Closing Bell - Wild Ride, Crypto Crash & Cloudy Days Ahead? 11/8/22

Episode Date: November 8, 2022

Wall Street taking investors on a wild ride. The Dow had been up 500 points amid investor optimism over the midterm elections, but gave back some of those gains following a crash in cryptocurrencies. Crypto exchange Binance rocking the crypto world by announcing plans to buy rival FTX's non-U.S. business. Mizuho's Dan Dolev discusses why that could be very bad news for Coinbase. Morgan Stanley Chief U.S. Equity Strategist Mike Wilson says the market could get a post-midterm election pop, but thinks that rally will likely be unsustainable. Find out what it will take for the bear market to end. iCapital Chief Investment Strategist Anastasia Amoroso sees rising odds of a year-end rally, but is concerned recession risks are not fully priced into the market. Sunpower CEO Peter Faricy discusses his company's strong earnings and whether a potential Republican win in the midterms could signal cloudy days ahead for solar stocks. And Kimberly Clark CEO Michael Hsu on how the consumer products company is handling rising inflation and its impact on consumers.

A crypto crash, spooking stocks, and the market loses early gains. This is the make or break hour for your money. Welcome, everyone, to Closing Bell. I'm Sarah Eisen. Happy Election Day. Here's where we stand in the market right now. Dow still up about 200, more than 200 points. At the high of the day, it was up 528 points.

What is contributing most? Healthcare again having a good day. Amgen, UnitedHealthcare, Boeing, and American Express, the biggest contributors to the Dow gains. S&P is only up two-s of one percent, about seven points. Again, at the high, it was up 52. So we had a strong rally and the Nasdaq has gone negative on the session. So far for the week, we're still higher by about a tenth of one percent. Coming up this hour, Morgan Stanley, chief U.S. equity strategist Mike Wilson on why he's predicting a short-term market rally in the wake of the midterm elections. Plus, we will take the pulse of the consumer

in an exclusive interview with CEO of Kimberly-Clark. And then take a look at Bitcoin. That's the huge story today. The cryptocurrency has been extremely volatile, plunging below $19K after Binance announces plans to acquire the non-U.S. business of Sam Bankman Freed's FTX, which has been facing a liquidity crunch, sudden development that is still ongoing. Let's bring in Mike Santoli. We have to start on the crypto news and what it means and why it is spilling over into the broader market. It's not so much there's direct linkages to exactly what the stock market's attempting to value, but the intraday moves, when you're talking about a multibillion-dollar potential liquidity crunch

that requires some kind of a backstop from a competitor in a market where there are a lot of investors, not just in Bitcoin and other coins, but in FTX itself that own a lot of other things, a lot of venture money, private equity, and hedge fund managers are investors in FTX. To me, it's not about we know what the implications are. It's the fact that you don't know what the implications are. And you you see a loss like this, also a breakdown in the Bitcoin price below kind of a support level. The connection with the way the Nasdaq is traded was pretty tight. The high for the day just afternoon around 1 p.m. And then we just see this bounce here on 230. That's when the equity just after noon, around 1 p.m., and then we just see this bounce here around 2.30. That's when the equity markets did bounce. So in the absence of other

news, I think it's a stress point that people are monitoring. Probably not going to be the lasting driver of what stocks are going to be up to, but it's obvious today when you're talking about any kind of capital market pressures coming from the unknown, that's a problem. Well, it doesn't inspire confidence in Bitcoin. And there's a spillover effect. Robinhood shares are down 19 percent. Remember, Sam Bankman Freed is a shareholder there. And speculation they might buy it.

Coinbase down 13 percent just on this idea that maybe there's more regulation or that there's a lot of instability. Well, also the idea that previously the savior to a lot of other distressed crypto platforms is now in itself in need of some kind of instability. Well, also the idea that previously the savior to a lot of other distressed crypto platforms is now in itself in need of some kind of help. Yeah. No, CZ, Sam Bankman-Fried, Sam Bankman-Fried. What else are you looking at in the market dashboard? I mean, the market itself, one of the stories over the recent weeks has been how much negatives, negative news the market has been able to absorb without breaking down further but it hasn't gotten us very far this looks you know a lot like a new trading range 36 or 3500 to 3900 we came up short of that i do think it is relevant we kind of closed the gap that was left by the press conference jay

powell gave last wednesday that's just above 3800 it's all preliminaries though we're really waiting obviously we'll get through the midterms we'll see if the seasonals kick in but really it's about the cpi number now take a look at. A measure of bond market volatility this is the move index it's effectively the vix for the treasury market and it really needs to calm down I think for equities to get a real foothold in a new uptrend going and you see it's rolled over pretty nicely here as it did a couple of other times when you did get relief rallies in equities. Now, it's still kind of in this uptrend, right? It's not truly calmed down. That's why all investors want visibility to where the Fed's going to end up with short-term rates. It should help the Treasury market in general stabilize around the yield range. And that would obviously be a help in general to all markets.

So it's constructive but not necessarily persuasive just yet that it's really rolling over. Got it. Mike, thank you. Mike Santoli. Every sector, by the way, is higher except for consumer discretionary. Tesla's down another 3 percent, hurting that group. Let's bring in Mike Wilson from Morgan Stanley. And Mike, really glad to talk to you, especially today, because you did have a tactical bullish call. And part of it was on the midterm elections, that that would help stocks and bonds. Why is that? Yeah, that's right, Sarah. I mean, we made this call, I guess, two and a half, three weeks ago,

and it's worked out. The first part of that rally was really just, you know, positioning and sentiment kind of getting washed out, the 200-week moving average held. But in order to get further support for this rally, we feel like rates need to come down. And so today, 10-year yields are coming in. We're still too high, though, for stocks to really make that next jump above the range that Mike was just talking about. But we do think that tonight's election could be very important in that regard because it looks like the House will go the way of the Republicans. That means gridlock, probably less fiscal spending will be achieved. Maybe that's in the market. We think it may not

be in the market, just like when we had the Georgia runoff after the 2020 election. That wasn't in the market and rates went up and we got more fiscal spending. So we think this is an interesting juncture. The CPI is important on Thursday, but we view that more as just an event that has to pass and come because at the end of the day, we think inflation will be lower next year. The peak is in. It's just a matter of pace and timing. And to me, the CPI is just sort of this event that has to come and go. So it's really about tonight.

As everybody's been saying incorrectly, we won't know the answers potentially for a couple days, maybe even a week because they've got to count the mail-in ballots. But directionally, we like to set up here. As far as today's action, as I said, the rates market is behaving better. The dollar is weaker. The breath is good. The breath is actually quite impressive and a nice offset to the damage that's been going on in the more speculative parts of the market. Just want to challenge the political point right now, because I get it's conventional market wisdom to think gridlock is good for the market and good for ultimately the economy, rein in the fiscal spending,

all of that. But do we really want more standoffs over the debt ceiling on the brink of a potential default or government shutdowns or nothing getting done in case we go into a deeper recession? Yeah, that's what we need to separate from this being a trading call versus our core view. So I completely agree with you that this won't solve our problems for next year, which is that we're still going to have to go through an earnings recession. And that's probably going to be kicked off in the fourth quarter earnings reporting period. So I agree with you. I mean, and ultimately, this is a trading call. We think it could be very important for bonds,

which would then spark the next leg for stocks. And we'll see how it goes. Like, you know, we won't stick around if we feel like these things are going against us. But I totally agree with your conclusion that gridlock doesn't solve, you know, the real problem for equities, which is going to be earnings next year, nor, as you rightly point out, if we go into recession, that may actually be a hindrance for the recovery. So yeah, we're not out of the woods at all yet on the bear market. Or it could be bullish because it could mean then the onus is all just on the Fed, as it always is, and they're going to have to pivot and completely ease because they're going to be the only form of stimulus, and the market likes that. So Mike, what is your call? Because we we're at 3825 and I think you're in June 2023, 3900. So,

are you still as bearish as you have been overall? Well, like in a 12-month view, we've been saying this for a while. We're not as bearish as we were at the beginning of the year because we think the 12-month view looks better now than it did eight months ago. The problem is the path, Sarah. We do think that ultimately this bear market will make new lows. So it's a treacherous path. This year, we think it's been pretty easy just to have a bearish view and kind of ride it. And that's what we've done. Now it becomes more tactical. Now we have to be more cognizant of these bear market rallies. We're not trying to capture every penny of the bear market and understand that we want to get long again at some point. So we've got to be disciplined around that. We think below $3,400 is the sweet spot for adding serious investment asset risk. We felt like

the trading rally at $3,500, $3,600 was a good trade. Nothing's changed in that regard. That's our call. It's a trading call. We think ultimately we'll put the real money to work when we make that final load, probably sometime in the first quarter. So bond yields have to come down, which a lot of people are looking for to buy stocks. And then there's the earnings expectations. And you have been saying that they're, what, still too high and not factoring in a likely recession, which is what we're facing? Yeah, I mean, that's the second part of our fire and ice call all year is that we're facing? Yeah, I mean, that's the second part of our, you know, fire and ice call all year is that we had the inflation risk. The Fed took care of that or is dealing with it now. That was the D rating. And now we have to deal with the impact of that

tightening. Now come through the earnings channel. And we think next year, OK, could be 20 percent too high in terms of the consensus estimates since bottoms up relative to what we think ultimately will play out okay now i don't care what you think the multiple should be that's not in the stock market all right now the good news is a lot of individual stocks have probably already discounted that right so it's been a really bifurcated market and now we're finally you know taking out the leadership the the big tech stocks are finally happening we're seeing a rotation into other parts of the market i think it's premature to make that bet that that's sustainable. But I like the signs of that, Sarah. I mean, I'll tell you this, you know, what we always look for

at the end of these bear markets is what's working at the end of the bear market, because that's what's probably going to lead us out on the other side. And that would be things like financials and energy, commodities, and also industrials. Those groups look quite good to us on the other side of this. And so we will be dogmatic. We got to start putting money to work here over the course of the next three to four months. But, you know, I want to make it perfectly clear, we don't think the bear market itself is over until these earnings estimates come down. Well, I don't understand why they haven't come down. You're not saying anything new, right? We all know that we expect the terminal rate as the market is pricing it now to go above 5% and a lot of tightening in a very short period of time. So why do you think the market has been

reluctant to price in an earnings recession like that? Well, some people would argue that we did, right? 3,500 is a pretty good level. And as I mentioned, a lot of individual stocks may have done that. But to your point, the expectations haven't come down that sharply. Correct. If you look at earnings estimates. Yeah. That's exactly right. And that's sort of the art form of what we try to do is we've done this a million times over the last 30 years, it feels like. And what I want to tell you is that the earnings forecast and the out year always take longer to come down than they should. And part of that has to do with the way that the estimates traffic company guidance. Companies have not really talked about 2023 yet. And until they do,

these numbers can stay lazily stale. And that's what's happened. So we think that will rectify itself probably in the fourth quarter reporting season. Maybe we're being a little bit too precise about that, but that's what we think. Mike Wilson, always appreciate it. I know a lot of people are

following your calls. So thank you for joining us. Mike Wilson is the Chief U.S. Equity Strategist of Morgan Stanley. By the way, do not miss CNBC's election night special, Business on the Ballot, tonight, 7 p.m. Eastern time, featuring a great lineup, including Scott Minard, Dan Niles, and many more, talking about the implications for the market and the economy. Up next, fintech fallout, a top analyst on what the Binance FTX deal could mean for Coinbase and Robinhood, which are both falling sharply. You're watching Closing Bell on CNBC. The Dow is up about 280 points right now.

Nasdaq back in positive territory. Cryptocurrencies and crypto-related stocks are plunging right now after Binance agreed to buy FTX.com, the non-U.S. business of Sam Bankman Freed's FTX. The news sent shockwaves across the industry, sparking concerns about its impact on crypto adjacent stocks. We're going to hit some of them right now with Dan Dolove of Mizuho. Covers Robinhood, which is getting crashed. Coinbase as well. Dan, do these kind of moves make sense to you? We're seeing moves 15 to 20 percent down. Yeah, I'm actually surprised Coinbase is not down even more because I think this speaks to the kind of inherent risk in the industry. You think about it, this is kind of like the third seminal event this year, right, after the stablecoin collapse, Terra, three arrows capital, and now this.

It kind of shows you the inherent conflict and the reliance on these exchanges, which just people can't trust, and how quickly you go from kind of being sort of very sought after to, you know, kind of on the brink of insolvency. So I think this is actually really concerning for Coinbase. Why Coinbase specifically? Because it has similarities to FTX and it's vulnerable to this type of liquidity event? Yeah, exactly like that. Because if you think about what, you know, 90 percent or so of their revenue at least

are made from, you know, these tokens, right? So they're just trading these tokens. And there's very little diversification. So the question is, can people trust the tokens that they own and what happens if everyone's trying to sell those tokens at the same time? And I think Coinbase is specifically prone to these issues. Robinhood, not so much. Remember, only 14% of Robinhood, people don't understand it, only 14% of Robinhood is crypto. Everything else is pretty much equities, options, et cetera.

So I think there's an overreaction on Robinhood, and I'm not surprised to see the reaction on Coinbase. But, okay, but didn't people think that Sam Bankman Freed might buy Robinhood? Isn't that also part of what's coming out here? So I think what's happening here is a couple of things. First, he owns it directly or indirectly, indirectly like a 7.6% stake. So I think maybe some people are worried that, I don't know the financial situation, his personal financial situation. So maybe people are worried that it would get sold. I think after Robinhood, I actually met with Vlad last week with the founder. I think the situation of Robinhood is so much better than people think right now.

They've turned around their business. They've turned around costs. So if you think about everything here, I don't think they're for sale anymore. So I think that anyone that thought that he was going to buy Robinhood, and I spoke with, you know, I think is basically talking like three months ago, I think right now the situation of Robinhood is much better operationally. So I don't think it was ever on the table over the last month or month and a half since they've improved the business. It's just crazy because Sam Bankman-Fried yesterday tweeted that the assets at FTX were fine.

Quote, they're fine. And then this happens, which I guess, Dan, is this because it's not regulated? Yeah, I think that's exactly my point. My point is like this entire industry is very little regulation, a lot of interdependence, a lot of leverage. And when one thing implodes, everything else kind of falls like a domino. And I think this kind of cocktail could be pretty bad overall. So it's not a specific FTX issue.

I think that I would watch Coinbase and I I think that this is a red flag, in my view, for Coinbase, because essentially, it's like the same business. It's already down 86% in the last year. What is it worth to you with this risk out there? 40. I mean, the risk out there is, remember, what we haven't seen, and this is actually a great point that you're making, what we haven't seen is the next downward revision. This is what people are not taking into account, right? Downward revision in retail take rates, right? They're charging over 1% for the retail take. Binance is offering it for free. So now Binance and FTX could be even more competitive towards Coinbase. Robinhood is already free, so they've got nothing to lose. That's another thing that people are not taking into account on Coinbase.

Really interesting. Thanks for pointing it out. Dan Dolup, good to see you. Appreciate it. From Azuho. Let's give you a check on the markets broadly. We've just taken a little leg higher, up 341 or so on the Dow. The S&P 500 also seeing most sectors positive right now. As we mentioned earlier with Mike Wilson, weaker dollar, third day in a row where we're seeing weakness. That's helpful for stocks. Lower treasury yields as well. Small caps are underperforming and the Nasdaq has gone back into positive territory. It was down when we started the hour. Amgen, Nvidia, PayPal, Apple, Microsoft all helping. Tesla and Amazon are weaker, though. Up next, the CEO of Kimberly-Clark on how he is tackling rising inflation and its impact on the consumer. And as we head to break, semiconductor stocks take a look, surging for a third day in a row.

On several headlines, including Global Foundry's earnings beat, Morgan Stanley issuing a bullish call on European chip names, and NVIDIA's new chip that clears U.S.-China export rules. Sectors all higher. We'll be right back. Take a look at shares of Kimberly-Clark. The stock is up more than 7% since announcing earnings last month. The consumer staples company, which is behind brands like Huggies, diapers, and Kleenex tissues, saw prices rise 9% in the quarter, and that offset a drop in volume and currency headwinds.

I spoke with CEO Mike Hsu earlier this afternoon and asked him how he thought the U.S. consumer is holding up right now. I think we've seen a tale of two consumers. And or in my comments, I might say that the man has bifurcated a bit. And certainly, you know, there's a large swath of consumers that have been relatively less affected by the economy. And so we still see strong demand for our premium products, and that continues to perform very well for us. But on the other hand, there are a pretty significant amount of consumers that are struggling with the economy, with inflation overall. And so we focused on being able to serve both ends of the market. And that lower end of the market, are you seeing typical

recession-type behaviors, trade downs, smaller shopping baskets? Yeah, still a little early. I mean, we have tracked it with the Consumer Confidence Index, which has kind of continued to decline since the middle of the year. We are seeing some trade down. I would say higher sensitivity to absolute price point and so really featuring kind of the right pack size at the right price point the right merchandising placing the right products on shelf and then also making sure that we cascade make sure we cascade our innovations through our value tiers has been important you've raised prices like everyone else in the consumer world how many price increases have we seen in the

last few years well quite a few for us. And you may be aware in our categories, particularly driven by fiber and resin-based products, we've taken on significant inflation, perhaps more than a lot of the industry. And so we have taken significant increases, probably more than I can count, you know, at this point. I think the thing for us is, though, and the way we view pricing is it's been important for our investors that we recover our margins. Our margins are still underwater versus where they were pre-COVID. And so we have still some work to do. But the reason why we have increased prices and increased our cost savings is that we've got to drive our margins so that we continue to invest in our brands. And we've worked with our retail partners on a long-term strategy to grow our categories.

You know, we have a lot of innovation to premiumize our categories in the time. We'll pivot appropriately in this environment, but we think it's important to continue to bring innovation, marketing, product quality to the category. Is inflation continuing to rise? Are you going to continue to pass along higher prices to the consumer? Yeah, we've taken it along the last couple of years. For reference, Sarah, the all-time high for us when I became the chief operating officer was 700 million in inflation back in 2018. Over the last two years, we've taken on an additional 3 billion. And so it's been a very

significant number. I would say at this point, it's starting to stabilize at a higher level. We know it's going to recede at some point. Reversion is typically what's talked about in our commodity baskets. Any sign of that yet? Not yet. But, you know, I would say. On the cost side or on what you're passing to the consumer? On the cost side.

On the cost. Yeah, so I would say. It's not coming down. Yeah, typically you'll see some volatility in the fiber market and the resin markets. It's tied to supply and demand. You know, we would expect the cost to come down over time, but we haven't seen that yet. What about for consumers? Are we going to be continuing to pay higher prices for things like toilet paper and tissues? Well, we would hope that at this point, our pricing, you know, that we've reflected our pricing where it needs to be at this

point. And right now, we're managing our business to drive the margin recovery at the current pricing that we have in. But how do you balance investment in a world where increasingly companies are cutting costs and demand is set to soften? Right. Well, we're here to celebrate our 150th anniversary. So we rang the bell this morning with our employees around the world. Invention is what we feel like is our core strength, and we're very good at technology and also consumer insights. And so, you know, we feel like there's a lot of opportunity for us to continue to develop our categories, serve consumers better. That's why we have increased prices so that we can continue to invest in product quality, our brands, and innovation.

But at some point, I mean, the volumes get hit, right? You can't just keep raising prices in perpetuity, can you? Yes. Yeah. But again, I think the thing for us, though, is our categories are still in the early stages of development, particularly in international markets, especially in developing emerging markets. And so, you know, while we're cognizant of the sensitivity around pricing with consumers, you know, it's our job to manage the volume relationship. And our teams are doing that very well around the world. I want to talk to you

about China, because your growth has held up there, even with the challenging environment. What does that market look like right now? Well, there has been significant birth rate declines over the last five years or so. And they're down almost 50 percent versus five years ago, right? So, there were about 9 million births this year expected versus around 17 million maybe five years ago. So, but, you know, through all that, our business has continued to grow at a high single-digit or double-digit rate. And again, I think it's's due the premiumization opportunity. You know our

Chinese consumers really want the best for their baby. There's a lot of focus on that. Alison Lewis, our chief growth officer, reminds the teams that you know the value per baby in China remains less than half of what it is in the U.S. So there's still a lot of headroom for growth in the category, despite the fact that the birth rate is declining. What about in the U.S.? Birth rate, we got a little bit of a post-COVID baby boom, it felt like. Yep.

Yep. So it was up slightly last year. It looks like we're expecting to be up slightly this year. So I think that's been good, a little bit better than it was pre-COVID, as you point out. And again, same approach applies for us, which is we think there is an opportunity to serve consumers better by developing products that serve the needs around comfort, fit, health or skin health. And you know how important that is for a child. And so we're happy to be in the child development business. It's been all about pricing for a lot of these stocks. Mike Hsu, the CEO of Kimberly-Clark,

whose stock is down about 12, 13 percent for the year, but so is Procter & Gamble's. They haven't been performing quite as well as some of the food stocks, for instance, in consumer staples. When we come back, SunPower, big winner today after reporting better than expected earnings, stocks up more than 10 percent. The solar company CEO will be here to break down the numbers and discuss how the midterm elections could impact his industry. We'll be right back. Up 460 right now on the Dow. Check out shares of SunPower, the solar energy and battery storage company. It's spiking today.

The company reporting strong third quarter numbers, also increasing customers 63 percent from last year. SunPower also announcing a partnership with General Motors. SunPower will be the exclusive solar provider for all GM customers. Joining us now to talk about all this is SunPower chairman and CEO Peter Farisi. Peter, it's good to have you back. What drove those new customers, especially at a time, I'm wondering, if it makes more economic sense with this rising cost of utility inflation to go into solar? PETER BUCKLEY, Yeah. Hi, Sarah.

Thanks for having me back, and happy Election Day. It was a terrific quarter. This is our third straight quarter of accelerating growth, 67% revenue growth on top of the 63% customer growth. So we're pleased with those results. Really, on the customer side, I think there's two things happening right now. As you mentioned, utility rates for consumers have risen dramatically year over year. So if you take a look at through August of this year, across the nation, they're up 14 percent year over year. There's 11 different states that are up 20 percent or more.

So it's really your utility bills really starting to hit the pocketbooks of Americans. And so clean energy has become much more attractive because we can lower your bills when you adopt solar power right away. The other big piece is that SunPower is the number one rated solar power company in America. And we continue to be rated number one. CNET just rated us the best solar company in America. And I think we're beginning to see disproportional movement to SunPower by consumers looking for the best customer experience. Is it the IRA, the Inflation Reduction Act? Is that helping those incentives? Yeah, I do think the IRA is helping. And I think we're just beginning to figure out

how we're going to take advantage of it. You know, they're still trying to figure out. There's a couple of big adders that are potential game changers. There's an adder if you sell domestically produced content. So imagine selling solar panels made here in the U.S. There's another 10 percent adder if you served underrepresented, low income communities. So the Department of Energy and the Department of Treasury is working out the details. We'll know more in Q1. But we're going to lean in on the IRA and be aggressive at taking advantage of all those incentives. Are you worried that if Republicans after these midterm elections gain control, as conventional wisdom expects in the House of Representatives

and potentially the Senate, no more incentives, that either some of that funding goes away in the IRA or no further incentives from places like solar in your industry, because they're much more focused on domestic fossil fuel production and less on what you do. Well, I've got great news. We may have found the first issue that crosses party boundaries with clean energy. So earlier this year,

Florida Governor DeSantis actually vetoed NEM legislation that would have taken benefits away from solar consumers in Florida. Very positive development. The Republicans have formed a group called the Conservative Climate Coalition that focuses on clean energy. So believe it or not, I actually think clean energy and solar in particular is becoming more bipartisan over time. Yeah. I'm surprised because your stock has sort of suffered lately on the opposite feeling. So we're going to have to hear from Republicans on that.

Peter, but before we let you go, I do want to ask about this new GM partnership. What is the intersection between solar and EVs? How big of a deal is this that you're making? I think it's a potential very big deal. And really, the genesis of it is when you buy an electric vehicle, two things happen. One is these new chargers called bi-directional chargers are not a do-it-yourself. You need someone's help to install them and connect them to your electricity. That's the role that will play initially. But the bigger role is as soon as you have an EV, your energy usage per EV goes up about 40%. So imagine these expensive utility bills, and now you're using even more energy.

We believe that more and more EV customers are going to want to have solar on their rooftop. Today, about 40% of EV owners have solar. I would expect that increases to 60 to 80 percent over time. And they'll save money and they'll be doing something wonderful for the world. So we're quite excited about this partnership with GM. Peter Faresi, have to have you back on soon. Thank you very much for joining us. Thanks, Sarah. Take care. CEO of SunPower, you too. Take a look at where we stand. We've accelerated here in this final hour of trade, up 473 or so on the down, not quite at the highs of the day, but we're getting there. S&P 500 up a full percent now. And you do have every sector turning positive throughout the hour.

Even consumer discretionary is now up a quarter of 1%. Materials, real estate, and utilities are leading. Still ahead, iCapital chief investment strategist Anastasia Amoroso on today's rally, why she's concerned recession risks may not fully be priced into this market. We'll be right back. What is Wall Street buzzing about today? Kohl CEO Michelle Goss leaving the department store behind for Levi's. Goss will step down next month to join Levi's as president under CEO Chip Berg with plans to become Levi's CEO over the next step down next month to join Levi's as president under CEO Chip Berg, with plans to become Levi's CEO over the next 18 months. It's funny because she's been a huge proponent of athleisure and comfy clothes for the last few years. It's also interesting to note that Levi's is a family-controlled business, therefore less vulnerable to activist investors.

At Kohl's, Goss has been under attack from activist investors for underwhelming sales and also failure to sell the company despite interested parties and a steep drop in the stock price. Meantime, Kohl's announcing it is appointing board member and former Burlington store CEO Tom Kinsbury as interim CEO. Remember, he joined the board back in 2021 as part of a settlement with activist investors. Kohl's shares sharply higher today on the news. It also pre-announced and numbers were better than expected despite a 7% sales slump. Meantime, Levi's shares are in the red today. Some questions. Will Kohl's new interim CEO be open to sale leasebacks and be a dealmaker? This has been

a key source of value for Kohl's, the real estate. Investors have been pushing for more sales and then for Kohl's to lease them back for stores. Will Kohl's key partnerships like Amazon and Sephora stay intact? A lot of them were driven by Goss herself, and she stayed very close to them, I'm told. No comment from the activist Masalam, but he's got to be happy to see his board director become CEO here. Certainly, in the meantime, investors appear pleased as well with the news. Take a look at Disney. Shares are popping today ahead of its earnings after the bell. We're going to break down the key number to watch there straight ahead. That story plus, oh wait, not popping anymore. They're now lower.

We'll still tell you what to look for in the quarter. Plus, we've got cryptos on a wild ride today and Lyft is plunging on earnings when we take you inside the Market Zone. We are now in the closing bell Market Zone. CNBC Senior Markets Commentator Mike Santoli here, as always, to break down these crucial moments of the trading day. Plus, we've got Kate Rooney on crypto, and iCapitals' Anastasia Amoroso on the broader market, which we'll kick it off there because we're seeing a nice rally again here.

Dow, S&P and Nasdaq, Mike, it's broad. The dollar's weaker. That helps. Yields are lower. That helps. You think there's some midterm election optimism as well going on? Yeah, I think in addition to what you're saying in terms of the dollar and the bond market taking some of the pressure off, there is that generalized sense that tailwinds start to arrive around this time of year. Nothing is guaranteed.

But between that and the fact that I think in the last hour or so, the FTX token stopped making new lows, it sounds crazy. But that seems to have also kept the market from following suit. Only two Dow stocks negative, Disney and Walgreens. We'll talk Disney in a moment. But let's talk Lyft first because that stock is crashing after reporting earnings. Look at the stock. It's down more than 20%. Active riders falling short of expectations. Ridership numbers still stuck below those pre-pandemic levels and overall revenue up 22%

from last year, but that was below estimates. Quite a contrast to Uber, which last week said its quarterly revenue surged 72 percent. But Lyft president and co-founder John Zimmer painted a sunnier picture for Q4, seeing October as the beginning of a broader rebound. Listen. We saw that we're on path for October, that we hit record all time bookings. And then from a rides perspective, which is where there were a lot of questions, we actually saw month over month, 6% growth, which was higher than what we saw in 2019. Boy, no patience from investors, Mike. The stock is now down 80% over the last 12 months. What happened here? Well, no patience, but what they're doing is dialing ahead to 2024, right? So they're going to have a bunch of cost cuts. It's going to have everybody revise what they're doing is dialing ahead to 2024. Right. So they're going to have a bunch of cost cuts. It's going to have everybody revise what they expected to be. Twenty twenty three is a

little bit of a payback year. So it's not a crazy expensive stock by any means anymore. It's really just the concern that market share declines might continue. And the fact that maybe ride sharing seems like it's only viable for one dominant player as opposed to a duopoly. Right. And the analysts saw the progress toward 2024, but kind of mixed on the print. Yeah. Let's talk about cryptos. Cryptocurrency exchange Binance reaching a deal to acquire Sam Bankman-Fries FTX.com, which is facing a liquidity crunch. The deal does not include FTX's U.S. business. Kate Rooney joins us. Kate, how does this, so many questions, but first, how does the deal impact the rest of the crypto industry right now?

How much of the crypto industry is this? It's a big portion of it, especially internationally. So for one, this creates this massive global exchange. Binance and FTX are two of the biggest exchanges out there. This is a deal to buy FTX.com, which is essentially Sam Bankman-Fried's international side of the business. It makes up about 95 percent of that parent company's revenue based on some of the audited financials we've seen and reported on before. The U.S. business is a tiny portion of what it actually brings in. So if you combine Binance and FTX, it makes for a big player in this market. It also begs the question of who is the lender of last resort? If not Sam Bankman Freed, we've seen him do a lot of deals, bailing out other companies like Voyager,

BlockFi, list of names in terms of who he swooped in to try to rescue here. And he's now on the other side of this and is in the position to be bailed out himself by one of his biggest competitors. Right. Scaramucci was in there. So what happens to all of those companies? What happens to all the sports endorsement deals? The name was on the Miami Heat Stadium, right? They went everywhere. FTX Arena in Miami. Absolutely. Well, the ripple effects are still playing out. One question is, well, some of those deals that I mentioned, Voyager and BlockFi in particular, those have been signed, but the ink isn't dry. They have the option to buy BlockFi, but they haven't done that yet. So there's questions over if that actually happens.

Voyager has run into some regulatory issues and questions from state regulators around securities issues. Those those deals have not been done yet. And then the other question is, in order to get liquidity for Zambank, he's got a lot of private investments. He's done a lot of VC investing himself. You mentioned the Scaramucci deal and SkyBridge. He really has his hands in almost everything in crypto. So if he's looking to get liquidity, shore up his main businesses, does it have an effect on some of his venture capital investments? And what happens in the secondary markets? Is he going to go to rush to sell either some of these liquid tokens? You can see it affecting the price of even Solana, which is another token that they've backed, or potentially in secondary markets with private companies. So many ripples to watch here. What about the

players themselves, Sam Bankman-Fried, CZ. What is the history of this relationship here? Because it strikes me that it was sort of a brutal way that this happened, right? Because Binance helped trigger the run on FTX. It's been tense. Yeah. I mean, it's really started with drama over the weekend that just seemed to be the spat between these two high profile crypto billionaires. A lot of people I've been talking to are surprised that it's gotten to the level where there's an actual deal here or there's any sort of serious market implications. But these two, it goes back years. Binance was one of FTX's first investors. They really helped prop up and build this company. Flash forward a couple of years later, Binance decided to sell out of FTX and say, OK, we're going to cash out here.

And this was in FTX's last equity round. In exchange, they got these FTT tokens, which are really closely tied to FTX. And that's where some of the cascade effect, that token is down about 75 percent. But they've been sort of frenemies here. They were really going at each other over the weekend. And then now you're seeing a deal on the other side. The other question that we still don't know is, will this deal happen? It is a an L.O.I. We don't it hasn't necessarily happened yet. So they could still pull out after due diligence. Kay Rooney. Kay, thank you. A lot for you to find out. Keep on it. Look at Disney. We're

watching Disney because earnings are out after the bell. The stock has turned negative. Steve Kovac with the key numbers to watch. Steve. Sarah, so it's all about streaming and the street is looking for about 160 million Disney Plus subscribers. And this report is coming ahead of price increases for Disney Plus next month. $7.99 is going to instead of get you commercial free, it's going to get you the new version with ads. And then $10.99 for the current version, commercial free. And look, Disney streaming average revenue per user, ARPU, is far lower than Netflix. So these price increases and that new ad tier has dual purposes here to both boost ARPU and get to profitability and grow subscribers.

And there's also this interesting experiment going on, Sarah, with Disney+. They're adding more benefits on top of just streaming your favorite shows and movies, like early access to merchandise, exclusive merchandise, and discounts at the park for Disney Plus subscribers. So you can see them kind of starting to spin this new flywheel to lock consumers into all the Disney experiences with Disney Plus as the anchor. On top of Disney Plus stuff, it's foreign exchange. We've heard this from so many companies. And as Disney tries to grow internationally, this streaming service, that's going to be a huge headwind for them, Sarah. Yeah, Disney stock, one of the few Dow losers right now. It's down 35 percent and a little more than that on the year. Steve Kovacs, Steve, thanks. Let's get another

check on the market as America casts its vote to determine control of Congress. Anastasia Amorosa joins us. iCapital chief investment strategist. Nice rally here, Anastasia. It does feel like there is some hope, and according to Wall Street research, for the Republicans to take control of at least one chamber, and that would be good for the market and the economy.

Do you agree? I do agree with that. I think if we do get a split Congress or if we get a Republican sweep, that is likely good news for the market because the outcome would be a gridlock. You know, the market's typically like that because not much is getting done in that scenario. And also, we don't need any more fiscal stimulus for the economy. So if we don't have it, then we don't have to project inflation higher. So I think all in, that would be interpreted positively by the market. And also, you've got the election stats, the midterm election stats, and how the market performs after that. That's on your side as well. The typical rally into year end could be up to 10 percent going back to the midterm years, going back to 1974. So I think there's definitely some

optimism around the midterms that's lifting us higher here. But I would also say that it's also the fact that the Fed policy, the next leg of it is known and it is priced in. If you look at the Fed fund futures, 5% is there. We have priced in 5% rates or higher by March of 2023. So I think at this juncture, whether it's an inflation print or the Fed, I think it's going to be really hard for any new data on inflation to surprise the markets at this point. And that's a positive. The only thing is we've said that before. Every time we think we've priced in peak hawkishness, we get more and more surprising,

sticky inflation numbers, more hawkish rhetoric from the Fed, including Fed Chair Powell himself, that rates have to go even higher, better numbers on the economy. I mean, all these things, but better jobs numbers. And then and then it's then we here we are all over again. Higher rates sell off for stocks. Yeah, you're right, Sarah. We have all said it before. And that's why any sort of calls that you make here really touch and go and really for the next few weeks or maybe the next month and a half. And what I'm saying is even if we have a CPI print that's hotter than expected on Thursday, that's not likely to change the Fed policy, because guess what? They seem to have pivoted. They know inflation is high. Everybody knows inflation is high. But they're now squarely focused on the labor market and they want to start to see cracks in the labor market, you know, to really make sure that they get inflation under control. For now, the labor market is strong. And even if we get this hotter than expected inflation print, we're not likely to get more Fed hawkishness because of that. So that's why I think we have this opening into year

end. But then beyond that, look, if rates are 5 percent, something in the economy is going to slow down and slow down materially. And that's the part that I don't think we have fully priced in. Got it. Anastasia, Marissa, thank you for joining me. Appreciate it. From iCapital. We've got two minutes to go in the trading day. Mike, what do you see in the internals? Yeah, pretty solid, Sarah. for most of the trading day. You had about 2 to 1 advancing to declining volume. New York Stock Exchange approximately settling in right around there, a little bit less than 2 to 1 at this point.

Take a look at Tesla, two-year chart. Stock's down another 3%. A lot of the kind of retail and pandemic favorites really unwinding here. That shot up in late 2020 was actually when it was going to be added to the S&P 500. It was added at around $230 split adjusted. So you're underwater there, almost a two-year round trip. The volatility index has been hovering right below 25 or so, now actually a little above 25. Still in this gradual downtrend, but we've got CPI coming in a couple of days. I doubt it's going to fall away too quickly ahead of that, sir. Well, I guess we'll see if we get results before the open tomorrow. But so far,

it looks like the market is hopeful for gridlock, which you can see in the three-day rally we've got going on here. Take a look at the Dow. It's up for a third day in a row and out more than 1% for a third day in a row. Amgen, biggest contributor to the Dow gains right now, along with UnitedHealthcare, Boeing, Express, and Salesforce. Disney, Chevron, Walgreens are the only three Dow losers. S&P 500 looks like also going to get a gain of near 1% or so. And we have most sectors ending the day higher. The only one that's lower is consumer discretionary. There is the S&P actually just caught its gain in half, up half a percent. So we just lost a little steam here into the close. Materials are your best performing group.

Technology is going really strong. I mentioned the rally and the chip makers. That's certainly helping. Some of the solar stocks as well doing very well. There goes the bell. NASDAQ closes higher for third day in a row as well on this day of midterm elections.