Closing Bell - Closing Bell: 12/29/25

Episode Date: December 29, 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.

Welcome to closing bell. I'm Sarah Eisen in today for Scott Wapner. This make or break hour starts with a retreat from records as stocks pulled back from all-time highs. Here's your scorecard with 60 minutes to go in the trading session. We are seeing stocks give back some gains, as mentioned, down three-tenths of a percent on the S&P 500, so nothing extreme. The NASDAQ pulling back four-tenths. We're pretty much flat now into the Santa Claus rally. This is the third day in. Five more to go. I think four more from here, actually, which is a historically very strong period for the market. Materials, the hardest hit sector right now as gold and silver fall from those record highs. Discretionary and tech also in the red, while energy and utilities are posting gains today. And that leads to our talk of the tape. Should you lean into the broadening of the market that has been showing new signs of life as we close out the year? Month to date, we're seeing groups like financials and industrials outperform tech. Let's ask Palumbo wealth management's Phil Palumbo. Welcome. It's good to have you. Thank you. So how are you positioning? You manage high net worth clients, investors, entrepreneurs. are you positioning them into 2026?

Yeah, so first, we, you know, the win is at our back as it relates to the overall economy, which translates into earnings, which I think will be another up year for the market. And so with all that wind at our back, I do think that translates into the other 493 companies. And the question everybody has to ask themselves, well, why is that? And for me, it's about the Fed cutting rates, so rates going lower, that'll help the other 493 companies. And then I think a lot of these companies are going to integrate AI into their companies, ultimately increase in productivity, which will see their earnings start in.

increase. So I think those are the main reasons why you can see a broadening out. So you expect more Fed cuts? Because we got three this year. Yes. More than what was expected initially. Yeah, I do. I do expect that. And I do think the new Fed chair will be doves. So I think overall we'll see a situation where rates do go lower than we are today from a Fed cut situation. I think it makes sense looking at the labor market cooling a little bit. And I think to think that inflation is not problematic. And with that, I think it's a recipe for to continue to cut rates. And then you expect next year to be the year that we start to see the AI impact on earnings?

I do, yes. Higher margins? What does that look like? Well, first of all, I think you're seeing it already, right? And a lot of companies that are implementing, like Salesforce is one, that they implement it with their agent force, and you're starting to see it in their earnings now. So you start to see it already, and I just think more. Salesforce is one, but it got punished this year.

It did get, well, so there's an overhang right now with software companies, right? It's a concern about AI taking over their business, less seats within their business, but if you look at Salesforce and their business, they're thriving, right? So in terms of the agent force and their implementation of that, I mean, that's, that alone is up 330% year over year. The data cloud and that business combines up 114% year over year. It's now a $1.4 billion piece of their business. Why do you think the market's not giving them credit? It's because, it's because just like anything else, everybody's concerned that AI is going to take away part of their business and other people are going to use AI, develop

software like the CRM. But the end of the day, Salesforce dominates in CRM. That's not going away. In fact, they're using AI to make their business even better. And if you listen to the CEO and they talk about the rule of 50 come in 2030. I mean, they're doing a great job allocating capital. It's trading even less from a valuation's perspective, less than many of the software companies out there right now. So I think you're going to see a lot of implementation of AI into businesses, which you'll see productivity enhancements overall, which will translate into earnings power going into that. So Salesforce is one. Where else are you spotting winners, especially interesting

opportunities here where you think there's some market dislocation? Yeah, so Sarah, so I say it all the time. If someone said, sell all your stocks in a portfolio, what would you buy? and I would buy Google. Google, to me, and the big question after the run? Even after the run. The big question I get all the time from clients is, you know,

Phil, what's going to be the biggest winner of this AI run? And I say it's going to be Google. Google is the most vertically integrated business of all the businesses out there. And you've said that. I just want to give you credit before this year. I did.

It's helped you have a good year. It has, correct. Yeah. So, I mean, and Google just, I think, has it all. Gemini is just a phenomenal product. They have TPU. Now they're selling their TPUs, to Anthropica as an example.

So now they can compete in the chip space. and YouTube, more people watching YouTube than there is Netflix, and that Google Cloud business is growing phenomenally well at 34% year over year, and their backlog is up 82% year over year. So we're talking about an incredible business that's only going to thrive, and that's why you saw Berkshire Hathaway took a position in it recently. I know, it's just, you know, coming into the year, everyone was worried that Google was existentially threatened by OpenAI

and chat GPT, the whole search business was going to be, like the competition was coming, they wouldn't survive. Yeah, which I totally get that, but the opposite is. I think the CEO is an incredible CEO, and they executed really well, and now the momentum is at their back. So Google Top Pick. Yes. Salesforce, clearly. And Amazon. So Amazon's only up 6% year to date, right? Yeah, that's lagged. Yep. So it's lagged because of the tariff overhang, which is true of many companies out there. So I think going into 2026, a lot of the tariff overhang now is going to be, is fall by the wayside. Similar with the AI overhang with software. I think a lot of that falls by the wayside.

and you start to see e-commerce and you see investors give Amazon credit, right, for the e-commerce business where they laid the foundation. I think you see margins expand there. Their AWS business, the last quarterly print, they hit 20%. Their backlogs are phenomenal. And I think their AWS business in general, the cloud business, only continue to thrive. You know, they dominate in that business specifically. So I think, and then their ad business is up 20 to 25% growing.

And it's very profitable as well within the company. So I like those three companies a lot. Well, on that note, Phil, sit tight because, as you noted, Mag 7 stocks have been diverging as the year comes to an end. 2026 could see that divide widen as AI spend comes under more scrutiny. Mackenzie Sagalas has the details. We were just talking about Amazon lagging. Mackenzie, what else are you watching? So that Mag 7 trade is splintered, and the divide really comes down to who's converting AI spend to actual margin.

So what I'm watching, let's start with laggards. Microsoft, Meta, Apple, and Amazon all underperforming the S&P this year. Amazon's in last place at 6%. Meta had its worst day in three years after raising its Cappex guide. CEO Mark Zuckerberg has poured tens of billions into AI talent, reorged the AI unit four times in six months this calendar year, and still no clear payoff. Without a cloud business, the return story is better ads.

The winners, they look different. Alphabet owns the full stack, as you and Phil were just talking about a minute ago, chips, cloud distribution, and its AI model, Gemini. those shares 66% higher with margins expanding. NVIDIA is roughly 90% of the AI chip market and gross margins in the mid-70s. Everyone else's CAP-X is NVIDIA's revenue. And then Microsoft, it's in the middle,

40% Azure growth last quarter, the biggest spender among hypers, but also the most exposed to the AI arms race. It's got $300 billion committed from OpenAI and a new deal with Anthropic, and the question is whether the backlog justifies the buildout. Now, the setup for 2026,

if models keep converging, and they are, distribution matters more than who trained the best model. And that could reshuffle this board in Apple's favor. Sarah? Okay, McKenzie, thank you. Let's bring in Obermeyer's Alley-Flynn-Phillips and Crossmark Global Investments, Victoria Fernandez. Phil Palumbo is still with us. On this conversation, Victoria, how do you feel about some of the big tech names and specifically the divergence that McKenzie was talking about? Does it present opportunity for you? Yeah, I think you definitely have to start.

look at the tech space, not as just, you know, one big group that you can just kind of pick any name in there and you're going to do well. There's definitely going to be some divergence between those names, as McKenzie was talking about. You've got to look at those that you think will actually have a return on the investment from the CAPEX component that they have. And I think you also have to start looking at maybe the second derivative of the AI play. What are those companies that are actually going to put it to use the best? Those are the companies that I think you can look at investing as well. So tech will be a little bit trickier, although, Sarah, they are expected to be almost 50% of the EPS growth in 2026, so there's still a lot to be made there.

Yeah, I mean, that's, Phil, it gets to your point. So Amazon, you think, presents an opportunity here. And then on the second derivative, you mentioned Salesforce. What other sort of companies do you think will be AI beneficiaries? Yeah, so on the second derivative on the power play, Blue Energy, Blue Energy had an awesome year this year, up 288%. It's in our Palumbo emerging growth strategy. You know, we're big believe is that, you know, they have a great business model where they're able to provide electricity anywhere without utilizing the power grid. So we think blue energy is a great second derivative of current AI movement that we're seeing today. And that's kind of a continuation story.

Correct. But what about you? How do you play the AI story in 26? How does it look different in the same than this year? Well, I'd say, Bill, and everyone's brought some good points. I mean, we, for instance, really do like Google, Amazon, some of those other things. Amazon, some of those other things, but I like the idea we're talking about the second or maybe the third derivative. A good example to us would be Snyder Electric. Global

electricity demand is re-accelerated, driven by AII, electrification, data centers, and decarmonization. And this is no longer a cyclical story. You have sweeping policy mandates, rising utility cap-ex, and real wide-brid failures, which are forcing sustained infrastructure investment. Schneider is a direct beneficiary for the global electrification. Their products are instrumental, increasing energy efficiency, and also they spent the last few years transitioning from a cyclical hardware company to one that has reoccurred revenue. Another example to us would be ASML. It's a pure play within the AI buildout. ASML makes the machines that make every advanced chip out there. And so as AI moves from video to multimedia models, compute intensity is increasing, and AI chips are

critical for that production. You're seeing more orders and visibility, and essentially tight supply, rising demand will be the next link higher. Ali, I noticed you also mentioned health care as an interesting underperformer. Is that is that one that you want to get into? And when do we see the AI benefit there? That's been part of the excitement on the AI story is drug development and health care changes. True. And health care is one of those where, as you know, it's life the last two to three years for all

sorts of things. Our focus there more is really earnings revision, easing policy risk. And you see a lot of MNA momentum. So it's more of those aspects that are really encouraging as opposed to just really the AI angle of health care. Yeah. So, I mean, it gets to your point, Phil, about 493, the other 493, and when we'll start to see results. I guess the biggest question, which is kind of a circular question, back to the semiconductors and the original AI, is just how quick this enterprise adoption will be and how big the payoff will be. Yeah, that is the big

question. And again, I do see 2026 and 27. I do think the investments in AI and implementing AI into your business, without a doubt, makes a tremendous difference. There's tremendous value in utilizing the tool. You know, Jensen Wong talked about this when you give your employees access to AI tools that could increase productivity by two to three times. I'm personally seeing it in my business, and I think many other businesses are starting to see it now, and it's for real. It's only going to expand. What do you do in your business with that? Everything from research component to marketing, which are the two components that save a lot of time for my employees that's increasing the productivity and increase in revenue as a result of it.

Victoria, do you see it driving the economy next year in the same way? I mean, this year, the CAPEX, the spending that has gone into AI, particularly in the first half of the year, where we were seeing numbers like 20% into GDP. And it's still a big contributor to GDP. How do you expect it to impact the economy overall next year? Yes, sir. I think CAPEX is the key right there. I mean, we know that CAPEX leads to productivity gains, as you were just talking about.

We know that it leads to profitability. As unit labor costs are kept low, margins continue to improve, that's one of the areas that we've been concerned with when it comes to earnings, how are they going to continue to keep their margins up? How are they going to continue these levels of earnings growth? And I think CAPEX is a key component of that. But I think we'll see CAPEX really start to broaden out. It's not just going to be the AI play that leads that CAPEX drive. You're going to have all of these other companies that then start to come out because of the OB3 bill

and you get the tax benefits in regards to manufacturing, research and development, building factories. So I think you're going to see CAPEX really start to broaden out. That's going to be a key driver along with the earnings growth and the consumer as well. You've had, you know, Dana, you've had Jan Kiffin, people on today on the network talking about the consumer and they'll continue to spend. Those three elements, the CAPEX, the earnings, and the consumer, I think is what you're going to see driving the market next year. But Victoria, do you get worried that the consensus is getting very bullish, not just, you know, sell side analysts, but all the conversations, everyone excited about growth, the impact of the big, beautiful bill, the fact that we're lapp. some of the tougher tariffs, the fact that the AI spend is still on fire, it's all becoming

very consensus. It is and you can't look at it through rose-colored glasses. You have to say, wait a minute, there's a chance of another government shutdown. There's a chance that we're going to see inflation start to move higher because companies have said they have not passed on all of the tariff costs as of yet. They're going to continue to do that incrementally. So you can see inflation continue to move higher. The labor market could weaken.

There's a lot of elements out there that I think could continue to be warning signs for the economy, so you have to take that into consideration. And we know it's a midterm election year. You typically have a pretty large entry year drawdown, 15 to 19% in a midterm election year. So I think it's going to be a very volatile year. You're going to have to be very tactical in where you put things to work in 2026. Where's your hedge, Phil? I bet you didn't expect your hedge gold to be up, I don't know, 70% this year or so. Yeah, so gold's been a core part of our overall portfolio. Two main reasons why we implement We did research going back 50 years, and when we did that, we realized that gold has really

hedged during a major downturn, number one. And number two, when there's inflationary trends moving upward, gold's a good place to be, right? Which worked in the 70s. Really didn't work, though, in the big move that we had inflation. Do you think that's what the gold move is about? No, it's not about inflation. The gold move, I really think is more, it's two things, right? Number one, I think it's more about dollar down, interest rates down, right?

I really think it's that simple. Yeah. The other part is, is there something around the corner that we're not seeing that can create an exogenous shock that nobody knows. It's like the unknown unknown. That's what concerns me, even with the price of silver moving up. So just like anything else, like head on a swivel as you're an investor and just making sure you understand that. Maybe there is something going on that we're not talking about right now because all we're talking about is the same thing, which is AI, AI, AI, AI, but maybe there's something else going on that when that's seeing.

I know. You just don't usually see stocks at a record high and gold having such a good time. You're right, exactly. So there is some type of issue going on or that does concern me. And so diversification is the key to that. And so what, 10 percent? How am I? 10%. We started at 7.5%. Now we got to 11.12. We paired some back. We moved into Bitcoin, but part of that pairing back. Not that we think gold and Bitcoin are the same, but we thought Bitcoin is a possible store of value is how we look at it. So longer term, we think it could be a good value. All right. Guys, we'll leave it there. Great setup conversation. Thank you very much. Allie, Victoria, and Phil. It's good to see all of you. We'll send it over now to Christina Parts in Evelas for a look at the biggest names moving here into the close. Christina.

Oh, I got to talk about silver and platinum. They did hit record. Highs overnight, but sold off heavily during the day along with gold after the CME raised margin requirements for precious metal contracts. Higher requirements forced traders without cash to sell, and that selling did help or did send some prices tumbling. Mining companies like Newmont and Freeport MacMoran are among the biggest percentage losers in the S&P 500 today. Energy, the best performing sector today after peace talks between Russia and Ukraine fell through over the weekend. Crude oil is moving positive, taking oil companies along with it. Exxon Mobile, Chevron, Conoco Phillips, all in the green today, roughly 1%.

Let's say Exxon, almost one and a half. Finally, shares Lulu Lemon. Those are up about 1.5% after founder Chip Wilson launched a proxy fight by nominating three independent directors to the company's board. Just two weeks after the Athleisure Ware Company announced the exit of CEO Calvin McDonald without a successor, Lulu Lemon shares definitely struggling this year, down about 44%. much, yeah, big drop for this name. But up today. Yeah. Okay. Thank you, Christina. We are just getting started here on closing bell. Up next, Plexo Capitals, low Tony is standing by, his take on

NVIDIA's $20 billion deal for GROC with a queue. We are live from the New York Stock Exchange. You're watching Closing Bell here on CMDC. We're back on closing bell, shares of NVIDIA, sinking among the broader tech pullback here, sinking down 1.3%. The company announcing last week, a $20 billion non-exclusive licensing agreement with chipmaking startup GROC for GROC's inference technology. Joining me now to discuss what a deal like this means for the future of the AI race and the whole ecosystem, a CNBC contributor, Plexo Capitals, Lowe Tony. It's great to have you, Lo, Lo.

What do you think of the structure of this deal that NVIDIA is doing? It's not an all-out acquisition, but it's not that dissimilar. Yeah, it's interesting because some of these headlines frame the deal as a strategic. acquisition. But really, to me, this is more clearly an architectural admission. You know, most people think that NVIDIA bought Brock, but they didn't. They really captured a capability. And that's the architecture, specifically the LPU, without the regulatory friction of buying the whole firm. And they had to do that because of inference economics breaking the old math. What does that mean? What are they actually getting?

Yeah. So when you think about Nvidia, the GPU dominates training, but training is very episodic with big spikes. So inference is when people are actually using the models to execute chats with GPT, execute agentic workflows. And that is a different math because inference already costs 15x more than training over a model's lifetime. So that's really the math driving this deal. It's like the training attracts the attention, but the inference determines outcomes. What do you make of what they're paying here? I mean, this was, GROC was last valued at $6.9 billion in a September funding round. NVIDIA has, you know, according to our David Faber, $20 billion price tag on this deal. You know, some could argue as a drop in the bucket. Some could argue it's overpriced. I think when we look at NVIDIA and where they are right now, with the GPU, they were built for flexibility.

but they ran into the problem, and they knew this problem was coming, that inference is now starting to dominate. And so it would have been tough to retrofit the GPU. So this deal does make sense. It is expensive, but they have the money. Is it a defensive move to hold off competition here in GROC? Yeah, you know, I think look at it as, you know, it is slightly defensive. They're not necessarily late.

they are reacting. And I think we should go back to a comment that your prior guest made about Google and the fact that is vertically integrated. The core of that vertical integration is their TPU chip. Now, the founder of Brock, Jonathan Ross, actually built the original TPU or what became the TPU during his 20% time at Google because he saw this bottleneck coming a decade ago. So, NVIDIA is doing the same thing, right? There, they're integrating at the infrastructure layer, but under much tighter regulatory constraints. They can't buy everyone, so they're just licensing the capability. Right. So all in all, if you're, I know you invest in early stage startup, so not necessarily

a company like an Nvidia, but does it make you like Nvidia more or less? The way I think about it is when we look at Nvidia and the stock and the run-up, I mean, that reflects the training boom. We've seen all of these models execute on their training strategies and now they're starting to really focus on the ability for people to execute these models. So what this deal does is it protects NVIDIA stock for the future inference boom. Yeah, I mean, it was interesting earlier. We were talking to Jonathan Canter, the former DOJ antitrust chief, and he was saying it actually raises the red flags, even though it's a, you know, non-exclusive licensing dealer, whatever they're calling it, if they're trying to

take out competition and take out a key hire. of a company that could be bigger if it wasn't doing this deal. Yeah, and those are the things that are going to happen. You know, we've seen Alphabet slash Google execute one of these deals as well with Windsurf. I suspect that people will continue to push the envelope because of the regulatory nature of when these deals get scrutinized for being anti-competitive and monopolistic. We'll see. I think InVidio will be able to get this deal through, but I think when we're, we start to see more firms, especially the MAG7, try to execute these.

It's going to be a little bit tougher for them to be able to continue with this type of approach. Yeah, I mean, what's interesting to you and in your world right now? You're investing in these early stage companies. What part of the sort of AI value chain are you in? The great question. So we think about this simplistically in three layers. There's the infrastructure layer, which is where Nvidia is playing. There's the model layer, which is Anthropic, which is a Plexo Capital Portfolio Company, as well as Open AI Play.

And then there's the application layer. We believe the biggest opportunities are at the application layer. You could look at companies like Harvey that focuses on law, or you could look at perplexity that aggregates a lot of the models to execute a more friendly user interface. Those are the areas that we think have the biggest opportunity. Here's the challenge. A lot of these folks are building on top of the Anthropics and the Open AIs of the world. And we also see those labs or those model companies also wanting to move up the stack,

probably best represented by when you look at some of the vibe coding and when you look at any sphere which has cursor, cursor uses Anthropic and one of the biggest API customers. But at the same time, Anthropic has Claude Code, which is a lot of. also moved up. Why are these folks moving up that are on the lab side? It's because the margins look better once you get to the application layer, and they've really invested in all of this infrastructure, and they need more applications to amortize those costs. We'll leave it there. Thank you for joining us, Lowe, talking through the deal. And what's interesting, Lowe, Tony, from Plexo. By the way, NVIDIA CEO Jensen's Wong is going to speak at CES in Las Vegas.

A week from now, maybe he'll talk more about this deal. Still ahead. a tech bros brawl unfolding on the West Coast and on social media, how a new California tax proposal is targeting billionaire tech investors and entrepreneurs and why it's turning ugly, closing bell back in two. Welcome back, a proposed tax measure taking aim at California's tech billionaires, and the fight is turning ugly. Kate Rogers has more. Kate, what's the latest?

Hi, Sarah. So this is a one-time tax that would call for California residents worth more than $1 billion to be taxed the equivalent of $4,000. 5% of their assets. It'd be due in 2027, spread over 5 years in terms of payment. It is retroactive. It would apply to state residents as of January 1st, 2026, which is just days away. It's important to note, though, this tax proposal, not officially on the November 26 ballot, may not wind up there at all. But it is causing a very public battle on whether or not this will simply kill innovation and cause a talent exit. As venture capital is Peter Thiel and Google co-founder

Larry Page are considering leaving the state or reducing their California time. by the end of the year, according to reporting from the New York Times. Others, including investor Chmach Palahappati, have fired back on X, writing, quote, the inevitable outcome will be an exodus of the state's most talented entrepreneurs who can and will choose to build their companies in less regressive states. Gary Tan, president of the startup incubator Y Combinator, blasting the proposal as a, quote, unrealized gains tax that puts founders on the hook for becoming paper billionaires. Other states like Washington or Florida, for example, without income taxes,

could look more appealing for launching companies. Bill Ackman also saying he believes in a fairer tax system, but as opposed to wealth taxes, adding, quote, with respect to California's budget problem, the issue is not a lack of tax revenues. The problem is how the money is being spent. Representative Roe-Kana, whose district, of course, includes Silicon Valley, defended the ballot initiative,

saying that entrepreneurs will stay here in California because this is where the talent they need is concentrated, adding on X that Jensen wasn't thinking, I won't start this company because I may have to one day pay a 1% tax on my billions. He built here because the talent is here. I'm sure much more to come on this very hot topic. Sarah, back over to you. Yeah, and everybody's correcting him.

It's 5% according to the measure. And, you know, I guess it's not, Kate, billionaires just complaining about the government taxing billionaires. I mean, I think there's plenty of actually constructive calls here to make the tax system more fair. It's just about the government seizure of assets, particularly unrealized gains, which are so critical in terms of building a startup, right? And would that cause people to consider where they want to build their startup in the future? Will you go to a state that has a more favorable tax policy? And will this, you know, de-incentivize people from building companies here? Representative Kana says, absolutely not.

You know, that's a risk that he's obviously willing to take. But many top voices in the space weighing in and saying, yes, it will. Yeah, I mean, he said that he wouldn't miss them. I wonder if those words come back to bite him. Thank you, Kate, Kate Rogers. We'll see if it even makes it to the ballot. Up next to the outlook for the Fed in 2026, former Fed Vice Chair Roger Ferguson, standing by with his expectations for the new year.

Closing bell will be right back. Welcome back as 2025 draws to a close. All eyes remain squarely on the Fed. Here to discuss what the New Year could bring for the committee as former Vice Chairman of the Federal Reserve NCNBC contributor Roger Ferguson. And, you know, there's a lot of, there's a lot of drama with the Fed. And usually it's just, you know, will they raise interest rates? Will they cut interest rates?

Will they hold interest rights? But now it's like we don't even know what the makeup of the committee or who the chair is going to be. What do you think is the biggest wild card at this point into 2026 on the Fed? I think there are two or three wild cards. One is just the state of the economy. The data coming in has been mixed, shall we say. We've seen unemployment, you know, ticking up somewhat to 4.6 percent. percent, job creation slowing, wages slowing, wage growth slowing as well.

At the same time, we've had a GDP reading that even if you take out the noise, suggest a pretty strong economy with consumers leading away. So that's uncertainty one. Uncertainly two, as you point out, is who is the next chair going to be. And Uncertainly three, I think, is the process of bringing that chair in. Does it reinforce the notion of Fed independence or does it undercut the notion of Fed independence? So those are three things I'd be looking out for. What is the, what's the story with Fed independence?

Is there really cause for concern? That's an awfully good question, Sarah. First thing people understand is Fed independence was not a given. There was a big debate back and forth, ultimately settled in President Truman's office with the Fed Accord, Fed Treasury Accord, creating independent Fed in 1951. second point is there's always a lot of tension between the white house and the chairman of the fed of the fed uh point three though this is really unusual the degree to which that uh tension is spilled over into the public the degree to which the president has directly attacked the

intelligence of of the chairman and frankly then you know the legal attack um on fred independent so i think it is not a given i think it's likely to be uh handled well by the spring courts court. But then there's still the whole question of whether or not the new chair of the Fed will be able to demonstrate to the markets satisfaction, credibility around being independent of a president who says, you know, you can only be appointed chair if you agree with me. So you sort of alluded to the Supreme Court. January 21st, the Supreme Court hears oral arguments on the Lisa Cook case. This is the Fed governor that the president is trying to fire and there are questions about whether he can do that with cause.

What do you think is at stake on that decision? Everything. So if it's an unlikely event that the Supreme Court decides that a governor of the Fed can be removed under these circumstances, the entire question of Fed independence, I think, is open and up in the air. The Supreme Court has hinted that the Fed is different from other agencies where they've given the President the authority to fire people based on policy gifts agreements, which, you know, had been removed in the 1930s. So I think the odds are, and the market is acting as though the Supreme Court will recognize

the Fed is somewhat different here and work hard to create a really high standard before a president can remove a sitting governor. Yeah, I mean, there's that case. And then you said the other question on independence relates to the chair and whether they can demonstrate, I guess he in this case, because now that we know the four remaining are he's independence. I mean, I feel like this is a little bit overblown. because all four people that are in contention here are people who understand the Fed,

understand the economy, and more importantly, understand the markets, and the bond market really will tell the Fed if there's a risk that they're making a policy mistake. Don't you think? No, to be fair, I agree with you. I think any one of these four people get in, and I know three of them very well, they will recognize that, you know, in the long run, history will judge them by how well they protect the feds independence and how well they make decisions based on the incoming data point two it's not just the long run but as you say the market will be looking and if they make decisions

that are not credible in terms of maintaining inflation at a very low level and and maximum sustainable growth i think you'll see you know the market punish them but we should also be aware that you know not everyone will necessarily uh recognize that risk right away and so i agree with over the long run. The question is what happens in the first few meetings. Okay, so bigger risk next year. Is it going to be upside on inflation or on unemployment rate? I think unemployment's likely to continue to creep up a little bit, but I have to say, inflation has been running above the Fed's target for five years. The forecast from some Fed officials is inflation getting back to 2% three years from now. That doesn't strike me as increasing

Fed credibility. And we had a policymaker, a president of one of the Reserve banks, openly musing about the Fed gradually losing credibility. So, you know, I'm not one to say inflation is behind us, and I think they really need to be on their toes for that. No, it's just the jobs picture maybe looks a little bit more dicey at this point. It looks a little bit more dicey for sure, but part of the problem is we don't know what's driving that. So there's this tension between An economy is continuing to grow consumers that are continuing to lead the way and unemployment that's sort of gradually ratcheting up. And so that throws in the question is the labor market still imbalanced but somewhat softer. Is it a precursor to a rapid fall off or, frankly, is a reflection of an economy that's becoming more capital intensive and maybe even becoming more productive?

And so I think there's a tension there around what is they, quote, soft labor market really telling us about the underlying of the economy. Okay. Sounds like you're a holder if you got a vote in January, January 28. I'm absolutely a holder in January. You've paid me well. Okay. Roger Ferguson, thank you.

It's always good to talk to you. Thank you. Especially with so much going on with the Fed. Up next, we are tracking the biggest movers as we head into the close. Christina Portsenevola is standing by with that, Christina. Wow, we have a biotech stock that's seriously. on breakthrough status, airlines getting hit by holiday travel chaos, and crypto continues its slide. Those lubers when we come back. News alert here on Lulu Lemon, the company responding

to founder Chip Wilson's proxy fight and plans to nominate three independent directors to Lulu's board. Lulu Lemon saying in part they will evaluate Mr. Wilson's nominations. They actually responded saying that in the interest of avoiding a costly and distracting proxy fight, the board requested for Mr. Wilson the names of his director nominees to evaluate their qualifications and backgrounds, but Mr. Wilson declined to engage further. Now they say now that the names have been submitted, the board will evaluate his director nominees in due course in accordance with the board's governance process. So unclear whether there will be a proxy fight because the company is saying now that they are not making any recommendations to shareholders, but they will

in advance of the shareholder meeting. It hasn't been announced when that was. It was in June over the last two years. So potentially they could avoid a fight. if the board does agree with Chip Wilson's suggestions here for board nominees. Remember, he's not suggesting himself on the board. He has plans to launch a proxy fight with three directors. He's been complaining about the board for months now. The stock is down 45 percent so far this year. Watching Lulu up one and a half percent, just over 10 minutes here until the closing bell.

Let's get back to Christina Parts and Evelas for a look at some of the other key stocks to watch here into the close. Christina. Well, let's start with Praxis precision because that company is up about 11 percent after the FDF. granted breakthrough therapy designation for its essential tremor drug. BTIG also calling the stock a top pick for 2026, increasing its price target. Praxis precision medicine up just under 300% this year, not too shabby. Delta Airlines, though, dropping roughly around 2% with other airlines like United, Alaska, also in the red on your screen, likely due to powerful winter storms

that are causing major delays and cancellations during the holiday travel season. Finally, Bitcoin moving slightly lower after briefly topping the $90,000 mark overnight. The crypto space has yet to recover from a sell-off that began in late October. And that's already seeing crypto names like Robin Hood, Bullish, Coinbase, all moving lower as well. You can see a bullish down probably the most 2% lower. Sarah? Okay, Christina, thank you. Up next, we are charting the market in the final stretch of 2025.

Top technician Katie Stockton is standing by with her take. The Market Zone is coming to you next. we are now in the closing bell market zone cnbc senior markets commentator mike santoli and fair lead strategies katie stocked in are here to break down these crucial moments of the trading day plus diana olick standing by tracking the action in the housing stocks and that's where we will begin here diana we got some better housing numbers today for a change yeah we did home builder stocks though are getting nothing from today's better than expected report on pending home sales it was the highest level in that index for signed contracts on existing homes in nearly three years.

But you can see the home building ETF, ITB is down on the day following the broader markets. Big names like Lenar, Pulte, D.R. Horton, all off around 1% on the day so far. The builders are much more sensitive to mortgage rate moves, which we really haven't gotten much of today and to the broader economy right now. Also, a win for the existing home sales market, while it does show more buyer demand, it does not necessarily translate to the new home market, which are new homes are more expensive. It also shows the existing home market now getting more competitive again. The builders had been benefiting from those slower resales, Sarah.

Okay, Diana, thank you very much. Let's bring in Katie Stockton, founder of Fairlead Strategies. Mike is with us, too. Mike, just on the home builders, some of the worst performing consumer discretionary stocks of the year, Lanar, I'm looking at the year-to-date returns. It's pretty ugly, down 11 percent, Home Depot down 11 percent. They're at the bottom of the pack. They are.

Even on a two-year basis, you know, there's a very strong group along with semis. It was a really good kind of bellwether leadership area. I think the stickiness of longer-term rates, the need for home builders to subsidize new buyers by, you know, buying down the rate. And just, I think it's also tracking consumer confidence, which is not really correlated with overall spending levels, which has been resilient. But I do think it has restrained sentiment toward big durable goods type things. Plus, the cost side is not being, not helping them. just in terms of lumber and other stuff. So that labor demand, so I think there's a lot of things coming together

that's more or less having the group give back multiple years worth of excellent outperformance. And also, by the way, it's a warning that these deeply cyclical stocks, when they look super cheap on peak earnings, because they did, even at the highs, they looked really cheap. That's often not the time to bet big on them. I was wrong.

Lenard down more than 20%. I looked at it wrong so far this year. So, Katie, overall market, technical take. You know, we don't play so much into the historical trend. but Santa Claus rally is like a pretty consistent thing. I think 70% of the time the market's up. It's pulling back here from record highs. How does it look to you?

Well, it's funny because I do feel like these seasonal phenomenon are now anticipated by investors and they happen before they used to. So we saw a rally right up into when the Santa Claus rally actually is supposed to start, which was on Christmas Eve. And it's usually the last five days of the year into the first two of the new year. So I'm not sure it'll be the same this time around. really rely on these seasonal phenomenon for our decision-making. But listen, it's not bad to see the S&P 500 having reached a new high. The catch is that we have tech-heavy benchmarks like

the NASDAQ-100 for one, having not done the same. So we don't have that great participation from the technology sector or higher growth stocks in particular. And I do think that they're essential to the next substantial upleg. My guess is that we probably have more corrective action in store early in Q1, and that'll be a nice opportunity where we're more interested are in the likes of the home builders, actually, areas of the market that have done a bit worse on the either sector group level, because looking at that rotational work, they look a little bit better. So like what? What sort of opportunities do you see as a buy into the next sell-off? We're looking at REITs and utilities right now in the near term as having, I guess, signs of life

in relative terms and also better absolute setups than some names that have already seen good runups. I just pulled up ITB while you were talking, which is the Home Builder ETF, that actually has a counter-trend signal supporting a relief rally for home builders. So anything really that's outperformed over the last month and a half or so, I think looks more vulnerable in the very near term to underperformance if we're talking about relative to the S&P 500. Do you count gold and silver in there? I've had pretty stunning run-ups. They have, and today definitely gives one pause and adding exposure. But listen, the long-term and the intermediate term uptrems are still very strong for the precious

metals, even for copper. And yet this short-term downturn that we have, really as of today, does impact the charts to some degree. For example, silver has now an outside down day, which is like an engulfing pattern on a candlestick chart, and that usually does see some downside follow-through. So the messaging would be that investors or prospective investors and precious metals might want to wait a little bit. Okay, Katie Stockton, thank you very much for the tips and the technical take, Mike, as we head into the final moments here of the training day. I do want to call out that you have a very big interview tomorrow here on closing bell.

Pretty exciting stuff. So the individual who's come to be known as the mystery broker, this is a source of mine. It goes back 16 plus years. He first started emailing me. I've kind of written about him in column. I've kind of updated people on social media. That's a pretty big calls. He's revealing himself.

He will be right here with me as I host Closing Bell tomorrow. For the first time, we're going to unveil him, take his identity. But also, he actually has a pretty provocative market outlook as well. So tease that up. We'll see how it goes tomorrow. I'm very curious because everybody looks to you for market wisdom. So for you to have a source that you consistently can fight in and rely on. I think he represents an interesting way of viewing the market.

Look, I'm not going to say it's been foolproof, but he's called some very big turns, including in 2009, and he had been bearish in 2007. That was all how it started, how I presented his outlook. And so, look, we'll go through some of the record and all the rest of it. But I do think it's illuminating. It's nobody anybody's ever heard of, so don't expect to see some kind of a big name show up here on, you know, Warren Buffett's second to last day as CEO of Berkshire Hathaway. But we will have that to talk.

Thursday is the last, that's it? Yes, yes, so he's winding that up. Look, he's always been somebody who said, expect new highs eventually, and we have a bunch of them to send off Warren on Wednesday. We'd point out, we've been at this level, you mentioned the beginning of the Santa Claus

rally period, we've been at this level for a couple of months. This market's not overextended. It's rotational, it's low momentum, it's kind of handing things off, and it's also not overextended going into next year, so maybe that's a net positive. Yeah, sort of marching in place up 17, almost an 1 half percent for the year. That is the S&P.

Now back up about 21 and a half percent for this year. But going out today with small declines. Now Jack down half a percent. Most of tech is selling off, except for Micron, which is hitting a new high today. And some of the defensive is also working. That's it for closing bell.