Market Momentum, House TikTok Vote, Dimon Backs Iger, Downgrade Call: "Sell" Tesla 3/13/24

Jim Cramer (0:00)

It's Jim Cramer here. You're listening to the opening bell of CNBC's Squawk on the Street. Don't miss a minute of the action.

Good Wednesday morning.

Carl Quintanilla (0:08)

Welcome to Squawk on the Street. I'm Carl Quintanilla with David Faber, Mike Santoli at Post 9 of the New York Stock Exchange. Cramer has the morning off. Coming off that record close, futures mixed as we sit in this brief data vacuum today between CPI yesterday and PPI retail sales tomorrow. Bonds are under pressure, 10-year approaching 4-2.

Our roadmap begins with momentum, fueling this market's record run. How concerned should we be about unwind risk?

David Faber (0:32)

We are also counting down to that House vote on legislation, which could result in TikTok being banned in the United States.

Plus Tesla, quote, ain't looking so magnificent. That is the view of Wells Fargo, the firm slapping that EV maker with the equivalent of a cell rate.

Carl Quintanilla (0:51)

Let's begin with this ongoing market rally. As we said, S&P is coming off that record close, posting its best day yesterday in March.

A lot of discussion. We were talking about the Wells note today about disjointed momentum trade going on in front of Friday, Mike.

Mike Santoli (1:04)

Yeah, it has been a little bit agitated. Now, this has been a sort of a fuse that people have been watching potentially burn down. This idea that the market was overreliant on these pure momentum winners.

So last Friday and then this Monday, you did see a reversal. You saw it really mostly absorbed in the way of rotation. So Nvidia down 10% high to low. Other stuff in the momentum basket and laggards took up the slack.

Yesterday, a little bit of a reversal. It was a bounce. I feel like it's admirable that the market is able to repair itself this way in the ongoing basis. It's a bull market. The pullbacks have been shallow. They've been brief, but it still hasn't relieved a lot of what could be the excesses within it, which is the extreme outperformance of things like semis and the extreme reliance on the day-to-day basis on sometimes a handful of names. Yesterday was kind of a 50-50 market breath day, and yet you had the best day in March, and you got a new record. So I think that's why people are still a little bit on guard about the field position. The market's in a, you know, you mentioned it's quiet on the macro front.

Yields have been levitating a little bit within their range. And what that has tended to mean is whatever broadening action you would expect, you know, if the economy is going to be great, it gets halted when the yields go up. So January 5th of this year was the low in yields. It was the high for the equal weight S&P relative to the NASDAQ. And so you see this dynamic out there where, you know, only the secular winners can perform when yields are going up and you're not going to get a rate cut very soon. So I think that's where we are.

Sentiment seems pretty elevated. Some new data this morning. Investors intelligence, pretty extreme. So, you know, it makes all the sense in the world to expect this market to cool off.

It hasn't done so yet.

Carl Quintanilla (2:46)

Right. This was sort of the topic, David, of Sarah's discussion with Ken Griffin yesterday about there really being two separate risk profiles in the market right now. There is the AI trade and then there's the less expensive sort of industrial base trade that he talked about.

David Faber (2:59)

Yeah. Talking about both and, of course, perhaps not a surprise and not necessarily something our viewers are not well aware of, which is NVIDIA looks pretty good. You seem to think, Carl.

Carl Quintanilla (3:09)

Channel checks?

David Faber (3:10)

He kind of likes it. Yeah.

Mike Santoli (3:12)

He says they're operating at the top of their game.

David Faber (3:14)

He's been doing his channel checks. And it looks good.

It looks good. We can take a listen, I think, to what Mr. Griffin had to say to Sarah Eisen.

Ken Griffin (3:23)

None of us know where we are in this journey. What I will tell you is the team in NVIDIA looks like they're really on top of their game right now.

David Faber (3:31)

Yes.

Ken Griffin (3:31)

I mean, there's no ifs, ands, or buts. They have done just an incredible job. This is like the gold mining in California. Those that sold the picks made a lot of money.

And it's very clear that NVIDIA right now sells one of the most important ingredients in the AI story. And they've done an incredible job of capitalizing on it. What's really interesting to see is that the large language models, the barriers to the production of a world-class model appear to be somewhat lower than we had thought they were nine months ago or 12 months ago. I mean, if you look at just recent events, Anthropics' most recent model release is a real competitor to what's been done at OpenAI.