Closing Bell - Closing Bell 12/17/25

Episode Date: December 17, 2025

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 so much. Welcome to closing bell. I'm Scott Wobner, live from Post 9, here at the New York Stock Exchange. This mega breakout begins with the troubled tech trade. Another day, another slide. Let's show you the scorecard here with 60 to go in regulation today. Red for the majors led by the NASDAQ. Once again, it is the AI area that is selling off.

Oracle is lower again today on a report over its data center financing. We will, of course, have the latest coming up. Shares are down 5%. CoreWeave for its part, down again, too. Down 5% as well. InVIDIA, it's off around 7% now in just one week, down another three and a half today. Elsewhere, Robin Hood dips deeper in the prediction markets and the NFL. We got that story coming up and take a look at shares of Medline.

The biggest IPO of the year is out of the gates, looking pretty good, up near 35%. There is Lenar, though, it is lower after its earnings. It does take us to our talk of the tape, an anxious market, a turbulent tech trade, and what to do about it. Let's ask our panel, Triberians, Adam Parker, High Tower, Stephanie, Link, I capital, Shanali Bassick. Adam and Stephanie are both CNVC contributors. It's great to have everybody with us. Shanali, I'll turn to you first because you're sitting with me right here at Post 9 at the New York Stock Exchange. What's going on in this market?

You know, it's interesting. We've been saying for months, right, that the tech trade would get more selective as things start to get hashed out. It's not always going to be pretty. I think what's interesting about today is signs of any contraction here in credit. markets as it pertains to that big tech trade. Now, what I'm hearing here is that really this might be an idiosyncratic issue when it comes to this site when it comes to the Oracle project, but it just shows you that these are not riskless propositions.

There's a lot to consider when it comes to the buildout. That means the localities, their feelings about these data centers, as well as the other infrastructure and also the returns being demanded. Look at what is being demanded just on other Oracle sites, north of 25%. So certainly, investors want to be compensated for that risk. Adam, have we hit some kind of inflection point here in the AI trade? I mean, what is happening that the market is all of a sudden so concerned about certain things and certain stocks? Yeah, I mean, look, we published over the weekend.

I think you saw that you're not seeing the multiples, the enterprise value forecasted sales, expand for some of the original winners. So whether it's Nvidia, Broadcom, AMD, the multiples of P. peak. So for the trade to keep working, I think, and get back on track, you need the fundamentals to come through. And I think you'll see that. I don't think it's over. I think you'll see that in January and April. I think what hurts the people I talk to the most institutional investors trying to beat the S&P 500, what will hurt them the most is if the great eight outperform the market. I mean, every year ahead outlook that I've seen or that investors have told me about is, well, we're kind of bullish on the market, but we think the grade eight will lag and there'll be

diversification. So that, you know, if you want to be contrarian, you say we're getting close to buying these things and they outperform again in 26. I agree with the comments we talked about the last year show. I think Oracle also has some idiosyncratic stuff on top of it. And I think the market's worried about two things that cause every peak, Scott, which is arrogance and debt. And the market's got some of that in the AI space for sure. Steph, is that how you see it as well? I mean, as goes Oracle seems, so goes the AI trade in general. It's just not going to going to find any traction it doesn't appear. If this continues to go, Stephanie, the way that it is now. Look, Oracle is a real concern, and the CDS spreads are telling you that at up 153

versus February lows at up 33. It's not disaster, but it's concerning, and it's all about the financing and the lack of understanding of what they're going to do. This is all because they're going to have negative $21 billion in free cash flow next year. You want to contrast that to something like Broadcom, which is lost their multiple from 40 times to 32 times in a week because, in sympathy with Oracle, but they're growing 40% in earnings. You're almost had a one peg for one of the best custom ASIC companies in the industry. And they are going to have $46 billion in free cash flow next year, and oh, by the way, that's up 71% year over year. So I think you have to be very careful on what you're picking within the AI, especially in the technology side, because all of these

stocks have had tremendous runs over the last several years. But where the fundamentals are not getting rewarded, that's where you do your homework, roll up your sleeves, and you look at some of the numbers. Rockcom's AI growth was 70% in this past quarter. Guidance is on. 100%. Their backlog up $72 billion for the next 18 months. These are real numbers. But again, it goes back to cash flow. They don't have to go to the debt markets. They can fund this all out and continue to grow and expand. And so there's a lot of companies that are great that you can own that are getting thrown out with the Oracle concerns. And I would add industrials, utilities, and also the power companies, healthcare companies are going to see benefits from AI. And

right now they're just throwing everything out. One last thing, Scott, the top performing stocks year to date of 2025 are down about 120 basis points in the last two months. The other sectors are actually higher and the market has not collapsed, which is very encouraging to me. And it speaks to the rotation and the stronger than expected economy and better earnings growth for next year. And I think it's going to continue. And we get Santa Claus rally starting late next week. I think you're going to continue to see the broadening into the end of the year and into 2026. I come back to this

in just a moment. I do want to get more, though, about this Oracle story because it is based on an FT report that Blue Owl won't back a $10 billion data center in Michigan. It just has added to the anxiety that has existed over this name for the better part of the last

few weeks at least. Seema Modi's here with the very latest. So what do we know at this hour? What are you hearing? Scott, been speaking to a number of different people. And the important context here is Oracle is in the midst of this ambitious data center rollout, right? It has that $15 billion project in New Mexico, $18 billion project in Texas, and then there's this $10 billion Michigan data center that we have been discussing today following that report from the FD that the financial firm Blue Owl is pulling out as a backer.

Now, a source familiar involved in looking at this deal tells me that Blue Owl did conduct due diligence around this deal, but found that the economic terms tied to this specific deal were unfavorable compared to the other two that they're involved in with Oracle. And so they decided not to move forward. Now, Oracle has gone on records telling us earlier today that they have found an equity partner, that the schedule is on track, no change in plans. But I think what is significant, Scott, is to see how the stock is reacting. It's still down about four to five percent on the day. This specific story, I think, is raising a couple of questions, right? If it's not Blue Owl, who is the equity partner that is involved in financing this Michigan data center? How much

more debt does a company need to take on? What is the timeline? And how does Oracle orchestrate a bond deal without seeing its credit rating drop into junk? It's right on the edge right now at Triple B. Worth noting that the latest comments from Moody's yesterday suggested that they're assessing all the risks around Oracle, but they're keeping their rating where it's at at investment grade. Adam, thank you, Seema very much. Seema Modi. Adam, as long as you have the stock price of Oracle going down into the right and you have the CDS going up into the right. Can the tech trade get any traction whatsoever? Yeah, it can. It can. And we talked about it last week. I think, look, I told you, so much money has run in this world within sectors and

market and valuation, momentum neutral, et cetera, et cetera. It's easy for pod guys to pick on Oracle because of the stats that Steph laid out, right? They've got a lot of debt. The CDS is blowing out. You know, they're burning a lot of free cash. So I totally, you know, agree with Steph's setup there. You know, Broadcom is in a lot different situation than Oracle is. And I think if you're in a pod, you've got 30 AI names, you're going to be long, 15, short 15.

It's easier for you to short Oracle. So I think this is a little bit temporary. You saw Fermi in the data center. I get a cancellation in Texas this week. You see the news on Oracle. People are worried about a data center overbilled. And they're just worried about taking some of the air out of the stocks. I mean, you saw it with a competitor in another kind of power play with Genevard over today.

So I think you've got the challenge right now is the S&P5 is essentially two-thirds in AIETF. Okay? That's what it is. And so you've got to figure out how much exposure do I want, and then where can I diversify from it? And so that's the balance and the needle people are threatening. I'd also throw in there that more than I've heard in a long time, as I've been doing meetings this week, a couple negative comments on Open AI. People are just worried about all the debt that's going into their and their spending.

So, you know, I just think there's a little bit of, you know, typical noise that happens, but ultimately you're going to see strong enough fundamentals by a number of the big players that it's not like the AI trade is over. I think the growth rate will still offset some multiple contraction for a lot of the names in 26. Shanali, Adam's point is well taken about what these stocks mean to the S&P 500. You know, when you look at targets and people are picking their projection, for 2026. You guys are out. We get your first look. Yep. With I Capital's outlook for 26, 7200 to 7,400 on the S&P. Is that because the AI trade is going to suffer? And thus the S&P

just by nature, by design, it can't do that well. Listen, we're coming off of three years of blockbuster performance from the S&P 500. And when you look at it, the top 10 names are still accounting for almost 40% of the index right now. So it's not just, that. It's a matter here of what we think is going to happen with earnings, which is going to continue to drive growth. We also think that you might see some compression in multiples. We're assuming 21 times forward earnings in the bottom end of that range. It's not to say you can't still be around here, but we don't necessarily believe that you need to stay at these levels to still see some growth in the index. We are looking at other areas. We've been keeping

an eye on financials. Things like the Medline IPO today is very exciting. a non-tech name getting that much love. We'll have more on that coming up, too, by the way, because it's a big one. Absolutely, and it's private equity backed. So between financials, between the cyclical trade, between, by the way, the last month, the S&P equal weight has been better performing than the S&P 500. That's a broadening. I can't think that the rest of the year was a broadening.

It was a rate trade-driven rotation. But this is what we're seeing as a truer broadening, and that's where we expect some more love to seep into the market into next year. Sounds exactly how you think things are going to transpire stuff. Yeah, absolutely. I totally agree. We're going to see a broadening out. I don't want to abandon tech, though, Scott. You know that.

And so I'm very much involved in that area. I'm not overweight tech. I haven't been. But I also want to barbell it. I want to barbell it with the financials. And what makes me so excited about the financials and the economy is that we get H-8 data. That's released by the Federal Reserve every week. And loan growth has been accelerating for eight consecutive weeks.

That's the best since the second quarter of 2022. Why that's important, we want loan growth. That is going to fuel the economy, and they are doing it. And I think they're going to continue to do it next year. And then you have the consumer, consumer discretionary, doing quite well. And look what we got yesterday. The retail control group was double the expectations. And the consumer continues to be strong.

So I think energy kind of comes to life in 2026 as well. You know what I've been buying, and it's not tech, it's been SLB, it's been Estee Lauder, it's been Rockwell Automation. I think robotics is going to be a big, big theme for next year, and I bought Union Pacific. So I'm trying to continue to diversify, because I think that's going to pay off in 2026. Adam, I'm not 100% sure. And in fact, I don't think you agree with a lot of the sector lean-in or favorability that Steph has. I mean, the consumer, I'm not sure how you. how you would assess that here.

It's not like you've been pretty negative on the consumer and certainly certain parts of it, but what about now? For sure. Well, you know, we're overweight health care and financials and, you know, the biggest in the positioning is tech. So I agree with stuff. I mean, you've got to be close to Margaretway Tech.

That's a third of your positioning. You own some cons services and financials. I mean, tech comp services and financial are 59% of the S&P, those three, right? So, and again, if you put some power in Uts on there for the data center, you're close to two-thirds. So I do, I like health care a lot. I didn't hear anyone talk about that a ton. I think that that's the whole point of this stuff is people live longer and they're more productive while they're alive.

I think there's a number of health care stocks that will show the benefits next year. I think consumer remains bifurcated, so it really depends on what you're talking about. The platform businesses are great, but they traded high multiples, Costco, Walmart, etc. So can you find some one-off things that can work underneath the surface? maybe. And I think that's, you know, possible rotation. I think you're going to see tax credits for low-income consumers come in next year. The gas price isn't really hurting that much. So you may get a little upside surprise on consumer spending Q-1. And maybe that does create a little bit of bounce, you know, downstream a little bit. You know, 22 of the 77 stocks in the

SRT have more than 15% short interest, Scott. So if one of those guys you saw with coal is a couple weeks, and one of those guys gets a decent number, they rocket higher and people can make money being long for a short trade. We're also thinking, Chenali, about, you know, portfolio breakdown, not sector mix and sector sort and all that kind of stuff that we always talk about. You guys obviously have a big role in alternatives. And I think there's a good debate. And actually, Rich Saperstein yesterday, who's one of the top-ranked financial advisors in

this country, kind of surprised me with his belief that you shouldn't have that much right now in alternatives. They're crowded. They're illiquid. They're not all created equal. Yet you continue to like many of them. Now, obviously, as I said, I Capital has a role to play in that area, but defend it. Right.

We're certainly getting a lot of interest in other areas. You think about venture capital, for example. I've been using the recent data bricks financing as one example. You're seeing valuations catch up in private markets. You're seeing the IPO markets start to come back in a bigger way. This all provides some fuel for areas of venture capital. Now, Scott, there's a ton of dispersion more than really any other asset class when it comes to venture capital. So again, not a riskless proposition by any stretch of the imagination.

I think also maybe a little contrarian is private equity. We think that there's room here. I would caveat by saying that one of our biggest blind spots for next year is also those vintage risks that you're seeing. Anything bought in late 2020, 2021, all of a sudden chickens are going to come home to roost there, too, because you're seeing people who bought assets at a very high level that are now going to have to, what I say, eat the valuations, what I keep saying. And they're going to have to accept that they might have to sell them those assets.

assets for a little less than maybe what they want to do. All right. It's good to see you. Snelli, thank you. Steph, thanks. Adam, you as well. We'll talk to you all soon. We were just talking about this IPO, the biggest of the year, making its public debut at the NASDAQ today. Leslie Picker here with those details, hey, Les.

Hey, Scott. Yeah, those shares currently up about 36% after opening a few hours ago at $35 per share. And that was, of course, above the $29 IPO price. Here's a look at the management team, a little behind the scenes action here, watching the stock open at Morgan Stanley, just a few blocks away from the listing venue here at the NASDAQ. Medline, which makes and distributes medical products is the biggest health care IPO and the largest sponsor IPO on record. The company sold $6 billion worth of stock upwards of $6 billion, the proceeds of which will be used to pay down some debt. A lot was

writing on this one, though, Scott, as we've talked about as a test of the overall IPO market, particularly for companies owned by private equity. I'm told that Medline executives held testing the water meetings for over a year, 200 meetings in total, plus a six-day roadshow. The long-only mutual funds that made up the top of the order book had no fewer than three meetings with Medline before committing. So a lot riding on this one, and it seems like everyone involved really took it seriously. Yeah, so far so good, too.

Leslie, thank you. Leslie Picker. Another big story we're following today, Robin Hood, rolling out some new prediction markets features. Mackenzie Sagalos is here with those details. Hey, Scott, so Robin Hood users can now trade what are essentially parlays and prop bets on the NFL inside the app. These are event contracts tied to game outcomes, totals, and spreads. And they're also adding contracts on individual players, like whether someone scores a touchdown or hits a yardage mark. They say early next year it will let users build custom combos that stitched together up to 10 outcomes across NFL games, which pushes Robin Hood even deeper into territory that's traditionally been owned by sports.

books. CEO Vlad Tenev is treating prediction markets as its next major growth engine. After telling investors, this is now its fastest scaling revenue line with roughly 11 billion contracts traded since launch. And because prediction markets can expand nationally in a way that sports betting often cannot, the race is really about liquidity and habit. Robin Hood is trying to lock that in with the new joint venture with market maker Susquehanna. Scott? All right, McKenzie. Thank you. McKenzie Segalis. We're just getting started here on the bell. Up next, the former Dallas Fed president, Robert Kaplan, is with us. What should the Fed do in the new year with interest rates?

Who should the next chair be? I'll ask him that too next. Welcome back. For investors in 2026 is what the Fed will do with interest rates, not to mention who will be the next chair for more on both fronts. Let's welcome in Robert Kaplan. He's the former Dallas Fed president, now vice chairman at Goldman Sachs. It's always good to see in person. Welcome back. Good to see you. All right. Let's start with the meeting that just ended. Would you have voted for a cut? I probably on the margin would have argued against a cut. Really? Yes. I think we're going to head into a firming in in 2026 due to regulatory relief, tax benefits, tax refunds, continuation of the AI boom. And I think a lot of the weakness we've recently seen the job market, it's a little bit of tariffs on small business, but it's the shutdown.

It was going to have a negative effect. The shutdown's now over. And I'm worried that we're now at neutral. Do you want to be at neutral when inflation's running above target? So when you say firming, you're talking about inflation. firming further from here? I think the GDP growth is going to firm. I think inflation may be sticky in the first half of the year, but we'll have to see.

But the way I would handle this is my attitude, once a meeting is over, decisions made, now the debate is what we do from here. And I need to see either a deterioration in labor or an improvement in inflation in order to act. So you wouldn't be one of those who would be willing to, run it hot, so to speak, and protect against the downside in labor, like a Waller, for example, who told Steve Leasman today, the labor market says you can cut again. Yeah. So, yeah, I think we bought our insurance.

My attitude would be we just did 75 basis points. We more than bought our insurance against a cyclical slowing. I think a lot of the weakness in labor is structural. Tariffs are hurting small business disproportionately. Anticipation of AI is a structural issue. And I don't think, I think we bought enough insurance and we need to make sure we haven't been to target on inflation for now four years. And I want to make sure we get back down to target.

So do you not believe that 4-6 on the unemployment rate is legit? Do you think it's skewed? It's a little bit for two reasons. Again, we just had a shutdown and you got this jump in labor supply. I have a feeling over the next few months it would not shock me if that jump and labor supply gets revised down. I don't think you're going to see a persistent jump in labor supply. What do you make of the dissents, the divided nature of the Fed? You in many ways are representative of what we're seeing and hearing from the chair that's actually taking place in the room.

How does that resolve itself? So the reason the divide got more accentuated is they were getting close. to neutral. At four and a quarter, four and a half, you can debate it, but I'm more calm. I think neutral is in the range of three and a half to three and three quarters. Two and three quarters percent inflation plus three quarters to one percent real. And the reason the tension increased as we got to neutral is inflation's running above target. Do I really want to be at neutral? I think it may turn out to be fine, but I think that's the tension. I think that tension now is behind us. in that they did it.

Now the question is, what do they do from here? But if I was against it in December, I certainly don't want to see any more. I want to see some evidence that inflation's improving. And we may get it, but I want to see it. But the risks are still two-sided. You could wait to see what happens with inflation, but the labor market takes a turn for the worst,

and it might be too late to deal with it. I mean, at some point the market might be worried about a mistake. So this is where you have a good debate, and I think it's healthy. Chris Waller is arguing he's more worried about weakness. I would argue we just had a shutdown. The shutdown's now reversed. We've got big tax refunds and tax incentives going into next year.

We still have the AI productivity boom, and I think we bought enough insurance. But that's a good thing that you have that debate. I'm trying to think of whether the Fed has a good handle on what's really happening in the labor market. as it relates to AI. So we know that there's going to be a productivity boom. There are already scenes of that. Wage growth is slowing. Some might suggest dramatically.

We think that AI is going to displace however many jobs you want to ascribe to that. Thus, one of the Fed's two mandates may be disrupted in a way that we haven't seen haven't seen in decades. I'm trying to think of how the Fed is necessarily going to deal with the greatest unknown that it's dealt with literally in decades as it relates to one of their two mandates. So this is where you've got to be very close to context. You've got to be talking to businesses. Looking at the data may not be that helpful. And to me, the big issue is, is it

our job, and this is a good debate, is there a cyclical slowing going on, or is there a structural issue, which will get worked out, but AI is happening so abruptly, we're going to have an uncomfortable period for a year or two. It's going to take a while for it to work out. And then you've got to also add to that, we've got tax incentives coming. You're going to get a big boost. Our GDP forecast for next year at Goldman Sachs is 2.5%. That's a big firming, and you have to take all that into account. So AI will create job disruption, but it's structural. Does it mean we should run hotter to offset that structural issue. I think that's the debate. Are you thinking about

whether there's an AI bubble or not? Is that something on your plate if you're a Fed person in the room, a voter or a non-voter? So I would segment two parts of AI, the infrastructure, which is four or five hundred billion, it's going to be four or five hundred billion next year. I actually don't think that that's overdone yet. There are going to be a point it will get overdone. There's But not yet. And here's why. We still don't have enough compute or power to fund the downstream adoption. And the downstream adoption is in the first or second end.

It's not a bubble yet. It's early. Now there's some infrastructure companies that are very highly valued and some of the adoption companies, but you can carve those out. In the economy, I think we still have the productivity boost ahead of us. I mean, do you think that Jay Powell would get to a point where he gives some sort of irrational exuberance type speech looking at some of the stocks you're talking about, but also noticing and noting, I guess, that we're still, if we're in the second inning on some areas of this, you could be quite literally three, four years away, just like we were when Greenspan made his famous speech. Yeah, so I think he's going to be between now and May, and that's what we're talking about for Jay. some changes after May, and I'll comment on those.

I'll ask you about that. What I would, what he's going to do is be balanced, be a risk manager, not so much a prognosticator. We, he made sure we got the three insurance cuts, fair enough. We're now at neutral. He needs to see a change in one of the two, either jobs or inflation, either further weakness in jobs, then he can act or further inflation. The next Fed share is going to change the follow.

following. The next fair is going to want to, chair is going to want to anticipate disinflation. That productivity improvements that unfold, the next year is going to want to say, we're going to have disinflation over the next couple of three years. Monetary policy acts with a lag, and so we should anticipate it and adopt it now. J's a little more reluctant because they went through a period where they tried to prognosticate in 21 or 22. It didn't end well. Well, but I think the next year is going to push them. Is you talking about the transitory? Yes.

But the next chair is going to say we should be looking further ahead, and that's going to be the tension, and they'll have that debate. Speaking of, who do you think should be the next Fed chair? Well, I'm obviously not going to comment. I think any of the people mentioned and being interviewed would do an outstanding job. You do? I do. You truly believe that?

Are you just saying that? No, I believe that. I think some of them, my advice to whoever gets the job is when you get there, You're going to have to, at least you're going to have to project that you're doing the job without regard to political influence or political considerations. If you have views, you're going to have to debate them and present them and persuade others. And the second thing, you're going to have to stay away from partisan or political comments. You're going to have to be apolitical in your demeanor for some of the people that will require some adjustments.

But that's what they need to do. I mean, it sounds to me like you're in agreement with those who say, say, cut out all the noise around certain figures within the final group, that it's only one vote at the end of the day? It's one vote, and probably the biggest news event to me last week didn't get reported on much. The governors approved unanimously all the presidents, okay? And so there was some concern that maybe with a change in governors, they would do more

to change the composition of the president's. I think it's possible that that won't happen. And that means the next Fed share will have to get seven votes through persuasion and debate and getting a consensus not by, you won't come in with seven votes wired. Do you think after Chair Powell's term is over, he has any desire to stick around, or is he like get me that you know what out of here? I've had enough. I mean, I have advice I could give.

My own advice is, what would your advice be? My advice is you've had a great eight-year run. Obviously, you may have preferred to have done certain things better, but overall, I think, a very strong performance. Leave graciously. Do not stay and be seen as a thorn or a counter to the new chair. In the same way a CEO would leave and leave it to their successor, I think that's the gracious thing to do.

I think Jay is a gracious person, and I think it's the right thing for him to do. Okay. Exit stays left. We'll see. Robert, thank you very much. It's good to see, as always. That's Robert Kaplan right here at Post 9. Still ahead. Giant curve ball as one of baseball's hottest pitching prospects says he's dodging the Dodgers of all teams. We'll discuss the big money on the line.

Closing bell right back after this. Welcome back. The biggest catch of baseball's off season is the Japanese pitching star, Tatsuya IMAI, with teams lining up to pay him between $150 and $200 million. But it's the team that IMAe apparently doesn't want to play for that's generated the biggest surprise. Jared Diamond is sports reporter with the Wall Street Journal. He joins us now. It's good to see you.

I loved your story. He doesn't want to play for the Dodgers. Can you imagine? Who wouldn't want to play for the Dodgers these days? Yeah, look, it's sort of because. come this annual tradition where the best Japanese player on the market goes to the Dodgers. Ever since Shai Otani signed there, they've kind of cornered the market on this incredible hotbed of talent. Now you have Imai who goes out there and says, I want to play anywhere

else. Why is he saying that? I mean, you would think that the chance to play with Otani, obviously, Sasaki, Yamamoto, the track record, the winning would be a no-brainer. the deepest pockets in the game right now? He's a real competitor. He went on Japanese television a couple weeks ago, and he said, while I would love to play with Otani, who wouldn't? My real dream is to take them down. That was the words he used.

And if you're a sports fan, you love to hear that. You always want to believe that the players want to compete against the best. So who's the favorite then? You're probably not going to like to hear the answer, but the East Coast Dodgers, probably the Yankees, are probably the favorite at this point. Why, I mean, the Mets, maybe, Phillies, and it's all going to come to a head soon.

That's part of this story, too. Yeah, so he has to make a decision by January 2nd, which is a couple weeks away. He is like, he's in the U.S. now. He's starting to meet with teams if he hasn't already in the next couple of days. I'll have to decide, look, the Yankees do have a nice track record of acquiring Japanese players,

and there really haven't been that many. You forget, Japan is still a relatively new market in Major League Baseball. It started in 1995 with the Deonomo, but it's really just picked up in the last few years, and the Yankees do have a lot of brand recognition in Japan. Yeah, they do. They sure do. What does this say about the lack of competitive balance in Major League Baseball, which is festering to the point where you may have a significant issue come 26, 27?

It's the biggest issue facing baseball right now. Of course, the Dodgers have won two straight World Series. They have spent so much money on payroll, And it's generated a lot of criticism from fans and other markets who say, hey, my team can't compete with that. And all of this is coming at a time when baseball's labor agreement is expiring at the end of this upcoming season, the end of 2026. And most people in the industry expect a very bitter labor fight over one question. Should there be a salary cap in baseball? Baseball is the only major American sport that has no salary cap.

Teams could spend whatever they want on players. And some would argue, the league would argue, the owners would argue, that it has prevented small market franchises from competing. The Dodgers have more money. They could sign all the best players. But to get that salary cap, baseball players union has fought for decades to fend it off. It will take a long time away. And are they willing to sit out a year for that? Now, again, we're only talking about 150 to 2.

$100 million. We're not talking about $700 million like an Otani shot and a lot of it in deferred compensation. But is there any way that this particular deal could be the straw that breaks Campbell's back that forces the issue even further that causes a lockout in Major League Baseball? If he changes his mind and goes to the Dodgers, which you never know. Well, even the Yankees, I mean, again, you're still talking about a, you know, a select number of teams who can even afford to pay somebody liking mine. There's going to be a lot of it. attention on who wins the World Series in 26. And it doesn't just have to be the Dodgers. You're right. If the Yankees, if the Mets, if one of these high roller deep pocketed franchise

wins another World Series, you're just going to see more of an outcry from fans in Milwaukee or Cincinnati or one of these other markets. Hey, what are we supposed to, what are we supposed to do here? Well, I mean, Milwaukee, didn't they, didn't Milwaukee win the Central this past, this past year? They always do. They're competitive. Until they played the Dodgers. And then what happened? They lost in four, they got smoked. Every one of these small market teams, it seems to me, they might be competitive in the regular season, but when it gets down to brass tacks in the postseason, they're always short. No team with a bottom 10 payroll, so the bottom third of baseball has won the World Series since 2003.

It's a long time. It's been a long time. You need to spend money to win the World Series in baseball. All right. Well, you got us talking in the off season. You did, Jared. Thank you for being here. It's Jared Diamond with the Wall Street Journal.

Next, we track the biggest movers as we head into the close today. Christina Parts de novoos is standing by with that. Hi, Christina. Hi, Scott. Well, defense stocks sliding on reports of a potential White House crackdown. Streaming giants making moves in a major media deal and a home builder getting hit on weak guidance. Those stock movers next. All right, about 10 minutes till the closing bell.

Let's get back to Christina Parts of Nevelos now for a look at the key stocks she's watching. Hi there. Hi, Scott. Defense stocks. They're sliding right now after Punch Bowl news. Bull News reported that the White House is prepping, an executive order that could limit buybacks, dividends, and executive compensation for military contractors named like Lockheed Martin, General Dynamics, and RTX you can see on your screen, RTX down almost

2%. Shares of both Warner Brothers Discovery and Paramount Skydance lower after Warner Brothers rejected Paramount's hostile bit, all cash bid in favor of Netflix's offer. Netflix's CEO telling CNBC that the deal gives Warner Brothers more flexibility. Netflix up only slightly on the news. And then, last but notly, shares the Villanar, sinking around 4% after posting disappointing Q1 guidance, citing inflation, low consumer confidence, and supply shortages. Despite the adjusted guidance, the HomeBuilder did post Q4 revenue that beat Wall Street estimates. And if anybody's wondering, this happens every day at this time

for the closing bell, the screen behind me. I was wondering. Thank you. Thanks for helping me out. Christina Ports and now. Any time. I got you. All right. Next, a rundown of what to watch for when Mike Kron reports results top of the hour. Plus, Neveen, Sarah Malick. She gives us her 2026 outlook next. We're back.

This is the closing bell market zone. CNBC senior markets commentator Mike Santoli and Newveen, Sarah Malick. They're here to break down these crucial moments of the trading day. Plus Christina Parts of Nevelos is standing by with what to watch for from Mike Kron. Those numbers coming out in OT. Sarah, I'll begin with you. How does your outlook look for 2026? Well, people are turning to 2026 now because Santa's a no-show this year for the markets.

The three things that we're concerned about next year are the Fed, the economy, and what our tech stocks going to do. So first of all, with the Fed, I think we're going to get a zero to maybe one rate cut in the first half of the year, but it should accelerate the second half of the year after we get that new Fed chair. Economy's been interesting. It's really the consumer versus the employment markets. employment markets have been weak. We did see some recovery in November's payroll earlier this week. But what's been unprecedented is the number of federal job reductions this year running at $268,000, the worst level since 1953. So employment markets in their growth next year may

depend on how do federal payrolls grow or not grow next year. And then, of course, finally, tech stocks. We're optimistic for 2026. This tends to be a seasonally week period for tech, which is what we're in now and what we're seeing. But tech earnings. growth for the great eight stocks next year should be running about 24%. And that's over double the rate of the earnings growth expected for the S&P 500 next year. I'm just, I mean, I'm interested, I guess, in a lot of what you said. I mean, the comment about how tech is seasonally weak. Now, I mean, this doesn't seem to have precedent to another period of time to suggest that, well, as tech is seasonally weak, we're asking ourselves some serious questions about what's happening

with the AI buildout. That's why the stocks are weak. I'm not sure it has anything to do with the calendar. I think it's a combination of both. This tends to be the period where stocks are seasonally weak for tech, but of course, you're right. The question is around what is the return on investment for all of the CAPEX that we spent on artificial intelligence?

I think over time, while there may be a lull or a pause in the stocks because of it, over time the amount of productivity and revenue growth that all of this AI spend is going to cause for not only tech the tech industry, but across the board is going to play out. Now, of course, similar to other periods, there can be periods of consolidation, but I would use those as a buying opportunity. You do need to be selective, though.

You can't just blindly buy the MAG 7 or the Great 8, but companies like Broadcom, which had some weakness last quarter, that's a buying opportunity, Alphabet with Google Gemini taking market share and also the upside and optionality from Waymo and YouTube. Those are two companies that we like in the tech space, and we would use this weakness as a buying opportunity for those.

to me also that your 7,500 target on the S&P is pretty predicated on more rate cuts. I mean, you said it at the outset that you think maybe we get zero to one in the first half, but then you get a new chair in May, and then you have obviously somebody that the president's going to put in there who he thinks will be able to deliver the rate cuts he wants. It's still only one vote, as I said with Robert Kaplan earlier today. How much of your 7,500 has to have those? rate cuts? Our 7,500 is based solely on earnings growth. So consensus earnings growth for 2026 is running a little above 10%. His short learning's growth tends to be around 7 to 8%.

Tech earnings growth is over double that. The magnificent 7 tech stocks plus Broadcom is running at about 24% estimated for next year. We think companies can put up those, that earnings growth with a slow pace of rate cuts. You know, some margin expansion and, you know, continued GDP growth of around 2 to 3%. So we do expect, you know, around two rate cuts next year. We do think that'll happen in the second half of the year. But it takes a while for those rate cuts to flow through the economy. So next year, you're going to get the benefit of the rate cuts that we already saw in 2025. All right, Sarah, good to talk to you. We'll see you soon. Sarah Malick with Newveen. Christina Parts of Nevelas, as we said, following Micron, those numbers

come in OT. What do we know? Yeah, well, we know that the stock has been up, but over 165% this year alone. And the question really is whether the stock has gotten ahead of itself. The rally has been driven by expectations of a memory chip pricing recovery that's essentially playing out. Morgan Stanley says server memory prices have roughly doubled just in the last quarter with another 30 percent increase being negotiated right now. So that's massive pricing power driving this memory rally. Micron is also making a strategic shift exiting its consumer memory business to focus entirely on higher margin data center and AI chips. So that's important. for estimates coming out after the bell.

But the stock, as you can see, has really just already run up so hard. Some analysts think Micron will beat profit estimates by 25% or more, which could keep the rally going. The problem is, we've seen this before, Scott with NVIDIA and Broadcom both sold off after earnings despite strong results because expectations were incredibly high going into the print. The question investors need answered right now, is there still room to run or has this memory of pricing boom already been priced in?

All right. Christina, thank you. This is Christina Parsnavelas. I've turned to you, Mike, for the last moments that we have. It's going to be an important one, I guess, at an important time, just to figure out what the world's going on. Anytime you can hear from anybody related to this. And you wonder what Micron or another one of these players in the food chain can say that

kind of gives people confidence going out several quarters, that it's not been double ordering, and that in fact all the demand is going to be there. One of those days today where, you know, we aren't able to absorb the pressure from the AI, But it's one of those deals where you lost the game, but you covered the spread, because most stocks did better than the index, and it really is still kind of a 50-50 market. It's just that they weren't able to really support the indexes now. We're now at 6720 and the S&P, basically where we were before last earnings season started. So we're talking about early October levels that we first got to.

A corollary to that is, market's less expensive than it was. Invidia is down to 23 times earnings. It's the same as the S&P. So I guess somebody might be looking at that and saying the market's given you a chance here to enter. Okay, yeah, well the NASDAQ's down one in three quarters of percent, so we'll see who wants to come in through the door. As the bell rings us read, I will see you tomorrow in overtime before they're a giant.