Closing Bell - Closing Bell: 1/12/26

Episode Date: January 12, 2026

From the open to the close, “Closing Bell” and “Closing Bell: Overtime” have you covered. From what’s driving market moves to how investors are reacting, Scott Wapner, Jon Fortt, Morgan Brennan and Michael Santoli guide listeners through each trading session and bring to you some of the biggest names in business. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

All right, guys, thanks very much. Welcome to closing bell. I'm Scott Wobner, live from Post 9, right here at the New York Stock Exchange. This make or break hour begins with the fight for Fed independence. And how investors should be thinking about that key issue, we'll ask our experts over this final stretch, including former Dallas Fed President Richard Fisher and a man being considered for the job of Fed share, Black Rock's Rick Reeder. First, though, we show you the scorecard with 60 to go in regulation. Stocks are mostly, as you see, brushing off news of that criminal probe into Chair. Powell. There's a more defensive tone, nonetheless with the markets today. Staples are leading the way, otherwise a bit mixed in terms of sector performance. Alphabet shares, they're notable because Apple choosing Gemini to run AI-powered Siri. We're keeping an eye on both of those stocks. Alphabet briefly topping $4 trillion in market cap. On that news, it's significant. We begin our talk of the tape. Powell under attack. For the latest, we go to the White House and our Aymond Javers, who has the latest for us. Amon. Scott, we heard from White House Press Secretary Caroline Leavitt a short time ago here at the White House briefing reporters.

She took some questions and she was asked if the president had directed Department of Justice officials to open that investigation. She said no, and she also had this to say. The president has every right to criticize the Fed chair. He is a First Amendment right, just like all of you do. And one thing for sure, the president's made it quite clear is Jerome Powell is bad at his job. As for whether or not Jerome Powell is a criminal, that's an important. answer the Department of Justice is going to have to find out and it looks like they intend to find that out. And Scott, I also asked the White House press secretary if the president believes that

Jay Powell should go to jail if it's proven that he lied to Congress. She said she'd give the same answer to that question that she gave in the soundbite that I just played. That is, that'll be up to the Department of Justice to determine that, Scott. So some high stakes here at the White House. Back over here. Yeah, no doubt about that. Amen, thank you. Appreciate that. That's Amon Jabbers on the North Lawn Force. Former Dallas Fed President, Richard Fisher. He joins me now. It's great to have you on one of the people I was hoping to speak with today regarding all of this.

What was your reaction when you heard this news? That he was carrying it to the president. And we know Pondi only acts on behalf of the president. There's no independence to the Justice Department. That he was carrying it too far. And this may well backfire. Look at the... Former Secretary is the Treasury, including Paulson, who is a Republican.

Look at the former Fed Chair. Look at the three or four senators now come out against this. And the member of the House, who's very important here, who chairs the Finance Committee, they're all against it. So I don't think it's to his favor, that is, the Trump administration. And I don't accept the fact that the president had nothing to do with it. So what did you think of Chair Powell's responsibility? response, both in how public it was, obviously, and how pointed it was. That seems unprecedented

in and of itself. I think you're right, and yet the attacks that he suffered are unprecedented, and its case, as it's purported to be, is unprecedented. And if you look at what's happened in the marketplace, yes, the stock market is even. But again, gold is up 6.2%. Silver's up 18%. That, to me, indicates nervousness. I'll set aside platinum, which is used, it's up 10%, which is used for industrial purposes. And I do think that the market is shaken by this. Now, having said that, it appears that Jerome Powell has the upper hand here. And if he is indeed trying to influence Powell to leave after his chair, I think if anything, he stoked some resistance by Powell to do so. I'm not worried about it's ever leaving the chair. And I do. And I do.

do believe they've made mistakes. But is a criminally responsible? I doubt it. And we'll find out. But, again, don't accept the argument that Ms. Bondian and Justice Department is independent. They are not. The former Fed Chair Janet Yellen told our Sarah Eisen today, quote, I find it extremely chilling for Fed independence. Lloyd Blank find the former Goldman Sachs CEO on X a short time ago, said, quote, trying to kill the Fed independence by criminal investigation is not good for that institution and maybe even worse for the Justice Department. Feels like an attempt at murder suicide. Your comments on both of those reactions? Well, also look at Frank Paulson, the former chairman of Goldman Sachs, Republican Secretary of the Treasury feels the same way.

Look, we have to preserve better reserve independence. Yes, they make mistakes. No question about that. They've done some horrific stuff. For example, in accepting the argument of transitory inflation, but it's better than having it politically controlled. And if this is a pretty bald attempt, it appears to me, to take control of the Federal Reserve, and really to scare Powell away from holding not the chairman's seat, but the governor's seat for another two years. And if anything, it, I believe, I haven't talked to him, but I believe it reinforces that instinct because he will stand. And the FOMC, by the way, will elect who chairs the FOMC going forward for the next year. And I think he's got support of the committee.

I mean, some might suggest that... It doesn't work in the Justice Department, or excuse me, doesn't work in President Trump's favor. And we'll see he's already backing away from it somewhat. We'll see if he backs away for it altogether. I mean, some might suggest I was going to say that, The final nail now is in the coffin, so to speak, of Fed independence, that this has sort of crossed the rubicon of, you know, having the Justice Department open a criminal probe into the sitting Fed chair is something we haven't seen before. Do you think whoever the next Fed share is can effectively do their job independently? No, not if they're appointed by Powell. I think he just undermined.

If it's Kevin Worse or Kevin Hassett or we'll see if our friend who appears next to me on this show, who's a very good guy, by the way, or whoever it may be, it undermines their authority. And therefore it's not good for the Fed independence. And whoever the next Fed share is, is just going to have to make it very clear that they're going to operate according to what the data and the inputs tell them and not what the President of the United States wants. I can understand why the president is doing this. He's getting a weaker support from his base, the MAGA base.

He's now talking about credit card limits at 10%. He's talking about other restrictions on home prices. He's now talking about attacking the Fed. That appeals politically. But it doesn't really make sense from the standpoint of Federal Reserve independence, which is a powerful instinct and history. throughout the United States. So let's hope he's wrong about that. Let's hope he backs away from it. The four people you're showing right now are all very able, and he's just undermining every one of them

if they happen to be appointed by him. I mean, I don't know what it means for the upcoming meeting. I'd love your opinion on that. It certainly makes the press conference more spicy. Well, Scott, look, Powell's a man of tremendous integrity. He will not let this affect the judgment of the committee. I doubt they're going to move in January at the end of the month. It will make the press comps a little more exciting. But I think he set his piece. And as far as the committee's concerned, they'll do what they think is right. If it means cutting another quarter, they will do it.

If it means holding still, they will do it. I believe it most likely will be the latter. We'll see how much more data we see before the end of the month. But I don't affect it. It doesn't affect a decision, in my opinion. Richard, we'll leave it there. time so very much today. We'll talk to you again soon. Thanks for probing on this and thanks for doing what you do. Appreciate you. That's Richard Fisher. For more now, let's bring in Rick Reeder.

He is Black Rock's CIO of Global Fixed Income. He's back here post nine. It's great to have you obviously. Always, but certainly as this news was breaking and we knew we had an interview scheduled with you. We were looking very much forward to this. You heard what Richard Fisher had to say that this action in and of itself undermines everybody who was on that wall that we showed, including you. You feel that way? So, I mean, he said a couple of things I also could agree with. First of all, the Fed's going to, whoever the chair is, whoever the committee is, they're going to make the determination on the data. So whether whoever gets appointed in that chair role, listen, you have to make, and I, you know, listen, I believe this, and I think there's

a power of that institution that you are going to do what is right for the country. And so do I think, listen, I think there's a lot of drama. There's a lot of discussion about it. I think at the end of the day, whosoever's in that seat, not just that seat, the whole committee, they're going to look at the data, evaluate the data, and make whatever the right decision is. So I think there's a little extra drama to something that,

listen, I think, I mean, I've sat on the Fed's advisory committee for a number of years, the Treasury Boring Committee. That institution has incredible integrity. We could, you know, I'm not going to get into what happened here, but that institution is very sincere in terms of what their mission Would you be comfortable being the Fed chair in light of this development, knowing what is always sort of hanging over your shoulder? So I'm not going to comment on that. Listen, I'm going to just say it again.

I think that anybody who's in that seat, that is an independent seat. That is a seat that you report to, I would argue, to your constituents, which is the country. And so I, I wouldn't comment. I mean, whoever is in the role is going to make the right decisions. I just going to make the decisions that is the right thing for maximum employment and price stability. Is that the message that you're going to deliver face-to-face to the president when you meet later this week? So another thing that I'm not going to comment on. But I would, listen, I think there's some things that the Fed can do, and I think there are some initiatives.

I've been pretty vocal for many, many months. I think the Fed's got to get the rate down. By the way, I don't think I have to go down that far. But I think the Fed's got to get the rate down at 3%. I think that's closer to equilibrium in a labor problem. In a situation today, we have what is potentially a labor problem. So I would certainly convey what I think today. You've got to get the rate to three.

I think you've got to. And then you've got to look at where we are. And so anyway, if asked, that's what I would talk about. Do you, let's try for the moment to take yourself out of it. I understand how difficult it is for you to address it. I'm going to ask you the questions anyway. But do you worry about Fed independence, if you're not even in this conversation, given these events and others along the way? I don't.

I mean, you know, at the end of the day, I'm like I'm saying, because I've been around that institution for so many years, I know what the culture is. I know how they make decisions. But no, I'm not, I would say, as somebody who does an awful lot in the interest rate market, does a lot in the equity markets, Am I concerned about we've got a committee and that we've got a group of people that are going to just move with whatever the fiscal initiative is? I think, listen, I think there are some things, though, that whoever is setting policy and who ever sits on that committee that you have to think about going forward. One is the debt in the country is significant. I think part of why I think the motivation is you've got to move the rate to a level that is and allow the economy to, quite frankly, to breathe because we've got to de-lever what is. I would argue today an over-levered government.

Just to make sure we get this fully on the record before I ask you about the markets, is it true that you're interviewing this week, this Thursday with the president? I mean, I would go right to the market. So I can't. You won't even comment on that? No, all I will say is I've seen a bunch of the stories that have been out today and the press stories that are out today. They seem reasonably accurate. Okay, fair enough.

Janet Yellen today said, aside from she finds it extremely chilling for Fed independence, as I said with Richard Fisher, that she was surprised the markets aren't reacting more. Are you? I mean, I'll just tell you the way we invest. At the end of the day, I've got to make decisions. So including overnight when the markets were reacting in a pretty extreme way, I look at where the economy is, economy's operating at a really good level. I look at where the technicals in the equity market, the rates market.

So, I mean, quite frankly, much of what has been a successful trading strategy, investing strategy for the last couple of years is markets tend to overreact to a lot of data, and then we get data the contrary or different data the next day. So one of the most successful strategies have been when markets tend to overreact, be on the other side of that. I've had conversations of late with people who manage money. You allocate capital for the largest money managed in the world, right? whatever the number of assets in the trillions, Black Rock is now.

This person said on this set the other day that they are taken aback and almost influenced in their investment decisions now by the way that the administration has put itself so forward into the affairs of corporate business, you know, what they want to do with credit cards. But they said about Exxon on the back of that company CEO calling Venezuela uninvestable, buying back stock, et cetera. Are you starting to think about that stuff, too? So, listen, I mean, you can have an opinion on whether philosophically, that is, you compromise pure capitalism, you can have an opinion on, is it the right thing on things like rare earth, et cetera, that the system isn't tilted, isn't fair in an equilibrium. At the end of the day, I think you have to consider the environment we're operating.

If you do believe, and I will say, if you think that this is going to be an aggressive administration, you've got to think about, so where are some of those initiatives? Affordability for sure, bringing down energy prices for sure, promoting deregulation. So every day when I come in, we think about what are the big, and it's the way we run our money. How do you think about structural themes? And one of the structural themes is clearly going to be an administration that is going to be active. That's for sure. You wrote recently in terms of your outlook for 2026 that the odds are changing.

changing. These are your words. The odds are changing. 2026 is a market for investors, not gamblers. What do you mean by that? So, Scott, I mean, I've watched markets develop for years and what blows me away when you look at the zero-day options, you look at investing or speculation on margin, you look at levered ETFs, it's pretty extraordinary to me, how much of the market has become momentum-oriented and literally is just looking for the day trade. Today, I mean, I think this is going to be, By the way, what's motivated that? Hey, you've had incredible asset appreciation. Their ability to put margin or put leverage on an asset

and with technology rallying, those stocks don't go down so you can put a lot of leverage on it. You can gamble on it. I think you're going to see a much more mixed market this year in terms of bifurcation. I still think the market's going to have a good year in both debt and equity. But I think you've got to think about dispersion's going to be higher,

volatility is going to be higher. You're going to have days where you're going to see spikes one way or the other in the market. And I think, and by the way, once you get to multiples where they are, once you get to spreads and credit where they are, you're going to have, you've got to live up to these multiples, and I think you're going to see more ball around it. I'll ask you about that in a second as it relates to earnings because we're about at the start

of earnings season, which is going to be tomorrow with JP Morgan, obviously. But on the theme of your outlook, you also said, quote, you win not by chasing every hot trade, but by seizing positions thoughtfully and focusing on high probability outcomes. Where does that lead you then in how you're thinking about where the highest probability the outcomes are within the market, both stocks and sectors? So, so we'll turn it, stock market first. Listen, I think, you know, we've talked about it for a long time. I'd never forget the interview we had, we said, this is the greatest investment

environment I've ever seen. I still hold to that. You do? Yes, I think it's a great, but I think what you're going to see now is much more volatility. By the way, the ability to actually sell volatility is fantastic in some areas, like single name where you see big spikes in volatility around particularly tech names, etc. I think the best idea. I think the equity market is going to have a good year. We've scaled back a little bit of what we have in some of the high-flying tech.

I still like the multi, I still like the hyperscalers, but we've changed some of that evolution. Software is trickier this year. Listen, I mean, recently some of... If software is trickier this year, I hate to... What would you call it last year? Yeah, tricky. But I would still say the bigger entities in software, the ones that were entrenched client bases are still done okay. memory has had a spectacular run, not just in the U.S. and Korea. You know, you take some chips off.

The microns of the world? Correct. So you take some chips off the table and some of that recently. I still think, hyperscalerscalers still make sense to me. I still think the energy infrastructure trade makes a ton of sense. I still think health care technology is spectacular. I would say, and today, you know, we did a little bit of this today. I still like financials.

I think the financials, you think M&A is going to be higher, which it is. trading activity is going to be high, which it is. Net interest margin is going to be in a pretty good place. So I still like the financials. I like the European financials. When you say we did a little of this today, you bought some of the financials group today? Yeah, correct. Just as earnings are about to start.

Just as earnings are about to start. And just as some of the stocks got hit pretty hard today on some of the news on the credit card dynamic. So I thought we didn't do a lot, but I thought some of it was overdone. Some of the credit card names included. Credit card and including. And what about the big money center bank? A little bit. I mean, today they only came off even at the trough. They only came off 3%, 2 to 3%. So it was a bit of noise, but some of the credit card businesses were down quite a bit.

And you think in general earnings are going to be good enough to justify where the stock market's trading now at 22 times. The conventional thought is, okay, multiple expansion done. Now you've got to prove it. You got to prove it with what you deliver in terms of earnings. And expectations are high. Are they too high? So I think we're going through, and I've said it before, I think we're going through a productivity revolution that people are underestimating today. So there are two sides of a productivity revolution. One is we've got an economy growing at pretty spectacular levels. I still think you're going to see 5%, maybe 5% plus nominal GDP this year.

Wow. So the top line revenue should be reasonably well supported. Then the other side of productivity is, gosh, I've got to get my cost structure down. Part of why I think M&A is going to be high. His company is going to look for synergistic M&A. So I think costs, and you've seen it through the labor reports, you've seen it through other forms of how do I get my cost structure down. So do I think there are going to be some surprises of companies not meeting expectations? It would be unreasonable to think there wouldn't be.

But I think it'll be a pretty good quarter. And by the way, I think it'll be a pretty good next quarter as well. You've got a tailwind of fiscal. And you've got an economy. Part of why I think the Fed needs to cut rates. You have an economy that's operating well, but not on every cylinder. Low income's getting hurt. Small business is getting hurt.

But, boy, the big companies today that have the ability to use data and cut their cost ecosystem is pretty impressive. 5% nominal. It sounds like you're making the case for what's happening in the market to start the year. Yeah. Big cyclical trade. You like that? Yes. So one thing.

Like you mentioned financials, like industrials, materials, materials, stuff like that. So I think every time we talk about small caps and I never like small caps. I was going to ask you about that individually, but I guess you could lump that in there. Yeah. So actually, we've done. And the gentleman I work with Roscoatch, which is brilliant around this. We've done some orientation towards some of the mid-cap, some more industrial, a bit more balance in the portfolio than we've run over the last couple of years.

Listen, I still think you want to be in equities, you want to be tethered to high ROE, high free cash flowing businesses. But boy, there's some things we've done. You think about picks and shovels in the infrastructure demand in terms of companies that are going to be in and around it. That's real. Well, I think of, I mean, well, you talk about that. I think of a Caterpillar, which was one of the best performers of last year. You're talking about something like that? Yes, but that's so big.

Yes, except for I would go a little bit smaller in terms of the companies that are in, maybe more of the connectors, plug, et cetera, that are in that space. By the way, I also think the energy dynamic is still real in that space. Are you saying, though, that you're not, you're still not a believer in the small cat? I mean, because the Russell is off to a rip-roaring start this year. So we're running more of balance. I still don't like small caps. I still think it is hard for most small businesses to compete in today's environment

because the utilization of data, the ability to operate at scale. But we are definitely doing more, and quite frankly, a lot of how I do it, because some of them are really small and hard to get scale around, is I use a number of the indices like IWM, like KRE, etc. So I actually think some of the banks, some of the big cap banks, are a big cap banks. actually okay. Well, because what you're talking about, whether you know, you're in the chair in the Fed building or not, you think that rates need to come down, which likely means that trade's going to continue to work. So I think that, so yes and no, I don't think those entities are necessarily rate driven today. I think it's certainly a positive influence you think about

last year. You had to move in interest rates and those stocks didn't necessarily perform. I think It's a combination of you've got a good economy, supportive Fed, and the ability to actually do. And there's something that we talk about a lot. AI is actually allowing from democratization of technology into some of the mid-cap companies. So I think that combination ends up being better for some of these companies. By the way, I don't give people the impression, like small-cap time, let's get crazy. But a bit more balanced. Oh, no, you didn't.

You still don't like them. You didn't mince any words there. No, but a bit more balance, I think makes sense. All right, we'll leave it there. Rick, I so much appreciate your time, as always. Thank you for being here. Thanks, that's Rick Reeder. We're getting some news on the auto front. Philabo, of course, joins us with that. Hi, Phil.

Hi, Scott. Later this afternoon, Cox Automotive will release its analysis of December auto sales. Listen to this. In December, the average transaction price for a new vehicle hit an all-time high. $50,326, what was driving that, a couple of things. heavy demand for mid-size SUVs, but pickups, rapid demand there in the month of December. In fact, December pickup sales the best since 2020 with the average transaction price, the price that people pay at a dealership topping $66,000. Do the math, that means more than $15.3 billion was spent in December on pickup trucks. Scott, we'll send it back to you.

All right, Phil. Appreciate that. Thank you. That's Phil Leboe, of course. We're just getting started here on the closing bell. Up next. Earning season, as you know, about to get underway. We'll talk about what to expect if they'll live up to all that hype.

Our closing bell panel is waiting in the wings. Adam Parker and Anastasia Amoroso. They weigh in next. We're live at the New York Stock Exchange. As always, you're watching closing bell on CNBC. Earning season kicks off tomorrow with a lot to live up to. Can they do it? And they meet the moment.

Let's ask our panel. CNBC contributor, Adam Parker. He's founder and CEO of Trivariate Research. Anastasia Amaroso is chief investment strategist for private wealth and retirement at partners groups. Good to have you both. I think it comes down that that's everything, right? Our earnings is going to meet the moment. Will they live up to the height?

I think in the near term yes, but in the second half the year, no. I mean, I really spent some time last week studying the shape of the estimates. And I agree with what Mr. Reader said. I think they're in good shape. Near term, you saw some positive, you know, pre-releases in tech. But I think the way the analyst estimates are in there, they just go up every quarter. So you're at 18% growth by the time you get to Q4. I suspect May or June of this year is when the rubber beats the road and the estimates being too high.

But I think for the near term, we're probably okay. You just don't believe. Do you not believe that there's as much staying power in the economy as some would suggest there is? Because if there is, why wouldn't earnings continue to be strong for the full year? I'm going to parse a word you use there a little bit and use the word economy, right? And I just think that top 100 companies are just different than the economy. And their estimates have, and they've grown way fast than GDP, obviously. And I think when you look what's in there, it's like 15% plus growth for this year 26 over 25 with an acceleration through the year.

When I really peel back, semiconductors have the highest forecast of gross margin expansion they've had in 25 years for forward estimates, the number of companies that are going to expand margins. I'm worried that it isn't about what expensive or not, it's about missing. I think this quarter were fine. I think most companies are going to beat and raise. I think we're probably okay. But as expectations get higher when you miss, the penalty for missing has been much harsher than the reward for beating.

And so that's why, and I think readers said that too, the volatility. I think companies that miss are going to get punished as we get into the middle of this year. Guys, let me see if I could please that chart again of the semiconductor. because as I look at that, are you suggesting that that group, which has done incredibly well, is well over its skis? I was hoping you would ask about this because for the last two or three years I always get accused of liking semis and that it's like, you know, I used to cover semis and it's like a home bias. We actually wrote, I thought of you when I wrote this that for the first half of the year,

I probably would own software over semis. Really? Yeah. That they've been beaten down enough that they're attractive now. Yeah, the estimates in bed zero. Average company has no revenue acceleration. That's what you need for software. The average semi has massive margin expansion. So the high expectations versus low expectations, high valuation versus low valuation, I think it's worth little trade. I kind of agree with what Reader said before too, which is probably its late innings on the Sandus, Mike Ron memory trade. I think they can earn more money. The numbers probably come up, but each time that happens, they go up less. So we've got to be toward the end of that trade. Even if micro earns 45 bucks, maybe you pay 70 times. You're getting close to the end. So I think it's prudent to maybe rotate for the first six months of year.

As I've been out marketing our ear, hell, look, and that nugget, it's been met with ample pushback. So it's probably a little early, but that's also part of our job. Is this a tale of two halves this year? I don't think so necessarily. I think there is a big story this year in the markets, which is this is the year that the Republican Party will be trying to win the midterm elections. And that means that a lot will be thrown at this economy in order to shore up the consumer. So when I think about some of the measures that have been enacted, announced, perhaps

threatened to start the year, it is all about the support of the consumer. So for example, gasoline prices, they're falling perhaps as a result of the actions in Venezuela. And we do think that selling Venezuela and oil and enabling that to be refining the United States, that could be a big boost for the consumer. If you think about housing, I think this is going to be an all-year campaign to bring down mortgage rates and rates across the curve. So once again, supportive for the consumer.

And even when you think about tariffs, you know, maybe we'll see some tariff rollback throughout the year. So I do think this combination of kind of political intent will support this economy. So that's why, Scott, when I look kind of to go back to your initial question, which is about earnings expectations and will they deliver, I think the bar is set low enough, the economy is solid, the refunds, the tax refunds are coming. So I think the companies will focus on that. I suspect the guidance will be positive.

And then on top of that, you've got productivity, which is the number that we received last week, which is almost 5%. Productivity growth is really taken off. Over the last three years since the launch of Chad GBT, it has averaged at about 2.2% doubled what it was before the pandemic. So you look at the margins of these corporations, and they're forecasted to be 13.9 times, which is record margin despite all that tariff noise. And maybe the last thing I'll add to that, you know, you do see this kind of gap reopening between the max seven stocks as we progress through the year versus the 493, where the max seven, Bernie's growth will continue to actually accelerate. So I don't think it's necessarily a story of two halves.

I think it's this continuation of a positive trend, but one that is not only about the AI trade, but it's about defense, it is about housing, it is about energy, so a lot more to do in the market. Rebuttal? No. You know, I don't like to make that first half up second half down. I just was literally saying the estimates accelerate more in the second half the year, and so the bar becomes higher. Well, I mean, you are somewhat insinuating in some respects that maybe in the second half

we're not going to be able to meet the very high expectations, thus do you have an issue? I think there's a, I don't know if she said anything I directly disagree with, meaning like the earnings could grow 10% this year. It's a solid overall year, a solid backdrop. stimulus. I agree that, look, there was some new news last week, right? We're going to pressure the GSEs to buy, do MBS purchases. That's bullish for housing. I think you got to own the home builders. I agree with that. But Anastasia points a picture in which, and the market seems to be obviously reacting to it, discretionaries near the top of the return stack. Yeah.

Yeah. Yeah. Andesia paints a pretty good picture for that group for the whole of the year. The retail is up 7% today. When we did our year at Outlook, we upgraded discretion from a sell to a hold. You know, and I did. I did, yeah, as part of the Outlook a couple weeks ago, and I thought that logic was, let's get, cover some of the shorts. I didn't like the price action being so negative where you saw really bad businesses get squeezed

higher, and I do think there's a lot of one beautiful bill and stimulus coming that's helped the consumer. So I could see the consumer having a good first half, but again, the estimates are really high, and so I'm really focused on a lot. I'm really focused on estimate achieveability just because I know that the penalty for missing stars. I think the margin stuff is trickier. The median companies in the top 500's gross margins actually are lower today than they were in February of last year. There's a little bit more struggle on the margin expansion.

So you need some of the companies to come through to get multiples higher. So I guess our, she didn't say anything for me to disagree with, but I think my thing is the probability the multiple contracts is probably higher than an expand. So maybe that's now the consensus view. wasn't when the bullish bracket firms did their outlooks in November. Last question. To keep with the theme of how we started this show. Fed Independence, Anastasia. Does it matter to you?

It doesn't seem right today to matter to the market all that much, this issue. Yeah. Fundamentally, it should absolutely matter. Clearly, the markets are shaking it off. And I think the reason is because we've sort of gotten accustomed to this overtures and, you know, these periodic, you know, threats to Fed independence. But what happens after that is either the White House or other policymakers backtrack and they sort of throw the threat out there and then they backtrack on it. Or what the markets really realize is that there is a due process.

Just because there is a threat or a legal threat or a lawsuit that is being filed doesn't actually mean that a party is being proven guilty. There are checks and balances. There is a process. And it's not necessarily a certainty that a particular outcome will prevail. So just because the independence is threatened periodically, I don't think it's gone. Okay, last point. I've done several meetings there through the years. I think it's a very serious place.

Again, I agree with what Reader said there. I think they'll do their best to make the right move. I don't think the market's not worried about it. I thought Kramer, I was watching on the airplane this morning, CNBC. He was a little more histrionic about it than I would have thought. He kind of said, is the president trying to take the stock market down 10%? Was this common? I was a little surprised he said that.

Well, I mean, you know, it's one thing to have an investigation. if you want to make the leap and try and visualize the sitting Fed share going to jail. Right. Yeah. No, I don't. Yeah. That's a little another ballgame, isn't it? All I'd say is just throw some numbers at people. The bottom-up numbers are $345 for S&P earnings for 2027. I think they're too high. If you pay the all-time highest multiple on the 345, which would be about 24 times forward, you get about $8,200. So the bulk case multiple on the bulk case earnings a year, two years from now is about 18% upside for the S&P. So, you know, maybe. All right, we got to bounce.

All right, good to see more. Adam, Anastasia, appreciate you very much. We'll see you back here soon. Coming up, President Trump, taking a swipe at the credit card companies. Those stocks moving today, as you already know, we're going to dig down a little deeper there. You see synchrony down eight and a half. It's American Express and Capital One. Closing bells back right after this.

Further story by now, credit card stocks falling as the president says they must cap their interest rates to 10% for a year. Leslie Picker is following that. And joins us now with more. We've seen pretty stark the moves in some of these names. Yeah, the reaction is pretty fast and furious there, Scott. And that level that you mentioned, that 10% is about half the national average rate charged, according to Fed data. So JP Morgan analysts say that if such a thing were enacted, a reduction in yield would be a significant earnings impact for banks with sizable card portfolios. City has the highest share of credit card loans followed by JP Morgan, Bank of America,

U.S. Bank Corp, and Wells Fargo. The firm notes that the move would have have second order effects, such as tighter underwriting, higher fees, and cutbacks to rewards. Today's declines, of course, come a day before fourth quarter earnings season is set to begin. Overall, the banks have been on an impressive run outperforming the S&P 500 for two years in a row. Analyst B of A say the industry's EPS outlook is the best it has been post-financial crisis. So investors will be homing in on any color that could derail what's perhaps the best backdrop since the mid to late 90s for the banks, Scott. All right. Leslie, thanks.

It's going to be busy. You are the next few days, right? Earning season. Yay. Super Bowl time. All right. We have about 15 minutes to go before the closing bell. Christina is following the stocks that are on the move for us.

What do you see? Let's start with Alibabaabos shares. They're jumping right now. First, there's China's top antitrust body launched a probe into competition practices in the food delivery sector. The increased scrutiny should raise costs for new entrance. But really, I think the driver, has to do with Baba's cloud computing unit that reported that its large language model

Quinn was downloaded 700 million times for the first time. Shows competitions ramping up, shares up 10.5%. Abercrombie, American Eagle, and Urban Outfitters all sliding after the retailers pre-announced their holiday results. You had Abercrombie that cut the high end of its guidance, while American Eagle raised its Q4 operating income after, quote, a record holiday season. And then Urban Outfitters now is on pace for its worst day since August, December. Despite its November and December sales rising about 9%.

You can see on your screen just a sea of red urban down 12%. And lastly, shares a beam therapeutic soaring after it received positive updates from regulators, which could lead to FDA approval of its genetic disease program, and liver targeting therapy. Shares, which climb nearly about 12, well, I should say up 23% right now. We're up 12% just last year, so definitely a big swing right now. Scott? Yeah, continuing that.

run. Christina, thank you. Christina Parts of Nevelos coming up next. Light Street capitals, Glenn Kacher is back with us. We get his take on tech's tough start to the year, what he likes or what he doesn't like right now. Market Zone's next. We welcome you back with some news on META, and Julia Borson has that for us. Hi, Julia. Yeah, that's right, Scott. Meta is reportedly planning to cut 10% of the employees in its Reality Labs division. This according to a report in the New York, The New York Times that says that these cuts would come from the division that is focused on creating the metaverse. And this, of course, comes as the company has been focusing its resources on its artificial intelligence initiatives. Some other announcements today about its interest in infrastructure and its new business focused on that.

Also, the appointment of Dina Powell McCormick to a new senior role at the organization. Shares down now nearly 2%. Back over to you. All right, Julia, thank you very much for that, Julia Borson. We're now in the closing bell market zone. CNBC, senior markets commentator, Mike Santoli, and Light Street Capitals, Glenn Cacher, are here to break down these crucial moments of trading day, plus Steve Kobak, with more on who Apple picked to run its AI-powered. Siri, Michael, I begin with you. We are on track for new closing highs for the S&P and the Dow, and we are brushing off all of that stuff about the Fed Chair and the President and the Department of Justice. We are.

I mean, the market did not really find approximate cause. to really rethink either the near-term or intermediate term interest rate path or anything fundamental about the way the Fed operates. Mostly, I think, because of a lot of the institutional pushback that you got immediately to these reports right here. It just didn't seem like things were going to break in a new direction. Now, with that being said, the market had to rely on some of those rotational dynamics to get itself positive. The leadership up to this point this year has been all the cyclical, the banks, the retailers, the transports. They're all down today. And so we go back to some of the AI names and Walmart has a strong day. So I think it's all to the good. I think it's going to be

hard to get most investors off this idea that you want to be positioned, you know, for a good earning season and for reacceleration in the economy. At some point, the economy's got to prove that. I think that view is very crowded right now, but it's not really being challenged outright. And because the bond market didn't panic about the Fed, stock market was free to just grind its way higher. You feel pretty good about bank earnings, which begin tomorrow with JPM? relatively good. I mean, I think it all is a matter of the setup. They obviously are pretty heavily owned. They often, just as a matter of tradition almost, don't always trade great off of their results, even when the numbers are good. There's a lot of scrutiny of, oh, did they really capitalize

on a good trading quarter and all the rest of it? But yeah, I think basically the macro message from what the banks have to tell us, I'm almost certain will be pretty positive. All right, good stuff. Mike, thank you very much. That is Mike Santoli. Now to Steve Kovac with more on this Apple and Alphabet News. Yeah, and Alphabet is a $4 trillion company now. We'll see where it closed here in a few minutes' time. And this is all because of this new deal between Apple and Google for Gemini to power Apple intelligence, including that new AI Siri update that we're expecting in just a few months' time.

Now, look, this is actually a big hit, Scott, to Open AI and Chat to BT, which Apple had previously said was the best AI model. You also have Elon Musk complaining about this whole deal, too, saying it's a big hit. anti-trust concern and things like that. That's probably a little bit of sour grapes. GROC was never in the running to power Apple intelligence. Now, Gemini has the momentum behind it now. Like I said, Alphabet crossed that $4 trillion market cap because of these headlines around the deal.

And for Apple, it's really high stakes after they failed to get that Siri update out about a year ago. They really have to nail it this year. Now, what investors need to pay attention to is the big question behind this deal. Which way is the money going? Is Apple paying Google to license Gemini or is Google paying Apple based on usage sort of like they do in their search agreement? We're going to be digging into that one a lot in the days to come, Scott. Yes, we will. All right, Steve, thank you. That's Steve Kovac. Now to Glenn Kacher. It's good to see you. Nice day to have you on. Welcome back.

Hey, thank you very much. Scott. Appreciate it. So this news, obviously, Alphabet and Apple brings this conversation to mind that you love Alphabet stock. You say some things, at least to our producers, that would have sounded blasphemous just eight months ago. You say it's likely that this is Google, likely the number one beneficiary of AI in the long run, and they have the best monetization engine and the largest user base on the internet. Man, the market thought something totally different like eight months ago, and then the chart went parabolic. Yeah, I think there's been a big misunderstanding, really, on Google's position in the market. Right now, of course, Open AI is leading the charge on current usage and traffic for their chat GPT.

But Google's coming up from behind very quickly. They have a more efficient compute architecture with the TPU. They have the ability to resell to all their enterprise customers of Google Cloud platform. And then you look at their other models in imaging and video that are leading. the industry, applications that they have in their full stack include search, of course, YouTube, Gmail, and Maps. And then they have the whole product network, advertising network using Android and Chrome and search partnerships with companies like Apple that you guys just mentioned.

So that's turning from just a search traffic partnership to an AI traffic partnership. You said you've been buyers of Google. how recent and where along the roadmap that I just showed, which is the chart, which shows the stock just ramping straight up into the right? Yeah, we bought quite a bit in the middle of the year, starting in the late spring. And I've been adding recently as the stocks come back a little bit. So we're very excited. If you look at it, if Open AI maybe goes public at a trillion dollars, that's 25 times forward revenue, we think. Google trades at 10 times revenue, trades it 29 times consensus, 26 earnings, and it's growing earnings at 35%. It just is an incredibly well-run company

doing incredible capital allocation today. And then you've got things like Waymo on the upside and really upsetting the entire auto market, perhaps, in the long run. You like Amazon? Amazon 2. What's been wrong with that stock? It's off to a good start this year, but certainly underperformed in a big way last. Well, I think they've been kind of slow and quiet on their, you know, what they're doing in AI. They've largely partnered with Anthropic there. I think they're starting to emerge as a winner, of course, in advertising, and is that the ability to use AI to your advantage for your advertising business for really any of the big ad play.

players has been documented and a real source of growth. So you look at that, you look at the e-commerce business, which are kind of getting for free, and then we think AWS gets driven by enterprise, AI, traffic over the next five years. So really like their positioning in the market. What do you make of the whole debate right now about the mega cap trade in general versus, say, everything else? Yeah, it's a good question. I mean, look, in the next couple of years, you know, we're certainly seeing a huge period

where we've got tons of demand outstripping the supply of AI compute. And so that's causing these hypers, you know, X-Out-invideo, but the hyperscalers of the Mag 7 are having to fund this. And, you know, you're seeing them now they're up to around 73% of their operating cash flow going to CAPEX. in 2026. This is a big adjustment from these companies that were throwing off tons of free cash flow just a couple of years ago. So the market has to deal with that. The market also has to deal with, you know, Open AI, which is, you know, trying to borrow effectively the balance sheets,

hundreds of billion dollars worth of balance sheet from Oracle, SoftBank, Arm, and CoreWeave. And, you know, the market has to digest that. So there's going to be an interesting, kind of, you know, does Open AI get the next $100 million, $100 billion round raised in the first half of this year? Or does it take longer? So that's a, there's a big question in the market there. And so I think everyone's wrestling with this. How fast is revenue growing versus how fast OPEX and CAPEX are growing for the hypers and other players? All right.

We'll leave it there. Glenn, thanks for your time. Appreciate it as always. And you can hear the bell ringing, marking a new closing high for both the Dow and the S&P 500. That does it for us. I'll see tomorrow.