Earnings Deluge Begins 7/28/26

The Bell is bringing it to the trading day at the N-Y-S-D. Third Coast Bankshare is ringing the bell not the Nasak. Golden Eagle strategies doing the honors. Welcome to Closing Bell. Over time we're live from Studio B at the Nasak Market site. I'm a list of Lee along with Mike Santoli. Stocks mostly higher. Well off the morning. Lowes eats a Dow of $500, $50 points. The SB 500, a quarter of a percent, the Nasak slightly lower but it had been down nearly 1.5% early in the session. The market rotation continuing is staples. Healthcare and materials jump as tech lags. Even within tech there's a rotation chips down again. The socks down for the fourth straight session. Typer's longest losing streak of the year but software moving higher. The IGV up nearly 1% much more on the market's coming up. And we're about to get ready for a flurry of earnings. Chips and memory in focus with KLA and C-Gate, Ford, Visa, Mondalees will give us a read on the consumer and of course we have the Fed we need tomorrow which you know factors into how the market's in today but as you noted the rotation is fully on. We did have financials and healthcare new intraday highs there on those sectors. Both consumer staples and discretionary up a couple of percent. It could have been worse and almost was in terms of the momentum meltdown. We did bounce off the morning lows. It looked like the semiconductor momentum to the downside was going to get a little bit out of hand coming off of the Korea crash overnight. But again this market kind of relies on the majority of other stocks to keep it going. Market is not really making any sudden moves at the index level. We're 7432. We've been around here for a long time. 10 weeks. Now I could sprint and say Microsoft's up 3% week to date. Alphabet's up 4.5% week to date. Is that them saying that maybe the hyperscaler trade has gotten a little over down to the downside or is it just let's not get too negative you never know what we're going to hear tomorrow? Exactly. I mean I think that sounds like the positioning that the market is taking. I mean I think it's also worth in video. It turned around from deficit in the morning but on very light volume it wasn't a convincing bounce. So you can see the skepticism even there for the main chip company out there that could have led the sector higher but just couldn't do it. The semis definitely do not have the benefit of the doubt. And I also would note that the stocks bounced off its 100 day average almost to the penny this morning. So it does seem a little mechanical. We'll see where it goes from here. Let's get more on the markets and the semis software shift with SEMA Modi. Hey Mike and exceptionally tough day for the semiconductor sector. Applied materials Intel, micron, UBS writing in the last hour that hedge funds are beginning to put on tactical shorts ahead of the hyperscaler cap X estimates that will start rolling out. Remember we got Microsoft and meta reporting tomorrow just zooming out a bit. The SMH ETF is now down about 25 about 20% from its June high driving these stocks lower of course concerns around competition. The open versus close to risk model debate which is yes raising questions about the whole unit of economics tied to AI now somewhat related glassware maker corning which is exposed to the AI ecosystem. Disappointing investors by delivering a guy that didn't really satisfy the street that sent Sienna and co here. These are optical makers down by seven to 10% on the day. Other names tied to the AI build up look at industrials like caterpillar which has seen its stocks so over the past year giving back around 3% earnings due next Wednesday. But the software rebound remains intact back to back gains for names like sales force Adobe service now and that rotation you guys talked about into staples Coca-Cola CEO telling CNBC this morning that world cup boosted sales and even though consumers are facing higher gas prices. Cokes results didn't really show consumers cutting back that stock at an all time high craft times. Moles and cores general mills jam smucker all higher on the day. Melissa. Sema thanks. Sema Modi the Fed beginning its two day meeting yields moving lower ahead of tomorrow's rate decision Rick Santelli is in Chicago for us. Hey Rick. Hi Melissa I can't stop thinking about what you said yesterday that yes if you look at a 12 hour chart we see the oil and tens are moving together but not necessarily in a commessor it fastened we're down significantly well over 4% in the September futures for crude oil. But we're down about five basis points in the 10 we're down about the same in a two and even though directions the same it's going to make the feds job a little more dicey because even afraid follow oil down on chapter two the war in the golf is it going to be enough now there's also a whole discussion going on about break evens and how they're not pricing right should be shocking tips have never really priced inflation right but as you look at the break even from the start of the war the end of February you can see it's hardly moved at all it's gone for about 224 to 217 to 18 but now let's add in nominal rates for the same time they were at 394 they're now at 460 and that's 10 basis points off it's high yield close from last Thursday what that tells me is that real rates are elevated now are they going to come down or break evens going to come up well this is something the fed needs to pay attention to because if real rates are that sticky maybe they're going to do the heavy lifting for the fed and do part of their job or the fed could think maybe fed funds are a bit too low in either case hopefully mr. wars will touch on these topics tomorrow Mike back to you absolutely Rick thank you very much well oil prices down big for the second straight day as the pausing fighting holds for now pepper Stevens is here with more hey mech well oil is extending yesterday's declines as the paas holds and as a Ron holds talks with Saudi Arabia and Oman about the straight up for moves CBC private also back in bad been saying the market continues to trade sentiment and positioning faster than it trades physical barrels noting the more than 30 percent July rally we saw prior to the recent weakness was thanks in park to short covering which on ground as rhetoric softened over the weekend now this is within the broader backdrop of the narrative flipping quickly between one of scarcity to one of surplus now the hootie threat in the red sea is having an impact on Saudi Arabia's bypass capacity with low things at city of career at a 17 week high of 1.3 million barrels per day that's according to Kepler's Matt Smith that comes as exports out of Yanbu fall to a 19 week low as more ships head north to the Suez Canal rather than south via Bob Bellman dive now product prices did advance on the day bringing the 321 crack spread to $72 Russia did announce plans to relax its diesel export ban next month but they are still reportedly keeping the bet gas the lean ban in place through the end of the year one lessa pipa thanks pipa Stevens we are waiting today is deli use of earnings we are seeing some stocks move in the after hours on their releases we're going through the numbers but we should flag C8 is down about 8 10% right now KLA 10 core is down by about 4% we'll go through the numbers bring them to you as soon as we have them mean time let's bring in Paul Hickey has bespoke investment group co-founder Paul great to have you with good to be here is there more unwind to the semi conductor trade you think you know it's hard to figure out where these things stop but I think what we saw in korea overnight and what we're seeing as we saw early on this morning and then we saw some stabilization I think we're pretty close to the end of this leg of the sell off you know it's perfectly natural everything that worked in the second quarter hasn't worked so far this quarter in july so we're seeing massive unwinds but they were massive rallies to begin with and so if you've been riding them up and down it's been the down part has been a lot more painful than the upside but it's to be expected you just brought up C8 it's still like 30% above its 200 day moving average so it's had an enormous run and you know we'll have to see what the results. Yeah still an orbit at a lower level hang on one second Paul Ford earnings are our filibow has the numbers. Hey Mike take a look at shares of Ford ticking a little bit higher after the company posted better than expected earnings for the second quarter earning 42 cents a share the street was expecting 35 cents a share revenue a little shy of expectations but not by a lot coming in at 44.89 billion the streets at 55 45.86 billion numbers within the numbers for the second quarter for Ford net loss of 1.3 billion dollars and EBIT margin of 5.2% with free cash flow of 2.1 billion dollars and for each of the divisions here's how much money they made or lost when it comes to internal combustion engine vehicles they made 1.13 billion dollars made 1.7 billion on their commercial vehicle division and then they lost 919 million dollars when it comes to their electric vehicles those remember are the current generation they're moving towards a next generation that will be coming out next year. Now the reason the stock is moving higher guidance they are projecting that their full year profit will be between 10 and 11 billion dollars previously the guidance was to make between 8.5 and 10.5 billion dollars so substantial increase in the full year profitability and then free cash flow of 6 to 7 billion dollars previously they expected free cash flow of 5 to 6 billion dollars and they are declaring a dividend for the third quarter of 15 cents a share lots to discuss with Ford CFO Sherry House we're going to be talking with her in just a few minutes we'll discuss the quarter where they were better than expected in terms of earnings per share more importantly we'll talk about the raised guidance guys back to you. I'll see you then Phil thanks to be some earnings are out he's on's got those numbers here. That's right Melissa so he's out with a beat on both top and bottom lines for their fiscal third quarter adjusted EPS rose about 11% to $3.32 which exceeds analysts estimates by about 9 cents revenue rose 14% to 11.6 billion topping the 11.39 billion dollar estimate. Now total payments volume that jumped 10% and cross-border volumes jumped 13% in the quarter there's not much to say about the layoffs that we reported on earlier today that's about 7% of visa staff just to mention how AI has quote fundamentally shifted visa's product cycle recalled that the layoffs are mostly of tech and and product teams back to you. All right, Hugh, thanks. Hughson, C-gate earnings are out the socks on the move. Christina parts of the level size is the numbers. Christina, yeah. I'm Melissa. A lot of people just lump C-gate with all the memory names, but this is a hard disk drive and storage name. They beat on the top and bottom line $5.71 adjusted on revenues of $3.66 billion. I had to do a double take with the Q1 guide because that did come in stronger too. At $4.1 billion revenue, that was higher than the street wanted on EPS of $7.30. So much higher than the 580. Their gross margins were intact for the Q4, 52.7%. They said they had a record free cash flow of $3.1 billion. And in the release, they're saying they see momentum continuing into 2027. So again, this is a company that is soared over the last year and N is relatively volatile, much like the memory names. You can see it's actually climbing post earnings, something we haven't seen from a lot of the chip names as of late, guys. Christina, thanks. Christina, part of the novelists. Let's get back to Paul Hickey now. So we have some numbers out. And you were saying that there's probably a lot of deleveraging still to happen on this chip trade. I mean, that was what really pushed it in Korea, the massive build of leverage, households in it, a belief that there was some sort of state-backed policy. And that ended up to be just crumbling away at this point. Yeah, so I mean, I think on Seagate, you know what I was saying, we're probably closer to the end of this, but Seagate's reaction today to earnings is actually sort of positive unlike the other chip names. But I think those Ford numbers were phenomenal. The guide, the low end was guided above the prior high end of guidance. The commercial business is doing great. So I think Ford numbers are a big, a good indication of the overall economic strength that we're seeing in the US economy. And I think that's a good sign. Overall, and it's for the broadening out trade, other sectors of the market doing well. Question, I guess, is that broadening out trade, and we constantly talk about this, is it really just kind of a stop gap, you know, kind of offset when the leadership parts of this market need a rest or get a break or come under a lot of doubt? Yes, but it would be a lot worse if everything was falling apart. So it's great that we've seen some passing of the baton. But now, and so far this year, you've seen the four largest stocks in the S&P 500. They now have market multiples after the recent pullbacks. So you've seen these valuations come in. So I think we made a big deal of Google or Half of that earnings last week, stock reacted negatively. But as you were saying in the intro, this week the stock is rebounded. So we placed so much focus on these individual hype mega-cap companies, and how do they react to their earnings on the day, and that's going to be a bell weather for how the market performs during the earnings season. But if you look back historically, you're better off flipping a coin as far as how those stocks react on the day after they report to how earnings season is going to progress. Yeah, you're spoiling the fun, but I've said that for a very long time, that like there's not any kind of magic bell cow stock that we have to follow. Well, there's plenty of other stocks that have a higher correlation, but they're not the mega-caps. On the other hand, just on that point, Apple often viewed incorrectly as a broad market bell weather. However, it's really been a beneficiary of everything else going on, and now that looks like a richly valued stock. Yes, so that's trading over 30 times earnings of the five largest companies. That's the one that's the massive-- if you look at a chart of their valuations versus the S&P, it's everyone's here and then Apple's way up here. So yeah, Apple, whatever, what's good for Apple, hasn't been good for the overall market, and that's been for years now, going back to early iPhone models. And what's been good for Nvidia hasn't been good for Nvidia. I mean, the opposite side of it is that Apple is so richly valued, and Nvidia is below market multiple at this point, which is fascinating considering this is the epicenter of the AI trade. I know, it's phenomenal. AI was supposed to make us all smarter, and no. But the uncertainty regarding how AI is going to play out is greater than anything we've seen. You brought up Nvidia, and you look at a stock like Oracle, the swings in that stock over the last year have been crazy. Just in the last 70 trading days, it has seen its largest-- one of its largest ever 35-day rallies. And then immediately after that spike, it's all one of its largest 35-day decline. So the market doesn't know what to make of it. And you just see that in all areas. In Iran, there's so much uncertainty. With the Fed, we've never seen this level of uncertainty going into a Fed meeting as we're seeing-- Yeah, right, on the day before. Yeah, yeah. It's been a long time. I guess the question-- with the sums of money being swung around this economy, I actually think it explains a lot of something like an Oracle, which is just kind of the whip end of so many of these trends. I mean, it was made from a boring enterprise software company overnight into a play on the biggest technological movement, by the way, we're showing you the closing bell at SIBO in Chicago there as well. Yeah, so I mean, Oracle-- On the one hand, it has this enormous backlog, but on the other hand, it's all open AI. So that heavily reliant on one company for that business. And so we'll see how it plays out. And there's a lot of uncertainty. But I think you see that decline. It's 50% over it. Like in the last month, I think that's a little bit overdone on the stock there. Yeah, we'll see if-- if-- kind of first in, first out in terms of the selloff works out as we get through the Fed tomorrow. Paul, good to talk to you. Thank you very much. Good to be here. All right. KLA earnings are out. Christina Parts and Evelis has the numbers. KLA falls into the semi-cap equipment space, and they do a lot of the process control for semi-conductors. So it's considered AI-cap-ax play. And so for this name, they've posted an EPS of $1.05, $5.00 beat with revenues of $3.66 billion. So a small revenue beat. I think in regards to the guide, maybe that's why we're seeing the stock down so much. The EPS coming in guide at 1.16 at the midpoint. That's only two cents higher than what the street anticipated. Same thing for Q1 revenue guide, $4 billion. When I was going through some analysts notes prior to this, they were saying that it needs to be higher for $4 billion for the stock to really move. So perhaps that is why the non-gap gross margins guidance for Q1, 62 and 1/2. So a little bit higher than what the street was anticipating. But nonetheless, it wasn't enough to appease investor shares down about 8% for this semi-cap equipment name, guys. Yeah, already almost 40% off the highs as of the closed regular trading today, Christina. Thank you. Modeling earnings also outfraining Gomez has those numbers. Brandon. Hey there, Mike. That's right. Shares are up about 2% heading into the earnings from now up about 2% as well coming into the after hours trading. A B on the top and bottom line here at EPS, 73 cents a share. A head of estimates of 68 cents. Revenue also a B at 9.36 billion compared to the 9.2 billion. Total organic revenue growth doubled expectations at 2.2%. Meantime North America organic growth up 3.4% with revenue coming in at 2.63 billion ahead of the 2.57. That was expected. Now the company is also issuing a 4% increase to quarterly dividend rather. Shares up about 2%. Guys. Brandon, thank you. Don't miss an exclusive interview with Monterly CEO tomorrow at 11 a.m. Eastern on Squalk on the street. Well, lots of earnings just out even bigger names coming tomorrow with Microsoft and Meta concerns about spending on the AI build out Meta today making a move, which could address those concerns. Julia Boursten joins us now with what it says about Meta's strategy, Julia. Well, Mike Meta and BlackRock announcing a new deal to develop and own a $14 billion data center in El Paso, Texas. This deal illustrates Meta's strategy to build out AI infrastructure and share the costs. The data center will provide one gigawatt of compute capacity starting in 2028 and Meta will lease the entire campus. Now in addition to powering its own models, Zuckerberg has said AI compute it could possibly lease excess compute out. So this could play into that as well. Funds managed by BlackRock will own 80% while Meta will retain the remaining 20% with BlackRock financing. $12.5 billion in debt and Meta taking on $1 billion in debt. Now, Meta shares are down 12% since its last earnings on its growing AI spending. The company said last year plans to spend $600 billion on a data center build out. Well, at the same time, Lenders are demanding higher yields to finance projects like this one. And analysts expect Meta's capex to dramatically increase from as much as $145 billion this year as much as $247 billion next year according to Wells Fargo. So in Meta's earnings tomorrow afternoon, we expect Zuckerberg to flag this BlackRock partnership as a roadmap for future deals. We're watching to see if he reveals anything about plans for an AI cloud business. Guys, this might be a roadmap, Julia, but it also might be a template for investors demanding a higher premium for that debt. I mean, some reports are saying that they're demanding north of 7%, which is for tens of a percentage point higher than the Hyperion Round of Financing that they saw last October. So that's considerable when you think, you know, taking consideration how much they are raising and how much that could add up in terms of interest expense. Yeah, it's not just the debt. There are so many pieces of this, Melissa, and you're right. They are looking at higher debt financing costs now than they were a year ago. They did a similar deal with Blue Owl, but I think what we're going to see here is them bringing in more partners who can help carry the cost of that. So making sure they're not fully exposed, not just in terms of capital expenditures, but also all of these debt costs. Because it's getting more expensive to do this. And there was a big article in the New York Times about the huge data center that meta is building in Louisiana and this idea that this is a huge amount of effort trying to get everybody. everyone on board for these big issues and it's really something where they have to get entire communities to be okay with them putting in this investment there and then they need to get the support of co-finance series as well. Julia thank you. Julie Worson. As you mentioned for just reporting as results the stock is higher on the back after earnings. Coming up we'll be joined by the company CFO in an exclusive interview. You're watching Closing Bell Over Time Live from the Nasak Market site. [Music] [Music] Earnings just out from forward EPS beat the street revenue mislightly but the boost and full your guidance is helping the stock shares are higher by almost 8% right now joining us now in an exclusive interview as Ford CFO Sherry House along with our own Phil LaBeau. Phil. Thank you Melissa Sherry thank you for joining us today. We just went over the numbers you beat the street on EPS and I think what's interesting here is you're raising your full year earnings and free cash flow guidance in large part because you're more optimistic about what you're seeing with what people would consider the traditional business the internal combustion engine vehicle business as well as a few other areas. How much of that is due to the stronger US sales and pricing in this environment? Well Phil thank you so much for having me on today and it is great to be here to talk about our second quarter performance our second strong quarter performance leading to our second raise yet this year. And you're right on the story this quarter is really about strong pricing and mix in particular where we're seeing the mix improvements is with the Bronco as well as with our three row SUVs like the Explorer and the Expedition. We also saw continued leadership in the F-150 series as well where we had the highest market share the highest share of revenue with the least incentives. But our story this quarter didn't stop at the top line. It also was about deep operational improvements and cost and quality. In fact we're on track to be able to deliver our second year of improvements in material cost and warranty. This year we're looking to bring home one billion dollars and we're on track for that. The other thing we're really excited about is our initial quality was really recognized here recently by Ford being named the number one mainstream brand and the JD power initial quality study. But most important for this quarter that business isn't just executing to plan that business has been able to absorb headwinds as they've come at us. Sure well Sherry the one of those headwinds was the novellus aluminum supply from upstate New York to fire. I should say fires that happen there that have severely impact your aluminum supply. You've expected that the recovery now is going to be what 2.5 billion dollars in terms of volume. Originally you thought it would be 2.5 billion to 3.5 billion or 3 billion I should say why the trim there down to 2.5 billion. Well it was always an estimate from the start 2.5 to 3 billion but the important number to take away is that we are going to bring 1 billion dollars additional on a year over year basis as part of our recovery. That's what we guided and that's what we're sticking with our cost are actually down as well. Originally we thought it was going to be 1.5 to 2 billion dollars of cost hit and it's actually turning out to be closer to 1.5. But the most important thing is the hot mill is back up and running. We are qualifying and validating our parts now. We just had June return to our normal run rate across our super duties and our F series and by the time we exit about September we're expecting that we should be 100 percent back on that hot mill. So we are geared up and ready to go. Sherry you're forming a joint venture with Gili out of China for your operations over in Europe. That is focused on European operations. Any chance that that is also in other continents around the world or elsewhere in the world aside from Europe. No that isn't the plan. Right now we are very much focused on Europe. This was a fantastic opportunity for us to take advantage of a wonderful plant that we have in Valencia, Spain and open up the capacity. And now we will be able to offer two products that Gili will make there, two products that Ford will make there and one product that we plan to co-develop. What that means is every product coming out of that plant will be at a lower cost. And this is what we need to do in this competitive environment. So we are looking to do more partnerships like this in order to make sure that we are being very thrifty with our capital and capital efficiency is top of mind for Ford. Sherry are you still on target for the new lower price EV to roll out next year? We are. In fact the universal EV platform is busy getting ready. We have equipment installed and we are busy getting qualification of the that the equipment is running well. The supply chain is ramping up and you might have even seen some of our products on the road that we are testing today. So we are on track. UEV is planned for 2027 and that is going to start with a medium size pickup truck. Aimed at about $30,000 as the starting price. Sherry thank you for joining us today. Sherry House, CFO the Ford Motor Company on a day, Mike and Melissa where they beat on the bottom line 42 cents a share versus the street at 35 cents a share. I will send it back to you. Yes, stock responding to Phil. Thank you very much and thanks to Sherry House as well. Coming up we will get you caught up on some of the stocks making big moves after hours and explain how Brutcher has a way added billions to its market cap today without saying a word. Close and bell overtime will be right back. Welcome back to Close and Bell overtime live from the Nasdaq market. So stocks mostly higher today. The Dow up 537 points. The S&P gained a quarter of a percent. The Nasdaq slightly lower due to declines in chip and memory names. After hours we got results from chip equipment maker KLA, that stock down 8 percent, a half percent. It beat on earnings and revenue. It is guidance for next quarter for both earnings and revenue. At the mid point of the ranges, still slightly ahead of the estimates. With Seagate popping after its results, adjust the earnings of 571 to share. That compares to a forecast of 509 revenue. Also better than expected. First quarter guidance, likewise strong seeing earnings of about 730 per share. Compared to the estimate of 580, that stock up 7.7 percent. We got more chip earnings to tell you about. Let's get to Christina Parts and Devils who has been breaking down those numbers for us. Christina. I am going to lump Corvo and Sky Works together since they are both radio frequency chip makers. Specifically for connectivity and power. Corvo is more expensive smartphones and they post it on EPS. Beat of $1.64 in revenues of 785 million gross margins also beat at 52.8 percent. Even though the company said in the release they weren't going to actually share guidance, they did say that gross margins for fiscal 2027 should stay above the 50 percent range, which is great. They also said their full year EPS guide would come in at $7, which is slightly higher than what the street wanted. The reason they don't want to provide guidance and they have suspended their earnings calls is that they are going to be acquired by Sky Works, which also just posted their earnings and said the deal is expected to close this calendar year. The company beating on earnings per share in revenue stating that mobile performed well on healthy demand and that they are seeing double-digit gross specifically in auto because they provide the software and the radio frequency chips and cars as well as data centers, which is a growing sector for them when compared to last year's numbers. gross margins were just a touch light and they also announced a $2 billion stock repurchase program. Perhaps why you're seeing shares were originally unchanged down down 5 percent. Last but not least, NXPI. This is a not-o story given their exposure to the space. The company saying they're seeing growth across all end markets. They posted EPS beat of $3.61 on revenues of 3.5 billion so not as big of a beat. gross margins coming in at 58 percent for their Q3 guide. Gross margins only increasing about half a percent of 58.5 percent. Their EPS coming in at $4.11 slightly higher on revenue of $3.75 billion, which was the midpoint. This is a company that you saw Texas Instruments competitor fall after their earnings report even though they said auto was strong too. This beat just wasn't enough for NXPI given what we saw with Texas Instruments very recently. Christina thanks. Christina Fartz-Neville. Berkshire Hathaway winner today thanks to some of its investments. Apple is its largest holding. That's not getting a record high today. Coca-Cola also a major holding of Berkshire and also hitting a record after its earnings. Bank of America also hitting a 52-week high. UBS raised its price target on Berkshire Hathaway. A share is by 3 percent. The thinking is that the stock Berkshire Hathaway is not performing as well as its equity portfolio is performing. This turn back towards some more quality type stocks definitely benefiting. I also noted earlier insurance stocks were breaking out today. Guy goes the biggest operating business all state and progressive up to and 4 percent. Sherry Williams a big beat stock up 8 percent. It's not a huge piece of Berkshire but they do own Benjamin Moore. So in general there's just a lot of places that at least on a one day basis they're winning. Time out for CNBC News update with Brandon Gomez. Brandon. Hey there Melissa. The Trump administration today implemented new bands on the import of Chinese robots and power inverters. Those inverters enable renewable energy sources and batteries to connect to grids and data center equipment. According to the administration the bands will help secure the US AI supply chain from Chinese threats such as power disruptions, data theft, and cyber attacks. The FAA proposed new rules today to speed up the approval process for commercial space missions. It would exempt companies such as SpaceX from following provisions set out in 13 environmental and other laws, including the Endangered Species Act and the Clean Air Act. And according to ESPN, Philadelphia Eagles' pro-Bull defensive tackle, Jalen Carter, just agreed to a four-year $152 million contract extension today, making him the highest-paid defensive tackle in NFL history. The deal comes just one day before training camp begins for the new season. Hefty Payday there, Melissa. All some things back to you. All right, Brandon. Thank you, Brandon Gomez. Well, small caps have cooled off in July, but they are still significantly outperforming the S&B 500 up next. We'll discuss whether they are still big gains ahead for the Russell 2000. Welcome back. Shares of Blue Energy jumping by about 10% after hours earnings of 78 cents a share compared to the estimate of 41. Revenue also a beat. The company also raising full-year earnings guidance by about 70 cents a share at the midpoint of the range. Remember that includes a just reported 37 cent beat. So up 10 percent, but it's been down like 25 percent. Oh, for sure. Yeah. It's been a little cut half at some point. Small caps have outperformed the broader market indexes this year's investors look for opportunities beyond mega-cap tech. The Russell 2000 up 19 percent so far this year compared to 8 percent for the S&P 500. So can these smaller stocks continue to outperform? Joining us now is Goldman Sachs asset management, small cap, full-to-go manager Greg Toruto. Good to see you, Greg. Thanks for having me. It feels funny to kind of generalize about thousands of stocks in terms of what moves as a lot of superstitions and theories, you know, whether it's macro interest rates. What's your base case for why this sub asset class can work? Yeah, I think that there's a, we're in a really nice earnings path right now. It's been a couple of years since we've had that. Earnings are outpacing their large cap brethren, so that helps. Valuations are still attractive even before we get some positive revisions. And there's some individual catalysts in the tech area in healthcare, namely biotech, and parts of industrials and financials. So I do think that there's a lot of things going on. It's not just a one-size-fits-all market, so you have a lot going on underneath the surface. Part of it benefits just from a broadening trade. I mean, financials, healthcare, those are the bigger sectors. I think information technology is like the fourth biggest, so it's not as much waiting towards that. So I mean, do you argue that maybe it could even be a port in the storm, to some degree? I, you know, there's a lot more volatility in small caps than there are in generally in some of the large cap stocks. So I wouldn't say that, but I do think that there is a little bit more valuation cushion. That's one part of it. And I do think that as you broaden out, you know, you're not playing that one trade sort of thing, so it's not just hyper-scalers or AI or biotech. You can play a number of different things in Medtech for healthcare, for example, or in parts of a consumer retail and apparel if you like that or restaurants. I mentioned sort of the macro story, and I think one of the more simplistic things is, if policies being tightened be careful with small caps because maybe that's, you know, going to restrain risk taking in liquidity, is that relevant here as we go into a fed meeting? You always got to pay attention to interest rates, and I do think that you have to pay attention what goes on in the fed. I do think that in the last, say, six months, there has been a bit of a delinking between sort of the path of the 10-year and what's gone on in small caps, which had been a lot tighter for the two years prior. So I do think it's something that we have to watch, but I think the underlying macro and the underlying demand side of the economy is good enough, and the US, you know, is being one of the stronger economies out there is helping that a lot. All caps are a domestic story, so as that goes, I think that that outweighs some of the interest rate influence. What are your favorite areas right now? So we like biotech. Biotech's been good for a couple of reasons. One, there's been M&A, and there's also been a clinical trial success rate that we haven't seen in a while. So we like that a lot. I do think that, you know, there are parts of tech, cyber security. You know, I don't think it's a one size fiddle market there either. I think cyber security is an area. Because AI proliferates, agents proliferate, it can be a way to kind of protect yourself. We saw what happened last week where that high profile breach happened. We like that. And I do think like aerospace, you know, even if you kind of shift away from defense, aerospace and sort of the kind of the commercial aerospace boom that's happening, the air shows were a nice catalyst for that. We like aerospace as well. I imagine the whole AI buildup boom has to be sort of spilling into some of the areas. For a couple of years, we were waiting for it and it didn't happen. But we're starting to see it in a bunch of different places. The components side in semiconductors, you know, the data center side, they're getting built, the ones that have been built. Now you're paying attention to some of the things beyond just like the cooling towers that need to be out there. So there's a number of ways to play it in small caps. Software interestingly enough is actually starting to come in some parts that, you know, as we have more instances of these AI models that are out there and you need harnesses to kind of make sure that things work properly. You get to choose the right model and you have these neoclouds, the word I ever thought I would ever use, that are also helpful. So I think that there are a lot of parts of the small cap market that benefit from the AI buildup. Have they gotten the valuation boost that the larger caps have? Some have and you saw that like in the semis, especially in the second quarter, semis really, especially down and capped, it really, really well. You've seen a little bit of a profit taking move in the last month driven by the memory side of things in Korea. But I also think that there's some longer lasting opportunities in some of these companies, especially in the broader base communications equipment because those data centers have to be connected together and that has not even started yet. Great. Thanks. You're great. Thank you. Well, President Trump keeps calling for the Fed to cut interest rates, but up next, we'll discuss whether Kevin Warsh and company are more likely to hike rates than lower them, closing up a lower town with you right back. Welcome back. The Fed will reveal its latest interest rate decision tomorrow and while the Central Bank is expected to stand pat, could a rate hike actually be on the table and show the independence of new Fed share Kevin Warsh. Let's bring in senior economics writer Matt Peterson, Matt great to see you here on set. It's interesting that there's a growing core saying he could hike rates tomorrow. What is your reporting show? There's definitely a lot of people out there who think that it's possible. I mean, you look at the market, it's like a 30% chance that he will hike interest rates. I do not personally think that this is very likely based on my past conversations with him and all the things that he has said since he has become Fed share. I think he would like to cut interest rates if he possibly could. But there are a lot of people on that committee who would rather hike them. So we're going to split it and stay flat. Right. So the kind of net dovish move is to kind of keep this hold to some degree. But there's so many paradoxes in here which as you pointed out, Warsh has kind of this consistent hawkish bent before and now is kind of put in place presumably by President wants lower rates. The other piece of it is he wants less transparency, less forward guidance. I says the balance sheet has helped Warsh should overmaid. All those things implicitly say markets have been too common, too strong because of the Fed. So what? We want them weaker and more volatile. I do think that's the upshot of what he thinks. You know, you look at all the things he said about Silicon Valley Bank, for instance, right? He doesn't think that the Fed should have bailed out Silicon Valley Bank necessarily, right? He generally is in favor of a kind of more rough and tumble market. I mean, he's yet to really be tested on any of this kind of stuff. So hard to say for sure. At the same time, it's not a committee of one. It is a committee of many people with many different opinions and already we've heard some be much more outspoken about where they stand on where rates should be headed and that would be higher. So how do you think that influences? Because he has total cover to say, I do not or I mean, I guess he won't say this because this is probably not what he was going to do, but he could say they wanted to hike rates. It's true. I do think if the Fed decided to cut, excuse me to raise interest rates, Kevin Warsh would champion it, right? He would come out and he would be the voice of that. I don't think he will. I mean, he's got a pretty divided committee, right? You have maybe three or four voters who were really worried and think you should raise interest rates. You know, in a group of people who are more or less in the middle. And so there's a chance for persuasion here on the part of the Fed chair, right? I mean, I think you hear what he said about energy, about AI, that he thinks that these are sort of net, dovish things for the economy. And so he's going to keep his bias, I think, towards all rates. Yeah, I mean, look, it would definitely be a statement of price stability as he's repeated, you know, constantly. Maybe even longer term rates would stay tame. If in fact they were to lift short term rates now or in September. I also think it's sort of interesting that the president yesterday, you know, said he'll do the right thing, he'll do what he wants to do, but there are people on the committee who are very political. Like, in other words, if they hiked, it would almost not land on Warsh. He said there's someone with bad intentions, right? I mean, it's talking about Jerome Powell, of course. You know, I think that's a kind of minefield for Kevin Warsh here, right? He cannot look weak. I think he thinks that the president chose him because he looks strong and he, you know, he wants to look like he's in control. And so if he can't disset, right? There's some people out there who think maybe this will be the first time that chair has ever been in the disset. I've really, really doubt it because you don't want in your second FOMC meeting to see him like it's out of control. I also don't think the committee would vote. to tighten without it. Yeah. Matt, thank you. Not Peterson. Well, Apple's making a big bet that you will want to lease your next phone from them rather than buy it up next. What that could mean for the stock, which just crossed the $5 trillion market cap, closing by over time, live from the Nasdaq Market Type. You're right back. [MUSIC PLAYING] Let's get you set up with tomorrow's trade today. The Fed's interest rate decision will be the big event on the economic calendar. And a huge day of earnings kicks off before the bell with Procter & Gamble, Humana, Boston Scientific, Biogen, and General Dynamics. And then, during closing by over time, we'll break down results from Microsoft, Metacallcom, Arm Holdings, and LAMResearch. And if that's not enough, we'll also get numbers from Robin Hood, Starbucks, Chipotle, MGM, Resorts, and Carvana. We're going to have some questions answered, hopefully, in 24 hours. Apple shares have been on a roll recently, up 25% over the last three months, now topping $5 trillion in market cap today ahead of its earnings on Thursday. And now investors are hoping a new leasing program could be the next catalyst for the stock. McKenzie-Sagalos has the details. Matt. So Mike, Apple's trying to change the economics of the upgrade cycle without having to discount its hardware. iPhone replacement periods have stretched to nearly four years. While memory costs are pushing the next line up higher. But with Florida, Apple can turn a much bigger sticker price into a monthly payment and create a natural return point after 12 or 24 months. But this is not standard installment financing. The customer does not automatically own the device at the end of that window. They either return it, buy it, or move into another lease. And that gives Apple influence over when the next purchase happens and pulls more of their relationship away from the wireless carriers. It's also another example of a capital-light deal. Clarina funds the lease and carries the credit risk. Well, Apple keeps the sale, the customer, and the opportunity to attach Apple care, accessories, and services. So really heading into earnings on Thursday, Apple's trying to protect premium pricing while making the next hardware cycle, including potentially a foldable phone easier for consumers to absorb. Guys, I mean, this is just in time for the price increases that are set to take hold. Right, McKenzie? I mean, any price increase will be diminimous if you're breaking it down over all those months. But precisely, you think about it in the context of the iPhone 18 Pro. You've got tech insights that should have tear down on the physical phone, assuming the memory price increase is saying you have to add $200 to preserve margin. You spread that out over 24 months. You're looking at $8 a month, which is a lot more palatable. And then in the case of this form factor change, potentially with the foldable phone, you've got Wall Street modeling anywhere between 2,000 to 2,500 per device. If you max out on perks like memory, you're looking at $3,000. So you really need to introduce a program like this. And what's so fascinating against current installment plans is that you're not building towards ownership. You're building towards just renting use of it. And so now you've got a reason to upgrade at the one or two year mark, whereas before, that just the incentive is weren't built that way. Right, yeah, you definitely are kind of-- you're not building equity to so to speak, Mac. Thanks very much. We'll see how this goes through the numbers on Thursday. By the way, the old wall phones used to lease them from AT&T, like a wall phone. Like it was on your wall. Yeah, exactly. You didn't actually own the actual handset. So it's just going back to it. That's right. It's the lease. That's going to do it for overdrive. Fast money begins right after this big break.