like UPS. The stock has lagged big time. Waiting for this. Waiting for this. We

were all expecting it. We didn't know what the actual numbers were going to be. The numbers came in. They reset the numbers lower and they and now it's out there. So that's fine. It's going to cost them a lot. But in the meantime, they just reported earnings where they had better U.S. package growth because of the economy, better pricing, and they have productivity and efficiency measures underway that I think margins can actually stabilize from here and move higher gradually. And you know when you have a good top line and better margins, you have positive operating leverage. And it's not getting that credit right now. It's getting about 17 times forward estimates. It's massively underperformed FedEx, almost like 40, 50 percent year to date. And Carol Tomei is the CEO, and I'm not betting on, I'm not betting against her. And you take this huge unknown, it's now a known known, not a known unknown.

Can we bring up guys at one or five or three-year chart at Home Depot? It's another company you like, and this is an interesting take because I could say, oh, make the bear case real easily because it's at higher rates. But I could also then say, wait a minute. No one's moving. Nobody's moving. We know that. The data is like the worst in 40 years.

So guess what? They're just going to stay in their home because of interest rates and fix it up. Yeah. And in the meantime, new home sales are at the best level since March of last year. So you have a little bit of that kicker, too. But this company is doing a great job increasing market share. They, too, have productivity and efficiency things underway. They're doing a great job in terms of execution, great management team. And I like some of the initiatives like e-commerce and pro, and they're going to fix the supply chain. That had been a big problem for them. So I like this one. It's a little risky because they report earnings next week, right? So what? I'll buy more if the stock is weak because all of these things

that I just said. The numbers aren't as good as you think, although 80% of companies always beat earnings because if you've got a good CFO. That's right. Here's the number we need to get to. Wink. I'm winking. That's right. But these are, you know, look, that's what this is what I do. I try to buy best in class on sale. Right. Home Depot, number one in the industry. UPS, number one in the industry. Both stocks have lagged year to date. They've had issues. But I think given their track record that they will fix them. And then you'll get kind of the herd to then understand the quality and what you get. So I like both of these names. And

yeah, I mean, I have a little extra cash around earnings season on purpose for this very reason. Call it dry powder, I believe. Well, sit tight. We're going to bring in a couple of new voices to this conversation as well. Bring in Malcolm Etheridge of CIC Wealth Management and Ayoka Yoshioka of Wealth Enhancement Group. Malcolm, of course, also a CNBC contributor. Malcolm, I'll start with you. Anything you heard from Steph that you agree or disagree with? Yeah, I think I agree with Stephanie on this one about the economy overall and where Powell is probably thinking. I think

he's been focused on that core CPI number this entire time. He's made it very clear that core CPI, things like owner equivalent rents since the very beginning were the thing that really was going to move the number and make the decision for him. And so I think I'm probably a little bit committed, a little bit more committed to a raise actually in September than Stephanie sounds like she is. But I think we're thinking similarly in the sense that the Fed is not done, whether it's a pause in September and then we hear something else in November or we hear a raise in September and another raise in November, depending on how aggressive they decide to be. Either way, the Fed's work is not done here. This last couple pounds that the Fed is trying to shed of inflation

out of the economy is going to shed of inflation out of the economy is going to be the hardest and the stickiest. And so that's where being willing to stay disciplined and stick with it is really going to matter. Yeah, I agree. I mean, unless the Federal Reserve somehow knows how to bring down rents or give people pay cuts, I don't see how they're going to impact wages or shelter. But from a market perspective, from an investing perspective, do we care if the Fed raises once or twice more or if they just stay here? Because it has been one of the fastest and most aggressive tightening cycles in American history already. Well, I think we do simply because the whole reason the Fed wants to control short term rates

is to make you and I feel a little bit less prosperous so that we're willing to spend a little bit less, right? So you make it more expensive for me to upgrade to that next house. It makes me feel a little bit less prosperous. I can't go get the next Tesla to feel a little bit more prosperous compared to my neighbors whose cars are also in the driveway. And so from a sentiment perspective, that additional couple percentage points of interest hikes will actually make a difference psychologically. And that's ultimately what the Fed is after anyway. They just want to convince us to stop spending money, which I think is actually already happening.

We'll probably find out a little bit of that with Home Depot's numbers you guys were talking about and some of the other retailers who are about to report. I think the consumer is tapped out, and we're about to find out just how close we are to the end of that rope. Your take on all things we just talked about or throw something new into the mix. Why not? It's Friday. Let's have some fun. Hey, Brian, thanks so much for having me. You know, I do think that it cuts in 2024. There's a probability of a cut, I think, as early as March or April of 2024. And I think that needs to get priced out of the market. You know, I think the Fed will really want to hone in on the fact that they are going to keep rates higher for longer. And it really needs to get priced out of the market.

And that's going to impact yields, which will then impact valuations on the equity side. How do we make money right now, Aya? We've had a pretty good year. S&P is up 17 percent. NASDAQ's I think up, or the NASDAQ 100, I think is up about 40, 41 percent. How do we make money from here on out, Aya? Sure. So, you know, I think there's multiple ways. A, fixed income is still pretty attractive with really good yields. So, you know, take advantage of the great run in equities, take some off the table and maybe, you know, lock in some of those yields. And then secondly, from just an individual stock perspective, you know, we think you can take some profits in some of these great tech names, not get out of them.

You know, you want to stay in them for the long term. But, you know, find the opportunities. Find the Home Depots, the UPSs. We like CVS for the same reason. CVS was an age... You just throw those names out randomly, UPS and Home Depots. That didn't sound like an accident.

You know, there's $5 trillion on the sidelines, right? What sidelines? Who are these sidelines? In cash. Raiders sideline? Yes, yes. What are you talking about? You can be in cash because you're getting something on that cash now, but it's on the

sidelines. Sentiment to me seems really still off sides in terms of negativity. But don't you want some, you want to have some cash allocation. I don't ever want to have no cash allocation? I don't ever want to have no cash anywhere. Right. No, there are alternatives now that we haven't seen in the last 10 years and a half percent for a tax free government CD for one year. It's not bad. I'm a financial coward. If inflation stays at four or five percent, three, four or five percent, that's not great. So long term average for the S&P 500, total return is 7%. 7%. So we've had a nice run

this year. I'm not saying it can't continue. I think we chop around personally for the next couple of months. But I think then people are going to chase into the end of the year for sure. But I do think that there's money on the sidelines. There's people that are not believing. I think the economy has held in much more than people have been expecting. Earnings have held in. Maybe we're troughing in earnings, right? Companies have done a great job in terms of margins. So I have ideas. It's not like, yeah, it's not the high flyer of technology companies. It is maybe boring to talk about UPS or to talk about Home Depot. Making money is not boring. But I got, oh, by the way,

I mean, Fortinet on last Friday fell 25%. For a company that's going to grow total revenues of 20 percent, margin expansion of 100 basis points per year, free cash flow growth of 20 percent. So I can find names out there to buy. Maybe I don't want to buy the whole index, but I can find pockets. And I love the fact that we're broadening out in the in the overall sectors. That, to me, is super healthy. And I still like a lot of cyclicals. I mean, industrials are doing well. Energy's doing well. Well, see, I was just about Malcolm. I was just I don't know if Stephanie's looking at my notes or what I was about ready. I was going to save this nugget for last call 7 p.m. But because I like you guys, we're going to roll it out now.

If we could throw up the XOP, the XOP is one of the bigger oil and gas ETFs. Malcolm, I'm sure you're familiar with it. It's up seven days in a row. Energy is the best performing sector of the last couple of months. Still, almost no one's talking about it. It's almost like you got to whisper oil, whatever. Do you have any energy exposure? Would I? I'm not a fan. Do I personally? No. That's not the place that I like to make money. The energy market moves way too fast for me and doesn't necessarily have rhyme or reason to it in a lot of the cases. But I did have it on my bingo card that you would find a way to work Exxon or Chevron into the conversation.

But I will say, though, to that extent, if energy has been up for seven days straight and you and I are having a conversation about it, I guarantee you Jerome Powell and his people also know inputs like energy, commodities, those things that increase the cost of like food stuffs, for example, are definitely going to be impacted near term. And so that's also what's leading me to believe that September we're actually going to see another 25 basis points. Wow. I mean, that's so critical. You know, people don't realize this. They think about oil and they think about driving a car. Half of oil is autos. The other half is everything else.

Roofing materials, plastics, pharmaceuticals, tires, asphalt. This is, and by the way, oil back above 80 bucks a barrel, probably going close to 100. Let's pray there's no storms again in the Gulf of Mexico. Do you have any energy exposure, Aya? We do, and we own Chevron and Exxon, so I don't think we're going, you know, too far out there. However, you know, the consumer has been more sensitive to, you know, gasoline prices than they have been to interest rates. And so, you know, it will be interesting to see if the economic slowdown that everybody has been talking about and predicting actually starts to happen if we continue to have oil prices go higher. Steph? I am a thousand basis points overweight energy. I own Chevron, but I also like this

company SLB. It's my biggest position. Formerly known as Schlumberger. They are a miniature technology company or a massive technology company that's so totally underappreciated with all the digitization that they're doing. They have pricing power and margins that are going higher every single quarter. They raise guidance. It's a great little story. And I also own Diamondback Energy. So I kind of have like this barbell, right? The original fang. The original fang. That's right. But I also am overweight in industrials quite a bit. And that is mainly because... Even with the higher input costs.

Well, it's also because they're seeing such massive demand from on-shoring, reshoring, energy transformation, electrification, the grid. I know, listen, the Inflation Reduction Act, whatever you think about it, is going to put a lot of money, hundreds of billions of government money, taxpayer money and then private capital to work. Let's hope. Anyway, power lines. Right. Whatever you need to do. Actually, we need power lines. We do need power lines, but also the aerospace services. Yes, yes, yes. That's grid. That's a hundred.

PWR is the PWR. I like Ingersoll Rand. But I also I are. I also like the aerospace cycle. Right. The aviation cycle. Boeing and GE, they're minting money now. And that's really a change in the last two quarters from both of these companies. And I like the spin from GE. I like GE Healthcare, too. It's done really well.

So I think there's a lot out there. It sounds like the market theme, guys, today, and this is kind of how I live my life, is boring is the new sexy. Yeah, for sure. That's it. That's exactly right. We're going to end on that. Oh my goodness. Aya and Malcolm, thank you. Boring is the new sexy. Let's not only just talk it, let's live it. We can live it. We can live it, guys. It's Friday.

It's Friday, right? Thank God. All right, let's get a check on some top stocks to watch as we head into the close. For that, Christina Partsenevelis will join us here on Closing Bell. Christina. I don't know how to even live boring is sexy, but let's talk about Chinese tech names. JD.com, PDD, among the worst performers in the Nasdaq, continued drop that we're seeing after the Biden administration said it plans to ban some U.S. investments into China's advanced computing as well as artificial intelligence

sectors. This is in an effort to stop the Chinese military from accessing American technology. Other issues, though, you've got hurting the sector, financial troubles at a Chinese property developer, and a drop in Chinese consumer prices. And that's why JD, for example, is down almost five and a half. It appears people are more than willing to dish out thousands of dollars for a Soho House membership. The private members club posted a stronger than expected earnings report with its membership wait list at an all time high. Ninety five thousand people waiting to pay at least what, three thousand to five thousand dollars for a membership. Ninety five thousand people on the Soho House network. I assume that's not just the one in London or here, but like the whole network.

No, no, no, it's the wait list. It's the wait list to actually get a membership. That's not their members. Those are those people. No, it's the wait list to get a membership is 95,000 people. Yeah. What recession, right? Apparently not in the arts, because you go into the Soho House, I'm told.

And, you know, it's more the arts cool kids, you know, just like you. Christina, thank you. Thank you. Mm-hmm. We are just getting started here on Closing Bell. We've got a lot more to do. And up next, trading the tech pullback, the XLK. It's not a Jaguar.

It's an ETF. Down more than 2% this week. Apple's actually been dropping lately. Is that even allowed? Anyway, seen some ugly moves coming out of tech earnings recently. Star analyst, Mr. Dan Ives, gives us his forecast for the sector and how he is navigating some of this, which brings us to our question du jour. We want to know, is it time for you, all of you out there watching or listening,

to pare back, scale Back on tech investments, head to CNBC Closing Bell on X, formerly known as Twitter, to vote. We will share those results later on in the hour. You are watching the aforementioned Closing Bell right here on CNBC. All right, welcome back to Closing Bell. Well, don't look now, but the tech rally, we had a huge rally, right, most of the year, losing a little bit of steam over the last week or so. Datadog, Supermicro, NVIDIA, they're all among this week's worst performers.

Even Apple has been dropping lately. But your next guest expects any pullback like this one to be short-lived. And he is reiterating his bullish call for a much as 15% gain for tech, just macro tech, I guess, before the end of the year spring in. Wedbush is Dan Ives. Dan, is that a macro tech call? Not really. I mean, to us, what we're seeing from enterprise spend, I think, in terms of where we see guidance, and I think the AI revolution, the fourth industrial revolution, is now taking hold. And we believe this is just halftime of a new tech bull market underway.

Who's going to drive it? Because stocks go up when there's more buyers than sellers. I think big tech ultimately is driving it. I mean, if I look from a cloud perspective, we've seen upticks from this earnings season, from Microsoft, of course, to Amazon with the flex, the muscles quarter, Google. And what we see going to the second half, I mean, we believe ultimately spending could increase four or five hundred bips on the cloud. And that ultimately is going to be driven from what we're seeing on AI. And that's going to drive cybersecurity. It's going to drive broader enterprise. And I think many investors here are not positioned well where we believe going into 2024, we see tech stocks up another 20 percent from these levels.

Well, I don't know if you heard Stephanie Link a few minutes ago, Dan. If you did, I'll just reiterate what she said for the viewers that maybe you didn't either. Fortinet, right? FTNT is cybersecurity company got crushed, fell like 20 percent last week. If cybersecurity palantir, I know a name that you cover and like, if this is the future and we know how what a threat cyber is, why are an investor, why are they selling at the drop of a hat with a number that slightly misses? Because I think right now there's nervousness, right? And not just in terms of Fed backdrop, but in terms of maybe how some of these names have run and you're not yet seeing that parabolic growth but ultimately when i look at fortinet that's a table pounder i look at palantir another table pounder microsoft continues to be our top

pick and i think the best tech name out there is apple where i think we sit here a year from now we're looking into three and a half trillion dollar markup. iPhone 15, we think it's going to be a mini super cycle. And I think that right now is just the sentiment, glass half, you know, when I say glass half empty relative to tech. And I just believe this is just get out the popcorn moment, who I view as a massive second half rally for tech stocks. And you still love Rivian, RIVN, the electric truck and SUV maker. I mean, look, to me, they are a core EV player. And I mean, you've talked about a bunch. And when I looked at what Tesla is doing, you look at what Rivian, there's been many winners.

And I think what Rivian's now finally turned the corner from a supply chain, demand looks strong. And this green tidal wave is playing out. And that's why I just continue to take a step back here. It's a 1995 moment, not a 1999, 2000 moment. Internet, 1995, I think it's the biggest transformational tech trend we've seen in 30 years, which is why I view this as a bright green light transformational thing, maybe, perhaps, and tell me if this is hyperbo course, you know, dial-up modems, things like that. The web comes out, AOL makes it accessible, Netscape. It feels like a Netscape kind of moment in a way, if that makes any sense. Brian, I mean, it is. And I think that's why it's a 1995 moment, not 1999, 2000. We're talking about incrementally a trillion dollars of incremental spend next decade. That's why when I look at a quarter knee-jerk reaction of some of these quarters

intact, I view that as just table stakes relative to where I see these names going over the next 12, 18, 24 months. And that's why we're hand-holding our clients through this, because I view this as more of an opportunity not to hit the elevator. Dan Ives, Wedbush, very bullish on tech. Dan, we appreciate it. Have a great weekend, my man. Thank you. All right, we've got some breaking news on Sam Bankman-Fried.

Kate Rooney joining us with the details. Kate, what's going on? Hey there, Brian. So Sam Bankman-Fried's bail has been revoked. The judge deciding this just moments ago in a Manhattan courtroom, still deciding whether that means he's headed to jail. The judge, though, saying that he attempted to tamper with witnesses at least twice. DOJ prosecutors had accused him of witness tampering.

You can see the courtroom there, outside there. He also, they say, intimidated witnesses through his many conversations with the media. The latest example, Brian Bankman-Fried, had leaked a series of documents to The New York Times about a key witness, Caroline Ellison. She's the former CEO of the hedge fund Alameda, which was also founded by Bankman-Fried. She's already pleaded guilty to multiple counts of fraud and is Bankman-Fried's former girlfriend. Bankman-Fried's legal team had argued that he was exercising his First Amendment rights. By talking to the media, the judge had issued a warning. Back in July, Bankman-Fried has already had his Internet access restricted, was not able to use a smartphone.

The FTX founder has been on house arrest as part of the $250 million bail package. Now, though, may be headed to jail in the New York area. We'll get more information about that soon. But again, bail has been revoked. That trial is set to kick off in October, Brian. OK, I know there's a lot we don't know. This is a big deal. And I think, I know you've been reporting on it, Kate. I'm going to go through, forgive my old brain if I get something wrong. I believe the, wasn't the bail at like 250 million, some huge number. Obviously the people who put it up did not have to put up 250. They put up a tiny fraction of that, but the bond, effectively $250,000. And Bankman freed, per reporting by Kate Rooney, you might know her. He's been at his parents' home, correct?

So it sounds like he could or will go to a jail cell, like now. That is what we expect, that he would be remanded from this court hearing, essentially go straight to jail from there, and be remanded in the New York area. He has been in Palo Alto on the Stanford campus where his parents or professors or were professors at one point. He grew up there, has been under house arrest. But the judge has really warned you. You're cutting it close here. He said that Sam Bankman Freed has really kind of pushed the envelope when it came to his bail conditions. And you're seeing the results here. We'll bring you any updates, though.

We've got a producer, Don Geal, inside there. I just got an update in my ear from the production staff, Kate, that Sam Bankman-Fried is being remanded to jail right now. I see that here. The judge says that. It's official. I want to make this news clear to our audience. This is Sam Bankman-ed, FTX. Again, everything's alleged. Nothing's proved. Billions of dollars, whatever you may think.

Sam Bankman Freed, a lot of people felt like that he was given a little bit of preferential treatment, perhaps, right? Despite the huge bond, he got some millionaire friends that come in. He's been living with his parents. I have a law degree, but I'm not a lawyer. I'd love to hear from anybody in the New York area. I would assume Sam Bankman Freed could go to Rikers Island today. Sam Bankman Freed from you hung out with him in the Bahamas, going from his parents house with an ankle monitor to a New York City jail, which could be Rikers Island. This is a big change for Mr. Bankman-Fried. Absolutely. I mean, he's got a couple months ahead of the trial. One of the arguments by the defense here was that the discovery process needed the internet. He needed to be able to go through these documents. And they said,

it's impossible for him to be able to do that from a jail cell. So the next question from legal experts I'm talking to is, will this delay the trial? Could they say, you know, he doesn't have access to his lawyers or the type of internet he had in his parents' house in Palo Alto. And that's up for debate if, you know, he doesn't have as much access to those documents. And they have argued that that's one of the reasons he needs to be on house arrest. But the judge was very clear in July and said essentially, you know, like, one strike here, Sam, you've got to really honor these bail conditions. And he pushed the envelope to the point that the judge clearly said here, you know, you're intimidating witnesses. I've spoken to former FTX employees since that Caroline Ellison piece came out who have said, you know, I don't feel totally comfortable that there's conversations I've had with Sam Bankman-Fried

that wouldn't get leaked. So it has made some other potential witnesses nervous. Yeah, and right after, guys, I know we're a little bit long here. I think this is a huge story. And, of course, Bankman-Fried, after he got arrested, was doing a series of interviews. He spoke with CNBC as well with, I think it was Andrew Ross Sorkin. Kind of these rambling, bizarre interviews. And I realized, I'm like, okay, he's going for the bad businessman defense. In other words, I think it was Andrew Ross Sorkin, kind of these rambling, bizarre interviews. And I realized I'm like, OK, he's going for the bad businessman defense.

In other words, I'm not a crook. I'm just not good at business. And that seemed to be clear what he was going for. It's like, I just I'm just not good at running businesses. Right. MIT or Stanford. I'm smart, but I'm not smart enough to run the business. But I'm not a not a criminal. Go a little deeper quickly into the Caroline Ellison. I know that was his alleged rumored girlfriend who made some also bizarre comments on video about not using hedges and stuff. Anyway, that aside, what's the allegation here between him and with the witness tampering? So she has already pleaded guilty. She's been cooperating with this investigation. The witness tampering, which there were these journals essentially on, she kept them on Google

Docs and they talked about her time at Alameda, this hedge fund that she was under stress and it sort of painted her in a certain light. And Sam Bankman-Fried had given those documents. He had access to those, gave them to New York Times reporter. They published a story that said essentially here's the inside look at what she was going through at the time, painted her in a certain light, unclear what Sam Begman-Fried was going for there, but using what they argued was his First Amendment right to speak to the press and to defend himself. And that was really what they're talking about here.

That story was published in The New York Times and other news outlets have argued that that was newsworthy, that he was within his First Amendment rights and that they did have the right to publish that. Although there was questions whether that was in discovery, if he had access to other documents that he was not including in some of the legal process here. But huge, big news here. Huge story. And unless something changes on this change, a huge life change imminently apparently coming for Mr. Bankman. Freed. Kate, I have a feeling we have not seen the last of you today on CNBC. Have some coffee.

We'll see you in a bit. Kate Rooney, by the way, you're invited on the last call, 7 p.m. Eastern. Tune in. All right, up next, five-star stock advice. Capital Wealth Planning's Kevin Simpson making some big moves amid all the market swings. He's going to break down some of his favorite trades right now. Closing Bell returns. All right, welcome back to Closing Bell returns. All right, welcome back to Closing Bell.

The Nasdaq is less than 30 minutes away from posting its first back-to-back weekly loss of the year. Hey, the Nasdaq 100 is up 40% already, so take it with a grain of salt. But your next guest says the tech's recent pain could be a gain for some of this year's lagging sectors, making some big moves amid the volatility. Joining us now in person, post-9, Kevin Simpson of Capital Wealth Planning. Kevin, good to see you. Good to meet you. We've spoken like 100 times, but never in person. You're much more handsome in person, Brian. And taller. That's all I ever, never, see, no one ever says handsome. They just say you're much taller in real life. I guess everybody on TV looks the same. All right, SLB. We just had

Stephanie Link talk about it. Company formerly known as Schlumberger, kind of a bizarre name change, but whatever. Oil services company, global tech, as they would call themselves. Why do you like SLB? You know, energy was our big winner for 2022, but they've lagged so much in 2023 that I feel like there's opportunity there. And when we're looking for companies that have just cash flow on top of cash flow, this is a company that takes care of shareholders. They've got share buybacks. They're paying dividends. And if we think about the rig count, and this is your area, not mine,

what was the daily rate a few months ago? $250,000, $300,000 a day. Now we're up to $500,000. And I don't know how high it could go. Could it go to a million? I don't think we'll see a million on that. You're talking about the cost. What Kevin's referring to is the cost to basically get a drilling rig, because it takes about three weeks to get a well done,

everything, and then until the oil comes out. Not like the olden days where, you know, a donkey was knocking the thing in there. And they don't drill dry wells. So because of SLB's technologies, you know, no one's missing. No one's like, oh, there's no oil here. I mean, this is gone. This is tech. Company's been printing money. Does it get hurt or does it benefit in a weird way from the fact that there are many massive institutions that will not invest in fossil fuel related companies? I could see both sides of that. Yeah, you know, I think a lot about that, but I'm going to be agnostic to it. I'm going to look at the balance sheet. I'm going to look at earnings. And I ultimately need to make money.

The fact that there may not be as many people or institutions chasing the stock, I think, gives me more of an opportunity to accumulate the position. So we own it. We bought more. We own Chevron. I mean, we love the energy space. My only downside is I've got a covered call written against Marathon Petroleum, and I'm going to lose it this month. So I want to allocate some more assets into the space. Schlumberger is a good name. Okay. And speaking of the energy transition, right, we're going to go from fossil fuels to what we just talked also with Steph about power lines,

whatever we do, whether we build a windmill, a solar farm, electric cars, all I know is this, all of them are going to need copious amounts of two things, lithium and copper. And you added to Freeport-McMurray. Yeah, we want to play both sides of the trade. So I was thinking, you know, what does it cost in terms of copper right now? And it's at a one month low. So we initiated the position about a month ago. They posted good earnings. They beat on the top line. They beat on the bottom line. Stock tanked about 5% on that good news. They've been cleaning up their balance sheets. They've been paying off their debt. They have a sub 1% dividend, which isn't the best thing for me. But the dividend growth over the past three years has

been massive. If China actually reopens, if there's stimulus in China, if people buy electric cars, it's four times as much copper for an electric car than it is for a traditional car. So I think if we're building a position in something, these are names that are certainly out of favor. I like the hedge because in a weird way, if you believe one's going to win or the other's going to win, it's either going to—oil and copper are basically the same thing in a weird way, right? They're both sort of power different things, but you're going to need a lot of them depending on how it goes. Yeah, there's no third horse in the race. Not yet. We'll see what happens when the aliens come.

Once the aliens come down, then we'll know. They'll give us their technology. Kevin Simpson, Capital Wealth, great stuff. Appreciate it. Kevin, thanks. Good to meet you. All right, up next, we are tracking some of the biggest movers as we head into the close of the day and the trading week. Christina's back with what we're watching, Christina. Profits down 75% year over year, but AI is here to save the day. And the stock is obviously up. Details on that name and much more after this very short break, I promise. All right, about 16 and a half minutes, oddly specific, until the closing bell. Let's get back to Christina for a look at some of the stocks that she has got

her eyes on. Well, that company I was alluding to is News Corp. It's higher as an earnings beat outweighs a 9% drop in revenue. The Fox News parent company is also getting a boost from AI commentary with CEO Robert Thompson saying there's great opportunity in the generative AI, including the potential for new streams of revenue. And he says that investors are, well, we should say investors are pretty excited about it because the stock is up over 4% right now. And UBS is on track to close at an all-time high as the bank says it no longer needs the Swiss government's backstops to support its takeover and rescue of Credit Suisse.

That news has shares about 5.5% higher. Christina, we'll see you in a few minutes. Thank you very much. All right, everybody besides Christina and I, it's your last chance to weigh in on our question of the day. We asked, is it time to pair back, pair back, P-A-R-E, back on tech? Head to CNBC Closing Bell on Twitter. We're going to bring you the results after this short break. All right, let's get now to our question of the day. We asked you, all of you, the trillions of people watching and listening to this program right now, is it time to scale back your investments on tech? A majority, but not a huge majority, 56.9% said no. You're going to stay in tech, but hey, 43.1% said yes.

It's maybe a little more than you would have thought. All right, up next, your retail rundown. Target, Home Depot, Walmart, among the big names all reporting next week. We've got an analyst standing by with what he's going to be watching when we take you inside. What's it called? The Market Zone. And by the way, next week, on Monday on Monday. Do not miss my sit down. Florida Governor Ron DeSantis going to go down to Florida this weekend. We're going to be meeting and speaking with the governor as well.

And then you can watch the full interview Monday, 7 p.m. Eastern time on last call. Closing bell. We'll be right back. All right. Welcome, everybody. Seven and a half minutes to go until the close. And we are all together now in the market zone. Senior markets commentator Mike Santoli is here to break down the crucial moments of the trading day. Contessa Brewer on the sell-off and casino stocks and why she didn't join us in the tin building last night.

And Greg Mellick of Evercore ISI shares what he is watching ahead of retail earnings next week. Mike, first up to you. And also, you and Josh Brown got a big special tonight at 6 o'clock. We do, yeah. Coming up will kind of be your opening act, I guess, in some ways tonight, Tully. Look, I think the market, if you really look back at how the week was kind of churning and it seemed like an untrustworthy tape, right, we didn't hold a lot of rallies. We're only down, you know, 30 basis points in the S&P for the week, still kind of churning around these same levels. It seems as if the bar has become higher in recent weeks for what benign economic news has to be delivered to

investors in the form of dis delivered to investors in the form of disinflation, in the form of better growth in order to get us moving in terms of appetite for stocks from here. But I think, you know, you'd have to say that the overall market has absorbed pretty stiff pullbacks in the leading mega cap tech stocks without falling apart just yet. I wouldn't want to call it all clear, but it seems as if markets kind of held its ground OK. Yeah. All right, Michael, see in just a second here. All right, Contessa, I'm I'm confused. Maybe we could throw up Penn Gaming. Penn Gaming makes this huge deal with Disney. And yet Penn Gaming stock is now below where it was before the Disney deal a couple of days ago. I don't

what's going on. And it's stocks? It's not just Penn here. I mean, there was some crazy casino action today. If you look at Penn shares down, DraftKings shares up, it was really a reversal of the action that we saw post-deal news between Penn and ESPN. Do you see that switch there? Not helping Penn especially is news that Dave Portnoy, back to being the full owner of Barstool for $1, is now positioned to unload a massive chunk of Penn stock, potentially more than a million shares.

So MGM, Caesars, Las Vegas Sands win. They all saw a concentrated sell-off at the opening bell and almost identical price action. Look at that, how they all follow each other throughout the day after PPI data indicated that increased costs and goods of services could impact, of course, their retail businesses. And then an hour ago, Brian, Wynn put out a news release that it is shutting down its online sports betting and iGaming operations everywhere except Nevada and Michigan as soon as possible. And even in those two states, it's under review. The company says it just can't justify using its capital on all that marketing to acquire customers when posted an operating loss of $59 million in the interactive segment for the first half of the year. So basically, they're washing their hands of that. So there you're seeing some of what was happening in the casino space today.

Nevada, I get. Michigan, a little bit odd, but okay, there you're seeing some of what was happening in the casino space today. Nevada, Nevada, I get. Michigan, a little bit odd, but OK, there you go. Could solve that mystery at some point. All right. We've got a Russia retail earnings the coming weeks. Names Target, Walmart, Home Depot. Greg Mellick joining us now. Greg, any of these names you like more than others heading into earnings? Yeah, we'd rank them with Walmart number one, Home Depot somewhere in the middle, and then Target, least favorite of the three. And the key for Walmart is they're getting real traffic momentum. They're winning new customers. And we think, frankly, earnings expectations, both the company's own guidance and street expectations, have just been too low, frankly, all year.

So we're still looking for a pretty nice quarter and probably a beaten raise next week. Okay, that's it. And is there something, Greg, quickly back to you, in any of these numbers, whichever it is, Walmart, Home Depot, Target, that we have to watch, is there any kind of a tell from these numbers on how the consumer's doing? Yeah, I think you're getting to the right point here.

For the most part, the retailers have guided down their numbers for enough this year. So this earnings season, it's going to be about what are we learning about going to be about what are we learning about back to school? What are we seeing into the third quarter? Because at the end of the day, the question is, can retail earnings reaccelerate into next year and is the worst behind us? So that's really what we're looking for out of these earnings prints next week. That's it. And yeah, we'll see what happens. A lot of stuff going on in retail. Greg, is there a name to avoid? We always say, what do you buy? Is there a name you don't want to own?

You know, generally speaking, we're kind of in line in the group and I would say traffic momentum is key. And so of the three, I think Target will probably guide down. I think people know that. so it feels pretty washed out. But the key is retailers growing traffic. So if Home Depot starts to have a less negative comp, that'll improve some confidence that, you know what, next year could be an up earnings year for them. So I think it's really focusing on those retailers gaining share and winning customers. Those are the ones you want. And I would put Walmart number one next week on that front.

All right, Greg Mellick. Greg, thank you. Let's go back down to Michael Santoli. Got two and a half minutes, Mike, until the close of the week. Kind of a weird week for tech. I mean, I didn't know Apple was allowed to go down, but it's actually down a lot. Meantime, oil stocks, the XOP is up. I think it's seven days in a row now. You wonder, is this like a meaningful shift or part-time phenomenon?

Yeah, it feels like a combination of just sort of an overdue cooling off in the biggest stocks. Big ones down 10 plus percent, a lot of them. NVIDIA is the biggest net detractor from the S&P 500 on a week-to-date basis. You mentioned rotation certainly into energy, also a little bit of pharma and healthcare there. So a combination of defensive and cyclical. CAT's been a big upside contributor. Home Depot as well this week. So it does seem as if the market wants to attempt another one of these rotations. Now, there's going to be some kind of slippage in the gears there because, you know, energy is four and a half percent of the S&P, you know, tech's 27 or something like that. So it can't be a one for one type of thing. But it's one of the

ways the market is able to keep itself supported and, I guess, keep volatility somewhat suppressed when things are going their own way. This in the face, though, of the 10-year yield hitting 416, very much challenging those year-to-date highs as well. But let's end the show. And I know you've got another show. We both have shows coming up. On a really high note, because if the market were to close today for the year,

if like, let's say tomorrow was December 31st, whatever, this would be one of the best years ever for the Nasdaq 100. We've had a heck of a run. Absolutely. So we say we're digesting the gains and there's plenty of them to digest also off the lows. I mean, the S&P got you a 30 plus percent return off the October low. So that means it's not that surprising you'd have some backing off of the market. Obviously, we know August, September, not always easy, a lot of give back. Even in a typical year, you usually get some, you know, five plus percent pullback. So we haven't even had that yet. So it's both a good story and one that says, you know, be ready for something that's a little bit less pleasant along the way.

Yeah, that's it. It's been a heck of a year. Michael Santoli, we will see you and Josh Brown tonight, 6 p.m. Jim's off. CNBC special, Taking Stock. That is followed by, of course, Last Call, hosted by the handsome and brilliant Brian Sullivan. Well, give us a good lead in, my man. Give us a good lead in.

That does it for Closing Bell. We'll see you on last call. Let's send it into overtime with Morgan Brant.