Transcripts For CNBC Closing 20240704

Numbers and, of course, the payroll report tomorrow, which leads us to our talk of the tape we ask how results from apple and amazon right after the close of trading might drive the tape from here. Here to discuss all that is stephanie link, and malcolm etheridge, both are cnbc contributors both are here at post nine as well welcome. Hi. Steph, obviously, look, apple and amazon together more than 10 of the s p they matter for the index how the market reacts to the numbers. In general, in the context of an earnings season that has been strong relative to expectations, the mark kind of shrugged on some level, where do you think that leaves us as we figure out if this has just been a little bit of an air pocket in august i think it is a little bit of an air pocket, digesting the doubledigit gains we have seen across almost every indices. And i think august can be volatile maybe trade around, maybe to september, mike. But i think the economy underlying is pretty good. The Economic Data has been coming in a little bit better than expected. Especially on a consumer side, especially on the job side we get a jobs report tomorrow, which will be very important, but, look, challenger grey today layoffs, the lowest number since august of last year. Initial claims are well below recessionary levels on a fourweek moving average basis and adp yesterday blew away the numbers. To me, consumer is good. Manufacturing a little less good but if youre in certain pockets within industrials, like lets just say aerospace or onshoring, those companies are seeing booming earnings, right . I think you add it all up, and i think thats been driven thats driving better than expected earnings and i think and takes the edge off these higher treasury yields. I think so. Well get back to this. We want to get to former President Trump arriving at Reagan National airport ahead of his arraignment. To eamon javers for more. The former president , as you s said, did just land here in washington, d. C. Take a look at the picture from just a moment ago, the trump airplane landing in suburban virginia here. The former president emerging grimfaced i think you can say, saying thank you to some supporters there on the ground and making his way to his motorcade. Hes going to motorcade relatively short distance to downtown washington, d. C. Where the federal courthouse is located. Hes going to make an appearance there in response to a summons and, remember this is a fourcount indictment of the former president of the United States, unlike anything we have seen in the history of the United States. The indictment charges the former president of the United States with conspiracy to defraud the United States, conspiracy to obstruct an official proceeding, obstruction of and attempting to obstruct an official proceeding, and conspiracy against rights, specifically Voting Rights all in the context of the former president s efforts to overturn the 2020 Election Results. We can expect the former president here to make a vigorous defense of himself. He is an active candidate for president of the United States we already have seen a number of his supporters out there making the case that this indictment is illegitimate on the grounds that it essentially goes after what theyre saying is the former president s free speech rights, to simply raise questions about the validity of the Election Results, the special counsel in this case, jack smith, clearly didnt buy that argument, he addresses it in the indictment and well see how this Court Proceeding goes from here. Were expecting the former president to be making an appearance in court around 4 00 p. M. Eastern time as you watch the motorcade there departing the tarmac at ronald Reagan National airport and making its way to washington, d. C so well see the Legal Proceedings in about an hours time the president is going to clearly the former president is going to clearly have plenty of time to make it there, not a long drive between dca and the prettyman courthouse in downtown d. C. Back to you. Thank you very much well get back to you soon for sure on all that back to the markets here and, malcolm, when we get into apple in terms of what we expect to see, what we expect the market to take away from these numbers and im fascinated by this in particular because it is 7. 5 of the s p 500, the stock is up close to 50 year to date, and yet it is a flat revenue year basically, were not really expecting much in the way of growth in the overall business so what are you going to be looking for specifically flat may be generous. The consensus seems to be that apple will come in with their third consecutive negative revenue print and thats going to be overshadowed by a lot of positive talk about the next upgrade cycle, the iphone 15, where we see sales going toward the end of this year because that phone is going to roll out pretty soon here and i think that any good news that they can say about that, any upbeat guidance they can say about that, those numbers, thats going to translate to the street as positive confidence about the consumer as a whole. Apple is a Huge Consumer services brand, product brand, all those good things and they reflect very positively on the consumers willingness to spend. I think hearing good positive guidance from apple on that ecosystem and the upgrade cycle is probably going to be exactly what the market wants to take away from the announcement that we get from apple. China comeback story in there as well. It is many things to many people, apple is better be good, though. It is expensive. The average tenyear valuation is at 19. 25 times. So i get it, services is has changed the mix and services i think will be the bright spot, mike, for the quarter. And i think Online Advertising will be the driver of that, but you can see a Service Number of Something Like 6 , but i think expectations for next quarter is that it accelerates to 10 very important, thats going to be the piece i think that people focus on, not the iphone we know the numbers are going to be weak. To that point, i actually dont care as much about the iphone as i know the street cares about. I want to hear more about apple financial, right they made a big shift that people may not have noticed, they initially came out with apple pay, then the savings account and the credit card and all of those were done with subsidiaries but then with this new thing, apple pay later, they went through the trouble of standing up their own subsidiary, which means that they plan to take this thing a little bit more seriously. They applied for licensing, thats the first step to becoming a bank. So i really want to hear more to your point about services, where does that whole plan to go with the finance piece . Thats where i think the new frontier could be for them, seeing services as that push and bringing in those dollars from apple financial. Margins too. To get very excited about the potential for longer term growth from here, it almost has to come from these new humongous categories that theyre slowly building, i suppose. Steph, though, 6 services growth, thats pretty good cpi was probably average 6 . I know. You look at if you look at relative to how the economy has been growing nominally, you do want more. You want to accelerate from here. I go back to valuation. What are you getting in valuation for this kind of valuation . If you think that to malcolms point the services can expand in categories, then, sure i would be more generous in terms of valuation, but still, 43 times is a really big number. And i think just to broaden it out slightly, microsoft has traded soft after its own report, and the report itself was perfectly fine wasnt as if people were taking a lot of issue with it and it is down 10 off its high and it feeds into this general view that that the huge popular megacap nasdaq stocks did for you what it could in the shortterm. Thats why it is important to focus on the economy, earnings and were seeing this broadening too, right i hope the broadening lasts, you know thats where i am you dont want to ignore technology, but 35 of the s p 500 waiting in tech and com services, thats a lot as a portfolio manager, i would never have 35 of technology or any sector for that matter it is just not a good risk profile. I hope that we do see a broadening and i think the macro, the economy being better actually supports the broadening. We will see, though, if apples positive guidance makes enough of a difference the last time i was on with you, two weeks ago, the market has responded with a big yeah, but if you look at uber, strong earnings, chipotle, heinz kraft heinz, any airline, yeah, but has been the response from the markets and so even with positive earnings, this very well may be the last good earnings season that we get through the rest of this year. I know youre more positive on the markets than i am. If it is, the market still is responding with a big yawn. Yeah, but theyre up 40 , 50 on the year. You have higher Interest Rates thats going to hurt. Thats the thought, the market got a little bit ahead of this quarter and well see if this is the trough and well grow from here. 2024 results start to become more expensive lets turn to amazon we can actually expand the conversation to mark ma haney of evercore isi can handicap for us, mark what were looking for within amazon. This is a stock that was really sitting out a lot of the rally until this year. Had a big catchup move, but still not quite all the way back. I think you set it up, mike maybe even been charitable amazon is a stock, it has been a dog the last two years it started to turn and three things that matter tonight, are we going to see this recovery in north american retail margins . Thats a probability are we going to see signs of an acceleration in north american retail sales growth . This is a big data point on the u. S. Consumer. Im not sure i think it is possible we will but i dont think amazons Retail Business is gangbusters yet. But possibility well see green chutes there and then what really matters to the stock tonight is this aws business, which has gone in free fall mode from 30 plus growth to 10 , to 11 thats in the past the question is, will they acknowledge or will they guide to acceleration for the back half of the year thats an unknown. I think it is 50 50 whether they do or not. Well be doing 9 , 10 , 11 growth year over year. If you knew that a few years ago, you would have sold every share of amazon you had. I think well get an acceleration moment. Whether we get it into the next quarter read or later in the year, it is coming it is one of the reasons why i like the stock here. It is interesting, mark, you still do have kind of at least on the surface level, you know, the sell side is on board. It is mostly buy ratings out there. There seems to be a lot of skepticism or just this barrier with investors to really believing there is a sense of urgency, either on the call side for amazon, or that theyre moving quickly enough in the right direction on a. I. , wherever that might mean for aws. All of it together feels like they have something to prove i think youre right. There is a fair amount of skepticism i know the stock is up year to date it joins with the other big tech names and there is a fair amount of hope. I still think that there is a little bit more skepticism on this name, higher level of skepticism on amazon than there has been at most parts of the last call it eight, ten years. Did they lose the cloud crown to microsoft because of a. I. . I think thats a real thesis that is out there in the market. Can they really recover these north american retail margins that went negative the first time in a decade last year can they are they losing market share to walmart and other omni channel players thats probably less of a fear the real big one, the elephant in the room is aws and amazon, is a winner from a. I. Or a loser . Almost certainly is a winner, but we want to see that in the numbers. 10 year over year growth is not an a. I. Winner 20 is can we believe they can get there for next year at some point . Right malcolm, amazon, how are you thinking about it here im more interested in what amazon is going to tell us about digital advertising. They slotted themselves as the third contend wecontender. More importantly in the near term, im interested to hear what their plan is for the a. I. Unit since they made this decision to go open architecture, not the meta version, but truly where builders can come in and decide to develop on the lambda llm, build on chatgpt or anybody else and amazons positioned itself to get paid one way or another regardless because anytime they interact with that klatchatbot, Amazon W Services is going to create a toll on the highway. Im interested to hear where andy jassy sees opportunity to take market share, and also where the longer term picture is for a. I. As it relates to aws. And, steph, you would think, just in a really big picture way, the number of digital interactions amazon has with customers, the number of transactions, the preferences that the volume of data that the company sits on, you would think that if those thats the raw material for a. I. Progress. Sure. They have a lot to do here. Market seems to feel like, well, theyre kind of a Logistics Company and theyre spending a lot to deliver people stuff the next day and not taking much of a margin off of it. Not the a. I. Play, right . It is, i dont think it gets at the respect like to your point aws, if they grow 10 this quarter, the second half comparisons get much easier. And thats why it is going to be all the more important for the company to also not only talk about easy comps, but generative a. I. And what it can do to see that acceleration, like mark was just talking about 10 is not really exciting i do think theyre taking share in ecommerce, mike. And i think if you look at the prime day, items bought, up 25 year over year that bodes well and theyre fixing some of their delivery and networks and that sort of thing. And inflation is coming down we learned that from fedex, right . Yield per package came down substantially. That should help logistics pricing should get better for this company, right and so i think it is probably going to be decent i dont know 57 times forward estimates, 58 of the year 22 times ebitda, a lot of expectations. I know, mark, you make the case that on a cash flow margin basis, it is not out of line with how it traded in the past using some assumptions for how much the company can grow. Where do you come down on the sum of the parts idea, not that it is going to be broken up, but ive seen some work that says aws is worth 50 of the current market cap, advertising, 20 plus more of that from there. And you this massive ecommerce operation that is not reflected particularly heavily in the 1. 3 trillion market value. I know a lot of people do look at it on the sum of the parts basis. I would be shocked if they were really forced to by regulators, truly shocking thats a low possibility event if you do look at it on the sum of the parts basis, the market generally a lot of investors have been willing to give that aws business a trillion in value. Im not sure they will if this growth stays at 10, 11, 15 . If it gets back up to that golden level of 20 plus, yeah, then you can Start Talking about that and then some of the parts are attractive you throw in advertising and to malcolms point and i agree with him on this, i think amazon is the next 100 billion a year ad revenue platform out there it is going to take them a while to get there thats all goodness for the margins. You goet this recovery, thats good for the margins too the pitch on amazon, the best midshift story in tech because the Fastest Growing businesses, they should be the fastest, are much higher margins than the core business. There is this wonderful fundamental Inflection Point were on the cusp of. Well get that in the second half of the year, i want to buy that stock before it is obvious to everybody thats a good point that the faster growing business is going to become a greater part of the whole and therefore the multiple, for better or worse it traded right in line with the cloud sector in the last three years so it seems to be the way the market views it for now. Everyone, thank you very much. Steph, malcolm, mark, great conversation thank you. Lets get to our question of the day. We want to know what is the best tech stock among the big ones to own right now . Apple, amazon, alphabet, or microsoft . Head to closing bell on x to vote well share the results later in the hour lets get a check on top stocks to watch seema mody is here with those. We got to start with shares of expedia under significant pressure today following a miss on quarterly growth bookings which came in 1 billion short of wall street consensus due in part to weakness in the u. S. Travel market. More travelers headed overseas this summer. The ceo telling cnbc earlier today that the travel market is not slowing down, just normalizing a bit. The stock down 16 on pace for its worst day since march of 2020 different story for clorox, on track for its best day since the pandemic higher pricing helping offset volume declines in the quarter household categories like cat litter and barbecue grilling saw strong demand. Linda rendell anticipating a mild recession next year the stock up 9 at this hour seema, thank you. Talk to you soon were just now Getting Started up next, short and shallow thats the call from Wells Fargo Securities chris harvey on any pullback in stocks hell make his case after this break. Were live from the New York Stock Exchange youre watching closing bell on cnbc. You ok, man . The internet is telling me a million different ways i should be trading. Look whats up my trade dogs . You should be listening to me. You want to be rich like me . 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Plus one line of free mobile for an entire year. Its the mobile made free eventhappening now. Get started for just 49. 99 a month. Plus, ask how to get one free line of unlimited mobile. Comcast business, powering possibilities. Stocks off their session lows after early dip of about half a percent in the s p 500. Now down. 2 we had a surge in treasury yields along with it this all coming a day after fitch downgraded the u. S. Credit rating, driving equities lower in part. My next guest says he expects this pullback to be relatively short and shallow. Lets bring in chris harvey of wells fargo for more on that chris, short and shallow, sounds like the recession a lot of people had been predicting until we didnt get even that. Im curious how you think about the field position for stocks given that a lot of folks will say sentiment got over its skis coming into august, sitting on 20 s p 500 gains, seasonal weakness, yields higher, what gives you the confidence this will be a viable event so, what we talk about and what were saying to clients is the macro is incredibly strong youre right the market is up 20 but if you look credit spreads are hitting at the end of the last month, they hit year to date tight if you look at consumers net wealth, that is up furthermore, when you look at the economy overall, and the cash in the system, it is still plentiful. Thats not to say there arent risks there are plenty of risks out there. You are talking about some of the risks with microsoft and with amazon and apple later, were also talking about the risk with higher rates and, again, we can get pullbacks. But at the end of the day, do we see a point of inflection with any of this . No, we dont see that point of inflection what we see are pullbacks who we think theyll be short and shallow and one thing we talk about is when we turn the calendar to september, the calendar will be stronger, thats when we have a lot of conferences, optimism will start to build, and we could see froth start to build at that point in time and thats when we become concerned. But right here, right now, it is really more manageable, shallow and shorter pullbacks. September or really even starting now, this focus on next years potential earnings or next years economy more broadly and you dont think that necessarily were going to hit bumps along the way in terms of the macro from here. I agree with you everything we can observe looks like things are liquid and risk appetites are healthy and we have a pretty good footing in the economy. But i just do wonder with yields where they are, and the fed potentially having to do a bit more whether it will stay that way. Yeah, mike. So here are the two big risks we see. The tenyear is making a bline to 4. 25. Thats your high over the last couple of years, your high for a long time. If we get through that, then things could get sloppy. If we get numbers and i agree with the earlier guests, some earnings havent been great because you had such a great runup at this point in time i dont think anything is going to break it is just more profit taking if you will but the risk is that the tenyear for some reason continues to go higher and that people dont step in if you look at when the tenyear made it to 4. 25 in october of last year, credit spreads were much wider your yields were 50 basis points higher maybe the current yields arent high enough for people to step in and things get sloppy, okay the second thing we worry about is something good happening, the consumer actually starts to step up and starts to spend even more and what that does is it starts to accelerate inflation again and that brings the fed back to the table to the end of the year thats more of an end of year type issue. We have some time, you know, next fed meeting not until late september. So were going to get a lot of numbers between now and then in terms of how to approach the market, i know i think youve been emphasizing maybe midcaps and smaller stocks or somewhere outside the very large growth names. Yeah. So, mike, what we have been emphasizing is midcap growth, we think midcap growth is your bisque rbest risk reward and from a sector point of view what we also like is we like that media and Entertainment Group that has done exceptionally well, has a lot of properties that we like, has an a. I. Kicker, it is working. And what we want to do is balance that with something defensive. That something defensive is Healthcare Pharmaceuticals we think thats a good combination. If youre looking for a sector play, it is media and entertainment, or looking for something that say little bit better, what we think say better risk reward and multiple expansion, midcap growth. In terms of the overall valuation flag that is being waved out there, people saying, how can we sustain a 19 times s p multiple, yields are here, or whatever, what is the answer . Just to stay away from the biggest stocks yeah. That is something we have been contending with for some time. The issue and what we come back with all the time is valuation is not a catalyst. Valuation is high. And it is hard to really justify these valuations or really say that multiples are going to expand from here and thats why were looking at some of the other places, media and entertainment has a valuation that is less than the Market Pharmaceuticals does, midcap growth also does but, yeah, the valuation of all of our markets, a little troubling, but at the end of the day what were telling clients is think about this as 1999, 2000 at that point in time, what really derailed the economy and the new economy stocks was the fed as a fed got more aggressive, not less aggressive toward the end of the cycle. Were just not seeing that at this point in time so until we see some sort of major catalyst, that would be the fed, we just dont think there is a big point of inflection. That was, of course, after the s p spent about three years, well above 20 times earnings didnt happen the moment we got there, chris thank you very much. Good to talk to you. Good talking to you. Cis harvey at wells fargo. Up next, is it time to short bonds . Thats the big call today from one billionaire investor well debate it after this break. please dont go please dont go please dont go please dont go dont gooo dont go away preorder now and get a free storage upgrade. please dont go tenyear treasury yield hitting the highest level of 2023 today highs not seen since november. This after bill ackman said it is time to bet against bonds, specifically the 30year lets bring in jim karen at Morgan Stanley Investment Management good to see you today. Your take, first of all, on what seems to be driving this selloff in treasuries, this rise in yield. There is plenty of plausible explanations out there pretty sturdy u. S. Economy, bank of japan last week getting global yields moving to the upside, the fitch downgrade, maybe focusing attention on treasury supply out there, or other . I dont know, positioning. What is your take on why were moving here and why this move is sustainable . Well, good afternoon, mike. And, look, i think it runs deeper than even that. I think there are four things taking place right now number one, the market is starting to think about a higher for longer fed funds and even possibly one more rate hike. The second thing is that the narrative in the market is starting to incorporate a soft landing. The third is that by incorporating that soft landing, theyre reducing the risk of the probability for hard landing and the fourth part of this is that time is money, meaning that if you were in longer dated bonds to get the duration, protection or the hedge to your portfolio, by owning longer duration bonds, what people are realizing is that that came at a very, very big cost because yield curve was so inverted with longterm yields so much lower than front end yields that people were paying up for that hedge and now theyre not willing to do that as much given that the expectations are that the fed may stay higher for longer and that will have the soft landing those four things are probably more important than the recent fitch downgrade or the bank of japan or anything or anything like that. And so what does it mean from here it suggests perhaps were in a higher range in terms of yield for some time. I know youve been making the point we go back a long way before october when we got to 4. 3 of the tenyear, before the Global Financial crisis before you were out of here seems luke like a trend change. A lot of it has to do with the shape of the yield curve even if we look at the fed funds to tenyear yield, if we look at that spread right now, that spread is like 130 basis points inverted, 120 basis points inverted meaning the tenyear yield is so much lower than the fed funds rate if that went to zero, you would start to have a natural rise in the longterm bond yields. And that could bring tenyear yields up towards 4. 5 , 4. 75 , and that would still mean that the fed funds to tenyear spread is still inverted. That doesnt even flatten the curve. That keeps it negatively sloped and just keeps it there, but less negatively sloped than what it is right now or less inverted than what it is right now. So, is the bond is the market implicitly saying, if we got there, lets say if we got tenyear yields going back up, could the economy handle it . Is the market suggesting that, well, if we got there, something would break along the way and we have fed rate cuts or something would a linear move to that level . Yeah, exactly i think thats a great question. Thats why the yield curve is likely to stay inverted for a long period of time. The further we are in the cycle, the more likely it is that something will break and were going to have a recession and as yields continue to move higher with the markets basically betting on is that they cant handle the higher yields, we could get there, but it could create a bigger downturn and thats why the longer term bond yields may stay lower than the fed funds rate, but in the process, they could be higher than where they are today. And i think that is the balancing act right now that the market is trying to actually figure out, how much lower should the tenyear yield be versus a fed funds rate. 130 basis points lower, 50 basis points lower should it be 75 basis points lower. Whatever it is, all roads start to lead towards these higher back end yields, as long as you incorporate a soft landing in a nonhard landing scenario what does it mean as an investor in terms of where you see value, whether it is in fixed income, other Asset Classes related to this yield regime so, you know, the way we start to think about this is that if we are going to have a soft landing, areas in the markets like, for example, high yield and even bank loans, if we have a lower default rate cycle, if we have a mild recession, i think these bond yields today, the all in yields actually look reasonably attractive. Nonagency mortgages look relatively attractive. On the equity side, what i would say that i would start to look more along the lines of the value sector, counting on a broadening of the breadth of the market and also i would even start to consider some of the midcaps and small caps the reason i say that is that i think a lot of the small caps are still priced for particularly Small Cap Value is still priced for a recession at this point and a reasonably decent recession. I would argue that these sectors in the markets are not yet priced for the mild recession scenario you get to the fixed income space and the high yield space, you get to get paid to wait, meaning you get the positive carry and collect the income as you wait for this potential slowdown, and it is not so much of a question of when the recession is going to occur, there is going to be recession, the question is mainly how deep is that recession going to be and does it create all of these effects across other assets . If the view is a softer landing, you maybe have less negative side effects. And you can play the lag time along the way, i guess, getting the yield. Jim, great speaking with you, thank you very much. Up next, were tracking the biggest movers as we head into the close. And the setup on apple ahead of earnings well break down the key themes and metrics to watch at pnc bank, you can find us in big cities and small towns across the us, where our focus is to always support the people who live and work there. Because you call these communities home, and we do too. Pnc bank. Pano ai chooses tmobile for business for 5g solutions. Because tmobile helps pano ai innovate, so they can stop the spread of wildfires. Nows the time to see what americas largest 5g network can do for your business. Ah, these bills are crazy. She has no idea shes sitting on a goldmine. Well she doesnt know that if she owns a Life Insurance policy of 100,000 or more she can sell all or part of it to coventry for cash. Even a term policy. Even a term policy . Even a term policy find out if youre sitting on a goldmine. Call Coventry Direct today at the number on your screen, or visit coventrydirect. Com. Just about 18 minutes until the closing bell see the dow down 45, modest losses across the board. Back to seema mody for a look at the key stocks to watch. As we await for apple, look at qualcomm shares falling after earnings disappointing yesterday. The chipmaker came up short of revenue estimates, but investors mostly focused on the companys softer than expected guidance with the smartphone business and the slump, qualcomm makes the chips and processors at the heart of a number of phones including the most high end android devices. Deutsche bank downgrading the stock to hold from buy, currently down nearly 9 lets talk etsy. Shares under pressure after the company delivered a softer than expected outlook for the third quarter. The ceo noting improving trends and active buyer growth accelerating driven in part by international customers. Morgan stanley cutting its price target on etsy stock from 74 to 72, currently trading at 82 bucks a share. Mooic . Seema, thank you very much. What is the best tech stock to own right now apple, amazon, alphabet or microsoft . Head to closing bell on x to vote the results of our x question we asked what is the best tech stock to own right now the choices were apple, amazon, alphabet or microsoft. Apple, winner and still champion, 40 of the vote, the least love for amazon. Thats the other big name reporting after the close. Up next, we have youfur ll earnings rundown, all the key reports you need to watch in overtime, plus, expert analysis from dan ives ahead of Apple Earnings closing bell will be right back somebody would ask her something and she would just walk right past them. She didnt know they were talking to her. I just could not hear. 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This is getting quite a bit of attention from global media. We were taking a gander at all the reporters there from all the way around the world and broadcasting in all kinds of different languages. This is a historic occasion. It is the first time we have seen a president under indictment as he is now this week under four charges relating to attempting to overturn the 2020 president ial elections. Nothing like this has happened in u. S. History before we expect he will make an appearance in response to the summons inside this courthouse in just about ten minutes time. Not entirely clear how long this process will take. But i want to draw your attention to this live shot. What youre looking at is sort of the present modern day and you can see the upper righthand side of your screen there, you can see the capitol dome, where the insurrection took place on january 6th. The stairs where many of the Police Officers were injured are almost visible in this live shot from the courthouse where the former president will be arraigned under this indictment now related to his attempt to overturn the Election Results in 2020, which led to that january 6th insurrection and in the indictment, the special counsel says that the former president sought to take advantage of the violence on that day, on those steps, that are visible in that shot or nearly visible in that shot, in order to continue his efforts to overturn the federal election. All of this taking place just blocks away from the scene of the crime, allegedly well wait and see what happens and what transpires inside this courthouse, but it is expected to get under way at the top of the hour at 4 00 p. M. Eastern. Eamon, thank you. Talk to you again once it does happen were in the closing bell market zone. We break down what is at stake when apples results hit the tape in overtime and other big earnings after the bed deirdre bosa is standing by. And kate rooney has the setup on bloc and coinbase. Look at the broad market setup here the s p 500 down half a percent earlier in the morning, found buyers once it cracked below 4500 you see where it sits relative to the 50day moving average thats what we had since the highs of last week, 2 to 3 maximum downside if we got a routine pullback, thats around 4400, put a good scare into the market even though it would still be in that uptrend. Treasury yields big part of the story all week youre seeing the tenyear yield threaten those fall highs. That was back when the market bottomed in october above 4. 2 thats challenging a lot of the asset allocators out there, making valuations a little bit tougher. Well see if this proves to be the top end of the range markets rotating Energy Relative to tech, actually has been outperforming on a onemonth basis you go back any further and tech has built up a lot of the lead the market is finding things to actually support it, even as some of the best performing areas of the market do back away, which does bring us to apple. Biggest part of the tech sector, biggest part of the stock market as a whole what are the one or two things youre looking for in the report that is going to determine whether this is considered to be a pleasant surprise or a disappointment first, china. When cook talks about china, are they seeing an uptick there . We believe they are gaining market share thats important going into the cy cycle. Second is margins. Are they able to expand margins more and more . What you see on the chip as well as on the global scale, thats just giving them more and more of a tailwind. You combine that, i believe, this is really one going into september and december, it is a mini super cycle that plays out despite the macro. I expect good news from cupertino and cook. You liked the stock for a long time. It is up 40 this year looking at 220 price target, right . So even if you kind of like it, everything is falling into place, were talking about tenish percent upside from here is does that tell us where the valuation is or Something Else youre concerned with . I think really it is all as we go into next year, if services uptick and youre getting back to double ditht dio services, double digit growth and 100 billion from an annual revenue perspective and look at the install base the thing most investors are not talking about, 25 of the 1. 2 billion of that upgrade, the pentup demand continues to be the story. Thats why as we know with cook, hes playing chess, others are playing checkers thats why when he speaks, everyone listens thats going to come out tonight. I think it is 12 punch between him and jassy and amazon. Is there any reason to rethink peoples willingness to upgrade on time based on qualcomms numbers, the phones dont they dont wear out, so i just wonder if there is anything structural we should be worried about. Qualcomm is speaking to their shared gain. It all comes down to china and that is the gaining share and i think for apple, thats putting fuel in the engine of this despite many that continue. Dan, thank you very much. Well see the numbers soon deirdre what are we looking for, for amazon lots of different things. Most importantly, the aws, Cloud Business number, it has come down significantly over the past six quarters it is expected to come in at 10 and that would be kind of in line with what the company told us last quarter. If it is lower than that, though, we could see the stock make some larger moves to the downside if higher than that, to the upside it is a Cloud Business that makes up less than 20 of overall revenue, but is the profit engine of this company. Allows amazon to do all the other things it does well be watching, of course, the north american retail online sales business, investors look for more efficiency after that huge buildup over the pandemic in terms of spending, thats been a big topic for the other megacaps we heard of well want to listen to amazon and their capex plans because they spent on logistics during the pandemic, now they have to be spending on Cloud Infrastructure to serve the degeneratie ive a. I. Boom. It seems like prosecart of te case is they can rationalize things on the ecommerce business just because they did make such heavy investments. Yeah, huge investments. They doubled their Logistics Network over the pandemic, and lost a lot of profitability doing so so, yes, better efficiencies there, but then you have this whole other question that we saw from microsoft and google and that is spending on Cloud Infrastructure, gpus to pay for the generative a. I. Boom i dont know how investors take that more efficiency on the core business that they already spent on are they going to have to raise capex costs even further well be watching thanks so much to kate rooney on coinbase and bloc. So, bloc, the bar here for bloc, well start with that, has been particularly high it has seen 40 annual growth in that time period cash app, that has been the crown jewel for block, surprising to the upside with 49 year over year growth earlier in the year. Strong user growth and engagement thats a key area this quarter the app is becoming an alternative to Bank Accounts it does skew to more of a subprime consumer. There are concerns as about Discretionary Spending wall street also looking for updated july trends. To coinbase, Trading Volume is expected to slow, you can pretty much see that forecasted in real time so wall street very much anticipating that. Theyre expecting to spot volume down 35 quarter over quarter. That would be at a multiyear low. And then the take rate is also a key part of that expense discipline could surprise to the upside and the call will likely focus on profitability, progress over there, recent regulatory developments and legal rulings stock is up 150 or more this point this year. Also one of the most highly shorted names out there, volatile one back to you. Exactly no coincidence there kate, thank you very much. 30 seconds left, the index is up on the morning lows. The s p 500 is down half a percent. It is now hovering just above the 4500 level market hesitating ahead of the big earnings reports apple and amazon, together, more than 10 of the s p 500. 4. 3 trillion in market cap. Well get to those numbers coming up next ahead of that jobs report tomorrow thats going to do it for closing bell. To overtime with Morgan Brennan and jon fortt. Stocks finishing the day lower again today after long dated treasury yields hitting their highest level since november it is the make or break moment for megacap tech, though welcome to overtime. Im Morgan Brennan with jon fortt. Apple and amazon are the headliners of a major afternoon of earnings reports. Amazons reports are due out in just seconds well get apple at the bottom of the hour not jus