Closing Bell - Closing Bell: 1/13/26

Episode Date: January 13, 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, ScottWapner, 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 so much. Welcome to closing bell. I'm Scott Wopter, live from Post 9. Here at the New York Stock Exchange. This make or break out begins with a suddenly uneasy market. With some key questions facing investors, more on that in just a moment, but here is a look at the scorecard. With 60 to go in regulation today, stocks have been mostly lower for much of the day. The CPI was largely in line, but noisy, so not exactly a lot of conviction behind that reading. investors continue to assess the fallout from the administration's increased attacks on Fed share Powell and JP Morgan kicking off earnings season today. The stock lower this afternoon and it's now negative as you see on the year by some three and a third percent, just as other large financial institutions get ready to report in the days ahead. Elsewhere, Delta shares,

they are lower following its earnings report. We'll have more on that ahead as well. It takes us to our talk of the tape whether the move up in volatility is, is a sign of even more to come in the months ahead, as some are suggesting. Let's ask our headliner today, Liz Ann Saunders, chief investment strategist for Charles Schwab. Welcome back. It's nice to see you. Nice to see you, too, Scott. Thank you. How about this volatility, which is renewed, it feels like, is it directly related, do you think, to the Powell probe? You know, it's hard to isolate things in the immediate aftermath that you did not see a reaction in the market. Maybe it's a little bit of a delayed reaction, but it could just be, you know, a pause period after what have been pretty robust rotations happening under the surface.

So I don't think it looks to be anything terribly alarming right now. This is just the nature of the beast. How does the market look to you as we begin the year pretty well? It does. The broadening out trade, I think, has legs, and that's inclusive of international equities, small caps. but I would stay up in quality in terms of small caps. I think you want to kind of fade the unprofitable segment of small caps and lean into the profitable. I think the equal weight outperformance has legs.

You've seen a pretty significant shift into cyclical segments of the market materials and industrials. I think that's the market telling you that the economic outlook is relatively healthy. And I think those trends have legs. Not in a linear fashion, that doesn't mean every week. every month you're going to see our performance across those cohorts. But I think it is a year where you would expect a continuation of more dispersion, lower correlations, and a playing field that is a little bit more level for active managers relative to passive. I'd like you to listen to a soundbite from Black Rock's Rick Reeder, who was with me yesterday. If you recall,

it was a few months ago. He called this one of the best investing environments, if not the best he's seen, and he doubled down. Let's listen. We can react on the other side. 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. Do you think this is a great environment, just given some of the things you said, the projections for where earnings are going to be, a run-it-hot, so to speak, economy into the midterm animal spirits around M&A, deregulation, and the like? Yeah, but I think it's going to be with fits and starts. You know, specific to the inflation backdrop, we're already in a situation where the market is expecting the Fed may at least temporarily put itself in a timeout akin to what they did a little more than a year ago

when they had launched an easing cycle, put themselves in a timeout because of tariff-related uncertainty, you know, went back into an easing cycle, and now because really neither side of their dual mandate is suggesting they want to go full steam ahead with rate cuts. I think you could see some volatility, but I think what we're likely to see is a continued sort of churn and rotation kind of environment. It probably means that you need to be a little bit more nimble, but I do think it is more representative of what we used to think of as a stock pickers market. I think we shouldn't invest with a monolithic mindset. I think gone are the days. You could just, you know, bet on a cohort like the Mag 7.

and I think we are in an environment where you're going to continue to see these rotations. And for the stock picker out there with lower correlations and more dispersion, it's a great platform. So it sounds like you agree with what I hear from many that it's going to be a much more tactical market this year, a stock picking market. And maybe it's because all of these other stocks outside the Mag 7, and I think you believe this too, are going to have such a nice bump in early. earnings growth that they're going to justify in some respects investing in them in ways that maybe they haven't been able to in the past. Yeah. So I think that the shift away from such a hyper-focus on the Mag 7 is a function of the direction of travel for aggregate earnings for that group. In level terms, if you're taking a snapshot and you would look at expectations for this quarter

or even all four quarters of 2026, you are still looking at a higher growth rate for cohorts like the MAG7 or tech or comm services relative to the other, other 493, other sectors, but it's the direction of travel that matters. So you're seeing a decelerating pace of earnings growth for many of those prior tech favorites and an accelerating pace of earnings growth in some of those other areas. So as I often say, you know, this got better or worse, often matters more than good or bad. So I think we have to look at direction, not just level. And I think that has been one of the supports. By the way, the rotation story is not a brand new story. It gets It's masked when you have a concentrated market like last year, or at least the first quarter, call it three quarters of last year. But, you know, the S&P, the market was up 16% last year. The average member within the S&P 500 had a 27% drawdown last year. The average member within the NASDAQ last year, and the NASDAQ didn't even better at the index level, but the average member within the NASDAQ had a maximum drawdown of more than 50%. That both suggests that there's more, there's a fuller story being told under the

of the cap weighted indexes, but it also establishes the backdrop for more opportunities because you've had that churn and those sort of rotating bare markets that have happened under the surface providing that opportunity. Are the risks that some cite at this point, some would say it's like they're, you know, crying wolf. I mean, the backdrop as you paint and others do as well, sounds pretty good. Someone like Jamie Diamond would suggest, as he said in the earnings release for J.P. Morgan, that markets are underappreciating the hazards, whether that's complex geopolitical conditions, the risks of sticky inflation, and elevated asset prices. How would you assess those level of risks and how they would enter into your thinking? It is part and parcel to the

descriptor word that we used in our 2026 outlook to describe the backdrop, which is unstable, being a more relevant descriptor than uncertain. The backdrop is always uncertain. I think when you think about risks, and we're paid to assess not just the opportunities, but the risks, I think it is that the unstable nature of, you touched on it, geopolitics, that is inherently unstable at this point,

even ongoing tariff policy, not just the policies themselves, but the manner by which they're announced, you know, on social media post. you've got instability as it relates to pressure on the Fed, the Fed's decision tree as it relates to their dual mandate, which at times have been sending different messages. So when you think about the risks, I think they're multi-wronged and they could erupt. But we had an experience last year where you had that tariff turmoil near bear market in the case of the S&P, an actual bear market in the case of the NASDAQ and the Russell. But what you also had in that early April period of time is that power player in the market,

these days, which is the retail trader that still very much believes in the buy the dip. And they step in and they tend to keep these dislocation periods from elongating into a more protractive bare market. So I wouldn't be surprised to see some of that kind of action where you get these sort of pops and volatility, but they're not long lived and they don't represent something more systemic in the financial system. Do you see a retail investor being as highly engaged like they were and that cohort wasn't in 2025? You obviously, have a unique vantage point given where you work? Well, I think it's important to distinguish between individual investors and retail traders.

So part of that retail trading cohort is the cohort that sort of grew out of the pandemic or they skew younger, they skew mail. They're part of the reason for the surge in sports betting and the popularity of betting markets. I don't think that they pay a heck of a lot of attention to what's going on in the macro backdrop. They really believe in those acronyms of BTD and phone. and Yolo and Hoddle. And I think that's the mindset they're likely to stay in. But I also think that they're looking for other opportunities. And some of that churn under the surface has been the provision of those opportunities. So I think they will continue to be power players. But I don't

think they just rest on sort of past performance as a guide to what they're going in. They find momentum and they find opportunities anywhere. It's arguably maybe a little bit trickier an environment for longer-term individual investors to navigate, but my message to them would be, don't try to play that short-term game. What we do know is over any reasonably long time horizon, there is a strong connection between fundamentals and stock prices, not necessarily the case short-term, and you're still going to see that trader cohort, which has become, again, the market's power driver in the short-term. But it's an important distinction. We are big believers in the notion of investing. Investing is about owning. Gambling is about hoping.

Those are two very different philosophies. And I think there'll still be some push and pull and kind of battle between those two philosophies. Well said. Let's expand the conversation if we could and bring in our panel. Solis is Dan Greenhouse and so fies, Liz Thomas. I mean, you heard Dan from Lizanne. You've heard from Rick Reeder and you've heard from others and you probably believe yourself because I think you've articulated the view here on our program many, many times.

Backdrop looks good. It's hard to, you know, you can throw darts at it, but they don't. really stick. Yeah, and again, I mean, there are always things to worry about it, and Lizan made the important point. This has not been some relentless march higher. We just had a Liberation Day sell-off that was quite extensive in certain parts of the market, certainly at the individual stock level. Just a couple of years ago, we had a 10-month bear market that saw the S&P drop by nearly 30 percent. So it's not as if volatility has not arisen from time to time. It's just the fundamentals and the backdrop, plus an

accommodative Fed, have supported higher prices. And I think as you go into 2020, six, the case I've been making, is a lot of that is still in place, higher earnings growth, supportive Fed, et cetera, et cetera. It is interesting, though, that even people who are bullish and sound positive on the environment, Lizanne, Reader, Tom Lee, suggests it's going to be a much more uncertain, not linear road. Tom Lee suggests you can even have a bare market mid-year before you recover and then still have a very strong year.

There's just a lot on the plate. We're still waiting for the Supreme Court on tariffs. We don't know at the labor market to what degree is. it's going to hold up. We don't know how engaged the Fed's going to be. We don't really know where this assault on Fed independence, what some say that is, is going to go either. The one pushback I would give is every year there's a list of uncertainties coming into the year.

And certainly since the GFC, that's been even more true, I think, in the 15 years where the 10 years posted GFC than before that, because now there's a cottage industry of people selling substacks and newsletters trying to be as barris as possible and play up every individual issue. that might affect negatively the economy and markets. And so this year, in that sense, is no different. But again, what is it that drives stock prices higher? It's improving fundamentals.

It's increasing confidence. All else equal. It's lower interest rates. A lot of that is in place right now. And I think it's important to remember that that can change on a dime. The tariff story can expand or perhaps something can go wrong with the Fed or the AI story. But on balance, as long as that's your backdrop, generally speaking, that does support higher prices. You didn't say, he didn't say, Liz, arguably the most important thing of all which drives stock prices higher.

That's quality earnings and continued strong earnings growth. And that's where the expectation is for this year. Some say maybe they're too high earnings expectations. What do you think? I think over the long term, that's true, meaning it's true that fundamentals drive stock prices higher. In short-term periods and especially short-term periods that are dominated by geopolitical risk, I think momentum drives stock prices higher or lower. Lizanne said something along the lines of better or worse matters more than good or bad. And when we look at just the fourth quarter of 2025 versus now the first quarter of

2026, there are things that are better. Unemployment came down. We just heard about that. We've got inflation that's still cooling. We've got consumer sentiment that's recovering. We found out about some retail spending that was much stronger than we expected. Growth expectations have risen. So I think we're in a better place right now from a sentiment and momentum perspective than

we were in the fourth quarter and some of that soft patch. However, to the point about volatility and what we might see this year, we've already started the year with some geopolitical headlines, right? Venezuela, the Fed, and they have more shock factor. I guess, but the market's been amazing in its ability to just kind of brush things off because I think it feels like it's better educated, if you will, in how to deal with some of the social media posts, some of the verbal missives, et cetera, understanding that what is said may not be what is actually done, and even an initial reaction has often reversed itself. Well, and I think we're seeing that right now with some of this Fed independence question.

The market has largely shrugged it off because it's been really condemned or at least said this is a bad idea by pretty much everybody, both sides of the aisle. So I don't think the market's taking it seriously yet, and we have to wait to see what the long-term effects might be, and those long-term effects, I think, are real. It could really affect interest rate policy and how it's made. It could really affect the long end of the yield curve. So there are things that down the road, I think, could be detrimental to investors, but today and the here and now, not reacting yet to your point, because we want to just wait and make sure that it's actually going to stick. Let's debate what is undoubtedly part of the

broadening trade. It is the best-performing area of the market year-to-date. It is the Russell 2000, the small caps, the Russell's up six and a half percent. I mentioned my conversation yesterday with Rick Reeder, which I hope that many of you heard. He also addressed that, a trade he hasn't liked. Does he now? Listen. 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. yellow room. When he was saying we're definitely doing more, he said more in midcaps,

but obviously still doesn't like the small caps. I said the Russell's up six and a half percent year to date. It's where the action's been. Rightfully so. Well, let's be clear, going back to the Liberation Day low, the Russell 2000 is outperform the SB 500. So this is not in that sense new. Now, that's a random starting date, the Liberation Day low. What about a month before that, obviously not quite as obvious. But I've made this point on air before and I'll make it again. Most people watching the show cannot name 1,99 of the Russell 2000 companies. You don't know what they are. And even if you look at the S&P 500, which is the smaller index of profitable small-cap companies,

you probably don't know what most of those companies are either. And so when Rick says things like he's looking at mid-caps, mid-caps, you know a lot of those companies. We talk about them on the show. We talk about it on half-a- By the way, you're insulting the intelligence of our fine and educated viewing base aside. To be clear, I don't just, well, they don't know that,

but let me just be clear to the viewer. I'm not saying you random viewer, I'm saying, in general, most institutional investors don't know. Okay, so buy the IWM. Fine. People buy ETFs all the time. I mean, the point is

what is reflected on the screen, the chart thus far in a very young year, reflective of how this is going to look later? The short answer is, I don't know. And I know there are going to be plenty of other people who take the position. Yes. My standpoint has been that the AI trade is the driving factor behind markets right now. It's not just Nvidia and Broadcom. Obviously, it's scaled down through Vistran Eaton, etc., etc. That idea, that investment theme, that cyclical story still remains in place.

That favors a lot of large caps and midcaps. I don't think it really finds its way too much down to small caps. But that said, in an environment where inflation is a little bit, if you dig through the data historically, in an environment where inflation is above target persistently, the Fed is accommodative and earnings expectations are expected to be roughly around where they are, those are periods oftentimes where small caps do outperforms. So yes. Run it hot.

Does that coincide with buy small caps? Is that what's going on here? I don't think it does coincide with buy small caps. If you look at when small caps actually outperform the best, it's in the early part of a cycle. Running it hot usually happens in the latter part of a cycle. And if you look at just history, there haven't been a lot of instances of this, but history when the Fed is normalizing rates, not during a recession, but normalizing rates. After that last rate cut, large caps actually do better than small caps one year out. And that actually starts to happen even six months after that last rate cut.

But this isn't necessarily a Fed, a classic, as I think you're alluding to, a Fed-induced run it hot. It's a Trump-induced run-it-hot because he wants to get the economy. absolutely humming right into November and the midterm. So it's a little different dynamic. It's different. But much of the thesis about small caps has been that they'll do better as rates come down and as the Fed continues cutting. And I think we're realizing this year, the Fed isn't going to cut that much more because there isn't much justification for that to happen. I think the market, up for debate, of course. Until May, I don't think the Fed is going to cut much more. And I think there's an expectation. Glad you qualified it. There's an expectation in small caps

that maybe it was going to go further. All right. So Liz Ann, I'm going to give you the last word. We've covered a lot, but we really haven't gotten deep into the mega caps, which certainly they don't report for a little while. So we're not going to be reminded of the incredible earnings power that they all have. And we're going to be focused on that again. As we think about this AI trade,

are we going to be once again pushed back into those names because of what we learn in this earnings season? Maybe individually, but not necessarily in the aggregate. I think we have to be really careful about monolithic investment decisions. I would apply that to the discussion you all just had with regard to small caps. That's a huge index and not all are created equal. I think as it relates to small caps, as it relates to even cohorts, small cohorts, I think it's at the individual stock level, and I think you really want to take a factor approach.

I think to be old school, I think we're in an environment where GARP makes sense. So it's not generic quality as a factor, but it's that very curated combination of growth-oriented factors like positive earnings revisions, positive earnings, surprise, stability, if not growth, and profit margins. That would be on the growth side. Your traditional value factors like price-to-book and price-to-sales, but also balance sheet-oriented factors. I agree that it's not a done deal, that the Fed continues to ease here. That brings factors like interest coverage back into the mix. So that's the way I think you want to approach. cohorts, sectors, and indexes is not through a monolithic lens, but with that factor-based approach. All right. Great stuff to you guys. I appreciate it. Liz Ann, we'll see you soon. Good to see you. All right. Liz Thomas, thanks to you and Dan Greenhouse, of course, to you as well. The credit card stocks, they are selling off hard again today. Christina Parts and Nevelas joins us now. She's tracking those as we move closer to the end of trade today.

What do you see? Yeah, so many of them are just extending their losses from yesterday. as President Trump today continues to target the sector. And what do I mean about that? Earlier this morning, he urged lawmakers in a true social post to support a measure that would force larger banks to offer retailers the option to actually bypass companies like Visa and MasterCard for transactions.

President Trump said the bill would control the, quote, out-of-control, swipe fee rip-off. Visa, MasterCard American Express, you can see on your screen just all falling. MasterCard down almost 4% Visa same scenario. And it really comes after they all fell yesterday, following President Trump's call for a one-year cap on credit card rates at 10%. Scott.

All right. We'll come back to you a little bit. Christina, thanks. We're just getting started here on the bell up next. Sycamore Tree Capital Partners, Mark Okada. He is back. He tells us his number one concern for both credit and equity investors right now. We're live for the New York Stock Exchange.

You're watching closing bell on CNBC. All right. Welcome back. Our next guest wonders whether both the credit and equity markets. markets are too optimistic about the road ahead. Even with the bullish backdrop, many continue to cite. Marco Cata is co-founder and CEO of Sycamore Tree Capital Partners. He's back at Post 9, and we're so very glad to see you.

Welcome back. Good to see you. Scott. Happy New Year. You as well. So I'm looking at your notes, and I'm confused. Your base case sounds like what everybody thinks. Yeah. Bullish economic backdrop, right?

I agree with that. But you cite as your number. one concern, what's priced into this rally will not be met with fundamentals. In what sense? Well, because the markets have grown so much. If you look at the scale and size of the markets we're dealing with now versus the economy, like GDP has doubled since the GFC, but markets have tripled. So everything is big now. We didn't have crypto before. Now it's, it pops up to $3.5.4.5 trillion, not down to $3.5 trillion. I don't know where that trillion went. It didn't seem to bother anybody, but markets are huge. Private credits grown a trillion a half. So the growth in the

market just means that a supportive environment is kind of your only option. Everything's too big to fail in my book. And so the concern is that all of this bullishness that we have, which is across the board. I mean, Scott, it's rare that you don't have a bear somewhere when you read everybody's letters for the year. I keep saying that up here. It's hard to find people who are And you're not. Economically, I'm not. Economically, if we want to talk credit, which is why I'm here, right? Let's talk credit.

We do our credit check with you. And credit has already started the cycle. You can look at the indices, and last year, markets look fine on the surface. You make 6% or 7%, 8%, that's great. But you start to peel back the onion and look at what's happening underneath the hood within credit. The cycle's already started. If we look at the differential between higher quality, the good stuff, and the stuff that's starting to look a little scary. That's what you're looking at.

The spread, for example, between B and Double B versus Triple C is wide. Exactly. So the numbers, to put it in context, if you look at the spread between double B and single B is about 50 basis points, that is kind of in line with, that's actually a little bit better than historical average. If you start to step down into the world of triple C's, we're twice the historical difference between a single B and a triple C. But that just means don't go too far out on the risk curve as it relates to credit for larger returns. Well, it's a little more complicated than that, right, in credit.

I try and simplify things. Yeah. Well, that's good. That's what people want. Simple. But there's no easy button in credit anymore. I think that the reality is that. is that the way we've set this up, we've got three big markets. We've got high-o bonds,

syndicated loans, and private credit. And all those markets are big. The one that has grown the most, obviously, is private credit. And the fastest. Yeah, grown about 14% K-German. People think it's still going to keep going with all this bullishness. And I don't disagree with that, per se. But when you do a lot of lending, especially in below investment grade credit, what happens three or four years later. Not everything works. These were all below investment grades. So the law of averages starts happening. And that started a little bit earlier than I thought it was going to happen. But it actually happened in 25. And so we're going into a traditional credit cycle where you're going to have your winners and losers. The losers are getting hit much harder than

historically. What I mean, that's kind of, you know, the losers in the stock market are getting hit more than the winners too. You're seeing it across all areas of the asset spectrum. Exactly. And so it's, but in credit at least versus equities in the world you run around in most of the time, you have the upside. Our upsides, we get our money back in our coupon and we get to reinvest it in the next deal they're on par. So we have to avoid those losers. That's our job. The other statement you make, I find interesting, and it's obviously directly related to this and you somewhat address it, but I want to go specific to those who think tight spreads in the credit market are signaling all as well are mistaken. because when we think about credit and we talk about it,

we always cite the fact that spreads are tight so things are good. Yeah. What are we missing? Because the way this will roll forward, as the market broadens out and the credit curve steepens, which is what we're talking about, the overall risk bringing them has to rise. There's more risk in the market. You think you're smarter to avoid some of these issues, but you're going to get hit with some. And so that just means you're going to need more spread in what you're doing.

just means that spreads should widen from here based on what we're seeing. Now, certainly the hope, Scott, is that this really nice economic bullishness that we are, will help all of this. Well, that's why when you say spreads should widen more, I was going to say might widen more. And then you went to the payoff of the economy. If the economy remains as strong as people, including yourself, think it will. Right. And we won't have a credit problem, will we? We won't have a large credit

problem, but we already have credit problems. There is $100 billion of loans that are trading below 80 right now, already. So that's already been priced into the space. Now, where that goes from here is what we're talking about. Does that reflate back up into the 90s and par? Some of that will, but some of that's going to be hit in places where this sort of multi-speed economy hits it differently. You can call it the K-shaped dynamic within credit. You have the winners, and then when you get into the losers, it's pretty bad. Well, you say 50% of those trading below 80 or below are going to default. That's what is history.

That's what's been happening within that space. What's up with the credit market and concerns about Fed independence? How are you thinking about the relationship? Because the credit market's been pretty quiet. Granted, it's only been a couple of days since we've learned about this probe into Chair Powell, and we're thinking about it more. substantially than we have. Well, first of all, I'd hate to have that job.

And I'd hate me the guy that gets that job. And what a horrible job. The cognitive dissonance of being that person in general to lead the Fed in this go-forward environment is going to be difficult. I think there's a couple of major takeaways. Number one is I think rates go higher because of a lot of the instability that we're saying here

from a risk-prinion standpoint, but also, I mean, you've got pushback in Congress, You potentially have these tariffs, you know, the Supreme Court coming in. That pulls a lot of that cash back out of that fiscal situation. Maybe makes rates go higher. So whether it's the risk-free rate rising and there's about a 50 basis point sort of term premium that we're saying that's been rising, I think the market doesn't like any of this. We don't like this in credit.

Do spreads widened because of that? Probably not. This is more of a basis sort of issue. But rates will back up. Yeah, Rachel back up. Directly because of this. Exactly, yeah. Do you worry about Fed independence as an investor?

Yeah, sure. I mean, but I think there's a time when it matters more. A time when it matters more. Like right now, if everything is very rosy and economically, if you feel like the fiscal stimulus is great, the deregulation that we should get from some of this unindependence, the liquidity that the fed's been pumping in the market. That's all very supportive.

And so I think there is kind of a discounting of some of this. But it's not a positive. There's no way you can pay this a positive. I think the big thing that I would watch over time is the value of the dollars, Scott. You know, that is our store of wealth. That continues to go down or gets back up. Gold is going to continue to go up then, right? That's right.

This is all very good for gold. And it has been. Obviously, yeah. Mark, it's good to see you again. Thanks for being here. Thank you for having. All right, it's Mark O'Codda joining us right by you as well. Coming up, Delta's economic indicator of sorts.

What the company's results are signaling about the state of the consumer. Closing Bell, back right after this. I want to show you the Dow, which is now down by more than 500 points. Remember, last couple of days, we're saying the Dow was closer to 50,000 than it was to 49. Not so much anymore, thanks to pretty reasonable declines today in J.P. Morgan following earnings, visa on the back of those credit card company threats. Maybe the fact stocks just up a lot as well. CRM, that sales force, is also a sizable weight today.

So we'll follow that over the 25 or so minutes that we have left in the trade. A reminder, too, about a program on tonight we'd like you to see. We're bringing you a special report. Warren Buffett, a life and legacy. Mr. Buffett's sitting down with our Becky Quick in a series of interviews discussing life, philanthropy, and business. Becky also talking with Mr. Buffett about some of the biggest challenges in the world today, including his thoughts on artificial intelligence. The genie's out of the bottle.

I mean, if someone wants to impersonate me in a way to scam people 10,000 miles away, or in Omaha, they can do it, and they can imitate my voice, and they can imitate my appearance, and they can talk. They can fool by my kids. What do you do to stop that? How do you combat it? How do you put the genie back in the bottle? That's the same problem we have with the nuclear weapons.

We know how to build them, and we know how to build bigger ones all the time. The problem is so other people, and they've got no use except to kill people. Or deter the other guy from using his. I mean, that is something to have created in the world. Well, there's much more. Tune in tonight, 7 o'clock right here on CNBC. Warren Buffett, a life and legacy. Coming up next, closing bell, we're back in two. Shares of Delta Airlines are lowered a day following its mixed earnings report, a release that revealed a closer look, we think, at how consumers at both sides of the income spectrum are faring.

Our Phil LeBoe joins us now with more. That's what the takeaway for us was today, Phil. what was inside this report about who is inside the cabin and where? Well, take a look at the two numbers. These two numbers, it encapsulates the K-shaped economy, if you will. Take a look at main cabin revenue in the fourth quarter. Down 7%. It was offset by premium products revenue up 9%.

In fact, there was greater revenue from premium products than there was from the main cabin. People are paying up to fly Delta. That's been the case for some time. And that's a primary reason why Delta expects profits for the full year of 2026 to be up 20% compared to 2025. And when we talked with Ed Bastion this morning on Squawk Box, he made it clear there is no slowdown in demand for people who want to pay more. Fares are driven by demand. And the demand set that we've talked a lot over the last several years that's growing the fastest is our premium sector. And as a result of that, our premium demand is what drives fares because there's limit to how much support.

we can put in in terms of the premium product. Our customer is a premium customer, and they're willing to spend what it takes to be sitting up front. Part of that premium customer set, if you will, is the corporate traveler. It always has been, and that corporate travel, that's expected to continue for Delta in the fourth quarter. The revenue from corporate travel was up 8%. Ed Bastion says they're continuing to see strong corporate demand here in January, Scott, despite the fact that there have been a lot of questions about this slow, higher environment, whether corporate spending is going to slow down. They are not seeing that at Delta.

Yeah, really interesting, Phil. Great stuff. Thank you very much for that. That's Phil LeBoe. Coming up next, we tracked the biggest movers into the close today. We're back. Just two minutes. All right, we're back.

Let's get back to Christina Partsenevulus now for look at the biggest names moving into the close. What do you see? Well, let's start with Moderna shares because they're leading the S&P 500 lower after the, I should say, higher. Wow, 16% higher after its CEO said at the J.B. Morgan Healthcare Conference, he expects 2025 sales to top the midpoint of its earlier guidance. The company is also projecting revenue growth up to 10% for 2026, driven by primarily new launches and geographical expansion.

That's why you're seeing shares up 16%. Roblox shares also in the green after being named a top pick from analysts at Morgan Stanley. The firm saying it expects the company to really retain users at higher rates than feared and continue to produce new hit games, and that's why it shares are up over 10%. And last but not least, trivia therapeutic shares. Those are the ones that are sinking right now

after the FDA extended its review for the use of the company's rare kidney disorder drug. The agency will now give its decision on April 13th. That delay, as far back here, the fall almost 15%. All right, Christina, thank you for that. That's Christina Parsnavlos, of course. We're now in the closing bell market zone.

CNBC senior markets commentator, Mike Santoli, joins us right. now to break down these crucial moments of the trading day. Michael, I'll go to you first here. What do you make of this day? We're down about 500 now on the Dow. Yeah, and it's another one of those reminders that a market that's broader, less narrowly dependent on the mega-cap AI stocks is sometimes a more treacherous tape. And, you know, I don't think there's anything too damaging happening, but you have very much a split market. You have 1,300 stocks up, 1,300 down in New York Stock Exchange, But enough weakness and enough areas with software and a little bit of the seldom news on the banks that keeps things a little bit more slippery than you might anticipate.

So I don't think it changes anybody's overall thesis, but does show we got a very fast start out of the gate with the S&P 500 making those new records. Yeah, sure, we have some round numbers right overhead. Maybe that's causing some hesitation, 7,000 on the S&P, 50,000 on the Dow. But for now, I do think it's sort of interesting that yields down oil. up some of these kind of rotational dynamics that are leaving the equity market just slightly off balance. All right. Good stuff, Mike. Thank you very much. We'll see it coming up in just a bit on overtime. Christina, tell us about Intel and AMD. Well, we're seeing those shares rise over, what, 5% for both of them as supply chain checks really point to a growing CPU shortage

that's been largely overlooked as the market really stays fixated on memory and AI chips. Key Bank says both companies are effectively sold out of these server CPUs for 2026 with hyperscalor demand coming in far stronger than expected, which would open the door to potential price hikes of roughly 10 to 15%. The driver, of course, is agentic AI. Unlike chatbots that run on demand, these systems really operate continuously, creating far more compute-intensive workloads, which is why you need the CPUs in the back end. Intel, though, is prioritizing higher margin data center chips, and with TSM, reportedly able only to meet about 80% of that wafer demand. That is why you're seeing that supply crunch. The AI supply crunch is now spreading beyond GPUs and memory giving both Intel and

AMD real pricing power right now. Christine, thanks for that. Julie Borsden, we have some news regarding Netflix and Warner Brothers Discovery. Is that right? Yes, Netflix is reportedly considering amending its bid for the studio and streaming division of Warner Brothers Discovery to make its bid all cashed this according to a report by Bloomberg saying that Netflix is, working on these revised terms. This, of course, comes as Paramount Skydance pushes its offer for the entirety of Warner Brothers Discovery. We have reached out to Warner Brothers.

Excuse me, we have reached out to Netflix for Common and we will reach out to Warner Brothers for Common as well. You see both of those shares trading up about 1%. Back over to you. Okay. Julia, thank you very much. We'll follow the activity in both of those names and any more reporting that you might have. Julia Borsden, Leslie Picker on the banks. So J.P. Morgan is one of the reasons why the Dow looks the way it does

today. What was the issue? Why is it down 4%? Yeah, really trending lower. It was kind of a complicated quarter, Scott, really complicated by the purchase of Apple's credit card portfolio, which impacted EPS due to a multi-billion dollar reserve build. Excluding that. The top and bottom lines, though, were higher year over year, thanks to a jump in its markets division, particularly equities, products. Investment banking fees, though, they declined in the quarter and missed estimates and missed the company's own guidance, thanks to lower than expected revenue in equity and debt underwriting. Now, we got a bit of color from J.P. Morgan executives on the administration's credit card interest rate cap proposal. CFO Jeremy Barnum said on the media call that such a

move, if it were to happen, would be, quote, very, very negative for consumers because price caps would result in the removal of credit, broadly speaking. Now, we'll get fresh insight on the impact of this proposal when Bank of America, Wells, Fargo, and Citigroup report tomorrow morning, Scott. All right. Appreciate that. Leslie, thank you. Megan Schew of the Wilmington Trust is with us as well.

All right. So earning season is off and running now. Markets having a little bit of an issue today. How do you feel about things? Yeah, I feel pretty good starting off the new year. I mean, we ended the year on a pretty solid note. looking at expectations for really pretty robust earnings in 2026. I think the one red flag that we're sort of watching is pretty significant weakness or at least stalling in the labor market. And that is,

of course, sort of complicated by reduced inflows into the labor market, reduced immigration. But when we look at some of the weakness in private payrolls, it is a little bit concerning. I think What we're expecting to see is a little bit of softness in the first half of the year with some recovery in the second half of the year. And the market's probably going to be looking through that to continued strong earnings in 2027. So we're saying fully allocated to equities, but focusing on higher quality within that space. Pretty confident on what earnings are going to deliver this season. Well, earnings have continued to surprise to the upside. And we've seen earnings continually get revised up, strong beats.

So I think if you look at 2026 expectations for call it 13% earnings growth, it's very possible that we see something closer to 14, 15% earnings growth. I don't think you're going to get a lot of multiple expansion from the market, but that's okay. We're obviously pretty fully priced there with rich valuations. But what's been encouraging, in my view, has been that tech valuations have not increased materially over the past, call it two years. They basically just move sideways because earners. earnings growth has been so strong. I think you're going to see a little bit of a passing of the baton, better earnings growth from non-tech companies and a little bit of convergence there. But it continues to be, I think, a story about a gradually broadening equity market participation. Oh, I was going to ask you about that next. So you believe what we've seen to start the year has some staying power in terms of the broadening of the market. Yeah, I think the underlying earnings trend speaks to better improvement coming from some of the non-tech parts of the market, but you're still looking at really robust earnings growth and, again,

higher quality. I think the thing to watch on tech is that the second half of last year, investors definitely became more attuned to tapping the debt markets. I don't really expect that to reverse. It's just all about the trajectory of the, called the hyperscalers, using debt to fund CAPX and making sure that those CAPX projections remain in check and don't get out of All right, Megan, I appreciate you very much. Thank you. That's Megan Shoe. We are getting a new development in the probe of the Fed chair, Jay Powell, and a potential, potentially very important one. Emily Wilkins is on the hill, as you see with these details, M. Hey, Scott, well, as you know, this entire investigation is about what Jay Powell did or did not tell

Congress during his testimony last year. And now we can report that the Financial Times is coming out with a report that Powell actually. sent lawmakers a very detailed and in-depth letter after that testimony where he really laid out some of the costs, the reason why the projects had gone over, answered a number of lawmaker questions. And this kind of raises the overall question of whether or not some of the information that the DOJ is accusing Powell of not coming forward with has actually already been out there to lawmakers throughout this time. Now, I've reached out to several lawmakers on the committee, have yet to hear back from them as far as the details. And it's unclear.

exactly what is in the letter and how that lines up with what the information the Department of Justice is asking for. But it does certainly give some credence to the idea that Powell is trying to be transparent with the cost of this building and just another wrinkle in this overall investigation that's been going on into Powell. Scott? So, and we've already heard from some senators quite publicly come out and say they're against the probe of Chair Powell in the first place.

And you had the reporting on Senator Tillis among the small group. of people who have come out to this point. Am I to assume that there are others who disagree with it as well that just haven't come out publicly and said so? You know, Scott, it's been interesting. I mean, tell us you've seen Dave McCormick, you've seen Kevin Kramer, all Republicans on the banking committee come out and say that they believe that Jerome Powell is not guilty here,

that he hasn't committed any crimes. And what's been interesting to me is that even senators who I've talked to who have kind of said, to let the investigation play out or I need to learn more information. No one's really come out with full-throat support for this investigation to Powell. No one said it's absolutely necessary. No one said it must be done. Everyone's either kind of in a wait and see posture or they're actually coming out defending Powell and really saying that this could potentially hurt the Fed's independence if the executive branch was to go after the Fed chair like this. All right. We appreciate

this update. It's an important development, as we said. Emily Wilkins is down there on the hill. as you see with that. We'll check the market here. Remember the Dow is down by more than 500 points. Not that long ago. I was trying to get to 50,000. It's closer to 49,000 as we speak. You've had some weakness in J.P. Morgan today. That's been one of the chief culprits on the back of mixed earnings report. If you want to characterize it as that, a visa has been another loser. Certainly the credit card names have been very much in the news because of that idea from the president to cap interest rates at 10%. VISA's also been up a bunch along with some of those other names. So I'm not going to pin the last couple of days of trade simply on that news item,

but it is undoubtedly having some level of impact there. Sales force was another one of the weakest names on the Dow. So that's how the bell is going to ring today. It will ring us out. And we are the ruffle, which is leading year today.