Closing Bell - Closing Bell: Are Tech's Best Days Behind Us? 02/10/25

Episode Date: February 10, 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.

All right, thanks so much. Welcome to Closing Bell. I'm Scott Wobner, live from Post 9 here at the New York Stock Exchange. This make or break hour begins with streaking meta. On pace for its 16th update in a row. That's the longest winning streak ever for any mega cap name. Many other mega caps bouncing as well today. That's helping the market, certainly tech. We'll ask investor Gene Munster where that sector is likely heading from here. In the meantime, the scorecard was 60 minutes to go, and regulation looks like that. Well, new Trump tariffs on steel and aluminum being taken in stride largely by the markets today. We're green across the board. Lots of names in that space are higher, led by letter X.

That's U.S. Steel. There's Cleveland Cliffs up near 16%. New Corp a winner as well. Elsewhere, McDonald's is leading the Dow, even as its revenues in the U.S. disappointed. Sales certainly did. Is a bottom in, though? That is what the market is betting on. It would seem to be today near 5%.

It does take us to our talk of the tape. Is it time to add to tech or trim it? One famed investor doing both today. So let's bring in Deepwater's Gene Munster and Hightower's Stephanie Link. Find out which moves make the best sense right now. Steph's a CNBC contributor. It's good to have you both. Of course, when I say, Steph, a famed investor is doing both, I'm alluding to David Tepper, whose 13F came out today.

And it was really interesting. He is increasing his China tech holdings and he's taking down a little bit his mega cap U.S. holdings in those stocks, I guess is best said. Meta and Amazon, he cut both of those, but a big lean into that trade that he really liked in China tech. What do you make of it? Well, I think China technology and China in general has underperformed the markets for the last several years. If you're taking a bet, though, on China tech, you have to expect volatility, Scott, because the transparency is really not great for all Chinese pure play companies, not just tech, by the way.

The disclosures are not as robust. That said, these stocks are extremely cheap. So expect volatility. I mean, I think you can find other technology stocks that have lagged here in U.S. multinational companies within technology. But obviously, he believes very strongly in the growth trajectory of the Chinese market at the moment. Yeah. I mean, Gene, you know, we went from uninvestable for many investors here to maybe a better opportunity. Do you see the landscape shifting at all? You know, we're not there right now, but this is top of list for us to think about what happens with the relationship between China and the U.S. Tariffs, of course, the geopolitical, what happens with Taiwan, all this stuff that's been so well trafficked.

But if you play this forward three, six months, there's most likely going to be just a better awareness for investors about how this path forward is. In other words, is that I think clarity for investors about whatever those tariffs look like, maybe potentially actually growing a little bit closer to the us from a geopolitical standpoint that is going to unlock some of those that multiple i just want to put a finer point on steph's accurate comment about these stocks being cheaper they average about 10 times 2026 earnings this this is the the china tech companies and that compares to the Mag 7X Tesla 25 times. And so the disclosures aren't as good. Steph's absolutely right.

But there is a big enough gap there that this is, I think, any investor, present company included, that has been ruling these out. We need to go and do start doing more work on these. Gene, Deepwater owns both Meta and NVIDIA. Let's start with Meta. What do you make of this run? Why is it happening with the strength and the consistency that it is? It's just cheap. And not only cheap, but the visibility is so high. So on the cheap side, it trades at 25 times, counter 26, and is growing

earnings and counter 26 about 15%. The rest of theG7 is growing earnings about 10% and trades at a similar multiple, a 26 multiple. And second is this company. I think investors are becoming more comfortable with the concept that this is as addictive as a product can be. Their daily active users, 3.4 billion in the most recent reported quarter quarter that's up 5%. Same growth rate as in September, 7% growth in June. Scott, we've seen just this steady growth on that huge number. And that is their playing field to extract what obviously will be more content built by AI and better targeting with AI. And so just as a meta investor, this is a company that even though it's had this spectacular run over the last couple of years, we can sleep well at night knowing that it is highly addictive and they're

going to find ways to make more money within that context. Steph, I mean, you're a value investor. I mean, your history with this stock is so interesting. You lived through the worst year ever and you also had its best year ever, but you no longer own Meta. Jean says it's still cheap. Why haven't you bought it back? Well, I kind of feel like I missed it, number one. Number two, I made a lot of money in the name and I put it elsewhere. In fact, I put it into Amazon when Amazon was doing nothing for like two straight years, if you go back two years ago. And I actually today would be buying Amazon over Meta because I do think that those results last week were quite good.

Expectations were super high. But when you have U.S. retail, you've got a lot of ways to win in Amazon. You can win on the retail side. They had 10 percent U.S. retail growth. Margins were the best since 2004 in the U.S. retail piece. Margins also expanded internationally by about 400 basis points. And, of course, AWS growing 19%. I know the guidance was lower, but that was really FX and a leap year, difficult compares. So to me, I think at about 14, 15 times EBITDA, when it trades at about 18 times historically, that's the one I want to be putting more money into. And I will. Gene, Amazon over Meta. What do you think about that statement?

I'll take Meta again. I think that this is the probability that this gets multiple expansion is higher than Amazon. I think that ultimately we're going to see a probability that the numbers exceed expectations is higher. We saw their guide with Amazon a little bit soft for the March quarter. Now, I was given pretty wide guidance, but my general sense is that I think Meta, despite its big move, is going to continue to outperform. I would just highlight another arc that you touched on at the top. This is related to Amazon and Meta. But I believe that these mega caps are going to continue to do well. But I think we're going to see more performance in 2025 in those companies that are below $500 billion in

market cap. And so you can have both. You can have mega caps continuing to perform well. But I think that you are going to see a little bit of a shift here towards some of these it would the context is frontier tech investors are well traveled they're going to continue to own the mega caps but i think these frontier tech names are going to become more impactful in terms of performance over the next year or two years i mean gene adam parker has suggested that it's time to lower your exposure in the mega caps i mean he's been as big a fan as anybody, but maybe he sees a little bit of the writing on the wall like you appear to do. So again, not trying to talk out of both sides of my mouth here. I think they're going to continue

to do well. I think you should still own many of the Mag 7, but I think that you're going to get more performance. And part of it's just simply the law of large numbers, but also some of the news that we've picked up over the past week in terms of this AI spend. I know the market's not buying it over the last few days. All the positive updates, the one over the weekend from Altman related to how much OpenAI is going to be spending on hardware. But there's a lot of small sub $500 billion, that's small, companies that are going to benefit from this. And I think you're going to see that in the performance of these names kind of as you play out the year. Wolf asks a question today, Steph, are tech's best days in the rear view? How would you answer that question?

Absolutely not. We are in early innings in AI. We are in earlier innings in cybersecurity. I do not think the data center is dead by any means. And if you talk to any of the infrastructure companies, they're saying the same. I just think that, to Gene's point, we're going to see a broadening out not only within tech. And I would add again, like the IBMs, Accentures of the world, they had great quarters, CrowdStrike, I expect Zscaler to do well, Palo Alto this week, Broadcom, that great quarters. CrowdStrike, I expect Zscaler to do well. Palo Alto this week, Broadcom, that's a little more popular. But I think you're going to have a broadening out, continue broadening out in tech.

But then you're also having a broadening out in the overall market, Scott. I mean, if you look at the financials and health care and industrials and discretionary, they've all done actually better than technology, the XLK, year to date. That's not to say that tech is dead. I just think there's other places to put your money because the economy continues to be strong. And that leads to a good earnings across the board. And by the way, I always touch on margins. We have seen a number of companies see operating margin expansion. And you pay for companies that have good top line, but also margins that are expanding. That's how you get the operating leverage and a better and

a higher stock price. I hear you. But on what Wolf is talking about, they're not and no one, I don't think, is suggesting that, you know, tech days are over. But if you want to assess whether its best days are over, I think it's a fair question. If you look at, let's say, what the revenue growth for these companies was, what their competitive moats were, what their margins were, are those really sustainable? Well, I think anything that's tied to AI and anything that's tied to cybersecurity, they're going to continue to do well. Because I said that we are in very early days in both themes. Are they picked over? Are they over-owned?

Yeah, they're over-owned. That's why I only own one of the Mag7. And I think there's better alpha generation in something like IBM or Accenture or CrowdStrike. So I think you want to pick. It's kind of like a stock pickers market in within tech. It's not necessarily broad based. You could have just owned Mag7 all of last year and done quite well. I don't think that's the case this year, but that doesn't mean that they're done. It doesn't mean that they're not going to outperform. I think they can outperform some of

them, but I think there's other areas and other parts of the market that are really going to be competition for tech. Hey, Jean, you guys own NVIDIA, as I mentioned as well. That stock right now is up almost 4 percent. It's going for five days in a row and a nice comeback from the deep seek day where it sold down pretty hard. And Evercore today says tactical opportunity to buy it ahead of the print on 226. Do you feel like you have enough answers today to make a strong enough comment on where you think this company really is relative to deep seek some of the competition that's coming along and why the stock sold down in the first place? Do you have more confidence in part because of the growth rate from the hyperscalers about what they're going to spend on capex and 25 went from 22 expected growth rate to 40 after this past week we've seen this huge step up i mentioned altman's comments over the weekend that they're

going to continue that the scaling laws are holding together the market isn't buying it. If the market fully, I think, processed what has been the updates we've had since DeepSeek came out, we would see NVIDIA, it's down 5% from the pre-DeepSeek day, it would be up. And I think that, so my confidence has gotten better because the facts are that there's going to continue to be this massive investment. Now, I just kind of play this forward for the next few quarters, is that NVIDIA is going to surprise on the upside. The demand is very clear, and that means that probably this year, the hardware trade is going to hold together.

Now, next year, there's a different question about what happens with growth rates. And whenever you start even mentioning next year, then people start to get a little bit nervous and skittish. And that's the point that we're in right now. I do think there is going to be a shift in the trade, probably in calendar 26. But even with that coming up, I still think that NVIDIA, based on what we have seen over the past week after DeepSeek, I think that this is going to be, the business is going to be in a great place to exceed expectations over the next few quarters. Steph, most roads lead to NVIDIA, but not all.

There is an off-ramp to Broadcom. That's yours. Stock's up near 5% today. I know you hope that some of that mega cap, CapEx, goes that way too. Yeah, no, I think it's gotten a lot more of a popularity within investors, whereas last year or a couple of years was all about NVIDIA. Now it is kind of a two-part story with Broadcom. The reason I like Broadcom a lot is because of the diversification that it has in terms of its revenue mix. Yes,

sure, it has data center. It has AI. That is growing three times as fast as they had expected, but they also have software. And software carries higher margins. And that's about 41 percent of their total revenues. And then, of course, they have the real deep cyclical exposure as well. And I think that that's what's actually going to carry the day this year, because I think it's troughing. And so you add it all up. They have the best in class operating margins and gross margins, strong free cash flow. They're buying back a ton of stock. So I like that one. Now, I know you've been asking me, why didn't I buy it on deep seek and why am I not adding to it right now? Because it's still up almost 90 percent in the past year. It's had a nice run. And I'm not really sure what the who the incremental buyer is, but if it were

to pull back more and it got more attractive on a valuation basis, I would take a look. This company has the potential to do $11 to $12 in earnings power between now and 2027, and that is nice growth. But maybe it just pauses here for the time being. And if it pulls back, then I will pull the trigger and add more. All right. Good stuff. We'll leave it there. Guys, thanks so much. Steph, thank you. Jean, we'll talk to you soon. Thanks. Thank you, Scott. President Trump expected to announce tariffs on steel and aluminum today. Probably already know about that. Eamon Jabber's at the White House with the details.

We've figured this is coming. We just didn't know exactly what time. Yeah, exactly. And we still don't know exactly what time, Scott. That's right. You say he's expected to do it. We do still expect him to do it. We expected him to do it at one o'clock. That didn't happen. Next window looks like it's going to be 5.30 this afternoon for those 25% tariffs on steel and aluminum coming in to the United States from anywhere around the world. There was also this question about whether or not President Trump would impose reciprocal tariffs on countries around the world that have tariffs on U.S. goods. That, I'm told now, is going in a separate bucket. So the

idea here is, in terms of timing, we do still expect those 25 percent tariffs today from the president. We'll watch this 5.30 window of time Eastern for that announcement. But this reciprocal tariff announcement could come today, could come later in the week, TBD on that one. The other thing that we are expecting now at 5.30, which is new, is this executive order from the president on the Foreign Corrupt Practices Act. Scott, you know that that's the law that makes it illegal for American companies to bribe foreign government officials overseas in order to win business and that sort of thing. That law is one that folks in U.S. business over the years have complained about and said it makes it difficult to compete with foreign companies that are also competing in those markets because U.S. companies are held to a higher standard in terms of corruption. is sign an executive order which will direct the Department of Justice to put a pause on

enforcement of the Foreign Corrupt Practices Act while they work out new guidance to companies about what's acceptable and what's not under this new enforcement regime at the new Department of Justice. So we'll wait and see the exact details because the details will matter here in terms of the Foreign Corrupt Practices Act. But you're going to see two camps here, Scott, immediately. You're going to see one camp that says this is great for business and American companies

I can be much more aggressive in foreign markets and gonna see another camp that says that this is opening the floodgates to corruption the United States has been a leader on global anti-corruption anti-fraud why would we stop now that debate will kick off as soon as the president signs the document later today amen thank you very much that update on the North Lawn of the White House. There's Eamon Javers for us. Now let's bring in Lauren Goodwin of New York Life Investments and Brian Levitt of Invesco.

It's great to have you both here as well. Lauren, you get the first shot at this market today. We know the tariffs are coming. I mean, at least we think, because it's been telegraphed that we're going to get 25 percent tariffs on steel and aluminum. And yet the market looks pretty good today. What does that say? Well, the market is reacting to tariffs in a context of an economic and earnings backdrop that's been really strong, gives a lot of resilience to some of the headline inflation and other news that we've been getting. I think, though, that one of the reasons why the market has been so incredibly well behaved

is because of the December inflation print we got in January. It's helped keep the 10-year yield relatively well balanced. It's helped to sort of create a ballast against some of these outside pressures that we're seeing. Now that we have tariffs coming in, there's been a lot of conversation about what does this then mean for the near-term inflation outlook? And I think that's a really valid question. A couple of things I'd raise for investors is, first of all, regardless of whether tariffs make a short-term or medium-term inflation outlook, this is the beginning of a, or rather, one step on a long train of trends towards a more sort of inflation-prone global economy. And so as investors, I think we have to think not only about the risks like an

inflation print we'll see on Wednesday, but also a portfolio that needs to accommodate this geopolitical and political risk more regularly. Earnings are greater than tariffs. Is that to take away? Yeah, I think earnings are greater than tariffs. I mean, the reality with tariffs is we've wanted clarity. The market wants clarity. We don't want a prolonged period of policy uncertainty. You mean even if we know they're coming? We know they're coming. Just put them on the table already, right? Just put them on the table.

Yeah, I mean, I think there was a lot of concern with Canada and Mexico a week or so ago, and then it proved to be just a negotiating point for the administration. So I think the markets have kind of viewed this as we're going to put these things out there and they're going to become negotiated. I think if we go through a prolonged period of ever increasing tariffs or broader tariffs like we saw in 2018, that could start to hit sentiment. But as of now, yeah, earnings trump. But I mean, there is a suggestion that certainly as it relates to these specific tariffs, you know, steel and aluminum, that they're more structural in nature. It's not necessarily a bargaining chip.

It's like, we're tired of the US getting, the words that they've used, ripped off. We're tired of steel dumping, et cetera. And that this is more of a structural item, not like, okay, I'm just gonna throw this out there for 10 minutes and then I'm gonna take it back and everything's gonna be great. Yeah, yeah, I mean, structural goes back to the idea of clarity, though.

The idea that, yeah, these are these may not be the same as what we saw with Canada and Mexico initially on the initial 25 percent tariffs. But but yeah, this is this is the news. Right. The whole idea of just just tell us what the rules of the game are and we'll adjust accordingly with regards to the market. How do you feel about the market overall? Are we in a pretty good spot? I mean, we're, what, two-thirds through earnings season? We've had some broadening. I mean, I think there's a fair question about what tech is going to do from here.

You heard Steph. I mean, she's a big believer and a big bettor on the fact that we're going to have this good broadening, and we're not going to really need the mega caps to drive the train. There doesn't have to be the locomotive anymore. One of the things that I took away from the conversation around tech from Stefan Jean was that there's a lot of yes and going on. Yes, the fundamental story for tech stocks, which is a big part of market performance over the last couple of years, is a robust one. There is demand for what these companies are putting forward, and it's unlikely that that demand collapses in the next couple of quarters. It is also true that the risks to the valuations that we see are starting to increase.

We're seeing more jitters related to China, related to competition, related to tariffs, even just related to market health with respect to inflation, where rates are, etc. And so this is a market where I feel, because the U.S. economy is strong, has legs. I'm optimistic. We're fully invested. But we are starting to broaden not only into different parts of the tech and AI trade, but also, again, to some of these more inflation-aware asset classes, because that is, from my perspective,

one of the biggest risks that could impact not just market levels, but market positioning. What do you think? I mean, you have to think about what's different this time. So we've been in such a prolonged period of U.S.-focused growth names, and that was really coming off of an environment where we were in a low-inflation world, a low-nominal-growth world. So what is different? Nominal growth is stronger. Inflation's at the upper end of the Fed's comfort zone. And we may see the Fed that gets to ease over

a period of time. We haven't seen that in nearly 20 years. A Federal Reserve that could gradually bring down rates, which takes some of the steam off the dollar, helps, you know, normalize the yield curve for an extended period of time. And all of that can help broaden market conditions. And we're moving there. But, I mean, what happens if nothing else? Like, assume we get these tariffs and then we get others. Yeah.

The Fed's going to have no choice but to kind of sit back and wait and watch before it makes any decisions. Before you know it, you're several months down the road here, and they haven't had the opportunity to cut like they otherwise would have wanted to because they're unsure of the fallout from the tariffs. Now, I'm not sure what Powell's going to say on the Hill tomorrow, but what about that idea? If nothing else, you've pushed back the prospects of potential cuts. You have. And if the guidance continues to be, if the thought continues to be inflation stays within the comfort zone, four and a half percent is too tight for where inflation is. Four and a half percent. At some point, you would want to get back to neutral.

I think what you identified, the big risk to all of this is if inflation reaccelerates and the Fed has to hit the brakes hard. Now, that wouldn't be good for U.S. growth stocks either. When you say hit the brakes hard. I mean, tighten if they had to start to tighten. That's the big risk to all this. If you're on hold here, I mean, I would prefer good economic growth and no rate cuts. I mean, that that's an environment where you should be getting broader market participation. So as long as growth is good, cuts don't really matter as long as they don't hike really matter. As long as they don't hike, right? As long as they're not pushed to hike, we don't need cuts, do we? I don't think

that we need cuts as long as growth is good. But the sort of other side of the coin in terms of upside inflation risk, especially when it comes to tariffs, is downside growth risk. We have expected that U.S. growth would slow over the course of this year to at or just below trend, around 2 percent, maybe a little lower. But inflation to be sticky, that's a central bank's worst nightmare, especially a central bank that has two mandates. And so the challenge, I think, for the markets is that we've seen yields come down a bit. The 10-year is sitting right near that 4.5 percent percent sort of sweet spot where higher than that, I think that any sort of financial market conditions tightening, regardless of what the Fed is saying, can still be dangerous for equities. Right now, you have a fairly

decent Goldilocks environment, right? I mean, labor markets strong enough. Rates have come off the boil. You don't have a tightness in labor conditions. We think the Fed's next move is going to be a cut. Even with tariffs, we're still, as an investor class, reasonably optimistic about the road ahead. It does feel like a Goldilocks. I mean, today is like a perfect example in the market. It's precisely what we want in the market is rates down a little bit and the equity markets performing well. It's exactly what I exactly where I would get concerned on inflation. I watch the break-evens, the 10-year inflation break-evens sitting somewhere

around two and a half. If you break up to the upside meaningfully on that, that starts to become a problem. I don't think we'll get there. You look at the labor market, you see things like quits coming down. That usually correlates with wages not going up significantly. Shelter seems to be moderating some. So all of that is a good sign. I think the Goldilocks, are we allowed to say it, Goldilocks scenario persists here. I'm not overly. You just said it.

I just said it. I was asking the Invesco compliance department if we could say it. Live on the air. You're in trouble when you get back to the office. We'll leave it there, guys. Thanks, Brian and Lauren, Right here, Post 9. All right, so Christina Parts and Nevelos now for a look at the stocks moving into the close that we need to know about. Christina.

Well, let's start with Supermicrocomputer shares. They're extending their winning streak ahead of Tuesday's business update. They're expecting to address their delayed annual report. That's what a lot of people think. Shares are up 17%. While the company actually races to avoid a NASdaq delisting by February 25th, there are some looming headwinds. Growth projections have softened, with Wedbush pointing to potential delays in cloud projects that are tied specifically to NVIDIA's Blackwell

systems. Switching gears, shares of BP jumping higher as activist investor Elliott Management takes a stake in the struggling oil giant. BP declined to comment, but RBC analysts expect the activist investor might be pushing for bigger changes, specifically in the oil and gas segment. That's why shares are up 7% right now. And lastly, shares of Monday.com soaring after earnings. And I say soaring, up 27% as the firm makes a bigger push into AI. Piper Sandler also raising Monday's price target to $385 after, of course, the upbeat

guidance and early AI opportunities. Scott. Christina, thank you. We'll see you in a little bit. We're just getting started here on Closing Bell. Up next, Michael Bappas of Vios Advisors at Rockefeller Capital is back with us. He'll tell us how he is advising his clients in the face of these tariffs and economic uncertainty, what's going on in tech and the markets in general. We're live at the New York Stock Exchange. You're watching Closing Bell on CNBC. We're back. Stocks starting the week mostly higher despite the announcement expected of new tariffs,

potentially even more expected in the weeks ahead. For more on where the markets are heading, let's welcome Michael Bappas. He's Vios Advisors at Rockefeller Global Family Office. Good to see you again. Good to see you. Thanks for having me. Are you surprised at all by the reaction in the market today, knowing that all weekend we are, you know, as of yesterday, really, with, you know, the interview with President Trump around the Super Bowl, tariffs are coming today at some point.

Look, I think I'm not that surprised. It's funny because uncertainty always creates volatility, but it seems like we always have some component of uncertainty. I thought the market hates uncertainty, though. It does hate uncertainty, but here's the key. We're moving from a rotation from growth to value. There are companies that haven't moved in two and a half, three years that are starting to move and surprising earnings on the upside. So what we really try to focus on is earnings, companies, what's driving that. Tariffs may change the landscape for companies, but we're thinking they'll be nimble enough to advise all of their people to change along with the tariffs.

All right. So just as I said to Brian Levitt, who was sitting here, earnings greater than tariffs. That's what you're saying as well. That's the whole game. Even if we get tariffs and more come next week and the week after and after that. Yeah. As long as earnings hold up. And interest rates and inflation.

Those three components are crucial. Well, couldn't inflation, I mean, be impacted by the tariffs? Correct. It could. But I think earnings still, if earnings keep strong, inflation doesn't go too rampant and rates are regulated in a way that they don't go up too much, but they come down a little bit where they are now, maybe 50 bps here or there. I think the earnings is the most important component to what we're doing. OK, so how much of that plays into your growth is moving to value? A lot. All of it? A lot. I mean, look, technology will always be here. We are in the middle of

a hundred-year technology boom that's unlike anything we've ever seen in probably in history of humankind. Now, they have moved really fast, really far. You're seeing people rotate out of them because there's value in some of these other companies that are paying dividends. If you look at the financial sector, I mean, they surprised earnings on the upside in a dramatic way. And people still only want to talk about tariffs and Trump. So it's funny. At some point, managers will start to realize it. We'll all start to realize it. And that's where we're looking to invest a lot of our clients' assets. I mean, you hit on something interesting. People want to talk about tariffs and Trump because what was expected to be a robust 2025 for dealmaking, I know we're only a month in

or six weeks in, but we just had the slowest January in as far as a lot of people can remember. Yeah. In part because of the unknown coming out of D.C. I think a lot of people sat on their hands. I think a lot of people were waiting to see what happened. I think a lot of people were, you know, he only took office on the 20th, technically, even though he's been managing this for two months now. Sure, but the market, you know, gets ahead of everything.

Precedes the economy. I think the market's going to precede the economy by six to nine months, as it always does. And again, the geopolitical landscape is always going to be turmoil there. And clients and advisors, we have to stick to focusing on earnings, focusing on what matters, focusing on asset allocation and having an alternatives component to the asset allocation to help during volatile times on the fixed income and the equity markets. I mean, alternatives really matter at this point. Low volatility, uncorrelated, low beta to public markets. You know, we're advising our clients to be, you know, 25 to 30 percent alternatives

to assist in these volatile times. Best part in that is what? Private equity, private credit. Private credit, private equity, private credit, mostly private credit right now. There's so much money on the sidelines to still be put to work. People are just trying to figure out where to go. You're going to see M&A pick up in the next probably quarter or two. And that drives earnings, that drives markets higher because there's cash and because there's been no M&A or relatively no M&A for two years. You don't you don't feel like there's too much money going into private credit.

I'm not I'm not I'm not trying to lead the witness here either. At this point, no. At this point, private credit is a big component to alternative investments. Market neutral portfolios where you're looking for arbitrage with a low volatility, even quality hedge funds, quality, you know, quality multistrats, where they're just not correlated to the markets. So that in the volatile times and while we wait for earnings to come in and while we wait to see where inflation really shakes out with these tariffs, you have a coupon that's coming in at a regular basis with a low volatility. I mean, it's non-correlated, but also not as liquid. Correct. I mean, that's one of the issues. That's a great point. You have to be prepared for. 100 percent. Liquidity is, alternatives are limited on liquidity. But most

of what we try to advise our clients on, again, is a long-term time perspective, long-term time horizon, five, seven, ten years, because in the short term, you will see volatility with everything that's going on. What about the Fed? How hung up are you on what it might do, what it might not do? Powell, the next couple of days is going to be on the hill. The markets are obviously going to be paying close attention to that. That's very important. As long as it's pretty mainstream and pretty where everybody's kind of thinking,

we'll be okay. If something outside of the lines of what people are expecting comes, that will create volatility. What if I told you they're going to cut at the most one time this year? Would that change your outlook on anything? Yeah, it would. I mean, I think we're expecting more than one cut. You are? This year. I mean, just in general, the public is. We're expecting more than one cut. And I think the president is really focused on the long-term treasury rates and getting rates to a place where M&A can happen, where borrowing can happen, where markets are in a place that they can try to do deals with other companies to drive earnings. Sure, but you can't argue that, you know, we need tariffs here, there and everywhere, but that the Fed needs to cut interest rate

you're right you're right but they're not there lies the conundrum exactly and and therein lies why we look to strata focus on earnings really i know i know it becomes redundant in this conversation but it's a place where is most important for us to watch assuming the fed doesn't do anything crazy if you have if the if these next couple days uh... something unexpected comes out of the Fed chairman's

mouth. Usually doesn't. Doesn't. That will be the only thing that really causes any volatility. But we shall see. It's good to catch up with you. I appreciate you having me. Thanks for being here. Michael Baxter joining us back at Post 9. Up next, Rivian shares are revving higher today. We'll tell you what's driving that bounce. We're back on the bell right after this. All right, we're back. Shares of Rivian moving higher today. Phil LeBeau joins us now to tell us what's driving that move, Phil. It's an expansion, a potential expansion in terms of sales for its electric delivery vans.

Remember, the electric delivery van, one of the primary vehicles built by Rivian, has been only delivered to Amazon up until now. The company, they worked out this agreement with Amazon about a year ago, but now they're officially expanding it to other companies. No sales to announce yet, but given the success that they've had with Amazon, don't be surprised if we see other companies saying, yeah, we want these delivery vans as well. Perfect for areas with a geo-fenced designated route where you can go back and charge overnight. Deliveries last year up just 2.9%. And the majority of these were the R1S, the SUV, and the R1T, the pickup truck. But there's an estimate that about 14,000 or 15,000 were probably electric delivery vans as well.

They build these at the same facility as they build both the R1T and the R1S, Central Illinois. And as they build the electric delivery vans, they have the capacity to increase that production. Remember, they're also going to be building the next generation electric vehicle, the R2 model, at least initially starting next year in Central Illinois as well. As you take a look at shares of Rivian, keep in mind that we will get the company's Q4 results February 20th. And it's important because those results will give us some indication of just how much breathing room, Scott, they were able to gain when they struck that deal with Volkswagen. They hit the first milestone at the end of last year. Now we'll talk with RJ Scaringe, hopefully on that day, and get some perspective about where they are as they look out through 2025 into 2026.

Good stuff, Phil. Thank you very much for that. That's Phil LeBeau. Up next, we track the biggest movers into this close and Christina Partsenevalos is standing by once again with that. Hi, Christina. Hi. Well, coming up, we have a weight loss drug ad that sparks controversy at the Super Bowl with two senators weighing in as the company's stock is still soaring right now. Plus, could a single social media photo signal a crypto comeback for a major gaming retailer? We discuss after this break. All right, we're less than 15 from the bell. Back to Christina with the stocks that she's watching. What do you see? Game stop.

Those shares right now jumping on speculation, and I say jumping over 9%, on speculation that the struggling video game retailer might embrace crypto. And I use the word might because we're basing that theory on a photo of GameStop CEO Ryan Cohen, as well as the CEO of MicroStrategy, Michael Saylor, which was posted on X just over this weekend

from Ryan Cohen's account. MicroStrategy is thelor, which was posted on X just over this weekend from Ryan Cohen's account. MicroStrategy is the largest corporate holder of Bitcoin. And GameStop has previously did offer crypto wallets, but they removed them back in 2023 over regulatory uncertainty. So the two of those guys together maybe signal something about crypto, maybe not. But that's why shares are higher. Surging Gears, a controversial HIMS and HERS commercial from Sunday's Big Game is generating buzz. Shares jumping about 5% of HIMS. The ad, though, criticized the $160 million weight loss industry

and claimed that competitors were priced for profits, not patience. Two senators expressing concern that the ad may have misled patience. However, you can see shares still climbing. Cut. All right. Christina, thanks. see shares still climbing. Cut. All right. Christina, thanks. Christina Pertzenevelis. Still ahead, On Semi getting slammed in today's session.

We'll tell you what's behind the drop, plus what to watch for when Lattice Semi reports an OT. We're back on the bell right after this break. All right, we're now in the closing bell market zone. CNBC Senior Markets Commentator Mike Santoli is here to break down these crucial moments of the trading day. Plus, on Semi reporting this morning, Lattice Semi after the bell. Christina Partsenevelos has those two chipmakers' results.

And Angelica Peebles on what to watch for when Vertex reports in overtime in just a little bit. Michael, you first. Had some headlines this morning about tariffs, and so far we survived it. We did. I think that maybe the first kind of pass at those headlines for the market is seems contained, seems familiar. Not a huge percentage of S&P 500 market cap is particularly exposed to steel and aluminum. The parts that are are already really up because if they're beneficiaries, if they're not, they're kind of small parts of the index. The point being, I think it was largely free of big kind of headline air pockets today. And then it became a don't short a dough market type of a story.

You do have the anchor leadership of a couple of the big mega caps and then all the frisky stuff moving along the sides. You've talked about Supermicro a little bit earlier. A lot of space stocks are flying. So you have the kind of adrenaline and the kind of risk appetites are flaring on one side. The rest of the market, indecisive and a little bit tired, but definitely resilient. I mean, and the only reason you say something is resilient, by the way, is if it's facing some kind of pressure and challenge and it's kind of not buckling against it. I think that's the case right here. We have a little sensitive to a potential growth scare brewing, nothing really alarming at the moment. And then, obviously, you know, we just simply don't know

if this little move back in rates is a good thing and if Fed on hold. I think it's a net positive, but, you know, that remains to be debated. All right, Christina, on and lattice, tell us. Well, we got a miss on Q4 revenues, down 19% sequentially, a miss on its Q1 guide, a miss on Q1 gross margins. It's no wonder shares of On70 are down about 8% today, but I say only down high single digits, which speaks to maybe investor appetite or desire to want to call for the bottom. The power chip and sensor maker has over 80% exposure to auto and industrial markets

and is particularly struggling with inventory buildup in Asian auto markets. This weakness really is echoed by similar warnings from peers like Texas Instruments, Corvo, Microchip, which is why it's important to mention it because looking ahead to Lattice Semiconductors' report after the bell, while the company also has significant auto and industrial exposure, over 50%, Rosenblatt analysts remain bullish, lattice semiconductors report after the bell. While the company also has significant auto

and industrial exposure, over 50 percent, Rosenblatt analysts remain bullish, expecting strength from their programmable chips business to offset these headwinds. And so you can see shares are up 2 percent. But when you look on a year-to-date basis, they're still underperforming the SOX ETF, a barometer for chips. A lot of excitement down here for that. And Vertex. Who knew Vertex was that popular down here on the floor of the New York Stock Exchange? But apparently it is. And it reports earnings, Angelica, in overtime.

Yeah, Scott, we're just a few minutes away from hearing from Vertex. Now, there's a couple of things we're looking for. We're obviously looking to pay attention to how Vertex's cystic fibrosis drugs and its gene editing drug for sickle cell disease did in the fourth quarter. But we're more focused on Vertex's outlook for this year. The company's had two new drugs approved since December, a new CF drug called Elef-Trik and a drug for acute pain called Jernvix. And on Elefthric, the question is how quickly people will switch from Vertex's older CF drugs. And on Gernavix, there's some skepticism that sales will really take off this year. We're also looking for an update on Vertex's sickle cell drug. It's really a procedure and it takes months to complete. And it's been more than

a year since that drug, Casgevi, was approved. And the last we heard, only 50 people have started the process of getting it. So we'll have to see how that's rolling out. Scott. All right. Angelica, thank you very much for that. Angelica Peebles. Back to Mike. We got about a minute left. The Powell appearance tomorrow could be a little spicy. Yes. First in the new administration, a Republican controlled, controlled Congress. You have to imagine that they're going to try and fail to get him to opine about whether the deficit is too wide, whether the government should be cutting spending in certain ways, and maybe, perhaps, if they should expect inflation to go down from here, which would clear the way for both rate cuts and maybe some of the tax cuts that they're looking

for. But I'm interested to hear him kind of elucidate and elaborate on what he said a couple of weeks ago. They seem like they're kind of in a happily neutral spot, pretty pleased to let things kind of unfold for the next few months. We'll see if, you know, the patience is shared by the Congress people.

You did that very well, and your face is very tough. This is every woman in J.P. Morgan's investment banking department here right now. And we'll go out green. There's the bell. We're going to get it over time now with Morgan and John.