KG Explains ZS 30% Sell-Off, AI Memory Strength & Latest Economic Data

So, let's get out to Kevin Green, Senior Markets Correspondent, just to get us across what we're seeing here. Obviously, some record highs coming into the session today, KG. We mentioned, obviously, Zscaler, the cybersecurity sell-off this morning. I mean, I don't know, you and I were breaking down these numbers. What? Falling short of expectations on guidance, worries of 30% pullback and basically all the names falling in sympathy. I'm not sure if you have any thoughts on that, but also, of course, Micron rallying again. Just take it away. Yeah, well, so for Zscaler earnings, I mean, obviously, the guidance moving forward, it's not only the top line growth, which kind of gives you a little bit of concern that maybe some competitors are eating into their market share, but it's also the fact that they did pull back on their free cash flow guidance or their operating margin guidance moving forward as well. And that's because they are spending money on CapEx spending. So, obviously, that's not a really good recipe for the stock moving higher, and we are still seeing it move lower, actually. In fact, it's down about 30% right now, trading below this 130 level. So, a pretty aggressive unwind when it comes to that particular trade. I'm not seeing it really impact some of the others within the space. I mean, if you're looking at softwares as a whole, down about 0.7%, and even names like Palo Alto Networks, for that matter, only down about 2.5%. So, was it some headwinds? Yes, but obviously, I think it's something that's a little bit more of a one-off for a company that sees a lot of competition and has been behind the eight ball over the last couple of quarters, and we usually do not see really great reactions once they do report earnings here. I think from a broader market standpoint today, a little bit more defensive in nature, you do see consumer staples up about 1.1%, healthcare having a little bit of a snapback rally to the upside after yesterday's pullback, especially in the health insurance names, and communication services sitting up about 0.6%. I think everybody's obviously focusing on the headlines. We're looking at what's happening with Micron, which did actually pull back some of the gains, still up about 3%. And I think for Micron, obviously, there's a lot of optimism when it comes to the fundamental nature of their business, but how fast can they continue to move to the upside? In fact, this morning in pre-market trading, when it was around $985 or so, it was only about 3.2% away from overtaking Berkshire Hathaway when it comes to the market cap. So, a really great run, but once again, some profit-taking in some pockets of the market, and I think we're trying to focus on the headlines to see if a deal is going to be done with the RON. That's how we continue to see this gyration, not only in the equities, but also within the energy patch. Yeah, the Journal out with a piece today talking about how it only took Micron, what, 48 days to basically double this valuation, and basically, that is faster than what we've seen from Tesla, Broadcom, Walmart, NVIDIA, Microsoft, you name it, and Berkshire Hathaway within that as well. So, no doubt, an incredible run, and we'll talk about SK Hynix later in the program, but let's switch to the macro now, KG, because obviously, we've got a little bit of information on the mortgage applications and the Richmond Manufacturing Index as well. Just walk us through the numbers here. Well, we saw actually some improvement here when it comes to the Richmond Manufacturing Index. That came in at 13 for the print. Street was looking for 4, and the previous print was actually 3. So, improvement there. Also, on the manufacturing shipments, moving that up to 16 for that index level here. Previously, that was sitting at negative 2, and the Richmond Services Index came in at 14, better than the street's expectations and better than what we saw for last month at 9. So, you can have a data, once again, kind of seeing a rebound in certain pockets, especially in the industrial and manufacturing space. You have seen a trend of new orders actually increasing here over the last couple of months, especially if you're looking at the East Coast. Now, Sam, I think the big question mark there is, is this the fact that everybody's trying to get ahead of maybe higher prices when it comes to fuel, transportation costs, or even input costs for the commodities that they are utilizing for these products, or is that really organic growth that we are seeing in the manufacturing sector that has now gotten out of its recessionary levels? Over the last two and a half, three years, manufacturing has not really been that resilient or that strong within this market. It seems like it is starting to pick up a little bit of traction as the services sector stalls out here a little bit. Okay. And are you seeing mortgage applications as well? What are we seeing there? So, mortgage applications, we actually saw those drop by 8.5% on a week-over-week basis. Last week, came in at a loss of 2.3% or a decline of 2.3% here. Average mortgage rate coming in at 6.65%. Previously, it was 6.56%. So, not really too surprising. Higher mortgage rates, lower demand, that's really what that's kind of spelling out right now. The refinancing index, I found very, very interesting, though. I do not have the month-over-month comps, but that index in the previous week came in at 920.2. It actually just printed at 753.7. So, actually, a pretty dramatic drop on a week-over-week basis when it comes to refinancing as well. Higher rates is probably the culprit of that type of reaction here. So, housing data has been, I would say, for the most part, mixed. But if you actually look at some of the housing stocks, like DR Horton for that matter, you are actually seeing maybe some buyers trying to step in. It's up by 3.2% in today's session. And technically speaking, if you're looking at the three-year weekly chart, we actually did just hit last week the 200-week moving average. That has been a key area of support over the last five years. So, I think you are seeing a little bit more of a retracing balance to the upside here for some of these homebuilders, even though the mortgage rate picture is not as rosy as we would like to see. Yeah, the thinking seems to be that while it hasn't picked up in such a meaningful way as many had anticipated, at least maybe the worst is behind us as far as what we're seeing with that slump. I think that's what some of my guests have been pointing to. What about the latest with these Iran headlines? As I mentioned, you've got Iranian TV talking about this unofficial draft of this interim peace deal. And if that is agreed to, if and when, they say traffic through the Strait of Hormuz could get back to normal within a month of that. Obviously, we've got WTI sub $90 a barrel right now. Walk us through what you're seeing as far as the catalyst for that. Yeah, I think what's actually very interesting, Sam, we're getting more bullish commentary from an equity market standpoint from the Iranians over the last 48 hours than here in the United States. This draft that they spoke about, we did see a decent pop to upside in pre-market trading or in early hours trading for the futures. But we quickly saw that kind of reverse itself. And that's because the details that have been provided by this news agency seems like it's the same proposal that we've seen in the past asking for or requesting that U.S. troops and naval forces be removed from the region. They're going to be able to open up the Strait within 30 days. It seems like fully it could be reopened within 60 days, that 60 day timeline. There's two different timelines that are within this kind of memorandum of understanding here and making no mention of the uranium situation as well, which obviously that has been a very big sticking point for the U.S. So I think the market is still optimistic, but cautious that we may see a little bit of a rebuttal from the U.S. side here. All right, cautiously optimistic enough to keep oil in check today and stocks continuing to rally even just fractionally as we stand, as you say, a bit of push and pull beneath the surface with more of a defensive trade. But obviously things holding up for now. KG, really appreciate it. Thanks so much for getting us across all of that.