operations related to the surveillance of customers. really pushing back there and saying, dom, they are looking forward to educating the ftc what they actually do. >> all right. contessa brewer, crazy story for sure. >> thank you. if dom and i walked into a restaurant, would we -- look at dom and say, yes! >> thanks for watching "power lunch." have a great weekend. >> "closing bell" starts right now. welcome to "closing bell." i'm mike santoli if nfor scott wapner. mobilizing to finish out a bumpy week on wall street. traction in hard-hit tech. continued flow into financials and smaller stocks after a largely as expected inflation reading keeps fed rate cut expectations for september pretty well in place. here's our scorecard with 60 minutes to go in regulation. s&p 500 up about 1% now making a built of a stand after a 5% setback from peak to the lows

this week. nasdaq composite kind of the center of this pullback. participating today, but still underperforming. up about 0.8 of 1%. russell 2000 has been the big beneficiary of this rotation that began about two-plus weeks ago. you see it here. up another 1.3%. k many vw index up a couple of weeks here. up 85 basis points today. looking to finish out a knew five week and treasury yield yielding a six-month low under 4.4% as though fed rate cut expect aces flow through the bond market. that takes us to "talk of the tape" has the two-week pullback reset expectations enough to refresh the rally, or will the water stay too choppy for comfort? hair to weigh in, co-founder and

cio. avery, good to see you. >> great to be here. >> the job of a pullback. right? set of assumptions about the fundamentals, see if it was all just noise and excess optimism in positioning. where do you think the market sits now in a big picture way? >> a big picture way the market is overall quite expensive and there's a lot of vulnerability to many of the more expensive names in the market. so, at the same time i do think that some of them move up in some reasonably valued names overlooked probably make sense and there stick. yet other moves up in more junkie names. probably will come home to roost over the months ahead. >> reasonably valued i guess assuming earnings remain on track, that the economy can hang in here. the soft landing view seems to underpin most of what we can hope to expect from these companies? >> yes. certainly there's a risk to the down side. bill dudley out saying, hey, got to cut immediately. starting to see a rollover,

close to the rule, in unemployment. so there are risks, but what we've seen in that this economy is so sensitive to interest rates i think the moment the fed cuts, or the -- as the market starts to digest fed cuts brings rates down before the fed actually does, an accumulative effect. spending, housing you right at rates came down in november immediately start to spike up from about 2% to 5% on three-months annualized basis and came down as rates came back up again. we do have so much sensitivity to interest rates that i think we probably don't have to worry about the economy 235u8ing apart. by the way, if the economy fell apart, like, a lot of stock wos have to go a lot lower. but on my view, the fed doesn't want to restimulate the economy. they don't want to restimulate inflation but have a more even keel, and many stocks are not priced for that even keel.

like, there are still stocks underpriced for it and other stocks that are quite over priced for it. >> seems the environment a scarcity of predictable earnings growth or at least above trend earnings growth in those big mega cap secular cap names, plus the a.i. story that was just kind of rampaging through tech, and all of that got you this concentrated market. everybody would have agreed. probably need to rebalance the market. a lot to expect painlessly or quietly. there's been friction along the way. you seem to think that the big stuff, still is a little bit too expensive or too aggressively owned? >> i think vulnerable. vulnerable. because, like, these companies have the valuations are high. not extremely high for some of them on earnings, but on free cash flow, all of them are getting stretched, because they're spending so much on capex.

right? a lot on a.i. in some cases, some of the case on infrastructure but we really need to see a return on investment of that capex. if we don't see return on investment, there were questions on recent mega cap conference call are we potentially overspending going into excess capacity represented to a.i. and cloud? those questions weren't being brought up before. the answer was, we need to spend. that's more important to spend than to not spend. right? we've got to be ahead of this. now that investors are starting to ask for answers i think these companies will be vulnerable if not able to demonstrate and ro roi. a pull back in acceleration of growth. not focused on efficiencies they're vulnerable here. if the ceos expressed, hey, we've spent a lot, and we're going to digest and move forward, i think actually stocks could do well, but it's a much trickier place than before. investors would just buy the

dream. >> yes. seen examples of that before. seem to be overspending and throttle back the market will recognize that. i wonder, kind of posed these two different buckets of stuff that's up a lot and kind of junkie and maybe is going to fade, but also things that had been undeservedly overmooked before and now recognized maybe have a better fundamental story. what are exampleses in that latter group? >> right. we have -- examples both in more defensive areas as well as in cyclicals. we continue, not saying you'll make a ton of money that these stocks but certainly more defensive. in telecommunications. seen some telecommunications providers, investments in fiber, getting returns opinion not seeing the aggressiveness on pricing you've seen before. trading reasonable valuation. high div deidend yields. high free cash yields and plugging along. one of the major

telecommunications riders maxed performance this year. economy goes to hell in a hand basket i don't think their financials will be impacted very negatively. so you've got opportunity there to be defensive and maybe get some upside, if their initiatives continue to deliver. also in areas of insurance. not every insurance company but areas of insurance you have, pricing pow sir moderating some but still getting more pricingmanaged their businesses conservatively. they can compound book value, trading at reasonable valuations. again, not seeing the same cycles. it's there but a different cycle than the economic cycle. then also flip to cyclicals. within all cyclicals companies have demonstrated an ability to execute even in a weakening, somewhat weakening environment, and so you see airlines. one airline standing out above the rest continuing to execute

and seeing capacity start to come out of the weaker players. look, in a weakening economy, how do those offset? valuation's under five times earnings you have room there. right? >> sure. >> also similarly in autos. sooner a bifurcation, if you're making the right cars, right price point recognizing customers' needs value and delivering, you can do well. interest rate cuts creates room while competitors catch up over time but you're in a good position right now. >> saw what happens this week with competitors. absolutely. widen out the conversation a little bit and 314 research and from hsbc global research. good to see you both. warren, talking about trying to diagnose what's really been driving this rotation in the market. the sort of sloppy pullback-type action we've seen. you know, i've been remarking for a couple of weeks. you've focused on this too.

the small cap surge seems like the thing you see early in a cycle. seems a bit of a mismatch. what's the message you're pulling out of it? >> yeah. thank you for having me on. i think that's really what's tripping a lot of people up. that this is a, this broadening and especially small cap leadership low-quality leadership is an early cycle phenomenon yet we are late cycle. not coming out of the recession or a bear market. so my discipline is that i think it's healthy for the market and good to see small caps participating. you saw last week, portends good action for small caps one year ahead. my discipline, stay in the non-mag seven area but not quite go down into low quality. that's conwhat we see. late cycle broadening. there are areas of the market i think that, of the economy, depressed by the fed's rate hike cycle. look at new car sales below 2018

levels. home so manies below the lows of 02 2009. two things at once. credit expansion. supportive for broadening, discipline in the cycle for me say higher quality spectrum as you play the broadening. >> max, this idea of wary on the -- a lot of the action in the markets this year has been about essentially betting that the expansion continues. that it sort of is mid, late cycle. what's, an ongoing expansion. anything that come along from inflation numbers or growth data that would lead to you believe that's not the case at this point? >> no. actually, not really. it is quite interesting that whatever we have now with clients it is always about this

sort of pretty significant slowing now of u.s. growth the deceleration of growth that a lot of people are talking about right now, and we don't really see it when you look, in fact, at a couple of high frequency indicators. things like freight volume, same store retail sales. like consumer spending direct from credit card data. either stable the last couple weeks, last two months, or even picking up slightly. we know for example, layoffs are still sort of chugging along, and pretty much the lowest level from pre-covid, from the 2010. yes, picking up. in terms of levels around the lowest levels from the 2010s and we know job cuts overall doing down. a lot to suggest we're seeing really, really massive deceleration in terms of growth. not at all. >> and i guess, therefore, that explains why you remain pretty much maximum overweight in risk.

right? high yield credit as well as equities here. i note also that you have been saying to add to japanese equities at this point? they've had a little gut check. >> yeah. i do think, however, that what we've seen over the last couple of days, probably more of a positioning on winding of sort of consensus positions, carry positions for majority of this year. so a lot of those yen finance carry positions have been probably unwound. however, the problem is i think going forward that when you look at the bank of japan, they're constrained how much they can do. we know gdp is disappointing. real wage growth we know, for example, running at minus 1.5% year over year. real household consumption running minus 2%. from here any big really appreciation potential for the japanese yen is really, really, really constrained. if the end depreciates further

from here should give a bits of a tactical tailwind for japanese equities, indeetd for other risk assets as well. i would really say the sell-off that, so-called sell we've seen in the last two weeks is really not spread that much across all the asset classes. look at july, high yield spreads stable. index great spreads up 2, 3 basis points. not really seen this big growth scare that the bearish people want to talk about. >> that's right. no. mostly it's been kind of a lot of shifting around among poortsz of parts of the equity as opposed to cross-asset panic. warren, i wonder how technically things stand out, positions, highness the market, relieved excesses and how do you think this choppy period may play out from here. >> seasonally, the first half

being so positive. i think in early july look at years like this, it games out to be a pretty choppy next few months. from say august through october. i think this is going to be a period like you said where we're going to kind of alleviate some of the excess optimism. we look at things like speculative etf positions. we've seen already some pullbacks starting to add pessimism into the market. we see the percentage of volume and inverse etf, something we track, going up. xoe this is healthy. s&p 500 damage not bad at all. mostly rotation into things laggards and so in my view, i think that this is a bit of a holding period seasonally. we're going to catch our breath here and hopefully put pessimism into the market. but ultimately i don't see it. like max said. i don't see anything in the growth data. fed has your back and you need to stick with the stock market.

i mean, there's really -- some of these concerns i've heard, they're kind of created. i don't think that the, i don't think that this yen story is really something to worry about. yeah, political uncertainty and things like that, but, you know, that's kind of just table stakes in the markets these days. >> one hasn't there been? to emphasize, equal s&p less than 2% off its high up to now 7.5% year-to-date gain. not too bad. closing the gap slightly with market cap. the question when it comes to the idea that the fed has your back, could relieve from pressure if we get a rate cut. seems the playbook is if the fed is cutting, you know, in this kind of measured way, because it feels like inflation is in check, and not because the economy needs saving. that's ideal. therefore, maybe it's a slow and prolonged, slight easing process. how do you think it will go from here? >> right.

yeah. it does feel to me like the fed is more likely to go for hawkish cuts unless wep start to the see real deceleration in the economy, and what happens to stocks? i think it's jittery, because again, we've had so many stocks that are already pricing in. even starting three rate cuts this year. right? so i think that those companies that are going through rate cuts, get hawkish cuts they're going to suffer. get hawkish cuts, like, you know, like warren was saying. in areas like autos. areas more interest-rate sensitive you could get a relief on, that could kind of propel them along. so i think that it means you're going to see just a lot of movement under the surface. i think it's really hard to call where the market's going as a whole, except because also, you know, the big -- the magnificent seven comprises so much of the market cap, and i do think those ceos have more control over their valuations than the market

might anticipate, based and their decisions around capex. like, you know, of course, if growth is massively outpacing expectations, then they can go to the move. even if growth is a little softer, they have some things under their control and that's going to move indices. at least the market half weighted indices a lot. it's a tough call. very much a stock picker's market. one thing on consumer spending, spending a lot of time looking at spending data. yes. spending is positive, but pricing pressure is building. you're seeing consumers spend when they perceive more value. when they perceive innovation. overall much more discriminating making it harder for companies to deliver meaning. it earnings growth. you have to have all that or innovation or operational efficiency. otherwise, companies are going to continue to struggle. >> yeah. that certainly would steam explain a lot of the messy reactions to some of the corporate commentary with this

earnings season and the consumer-facing companies. great to talk to everybody. avery, warren, max, thank you very much for the time this afternoon. over to pippa stevens, the biggest names moving into the close. >> shares of 3m, best day ever up more than 200%. biggest gainer in the s&p 500 after the maker of office supplies and adhesives reported stronger than expected quarterly results. shares are at their highest level in nearly two years. another stock with a best day on record, shares up nearly 40%, newell brands. also raised full year outlook. company said making "significant progress in driving newell's turnaround." colgate-palmolive, goods maker beat on top and bottom lines with organic sales growth of 9%. the company backed its full year net sales outlook and said the consumer environment is "pretty good." shares up 3%.

mike? >> pippa, thank you. we are just getting started here and we are all over today's big bounceback in the indexes. up next, bitcoin has seen serious strength so far this year. bill miller rehm 4 er iv is ba. that's after the break. you're watching "closing bell" on cnbc. (♪♪) (♪♪) what took you so long? i'm sorry, there was a long line at the thai place. you get the sauce i like? of course! you're the man! i wish. the future isn't scary. not investing in it is. nasdaq-100 innovators. one etf. before investing, carefully read and consider fund investment objectives, risks, charges, expenses and more in prospectus at invesco.com

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price of bitcoin climbing. cryptocurrency topping 67,000. actually 68,580 at the moment. microstrategy getting a boost today ahead of executive chairman michael saylor's speech this afternoon. joining us from the bitcoin conference, bill miller.

great to you have join us today. start maybe facetiously to say what's new to the said at this big conference of bitcoin believers that hasn't really been in place since the dawn of the asset class, let's say, because it seems as if it's always reinforcing. if you believe in the attributes of it own more and more people will own it. what's your message going to be to the group? >> mike, thanks for having me on. there's always something new and cool happening in bitcoin, and so i don't know if you saw it just yesterday or the other day ferrari said accepting bitcoin for payments, but what i'm excited about is the fact that at this year's conference we now have additional companies coming out saying we're going to put bitcoin on our bappens sheet as a strategic treasury asset. you haven't seen that before. before it was microstrategy and doing this funny thing. it's working out. guess what? seeing other companies come to market and start doing the same thing. from my perspective, if you continue to see bitcoin gain adoption, which it has a 15-year

track record of doing, not owning it is a bad idea, you're going to see these companies outperform and then other people will look around say how can i outperform? the world's a competitive place. bitcoin is a great way to do it. momentum continues to gather. >> i guess the question i would ask, and certainly if more companies decides that they want to buy and never sell bitcoin it's going to increase the demand relative to the fixed supply. we all know that would work in favor of the prices, but what problem is solved by companies doing that? i mean, i just don't know how many companies are really going to want to place that sort of an asset on their balance sheet and have that be an aspect of their story? >> well i think it's worth asking what their alternatives are. the alternative is you can buy treasury asset that is, whose white paper says it will depreciate at 2% a year at least. look back at the history of the federal reserve they printed 6%

supply growth over the long-term growth rates of nominal gdp. what do you know? bitcoin is the new global denominator for capital. the problem it solves, you don't have all of these politicians running around currying for favor to redistrict wealth and change all sorts of things. you get what you get. 21 million in bitcoin and that's it. incredibly optimistic as the dominoes fall in favor of bitcoin. >> i guess, you know, not to argue the point too directly. you haven't seen companies over the years say i'm going to hold ap bunch of gold with our treasury cash. a similar idea. right? >> yeah. issue with gold is you can't divide it. you can steal it. hard to store et cetera. not see a lot of companies saying we're starting ethereum strategy because liquid tin isn't there. ful has packed dependence behind it and things are moving in the

right direction. >> ask quickly about microstrategy. the kind of casual case is, doing a funny thing. this funny thing is raising a lot of money and selling equity or convertible debt, buying bitcoin with it, holding the bitcoin. stock trades now at a huge premium to the value of the currently held bitcoin and that premium has kind of maxed and wand -- waxed and waned over time. what about microstrategies books? >> you have an incredibly intelligent owner thinking carefully about capital allocation and how to use it to maximum value to all constituents. sell shares as premium to a price he can pay for bitcoin, incredibly valuable on a bitcoin basis on their balance sheets. if they can continue growing bitcoin per share at an attractive rate, that's why you should own it. >> saying buy the stock today because they might dilute you by

selling to new investors at a higher, a high valuation and mutt- then recycle it into bitcoin? >> no. optionality longer term to the extent bitcoin gains value. think about what a major -- largest financial institutions in the world. what are they worth? hundreds of billions? trillions of dollars, around there? potential business line longer term for microstrategy. the world scarcest collateral. >> bill, appreciate you. given us a taste. enjoy the conference. talk to you soon. >> thanks, sir. appreciate being on. >> all right. up next, believe the bounce? stocks trying to take back some of this week's deep losses. nick colas is here and where he sees the mega cap headed. he joins us after the break. catch us on the go following the "closing bell" podcast on 'lbeig a.ite podcastpp wel rht back.

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welcome back. stocks attempting another rebound today. s&p 500 and nasdaq both trying to club some of this week's losses. on track for a first back-to-back weekly decline since april. nick, good to see you. you've been pretty much favorably disposed towards the market most of the year. probably figure this choppy period will resolve somewhat

higher. how does it look now in terms of tactical? fits and starts once a pullback is initiate initiated? >> totally true. positive all year but see volatility coming up. more volatility. a great run first half. july choppy. clear we have to resolve this imball, between very large cap tech valuations and russell's valuation. $9 trillion. top names. capital moving from three assets to a bunch of others. that's going to take toime to resolve between now and then. looking for a bottom vix hits 19 to 21. happened twice in the past 12 months and s&p bottomed four to five days after. near-term look is still to the down side. >> vix clicked above 19 yesterday. no? >> it did, but you want to see a close. we look at closing vix levels. 19.2 and 21.7 the highs for the vix the last year in those two

down drafts ending october and in april. >> so i think along the way, as the largest stocks and the ones that were most owned and had the best growth and we call it the magnificent seven or whatever else, as they dominated this market, there's a lot of stories about why it wasn't a bad thing necessarily. you know? markets take all kinds of forms. these were the best quality companies out there. so do we have to unwind them all the way and have them converge with everything else in valuation, or how much do they have to give back, i guess? >> we had a lot of enthusiasm on one particular new technology. generative a.i. totally valid investment thesis but we can agree in retrostect things got overdone and the hype behind the trade maxed out end of june. now cycling into another kind of trade, more cyclical of nature. we call it a mid-cycle market where industrials outperform, financials outperform.

the more classically cyclic's parts of the market outperform and playing catch-up now both because of a good economy and expecting rate cuts and because markets think there is a level of certainty about the election in november that might favor republicans as so we have a classic trade in that direction as well favoring sectors that would benefit from the deregulation. put it all together into the pot stir it up and you get this market. >> i mean, it is center mid-cycle, whatever you call it, until proven otherwise. one feature of those environments is that you always have anxiety it's falling away. or that there's something that's going to deviate from the expected trend. i mean, right now you see a lot of anecdotal stuff, collective anecdotal stuff sectorwise about weakening consumer, saw auto st stocks. maybe unemployment showing a little lift. how confident if the fed's cutting is it going to be into a resilient economy? >> right, mid-cycle markets are just as hard to invest as any

other kind of market. back in history say, oh, '90s were easy. made a ton of money. mid-2000s ed, 2010z easy. they weren't. always had things to worry about. exactly the same issues you're coming up with now. the consumer, are they okay? the fed able to cut enough? constant parts of mid-cycle markets. until you get a catalytic event that ends the cycle like the financial crisis or iraq invading kuwait or the 2020 pandemic crisis. until you get a real catalyst seize cycle continued on years and years and generate very good returns. >> i guess the counter to that, for some folks, look, never had a true valuation reset. even at the lows in 2022. and it feels as if you pulled forward a lot of the benefits. it do you rely not every stock is expensive even if the s&p is? >> it's a fair point. the issue with valuation, market expect aceat

expectations. if they're stable, valuations rise. it's not necessarily fair. you don't get a particular answer. same time not the way markets work. as long as thir confident in the economy, in fed policy and earnings valuations don't go down much. as a matter of fact, they tend to rise. look at the 150-year history of the schuler pe it's up and to the right. >> for sure. >> it's super hard to argue a short valuation we know. >> valuation is sentiment or expectations, as you say. final point. you mention on the market seeming confidence in a high probability of a republican win, at least in some form. if the race for president tightens up in the polls it's red as net negative. maybe the market retreats or chops around goes to the sidelines. does that make sense? >> it does. the most freakish thing about the small caporale this month

and the whole rally in the market is exactly like the rally from election day 2016 to the end of 2016. russell up 14% over that period. s&p lagged. nasdaq lagged. and neg ty and china negative the most. exactly the same playbook this month which makes it feel like we're beginning to discount an outcome. if in a koutcome is more uncertainty, market's assuming that's the outcome. >> see work, too, coincided perfectly with the good cpi reading july 11th, that who knows? the market doesn't exactly show its work and say, exactly why it's happening. i get it. it does rhyme with that period. nick, great to see you. thanks so much. have a good weekend. >> thank you. all right. up next, tracking the biggest movers as we head into the close. pippa is standing by. >> one medical device name is having its worst day ever. the reason for the 40% drop coming up next.

a little under 19 minutes until the closing bell. s&p 500 up about 1%. back to pippa for a look at key stocks to watch. >> bristol-myers pacing to for its best day in nearly a decade beating estimates top and bottom line raising full-year guidance

looks to cut $1.5 billion in costs by 2025 and reinvest that money into key drug brands and research and development programs. dexcom plunging 41%. worst day on reits record since 2005. lowering revenue guide uns. kpit attributed challenges to a restructuring of the sales team. fewer than expected new customers and lower revenue per user. shares are sinking to a four-year low. mike? >> pippa, thank you. still ahead, let the games begin. some big moves in the entertainment space. shares of itt and gaming popping in today's session. ctat's behind the moves in that seor coming up. "closing bell" will be right back. helps secure tomorrow. our time-tested fixed income suite, backed by over 145 years of risk experience, helps investors meet their goals. pgim investments.

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up next, tech's tumultuous run. feeling pain in the last days. what should investors expect from the likes of meta, apple and amazon all reporting next week. we'll discuss that anduc mh more when we take you inside "the market zone." amelia, weather. 70 degrees and sunny today. amelia, unlock the door. i'm afraid i can't do that, jen. ♪ (suspenseful music) ♪ why not? did you forget something? ♪ (suspenseful music) ♪ my protein shake. the future isn't scary. not investing in it is. you're so dramatic amelia. bye jen. nasdaq-100 innovators. one etf.

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we are now in the "closing bell" market zone. diana olick is here looking at the recent rally in the real estate sector. contessa brewer on two big deal ngs the gamtdbleing state of. steve kovach setting up us for big tech earnings next week and help breaking down the crucial final minutes in this market here this week. diana, multiple parts of real estate? >> start with crre, took off reporting better than expected q2 revenue, profitability and cash flow pt the stock jumped 10% yesterday and slightly higher again today raising outlook in sales and leasing better than expected. then came a note from evercore suggesting a "less bad sales environment." doesn't get better than that. right? really it's all about interest rates. cbre and broader s&p real estate sector stocks popped in the last four weeks because interest rates came down.

simple as that. today home builders got a boost again from falling yields with horton and lennar hitting record highs. average rate on the 30-year fix dropped five basis points to 6.86% and the prospect of it going lower this fall is what has the builders so very happy. mike? >> yeah. you said it about all about rates and fed rate cuts matter for commercial real estate if nothing else. thank you very much. contessa, tell us about the deals in vegas. >> yeah. when you're seeing really crazy stock moves. apollo made a $6.3 billion bid for two gaming companies. you've got international game technology, which makes gambling equipment, and software. it will sell its gaming business for a little more than $4 billion and keep its global lottery business. every, leases and sells kmim fintech solutions to the gaming industry gets $20.5 billion or

14.25 a share. and a merger deal was made in february, mike. shares have been on the decline. today, though, they are surging. apollo says it will take the company the private when the deal closes aiming for third quarter next year. look at igt up 18%. every up almost 4%. and winning approval from bali's board for approval. stock up 23% and rumor swirling about a pen acquisition. boyd, earnings call yesterday, didn't squash rumors it's interested. seeing both of those stocks going higher. >> interesting contessa, given these are generally opportunistic potential acquirers in an area stocks struggled. seems as if you have a little bit of a rescue bid in there for the likes of bali and boyd. >> yeah.

don't forget, kim made an offers $35 a share a year or two game. same company. now a little more than $18 a share. interesting. >> no. it is fascinating. we'll see how it all plays out. thank you. steve, you know, we thought this was a busy week, but nothing compared to next week? >> you thought this was crazy wait until next week. start what happened this week. tesla and alphabet set a horrible tone eight of the mag seven putting pressure on microsoft meta apple and amazon. not just beating expectations have to smash them now. the big concern alphabet concerns raised massive spending in capex to build out a.i. capabilities. pay attention to mk microsoft a amazon. last quarter microsoft said can't immediate demand and later cut a deal with oracle to offload some of that. amazon dealing with anthropic and hug pg face.

meta spending a lot on i've aye capex as well. apple a different a.i. strategy got a hint of last month at the worldwide developers conference. raymond james analyst this morning calling it a more stable a.i. invest after that volatility we saw with alphabet this week. >> fascinating. companies rewarded by the street han han handsomely. a backw wward reaction to what we're used to. how does it play into nvidia, greater valuability. talk about the payoff? >> the latter part is worrying people. when is spending going to stop? 's what the forecast for spending and when doll we recoup on the invest. answer, no one knows. on the earnings call, said o overspend on expect chers misread on that side of things than under spend and left with

not enough capacity. again, also said if i overspend, i can use that clout for other parts of the business as well. >> right. >> clearly no one bought that one, though. >> nobody bought it or real faith money well spent in the end. for alphabet in particular. are the other companies, with a little more credibility or something like that, that they spend more wisely? >> a huge question with microsoft which is spending, again, all of these companies are spending enormous amounts of money. i don't recall the exact amount microsoft is spending in this quarter but we'll get the numbers. they're saying the same thing. a ton of demand. don't have much visibility. that far into the future what that demand looks like, but we're spending tons of money on it. microsoft in the last six, seven months have been announcing billion dollar deals to invest in data centers around the world. in asia, in europe, you name it. all part of this a.i. buildup

we're seeing. amazon's doing the same thing. >> heard a slight bull case which is look, turns out might be ahead of its own for too much immediate ability to dial it down. >> that's also what microsoft said. microsoft made it sound like at least on the last earnings call, we can be more dynamic and kick it up if we need to and dial back if we need to. >> steve, thanks. rest up. brian, talk about the markets. what are we seeing. a little halting attempt at a recovery here. 5% pullback in the s&p 500. ongoing rotation has persisted through this week. what's your take? >> so my take is this was highly anticipated. we've been waiting for broadening out of markets, and so what you have now is an economic where growth is slowing a bit, but resilient and you've got inflation back in the comfort zone. so we get the rate cuts this year. maybe, probably two, maybe even three by january. and that starts to normalize the

yield curve and obviously broadening out the market. >> so are you not concerned about what people will throw out there about, well, you know, it's when the yield curve actually uninverts you have to worry about a recession. kind of coming a little too close to having unemployment get to uncomfortable levels before we get that first rate cut. is it going to be a close call, i guess? >> yeah. i mean, look at the usual guideposts on a path to a recession and, of course, inversion of the yield curve is certainly one of them, but the good news is there's not a lot of leverage in this economy. not a lot of cyclical excess in this economy and if you look at things like bank lending standards, or corporate bond spreads, they're not signaling recession. so those things would be moving in the wrong direction. the job market certainly weakening a bit, albeit from very strong levels. investors are looking for the fed to move ahead. some of us have been saying, you

know, let's get going with this. start to ease policy. it doesn't mean we'll gelt through this without some kearns abokearns -- concerns an a growth sloandown but come out the other side and the federal reserve is about to move us through without a hard landing. >> meantime, as much as there's been some sell on the news responses to some big earnings reports, they are tracking pretty well as expected, beat rates more or less like the historical norm. we're about towards $250 in s&p earning this year. expectation for next year another 10% on top of that. is that believable at this point? what parts of the market look better positioned? >> yeah. just believable. you know, you will see some slowdown but also going to see policy accommodations to support growth. and the expectation is likely to be a pretty good nominal growth backdrop. so i think for investors looking out over the next couple of

years, you know, they may have seen what small caps of value have done in the recent days and wonder if they miss. small caporales off the bottoms tend to last a handful of years. you could see pretty significant gains. this is likely just the begins. if we can get through as we believe we will without an economic recession and the fed normalizes the curve that can going to create a better backdrop for companies, and should have a reasonable nominal growth environment to support earnings. >> i suppose. nominal growth still 5 percent-ish at this pace. thanks. have a good weekend. heading into the close of this week s&p 500 up about 1% on the day. still below yesterday's highs. looking at about a 0.9 of 1% decline for the week. not quite recouping what was lost before then.

we see positive again in the market today. so that rotation remains in place. nasdaq up also 1%. also russell 2000 up 1.6% as the market calms and closing towards a high of 19 yesterday. that's going to do it for "closing bell." send it to "overtime" with morgan brennan. that's end of regulation. asset management rings the closing bell at the new york stock exchange in the new york city of transportation doing honors at the nasdaq. a roller coaster week. ending on a high note with all major averages higher today after the latest inflation reading was in line with estimates. dow and russell 2000 both locking in gains for the week as well. that's the scorecard on wall street. the action's just getting started. welcome to "closing bell: overtime." i'm morgan brennan. jon fortt is off today. on the show today getting you set for one of the most consequential week mps