Closing Bell - Closing Bell 12/18/25

Episode Date: December 18, 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 Wapner live from Post 9 here at the New York Stock Exchange. This maker break hour begins with this attempted tech turn. The sector hit pretty good lately lately, as you know. It is getting a much needed bounce today. Let's show you the majors with 60 to go in regulation. Nasdaq is leading the way. Haven't said that too much lately, have we? Thanks to Micron's earnings. Just what the doctor ordered. That stock is surging the most since April today. And so are many other chip names. They're higher as a result as well. That one's good for about 11 percent. Lulu shares, they are higher on Word Elliott has an activist stake. We'll have more coming up. Comes ahead of Nike's earnings in overtime. We'll take a look at all of this. Coinbase is joining the club and making a move into prediction markets, which are booming, as you know, will tell you exactly how much there's some very big numbers being thrown around there. It does take us to our talk of the tape.

The final stretch of 2025, whether a Santa Rally is still possible, and what this choppy end-of-year trade means for the start of next year. Let's ask our panel. Partners Groups, Anastasia Amorrosso, CNBC contributor, Payne Capitalist, Courtney Garcia, Robin Hood, Stephanie Gild. It's good to have everybody with us. Anastasia, I'll start with you. How the tape feels still kind of heavy.

I mean, we're getting a nice bounce today in the NASDAQ. It's much needed. I don't know how much conviction is behind it, though, in the near term. How do you feel? Look, I don't know. Near term, I think people may want to lock in some of the gains and what has been such a great trade all year, which is the AI trade.

But I do think we did get a couple of pieces of really good news overnight and also this morning. First of all, the Micron News. It's been a while since you had a memory chip company say that their demand is outpacing supply. So that's all due to AI. So that re-underites that conviction there. And then the second piece of good news is, of course, the CPI number and the fact that the services, inflation is now running at 2.3% year over year. So you take those two things together, and I think they do give investors some sort of a conviction.

And I will say more broadly, Scott, that I think, you know, AI trade had a bit of a pullback, had a little bit of consolidation. But if you look at the adoption of artificial intelligence, if you look at the productivity gains behind AI, and if you actually look at monetization, all those things are progressing in the right direction. So maybe this is some pause, some weakness, but I would actually step in and buy with the expectations for continuous strength into 2026. Well, you would.

So, of course, Jonathan Khrinsky is out today, says, well, it's premature to say, this is the top for AI stocks. Evidence is growing that it's more than just a speed bump. Do you agree with that or disagree? Yeah, I don't think this is like a bubble that's bursting right now by any means. I know that's become a continued conversation here on Wall Street. And yes, it is getting expensive. And I do think you want to start to broaden out your portfolio. But I think when we're looking at earnings growth next year, technology is still expected to have like 28% earnings growth going into 2026. But when you're looking at like materials are also over 20%, industrials are supposed to be over 15%. There's plenty of other places to put your money right now.

I think you bring up a good point. People are looking to lock into some of these profits after such a good year that we've had. And I think it's smart to do so. So I don't want to get out of AI, but if you haven't made any changes into your portfolio and a lot of people have not, you are really overweight right now. And when you're looking at tech and communication services, that's over 45% of the S&P 500. There's a lot of concentration risk right now. And I think you want to be aware of that. Steph, I feel like you've been one who's been out there saying on this program and maybe elsewhere that you're a little concerned about what's been happening with some of the AI story. The debt, particularly, we've been talking about on numerous occasions. So where does that leave you now? I think it's shown up a couple of times in the market.

And starting a few weeks ago, we started rotating into names that were just demolished this year and started to look like they'd had a turnaround. So Lulu Lemon is something, right? It's looking good right now, and it's something that, I think, speaks to that where you're seeing a change in the leadership. You're seeing a way to try to turn around the business. Look, my daughter asked for Lulu Lemon leggings, so that's sometimes an anecdotal sign to me, too. But I actually think we're in a moment where we could be starting to look at, like, these companies will still make money, like the chip makers. But I do think it will eventually end up a little more commoditized, and that's why I actually do like looking at some of the software names, for example, that can benefit. from AI productivity.

I've told the conversation for just a moment. Let me go to Washington. I do have some breaking news. Emily Wilkins has that for us. What are we learning here, M? Scott, you know, you just talked about Micron. You've talked about AI. Both of those have just notched a major win in the House.

They have just passed regulation that would basically help speed up data centers, the building of data centers, as well as the building of transmission lines. And, of course, the power and the energy that is much needed to power those data centers. And it actually passed the House with bipartisan. You saw about 11 Democrats across the aisle and vote with Republicans on that. And again, this has been something that meta, open AI, Google, Micron, they have all lobbied for. Now that it's past the House, it's going on to the Senate. We do expect senators to put their own touch on this particular piece of legislation.

But I know that Majority Leader John Thune, as well as others, have called permitting reform a huge priority for them this year. And certainly, as we've seen, something that can get done in a bipartisan manner. Scott. All right, Emily. That's interesting news for certain. And we're going to take a look at some of the stocks that may be on the move as a result, already having a pretty decent day, as we said, but this doesn't hurt. G.E. Vernova, up more than 4%. Constellation Energy, up near 6%. Verte, 3.3%. It's kind of the stocks you're looking at when you talk about something like this. But really, the data center question has been one of the questions, right? If you talk about Oracle, we've making the point here that until Oracle found some degree of stabilization in the market and the CDS for that matter, that this trade in general couldn't get much conviction behind it. And even in a day where these types of stocks are the ones that are bouncing, throw up Oracle again just to make the point. It's not bouncing that much. Yeah, I mean, Oracle to me is a little bit of its own story and that they have taken on way more debt than other companies. And

And they're making big swings and big bets that may or may not work out. Like, I think that's not, we're not sure. But I think the other hyperscalers are actually doing a better job in managing their cash flow and have the ability to turn this into real return on invested capital. And I think this announcement that we just had, the energy capacity is one of the biggest things that's going to help or hurt. And if we can get deregulation to improve it, and you saw that announcement earlier today with nuclear fusion.

Like, that's, like, pretty exciting to me. The big story of the day, obviously, as it relates to this, is Micron. And we've mentioned it already here. The surge in those shares. Christina Parts and Evelos joins us now for a closer look as to why the market likes this so much what they delivered. Yeah, we can say that Micron safely is giving the AI trade a shot in the arm. And Morgan Stanley called it, quote, likely the best revenue and net income upside in the history of the U.S. Semiconductor industry outside of NVIDIA, of course.

That was May 2023 when they had their blowout earnings. But that's lifting the chip sector broadly, Sandisk, Western Digital, Lamb Research. These are all memory data storage names. You can see on your screen, 6% or more higher. And investors really bet that this is going to extend across the industry. Micron said they're at record gross margin levels driven specifically by AI and structural supply constraints, with margins expected to keep climbing into next year. What really sealed this rally was disciplined capital spending at $20 billion for Micron

versus the 23 billion Wall Street fear. That signals they're adding capacity, but they're not necessarily flooding the market. There is a tradeoff, though. Dell, Lenovo, HPERs are all down, roughly 1 to 3% right now, as they have to absorb higher memory costs, so it's hurting their margins. But for Micro and the setup looks strong. Sold out through 2026, pricing power intact, and capital discipline that really keeps supply tight enough to sustain elevated margins almost 70% well into next year, Scott. All right, that's a good look there.

Thank you very much. By the way, Bank of America's trading desk today, saying that Micron was just what the, quote, rudderless AI trade needed. Curious as to what you all think at the same time, court, that Edjordini says expect more rotation away from the MAG 7 in 2026. What do you think about that? Well, I think what we're seeing when you get a lot of these, like, really positive reports that are coming out, showing the demand for AI is there. I don't think that's something that we should question. I think what investors are questioning is what kind of debt are they raising and what is the money? return on capital of this really going to be. And I think that's what Ed Yardinney is referring to is you really want to start to look at the AI adopters as opposed to the AI spenders when

you're looking out further. And so I think that's where this rotation comes in, where the rest of the 493 stocks and the Sv. 100 are going to be a lot more productive as they start to adopt artificial intelligence. But they are not spending the kind of capital that the large hyperscalers are. So, you know, I want to get out of the hyperscalers, but yes, I agree with the broadening out story, absolutely. Are we big believers in the Ed Yardinney perspective? I'm a big believer in the relative value perspective. You know, Scott, we just released our outlook this week, and I title it the year of investing at high altitude.

And what do you do at high altitude? You have to be attentive. You have to be discerning. You have to look for relative value across asset classes, but clearly, as we're discussing here, within artificial intelligence as well. But I do want to echo the sentiment that, you know, the three points that I mentioned before, adoption.

Adoption has done nothing but risen this year, from 10% economy-wide adoption to 17%. 55% of adults actually use some sort of. sort of an AI tool, that's up 10 percentage points since the beginning of the year. So check that box. You know, the second one is productivity. Scott, I looked at the numbers this morning.

And if you look at productivity growth from 2010 to 2019, it averaged about 1%. After the release of ChadGBT, that productivity level has stepped up, and it's now averaged about 2%. So it's not just sitting and hoping and wishing, but it's actually tangible productivity results. And all of that is translating into revenues

for not only the hyperscalers, semiconductor companies as well as data centers and eventually software companies. You think people, Deborah, are trying too hard to build a negative case against this group of stocks in the market. And then when we get into early 26, we'll be right back heading towards these names. They're the ones who have the best earnings growth. They have the best balance sheets. Yes, there are idiosyncratic debt stories that make people nervous.

But this is where the action is. This is where the action is going to continue to be. I think it's about the expectations more so than like the lack of growth. Like it's, I don't think we're going to wake up one day and all of a sudden like the story's done and no one's using AI. I think it's just more that, you know, you look ahead and the tech sector itself is an expectation of 23% earnings growth rate. And I personally think it's going to be a bit lower and some of the rates from other sectors will be a bit higher. So from evaluation perspective, that's what I just think that came in question. like did we pull too much forward growth today, you know, and that's what I think happened.

But it will reset and then it will look more interesting again. What does customer activity look like to you? This has been, in many respects, the year of the retail investor. Yeah. You guys are right in the heart of that. Is interest in the market waning? Is it still pent up demand to get after it a little bit? We've definitely seen less net buying in the last few weeks.

I'd say since this kind of mini rotation started at the end of October, but more recently I saw in the last week or so, there's been more buying in some of the names that have been more hit in the AI space, so like Oracle, for example, and Invidia. And on the crypto side, you're still seeing, actually in the last week you also saw a net buying pick up there again. So I think, you know, actually what we started with. People just said, oh, I've made a lot of money. And if this is like the end of it, I'll just take my chips and go.

And now they're kind of sniffing around again. Courtney, how much of the market, kind of volatility, uneasiness has to do with what's been happening in crypto, do you think? That that really is a gauge of where sentiment is and where volatility is going to remain until Bitcoin calms down and gets a little bit of traction again. The market's going to have problems getting traction again. Yeah, I think crypto has become a really good barometer for risk taking in the market. And especially when it comes to your retail investors. So when you are seeing a lot more trading in crypto, you're seeing those hit all too highs.

You're also seeing more trading in the markets. And I think you're going to continue to see that relationship there. So I don't think it's a problem that the markets can't do well without crypto. But I don't think you're going to see as much risk taking if you're not seeing that trading happening in crypto. What do you think? Yeah. I mean, I was just going to kind of reiterate the point, Scott, that you made, which is

about this earnings divergence, which we're going to see once again in 2026, the hyper-scalers. if you think about their earnings trajectory, it is said to accelerate once again into the tail end of 2026. And that gap that is narrow between the Max 7 and the rest of the S&P 500 is going to narrow once again. So I do think that maybe some diversification makes sense. But I think, you know, to Stephanie's point, I'm not surprised to see investors stepping in and buying the pullback there. I think elsewhere you can look at consumer discretionary sector, Scott, because I think it's going to be a big focus for next year, both from the rate cut perspective to the tax cut.

perspective, but also it's the midterm elections. And the prevailing party is going to try to shore up confidence into the elections year and also try to focus on affordability. So I think that combination of that could be beneficiary for consumer discretion. You didn't address, though, what's been happening with Bitcoin? I mean, are you, how close are you watching that for an idea of how you feel risk sentiment is in the market? Look, as private market investors, we're not watching Bitcoin all that closely. And we do look at blockchain technology. We have not to date invested into any blockchain companies. But I think it is a barometer of sentiment, and sentiment has been hit.

I think there's been too much optimism that's been priced into the market. But now I would argue whether you look at Bitcoin, whether you look at the AI trade, there's likely too much pessimism that's being priced in, and I suspect that turns around. We'll leave it there. Anastasia, thank you. Courtney as well. Steph, we'll see you soon. Thank you. Thank you.

Meantime, shares of Coinbase, speaking of crypto, they're higher today. As it adds prediction markets in stock trading in hopes of being a one-stop shop trading app. It comes as forecasts are soaring for just how big prediction markets will be. Contessa Brewer following that money for us. Hi there. Hi there, Scott. Yeah, a trillion dollars in annual trading volume before the end of the decade. That's the prediction from Eilers and Krejik, which is a gaming research firm.

With EBITA margins between 25% and 45%. Look, that's notably higher than sports books because they have to pay high. state taxes on gambling revenue. Sports, though, is really fueling the growth of the predictions markets. It's forecast to remain the anchor category, making up 44% of the volume by the time it hits a trillion dollars. But sports is also most at risk for regulatory crackdowns or legal crackdowns. Still, Draft Kings and Fandle and Fanatics, which are all launching predictions markets of their own, have gone in and said it's worth that risk. And then you have ICE, CBOE, Coinbase, CME all diving in citizens yesterday estimated that prediction markets revenue stands now at

$2 billion. They think it will be five times that by 2030. Of course, CNBC and CalC do have a business relationship. It's just interesting to watch the way, Scott, the investing and gambling worlds have begun to collide and merge and converge. Yeah, I mean, there are some who also believe contested that the crypto cohort is now, and one of the reasons why you may have some weakness in Bitcoin, for example, is there's so much rage about prediction markets that it's sucking some of the oxygen and the money out of the room. You know, I pointed out with Kelly Evans earlier that if you have so many users on Coinbase, for instance, who are likely to try prediction markets, some of it has to do with that underlying psychology of risk that you

were maybe an early adopter of crypto, that you felt like it was worth the risk to get in for the reward. And so prediction markets are easy to understand. They're intuitive in ways that even sports betting, I would argue, is not. And that's one reason why there's been so much popular imagination. As we see media getting into this as well with CNN and CNBC and sports illustrated going in and really capturing the sentiment from the prediction markets, it may even, and this is part of what Eilers and Cragic is arguing, that you may have wide adoption because it's everywhere. Yeah, all the money for certain, like you did for us.

Contested, thanks, contested Brewer. Meantime, after the bell today, Nike reports in overtime. Shares are down 10% this year. The big news in that space today, though, is around Lulu Lemon, which is higher today on word of an activist and a well- known one at that, Courtney Reagan. Yeah, hi, Scott. It's good to see you. So CNBC has confirmed via a source familiar that activist investor Elliott management has amassed more than a billion dollar stake in Lulu Lemon amid the company's recent announcement that its CEO of seven years,

Calvin McDonald is going to step down as the search for his concessor is conducted. Now, reports have suggested that Elliott is preparing to present Jane Nielsen. We have also confirmed that. She is the former CFO and CFO at Ralph Lauren. It is going to be She's going to be the suggested candidate that Elliott will put up for CEO. And of course, all of this comes from a renewed campaign from founder Chip Wilson for Lulu Lemon to make changes to its trajectory after some pretty harsh words about what's been going on there. And Jeffrey's analyst Randall Koenik, who's been critical of Lulu Lemon for quite some time, supports both Wilson's push for change and activism. He actually has 10 suggestions for Elliott management to fix the athletic retailer, including but not limited to refreshing the. leadership, restoring brand DNA, focus on core products, strengthen community engagement,

and fix America's first. Now, Lulu Lemon hasn't commented or confirmed these reports, but did announce plans this morning to open stores in six new markets today, including Greece, Austria, Poland, Hungary, and Romania. Shares, as you mentioned, Scott, are higher initially on this news here today of the activism. They are higher about 30% over the last month, but still down significantly year-to-date. Back over to you. Courtney, great stuff. Thank you. much for that. That's Courtney Reagan. We're just getting started here. Up next, Sam Altman on the record. Big Technologies, Alex Kanchowicz, sitting down with the OpenAI CEO to talk

everything from an IPO to the one company Altman is calling a huge threat. AK is here next with those highlights. Welcome back, OpenAI's Sam Altman on the record with Big Technology. Alex Kanchowicz in a podcast that has just literally dropped. Alex is a CNBC contributor. He joins us now. What a get. Thank you.

Congratulations. It was great to speak with him. So this is literally hitting. What's the big takeaway for you? The big takeaway is, of course, open AI is in code red, right? They acknowledge they have the competition from companies like Google, but Sam's vision is not to play on Google's field, right? Google is basically taking AI and putting it into every one of its product surfaces,

search and Gmail, you know, maps. YouTube. For Sam, the idea is the AI moment right now is going to change the way we use software. He's talking about AI native software versus bolting this on to existing programs, and he wants to get users in first and keep them, and that's how he thinks he's going to win. You've given us a couple of clips here. I want to play the first one, where he addresses the competition with Google head on. Let's listen. Google is still a huge threat, you know, extremely powerful company. If Google had really decided to take us seriously in 2003, let's say, we would have been in a really bad place. I think they would have just been able to smash us.

Okay, so it's interesting that he says that because last week, you know, he was on the network with the interview with David Faber and Bob Eiger. which he says of Gemini 3, that it hasn't impacted our metrics as much as we had feared. That's his perspective. I had Sung Cho from Goldman Sachs on this program the other day. He's the co-head of public tech investing at Goldman Sachs. He says that Google has taken the lead in the eye of investors over Open AI, that they have leaped over Open. What do you think? Well, here's the perspective of Open AI.

And Sam made this very clear. He said AI in a way is like a brand of toothpaste. Most people pick a brand of toothpaste and they just stick with it. They just go to the supermarket and they buy it every time and they don't think about it. Chachapiti has 800 million, maybe getting close to 900 million users. It's leading on time spent according to some independent reports. So what he's saying is I want to get people in the door first. Show them what we can do and build personalization, right?

Memory for him. Learning who you are, remembering who you are and then building personalized experience for you is something that he says is unbelievably sticky. So if he can get people in the door first, and he has to fight for every user in a way that Google doesn't, because Google can just push it. But if he can get people in the door first to chat GPT, he thinks he'll be able to hold on to them for a long time.

It is interesting, though. You use the words code red. I mean, you get the sense that they really feel that in the building? The way Sam described it is, it's kind of a funny analogy. He said it's like a pandemic. When a pandemic begins, the stuff that you do really early on makes a big difference. You want to try to mitigate some of the disasters before there are exponential growth and you're now behind the eight ball. And so what he says is Open AI does this

every now and again. They did it with DeepSeek back in earlier this year. They're doing it again now, trying to get ahead of the problem that could come from competition from Google and putting their energy now as opposed to trying to address it after the fact. One of the great questions for investors I think everybody is thinking about is when, if open AI is going to go public, which, of course, you asked Sam Altman about that, too. Here's what he said about that. In some sense, we will be very late to go public if you look at any previous company.

It's wonderful to be a private company. We need lots of capital. We're going to cross all of the sort of shareholder limits and stuff at some point. So am I excited to be a public company CEO? 0%. Am I excited for opening out to be a public company? In some ways, I am. And in some ways, I think it'll be really annoying.

What do you make of that answer? I think they're just going to try to stay private for as long as they possibly can. I mean, I think Sam acknowledges that at a certain point, you hit a number of shareholders, you have to go public. Maybe you're going to tap out funding. But I think he's going to just stay private as long as he possibly can. The scrutiny from the public markets might not be something that he wants to invite. And of course, yeah, the quarterly reporting what it does to your product, it's very different from what they're trying to do.

What about how, if they're going to wait as long as they possibly can, as you suggest, what about the maturity of the company itself when they finally go public? I mean, there are companies who some would suggest waited too long. Some had issues that they had to deal with, Uber, before they actually hit the public markets. Is this one in danger of going public too late? I don't think so. I mean, I think, so Open AI is 10 years old as of pretty recently. Chatsapiti is three years old. So what you have basically is a long-running research house that sort of struck gold with this product that exploded in popularity will hit a billion users early next year. And I was trying to turn that into an incredibly ambitious business. It's not just the chatbot. It's the enterprise play. It's potentially devices. It's an AI cloud. These are all things that Sam and I discussed. And they have to, you know, right now, they are building so intently and vigorously to try to support all of this that they might need a little bit of time for the math to make sense before they can bring that to Wall Street and say, here's our vision and here's how we're going to build.

Oh, I'm curious to hear, you know, what he might have said about, you know, a product with Johnny Ive. Multiple devices, not just one. Multiple. Devices that might be at your work, your house, when you go out, and maybe we'll have understanding of your context and then proactively push things to you. I couldn't help, but also think about the ongoing, I guess you could call it, battle between Sam and Elon Musk. I'm thinking of it in the context of the valuations of their respective companies that we talk about a lot. SpaceX, of course, the reports that they'll go public in 26, you know, $800 billion is the said valuation now. And then OpenAI has discussed, apparently, according to the information, raising tens of billions at $750 billion. So this is a race to the top in some respects.

Yeah, I mean, this is just speculation on my end. But when you speak with Sam, you hear how ambitious he is. On every front, I would be surprised if they keep going on their current trajectory, I would be surprised if they try to IPO at less than a trillion dollars. And I do think you're right, that there will be some attention to what Elon is doing and an attempt to exceed it. Did he say anything about AI bubble? Did you ask him about how the market sort of looks now,

it seems to be scrutinizing a lot of these companies more so than ever? He did. He said that the market was going a little crazy when every time they had a meeting, the company's stock would go up 20%. And he's seen what's happened in the market. He pays attention to this stuff, even as a private company, CEO, and said, I welcome the market being a little bit more rational. It was a little bit crazy a couple months ago.

Now that investors are starting to get more rational about it and not just, I mean, I'm putting words in his mouth, but investing emotionally and trying to get momentum on board this bubble, he says that it's in a much better direction right now. Well, congrats on the get, as we say, and thanks for sharing it with us. My pleasure. Thank you. It's Alex Kanchowicz, Big Technology. Be sure to catch the full interview, by the way, with Sam Altman right now on the big technology podcast.

Still ahead, Goldman's Jan Hacius is standing by. We'll get his take on today's CPI print, what it means for the economy, the Fed's next move, and more. We're back on the bell after this. All right, welcome back today's CPI print lighter than expected, though. Mudied a bit by the government shutdown, Goldman's chief economist Jan Hatsius is here at Post 9, with what it means for the economy and, of course, for the feds. Nice to see you again. Welcome back. Great to see us, Scott. Do you believe the 2-7 is real? Because there seems some question because of the shutdown. There are some questions around the shelter numbers in particular, and there is more uncertainty, of course.

So I would discount some of this. I mean, we had eight basis points on average for core CPI in October. October and November, that's probably a downside outlier. The more important aspect, though, is that we've now seen core inflation go basically sideways, maybe even sideways to down a bit on a year-on-year basis in 2025 with a significant amount of tariff pass-through. That means underneath that, the underlying trends are still improving. That's important, I think. So the most important number between 27, inflation, 4-6 unemployment.

How do you see those? That's a really hard one to answer. I think they're both very important. The important point from a Fed policy perspective is that they're pointing in the same direction because the 27 is a little bit better than expected. It is consistent with this inflation underneath the surface. And the 4.6 is a little worse. So at this point, at least if you look at the recent changes, the two sides of the Fed's mandate are pointing towards some additional cuts.

We have a couple more cuts. We do have a couple more cuts. You think in 26 we have a couple? We have two more. We don't have a cut in January at the moment. But I think I want to look very closely at the next employment report. If that confirms upward pressure on the unemployment rate, then I think, January is a possibility. Right now, I would say they wait until March.

Okay. Why shouldn't they cut in January if this number, 27, on CPI is believable enough, and 4-6 is concerning enough? Why can't they go? It makes sense to me. I think there's a good case for going in January, but we just had a meeting, and they set a higher bar. And in terms of what they're likely to do right now, I would say they probably wait a little bit longer. But it's becoming a closer call. Well, it's part of the problem that the Fed itself is so divided that getting to the end game of the actual decision is harder to come by. That's definitely part of it, although in the end, it's still the leadership that ultimately drives the decisions. So if Jay Powell and the leadership got to the point where they said, we really want a goal, we think it's the right thing to do in January, then it would happen.

If we were to say, well, the Fed is cutting into what looks to be a strengthening economy in 26, does that work for you? Are you worried about the prospects of that? I'm not really worried about it because the labor market looks like it's going to be a bit on the soft side, even with a pickup and GDP growth. And we're on the optimistic side with GDP growth in 26. We have 2.6% annual average growth, but nevertheless, think that the unemployment rate probably goes sideways here, and that means inflation risk, I think, is diminishing.

When you look at the economy as a whole and you think about AI, one of the questions I asked Robert Kaplan, also, you know, Vice Chairman now, of course Goldman Sachs, is whether he thinks the Fed has a really good handle. And I'm curious your view, too, as a leading economist, a really good handle on what AI is going to mean for the economy itself, for labor, productivity, job displacement, and all of the things that factor in how the Fed tries to run its policy based on at least one of its two mandates and how that's all going to figure. I think it's difficult to be super confident in terms of the speed of adjustment in particular.

I do think that we'll see a significant boost to productivity. And most of that productivity is going to probably mean we all get, you know, 10 or 20 or 30% of our time back. But there will be labor displacement as well. And I think it's going to be meaningful over a longer period, if you look out over a five to 10 year period. But if it's stretched out over a long period of time, then the rest of the economy has, has time to build jobs in areas that maybe don't even exist yet. That's what we've seen over the long stretch of history, that you've seen disruption from new industries and job losses related to those new technologies, but then the economy

has created jobs elsewhere. But for that, you need a multi-year period. And that's our expectation, but we have an open mind in terms of the speed. And I think the Fed is going to have to be responsive to new data. Do you feel like you have a good handle on how much economic activity in the economy is outside of AI? The whole, the criticism is like almost all the economic activity we're seeing is because of cap bags, data centers and all that.

You strip that away, the economy isn't as strong as some might believe. What do you think? We don't agree with that, actually. I think AI is very important from a forward-looking perspective, but, obviously, but on the net, it has not contributed much to GDP growth over the last year. And that's basically because a lot of the goods, almost all the goods that are being used in AI investment are imported. And that is an offset to the investment.

Imports are an offset to investment if you look at how GDP is calculated. So that's the primary reason why actually it has not contributed that much to. GDP growth. I got a run and I already went over, so I'm going to get in trouble. But nonetheless, the consumer, what do you make of where we are? You feel pretty good, case-shaped economy or not? I still think it's a relatively stable but not rapid consumer spending growth environment. We think one and a half to two percent in real terms. So we have the rest of the economy grow faster than the consumer in 2006. Investment, I think it's going to be probably stronger. And consumer spending hangs in there, but probably not much more than that.

I believe it there. You have yourself a good holidays with your family. That's Jan Haccius of Goldman Sachs. We'll see you soon. Up next, we track the biggest movers into the close today. Christina, parts of Nebulosa standing by with that. Hi there. Hi, Scott. Well, one footwear stock getting crushed on tariff fears. A space company rocketing higher on a defense wind and an AI shakeup feeding a research giant. Details next. All right, we're about 10 away from the closing bell. Let's get back now to Christina for the stocks that she's watching. What's on your list? Shares of Birkenstock dropping roughly about 11% right now after posting disappointing earnings

guidance for fiscal 2026. They blame tariffs, that news overshattering the earnings beat, and plans for opening roughly 40 new retail stores globally next year. I would guess maybe Scott does not own Birkenstocks. Shares of Rocket Lab, jumping roughly 10% following a launch for the U.S. Space Force's space system command under the Department of Defense. Rocket Lab says the launch was completed just five months ago ahead of, or five months ahead of schedule, I should say, the stock more than doubling this year up 133%. Last but not least, FACCET research system sinking right now, about almost 8% lower after reporting Q1 free cash flow below Wall Street estimates. A fact set noting competitive pressures from AI startups, it's the worst performing stock in the S&B 500 today, Scott. Christina, thank you very much.

Christina Parts in Avalos. Coming up next, we run you through. Drew, what to watch for when FedEx reports, top of the hour, that and more inside the market zone, which is next. Are here to break down these crucial moments of the trading day. Frank Holland is watching FedEx for us today. Those results in overtime, and Brandon Gomez is going to tell us about these cannabis stocks today, which are really moving on some important news there.

Frank, you first, FedEx, tell me more. Yeah, FedEx shares higher right now up about 1.5%. They've also rallied more than 25% since last earnings. after the company beat expectations, and we've seen just a broader rally when it comes to the transports. This quarter, revenues expected to increase by 4%. Profits estimated to see a more than 1% increase. Two key areas to watch here. First, the impact on express margins from the grounding of FedEx's MD11 planes after a fatal crash.

Now, those cargo planes, they make up just about 4% of the FedEx fleet. Also, how the end of the de minimis exemption will impact a quarter where a large percent of holiday goods are shipped, of course. The company flagged a $1 billion headwind for the fiscal year. last quarter. It's rival UPS flagged also a 10 times increase in customs entries last quarter. Some packages now need FDA or even USDA clearance in addition to the tariffs paid. Scott, back over to you. All right, Frank. Thank you. That's Frank Holland. All right, Brandon, tell us more about cannabis and the president and this order. Hey, Scott. Yeah, that's right. The president directing federal agencies to reclassify cannabis,

taking it from a highly restricted Schedule I status to Schedule 3. Now, it's a class for drugs with accepted medical use. The White House also saying Medicare will launch a pilot program in April, allowing certain covered seniors to receive free. Doctor recommended CBD products that meet federal and state safety rules aimed at patients with chronic pain and serious illnesses. Now, this still some hurdles ahead weighing on the stocks. The order is expected to face legal challenges, not to mention a ban on hemp-derived CBD products that is slated to take place next year in 2026. Investors now clearly weighing tax relief against new competition like Big Pharma, who might get into the sector now. Still, though, analysts say rescheduling could expand

banking access and open the door to much-needed capital. Scott, one will keep following here. All right, yes, we will. Brandon, thanks so much for that. That's Brandon, thanks so much for that. That's Brandon. We have enough gas in the tank here to get something going for a Santa Claus rally. Thanks, Scott, for having me. I do think we have some really positive momentum. We've had a little bit of volatility in the fall, I think that's been a healthy development. I think we're probably going to see more of that in the first quarter. But typically when you see a year that has been so dominated by the momentum factor, you tend to see that carry into the balance of the year. And I think today's CPI report, certainly you take with a dose of skepticism and caution because

we're still in this state of fog, but I think it was positive. I think it points to more rate cuts for the right reason, which is to say falling inflation rather than a further deterioration in the labor market. But I would say heading into the end of the year fully allocated to equities is what we're recommending right now. Yeah, do you go full-on broadening story in 26? We still like tech. I think that still has legs in terms of the overall AI story. So having a full exposure to growth. But I do think we've had some significant underperformance of other parts of the market, not necessarily sector-based. We've been really focused on higher quality companies having a near record underperformance this year, and I think next year, given our

somewhat more cautious economic outlook, we're poised to see some catch-up and some mean reversion, in other words, outperformance of higher quality names. So I think you get some broadening with tech maybe taking a little bit of steam out, but still delivering solid returns, and then the rest of the market is expected to have some pretty good earnings. All right. Megan's good to see you. Thanks for being with us. That's Megan's show. I'll turn to you, Mike, what's on your mind as you watch how this market has traded, a nice bounce for tech, which really needed it. Yeah, we sort of got to exhale a little bit. So the big pressure has been on the AI trade. Micron gives you a reason to have some of that pressure relief.

And then I don't think there was really a bearish case surrounding CPI, but a downside surprise, you know, however many grains of salt you take it with is still net positive. The bond markets had a sort of measured but positive response to that. That being said, I keep looking for this stall phase that we've been in in the market. Two months, we've been right in the same rates in the S&P, as something that's showing economic anxiety building. And it's really not. It still seems to be a repositioning from crowded AI at a time when conviction in the long term AI story is starting to flag a little bit. So banks making a new high again today. You know, industrials participating. It feels as if there's some comfort about the macro. The question is, what does that leave us with?

Because it's been very messy this rotation. You have had some relief hit some parts of the market that were lagging for a long period of time. I don't believe really in the changing horses that a full gallop and a new leadership group starts to kind of drive a bull market into next year. So maybe it's just a resting phase for Tech. And as I said yesterday, Invinia trading down to a market multiple, meta's down to just an S&P average multiple. So it seems as if maybe the market is just kind of biding its time. for a little bit. I wouldn't really bet against levitating for the next seven and a half trading days,

at least part of that, as the seasonals will tell you, is likely. Micron was much needed today. We see it on the board here up better than 10%. I mean, really, as we've been saying throughout the day, kind of just what the doctor ordered for this trade. Without a doubt, I mean, it's certainly the memory side of this equation. It's kind of

a mixed blessing because that area is really hot, but it's also a cost for everybody else. And you have, in video, okay, it bounces 2%. trading at a price it got to in late July, you know? So it's just tough for the index to find its way higher when it's been this kind of low momentum phase. I mean, even today, there's more new 52-week lows than highs on the NASDAQ. That hasn't been the trend, but it is the case

today. So I guess after a six-month blistering run that we had from April to October, maybe this is just that kind of payback phase. It's not really hurting anybody. We're up 15% year to date on the S&P 500. That's following two up 20% years. It's really not something anybody should complain about. But there is a level of frustration. It looks to me like a market where people were

nearly all in coming into December. They didn't have to buy more, didn't really have to chase it. We're hoping the market was going to get them out at higher levels to exit the year. Maybe it still will. But I think that's why you see the church. I still just take part of the fact that

there's not a lot of stress on the economically sensitive part to this market. All right, good to see you. Thanks for people, of course. As always, it looks like we get 23K back on the Mazzat. Yeah, we're going to get that back, I think, into the close. And you see the doubt, the S&P, Russell, all finishing green. Into overtime, we're going to cool.