instagram. it's so fun to have this group of people come together from different walks of life. i'm a financial expert we have football players, olympians, wrestlers it's fun to see. >> i didn't know they took this off line they're having a chat without us tori, congrats. >> thanks for watching "power lunch. >> "closing bell" starts now welcome to "closing bell." i'm scott wapner we begin with turning the page on may and we have two big interviews to set you up for the months ahead rick rieder joins. he'll give us a read on the markets and the fed. bill miller, iv, we'll get his take on the ai trade, crypto and more

we're watching d.c. as the debt ceiling vote gets under way. here is your score card with 60 minutes to go. the final day of the month, a whimper. major averages all in the red. tech taking a bit of a breather and cyclical areas getting hit as concerns of another possible rate hike continue to swirl. that leads us to the talk of the tape whether summer is likely to bring a swoon or surge of stocks let's ask dan greenhouse welcome back. >> thank you. >> we're about to embark in the summer selloff, swoon or surge? >> there's a lot of technical reasons to think we're up against the 4,200 level is what everybody speaks about we've had a pretty good rally. attitudes about the next fed

hike, you could make a case for a selloff in the lower part of the range. >> you think we're in a better place than we were months ago? you've been reasonably cautious. does the market look better or worse since the rally? we can get into the top heavy nature of the rally. generally speaking, does the market look better >> yeah. i was pretty bearish in 2022 the technical stuff started to work in your favor and that's continued. from a broad market standpoint, you should feel better about the market at the same time, the top heaviness can't be ignored we've been over this 100 times. >> is it a bad thing people have said it 100 times. >> brian belsky talked about this today.

>> he said it wasn't a bad thing. >> this level of a narrow leadership doesn't mean larger prices going forward at th it leaves the markets susceptible to such moves. you have the seven or eight biggest stocks, they're up 30% the rest of the market is down 2.2% it's not strong in that respect. >> what about the ai trade what do you make of it you watch these stocks and what they've done does it make sense to you? does it make you nervous about whether there's a bubble everybody is thinking about it. >> i agree with the general consensus that -- you should think about this in terms of the move to the internet, to desk top, to cloud and now to ai. it's going to reorient business up and down the spectrum the one point i want to make --

i'm excited to be here after this point continues to be made -- part of the move, particularly with nvidia, is owed to the underowned nature of tech the only reason you get this move is because people are playing catch up when you look at hedge fund holdings, the top names are microsoft, google, amazon, netflix, a few down are nvidia, salesforce and paypal. >> they can own those stocks and be lighter in the holdings than they would have been most people came into 2023 off the tech trade maybe some of that money has yet to come into those areas. >> these are the most widely held stocks.

i do think what you saw with ai, not just in terms of the mentions, but the rush to take advantage of this, you are resetting some of the earnings expectations which warranted some level of appreciation of the names beyond everybody catching up to buy them. >> let's bring in kristen bitterly how do you see this question has the market gotten too top heavy? are the ai stocks out of control? >> everybody talked about the nature of this rally those seven stocks you keep talking about represent the year to date gains. i think that creates exposure in terms of any type of future volatility when you look at net long positions and nasdaq futures they're at three-year highs.

you could see profit taking going into the summer months that's something we see from a seasonality perspective. when it comes to ai, we've seen that concentrated in a few stocks when we look at what this could add to the global economy, we're talking about $16 trillion in productivity games by 2030 it may be overexaggerated short term, but here to stay long term. >> i wonder if nvidia taught everybody a good lesson this week they come out with their guidance which blew everybody out of the water the stock was cheaper the day after earnings than it was before. >> you have gerstner on all the time you're not looking at these names from a valuation standpoint that's a mistake investors make.

inherent in growth and investing is assuming the e is incorrect what's you've seen historically over the last 10 or 20 years is the e is incorrect growth investing which is not what we do, but it requires some semblance or different level of investing simply than looking for deep value. >> what you can't have happen is what happened in '99 into 2,000 where the p gets way off into the distance from the e and the debate was starting to be had whether those stocks, the large mega cap stocks have become more expensive relative to where the earnings were in the environment we're in nvidia said to you maybe not >> there's a couple things one, going back to what i mentioned, this about the opportunity to continue to grow. the other thing -- not to bring

this back to rates, but a lot of these companies that have benefited from the rally, that have benefited from inflows, it's about free cash flow generation and the ability to self-fund which is why you're seeing the delineation between the profitable companies and unprofitable companies ai does not need to be in one of those companies that's mentions ai 100 times in earnings calls it can be in areas like cyber security, clean energy because ai consumes a lot of energy and that's going to be a big theme not just immediately, but five, ten years out. >> you mentioned rates the fed president says i'm for a pause in june. that doesn't mean i'm for it being done, but we can pause in june dan was talking about what's the thing that upends the tech trade? is it a more live meeting in june and maybe a hike thereafter

that does that >> it's interesting because every day we're repricing rates because of the probability of a hike in june or july we have to look at that combined with we've been dominated by this talk of the debt ceiling. now what's coming? just over the next month you'll see about 300 billion plus flood the market and $1.3 trillion by the end of the q3. that's a lot of liquidity out of the market that's something to be cautious of >> a lot of people are talking about that >> yeah. >> i wonder if it's one of those things where it doesn't turn out to be nearly as dire as some of the predictions are, that the market is able to absorb that better than some would otherwise think. >> this is somewhat of a complicated issue. i want to say, pardon me, i

think a lot of this is a good talking point. yes, a lot of liquidity is going to be drained. we don't know where it's coming from which is an important part of the conversation. if it comes from bucket a, not a big deal if it comes from bucket b, a little bit of a big deal the larger pool of liquidity is nowhere near where you were in 2019 where you had that repo implosion. you have a level of reserves above that dangerous level, that threshold where the banking system might be concerned. we can have another segment another day on it. it's going to happen they're going to raise $1 trillion in liquidity >> i agree with you on this point. it could create some volatility.

why are they not raising the vix or creating the volatility when you look at all the flows that come into market funds eclipsing $5.4 trillion, you have a lot of cash on the sidelines. where's the cash gone? into t bills. >> guys we have to leave it there. appreciate it very much. let's get to our twitter question of the day. do you think the fed will raise interest rates in june you can head to "closing bell" on twitter vote yes or no please vote. we'll share the results later on in the hour. we're just getting started. up next, rick riede joins me after this break we'll get his take on everything

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>> congratulations it's the black rock flexible income etf it reaches harder to reach sectors. what does that mean? >> you have less liquid assets we try to keep your yield up today. we're yielding over 7% it's one of the great things about fixed income and you don't have to take that much risk. >> what are the harder to reach areas that you identified that need to be reached through this product? >> the security market you're talking clos or residential mortgages, commercial real estate, but there are opportunities in high quality parts of the commercial real estate market the ability to say how much do you want to own, what's your

collateral, what's the covenance, what's the structure? >> this has been, it's fair to say, an historic period for fixed income and bonds relative to stocks. when we talk about the road ahead for the market, stock market, one of the problems the headwind has always been there's competition and there hasn't been competition in forever. now there is does that opportunity still exist in the magnitude that it has? >> it's kincredible normally when companies borrow you borrowed at 1.5 or 2%. now it's 5.25. think about it i can own companies, finance companies, not take a lot of interest rate risk and getting the same yield as the earning

yield in the equity market equity multiples are too high and i don't think it's going down much t. you're talking about historic opportunity you can build income and put that next to your portfolio. it's extraordinary. >> you like the stock market here >> i think, if you take versus fixed income where companies can finance themselves, which is not a quirky metric, today that's much more attractive we're going to get a trillion of treasury bills in the next three months the equity market not a lot of supply if money just comes into the market through 401 ks, the market has a hard time going down i think now you got to build more income.

>> i'm glad you went here. separate fact from fiction for us i had this conversation with our two prior guests many are saying once this debt ceiling thing is figured out, the treasury issuance is going to be so large i don't know if the market can handle that. it's a negative for the market is it or is it not >> it is it's a negative market, i'm talking about the balances we'll take a trillion dollars of bills. the treasury has postponed liabilities. you have to bill the treasury's general account. if you track how the markets do relative to draining liquidity, it's like qe here's the counter it's why i think it's a hard call people are sitting immense amounts of cash. the amount of money going into money market accounts is almost $6 trillion. any time you see a significant dip in the market, you see that

i have to put money to work. i think it's hard to say it's going down because we have to drain the liquidity. it is a drag. >> when you drain liquidity, what does it do to yields? they've been rising. it feels like every day they're going up >> you put that much supply into the market, that supply coming in, it's an alternative to what you get in fixed income. is there a natural migration that yields higher i think so one of the things you watch, people are sitting on their hands worried about the debt ceiling, worried about the draining liquidity, worrying about the economy slowing. it doesn't take much to actually get these -- people have to put money to work. >> what do you make of what's happening to tech? you don't only think about fixed income you think about the markets. >> if you said to me what would

you do with tech, i love tech. if you think about where the economy's going and ai and valuations, they seem pretty elevated the infrastructure is going to build in this economy. where is cap x coming? ai, automation, software look at the big tech companies, their ability to create real cash flow, listen, tech has got to be -- we build equity portfolios tech is still the place to get it. >> is tech where you think a portfolio should be build? >> for sure. you strip out the top seven companies in the equity market, it's had a good run. if you said i'm building a portfolio for the next two to three years, tech. health care has to be a big part

i think defense, that's got to be a big part. i build in equity. it's so different equity in fixed income you want to take the upside and be the bottom part of the cap stack where you have real growth one last thing, when you grow like that, it goes back into r and d. invest in r and d. >> let's talk fed. i want your opinion on what you see and what you think is going to happen. parker, philly fed, we can take a skip for a meeting he said he said a skip would not be a pause. what do you think happens? are they done? >> listen, the inflation data is concerning it's not coming down fast enough listen, i think we'll be -- look at the fed predictions for unemployment look at things like leisure, education, health care i think employment is going to stay robust. is the fed going to do more? i think they should pause.

i think there's more data. you'll get another payroll report and then there's more data to come you've moved 500 basis points. that will work its way through the system inflation is coming down, just not fast enough. there's a tradeoff we can get into a technical discussion about what the interest rate is for the economy. clearly you're high. you saw that play out in the banking system there's no risk in waiting, see how the data plays out i think they could go again. there's no reason not to wait. >> governor jefferson was like, one year is not enough time to see what 500 basis points is going to do once it filters in and through the system we're trying to make decisions after we've done this historical move by the fed and assume we'll have all the answers now. >> scott, we also kept rates too

low for too long think about what happened. you kept rates too low too long and then you shocked the system. you watched that play out in the regional banking system. you shocked the system you see commercial real estate and leverage loans you'll see rollover financing that's harder to do. see that play out. if inflation is not coming down fast enough you can go again there's no reason not to wait and see how this works >> how concerned are you about commercial real estate and what it can mean to some banks, especially regional banks? >> i'm not worried on a systemic basis. residential real estate is where three quarters of the wealth in the country is that you can't disrupt commercial real estate is a pressure point for regional banks. you'll see some credit contraction.

it's not a systemic risk it will result in slowdown in credit extension >> do we have a recession or no? >> listen, i think it's going to be better than people think. you have a 3.4% unemployment rate it's hard to go into a recession. consumers are in a bad mood, but they spend like crazy. i think the economy is in good shape. can we have a dip in the second half maybe. i think that's a lot of nuance. >> fed cuts any time soon? >> i think next year i think markets have been pricing in cuts because of the risk that the system tips over because of a significant credit crunch i don't think the fed is going to cut 25 basis points at a time mostly in 2024 they should cut rates. we talk about the debt ceiling if you keep rates too high too long, what it does to your debt service -- they got to bring rates down. >> i enjoyed

congrats to you on this big day. up next, searching for opportunity. bill miller iv is with us. 'lfind out where he's seeing upside in the market "closing bell" is right back

welcome back a shakeup at miller value partners after bill miller iv announced he's acquired the majority stake of the firm he holds an 80% and is now the firm's chairman and will continue to serve as the portfolio manager of the miller income fund. bill miller iv joins me now. good to see you. >> awesome thanks for having me, scott. >> the bottom line is this is your show now. what is the bill miller iv going to look like >> the whole idea here is to reinvent the customer experience

in active management you think about what active management has done over the past 20 years fees have been too high, the investment strategies are not all that transparent, generally speaking not well-marketed. we want to change that because we're the primary client and we want to reinvent that experience we want to let people know what we're doing in the funds we want to find new ways to help clients. >> how will your philosophy on investing differ, if at all, from your dad's? >> well, i learned most of what we're doing from him there's going to be a lot of similarities first and foremost we're going to invest in a concentrated way. it's hard to have 50 or 100 good ideas so we'll find 30 to 40 and bet them where our convictions lie. there's not going to be a ton of

transition from an evideinvestmt philosophy perspective. >> what role will your dad have? will you lean on him as part of the vetting process? how will he play, if at all? >> he'll have as much of a role as he wants to he's still involved in the markets every day right now. as long as he wants to do that we'll welcome his input as much as we can get it we want more from him rather than less. we would love for him to be out there marketing ideas and what he's thinking about, not only in the markets, but outside he'll continue to be an adviser. >> i thought it was interesting -- i want you to explain this better than i'm going to is it you no longer own the opportunity trust fund that's my understanding. that means you no longer own amazon and alphabet and meta is that true i ask it and it's somewhat

startling because your father is so synonymous with amazon that was a surprise when i learned this information i want you to verify i have it correctly so our viewers understand it. >> miller value partners will continue to manage the miller income fund. we're also exploring new ways to help clients in strategies they might be interested in his strategy, the opportunity trust he ran, is managed by patient capital. mvp is exploring new ways to help clients where you may see similar names. >> sure. but how do you -- as we look to what's been so red hot in the market, ai and ai-related trades, how do you view that on your own do you look to buy those names back

do you feel underinvested in ai-related stocks? how do you view it >> what's interesting now the only names going up are ai and big tech if you look at the market breadth over the past 60 days, 80% of the market is underperforming. that's because things like nvidia and facebook are going up everything else in the market isn't doing well capital intensive things are not doing well facebook isn't a capital intensive this business. google isn't it's very hard when you want a value oriented strategy so say we're going to yield if you look at what happened in

2000, intel was all the rage at $75 a share. creating a huge multiple it's now $27 now how well will nvidia do? i don't know i'm more interested in facebook at 10 1/2 times more. >> i find that ironic as well. your father could justify the valuation of amazon even as a value investor where you can't justify the valuation of nvidia as the same value investor so to speak. >> i don't think he owns nvidia. it's a little bit of a different situation. agree we have somewhat -- we have different investment styles one place where we're aligned is bitcoin.

bitcoin is up 60% year to date best performing 9 of the past 12 years. we have a big personal stake in it it's interested in new technology that people are still underinvested in we absolutely love it. >> are we going to emerge from what many have described as the crypto winter? are we in the process of doing that it's been in a tight range now for a while. >> no one has earned bitcoin more than four years and lost money. if you look at the feedback loops involved and the way it's produced and managed, it's incredible we continue to be massively optimistic about it. it's important to draw the difference between bitcoin and crypto

bitcoin is a cryptocurrency. if you look at the other ones, there's fundamental differences. it's important to understand those differences. >> when you bring up the intel example on valuation and where the stock price was back in the day so to speak and we compare it to nvidia, are you insinuating you think we're in a bubble related to ai or not? >> it could go further if you look at the options market and what they're saying about nvidia, you can write -- you're having a 24% yield. it's going to be volatile. people are trading short term on this thing do i like it 20 years? it's probably not the one i want to be swinging at. >> in terms of growth versus value, obviously i would think you're hopeful this would appear to be throughout last year in some respects a renaissance in

value at least from the october lows now everything's back towards growth was that just two steps forward and back to five steps back for value investing and how do you see that playing out >> i think it's interesting to think about what value these massive tech companies have and what the limits are of that value. if you think about facebook, how many of those employees at facebook have any impact on tomorrow's revenue very few probably the same with microsoft. you have these massively valuable things -- you know the top five stocks of the market comprise 25% of the market cap that's unprecedented you're seeing this massive concentration. you're seeing unprecedented amounts of concentration

wouldn't surprise me if it started to break up to make things more competitive. there's all sorts of ways these things can lose. we try to find things with low expectations with the most -- >> what's your most recent buy what's your favorite >> as an income investor, i'll throw two names out there that are interesting. chrysler trades at one times operating profit we think the value is much higher today it's covered by -- they have a stack of cash on the balance sheet that pays four or five years worth of dividends there's interesting stuff in the market if you're creative. verizon 7.5%

there's a lot of interesting stuff, even if you're concerned about recession. verizon is interesting if you're concerned about recession. >> i look forward to talking to you again. appreciate having you. congrats. >> thanks, scott. up next, number one retail analyst jim boss breaks down when nordstrom reports in "overtime. we're talking retail when we come back. what if you could make analyzing a big bank's data... no big deal? go on... well, what if you partner with ibm and red hat, use a hybrid cloud solution to connect data across multiple systems globally,

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want to alert you that moment in washington, d.c. has come the house of representatives voting on the debt ceiling deal. we'll bring you up to speed on the latest it's not supposed to end you any time soon. some are suggesting it could go to 8:30 tonight. you can see the tally on your screen speaker kevin mccarthy predicting it will pass. he's told reporters, quote, it's going to become law. we shall see in what has not been the easiest process we'll find out later this season how we end up and the markets continue to watch it let's check a look at the e-stocks. >> reporter: look at some of the

biggest movers advanced auto parts sinking. the company cutting its outlook and citing higher costs and inflation. the stock is on track for its worst day ever down 35%. sofi is on pace for its best day. gains being fueled by the debt ceiling deal sofi said the moratorium on student loan payments weighing on its business. shares are up almost 32% in two days scott? >> thank you last chance to weigh in on our twitter question we asked do you think the fed raises interest rates in june? the results are right after this break. ♪♪ dads are special.

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let's do the results of our twitter question will the fed raise rate ns in june 61% say yes. >>da> n ives talks about the salesforce results that and more in the zone next your shipping manager left to “find themself.” leaving you lost. you need to hire. i need indeed. indeed you do.

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mike santoli here to break down the most crucial moments of the trading day, plus dan ives from salesbush which reports in overtime today and retail and leisure analyst matt boss digging into the department stores ahead of nordstrom and macy earnings. all right, mr. santoli 62% of our voters think there's going to be a hike in june >> i think that's -- that conventional wisdom is at least two or three hours old because what's gone on in the afternoon in the midday when we spoke i said it's one of those days when the market's starting to think again and the economy and then you had fed speakers just grab the wheel and steer market expectation toward a likely pause with maybe a resumption thereafter we can get a blowout jobs number on friday and it can change the e q equation and at least at the index level it requires multiple things to break at once to get selling pressure taking the big and the small down

so it is still an uneven market and no real improvement in market breadth today and by the way, i came in this morning to the technicians saying utilities and staples, they look broken and here they are today. >> dan ives, waiting for salesforce after the bell in overtime tonight how many times will we hear ai related to this one? >> look -- >> 2,000 3,000? how many >> i think it will definitely be double digits. when you look at benioff in sales force, i think they're want being talked about as much as an ai play because of what's gone on in the last few quarters this is another quarter, step in the right direction in terms of margins and in terms of growth better than feared and in my opinion it's one of the best risk rewards out there software >> you're not looking for much, right? there's not that much enthusiasm about what this company might

deliver in overtime? >> that's what i like about the setup. because in my opinion, benioff, one of the best executers out there and the installed base that's unparalleled and you look at the opportunity with slack, tableau and i believe that could be incrementally a $4 billion a year opportunity for benioff in sales force and this is just another example of some of the transformation that's gone on right now in this market >> you mentioned the setup and the stocks are up 35% in three months why? >> first of all, i think this was a name many were negative on because of margins and because of the slack deal. i think ultimately they really overestimated in terms of what was actually going to happen because benioff back against the wall came in with a hall of fame quarter last quarter and when you look from an actual valuation perspective, this is a stock without being egregious

could be $260 and it is just another example and you bet against benioff and salesforce, you are betting strong. >> macy's out tomorrow and let's talk nordstrom first what are we expecting? >> scott, i think what you're seeing right now from the retail space is the tale of two halves pi i remember you and i talking about this calling for the tale of two halves. i think that's what you will get from nordstrom the two themes that we're hearing is number one, the aspirational consumer and in pack, capri this morning talked about it that consumer is growing and the growth over year-over-year basis has moderated and that consumer, in my opinion is focused on experience and leisure we're seeing that in our leisure coverage and cruise lines with bookings out through the middle of '24, and i think the other theme that you will hear about in both nordstrom and macy's tomorrow is the value-focused

consumer and the lower-income consumer is focused on necessities and that consumer is holding back on diskregszary purposes >> i mean, capri specifically mentioned expectations of slowing sales from department stores >> absolutely. >> look, the consumer is being very discerning, and i think what you really have happening, overall, the consumer picture i think is resilient when you look at it on a four-year basis to normalize for year over year meaning one year, when you look at that picture there's no question that growth in the consumer space is slowing and that's because, look, you pulled government assistance and the savings rate is normalizing and you have a year over year normalizing consumer and you look at the growth from two years ago the consumer in my opinion multi-year is fine, but on a year over year basis we're in a vacuum where the growth is slowing and to your point, you are absolutely seeing a shift more towards experential and

away from department store and mall-based specialty >> you have a tough market to navigate in choosing winners versus losers. who is the best bet right now? >> value convenience i would stick with best in class which would be a tj maxx for us and a best in class brand, lululemon has the growth and if anything, i think the pandemic has created an inflexion in terms of casualization i also like self-help on nike and tapestry in the handbags and accessory space has the global diversification. so you need self help and you need things outside of north america macro on a one of-year basis and those are the things i would be buying today and you start to see the consumer picture on a year over year and like i said, the underlying picture for me on the consumer is actually more resilient than people believe.

>> good stuff. >> that's matt boss joining me from j.p. morgan and we'll talk to you again soon. we're approaching the two-minute warning and mr. santoli before we get into earnings salesforce, crowdstrike, okta, we are all over the cloud and a lot of them coming into the print, too >> with salesforce up a lot since the last earnings report and it's only half way back from its peak to trough decline i think you have a lot of stocks in tech in that zone salesforce has rarely been this inexpensive or relative to free cash flow in its history that doesn't mean that's how it's going to trade and the eye of the beholder stock and i think it's worth mentioning it had pretty sloppy earnings responses today with advanced autoparts and hpe and hpq and the market is rag ed and it seems to

reflect relatively low expectations and the kind of market where everyone is selling something to buy something, it seems, safer and more predictable and that's yet market breadth has not cooperated and if i can see an upside to today's actions and we got a jolts report that scared the market briefly because it seemed like it was too strong and too many job openings and you have fed speakers saying don't worry about that we still have a pause on the table and it seems silly and fickle on an intraday basis, but that's what we're tightening and is it a goal and not a nasty side effect of what the fed is doing or can we muddle through for a while or do we have soft landings as applausible scenario >> whether or not we get a so-called june swoon will center around the stocks that got us to where we are through may. >> most likely, yes, if they cool off and the question is what else happens for the rest

of the tape i mentioned earlier that it's the staples groups and it's liquidating >> may is a wrap there's the bell i'll see you tomorrow. i'll send it to "the closing bell." i'll send it to "overtime" with jon ford [ closing bell ringing ] [ applause ]