Closing Bell - Closing Bell: 12/31/25

Episode Date: December 31, 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 Mike Santoli in for Scott Wapner. This make-a-break hour begins with the Bulls running out the clock on a third straight winning year and a rare eighth consecutive month of gains. Another day of subdued action with a slight downside bias. It's somewhat similar to the way 20-24 ended, which nonetheless did give way to a stronger action in the very early going this year. Take a look at the key index with 60 minutes left in regulation for the year. The S&P is down about four-tenths of 1% right now. It is up almost 17% year-to-date, also within about 1% of its all-time high set in recent weeks. NASDAQ down just about half a percent, and is also the S&P down a little bit since the start of the so-called Santa Claus rally period about a week ago. We'll see how that plays out. The 10-year treasury yield, it is perking up a bit a day after hawkish-sounding Fed minutes, though that yield does remain solid.

within a stable months-long range right now, about 416. As 2026 dawns, investors collectively anticipate the good times to continue with tax relief supporting spending, corporate earnings pointed higher, the Fed prepared to lower rates further, and AI spending still going full speed ahead. So which takes us to our talk of the tape, are these expectations too hot, or are they just right? Let's ask MJP's Brian Vendig, 314 researches, Warren. pies and CBC contributors, Sandhill Global Advisors, Brenda Vengello. Welcome to you all. So, Brian,

I'll pose that to you. A client comes to you says, we're on a great three-year run. Some of the leading stocks are up huge. Maybe I have, you know, heavy allocation to equities. What are we doing now? We adding risk, we subtracting it, we're just moving it around to other areas? Well, I think, Mike, the fourth court is a great indicator of that because I think investors are being a little bit more conscious about valuations and making sure that they're not overpaying for growth. Because we've seen in the short term, obviously, valuations stretch on the growth side of the house, but we've also seen earnings come out for next year, expecting 15% growth year over year, more contributions coming from areas outside of tech. And I think also when you think

about a tax incentives, deregulation, neutral Fed, that plays a little bit more into the cyclicals, so financials, industrials, real assets, catching a bid. And I think investors are thinking about positioning. So that's, I think, where investors are going into 2026. So you would essentially ride that type of a rotation into next year? I don't think this is the backdrop to pull off of risk. I think the key is diversification and also making sure that you're watching the yield curve, because I think the one thing in the horizon is if yields get above four and a half percent on the tenure, we have seen that as an indicator of a risk-off sentiment, but we're not there yet. We are not. And just really, just to amplify your point, and, you know, Brenda,

We can start here. The S&P over the last basically two months is essentially flat. We got the 6,900 in the S&P late October. You've seen financials up about 5% since then. Transportation stocks up 5% software down 7. Homebuilders down. Of course, crypto has had it rough. So how are you viewing things in terms of whether this is just kind of a stutter step in the tech led rally, Brenda, or is it an enduring change? I don't think it's enduring change, but I think it's healthy to have a little bit of a pause, especially on the tech trade that was responsible for so much of the strength that we saw from April, really, through September. But I do think when we look at fundamentals, I think the story continues to be strong. Our concern is that is very well-defined, and everybody is expecting 2026 to be a strong year. And generally, markets perform best when there is some level of skepticism, which maybe we've had a little bit of that in the tech trade more recently. But nevertheless, when there's a little bit of skepticism and there's room for upside surprise. And we look at this coming year where we have projections for mid-teens earnings growth for the S&P 500.

Valuation is elevated. Expectations for economic growth are high. So we have to ask ourselves, where is the upside surprise? going to come from. And I think it could come from areas outside of tech if other companies and industries can really figure out AI. And what we saw over the summer, especially with the MIT survey that came out, is a lot of companies were working with AI, but not having a lot of success. So if we start to see that success grow and manifest itself in better profitability in some of those sectors outside of tech, then I think that could be where the surprise comes from. But we think

it's really important to stay disciplined in this environment. And so we have generally been trimming equity as markets have been at or near all-time highs. And we expect to continue to do that as next year progresses. Well, Warren, I mean, I guess you're kind of in that camp of folks expecting further, you know, kind of good things here. The 7850 on the S&P, your year end target for next year. What gets us there in your view? Yeah, I mean, I think you have, when you stand at the beginning of a new year you have kind of a process of elimination you go through because we're never going to see all the wiggles that happen throughout a year so we have the big picture is fed is easing i think that's pretty well known it's just a matter of how much two three cuts we think three uh we don't see a recession

i mean there's been some fiscal contraction but we still have you know historically high fiscal deficits and we think those will expand in the first half of the year uh due to the big beautiful bill impacts and then we have earnings growth accelerating we have Q4 earnings estimates is really important Q4 earnings estimates have accelerated, and that's not what you see usually seasonally. This is the fastest acceleration of Q4 earnings we've seen since the post-COVID recovery in 2020. So when you put all that together, it's really hard, in my opinion, to construct a bear case. I understand the valuation point, but we've looked at that, and they don't concern us. In fact, I think what we see is margins expanding by 90 basis points in the Fed cutting.

And so, again, we've never seen a year historically. were multiples even contract under those conditions. And so it's all lined up. I think the Goldilocks environment that we've been in, really post-liberation day, is going to be with us at least through the first half of the year. That's when I think all of the cyclical disinflation that's in the pipeline continues to come through. If there's going to be a problem next year, I think it's going to be later in the year when we start to identify the end of the Fed's cut cycle. And in the rates market's going to have to reckon with what that means exactly in the yield curve may, normalized. But up until that point, I think there are pretty strong tailwinds to the bull market.

Brian, how much are you focused on that kind of interplay of whether we get this first quarter acceleration in the underlying economy and then what it does mean for the Fed? I mean, are we just going to be able to bake in, you know, you said, you called it a neutral Fed. So you think they're going to be kind of in wait and see mode in the first few months of next year? Yeah, I think that's a great point. I think the first half of the year, especially when considering Trump's making an announcement in January and then we know the effect of date of when the next chair is going to come in, I think it's a wait and see because right now economic growth is above expectations, which will keep inflation a little warmer than that 2% Fed goal. But at the end of the day, to Warren's point, it's not a recession. I think it's more of that investors for the last almost six years have been responding to the unintended consequence of policy decisions. And that risk isn't going away over the first half of the year. So I think the Fed's going to still be in the wait and see.

But I think at the end of the day, the offset to that policy risk is earnings. So if earnings there, we see a little bit more contributions from areas outside of mega-cap tech, mid and small might catch a bid in this rate environment as well. I think this is a great opportunity for a little bit more diversification in 2026. Brenda, you mentioned maybe just pairing back a little bit as equity index has got to all-time eyes. How are you thinking about this year's outperforming? of non-U.S. stocks, whether in fact that's really just a bit of a brief catch-up or is that something worth extrapolating? I think when you look at the drivers of return, a lot of that

came from the dollar devaluing. And if we look at fundamentals abroad versus the U.S., we still are seeing a story of earnings, beating expectations in the U.S., and that's not happening broadly internationally. We think it's important to have some exposures. there, however. So we think that diversification is important, but we would not expect a repeat of the type of returns that we saw this year internationally versus U.S. again, unless we start to see the fundamentals really get better. But think that diversification is important, as even in U.S. markets, and would agree that if you look at small on mid-cap stocks, still think there's room for more appreciation there. And would so think that being

diversified this year is important, but also just think being disappointed is the second piece. And I think that volatility, as much as everybody expects this to be a phenomenal year from a fundamental perspective in the U.S., I think that volatility will still be present. And so we think that being nimble and taking advantage of some of that volatility will be important. Warren, I know you said like it's impossible at the start of a year. to anticipate the wildcards, which of course is clear. But I do wonder about how we can maybe anticipate where this very hyperactive sort of retail trader activity might take us,

because it's been this idiosyncratic force in the market. I know you've tried to kind of examine it and sort of harness it and maybe not, you know, overlook the possible impacts. What are we looking at right now? It seems as if it's kind of cooled off as crypto has come back, but then we see silver doing what silver's doing, and you see these periodic eruptions of sort of meme stock action. Yeah, in my opinion, I know it's become a little passe, but in my opinion, this is part of that big debasement trade, which people have obviously been talking about,

and we've been talking about it for years. I think that the defining secular backdrop right now coming out of COVID and the post-prosyclical deficits we've run now concurrently for five years is a transition in investor mindsets from a deflation mindset, where you're really worried about protection of principle, the left tail, to protection of purchasing power, the right tail. And that debasement trade, it's not just watch the dollar go down. It's

this blob of liquidity that moves from market to market. And it's a new mindset amongst retail investors. I think it's very difficult to model, like you said, we try to. But I anticipate it being with us. It will just rotate, like you're saying, we're going to rotate from crypto and into silver. and next there will be something else. And I do think it's supportive, though, ultimately for assets in general. And that's the secular backdrop. It's one of the reasons if you don't see a recession, you don't see the Fed tightening, and you have deficits that are higher than 6% of GDP.

I think you have to refrain from being underweight equities, at the very least. And the next decision you make is what do you pair with those equities? Yeah. And I guess if nothing else, it kind of dissuades people from having heavy short positions or being too aggressive or maybe being underinvest. and I guess for as long as it does last. We'll see how that goes. We see the squeezerama going from one asset class to the next.

Really appreciate you guys finishing things up here with me for the year. Have a great one. Thanks very much, Brenda, Warren, and Brian. Meantime, another big year in the books for NVIDIA, the AI giant climbing, another 40% in 2025 helping lead the year's tech rally. Christina Parts-Nevilis has this on the run. Christina. Well, NVIDIA shares just have been on a while.

wild ride. It's been great to report on him, them. The stock dropped from roughly the 150s down to the low 90s by early April on worries about AI spending growth and U.S.-China trade tensions, also when we saw a lot of the market lows. But that April low was the bottom for NVIDIA. Shares did stage a massive comeback through the summer, climbing back towards 150 as Blackwell GPU demand really took off. Invidia's market cap actually crossed $5 trillion, making it one of the most valuable companies on the planet. But then since late October, the stocks really been under pressure, down more than 20% in recent weeks on profit-taking into year-end. No major news catalyst. But China revenue could actually change that downward trend. And why do I say that? Well, reports today say, Nvidia has up to 2 million H-200 unit orders from China-based customers. These are chips that have now been approved to be shipped to China.

Chinese firm ByteDance, the parent of TikTok alone, could get approval for $14 billion in chip purchases from Nvidia. And so that's why Nvidia is turning to TSM. see to ramp production. You can see shares are up about one and a half percent today on that news. But Chinese government approval really is just a total black box. Any H-200 revenue could trigger upward earnings revisions as early as fiscal Q2, 2026. That's because China is not factored into estimates. But shares, look at that on your screen, barely reacting flat today because investors have lived through these repeated starts and stops on China chip sales.

So until orders actually turn into shipments and shipments into revenue, the market is just taking a wait-and-see approach. Or maybe people just aren't paying attention right now and they have the day off. That's no doubt true, although also huge base effects there. It's harder to move the needle for that revenue base, Christina. Very good point, too. Yes, that is a good point. All right. Thank you so much. Joining me now is Doug Clinton, Intelligent Alpha founder and CEO.

Doug, how do you think about this? I mean, on the one hand, you know, the consensus estimates. for NVIDIA reflect pretty much rock-solid confidence in how the next few quarters are shaping up in terms of the capacity-constrained build-out of the infrastructure. But what about the market's reaction to kind of who's in and who's out along the way? Mike, NVIDIA is a name we continue to own at Intelligent Alpha. And as a reminder, at Intelligent Alpha, we use the modern large language models to do our stock portfolio analysis, our stock picking. So our models still like NVIDIA. And I think to Christina's

earlier point. Right now, you know, this whole China thing has gone back and forth for so many months. I remember six months ago, we started thinking about this. And I think we were very early to the game thinking that, look, eventually, you know, these chips, the higher end H-200s, and probably Blackwells eventually, will be sold into China. And here we are today, still talking about it, hasn't happened yet. And so I think once we maybe start to see some actual revenue, some actual dollars flow through to the P&L for Nvidia, maybe that's when the stock found that he gets credit for it. But I think heading into 26, the AI trade is still on. It's still intact, in my opinion. And I think we still have a few more years to go in it. You know, when it

comes to, you know, in video, of course, as I say, the sell side's there. The stock, you've seen valuation compression, you know, pretty much along the way. It's at like 26 times forward earnings. This is going to be, you know, 160 billion in free cash flow in the coming fiscal year. So do you think that's just kind of temporary or is the market looking ahead to when, of course, inevitably it slows growth off a big base? The market's probably looking ahead to some extent, but I think there is a challenge of where is the big incremental buyer, right? I mean, indexes obviously are probably helping all of the MAG7 because they're so overweight those stocks, but who's the big idiosyncratic sort of incremental buyer for NVIDIA? Do they need to see some of

these numbers from China to adjust, do they need to get a better sense? Maybe for what the demand is heading into 27. Because if you think about 26, what I think is really interesting is from an AI infrastructure standpoint, demand is off the charts. You know, Micron just a couple of weeks ago was talking about being sold out for the entirety of 26 for HBM. Blackbells, the demand is huge. You look at the power segment, GE-Vernova. They're sold out in turbines for a couple of years. And so I think we need to start to get a sense of what does the demand look like maybe into 27 to get investors to feel a little bit better about that to be that incremental bidder. Well, you say the AI trade is alive. I mean, there's so many iterations of it or it goes in these waves.

So we had, you know, early in the year, the Deep Seek scare. And then later in the year, the market just decided it wanted the, you know, kind of alphabet broadcom ecosystem over the Open AI, you know, Microsoft side of things. Is that going to continue to be a little bit of a push-pull, or are we going to be able to get some clarity into how the winners shape up from here? I think next year, the big story in AI will be about distribution. So 25, to your point, beginning of the year, I think Open AI was sort of crowned the undisputed leader. About mid-year, Google released Gemini 2.5, and I think that's where the tables turned a little bit because we finally saw from Google, With all of the tools, all the resources that they have, they finally put out a great model, and now Gemini 3 is also great.

Now it's neck and neck. I think those two companies are really the two that are vying for Frontier model sort of winner. In 26, I think it's more about how do these models get distributed and actually into user's sort of daily workflows, daily lives. Google does have a good advantage there. So they've got obviously several billion user per day platforms like YouTube, Maps, Gmail. search, of course. And I think Open AI, the question will be, can they find other good distribution partnerships? Can they maybe broaden the way they work with Apple? Might they do a deal with Amazon? There's been rumors about an Amazon investment. I think that will be kind of what shapes

up in the first half. If Open AI can find some good distribution and really challenge Google, I think that could tell the story between those two sets of stocks that you talked about. You allude to Amazon. I know, you know, it's kind of sat things out to a degree. There hasn't been a lot of enthusiasm about what it's doing in AI, but you think that that could change? I do, and our models at Intelligent Alpha have been sort of warming up to Amazon over the past month or so. And it's an interesting case, I think, where Amazon stock's only up about 5% this year. It makes it the worst performing Mag7 stock of the group. But if you think about the business, heading into the year, Azure, I think, was kind of the clear leader in terms of cloud.

Google had all that momentum we just talked about with the Gemini launch and then supporting GCP. AWS just had a great Q3. And on top of that, they've now announced deals to bring OpenAI into the platform. They may do the investment we just talked about. And I think if they can keep the momentum that they have in AWS and really prove that they are still a player in infrastructure, in AI infrastructure, I think that could be good for the multiple.

And then on top of that, they've got a great retail business and that probably gets ignored in this AI boom, but is still worth a lot of money. Are there any stocks outside of the sort of core hyperscaler cohort where your models are picking up that they might, in fact, either gain favor or start to become viewed as legitimate winners in the AI world? Software is another space that our models have been more interested in more recently. And I know you mentioned a little bit earlier, the fact that Q4, I mean, software. I think was down six or seven percent.

Yeah. And a lot of that's Oracle, but still, yeah. Yeah, the trade is difficult. Even if you look at the full year for software, I think software as a category is up about five to six percent. But within that, you look at a CRM, you look at Adobe, you look at Atlassie, and a lot of these names are down 20, 30 percent. And so our models have kind of come back and said the software names, they've been

beaten up a lot. Adobe is one name that we do own. We owned it earlier in the year. We were wrong about it. we own it again now. Hopefully we're right about it going forward. But I think the take from our models is one of two things is going to happen. Either these companies are going to prove that they can integrate AI into their businesses and AI can be a tailwind or they're going to show that in some cases, AI just won't be as bad as people think because I think what happened in 25 was for many

of these businesses, the worst case scenario got written in, which is that AI is going to destroy Adobe. It's going to destroy Salesforce. And I think the odds of that are probably low. So I think that software trade does become more interesting as we had in the 26. Doug, really appreciate you running through it all for us. Have a good New Year. Appreciate it. Thanks, Mike. Happy New Year. All right. We are just getting started. Up next, Health Care in the New Year. What BMO's Evan Seagerman sees in the sector as the group lags behind the broader market where he sees the most opportunity in that space. We are live in the New York Stock Exchange. You're watching Closing Bell on CNBC. Welcome back. After a turbulent 2025, the health care sector could be on the mend in the new year.

Here to discuss as BMO Capital Markets, head of health care research, Evan Seagerman. Evan, great to see you. Thank you for having me. Happy New Year. It's been a ride. I mean, if you just look at sector-wide, you know, major low in September, massive underperformance by health care, by farmer, by the rest of it. And then they kind of rip after some regulatory shadows, maybe recede a little bit, but where does that take us? For sure. And it has been a wild ride. Go back to Liberation Day when everyone thought farmer terrorists were going to destroy the sector. That didn't happen. But then you saw all those deals, which I think you're referring to, you saw a farmer really kind of leaning into the administration to ensure that they could, you know, really sell their products and open up access. So that's what kind of drove the performance in the back half of the year. And the question that I get is, A, is there other trades besides? the GLP-1s, which we can talk about.

The novo pill was approved last week. But also, what happens next year? There seems to be some consternation still at the FDA. That's a bit of a mess. And, you know, the AI trade kind of cools off. Do people put more money into pharma? So our thoughts, obesity is here to stay. We like the deals that we're seeing.

We suggested that, you know, that suggests to us that industry and the administration are working well together. But I'd like to see more kind of clarity at the FDA. And hopefully that can also drive performance in the smaller biotech names. When you say obesity is here to stay, I mean clearly as a category, it's been dominant in terms of mind share and everything else. Now you see some pricing actions and obviously some competitive back and forth. What are the smart ways to think and play? For sure.

And, you know, we are positive on Lilly, neutral and Nova. And I think that's very important. While we have the Nova Wagovi pill approved, I don't know if that's going to be enough to get them out of the doldrums. I feel like Lilly has been executing on all cylinders, and they'll continue to do so. But then we're looking to smaller names. You know, I cover a company's structure, therapeutics. I had some great data recently. So I think there's going to be more M&A in the space.

There's the scarcity of good assets, which could get some other big players in the space as well. And so when it comes to, I guess, maybe some of the more traditional legacy names, I know you sort of warmed up to Merck. That stock is actually also a good comeback. Aside from them being like, wow, they're too cheap, they're kind of unloved. What's the kind of positive, forward-looking story? Great question there. So we did recently upgrade shares of Merktero outperform.

And the key there is we're really starting to see them put together a portfolio of assets to help them get through the Illumin-Katrude. We all know that's happening. You could see some multiple compression kind of, you know, if they don't solve that, but they have great data from an oral cholesterol drug. They've done some really smart M&A. And they have some really interesting cancer assets beyond Katrina, which could help grow into the 2030s.

You alluded to M&A. What would you expect there, and is it time to just to sort of assume that there's going to be a big kind of a mopping up or a consolidation phase? Well, we've seen a lot of M&A recently. I mean, you had the Pfizer-Metzer and Novo kind of, you know, saga in early November. And I think a lot of these big pharma have holes in their pipelines that need to be filled. Like Merck still needs to buy. Bristol needs to buy. Novo needs to buy.

I could go down on the list. All the Europeans need to buy. So that really helps because if you have a biotech with good data on the precipice of approval, they are a potential hot target. One of our top picks into next year is ticker IRON disc medicine, you know, potential approval next year for one of their assets. And when you mentioned the FDA and the uncertainty that persists there, we know about, I guess, the vaccine impact potentially, but beyond that, does it remain an overhang or people just kind of wondering what the kind of approval metrics are going to be, or whether the draining of, I guess, basic research funding

is going to start to bite or anything like that? Well, you know, there's a lot of hearsay. And kind of ahead of the holidays, there was discussion around this commissioner's prior to review voucher. It actually put pressure on my top pick ticker dismedicine. Because, you know, they were worried about the legality of that, but also Veney Prasad was questioning kind of the data

around their package. So I don't love kind of, you know, an FDA that's, you know, based on trickled out information, kind of rumors. I want really consistency, and I want, clarity. And that's how you have a healthy biotech sector. And then finally, obviously you have the ECA subsidies expiring today. Does that make its way into anything in terms of revenue for biopharmac? You know, I think there's probably some spillover because folks are probably going to lose their coverage, unfortunately, which is not a great thing. And if they don't have coverage,

they're not going to have drug coverage. And that maybe pushes them to the cash pay, which is, you know, great for a few products like the obesity products. But if you have cancer, you're not and a cash pay, and I think that could be a minor drag overall. All right. One of many things to monitor. Thanks very much. All the best. Happy New Year. Having next year. Thank you. Coming up, after 60 years at the helm, Warren Buffett is stepping down. As CEO of Berkshire Hathaway, how he transformed the stock and where it could go from here. Plus, some restaurant names, feeling the pain this year, can the sector bounce back in 26? We'll discuss. S&P down now. 0.6%. Closing bell is back in two.

Up next, a Berkshire goodbye, legendary investor Warren Buffett's last day as CEO after 60 years behind the wheel. His impact on the stock and where it will go from here, we are back in two. Welcome back after 60 years at the helm of Berkshire Hathaway. Today is Warren Buffett's last day as the company's CEO. Joining us now at Post 9 is Gardner Russo and Quinn Chairman and partner Thomas Russo. Tom's great to see you and so glad you could come in and talk about this. Of course, known Warren and been investor in Berkshire for a very long time. And you would just love your thoughts initially on what do you think changes tomorrow, if anything,

with how Warren relates to Greg Abel, the incoming CEO, and how we should start to think about the management of the company now. I think the goal will be to continue as if nothing has happened, but it has. and it requires different relationships. I think Warren will remain active. Ideally, he'd have a relationship with Warren. Warren would have a relationship with Greg, much like Charlie had with Warren.

Interesting, yeah. And they've a source of information, feedback. There's a great story with Warren and Charlie that on an afternoon, end of the summer weekend, Warren would deliver an idea to Charlie, and Charlie would say, Warren, that's the stupidest idea I've ever heard. At least do me a favor, go home and take a look, and they come back the next day, and they reverse the opinion.

No, no, no, Charlie, you were right. It's terrible. No, Warren, you were. And that banter back and forth. Sure. Surfaces truth. There's the core belief that you want to find businesses that have the capacity to reinvest. They have strong, powerful brands.

They have management who can take long-term bets, which is a scarce group. It tends to be family-run companies. They'll still look for family-run companies, businesses where they can make the long-term decisions and free themselves up from Wall Street. Yeah. It's really been the unhinging of Berkshire from sort of Wall Street requirements. For sure. It has really helped the trajectory of $4 million per year.

versus something, like 19 of the S&P or something. When Warren in May did announce that he would be stepping back at the end of the year, he still said, you know, look, I'm going to be there if there are large opportunities. I'll be looking. I'll be helping out. You get the impression he was hopeful that maybe there would be one of these, you know, big opportunistic plays to be made. Not yet. Right.

What do you make of that and make of the fact that they've just allowed cash to build up? Well, I have to just remind everybody that where the cash sits is called assets and where the conversation exists is called liabilities. And people are walking around with a big sack on their back saying, oh, my, how are we ever going to unburden ourselves with this liability? Yeah, right. Well, the markets will give them every reason to unburden themselves because the market will deliver at a time when it's no longer $400 billion. It feels like 600 or 700 because what you're buying will have stumble. And you see the ingredients of stumbling being sort of assembled by extra leverage in the system and by valuation excesses in the system.

Now, it's across the board things you have to be fairly opportunistic, But the notion that that $400 billion hoard is anything other than an asset will be dismissed when someone finds themselves in need of money, there's only one place to go. Whether it's insurance or whether it's other services, they'll go to warrant and the margins will be fine. So you mentioned the family businesses and these other companies that really seek to sell, to Berkshire Hathaway. Is there any risk that that won't be as much the case if Warren himself is not there eventually? Well, I think Greg's been there, and so it often proceeds over time. You know, it can be sort of like signing the line right off the bat, but typically they get to know each other.

And an ambassador of that interchange has been Greg increasing. It's an example, especially so in Japan, with the multiple. holding companies that they've now invited Warren into increasing amounts of their capital. Well, that can continue to evolve favorably to Berkshire and increasing the capital. And tremendously winning investment, obviously, for Berkshire Hathaway as well.

And the other thing that really protects Berkshire, I think. It's seminal at the heart, is that after he's encouraged, and with Warren, he writes his own employment contract with the top 100, executive. And he tells him exactly what he wants them to do at full speed and with full throttle. When finished, if there's money left over, the mantra is send money to Omaha.

At that point, it gets mixed up with all the other cash and properly invested. A firm that doesn't separate strategic capital from execution capital ends up stumbling. And Warren avoids that by getting the money back to the people who can invest it in. Do you make much of the fact that Berkshire Hathaway shares have lagged since Warren did announce? He was stepping back. Now, I've always offered the context that the stock had an incredible run to very rich valuations to the very moment that Warren did make the announcement. But how are we to think about that? Yeah.

You know, we think that there's such a margin of safety within that position, within both with how the businesses that are there are valued and sort of the prospects for future reinvestment. And so I don't think you're going to see a big sell-off because that, and if you were to, we now have a history at Berkshire of share buyback. They've repurched $61 billion worth, and as that widened, the spread between intrinsic value and market price increases, you have a chance of seeing accretive acquisitions. Yeah, their value-sensitive investment instincts apply to their own shares as well. Yes, yes. Thomas, so great to have you weigh in on this.

Thank you very much. I welcome the opportunity. Thank you very much. Take care. Yeah. Up next, we are tracking the biggest movers as we head into the close. Christina Portsnevless is back with those. Hi, Kristen.

Hi, Mike. Well, policy shift in China is really hitting electric vehicle stocks. And FDA rejection sends one biotech tumbling and concerns about a chipmaker's turnaround timeline. We have all of those stock movers next. 12 minutes left until the closing bell. Let's get back to Christina for a look at the key stocks to watch. Hi, Mike. Well, let's start with shares of Chinese eB makers.

many of them taking a hit today as Beijing really revised its vehicle trade-in subsidies for 2026. So the program incentivizes people to trade in their gas-powered cars for an EV and a rebate. But the program is raising the minimum eligible purchase price for a new EV, meaning some of the budget options will no longer qualify for the incentive, hence the reason why you're seeing like Neo down 6%. Shares of Corsip Therapeutics in a nosedive today after the FDA did not approve one of its key drugs for a rare hormonal disorder. The company said it would meet with the FDA to look for a path forward, but that's why shares

are down almost 50% right now. And last but not least, Global Foundry shares are also sliding after a downgrade from Wedbush. Analysts see near-term pressure on consumer electronics, especially handsets, smartphones, has higher cost push-up prices and manufacturers cut productions, and they expect demand to weaken, which in turn means less demand for Global Foundry's chip manufacturing services, shares down about 3%, Mike. All right, Christina.

Thank you. Well, coming up, retail's rough ride. We're breaking down the year that was, and ask if whether rosy days might be ahead for the sector, that and much more when we take you inside the market zone. We are now in the closing bell market zone. Kate Rogers is taking a look at the rough ride for restaurant stocks. Plus, we're breaking down the year for retail.

Courtney Reagan is taking a look at the names that's faltered and ask if we're going to see rosier days, ahead. And Oppenheimer's Brian Nagel here with his top picks in retail heading into 2026. Kate, we begin with you. Some tough going for some restaurant stocks. Mike, it's so true. BTIG called it a, quote, humbling year for the restaurant sector. And that's really putting it mildly. Fast, casual, and quick service restaurants really took the brunt of losses this year. Kava, Shake Shack, Chipotle, Blumen Brands, all seeing major pullbacks down double digits year to date. Sweet Green, though, the biggest laggard. It was down

nearly 80% this year as younger consumers tightened their spending. Meanwhile, the winners for the year. Fast food names McDonald's Young Brands, QSR, and Brinker, Chili's parent company all fared best. The standout performer, though, Dutch pros up over 16%. This, of course, as Starbucks continues to try to stage a comeback. I spoke with TD's Andrew Charles, and he said some key themes, rather, for 2026 will be value offers continuing in fast food and look no further than McDonald's adding value assessments into its franchisee system grading for proof of that. Fast casual will also aim to win back consumers. We're already seeing that with Chipotle and its new protein heavy and GLP1 friendly menu ahead

of the new year. Charles predicts more specialty menu offerings to come. And then finally here, loyalty programs will be in focus as they provide, of course, a lot of data and ability to target consumers with offers in this hyper-competitive landscape. Mike, we will see if it works in the new year. Back over to you. A lot of efforts to adapt. Yeah, we'll see how it goes.

Kate, thank you very much. Let's get to Courtney Reagan with a look at the rough year for retail. I mean, maybe in some of the expected ways and others that weren't. Yeah, I mean, the XRT ultimately is up 7.5%, which isn't terrible, but it was half the S&P 500's performance. And if you would have told me that that would be the case in April, I actually wouldn't have believed that retail would have been up at all because you can see this dramatic drop from that April 2nd tariff announcement.

but then many retailers started to find their footing. Two of the biggest surprises of the year for me, the resilience of the consumer and retail's ability to mitigate tariffs. Low-price players soared. Five below up 80%. Dollar General gained 75%, dollar tree, 64%. But some specialty names soared too. American Eagle shares grew 59% in 2025.

Victoria's Secret gained 200% in just the last six months. UBS has American Eagle and Victoria's Secret on its 2026. buy list, too. Tapestry share is gaining 96% this year after its deal to buy Capri was blocked in late 2024, so things turned out all right. Now, PVH, Decker's RH, definitely among the biggest losers of the sector, RH, down 54%. Lulu Lemon shed 45% under some internal missteps and increased competition. Its CEO is stepping down. Target didn't rally like other discounters. It is also getting a new CEO in early 2026. And looking to the new year, Jeffries does think it is more constructive for retail, but, quote, selective still when it comes to stocks.

Nike, it's top pick, but it does suggest a short for onholding while UBS puts on holding on its buy list, along with Ralph Lauren, T.J.X, Signet, and a number of others. Mike? All right, Court. Appreciate it. Let's bring in Oppenheimer senior analyst, Brian Nagel as we head into the close. So, you know, Brian, broadly speaking, the setup, as a lot of these folks strategists will tell us, is that, okay, The consumer is going to get a little bit of a windfall with higher tax refunds and things like that. Is that going to move the needle for the group, do you think? Well, good. Look, happy holidays.

I think it's interesting. I mean, as I started looking into 2026 now, which again starts tomorrow. 2025 and, frankly, the last couple of years were very challenging for consumer discretionary. So as I think about 2026, a lot of those same pressures will very much persist, at least early in the year. Now, there are reasons to be more excited. here. You know, the potentials like you just mentioned for stimulus. Again, we don't know all the details there, but there's been more chatter. You know, that would, that I think would be a positive for consumer discretionary, you know, to the extent that we finally get some relief on rates.

And the other fact, you know, I talk about this a lot of their clients, and it's funny that I'm talking about this still in this day and age, but I do think we still have to get further and further away from the options of the pandemic. You know, I think a lot of these big retailers, big brands we've seen struggle, you know, over the last several months, even a couple years, a lot of that still ties back to the pandemic. So I am optimistic as I look into and then more importantly through 2026 that will move past the pandemic and a lot of those disruptions. So I think the year could get better for consumer discretionary, but it's not a flip-the-switch moment when we turn the calendar. And the continuing effects of the pandemic, are they mostly in terms

of companies having a hard time model consumer behavior? Or is it the pull forward of demand? or what do you think it is? Well, it's very interesting. And I think it's multi-faceted. I mean, one easy one is the pull forward in demand. You know, you look at categories, anything home-related. I do a lot of work on Home Depot and Lowe's and open-clipped in space. I think those companies are still suffering from a pull-forward in demand.

And then if you look at companies like, you know, the athleisure brands, Nike and Lulu Levin and others, I still think those companies are suffering because they were not able during the pandemic to really innovate their products. Now, that's a much longer story. We obviously don't have time here. But I think, you know, they're still suffering from that. Again, as we get farther and farther with the pandemic, you know, these dynamics should continue to correct themselves. Real quick on Nike, because the stock is up today, of the new CEO doing an insider buy.

It's an uphill fight, but you still like it here? Yeah, look, Nike's what we've labeled, one of our top picks for 2026, our top mega-cap pick and really what I call the Dark Horse pick. I mean, I think Nike sets up very well here for. for 2026. It's interesting to me to see the CEO buying stock. I think that was announced last night. And then just more recent than a couple days ago, Tim Cook on the board of Nike bought stock, too. So I think those are two big votes of confidence for what's happening at that company. But mega caps, Nike's our top pick for 2026. Excellent. Brian, really appreciate you finishing up here, 2025 with us. Happy New Year.

As we do head to the close, the S&P 500 having a tough finish off almost three-quarters. of 1%. There has been a profit-taking undertow to this market in the last few days. However, it will remain up more than 16% year-to-date, and all the major indexes will be going out at a double-digit year-to-date gain. The S&P up also 40% off that April low. The volatility index is at 15. That's about an average level. It peaked at 60 on April 7th or 8, and it made a low of 13 this last week, maybe gearing up for some fireworks.

In January, that does with a closing valve.