himself. at question is four and half million dollars in wire transfers. some of which apparently came from shohei ohtani's bank account to an illegal bookmaking operation. there was an interview with espn where shohei ohtani was said to have paid off his friends debts and then denied it. >> not gambling on baseball, so says the interpreter, i should say. thanks for watching power lunch, everybody. >> closing bell starts now. welcomed the closing bell. i'm mike. and for scott. this make or break our begins with apple ask -- acting as the biggest drag in a follow- through rally. apple shares off about 4% tracking for their worst day in almost eight months after the justice department sued the company for allegedly stifling competition and consumer choice in its iphone ecosystem. more than 4%, s&p 500, meantime of more than a third of 1%. not far from its lows for the

day. it's been up closer to two thirds on 1% ago led by ai chip leaders brought, and nvidia, the ai winners and consumer and financial names celebrating the j paul press conference yesterday. potential soft laughing -- landing. index will be higher still if not for the drag from apple. that takes us to our top take. antitrust threat to apple, the real thing. how might you change the equation more broadly? it protects market leadership at our tech correspondent stephen apple shareholder are here to stop that. let's turn to steve for the details of the case and, steve, it's a broad one. >> that's why we are seeing the reaction to shares that we are seeing today because, look, this covers just about everything apple makes. talk about imessage, sera, apple tv plus, the advertising business on and on and on, they make a case, the deal date does that just about everything

apple does is designed to keep people locked into the ecosystem and upgrading their iphones and hindering competition whether that is from other apps or with competing services or other hardware like accessories for the iphone that can include bluetooth, headphones or other smart watches that aren't the apple watch. huge, broad case. apple is denying all of the allegations and saying so much of the behavior that is described in this lawsuit is mostly done to keep, you know, the product is pristine as it can be. to keep users safe and secure, protect privacy, all of those arguments that they keep talking about. at the same time, there is evidence mentioned in here and i'm sure we will get more whenever this eventually comes to trial that shows, you know, that apple privately, executives among themselves, were making these decisions in order to keep people locked

into the ecosystem. imessage is a perfect example. there's an apple executive quoted in an email from years ago talking about how they do not want to put imessage on android, for example, because i would encourage people to just switch to a cheaper android phone. all of this to say they have to prove consumer harm in some way or harm against the app developers. that is the barrier here. apple will fight it until the very end. >> steve, how does the dispute with epic games about the app store and the terms under which you were able to have an app in the app store and where the payments flowed through and all of the rest of it, how does that bear on some of the allegations? >> yes, that s something apple points to. that case against epic games, the supreme court denied hearing it. apple largely won the case. there's one minor count the got ruled against them. at the same time, they are saying, look, this already went through the courts and decided that our model is okay. it's not an antitrust thing. however, google, with a similar case against epic and that was

a jury trial and not a court trial and google lost that. there's also that side of the equation too. it's just going to be really interesting to see how they argue against the court and what further evidence we will see that the doj has that backs up these allegations of competitive behavior. >> interesting. a little complicated. you know, sometimes the market shrugs off these things even if it is an actual lawsuit from the justice department. in this case, 4% decline, you know, i would read a couple of things into this. one, a little bit of fragile psychology around apple in the first place in terms of exactly how much they have during the right spot with ai but also the services business is, obviously, 25% of revenue but more than that in the evaluation, most likely, because it's a higher multiple piece. >> it's broken momentum. we know that. the momentum that apple has been broken for the better part

of 2024. it's below the critical moving averages and in and on way this news presents an opportunity for you to find if there is really going to be technical strength in the 165, 168 area, 168 is somewhere around there. 165 six-month low and go back one year it's 155 as well. we will test those support levels for sure as long as we have nvidia and the ability for nvidia and meta-to offset the weakness that we have seen in tesla and apple. ultimately we are going to be okay. if you're an investor and your hearing the news and you're saying okay, i'm going to move away from apple shares just on the merit of this lawsuit you are making a tremendous mistake. if you're making a big mistake because, understand, alpha and alphabet are going to be the continued target from regulatory bodies. you will continue to hear about a $1 billion fine that is paid or a $2 billion find that is paid and at the end of the day, the ability for these regulatory bodies to prove that the consumer experience is not

a good one for consumer base that continues to grow to be able to prove that from a pricing standpoint that apple's competitors are not raising prices as well, that there hasn't been an impact from supply chain disruption or inflationary pressures and to believe that they can take the apple product and make it something different, skinny it down so my hockey tickets, my baseball tickets, my car reservation, my membership, all of that is no longer aggregated in the apple wallet. it's in an individual app. i think it is completely false. >> what about, joe, there could be business practice changes. who knows if that will be the case but, you know, if they either take a lower share of app store revenue or, if they permit the direct charging of

internet purchases, things like, in other words, maybe that will move the needle very much but it raises the question why are we doing it this way in the first place. >> apple is prepared for that. they've indicated a willingness. they've done that in the case of the eu already. there has been a willingness on the part of apple to be accommodated from that standpoint. back towards messaging and the third-party messaging app, what sap is what it is today because of the iphone. so, i think apple will be more than willing. again, look, if you're selling the shares today based on the merit of these regulatory bodies who, quite candidly, cannot keep pace with the technological innovation of these companies, you are making a mistake if you are telling me or selling because of the broken momentum. i can understand that. >> steve, is there anything in the litany of allegations that maybe was surprising. we've known this type of thing

has been hovering over apple for a while. in fact, apple was conspicuous as one of the big tech companies that didn't have a formal case here but is there any piece of this it seemed like, you know, we were quite prepared for? >> yes, there's a big focus in the lawsuit about what they call super apps. if you're familiar with we checked, very popular in china, still available here. this is an idea of a nap that has many apps within it. for example, we chat lets you book a car and make payments and do other stuff. basically, the allegations here are saying apple does not allow these apps when they do. that was an interesting thing. i will also note thatwe have

got to talk about ai of it all because this is happening at the cusp of apple about to announce whatever ai product it has. we are the very early stage of what ai is. this lawsuit is all about the technology of today that may not even be around that much longer. the app store and all of these things we are talking about may not matter as much as ai comes more into play. the question then becomes and this is something i'm going to be watching, i feel like a lot of people will be watching, as apple works through this process and spends time and money and effort finding this case and finding the doj, do they miss out on developing ai and fall further behind or at least how they are perceived behind. we saw with microsoft, microsoft largely blames its struggles 20+ years ago with missing the mobile revolution. something to watch out for s does this make apple miss the ai revolution? >> is interesting. by the time the microsoft case was resolved the browser wars were over. google was around. so, yes. good point, steve. appreciate the color. thank you. let's bring in lauren of new york life investments. let's talk about this market and what we did or did not learn yesterday, how it bears

on the prospects for soft landing and, you know, whether it is supportive of risk market still. >> one thing is for sure, if you take what the feds showed us yesterday at face value, the growth is going to improve, inflation will be much worse, and unemployment isn't going anywhere, and we will still get three rate cuts this year, there is nothing not to like. that is risk assets all day. to be honest with you, i expect this rally can continue until the other shoe drops. what i expect the other shoe will be out of this whole fed dynamic is that the reason the fed can continue with its plan to cut rates even as inflation stays sticky is because we are starting to see cracks in the labor market. if that is not the case, then this balance doesn't work. if it is the case, then we are starting to see growth slow. something is to give but it's not giving right now. until we see unemployment claim start to climb i think it is a full signal. >> explicitly said a stronger job market would not be an impediment to rates. seems like they are determined to trim a bit off of the top f

whatever fed funds rate is right now, about 5%. unless something really conspicuous shows up in the way of them elation. >> i think the fed is very, very interested in cutting rates. there's a clear reason for that. that is how they keep financial conditions, market financial conditions loose enough to move this economy through at least the rest of the year, right? that is the closest that they get to an immaculate, soft landing. what i am seeing in the data though is that we are already seeing cracks in the labor market. nothing existential so far but we are seeing hours worked come down. small business hiring intentions come in. temporary work comes in. these are signals that strong wage growth is eating at profit margins and typically the last domino to fall before we see broader layoffs. i think the fed is sees that and that's why they feel comfortable moving forward with this plan. >> the kansas city fed has its own labor market indicator that has rolled over conspicuously, i would have to say. not a lot of mention of that if any yesterday in the meeting. joe,market got a little bit of

oomph at the open and rallied after the press conference yesterday or during it. you know, you had the maybe we will slow down the quantitative tightening soon but i guess we are starting from a high base here. this rally is already, you know, gone up 10% on the s&p year to date and maybe it is not as if you had a real springboard effect going into today. >> yes, i do you look at today and you dismiss the price action because it is largely attributable to what we witnessed with apple today. a very positive reaction, in my opinion. i agree with what lauren is saying. in addition to what chairman powell did he also addressed the potential liquidity concerns surrounding the reverse repo program winding down. he got ahead of that. i think the market like that. he is, obviously, in his words, consistent with other global banks, which natural banks, cutting rates, bank of england,

ecb, canada, australia already to follow suit. the market today is performing well. we haven't trend environment. the range is slightly below 13 to slightly above 17. that's telling you something about the marketplace overall. guess what? financials are about to be the leading sector in terms of s&p sector performance here today. right behind it, energy, industrials, performing really well. so, technology is only the fifth best performing sector of the s&p 11 sector. so, this is positive. i think this is as optimal a asset allocation environment for investors as i could remember. there is so many different places that you can go beyond the mag seven and back to apple for second, it reintroduces the conversation about s&p equal weight and i think that's great. >> lauren, so, for fresh money right now, a lot of options and a lot of things moving in a

positive direction. yorty have credit spreads tight, you have some broadening of the market but if you're concerned that there are cracks does that mean a rotation make sense? i wonder where you feel as if you have established your hierarchy of better places to be here. >> absolutely right. we are seeing an important broadening and all your we have seen a broadening and marketing activity. for investors i can be tactical, it makes sense to take advantage of the uptake we have seen in value in small gaps in the cyclical environment. i mentioned that i am concerned that the second we see unemployment start to rise that you are in a riskier environment. the type of balance we are drawing in a multi-asset allocation is incremental money and take your equity like risks in high yield. spreads are certainly going to widen as economic risk rise but you have an interesting carry there. i expect that if the fed is likely to cut, we think june,

july, the fact of the matter is, now is the time to be moving from cash into short duration credit assets and because we don't love duration risk with a curve we like to balance that short duration credit with long-duration municipal's taking advantage of a structure infrastructure. like joe said, there's so many interesting opportunities and a balance that investors can bring because you can get carry and yield and a fixed income. >> sure. they can do its job within a portfolio periods yes. >> by the way, i don't want he rate cut. it will teach us this, is the best return period for the s&p 500? go back to '95, the period from february to july, the market gave you 19%. back to june of 06 through september of 07 you have 22%. now look at december of '18

through the middle, i think it was august of 2019. 19%. 15% so far. a little bit more to come. it's interesting because i've had a few people say to me the minute the fed actually cuts rates, that might be the inflection point where you get market. >> that seems both plausible and a little too cute because 95 we kept barreling higher after the first. that's a best case scenario, as i keep saying. thank you very much. in the meantime, check out shares of red appeared stock making its market debut today. julie is at the post with all the details. hey, julia. >> i'm here the post. the stock is trading up at $50 a share. it did briefly dip below its opening trading price of $47. right now it's a 47% from its price of $34 a share. the volume here is incredibly high. nearly 41 billion shares have traded. that's on an offering size of 22 million shares. nearly double. incredible volume here. i spoke to reddit market maker

glenn carol. he said this is a picture- perfect opening for an ipo with a ton of investor interest. research just issued the first price target that we have seen on the stock at $54 saying that that does include a 5% discount due to overhang from the ftc inquiry into its data licensing practices. it believes reddit should trade at a premium to stall a mid-cap. due to its higher use, user growth rate and emerging opportunity to license data. now, reddit ceo steve has been telling me about the trading this afternoon that he feels immense gratitude and comical, while we celebrate today it's just today and tomorrow we get back to work. shares are now just ver $49 a share. back over to you. >> yes, the pricing conservative at 34 seems to have paid off at this point. thank you. send it over to rogers for a look at some other big names moving in. >> hey there. shares of papa john's lowered

today as the ceo is set to take over the chief executive role at shake shack in may. lynch took over papa john's and mentioned john there. during his tenure the company beginning in 2019, shares were 55% of the stock today having its worst day since may of 2023. shares of darden also lowered today after the company reported earnings and the ceo noted that spending from consumers who earn under $75,000 and $50,000 annually fell versus ear earlier as customers behaviors continue to shift. darden is down 7% having its worst day since may of 2022. my? >> thank you. we are just getting started. up next, weighing big risks. while everyone is focused on apple's antitrust news, there's one top analyst that says there's another tech company that could get caught in the doj crosshairs. details on that next. we are live at the new york stock exchange. you are watching close -- closing bell on cnbc. how's the chicken? the prawns are delicious.

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shares of apple down 4% on an antitrust lawsuit filed by the justice department accusing the tech giant of maintaining an iphone monopoly. the government's regulatory crackdown could also be a risk factor for alphabet which currently has two key cases on the docket. let's bring in mark of evercore. mark, you've just done a big, deep dive in general on alphabet and ask best of the business. how does the antitrust piece fit in here? it seems like it's been an overhang for a while. >> i think it is. it's more real. you're going to get, by the end of this year, a decision by the judge, a doj search antitrust case. this isn't -- i'm no lawyer,

but this is not a novel antitrust approach based on the experts we have talked with. it's very unclear how this could come down. is a significant chance they could come down against google which would lead to a series of trials to determine remedies. it may well last for two or three more years. this is all of the concerns for google that are coming to fruition and we are going to have your first decision and then you also have a case, a jury case that starts in the fall and you bring a jury case, antitrust case in the tech and it sounds like a lot of unknowns there. the risk is bigger and it's more real now than it has been in the past. >> unknowns about whatever potential words or penalties or settlements or whatever but also i wonder about what the risk might be to the business franchise and the way the google does business. there has been attention on the advertising tech that google operates but what does it mean, i suppose for the search

franchise at a time when people are asking questions about how durable it is in general. >> well, okay, i do believe that the search business is durable. let me address that right away. there's concern that jen ai may up and this golden goose that's been wonderful for google for two decades. i don't think that is the case. i think there is a real opportunity here for generative ai, search generative experience in all the different permutations we will see over the next year or two. we think it could material increase google's search query volume. if google is the one that has a decent shot of being the ai system for consumers, you are going to use google more than you did in the past. some of the fears about google being this intermediated by generative ai, especially on the search side were overstated. bring it back to some of these cases, especially the first one which is could they stop google and apple from reaching a an agreement on district deals? it sounds like a plausible outcome that could be great for google's payout immediately because it's $20 billion in cash.

the challenge thinking about this company strategically is the advantage they've had as a search engine is they've had so many queries and so much volume. if you're going to do the volume by 10% at some level that's going to hurt the efficacy or the power search model. i view it as a strategic negative if they were to lose the distribution deal even though it would save them $20 billion a year. >> right. yes. it is a self reinforcing thing. so, where does it bring you on the stock itself at these levels? clearly, you know, hasn't participated to the degree that some other have and it's a relatively modest evaluation. >> i'm picking it up here. i recently a couple of weeks ago made one of the top picks for the first time in over two years. i've had a strong preference

for meta-and they've done a lot of things right but mostly executed really well on some product cycles. i think we become too garish on google. the overhangs here are it won't manage their cost structure, they're not going to give you any cash back, they're mentored of -- i think all of those over kings -- overhangs are overstated and can be disproved now. they have 100 billion cash burning a hole in their pockets. i think they will. they must eel greater pressure given what mehta did last quarter. whether they come on get more aggressive, i think they will. they have the ability to do that. probably requires culture change did i know there's a lot of skepticism they will do that. at least none of this is priced in. if they come out with those two moves i think the stock moves

up. i like the ammrisesyetc t up on google shares right here. >> yes, it seems like there are some things within their control even if the legal side is less so, mark. thanks. good to catch up with you. >> of next, charting out the rally. the s&p heading for another record close. one top technician is betting on more upside the head. he will explain why and the sectors he thinks will lead higher. we'll be right back.

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welcome back, stocks in the green with the major averages and seven of the 11 s&p sectors hitting new highs. our next guest is charting a course for more market upside ahead. joining us now is john, chief technical market strategist.

john, it's good to see you. i know you have been in the mode of saying, look, you have to give this market credit and it is shown especially on the s&p 500 large caps that it actually has this pretty solid uptrend in place. where do the recent gains take us and how would you plate from here? >> hey, thanks for having me on. yes, really little to complain about when you look at the s&p 500 itself. solid series of higher highs and lower lows and averages in the right configuration, all of that. i'm looking somewhere north of 5300 on this. maybe dare i even say 5350 and with major support i would say 5105. as long as we stay above the support level, i would assume the pressure is higher. between now and the next time we talk, i would say, hey, that 20 day moving average is a good proxy for the short term trend if you were to take that back in the november low, it's hugged quite nicely in the trailing stops. 5300 if not a little more on this leg. >> it's only a couple percent

up from here. even though it was hard to imagine six months ago that we would be talking about those levels, what is potentially going to get in the way, either in the way of leadership with momentum fatigue and some of the market might take hold or seasonals or the fact that sentiment might get somewhat elevated. >>i think it's all of the above, to be quite frank. a lot of us including me thought the market would stall out lower but it keeps proving us otherwise. seasonals are an issue. the election is going to be an issue. i would say which one and i was talking to clients about this earlier, it's hard to pinpoint which one it is besides the unknown. it could be macro trends, interest rates, the 10 year yield has been pushing higher all this year. it's still in an uptrend from that perspective, trying to rollover really hasn't. the dow has been sticky strong.

i think the trends translate into stickier inflation and that could be something that stalls the market out. >> i know that technology, you downgraded in your work to more of a neutral position, what are the favored sectors and what happened with tech that seem to take a back seat? >> don't get me wrong, i haven't gone all the way down at this point. it's interesting because there is rotation going on. it's basically a downgrade of technology has made room for other sectors to move up. energy and materials because of the commodity and those are really compelling. within technology, it still looks okay, equipment still strong, the hardware, basically what has happened is the smaller cap is profitable ones have come down. those of come down. you've got a lot of those names in there. they have come in. also, just semiconductors, that industry grew. outside of a couple of ones

that we talk about all of the time, there has been splintering in that area. that is what brought down the ranking there but it has made room for energy and materials to push up. >> financials, i know they have also improved and you also have to make a distinction between financials entirely and banks because, really, a lot of the financial sector is not a bank. >> that is correct. one thing we can look for to be an optimist, you might want to buy a regional bank, interest rates, right? interest rates need to stop doing what they are doing because there is a relationship between the market andinterest rates and a big component of market breath would be the smaller banks. you are right. i agree with you. insurance names are good.

capital market looked great. it's just not those regionals. i'm trying to think, what would be the next area that could potentially improve financials. it would be those regionals and it would have to be tied to the direction. >> that is absolutely been the pattern. you get relief on yields and smaller stuff tends to be able to work. we will see if that holds true, john. appreciate the time today. thanks much. >> thanks, mike. of next, the future of espn. we've a first look at a new cnbc documentary featuring some exclusive comments. former disney ceo bob about what might be next for the cable sports network. that is after this quick break. closing bell will be right back. oh, charades! - okay! - love it! umm... first word. - tonsillitis! - nostril! uh-uh... bill! uh-huh... - hip-hop! - limping! mmhmm! medical bills! uh-huh! - pancakes! - cash! who pays you cash when you have medical bills? grrr!

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welcome back. espn is about to enter the ring in streaming but can it win in that arena? cnbc's -- a new digital documentary out now on cnbc.com. take a listen. >> to increase the popularity of the streaming app once it launches, espn has begun talking to strategic partners including the mba and the nfl who could help market the product and provide it with additional content. espn could even offer partners a small stake in its business although they say it may not be necessary. >> it's not about equity,

right? it is not about these partners taking an ownership interest in espn. this is about partnership and accelerating the launch or the adoption of espn flagship. >> it's possible that maybe the cash itself is what thereafter but, strategically, i don't see a benefit in bringing on yet another minority part near into espn. >> alex joins me to talk ore about this. there has been puzzlement around the notion of a partner for espn, whether it would be, you know, spreading ownership around or really some marketing mechanism. what is the state of play. by the way, it's such a confusing array of streaming things at espn that they are going to be putting out there. >> two great points. a little spicy about that, with bob saying he didn't see any strategic logic for disney and espn.

it's funny, i do see strategic logic of the disney standpoint if they wanted to do a deal because it would make the leagues put skin in the game for espn's existence, development, fleur schmidt. i don't see as much strategic from the league standpoint because they risk irritating the other media partners who are bidding on those rights against espn. if they were to do an equity deal, those talks are still going as far as i know. bob brought this up nine months ago. still, we have not seen a deal. that is indicative that, maybe, there is not an easy one to get done. your other oint about the streaming services, i think this is a phenomenal thing to talk about. i remember a few years ago when hbo had hbo max and hbo go and hbo now. espn may be entering a world where it has a new sports jv that it's going in with warner bros. discovery in fox and it has espn plus and has the espn flagship direct to consumer which comes out next year in

the fall and espn will be on cable. you do wonder if consumers are going to be like what do i get? what is this mean? different bundles and and so forth? i think that is a problem. it's going to need to have a very clear message to consumers about what you get with what package. >> ultimately, for any these companies and certainly disney, espn, the dream is to become agnostic as to how somebody consumes your stuff, right? financially agnostic. probably a long way until there to replace what the affiliates through cable get. >> i would go a step further. the dream is that you're subscribing to multiple services. that is the real dream. agnostic is, may be, the more realistic dream where it does not matter. the economics are basically the same whether it is streaming or cable and that is why when espn does come out with its flagship direct to consumer product you're going to see it at a price of 25 or $30 a month because that means, in the

cable world, everyone that subscribes for cable is paying for espn no matter whether or not they are watching. in the streaming world you're only subscribing to espn if you want espn. and the documentary rich brings it up. there's only 25 or 30 million people that fit into the bundle that i'm a hard-core sports fan and i'm willing to pay what it takes to pay for espn instead of just getting lumped in with all my channels. >> does the betting piece change the equation? >> i don't dig it does. espn has this licensing deal where they have just license the name. i think where plays in is you will see more personalization and programming towards the avid sports better in this new flagship direct to consumer service that will launch next year. it's possible espn has some innovative things it does with the new programming but, you know, how many people are betting and willing to pay $30 a month. it's probably generally the same audience that would've

paid for espn anyways. >> right. you need to see the games. thanks a lot. good to see you. watch espn's fight for dominance now on cnbc.com/sports. he still had, gearing p for nike numbers. the retail reporting in overtime. the manager will join us with what he is looking for in that report. that is coming up. as we head to break, a quick message as cnbc celebrates women's history month. >> to me, a change maker is someone who sees an opportunity to make things better. >> i've also been told that for real change you have to accept that doesn't have to be perfect but don't let perfection be the enemy of the good. i remind myself that life is fleeting and when you get the chance to affect change, you should move with real urgency.

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of next, your earnings set up, fedex, lululemon and nike reported in overtime. reporters standing by with a rundown of what to watch. that and much ore e take you inside the market zone.

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here to ring the closing bell at the new york stock exchange are some congressional medal of honor winners that will be captain william swenson, sergeant ryan and navy s.e.a.l. ref. you will see them ring the bell and just a few minutes. we are now the closing bell markets on. a number of key earnings we are watching overtime today. frank brings us what to watch for fedex. courtney is monitoring lululemon plus portfolio manager kevin mccarthy on nike's earnings and the outlook for retail. frank, fedex, stock is been on a run here. what should we expect. you know, little bit of a run recently but fedex chairs are before the market you're today and they're outperforming their rival, u.p.s. winter weather warning, -- expecting a muted quarter that covers the beginning of december through february. this is a company that also trades on margin and this

quarter it is increasingly important as a read on the company's cost-cutting plan. this is the last quarter before fedex consolidates its three units, express, grinded and freight into one company. the area to watch for the quarter is express air delivery. it generates half of all revenue but is a key area for cuts. evan -- revenue will fall slightly year-over-year but margin is the big thing here. that's a thing to watch as a company tries to write the fleet and staffing. the estimate 1.1% margin on worldwide exchange earlier today telling me that will be the lowest margin since the bank is begun covering this stock. a lot to watch in the signature air delivery business. >> yes, is the path to widening out those margins strictly on the cost side is it a business mix thing. what should we be looking for? >> it is comp located right now. dhl which is a similar company has a different profile in europe. it talked about softness in their air delivery business and on the other side of things, ground that bleeds into express

, e.g. excel and also rider, talk about softness in e-commerce, cost-cutting will be the main thing but there's also softness in a number of parts of the business. >> right. waiting for some of that to come back. thank you. courtney, what you expect here? exactly. that's exactly how i would describe it. lululemon is expected to report another strong quarter. comparable sales of more than 12% for the fourth quarter. interestingly, this perennial underperformed the s&p 500 so far this year. still, strong brand momentum expected to continue even in the face of ever increasing competition from everyone like peer pay logo to any other brand that sells their own version of athleisure. expectations are for gross margin expansion to continue from improved inventory positions as well as lower freight costs and as always, investors want to know how are

trends quarter today. will lulu give us any clue to that. more details on the men's division and that growth and any product innovation that is expected to come down the pipeline. back over to you. >> i mean, it has been forever. people have wondered whether there would be any resistance to the full price all the time premium pricing of lululemon. is there any sign in this environment do any of that is taking hold. >> it's unbelievable but it doesn't seem to be affecting lululemon. they have strong brand momentum. they are able to charge a higher average selling price and so many of the other competitors. they have never really done sales. sometimes you can find clearance items but that is not a traditional sale. somehow even in this environment, it is working for them. >> yes, as it has been or a while. thanks. kevin mccarthy, nike numbers, obviously there has been some disappointment here. the premium valuation has been compressed.

really going to be earning less and this fiscal year than it was a couple of years ago. you made the case or tried to make the case that the company is currently under earning. what would you say to try to persuade somebody of that case and what could you do to change that? >> yes, thanks, mike. i realize you're putting me in the hot seat here. it's a mistake to get bullish on the quarter for the last two years going into the nike print. i would argue that the risk is known here and probably reflected at around $101. i think, you know, as it relates to this quarter, as long as they can demonstrate a path towards more sustainable growth margin upside sustainable underlying, provide some proof that the growth in the u.s. after lapping this wholesale, you know, elevated wholesale shipments is sustainable. and then, show a line of sight for mid-single digit growth in china and right now in china you have some good news from local competition. you have seen back out there in growth mode, stock up 40%.

i think as it relates to this quarter, if they could do that, then the stock could work. what i'm looking for here is, you know, maybe a modest beat on revenue. nothing crazy. something flattish. good gross margin flow through and, you know, maybe a nickel or so beat on the eps. >> three months ago in the last report, nike did flab what it perceived softer consumer trends and whether that was broadly speaking or in their categories are in their brand, it's hard to say. how do you see things right now in terms of, you know, whether the consumer has much left in the tank. >> on paper the consumer looks okay. however, we are not necessarily seeing that with the trends playing out so far year today. i mean, it is channel by channel specific and it is income cohort specific. even though the low-end consumer is on an incremental basis looking a little bit better given disinflation, we are not

seeing it yet. you heard from darden this morning, you know, they did not put up great numbers. you here at chipotle or you here, or sweet and they are doing pretty well. i think there is a lagging effect here. nike has more idiosyncratic opportunity. more self-help opportunity and it is this debate between the bears that say the innovation engine is broken and the balls that say, you know, this is not an earning company. they went from $20 billion-$50 billion of revenue and the margins are the same. so, this probably seven dollars and earning power. right now, the shorts are winning. i think the paradigm can shift. we will probably see a little bit of hints of that in this quarter but it's not going to be a next quarter when we get the outlook for '25 that we will get some concrete data points on that. >> yes, and i guess really quickly, where would you place

a fair value for nike if we are talking about getting toward seven dollars and earning power. >> that is a physical '28 number. so, i think, you know, if this company trades at 25 to 30 times, you know, you've got to discount it back proportionally from there with an appropriate discount rate. >> got you. kevin, thanks very much. thanks for setting us up for those nike numbers after the close and as we enter the final minute of trading we are on pace for another record high in the s&p 500. we were up about 4/10 of 1% at the moment. three quarters of a percent and the dow industrials. 39 800. russell, the big al performer the preference conference from j paul yesterday, bond deals not doing a lot today to help out the equity rowdy but they are staying out of the way. tenure at 427 at this point. gold, is that another strong day? it's making a run toward the record highs that we saw earlier this month up about 1% today. and everything rally behind on

the stocks and bonds after the fed yesterday. swish national bank cutting rates as we get into -- [ inaudible ]. new york stock exchange with one more to go. over time. [ inaudible ] stocks soaring for a second straight day as a major avenues close at new highs. that is the scorecard on wall street. welcome to closing bell overtime. i'm john. >> yes, industrials and financials leading the charge today in a broad-based rally. record highs