Closing Bell - Closing Bell 12/26/23

Episode Date: December 26, 2023

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.

And welcome to Closing Bell, everybody. I am Brian Sullivan in for Scott Wapner. Hope you had a great Christmas. All right, this make or break hour begins with the Santa Claus rally. Wall Street coming into the final holiday shortened week with stockings full of momentum and investors hoping for a nine-week win streak. And we have a pretty good start. It is green across the board, the Dow leading the charge, Intel surging on the heels of a multi-billion dollar investment from Israel's government. We'll have more on that later on in the hour. The S&P 500 within striking distance of record levels.

And the small cap, Russell 2000, adding to its recent hefty gains. By the way, small caps, they're on pace for their best month of the year. Wow. All of this brings us to our talk of the tape and some questions heading into 2024. Because while things are pretty good, there are, as always, some challenges on the horizon. Let's welcome in Adam Parker of Trivariant Research, also a CNBC contributor. And Adam, I'm told that you are here to answer all, I mean, all of our questions, like what's the meaning of life and others. But I guess we'll have to keep it to the stock market and CNBC version. What is, first off, your expectation for how equities do in the new year? I'll try to answer them all,

Brian. Merry Christmas. Happy New Year. Thanks for having me. Look, I think 2024, it looks like you're going to have accommodation from the U.S. Central Bank, European Central Bank, maybe others. So, you know, synchronized accommodation is usually pretty good for equities. And I think if the median company in the market can have stable or higher gross margins, I think the risk-reward skew to the positive in terms of the outcomes. And I've seen all the year-ahead outlooks now for most of the institutional investors, and I think there's a range out there, but probably a little bit more optimistic than the average from the consensus. The stock market has kind of gone a little, I don't want to say crazy, but it certainly popped on this Fed pivot and the expectation, Adam, as you know,

that the Federal Reserve may end up cutting rates maybe in early 2024. I know our next guest may disagree on that just a second, but how much of the stock market next year, and I'm talking about the S&P 500, just the macro market, Adam, will be reliant on what the Fed does versus what it can do on its own? Look, there's two elements to answering your question, Brian. One is the corporate earnings, profitability, margins, and the other is the multiples, the so-called price-to-earnings ratio that you pay. And, you know, the Fed certainly, the week-over-week change in the Fed balance sheet has been statistically significantly correlated to the equity market.

When the Fed's accommodative, it's usually good for multiples. So I may not, I personally don't think they're going to cut anywhere near as much the Fed's accommodative, it's usually good for multiple. So I may not, I personally don't think they're going to cut anywhere near as much as what's in the price. But if they start doing it in the second half of the year, you know, the market's anticipatory. I think on the earnings side, there's a plausible case that the average company can have margins that expand some. The median stocks margins have kind of flattened here the last two, three months after going down a lot over the previous 18 months. So I think there's a chance that some companies can see some margin expansion.

That would be the cocktail for a bull market would be eventual accommodation plus, you know, rising margins. What parts of the market look better than others? You know, I do think most institutional investors I talk to think there's going to be a pretty big rotation in January. It's just too many stocks underneath that are up a lot in the last couple of months. You know, and some businesses that are pretty attractive if we don't have a recession, things like payments, health care services, maybe even some of the more macro-sensitive sectors like energy and metals could benefit from a rotation maybe out of some of the high-flying tech or some of the retailers which are up a lot

and probably don't have great long-term prospects. Yeah, when you talk about rotation, are you talking about out of like, you know, big tech and the Mag 7? You know, maybe a little bit less those guys, Brian. My view has been and remains anyone who's trying to beat the S&P 500 should be close to market weight, the aggregate, you know, magnificent seven. Why? One, they're pretty macro stocks. I mean, there's very little idiosyncratic risk to them.

Two, you know, it's really hard to know something about them that other people don't. I mean, there's, what, 60 sell-side analysts and what are you telling me, 4 million buy-side analysts who cover them. So the odds that I know something about Google that nobody else does is exactly zero. And then three, I can't really replicate them with another basket of security. So I can't find 30 stocks that trade just like Apple, so I don't need to own Apple. So given that, I think people should be kind of market-weight that group, make their bets on Alpha elsewhere. And most people, particularly institutional investors, have all kinds of rules that have prevented them from owning enough of those securities. So I tend to think they're going to be fine. And I would own at least a market-weight chunk of

those. Maybe you like NVIDIA more than you like Apple or whatever, a couple percent here or there. But I would own a chunk of those and make my bets elsewhere. Is there any time in which they just get played out, Adam? I mean, I think everyone's just going to – it's like betting against the Pistons right now. It's been a lock, right? They've lost 26 in a row in the NBA. And it's going to work until it doesn't, I think. I mean, they're still growing faster than the market.

They still have, you know, a lot of technology moats and prospects. And, again, I think, you know, they're such a big part of the market. They still have a lot of technology moats and prospects. And again, I think they're such a big part of the market. A lot of mutual funds or buy-side firms have rules that their biggest five stocks can't be more than 25% or they can't own more than X percent of an individual's security. So most of the big institutional managers don't own enough, haven't owned enough. And if they sell some of the winners, they will never be able to catch back up to where they are. So I see those things holding it pretty well. And a broadening rally would have to be in other parts of the market where the average company can have margin expansion. Remember, when CPI was up a lot, these companies were kind of impregnable to that. They had good pricing power, obviously have a lot of ability on the cost side to cut costs.

You saw that with Meta and others. And so the average company was more vulnerable. So to the extent that inflation is more under control, there's some chance that the more average company, not the MAG-7, could see some margin expansion. Yeah. All right. Adam, sit tight. I'm going to bring in another super smart voice to the conversation and welcome in our friend Victoria Fernandez of Crossmark Global Investments. Victoria, Merry Christmas. Happy New Year. Thanks for coming on. You listened very patiently with Adam had to say Adam's not super bullish, by the way, on the Federal Reserve. But I know you think there's a chance what they may not cut it all next year. Well, I think they'll probably end up cutting next year, but I think it's definitely going to be in the second half of next year. The market has priced in, I mean,

almost 100 percent chance of a March cut. And I think that's just a little too optimistic. It's probably one of the main reasons, along with some other risks we see. But one of the main reasons we think there probably will be a pullback in the first quarter or at least more volatility as that extra kind of 50 basis points that the market is anticipating versus what we saw in the dot plot gets priced out of the market because the market is absolutely priced for perfection right now on a soft landing. And we just don't think that's going to happen. The only reason we see the Fed cutting in the early part of next year is because they are concerned about the economy and we're starting to go into a mild recession. Mild recession. If so, if you're right, what would that mean for equities generally then, Victoria?

Yeah, I mean, I think we're going to see a pullback in equities. I mean, obviously, for the near term, for the imminent future, the path of least resistance is higher. We've got the small and the mid caps actually outperforming large caps last week. So we have that broadening in the market. We have the seasonality. We have consumer sentiment that is strong. So we expect the market to continue to go up here in the near term. But we think these things are going to start working their way through the economy in terms of the hikes that we've had, the leading economic indicators. I mean, it's in the name, Brian, right?

And we've had 20 months of leading economic indicators coming down. We've had PMIs and manufacturing numbers that have not been good. Look at the Philly Fed. New orders plummeted and prices went higher. So there's different information out there in the market. I think a lot of people try to choose one camp or the other to make their case. But if you take everything in together, I think you have to be cautious and expect some volatility and a pullback as we go through the first half of next year. Adam, do you think that we could have a, listen, every recession call this year was wrong? I mean, I thought we might fall into one as well. I was wrong. It's hard to say. I was wrong.

But pretty much everybody else was too. Do you see a recession 2024, even a mild one? Yeah, I mean, look, I focus on stocks, right? And the S&P 500 and the big seven that you talked about, they're a superior set of assets, right? So you can have a technical recession. The economists will let us know six, nine months after it matters because the equity market will lead the economy every time. So I don't really focus so much on that, whether we have some technical recession or not. I focus on whether the average company can grow its earnings, whether margins can expand, because those things are associated with stocks going up. I don't think Victoria and I disagree, actually, on the Fed.

I think their two mandates are full employment, stable pricing. It's going to make it really hard for them to start cutting, what is it, six or seven times that's priced in between now and the end of January 25. I don't think they'll cut that much. If they do, it's because conditions got much worse, and I don't think you'll have smooth sailing through that period. So to me, if they're going to cut as much as what's in the price, the economy and the data are going to get worse, and that will affect S&P margins and earnings. If I'm right that it's kind of more of a bathtub shape, things are eroding, not imploding,

companies can improve, then I think the equity market will end up higher, and I'm right that it's kind of more of a bathtub shape, things are eroding, not imploding, companies can improve, then I think the equity market will end up higher. And I'm not as good at those sort of triple-breaking putts of up short-term, down medium-term, up long-term sort of views. I'll just see my way through it that the market will end up being higher in 6, 12 months. And that's sort of my base case. Well, markets do go up, what, Victoria, 75%, 77% of the time. So people say, why do you have such a bullish bias? Well, because history, 100 years of history tells us that stocks do tend to go up.

You said maybe a mild recession next year, maybe not the level of Fed cuts that people think. Do you think and you said you were a little worried about stocks. Do you think the overall market one year from today will be higher or lower than where we are right now? Well, I'm going to pump that question a little bit, Brian, because our year end predictions come out at the end of this week. And so that will all be in there. You're holding out. I will tell you what I will say is that I am concerned about earnings and margins. Adam's talking about that. The pricing power as inflation comes down pricing power is coming down

for corporations but wages are still at a rate that is higher than that so their margins are going to get compressed and this is typically the time in a rate hike cycle where companies start and really paying attention to that in cutting

labor forces we've seen it with Nike we've seen it with Nike. We've seen it with Spotify, Hasbro. There's a whole bunch. And I think we're going to see more of that coming. So I will say I think it's going to be a rocky road next year. You know, Victoria, follow up on that. You're right. FedEx cut, Foot Locker cut, Nike cut, all the ones you just talked about. And the Mac and those stocks got cut. But the macro market didn't seem to care. It's a little bit, not odd, but I find it interesting. Is it all momentum and Fed interest rate optimism related? I think there's definitely this kind of confirmation bias going on with the

market right now. I mean, they expect six cuts from the Fed but they expect earnings to go up eleven twelve percent they expect revenues to go up five percent so it seems to me you can't have your cake and eat it too there has to be something that gives a little bit and I think that's going to be where some of the volatility comes in the marketplace which part is it that's going to give our earnings going to come down and that's going to start us going into a pullback or a mild recession? Is it going to be on the flip side of that and the Fed's not going to do as much as what they thought? That's the unknown question. But to me, it means you have to be a little more cautious in your portfolio. Look at some of those names that have taken such

a big hit that as we say, the market generally does better, that they will start to pick up. And I think that's where you want to be putting your funds to work right now. What are you saying? Are we going dumpster diving, Victoria? Is that what we're doing? No, not dumpster diving. I actually like some of the sectors that Adam mentioned as well. We like some financials.

We like the credit cards, Visa and MasterCard. I think you can look at insurance as well, something like an Aflac or a MetLife. These are areas that we think will continue to do well next year. Yeah. Adam, any of those groups that you agree with or disagree with? Well, I mean, look, if earnings are down and that's Victoria's base case, then I'll agree with her. The market's going lower. I think generally, like she's right, the bottom upup median analyst earnings expectations are for 11% growth next year. I think the earnings will be less than that, maybe mid-single digits. But the market, as long as people believe that earnings are growing and they believe they can grow indefinitely,

I think the market has a more positive bias, meaning at some point in the middle of 24, if you think 25 earnings are up in 26, I mean, there's a reasonable case that earnings could grow for the next several years. And so maybe the part she and I disagree on the most in the whole mix there is just that I do think companies can be productive, cut out costs, maybe less logistics, less transportation, maybe less input costs on commodities, not a lot of depreciation, et cetera. And yeah, wages are inflating, but they're inflating at a less rapid rate. And so I think the median company, the average company can maybe have some margin expansion. And I think if she's right that they don't, then that's going to cause the market to maybe go lower. But I think the base case is going to be higher. And I think the base case is earnings will grow. You know, last year, Victoria, as you well know, being a Houstonian,

energy was all the rage. Oil and gas boomed. Best performing segment. Houston, best city for the stock market. This year, a bit of a different story. Oil, though, $75, not a $45, and it's not a $105. Do you have a view on energy heading into the new year? Asking for a friend.

Yeah, well, you're right. I mean, I am a lifelong Houstonian, so we like to support that energy sector. And I do think you have some opportunities in energy. Yes, the prices are higher right now. I think with some of the concerns that are going on in regards to supply and demand, in regards to some of the geopolitical issues, at least in the near term, let's say three to six months, I think you can see some of the stocks move higher. As you know probably better than I do, U.S. crude production has reached all-time highs, and so that did bring the price back down a little bit, and there are some concerns about demand out of China.

So I think you have to be a little bit cautious, but you definitely want to have some exposure to energy within your portfolio. Yeah, not just oil and gas, though, either. Texas, I think, produces two to three times more renewable electricity generation than California does, the next highest state. A lot of people don't realize that about Texas. Adam, quickly, you got a view on energy? Yeah, I'm very bullish in the medium to long term. I don't see a way that we're producing 107 million barrels that'll be demanded. There's been way less EV adoption than people thought. And so cars are born, then they die. In the interim, they last 11 to 14 years. And when you do the math, it looks like peak oil demand will be something like six, seven,

eight years from now. So I have no idea in the next three to six months. There's just 19 variables involved that I can't figure out in a three to six month view. I think oil prices are in the nobody knows nothing camp. But I think when you look out longer term, you just don't have the capex to produce what's going to be required to meet the demand that's already been in place with the installed base of vehicles, et cetera.

So I like it a lot. The S&P, it's obviously only a few percent of the overall index. So to me, you can be a few percent overweight and capitalize in the medium to long term. So I like it a lot. And I would just say, look, a recession is more in the energy sector than almost any other part of the stock market. So if you think about estimate achievability and relative estimate achievability, I like the energy equities. You know, I know of a show at 7 p.m. Eastern time that likes to talk about energy and cars and all that stuff. And, you know, maybe we'll talk about it tonight. Adam, Victoria, guys, this is also a very good example

of why you come on CNBC during the holidays. You guys got like 62 minutes of interview. Take care. Have a good one. Happy New Year. Thank you both very much. We'll see you in the new year. Victoria and Adam, appreciate it. All right, let's send it over now to Christina Partsenevelos for a look at some of the biggest names that are moving,

heading into the close. Christina. Brian, there's an M&A shopping spree going on. Bristol-Myers, spending $4.1 billion to buy Raise Bio, which is developing cancer treatments. So that stock that you're seeing on your screen is up about, what is that, 31% we're seeing on the screen right now. This latest deal comes after Bristol-Myers just last week announced a purchase of Karuna Therapeutics for $14 billion. And AstraZeneca said it would buy China's Gracil biotechnologies for about $1.2 billion in an attempt to further its cell therapy ambitions and boost its presence in China. And that's why you're seeing a lot of other biotech

names too also rallying in this wave of M&A activity going on in the sector. You can see shares, though, for AstraZeneca up two tenths of a percent. Yeah. Second big deal for Bristol-Myers in like a week and a half. Christina P., we'll see in a few minutes. Thank you very much. All right, folks, we are just getting started here on Closing Bell. Up next, rethinking retail with the all-important holiday shopping season now in the books. We're going to break down the sectors setting up heading into the new year and maybe some of the names that could be set to outperform in 24. As always, live here at the New York Stock Exchange, and you are watching

Closing Bell on CNBC. All right, welcome back. Got some big news out of Cupertino, California. Apple appealing a decision to ban some imports of its watches this after the Biden administration upholding a big patent ruling. Steve Kovac joining us now with exactly what this Apple Watch patent fight is all about, Steve. Yeah, and it all comes down to the Biden administration this weekend just didn't give Apple what it was hoping for for Christmas. The U.S. trade representative under the Biden administration did not veto the International Trade Commission's decision to ban those Apple Watches by the deadline yesterday. The ban in full effect starting right now stems from a patent dispute of blood oxygen sensor brought against Apple by the health tech company Mossimo. They make similar

health tracking watches just like the Apple Watch. Apple says it is working to make changes to the Apple Watch so it doesn't violate those Mossimo patents and hopes to start selling it again soon. Also today, like you said, Brian, appealed in federal court for a stay on the ban until Customs and Border Control can determine if those patents were violated. They have until January 12th to do that. But in the meantime, right now, they are banned from selling two of the latest models of the Apple Watch. That's the Series 9 and Ultra 2 in the United States only. The Apple Watch SE, that's the cheaper model without that blood oxygen sensor. You can still buy that. It's still on sale in Apple stores. Third-party stores, though, like Best Buy, Amazon, and so on, they can still sell the remaining Apple Watch inventory,

but Apple can't sell it from their stores. Now, let's talk about the money here. Revenue impact. Morgan Stanley Analyst last week estimated less than 2% of Apple revenue will be affected by this ban, and Apple is missing about $135 million in sales for each week the ban continues. Now, that probably, Brian, doesn't sound like a lot, especially at Apple's scale, but every little bit counts as Apple struggles to return to top line sales growth again after four straight quarters of declining sales, Brian. Steve, it's a little bit of a confusing story because to your point, this is not all Apple watches. If they don't have that blood oxygen monitor on it, then they're totally fine. Do we know, I don't want to put you on the spot, like roughly what percentage of these watches have this functionality? I don't know

about the number. It's the newer ones though. So these are the models that went on sale in September. Now, of course, older models do have that blood oxygen sensor, but they're not on sale anymore. This is the Series 9, the Series 8 had it, the Series 7 had it, and the Ultra 2. So these are the current watches that Apple sells with those blood oxygen sensors. Apple's working on ways to get around those patents. There's some stuff on the software side they think they can do. But if that doesn't work, hardware changes are needed, Brian, and that's going to take a lot longer. All right, Steve Kovacs. Steve, appreciate it, my man. Thank you very much. Thanks. All right, now to some good news around Christmas, because new data from MasterCard shows that Americans boosted our collective spending

by more than 3% over the holidays. All this despite big jumps in credit card debt and the resumption of student loan payments. So how long can we keep this consumer spending boom going? Joining us now to discuss her outlook in retail is Sharon Martis, Director of Consumer Research at LESG. And also, I just found out somebody who worked on a program at NASA and the space shuttle. Yes, that was in the early 2000s after college. I did work there as a software web developer. Fun time. Underachiever. OK, I mean, come on. We'll get I'd like we'll do a different segment on that.

Let's go back to retail because it's just it is just amazing. However, big debt goes up, however high interest rates go, whatever. Nothing seems to slow now at the American shopper. The consumer has remained very resilient this year, despite all of the macroeconomic threats, especially inflation. When we look at the forecast, in fact, for next year, that's expected to remain within the 3 to 5 percent growth growth rate that we saw during like this year. And that's the forecast suggesting that consumer demand for products will remain the same. Now, make no mistake, the consumer did go out and traveling hotels, restaurants. That was the strongest sector this year and is still projected to be the strongest next year.

Is that baked into that 3 percent number that I gave them? Okay. So the experience stuff. Yeah, it's still number one. It's this one area that has the strongest demand for the consumer. In terms of individual names, Amazon is still projected to be the strongest winner next year. In fact, they're likely to not only beat earnings estimates, but post a positive surprise every single quarter next year in terms of individual names costco walmart for everyday low prices consumers still one designer clothing for last ross and tj maxx and then you have those retailers that have a loyal following like lululemon amber crombie ralph lauren free people and amber crombie will boost urban outfitters is amazon just becoming like the default shopping place just i need this i'm just going to go to this, and I'll get it tomorrow.

The consumer is all about instant gratification. They love the convenience and how effective and reliant the service is. Walmart, however, is giving Amazon some competition. It continues to increase the amount of merchandise it's offering on its online platform. In fact, the amount of money consumers are expected to spend next year online is expected to grow from 15.8% to 17.8% next year as a percentage of total retail sales. All right, so we'll back up a little bit. We talked about the experience stuff, the travel and the food, despite the fact that inflation. I would imagine spending is up because prices are up. So if you're just measuring pure dollars, the fact that a burger, fries and a soda can be 20 bucks

now is going to increase the amount of spending. I also I wonder about that. I also wonder how's the stuff stuff do it? Are we buying things or just food? We're buying mostly experiences, traveling. Traveling is also projected to come down next year, which will give it another boost. However, when we look at the forecast in terms of earnings, that's where things are expected to be different. It's important to know that the consumer is out and about right now shopping for the holiday season because a lot of the merchandise is on sale. In fact, almost 50 percent of all of U.S. retail merchandise is on sale. I'll start Discover with Centric Market. You mean right now or before Christmas? Now, in the month of December.

But not the post-Christmas, this is the stuff nobody bought. It might even go even higher post-Christmas if we haven't moved all of it. I need some sweat. I got cheap. I got cheap. I put off purchases because I'm like, A, I can't buy for myself. B, I just know that on December 26th, things are going to be half the price as December 23rd. So here's the benchmark. If you see that the discount offer to you is more than 40 percent after this holiday weekend, then you know that the merchandise did not move as expected and inventory turnover is still low.

40 percent. Or you have really bad taste in clothes because nobody else wanted what you're looking at. that the merchandise did not move as expected and inventory turnover is still low. 40% is the... Or you have really bad taste in clothes because nobody else wanted what you're looking at. Or that too. How about this giraffe sweater? I don't... It's 75% off is the reason why. So what is that again? 40% off.

40% of it is the benchmark. So if I see 50% off... Then you're getting a good discount because even though there's more merchandise on sale, what hasn't changed is the average discount provided on that merchandise that's still below 40% so if you're getting anything above 40 40 percent then you're really getting a good discount 35 didn't I didn't work for NASA so you got to forgive me I'm a little slow no 35 percent off about it is not a good deal that's just an everyday discount that's the discount that you're getting all throughout the year at any other point in time.

What is different this time around is that that pair of shoe that might regularly not be on discount is on sale this time for 20%. So more merchandise is on sale, but still for less average discount promotion offer. That was cool. Kind of learned something, too. 40% is the litmus test. Good deal. Not good deal. Exactly. You got it right. Even I got it. I got it. I got an A. You got an A. Thanks, Professor Space Shuttle. That's the next conversation. Sharon Martis, LSEG, the London Stock Exchange Group. That is correct. Correct. All right. Thank you very much. All right.

Straight ahead. Ed Yardeni is back and he is bringing a dozen reasons to be bullish. We got Lord Zalipan, we got Maids, whatever. He's going to make his case for why the S&P can reach new highs in the new year. Ed Yardeni, optimism just for you, next. All right, welcome back. Is eight really enough? Well, we're going to find out, because stocks looking to make it nine weeks up in a row as the S&P 500 now tries for its longest weekly win streak in nearly 20 years.

Joining us now and where we go ahead is Ed Yardini, one of the biggest bulls on the street and, of course, the president of Yardini Research. Ed, it's great to have you on CNBC and closing bell again. Thank you. Thank you very much for coming on. You've got a 5,400 price target on the S&P by the end of next year. Why the optimism? Well, 5,400 by the end of next year and then 6,000 by the end of 2025.

I think this is a bull market that has legs that's going to continue to charge ahead. The optimism is fundamentally based on the notion that we had a recession this past year, but it's been a rolling recession. The rolling recession actually started in 2022. And now as we look ahead here, we're looking at rolling recoveries in a lot of sectors that went into a recession.

But the overall economy has proven to be remarkably resilient, particularly the consumer. I think that's likely to continue to happen. I think what we're seeing here is a significant relief rally. And the relief is that we're not going to have an economy wide recession. And the relief is that inflation, in fact, can come down without a recession. Yeah, you just heard our segment with Sharon on the consumer and retail. One point1 trillion in credit card debt doesn't seem to matter, or maybe that we have the $1.1 trillion because people continue to spend.

Are you shocked still at the level of just confidence the consumer is showing? Well, they're showing it by spending. Obviously, if you ask people, they actually tell you that things are pretty lousy, but apparently, I've always had this view of Americans that when we're happy, we spend money. When we're depressed, we spend more. But there's money out there.

People are working. Real incomes are going up. Wages are rising faster than prices. And I know there's a sort of alarm about all the consumer debt, but virtually all of that is paid off on a regular monthly basis. I mean, it's 22 percent is the charge on some of these things. So I think most Americans pay just use this for convenience sake. And consumer credit outstanding really never has had a good track record of predicting when the consumers would retrench.

It's jobs. And if the job market suddenly collapses, then we'll have a recession. But right now, there's plenty of job openings. Can stocks, because listen, we know this, at least I believe this, and tell me if you believe it as well, Ed. Sure. The stock market may represent the economy in some way, but stock market is not the economy. Economies can go down or stall and stocks can go up and vice versa. If we see the economy in some way, but stock market is not the economy. Economies can go down or stall and stocks can go up and vice versa. If we see the economy slow down a bit, can earnings still grow? Can multiples still grow? Can stocks still grow? Yeah, well, at the end of the day, the stock

market is a discounting mechanism. It looks ahead basically over the next 12 months and tries to determine whether the economy is going to grow, whether earnings are going to grow, whether we're going to have a recession. I think the market's done a pretty good job of concluding that after last year's bear market, that that was not justified by the economy. The economy looks pretty good. I think ever since October of last year and again in October of this year, the stock market's been discounting what I call an immaculate disinflation, the idea that you can have inflation come down without a recession. What people forget about is that there is a recession out there.

It happens to be in China, and China is exporting a lot of deflation. And so they're doing us a great favor. Their economy is in trouble. And as a result, we're getting some real relief on inflation, particularly for goods. Your job is also, of course, to discount risks. And there are always risks out there in the market. If you had to point to some of the bigger risks for next year, what would they be? Well, I think a lot of people are still concerned that of a 1970s sort of scenario where we had two energy shocks. And at the beginning of last year, we had an energy shock when Russia invaded Ukraine and all the resulting impact that had

on the energy market. And the energy prices came down, the inflation came down along with that, and that's the way it played out. But the concern now is that with the war in Gaza going on, that if that becomes a much more regional war, and certainly the news is full of potential for that to happen, then we might very well get Iran more involved in the whole situation. And suddenly, Iran's oil dries up, something happens at the Strait of Hormuz. So the geopolitical risk out of the Middle East is significant. But the market and uh thinks and i think that uh the situation will be contained and there's a lot of oil out there the u.s is producing an all-time record high in crude oil field production and meanwhile consumers have

demonstrated when the price of oil gets to four dollars they cut back i did not have record u.s oil production on my 2023 bingo card. I'm not sure a lot of people did, but we got it. Ed, you had any 5,400 next year, 6,000. That's 26 percent from here over the next two years. Hope you're right. Ed, thank you. Thank you very much. All right. Thank you. All right. Happy New Year to you as well. Thank you. All right. Up next, we're going to be tracking the biggest movers as we head into the close. Christina is back with some of those. Christina. Well, can a billionaire revitalize a soccer club?

And an EV maker unveiled a new car, but something else is driving that stock. Details next. Welcome back. We just touched on it with Ed Yardeni, but the price of oil, also a big risk for next year. Right now, oil is up again as things continue to heat up overseas. Over the weekend, the American military carrying out retaliatory airstrikes in Iraq. This after a drone attack by Iran-backed fighters left one American serviceman dead or in critical condition and wounded two others, by the way. It is not just in Iraq.

Also in the Red Sea, Iran-backed Houthi rebels out of Yemen attacked another ship, prompting several vessels to avoid the area. It is just the latest in a string of attacks, and the Houthi terror group has warned it is only getting started. We're going to talk about all this and tensions rising in the Middle East and the impact on energy. On last call tonight, 7 p.m. Eastern time, we'll be joined by Halima Croft, who knows a lot about what is going on. All right. In the meantime, we've got about, what, 16 and a half, 17 minutes till the closing bell. Let's get right back to Christina Partsenevelis for a look at some of the key stocks to watch on this Tuesday. Christina. Well, we've got British billionaire Jim Ratcliffe that has finally or who has finally completed his purchase of Euro football team Manchester United

after months of uncertainty. Ratcliffe will acquire 25% of Man U and will invest about 300 million into the club. And that's why shares are up over 3% on hopes that he will help revitalize the British soccer club after a slew of managers and only four trophies in the last 11 years. And Chinese EV banker NIO revealed a new high-end car, the ET9, with much of the technology in the car designed in-house. That's making the stock move over 11% higher right now. Brian? Good stuff.

Christina, we'll see you in a bit. Thank you. All right, still ahead, home sweet home. The latest read on housing prices showing no sign of slowing down. We're going to break it down, including which major markets are seeing the biggest home price gains in America. Is your neighborhood on that list? You'll find out if you stick around. We're back in two minutes.

Welcome back to Closing Bell. Chinese Internet stocks rebounding today. This after regulators softened their stance a bit on the latest proposal to tighten controls on online games. China approved over 100 video games yesterday, including games from Tencent and NetEase. The move following draft guidelines released last week that led to double-digit losses for many of these same stocks. All right, up next, a multi-billion dollar grant sending shares of Intel higher, way higher. We got details on the deal, plus what it might mean for the company and its shareholders when we take you inside the Market Zone.

That is next. All right, welcome back. You are now officially in the closing bell of Market Zone. Christina Parson-Evils is back with a look at Israel's investment in Intel. Diana Olick on the landscape for home price. Seemed pretty good. And Julia Borsten on media M&A in 2024. Let us start with Christina on Intel.

Big day for Intel and its investors. Christina. Big day because it's $3.2 billion in extra subsidies from Israel to actually continue building a $25 billion facility in the country. The new government aid sending shares, like you said, a big day, up 5% higher, leading the S&P 500.

It also represents one of many expansion initiatives for Intel. So last year, Intel said it would invest up to $100 billion to potentially, again, potentially build the world's largest chip-making complex in Ohio, here in the U.S. Intel has also planned to build two plants in Germany, where it will get about $10 billion in subsidies, which is actually more than Israel, but you didn't see the stock react as much. But all of this is with the aim of reestablishing Intel's manufacturing chip leadership. And according to Trendforce, Intel finally cracked the top 10 foundries by revenue in Q3. The top three spots held by TSMC,

Samsung, and Global Foundries that you're seeing. And then down the line is Intel at number nine. The foundry business, though, it's growing. It generated $311 million in revenue in Q3, which doesn't sound like a lot, but that's up 300% year over year. And even though the company has had a long history of manufacturing delays, it says, it promises it's on track to deliver five new chip processes in four years, all by 2025. Although some analysts are still skeptical that Intel can actually follow through. But the stock says otherwise this year, up 93 or 91 percent at this moment. Brian? All right, Christina, thank you very much.

We'll see you again. All right, now let's get to Diana. Ola can talk real estate, Diana, because it just doesn't seem to be anything that is stopping at least the nationwide average price of a house to go up. It's unbelievable. No, you thought like higher mortgage rates might, but that didn't happen in October. Home prices rose nationally 4.8 percent year over year on the S&P K. It's unbelievable. No, you thought like higher mortgage rates might, but that didn't happen in October. Home prices rose nationally 4.8% year over year on the S&P K. Schiller Home Price Index.

That's a jump from the 4% annual increase in September and marks the strongest annual gain this year. And it came despite a sharp rise in mortgage interest rates in October. The average on the 30-year fix crossed 8% on October 19th. That, according to Mortgage News Daily, the highest level in more than two decades. Rates, however, dropped steadily through November and more sharply in December. 30-year fix now around 6.7%. With rates now much lower, home prices will likely continue to gain even more due to very low inventory. Prices are now 1% higher than the peak in 2022, and they have recovered all the losses

recorded in the second half of last year. So looking forward, Brian, nowhere to go. If you're on the radio, Diana just did the Siskel and Ebert both thumbs up. They both like the movie. Nowhere to go but up. Truly amazing, maybe because so many deals are simply all cash, right? Julia Boorstin, hello at West, by the way, you are looking at media M&A and the possibility thereof next year. That's right, Brian. Well, after a mixed year for media stocks, M&A is expected to be in the works as the media giants reckon with cord cutting, a weak ad market, and competition for content subscribers as well as sports rights from the tech giants. Paramount Global, its stock down about 10.5% year-to-date, faces upcoming debt payments.

Its CEO, Bob Backish, and controlling shareholder Sherry Redstone have been meeting with potential buyers, according to sources. Warner Bros. Discovery, whose stock is up 22% this year, is free to sell as of April 8th when restrictions from its Warner Media deal expire. Now, sources tell me that Comcast, its stock up about 26% year to date, might be interested in Paramount Assets or in spinning off CNBC, Parent, NBC, Universal to pair with Warner Discovery. Now, as for Disney, its stock up just about 5% this year after acquiring the remainder of Hulu. It's debating whether to sell its linear TV networks.

Brian, none of these companies have commented, but we know they're thinking about their options. All right. There's a lot here, a lot going on. Are there any wild predictions out there or just chatter? I saw somebody say that they thought that, you know, Apple could be a buyer of some companies, Amazon, any more that you were learning about the big tech companies really becoming the next wave of the media superstars, if you will. I would say the big tech companies are interested in sports rights. They know that sports is incredibly valuable, not just on TV, but for them. We saw this with the way that we saw both Amazon and also Alphabet's Google and YouTube TV make a big move into the NFL. So I think what

we're watching here is this question of whether or not they make a bid for NBA rights because those NBA rights are up for grabs. We're going to start to see the negotiations in the first half of next year, starting for the 2025-2026 season. Yeah, truly amazing. Is it really, when you say sports, I mean, are we actually digging in a little more, Julia, just ultimately talking about football? I feel like we are. The NFL is really valuable, and that's one reason why everyone is looking so closely at what's going to happen with Paramount Global. It owns the very valuable rights with CBS for the NFL. Now, the question is, what does Warner Discovery need to do? They are a rare media giant that does not have NFL rights. And that could be

one reason why those two companies are talking. So the NFL seems to be a must have asset these days in terms of sports rights. And then the NBA is close behind it in terms of must see TV. Yeah, it truly is. Paramount Global right now, that's what it's all about, right, Julia? It's Warner Brothers. Paramount is the new thing. I mean, that's the that's the one on everybody's minds. Whether or not that gets done, we'll see where we can go from there, I suppose. Yeah, I mean, I think the other thing to point out is that Sherry Redstone, controlling shareholder of Paramount Global, has a lot of options. She could also sell just National Amusements, which owns an 80 percent voting stake in Paramount Global, or she could choose to sell off pieces of Paramount Global, such as CBS, The Linear Piece or The Studio.

Yeah. When can we expect any movement on this, Julie? Any timeline? No specific timeline, but we know that last week, according to sources, David Zaslav, the CEO of Warner Brothers Discovery, had a meeting with Bob Backish, the CEO of Paramount Global. So they've started to talk. We know that Sherry Redstone has had some meetings about her stake in national amusement. So those conversations have started. I suppose everyone's probably on vacation this week, but we expect them to pick up in the new year. Yeah, and people forget. I mean, they hear Paramount. Maybe they don't.

What's Paramount? You know, whatever. Maybe it's Yellowstone or whatever. This is CBS News we're talking about, right, Julia? This is the future of CBS Sports and CBS News. Yeah, I would say the most valuable piece probably is not the CBS News piece, but it is those NFL assets that CBS controls.

Yeah, but my point is it's a big name. CBS News, 60 Minutes. I mean, there's some long-time established players that are suddenly up for play. Yeah, and BET, there are also these other pieces. Showtime, BET, there's Paramount+. There's a question of how these assets might be divided up or who would benefit from the different pieces of that. Well, I'd say the crowd you can hear loved your piece. Julia Boorstin is stretching it out like six minutes. Julia, thank you very much. They're applauding for you here at the New York Stock Exchange. We are in the market zone. Julia, thank you very much. 15 seconds left. Stocks going to close higher on pace, maybe, for nine straight winning weeks in the stock market.

Pretty amazing.