Closing Bell - Closing Bell: 12/30/25

Episode Date: December 30, 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.

Thank you, Brian, and welcome to closing bell. I'm Mike Santoli in for Scott Wapner. This make-a-break hour starts with stocks hovering just below record highs as the Bulls work to preserve a third year of extraordinary gains, and the Santa Claus rally hangs in the balance. Here's your scorecard with 60 minutes to go in the session. The S&P 500, as you see, nearly flat, sitting on a 17% plus gain for the year. The NASDAQ pretty much unchanged as well.

The Russell 2000 is the underperformer, just a slight defensive tone there. The Russell off by half a percent, a little bit of life and energy. Otherwise, it's pretty much churning in place this market. Coming up, the big reveal, my longtime source for sharp market insights, who's come to be known as the mystery broker, will be here in just a few minutes to tell his story and offer a provocative market outlook. But first, our talk of the tape where we ask whether the market's two-month sideways action means the bull market is stalling or merely resting.

Let's ask Trivariates, Adam Parker, Wilmington, Trust, Megan, and Wells Fargo's Scott Wren, Adam and Megan, RCNBC contributors. And thanks to you all for helping to wrap up the year for us. Megan, let me start with you. I mean, the S&P is right where it was a couple of months ago. There's been some subtle rotation in favor of cyclicals. So it's kind of slowed down, but it's obviously still in a decent position. Is this giving us any kind of a preview for what you expect into next?

next year. Thanks, Mike. I think it is. I think as we look towards next year, we're expecting a little bit more volatility than we saw, at least for the first two-thirds of this year, a little bit more focus on the source of spending when it comes to tech. We started the year where it was really just all about the AI trade, and investors didn't really, weren't really deterred by the amount of spending coming from those companies. But now it's really about whether that's being spent from cash or debt markets are being tapped. So I think that's a shift that we're seeing. I think that will lend itself towards more of a focus and better performance from higher quality

names, which really lagged last year. But I do think to your original setup, I think this is a healthy sort of churn as we reset for the next leg of the bull market, which we expect to continue outside of what we still have as a decently high recession risk. right yeah so that's the interesting maybe contrast there or at least juxtaposition of the macro outlook with how the market is set up adam i feel like you always have a pretty good feel for what the market's rewarding what themes are kind of coming out of the action in terms of how what it shows us about investor preferences so what would you say right now are kind of top of mind in terms

of what the market is is revealing hey mike thanks yeah i mean i mean I think a lot of it comes down to margin expectations and estimate achievability. And the reason I say that is we just came through a stretch in the last six months of 2025 where the penalty for companies missing estimates was really harsh versus history and much worse than the reward for beating. So it didn't matter. Expensive stocks that missed went down the same amount as cheap stocks that missed. So it wasn't valuation that mattered.

It was missing that matter. So we kind of are looking now, kind of scrubbing the 2026 estimates, and they look pretty optimistic. So I think the problem or the challenge as we kind of rotate the clock a little bit is, I think the probability of multiple expansion is probably lower than the probability of multiple contraction, and we have high estimates, and we have a bullish set of sentiment. So it's not the same setup as it was, you know, six, nine months ago. And so is there a way? Yeah, I mean, I see you're scrubbing the numbers, but are you basically trying to isolate where the earnings achievability seems to be, or is you just kind of looking at the trajectory of forecasts and, you know, figuring that the revision story is going to tell you what you need to know. Well, you know, we do pretty quantitative stuff at Trivary Research. So one of the things I like to do is look at what we call the incremental margin or the margin on revenue above today's level.

And we do that by doing a regression between the change in sales and change. in income. We see what the company usually could do for their margin on new revenue. And we compare it to what's in the estimates. And we use that as sort of a barometer for estimate achievability. Obviously, margins come down to revenue. And that's pricing and mixed. They come down to costs, which are labor, materials, logistics, currency, depreciation, et cetera. I'm a little worried that you've got mid-teens earning expectations. A lot of companies expecting margin expansion. I get AI productivity is going to go from hitting 5% to maybe 15% of the SB 500, but the bar is not as low. And what was

unusual about 2025 is estimates came up. I mean, they're higher now for 2026 than they were in the middle of the year. That's a pretty unusual pattern, as you well know, and have been writing about for years. So I think that the mix here is company by company. I think health care estimates do look more achievable than average. I'm a little bit worried that in the consumer discretionary sector as an example, every single industry in there is expected to have accelerating revenue despite the fact we've got very low confidence if you look at Michigan consumer and other things. So I think it'll come down to stock by stock, but I'll say health care looks a little better to me than discretionary as sort of, you know, a first, a first

glance. Sure. And Scott, you know, for as much as I was talking about how the market's kind of slowed down and it's been mostly treading water, we are on track still. for December to be the eighth straight calendar month of gains for the S&P 500. Now, those streaks of consistent strength tend to be a mark of a pretty sturdy market, although it's hard to extrapolate it in the short term. So how do you think that all feeds into January where we are going to get, you know, maybe these hurdles from tariffs and, of course, you know, the Fed and who knows maybe if another government shutdown is going to matter? Well, you know, I think Santa came a little early this year. That's one thing. And it doesn't surprise me that we've

stalled out here a little bit. But, you know, when you look ahead, for me, the S&P 500 is where it's at because of the intended AI cap-back spend, consumer spending was better all year long than a lot of people thought it would be. And earnings, I mean, let's face it, you know, earnings estimates coming into the year, you know, we smoked the earnings estimates. I mean, we did a lot better there. So, I mean, I think that's why the S&P 500 is where it is. And if you look forward, and if you believe like we do, that, you know, you're going to have a modest growth environment and moderating inflation, you know, that just without knowing anything else, is usually pretty good for stocks and good for risk assets. And I think that the likelihood

that, you know, earnings estimates, they're broadening out across a lot of different sectors are not just concentrated in a couple of sectors like they really had been for a lot of the last two years. So I think, you know, broader earnings participation, broader price participation from the other 493 companies that aren't in the Mag 7. And so I think, you know, you get a little bit better growth out of the rest of the world. And, you know, the 7,500 number we have out there for the S&P 500 at year in 2026. I mean, I think that's a very doable number under those circumstances. And then quickly, you say the S&P is where is that, it's at. Do you mean, Scott, relative to of non-U.S. indexes? No, just, you know, just really, Mike, at the, you know, we're basically

at a record higher, awful close to it still. And the way we got here, I think, you know, was just, you know, the first and second quarter in particular, all these companies did was beat estimates. And then all they did was not just say, yes, our AI cap-back spend is going to be the same. They bumped it up. And so, you know, I think that's a big thing that really pushed the market. And like I said, consumer spending, that's, you know, that's better than what we had expected all year. And then, you know, we're going to have these gigantic tax rebates. And we know that I don't care what consumers say. If they've got jobs and money in their pocket in the U.S., they're going to go out and spend it. So I think you can pretty much rely on that, at least going

into the middle of the year. Megan, how does that fit in with this sense that, okay, we're going to get a little bit of maybe a bump, at least temporarily in consumer activity early next year? but you still think that maybe because of the jobs market, that 45% chance of recession still hovers out there? Yeah, it all comes down to the jobs market for us because that is really the lifeblood of the economy. Our base case is that we continue to see the unemployment rate free fire, which would not be consistent in most circumstances with a recession. You tend to see a spike in the unemployment rate, but the labor market is, of course, a bit of a lagging indicator. it's circular. That's at the end of the day, the economy is somewhat circular. So we are, I would call that an orange flag. We are on heightened alert, but I completely agree that the consumer has

surprised to the upside. I think the first quarter might be a little bit of a giveback because people, you know, making it work, if you will, through the holiday season and companies making it work as well in terms of trying to sort of paper over or hide some of the tariff impacts and maybe push them into the first quarter. But as we get it, into the second quarter or even the end of the first quarter, you are looking at that stimulus. You are looking at, we think, more fed rate cuts, so easing borrowing costs. And then you're lapping the uncertainty from tariffs. So it does become a more favorable outlook.

We're watching credit conditions, which defaults, delinquencies, things like that. They were increasing. They stabilized. That's a good thing. And that's also why we continue to like banks in our portfolios as well. Gotcha. And then Adam, you mentioned going company by company trying to figure out which ones can can make the numbers. Does that imply that at long

last, there actually will be a greater opportunity set for people trying to beat this benchmark? Well, look, I do a lot of work on risk management. I think you know that we have many institutional investors that send us their portfolios to do custom risk work. And I think the challenge is just you've got these eight stocks that are around 40% of the S&P. If you adjust for their beta, they're over half. It's very hard to, you know, get, get it right given how well covered they are and how that, you know, remember nine months ago, Google's terrible, meta's awesome. Now three months ago, Google's awesome, meta's terrible. Like that narrative changes so quickly. So we've been sort of thinking, you know, let's keep the

market weight that group. And so if you don't let them hurt you, don't let them help you. And so given what's happened underneath, heavily shorted stocks going up, poor free cash flow problem is coming. We think you have to own a lot of stocks for risk management just to prevent, you know, outsized underperformance during these, you know, regime. So if you're doing risk management, then I think you have to make big bets where you're confident where company-specific risk is high, where you have an edge in the stock.

And so, look, I think it's a little bit of this misnomer of like, oh, only seven stocks worked or eight stocks worked. I mean, the truth is lots of stocks outperformed by 20%, lots lagged by 20. It's just that these gigacab companies that are, you know, a trillion or larger. When they go up 20 or 30%, you can't find the $2,300 billion anywhere else. So there's plenty of,

opportunity. I think it's going to be an amazing stock picking year again in 26 and that's what most of the institutional investors are focused on. Yeah, dispersion is all they can really ask for. We've had that. Guys, really appreciate it. We'll have to leave it there. Adam, Megan, and Scott. Happy healthy New Year. See you as well. Thank you very much.

Have a happy new year, Mike. Thanks. All right. Same, Scott. Thank you. And let's send it over to Christina Parsons for a look at the biggest names moving into the close. Hi, Christine. Hi, Mike. Well, let's start with mining stocks because they're on the rebound after yesterday's dramatic drop for metals like silver, gold, platinum. The CME just yesterday raised margin requirements for precious metal contracts, forcing traders without cash, extra cash to actually sell,

but we're seeing a reversal miners like Newman, Freeport. You can see also BHP Group, all in the green, BHP up of 1% Newmont probably up to right now, so the highest of the group. Switching gears, Malina Health Group, getting a boost from Michael Burry's substack post online calling the health insurance company a winning stock pick. Burry says Molina has a clear path to double-digit long-term growth and compares it to Warren Buffett's previous investment in Geico. That's why shares are up over 3%. So a vote of confidence.

Finally, shares of Warner Brothers Discovery are up slightly after Bloomberg reported that it plans to once again reject a takeover bid from Paramount Skydense. CNBC's David Faber reported this morning that Warner Brothers could reject the offer by Friday. Shares up half a percent. Mike? All right, Christina. Thank you so much. Thanks. Up next, the mystery broker revealed.

For the first time ever, you'll hear directly from a long-time secret source of mine. He has nailed some of the boldest market calls over the years, and today he has a big new call heading into 2026. Don't go anywhere at the mystery broker revealed live at Post 9 after this quick break. We are back on closing bell. Suspense ends now. After 16 years, the man who came to be known as the mystery broker has been a source of mine since 2009 when I was a columnist at Barron's. He gained a devoted following through my columns and social media posts, updating his sometimes provocative and often prescient market calls. His extensive strategy memos combined deep knowledge of economic history and market patterns with an utter lack of interest in publicity until now. Joining me now is David Snyder, who is founder of Journey One Advisors, a financial advisor since the night.

1980s as well at other firms. And yes, the mystery broker, Dave, it's great to see you. And actually, it's great to finally meet you because one thing we have to mention is we've never actually met in person. Exactly. And I'd love for you to just really introduce yourself in terms of, you know, where you're from? All I know is you were from the Philadelphia area, worked at all these different brokers firms and wrote these very, very thorough investment strategy pieces. So where'd you come from? How'd you come by your process? So I am from Delco, born and bred, which is about 15 miles southwest of Philly. Yep.

You know, we, home of Wow, Wow, the Huggies, and of course we say water. Sure. You know, Kate Winslet had, in a movie in 2021, could not get the Delco accent, so she had to go for training for weeks at a time. But anyhow. Yes, yes. So anyhow, yeah, so I've been in the business for 40 years. you know, it was with several different brokerage firms and then started my own, you know,

investment advisor as a RIA two years ago. So I always, I went to law school and then I became, I practiced law for a couple of years. I was always interested in the investment field. So I went and got my CFA designation. And so I've been, you know, I've been writing a lot of research reports and, you know, all the way back to 1986. I was going to say, so you entered the business in 86, kind of a fascinating moment to get into it, right?

Raging bull market crash, all the rest of it. And, you know, we started to correspond. You sort of initially sort of sent your thoughts to me in 2009, but also referring back to pieces you've done at 07, the top right before the financial crisis that you were kind of anticipating. And in 2009, I think why it took hold was because you had high conviction that the market low in March of that,

year was real, probably wasn't going to be tested. The rally was off and running, and I think it was very contrarian at the time. So how did you come by a lot of those conclusions? I mean, I'm not going to make it like it's always been the correct call at every turn, but what are you combining in your research? Well, I mean, first of all, before that, I called the exact top in October of 2007. Of 2007, yes. Yeah. So basically, in March of 2009, just everything from valuation, from just about every metric on valuation was really at generational lows. You know, you do use technicals as well. And so we had a really strong rally off that rally. It was unlike the other rallies were like 15%, 20% off the lows. That

was like 30% within a three-month period. This is a very interesting fact. Nobody knows. But One of the safest times to invest in the stock market is when the S&P advances 30% within a three-month period, any time within that three-month period. The next nine months, you get very positive returns. So the rally technically was completely different. It just also, there are a lot of the leading economic indicators started to turn. You had a lot of coincident indicators that were starting to turn. sentiment was completely washed out. I mean, if you look at the AI investment sentiment

in late February, early March, it was literally at all-time lows. So there were just, there was a multiple of technical, fundamental reasons. We had the Tax Act that was going to, you know, stimulate the economy. So, yeah, there were multiple reasons. Sure.

Do you want to get to how you see things, right now, at least in a big picture way. You've sent a 20,000 word, incredibly comprehensive take on where we sit now in the markets. And I think what's fascinating is you're seeing a lot of these indicators that this long-running bull market we've been in since 2009 is in a latter phase. So describe some of what you're spying. Okay. So I really, right now, for next year, you know, right now it seems positive for everything, you know. But, you know, secular bull markets, the last two from 49 to 66 and from 82 to 2000, they, the compound annual returns were about 15 to 16 percent on a real basis.

You know, in the market for the last hundred years has done about six and a half percent. So this, since March of 2009, we have compounded at 13.7 percent real returns. So we're almost at that model. And we're now at 16 years and 10 months. Those were 17 years, I mean, the 49 to 66 was 16 years in seven months. The 82 to 2000 was 17 years and seven months. So we're right in that time period. But I mean, everything, in my opinion, is within two years, this is all going to end.

We, you know, we have near-record positioning 45% of assets of individual assets. assets are now in equities. 70% of 401ks and defined contributions are in equities. These are all-time records. We have a lot of market concentration is a big thing for me. So a lot of people are looking for this, broadening in the market. But if you can go back to the 1800s,

when you have this kind of concentration, you can go back 1905, it was right before the 1906 bear market started when when concentration peaked. In 1937, concentration peaked, and that was the second wave of the depression, the market went down 50% the next five years. 1964 is about 18 months later.

The bear market, the secular bear market started in 1999. So we've had very consistent when you get really high concentration. It's not the high concentration. It's when the high concentration actually peaks. So people that want to see a broadening in the market, Be careful what you wish for, because in the past, it has always been painful for the entire market. So, yeah, so the market concentrates. And the high concentration comes with elevated valuations, which it seems as if the street has just made its peace with them.

And they're saying, oh, you know, the companies are better quality and all the rest of it. Well, that's fascinating because, you know, the PE went from 9 to 22, from 2009 to 22. It wasn't linear, but it would average one. multiple point. That's just the way bull markets make. I could make a really good argument. 2012, we were at 11 or 12 multiple. And we had 2 million job gains that year. We had 50% earnings growth all. The banks had all recapitalized. The sovereign debt crisis had ended in Europe. We were, you know, we were growing GDP at like 2 to 2.5%. And we had 11 or 12 multiple. By the way, and also profit margins and earnings before insertion taxes, margins

were at all-time highs. Yet we had 11 or 12 multiple. Today, you know, we have a 22 or 23 almost double that. So it's more the status quo. It was like the way the market works, it just doesn't go from a 9 to a 22 multiple. It does it over a multi. That's why you have these 15 to 20-year war markets. The same thing on the other side in bear markets, you know, when we went from 2000 to 2009, the PE multiple was just contracting it to hire lower highs and lower lows all the way through. But there was, so I guess what I'm saying is that people accept the status quo. Right. And they don't really take a look at historical.

I mean, there has to be a reason we're going to be, you know, they say return on equity is higher. Well, return on equity is always higher at the end of the secular bull market. And also, return on equity is really overstated because of all the buyback. When you buy back stock above book value, instead of reinvesting it in the business, you get, you know, you get a depleted book value. Yeah, so return on equities are definitely overstated a lot of these. But also, if you get a high return on equity, you have a really high bar because if that return on equity starts to go down, your earnings worth is going to go down.

So, you know, all those, we have, you know, one thing is junk buying these spreads. If you use the Bank of America adoption adjusted yield spread, hit two and a half percent in January. It's only been that low twice. In September of 97 and in May, I mean September of 1997 and May of 07, in both of those occasions, we're only, you know, months or two years away from a secular bare market. We have, you know, unemployment near historic lows. We've had unemployment under 4% until this year for like three, three and a half years. That's the most since the early 50s. It just doesn't, it goes high.

And you measure that when unemployment's at extreme lows as it was a few years ago and equity evaluations are high, that's just like a tough starting point. I call it a toxic combo. We've had the toxic combo four times. We had it in 2000, I mean, in 1929, 18 PE with the unemployment rate below 4%. We had it in 66, 69, and in 9%. 99, that same combo. Absolutely the worst 10 to 15 year returns after those four times. We actually hit the toxic combo in December of 2019.

So so far, you know, the returns have been slightly above average on a real return basis. However, you're talking about 10 to 15 year of time frame. And so, you know, I still think it's still relevant. Yeah, that implies. So we've gotten pretty good above average return since, in the six years since that signal, which means that over the 10 or 15 years span, things have to probably get pretty rough from that. Exactly. To make up for that, you're probably going to have a very rough period. I mean, you don't want to, I mean, the worst time to invest is when the unemployment row is at the low,

because you're not going to get aggregate hours going up because, you know, the participation rate is already at all time highs. And, of course, now we have the immigration and the birth rate in, you know, You know, I've always, you know, GDP is just productivity plus, you know, increase in the labor force. Right. And we, the demographics are so bad now. I don't see how we get more. Basically, GDP is going to be productivity growth for the next five to ten years.

We will get more deaths than bursts in the U.S. by 2030. So we have no immigration hardly, unless that policy changes. So we're totally dependent on productivity. And, of course, nominal GDP growth since 1935. 47 has been somewhere around 6.2%. Earnings growth in the S&P is 7.5. So there is just a very strong correlation between the two. You can get out of whack for a while like we have in the last 10 or 15 years.

And that's a big part of that is because the labor share of revenue has gone from, you know, 63 to 57%. But that's not going to continue. I want to get to, you mentioned that for the next year, it's tough to see. how you get that critical reckoning point. Well, yeah, because the catalyst has always been tighter financial conditions and higher interest rates. So it's tough, it's difficult to see how that's going to happen without that.

And right now it doesn't look like rates, especially the Fed, are going to go higher. If anything, you know, the worst case is they stay even. So, yeah, so I'm always looking for that catalyst. And then how you, what are you kind of looking to in the market right now in terms of where there's opportunity, where you would kind of feel as if things are being ignored? Well, the problem with, you know, small and mid-cap are, you know,

I don't think they're really cheap, but they're reasonably priced, but if you use it like the value line arithmetic index, which they have a three to five-year potential, which has actually been a really good guide over the years. That, and those, you know, that's 2,250 companies, so it's very broad, a lot of small mid-cap. That's actually in the top 20% in valid valuation. So even that, which isn't just big cap, is, now that, in March of 2000, that was in the bottom 20%.

And that's how small and midcaps could rally for two years. But by the way, you know, the S&P, small and midcap do not dictate how the S&P does, but the S&P can dictate how small midcap, because in 2000, small and midcap did well until 2002. And then they got absolutely destroyed when the S&P got destroyed. And so if you look back from March of 2000 until March of 2003, in a nominal basis, you didn't make any money in small mid-cap. But this time it's not even as good as that. At least you could point back then that there was really, really, you know, undervaluation in some areas.

Is there any way that the AI investment theme, the transformation that's going on, is somehow a path out of some of these challenges? Yes, eventually. But it's just going to, I mean, every secular bull market has a new revolutionary technology that captures, you know, the enthusiasm of investors. I mean, we had the railroads in the late 1800s. You had the, you know, in the 1920s, automobile's ownership went from 20% to 60%. You had electricity, replace steam.

And what happened in the Depression? All the auto companies went under. And then they also had a big return after that. But in the 60s, you had integrated circuits, mass production. You had aerospace. We were going to the moon by 69. It was a brand. You had the miniaturization of computers.

You had an incredibly bright first real technology rally. And so what happened completely blew up in 69. And it took five years, just horrendous returns for the next five years. And then, of course, we had the Internet bubble. So we have AI. Yeah, it's going to be phenomenal. But every new technology after, and it's really interesting, it doesn't wait till like many, many years. It seems to happen like in the first five years that you get the bubble and then bursting. So, I mean, there are just so many things that can go wrong.

I mean, you got, you know, you got the returnal investment hasn't been proven. You have, are they going to get enough power from the data centers? You know, you just have so many things that could go wrong. And you know that one of those things is going to go out. Just one of those things goes wrong and everything blows up. You have China, you know, they're 20 times more efficient on their training, their language models. Who knows that somebody might, and the capital may not seek out cheaper, more efficient ways to go. But it always ends up blowing up.

And we front-loaded, obviously, a bunch of things. And then, you know, the other thing I want to point out is one thing I really watch closely is margin debt. Now, everybody thinks when the S&P is up and margin debt's up, they think it's, but no, it's really, the really negative part is since, this is year-over-year-over-year-in October, margin debt has been up 40 percent, the S&P was up 18 percent. So that's almost 2,000 basis points. So we've never had, every time in the last 30 years, we had more than 500 basis points

of margin debt year-over-year. exceeding the S&P. It happened in 2007. It happened in, I mean, 1999, 2009, 2009, 2007, and 2021. And within six months after that, you had a complete washout. And then crypto, I'm really watching that closely, because that is a three to nine months, three to ten month indicator. I mean, crypto peaked in January of 2018. and we had a bare market in October. Right. And then in 21, it peaked.

It had kind of like a double top in April and October, and then 22 came. And, you know, the four-year cycle, which I still believe in, would mean that if October really is the peak, three to ten months from there would put you anywhere from February until the summer as a really dangerous period. I mean, all... A dangerous time for a possible top. All excellent stuff to flag.

Dave, really appreciate it. We can certainly go on. I know you got plenty more. But I'm so thrilled you were able to come here, and thank you very much for doing it. We'll talk again, and maybe next time we hit the, I don't know, the Phillies roster construction. Oh, yeah. It's a lot we're going to get too soon. Dave Schneider, I really appreciate it.

Thank you, Michael. I really appreciate it. All right. Well, coming up, fresh reaction to today's Fed Minutes with former Fed Governor Frederick Mishkin, what he sees in store for inflation, the economy, and potential rate cuts in the new year. Closing bell. Back in two. We are back on closing bell.

The just-release minutes from the Fed's last meeting show a deeply divided central bank with a tight split voting in favor of a rate cut here now with fresh reaction, former Federal Reserve Governor and Columbia University Professor of Economics, Frederick Michigan. Professor Michigan, so I guess maybe no surprise we have a bit of a split committee. Some disagreement. Is this just the natural outgrowth of, you know, rates being not too far from neutral and being far of the mark on either. mandate target, or is there something else about the kind of obstinence of one side or the other? No, I think it's very reasonable at this point to have a split. I mean, I would tend to be on the hawkish side. I mean, because of the fact that inflation is still above the Fed's target, and it's really slowed down its progress towards getting towards the target. But also, the labor market's been weakening a little bit, but the economy is still pretty solid. So when you put all

those things together, it's sort of a 50-50 type deal. You know, I would sort of lean to not cutting rates. Probably might not have even wanted to cut rates at the last meeting because I'm a little bit more hawkish. I think the inflation concerns are serious, and I don't see the progress that we should have. But the other hand, if the economy could weaken a lot more,

which is a real possibility, then in fact you would need to cut rates. So this is showing a committee that's actually responsible in thinking hard about the problem, and that it's not a slam dunk either way. Does that also mean, I know this maybe is counterintuitive, but does it also mean that the stakes are relatively low? In other words, if they wait another meeting or if they do decide to cut, if you're that kind of close and it's give or take either way. I just wonder if the risks of the next move are not that great.

You know, I don't know if the stakes are always there. I think that one of the big issues, however, is that the independence of the Federal Reserve is certainly very much in question right now for very obvious reasons because of the Trump administration's attitude towards the Fed and the fact that we're going to get a new chair not too far in the distant future. And that's where the stakes really are very high. So, you know, you always have an issue whether you move 25, this meeting, or that meeting, you know, you can always fix it.

In fact, the Fed frequently has. Indeed, one of the things that's actually unique about this Fed, which I like to call the Powell doctrine, is that they'll actually move very fast and sort of admit they made a mistake. So there have been cases where they didn't move, and then they said, oh, we've got to move 50 basis points. That's actually very unusual in terms of recent Fed history. And I think it's a good thing, not a bad thing. But the real issue is going to be whether, in fact, the markets start to believe that inflation is solidly grounded, that the Fed is committed to keeping the inflation goal of 2%.

We always describe this as anchored expectations. That's key to not only getting good performance in terms of inflation, but good performance in terms of the economy. And the Fed actually, this has been something that's built up over the last 20 or so years, has been very successful for the Fed. And indeed, now we're in a situation where we don't know how that's going to play out. And that may affect the way the Fed is making decisions because it doesn't want to look like it's weak

and willing to cave in to a president and want to slow. lower rates. And that could be a part of the important factor. And that's more to me the big stakes. And is, are you reassured at all in terms of how the market has treated those questions to date? In other words, long-term yields are not really blowing out to the upside. Market-based inflation expectations have been relatively steady. In other words, it doesn't seem like there's an alarm being sounded about either the way this Fed or the next chair will behave. You know, but that could change. I mean, you know, this administration throws us a lot of wild surprises.

I mean, we're living through wild and crazy times. It's exciting in a way, but also very nerve-wracking. And we just don't know. I think that your markets do turn on a dime when there's new information. And so we have to see not only who the new Fed chair pick, which to me is more important as how the new Fed chair will act. So, you know, there's always this debate that's somebody independent, not independent, whatever. The proof of the pudding is going to be when they actually are making the decisions,

and they do have the protection of independence, as long as the Supreme Court upholds that, and to see actually how they behave. When Fed chairs actually show that they're not serious about controlling inflation, bad things tend to happen. We call those inflation scares. For sure. We have seen those. Frederick, Michigan, appreciate the time today. Thank you. My pleasure. Happy New Year. Up next.

We are tracking the biggest move. as we head into the close, including a big call on one cyber name heading into the new year. Closing Bell, be right back. Just under 10 minutes, told the closing bell. Let's get back to Christina Parks and Neville for a look at the key stocks to watch into the close. Christina. Mike, let's start with shares of Intel because they're up about 2% after Nvidia finally closed its $5 billion investment with the company. The deal was announced in September, but it brings the chipmakers together to co-develop PC and data center processors.

That's why you're seeing shares up almost 2%, but on the year Intel up 86%. Let's move on to CrowdStrike now. Shares are moving slightly higher. We want to call it that, but after Wed Bush called the stock a talk pick for 2026, analysts over there highlighting its role in the growing intersection of cybersecurity and AI, making it a well-positioned leader going into the new year. So that is why they like this name. And then finally, Boeing is continuing its trend higher about almost 1% higher

after the U.S. Air Force awarded it an $8.5 billion contract to build fighter jets for Israel's military. The announcement came after President Trump met with Israeli Prime Minister Benjamin Netanyahu yesterday in Mar-a-Lago. Boeing up 24 percent on the year, Mike. All right, Christina, thank you very much. Up next, a big deal in the AI arms race today. The details when we take you inside the market zone next. We are now in the closing belt market zone. Ed Clissold of Ned Davis Research is here to break down these crucial moments of the trading day.

Plus, Mackenzie Sagallo's on a mega deal for META and Christina Bartonevolo is watching the chips on some new reporting out of China. Matt, kick us off with more on this meta deal. So my shareholders are applauding this one, meta adding $18 billion in market cap on a reportedly $2 billion deal for Manas, a Singapore-based developer of general purpose AI agents. a purchase that is more than paid for itself nine times over in a single session. The agent is able to execute complex tasks like market research, coding, and data analysis, the kind of tools that let small businesses punch above their weight. Meta saying in a statement that the acquisition is aimed at accelerating AI innovation for businesses,

a product line, already drawing $10 billion a year. Now, Manus went viral this spring when it launched. People were calling it China's next deep seek moment. The K-Web was gaining. the MAG 7 was selling off, investors were questioning whether USAI leadership was as secure as they thought. Now those trades have completely reversed. And as for meta, analysts are calling it a strategic win, saying it has the makings of another Instagram or WhatsApp-style home run. And Mark Zuckerberg, with 60% voting control, doesn't need anyone's permission to make these bets, Mike.

At all, and for double the price of what they got Instagram for, although that was many years ago, Mac, thank you very much. Let's get to Christina, who is watching the chips following some new reporting out of China. Well, China just escalated its semiconductor fight with a new mandate that puts billions of dollars at risk for American chipmakers. And this is according to Reuters, Beijing is requiring chipmakers to use at least 50% domestically made equipment when adding new capacity. Of course, there's caveats and waivers, but applied materials, lamb research, and KLA are potentially the most exposed. China accounts for roughly a third of revenue for these companies. We're talking about $20 to $30 billion in combined annual. sales now at risk as Chinese fabs must choose domestic suppliers. So this is part of Beijing's

bigger push, chip self-sufficiency. China's competitor to Taiwan semi-Smik, SMIC, is making advanced 7-nometer chips for Huawei and targeting even more advanced chips by late 2025. You have memory makers in China, YMTC, and CXMT that are closing the gap with Samsung and SK. Hynix much faster than expected. So this 50% rule shows the trade-off, Mike. Export controls keep advanced technology out of China, but the entire U.S. semiconductor industry pays in lost market share from the world's largest chip consumer, something Jensen Wong from Nvidia definitely, you know, loves to mention quite often. No doubt about it, early and often. All right, thank you, Christina. Let's bring in Ed Klissold as we head into the close. So, Ed, we have this market

that not far from the highs, but also not far from levels. The S&P first got to a couple months ago. It's not really accelerating higher. I guess the question is, do you still give the bull market the benefit of the doubt going into next year? Yeah, Michael, we do. Even though the market's consolidated, you know, after a great run earlier in the year, we had a six-month period after the Liberation Day lows. That was really something we hadn't seen since a pandemic. So some consolidation is actually warranted here. Look, if you look at the economy, you know, growth, is still positive. The Fed is still fairly friendly. Earnings growth is positive. And this consolidation has knocked some of the excessive optimism off of the bulls. And then finally,

the technicals are still quite positive, despite the consolidation over 60% of stocks above their 200-day moving averages. The advanced decline line, the running total of stocks that are up on the day versus down the day, hit a record high on December 26. So you put those things together, you know, decent economic growth, good fundamentals, sentiment, not overly optimistic, and strong technicals, it's a reason to be constructive on the market heading into the new year. Are there reasons? I know you kind of track all the different patterns and cycles to worry about the whole midterm election year effect. Yeah, so as we get deeper into 2026, there are some things we have on our radar because, as you pointed out, Michael, the midterm year does tend to be the weakest of the

In particular, the middle part, Q2 and Q3, is when bare markets tend to creep up. Now, we have a couple of things on our radar for next year. Number one is that we're going to get a new Fed share in May, and when that has happened, the market actually test the new Fed share. On average, you get a 15% correction in the first six months of a new Fed share. And there is reason to think that the market could be concerned about the individual. And we appreciate it. We'll look out for it all. We're going to have to leave it there because the bell is ringing right now. The S&P just below the flat line and just below 6,900 and just slightly down for the Santa Claus rally period. That doesn't have a closing bell. We'll send it to overtime with John Ford.