Closing Bell - Closing Bell: China Tariffs Impact on Tech & EVs, the Road Ahead for Tesla 11/11/24

Episode Date: November 11, 2024

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.

Welcome to Closing Bell. I'm Scott Wapner, live from Post 9 here at the New York Stock Exchange. This make or break hour begins with the bull market and whether a significant move higher is really now in the cards. We'll ask our experts over this final stretch. In the meantime, the scorecard with 60 minutes to go in regulation looks like this. Bit of a breather today, at least for the S&P and the Nasdaq. The Russell, though, is the outperforming. It has been all day long. Nasdaq has been the lagger, but there's a Russell up near one and a half percent. What about Tesla? It's remarkable run continuing today.

That stock gaining nearly 40 percent since Election Day. And Bitcoin, 85,000 is the new number. 86 now. Actually, it just shows you what that has done as well. The so-called Trump trade rolling on. It does take us to our talk of the tape. What is in store for this record-setting rally? Let's ask our panel.

Trivari, it's Adam Parker. JPMorgan Asset Management's Gabriela Santos. And Robinhood, Stephanie Guild. Adam, a CNBC contributor. Everybody, as you can tell, is at Post 9 today. Gabriela, I'll come to you first because I haven't heard from you since the election seemingly changed kind of everything in this market. How should we view what's taking place and what we think could still happen?

So we're just putting our pencils down here in our year ahead outlook and coming into the election. We were calling it out of the policy, sorry, out of the cyclical storm. So really this idea that before this, we had been talking about the economy normalizing, rates normalizing, earnings growth normalizing, and it just being kind of about rebalancing portfolios. Now we've tweaked that title to be out of the cyclical storm and into the policy fog. I do think up until the end of the year, markets are going to continue to cheer this removal of the actual election result uncertainty. But then into next year, it's all about the three S's. What's the scope of policy?

What's the sequencing of various policy measures? And of course, what's the starting point here in terms of valuations in the economy? Is it really a policy fog or is there clarity now? Because we know that former President Trump, soon to be president again, wants to re-up the tax cuts. He's going to do everything in his power, he's going to think, that's going to just stimulate more growth. I think that there's still quite a lot of questions around the scope and the sequencing. So what exactly is the scope of these tax cuts? Is it just extending the TCJA expiring provisions?

That's one scenario. Or is it adding on top of that additional corporate and individual tax cuts? And that matters in terms of projections for the deficit, economic growth and inflation, and hence rates across the curve. There's also this big, big question of tariffs, right? What exactly is the scope of that versus what's been proposed? And is that something that this new administration starts to implement right away? Or is it maybe something that's used as a negotiating chip? And hence, you have more limited impacts on

inflation, the dollar and rates. Stephanie, what's your view? I actually think the markets will continue to rally. We're right at the door of what I thought was a 20% probability of getting to 6,000 on the S&P. Right now, though, I think we could get to maybe 6,300 over the next three to six months. But I'm actually a little more positive on mid-caps rather than large caps, mostly because slightly better valuations, not as risky from a higher interest rate environment that you could see in small caps. So, you know, yes, there is a policy issue may be coming. But I think the biggest thing I'm watching for that is the direction of interest rates, because that could really slow down the economy. How much of the goalposts move in the last five days or so? I mean, it hasn't even been a week since we knew the results.

But I mean, have the goalposts really moved that significantly? Because the market is clearly placing its bet that the answer to that question is yes. Yeah. I mean, if everything is a distribution of outcomes, the distribution got shifted to the more bullish side, with the biggest difference in my mind being the specter of more M&A. And you saw the M&A firms have a huge day Wednesday and beyond. Continuing. I mean, the financials are the strongest group today. It's the banks, it's PE firms, it's all the ones who play right into the wheelhouse about what you're talking about. Yeah, we wrote Morgan Stanley KKR on day one. To me, that's incremental.

We have clients. We sell our content to law firms and boards and management teams and companies, as you know, and they're super busy. I mean, these people are not planning on having a good Thanksgiving in terms of wasting time. People are very busy trying to figure out, can they close deals? There's a lot in the pipeline. So that's a little bit of maybe frosting on the cake of the bull case that maybe wasn't in the bull case a week or two ago. And I think once you see some mid caps get taken and small caps, it brings up the valuation for stuff in the same industry.

And that's kind of how you get a bit of a more bullish scenario. What we wrote in our notes Sunday was, do you sell the inauguration? I mean, everyone's universally bullish on, you know, now to the end of the year. And at some point, maybe you do have to get a little bit of clarity on what some of the policies can be, what it really means for earnings out two, three years. But I do think for now, the bulls are in charge. That's been the thought, right? You have sort of a free pass, if you will, from election day to inauguration day. And then maybe all bets are off for a little while once we get through the mud of policymaking and all of that stuff, which comes with some will from Election Day to Inauguration Day. And then maybe all bets are off for a little while once we get through the mud of policymaking and all of that stuff, which comes with some innuendo

and unknown. And I do think investors will have a little bit to chew on here in terms of policy, in terms of some of these cabinet and advisory appointments and nominations, right? So eyes on who's going to be the Treasury Secretary, who's going to be at USTR, at Commerce, since some signs. But yes, probably through Election Day, there's a little bit more of a less of a focus on the policy. And for us, we are still quite bullish when it comes to the actual equities and corporate credit environment, where I think the outlook particularly change is much more on fixed income and FX. So we had expected interest rate volatility to come down. Now it's likely to remain elevated across the curve.

We had expected the dollar to continue to weaken. Now it's probably going to stay elevated and volatile. Versus for equities, unless there's truly a massive scope of tariff increases next year, I think that's still an environment it can move higher. How do you think your user, I should say, Stephanie, average age 34, is now thinking about the investing horizon moving forward? Let's not forget that Robinhood obviously has a younger, skewed investor base. So these policies are going to have outsized impacts on certain groups over another in the runway of their investment horizon, if you will. There, I mean, they've always thought long-term, like if you look at what they own and invest in, it's been things that don't necessarily work in one given moment or another, but do have this long-term trajectory. So electric vehicle

names across the board, Tesla being the top one, has been owned for a long time. And that ownership given moment or another, but do have this long-term trajectory. So electric vehicle names across the board, Tesla being the top one, has been owned for a long time. And that ownership, we really started to see pick up, especially around the election. They just tend to take a higher term, a longer term horizon. Crypto assets, right? Crypto assets. These are kind of the Robin Hood wheelhouse in some respects. And you guys have new products to be more of a reach out to that investor. We're talking about stuff like that, maybe a little more speculative assets, too. I mean, yes. And I'd say on the margin, like they all have these core positions that they invest in.

And they're the things that they know and use every day. Like Apple is practically a utility company for this generation. And so they're investing in those. And then what they tend to do is sell when things go up quite a bit and then buy back in when there's a dip, for example. And NVIDIA is perfect stock for that from here and there.

And so they do take these long-term views. And I'm not sure the election so much changes that. It's really just reinforced that their positioning was good, at least for now. You put forth the idea the other day that, I mean, you could have S&P earnings double, I think, over the next five years. It wasn't like 20 years from now. It was like the next five years. And that, you know, the S&P could be at what? What was your number?

It was like 10,000 or something like that? 10,000 by 2030. We were here in election night. I was getting a little lathered up. But yeah, that seemed possible because I think you could get above normal earnings growth if you really get productivity from AI deployment. And with the hoped for from his administration policies that will lead to a higher level of growth. Thus, you can maybe grow your way out. You're going to hear a lot about that, right? We can

redo the tax cuts and we can maybe cut them even further. We're not so concerned about the deficit because we can grow our way out of trouble, so to speak. If you can get nominal GDP up to a level where you can do that, you're probably going to hear a lot about that. Does that mean that the market's going to be less concerned with elevated interest rates, particularly on the longer end, as we think about what the deficit's going to be and mean? Yeah, two things. One is that goalpost, you know, I don't do rates, I do equities, but that goalpost, my whole career has moved. I remember 10 years ago saying, ah, it's 3% 10-year, the whole market's screwed.

And then it's three and a half. Like that moves, if the economy's strong, the long-income backup, things will be fine. At some point, I think people will say, you know, you got a bunch of high net worth individuals say, all right, 7% of the 10-year, I'll move some over. But I think we're pretty far short of that. I think there's five or six things that are going to grow way above GDP. It's AI semis. It's select software. It's housing and building materials.

It's electrification industrials. It's power and utilities. It's health care services. There's a lot of growth areas. So I spend a lot of time with investors trying to think about how correlated those growth themes are to make sure they're diversified across them. But I think there's lots of things to be optimistic. They're going to grow above GDP solidly. I don't think the politics really affect the three and five year growth rate of those businesses I just listed off. And so there are a lot of- But overall economic growth though,

rising tide lifts most, if not all boats. Yeah. And that should be good for equities generally. The only thing I'm worried about, and you see this probably more than I do day to day, is a year or two ago there were a lot more cautious cross-asset types when the market was 40% lower, and now they're kind of shifting to be a little bit more optimistic. So I've got to keep an eye on sentiment and the consensus, but I think for now the specter of, let's say four hundred twenty five four forty sb earnings in twenty thirty and you pay low twenties time that a ten thousand as a bcms close to base case to me then

and you know smoking peyote so i i think it's ok yeah what would you do you know that notice will be a lot of now but i don't know you can go investigate that you let us know that is that probably the right now that i don't have to have a good look at that no comment on that that product of as a for the tf but No. Is that Robinhood? No comment. Is that a product? I mean, as a as an ETF. But I think Gabriella, please rescue us quick. I think when it comes to rates, it's important to think about why would they be moving higher and where to. So in terms of the why, if it is a good mix of higher growth and you're primarily coming from higher real economic growth and yields move higher,

but they kind of settle around where they are, 4.3 percent, then no reason for alarm for equities. I think some of the policy that we're talking about next year and there being a bit of a fog is whether that growth mix starts to shift a little bit more towards inflation again. And you're talking about tariffs primarily. And as a result, whether rates move up because inflation break-evens are moving higher, maybe the deficit also plays into that. And then we start to test the 5% ceiling that we had gotten close to in the middle of next year. So to be determined, but unfortunately, interest rate volatility is still very much front and center next year for longer. Think that too? I think we're in the fourth soft landing since 1960 because we saw the Fed starting to cut rates because inflation started coming down.

I think margins were allowed to compress. If you look back at the last couple of years and even expectations of the future is that CapEx growth was higher than sales growth in the S&P 500 companies. And when you have something like that, that means there's greater R&D expectations of the future is that CapEx growth was higher than sales growth in the S&P 500 companies. And when you have something like that, that means there's greater R&D and there should be greater growth. So in many ways, I agree, but I do think interest rates matter and they will matter at some point. And I think the bond vigilantes could come out again if the deficit doesn't get dealt with at some point. I mean, it's 1.8 trillion. I just think if it's strong growth that's causing the 10-year to back up, I think everything

can work. If it is the bond vigilante, that's a different scenario I would agree with. But I think for now, look, you talked about relatively young 34. I mean, I know there's some large private world networks where their average financial advisor is 65 and their average client is 69. It really just depends on the mix of your client base. But if you're 69 and you're a high net worth guy with 20 million bucks, that's 7%, 10 year, 6.5, you might say I'll move a few million over. But any institutional investor I talk to who does equities thinks they can beat 5% or they can't get out of bed every day. So I don't think 5% really changes the algo that much for big cross-asset guys. So I think the market

can be fine at 5% 10 year yield. So we're at 6,000 even as I ask you this question. I mean, how much, Adam, do you think, I mean, how much of a ramp do you think we could have between now and the end of the year? What seems reasonable? There's a target that went up today to 6,200. It was somebody who's been chasing. It was Oppenheimer. They raised it for like the third time. So you've got chasers on both sides. You have chasers on the, you know, sell side. You have chasers investors are chasing. Everybody seems to think that this market's got legs. We look back over the last 98 years.

We had data since 1926. And we looked at years the market was up strongly, January 1st through October 31st, 20% or more during those years. And it's a very high hit rate when the market was up strongly, January 1st through October 31st, 20% or more during those years. And it's a very high hit rate when the market's up that much. It continues to do well in November, December. You add on this Republican sweep and the specter of more sort of bullish scenarios unfolding, empirical evidence says usually you rally another 5% plus during that time frame. Now, we've already had that 5% in November, so it's hard to tell,

but it feels like it'll be above average this time. 6,300 is just a few percent higher. That seems pretty reasonable to me, but I am worried, and people I've talked to in the last couple of days are more trying to figure out, do we just get kind of a nasty rotation in January like we had in January 23?

If you remember, the best short ideas you could have had were Meta and NVIDIA in 2022. And then you had to get max long on Jan, first day of trading in 23. So people are trying to figure out, do I trim a little in December just in case we get a rotation? We'll see. It's a little early for people to start doing that. But I wouldn't be shocked if we have a different conversation in three weeks. Are we in a protracted underperformance for MegaCap? As long as we're sitting here talking about way above trend growth

possibilities, is that the trade that's going to suffer the most because you're just going to now try and make it up elsewhere, whether it's, you know, mid caps as Stephanie likes or small caps or wherever outside of the mega caps? And I think the parallel to me is also this time last year, we had a really powerful rotation November, December. There was that catalyst, the Fed finally signaling that there was truly the end of the rate hiking campaign. And maybe this can be the catalyst, right? The removal of that election uncertainty. And from the list of policy items that we've been talking about, if you look much more at the value sector, if you look much more at mid-small caps, those are

ones that benefit much more from the constructive items on the policy agenda when it comes to deregulation or when it comes to at least being insulated from some of those tariff issues down the market cap spectrum. So the outlook for equities hasn't changed as much as we've gotten more conviction that you can continue to see this broadening out, not because economic growth is going to pick up, but because you finally have a catalyst and we're continuing to see earnings for the rest of the market come out of two very bad years for earnings contraction. It's easy to sit here when almost everything theoretically has been going up since the election and say, well, I like this and I like that and this and that and everything's gone up. So you feel great and you look good with the calls

too that every everybody has has made. But what about what what don't you like? What's the area now that maybe has changed for the worse? Well, for me, actually, I think small caps have a lot of expectations already built into them. I made a call in June, actually, for small caps. And I think now with the rally post-election, it's starting to look a little bit like a lot of things are built into it. A lot of growth has been into it. For 2025, I think earnings expectations are 40 percent, earnings growth expectations. So that's why I kind of was preferring mid-cap over small cap, because I feel like it's sort of the middle child that gets forgotten. But it's actually in a perfect place to be from an

valuation perspective, but also from an earnings growth perspective. But I also have been very negative on bonds in general, like any duration. I just have not liked. Yeah. How would you answer that? What's like a stay away or watch out for? Physical retailers. Still, that hasn't changed? I think they're terrible. mean uh... yes miss won't uh... proved to go up as much as people think uh... i think the banks small ones that don't benefit from eminem transaction maybe up a little bit too much to maybe a little bit of uh... okay i'm excited that there's less regulation in the rate environments

better but i'm playing pretty far above tangible for a lot of these things now. So I want exposure to the ones who benefit from transactions. So I'll own a Morgan Stanley or something, but I don't know why I need to own some of these regionals that trade, and they're up a lot. So, I mean, all the stuff that's ripped, you're saying, well, would I fade?

We're trying to give you some of those. Or what you would, like energy, for example, was the worst under trump the first time yeah now there's you know there's always like idiosyncratic things that happen that that cause those types of performance but should we expect something different this time and if so why i don't know why um if we're gonna if if the perception for the current moment is we're gonna be more liberal with supply it will be bad for pricing and those stocks don't act well when prices go down. So I don't think you want to be overweight a ton of energy or gas at the current moment. We have market weight in the S&P, which is only a few

percent. But I don't see why that would massively outperform until we get more clarity on how much supply. Higher growth, higher demand. Could be, but there's a very high correlation between the change in the oil price and the change in the net income of the energy sector and if people think there's going to be ample supply we'll see what OPEC and other organizations do but right now it's hard. And also the dollar. Yeah I was just thinking that too. The dollar. Stronger dollar than maybe some expected obviously.

The stronger dollar is bad for the mega caps too on average it hurts them a little bit more. Yeah. Gabriela how would you handle that question? For me. What don't you like? So for me the biggest change when it comes to this translation of higher rates, stronger dollar, is thinking about non-U.S. equities.

And I think before the election, there was some nascent momentum and flows going into your more cyclical parts of international markets. Specifically here, I'm thinking about China and Europe. I think at this point, the uncertainty around tariffs and around how much really Chinese stimulus can offset some of that uncertainty and that actual perhaps implementation. To me, it really changes the outlook within international to focus again much more on the structural, more insulated stories. And here to me, it really stands out India and Japan.

All right. We will leave it there. Stephanie, thank you. Gabrielle and Adam as well. We'll see all of you soon. Great to see you. To Pippa Stevens now for a look at the biggest names moving into the close. Hey, Scott. Bitcoin topping 87,000 for the first time ever as the post-election rally continues. With President-elect Donald Trump and other pro-crypto candidates set to take office,

Bitcoin has climbed about 29 percent since the election and has more than doubled this year. And shares of Block are up after Piper Sandler assumed coverage of the stock at overweight with an $83 price target. Analysts said they are impressed by the company's margins and expect it to benefit from a continued shift to electronic payments. Shares also getting a lift from post-election enthusiasm for payment stocks and block is up 11 percent. Scott. All right, Pippa. Thank you, Pippa Stevens. We're just getting started here up next. Driving in the fast lane, Tesla shares, as I said at the top, surging more than 40 percent in the past week alone. Star analyst Dan Ives is here. He has a new title.

He's going to give us his new views. He thinks Tesla's just getting started. He'll make his case next. Welcome back. Tesla shares popping yet again today, continuing to add to that post-election pop. My next guest calling President-elect Trump's victory a, quote, game changer for the EV maker. He's raised his price target now to $400 from $300. Joining me now, post-9, is Wedbush's Dan Ives. He is now the global head of technology research. A new title, a fancy new title to go with your jacket. Welcome. Thank you. Congrats. Thanks. All right. So why is this a game changer beyond the obvious of what people have seen thus far? This, what is a new and cozy relationship now

between President-elect Trump and Elon Musk. Yeah, I think it's really, it's the autonomous piece. I mean, if you look at full self-driving autonomous, I could argue it's the most undervalued AI play in the market today. And I think autonomous cyber cab in the timing, I think it could get accelerated two to three years And that's important in terms of from the sum of the parts this stock that could add a trillion dollars of valuation

Alone and you could be looking at 20 30 percent more revenue per year that you even see today You think two trillion dollar valuation over the next 12 to 18 months is reasonable. I think it's conservative, potentially, if they actually execute on the vision that I see, not just in terms of autonomous and AI, but really it's more about that software penetration within Tesla's from an FSD perspective, it changes the whole business model. I'm trying to think of, so they have less than 10% market share in China, correct?

BYD's got like a third. Demand for EVs is already sort of slowing globally. So if you have a pickup in tariffs and you have what is a more protracted trade war, what does that do to Tesla's prospects in China? And there's one big X variable. The bet for the ages. Pardon the pun. No, I think the bet for the ages for Musk was betting on Trump because he is going to have a significant seat at the table when it comes to the China tariffs. I think especially on the AI trade, I fully expect there'd be carve outs relative to Tesla

and Apple when it comes to any sort of tariff back and forth. And I think within China, Musk has been that sort of 10 percent politician, 90 percent CEO. China just had a record quarter, if you look back. So I just I'm not of the belief that China is going to be a huge headwind. I think overall, this is a game changer for the story. You know, when you look at what I think over the next 12, is there any spreading yourself to thin risk? You know what I mean? Yeah. Right. Guys running like all sorts of stuff. And now he's got a foot and a half in. He's going to have a foot and a half in the Oval Office whenever he wants it. But being essentially a whisper, really a strategic advisor for Trump, I mean, it's going to just put another sort of balancing act for him

between SpaceX, Tesla, Boring Company, and others. But my view here is that investors will take that because Musk having a strategic view and a strategic, I think, essentially chair in the White House is significant for AI, it's for autonomous. But most importantly, the biggest regulatory issue that they've had to navigate from an autonomous perspective, a lot of that now starts to dissipate. And that's a key part of the value.

I mean, I ultimately look at this as unlocking a trillion dollars of value in Tesla, AI and autonomous. Simply because of Donald Trump's win? Simply because of Trump's win, because Trump's win changes the whole game for Musk, for Tesla, for autonomous, for FSD. They'll still have issues on states. This is not going to be, you know, 100% smooth road, but this is a much different stock than it was a week ago with Trump in the White House.

Is there any risk whatsoever? I mean, I whatsoever? I mean, I know, I mean, I ask you this just as like kind of devil's advocate. I don't know what the likelihood, if any, there actually is. But is there any risk whatsoever of a larger role, bigger than foreseen within the administration to where he would potentially be a seller of stock? Sure. So I don't I don't see that Musk is going to take a formal cabinet position. We'll call him like an AI ambassador. He's going to be very strategic, I think, in very key aspects on tech, on tariffs, on AI. But I don't see any issue from a cabinet perspective, selling of stock. And I'd also say broader, from a tech perspective, whether you're an NVIDIA investor, Apple, Musk having a say in AI and in tariffs when it comes to China, as odd as it seems, there's actually a comfort in him having that seat on the table versus a 202 bureaucrat.

So I mentioned your new title, and with that comes with a little bit wider scope of a coverage universe now, including NVIDIA. How do you see the political debate around selling chips in China? Is there risk around that now more so than ever because of the relationship that Trump's going to have with the Chinese? Yeah, I think it's a bargaining chip because Trump, Musk, everyone knows there's only one game in town. It's NVIDIA, right? It's Godfather of AI, Jensen, NVIDIA. And this is going to give them more negotiating power in terms of chips into China.

And it's something that's going to ultimately play out. You saw the tariffs. I think it's had a contained impact on NVIDIA. But it continues to be our belief. This is all setting up for a golden age of ai not just for nvidia but for broader tech but it's a bargaining chip as they negotiate with beijing what about speaking of negotiations with beijing what about for a company like apple which is trying to embed you know all this new technology around ai and it wants to sell a lot of these phones within China,

they're obviously not expected to be that open to just allowing anything to be sold in their country. What kind of risk is there around that if there is some escalation between the two countries? And I think no one understands that better than Cook in terms of the China sort of dynamics. I continue to believe they get a strategic partner in China, better than Cook in terms of the China sort of dynamics. I continue to believe they get a strategic partner in China, whether it's Baidu, whether it's BABA,

that's gonna be, we'll call it the AI partner for Apple when it comes to iPhone 16, eventually iPhone 17. And I think that's why China is gonna be a strength for Apple, not a headwind. Because you can't have a carve out for everything, right? Not every single company is gonna to have its little carve-out which enables what is an acrimonious relationship between China and the U.S. to just benefit X, Y, Z company. And this company here, at some point, broader

policies in this country are going to impact big businesses. No doubt. But I think Musk being involved changes the whole landscape. And I think that's something we're intact. The reason you haven't seen tech sell off in terms of worries about tariffs, there's a view Musk understands in terms of there will be poker moves played, but no poker move was better than ultimately him betting on Trump. Because now we're talking about something that's going to be, I think,

trillions of dollars. That sure looks like a royal flush that he had in his hand. Lastly, and then I've got to go, NVIDIA. What is next week? The earnings, right? What do we think about this heading in? Get the popcorn, get the watch parties ready. I mean, this is going to be a jaw-dropper.

I think streets still underestimating in terms of where numbers go over the next one, two years. I think this is one they will battle, but ultimately four trillion mark caps on the horizon. We'll leave it there. Dan Ives, new title and all comes to Post 9 and shares his views. We appreciate it as always. Thank you. All right. Coming up, navigating the post-election pop. Citi's head of equity trading strategies here to break down his playbook into year end. And the two main risks he's watching could potentially derail the rally. Closing bells coming right back. We are back.

Stocks off the highs of the day, though. The Dow and the Russell 2000 are still riding a post-election high. The Dow now on track to close above 44,000 for the first time ever. Joining me now at Post 9 with his post-election playbook is Citi of Equity Trading Strategy, Stuart Kaiser. Welcome. It's good to see you. Thank you. Are you as bullish as seemingly everybody else? Yeah, I mean, we're feeling pretty good about things. There's a lot of things to like. Number one is you got this big event out of the way. You know, folks had de-risked a little bit going into

the event, a lot of vol premium priced in. I think all that's coming out. If you're going to be cautious, I just think it's the speed of the move you've seen and some potential risk maybe spilling over from the bond market. So generally speaking, good. Yeah. For how long does this last? Do we think I mean, what seems reasonable to you? I mean, we figured three to five days post-election you would need to get the positioning and the sentiment kind of rebalanced. And then from there, you're back to the data. Right. And that's, you know, what are we getting from U.S. economic growth? What are we getting out of the Fed? How do earnings kind of wrap up? All of those things. But, you know, it does feel like the end of last week, a lot of the positioning got cleaned up. And hopefully we're back to, quote, unquote, normal operation.

Is it reasonable to think now that what certainly felt like to many, you know, too high valuation or at least expensive now needs to be reset in and of itself? Because now we think and we're positioning for a higher level of growth than maybe we expected. Thus, valuations will be justified if not expand even further. Yeah, I think that's really the debate because a lot of people are saying 2025 earnings look maybe a little bit high. But if you believe they now. Well, that's the question, I think, is do you think you're getting enough of a growth impulse out of the deregulation and sort of the Trump policy mix to compensate for what looked like EPS that was a little bit high? And I would say it's hard to say exactly, but I think, yeah, people are probably a little more comfortable with

what that earnings number looks like, which to your point means valuation perhaps less of a challenge than it was, call it, four weeks ago. Isn't that the baseline bet at this point, where sort of all bets were off before? Now the baseline bet feels like, you know, the policies that are going to come forward, especially if there's a significant enough margin in the House, which is still to be figured out, but it looks it's going to be a red sweep. Doesn't that change the game on the way we look at all that? Yeah, it does change the game in terms of the growth outlook. You know, the other part of it, though, is there are parts of Trump's sort of policy platform that markets might not necessarily like. Right. So we're going to have to like, as I said, once you get the positioning out of the way, now it gets down to brass tacks.

Right. It's what is growth doing? What is the Fed doing? What are these actual policies and how do those translate through to growth? But, yeah, I think to your point, we've the floor has been raised at minimum and potentially the ceiling as well. Well, the ceiling, when you talk about what's the ceiling in yields and how much of an issue is that? If we break through the ceiling and we start to get to an uncomfortable level, where's the problem with that? Yeah. And I think that's exactly the case. You know, our view is equities are OK with the 10-year yield rising if that's coming from growth, right? If that yield starts rising because that's coming from growth, right? If that yield starts rising because it's coming from deficit or fiscal or tariff risk,

that becomes like a very, very different discussion. And we saw a very big rise in long-term yields and the term premium going into the election. And look, you know, I mean, we were joking, hey, if you have the 10-year yield at 475 next week, the market's going to, you know, catch attention. So to us, it's not necessarily the level, it's the speed of the move. And I think what happened last week is you had an initial move higher, right? The 10-year got to around four and a half. Then it moved sideways. And when it started moving sideways, I think that was basically a turnstile for risk to go on. And that's the situation we're in. Bonds are close today, which made it easier. If you want to hedge against higher yields, which you obviously think could be a concern, how would you do it? We've been looking like in the equity world, like TLT put spreads or something like that, something a little further

out of the money. You know, we were sort of saying, hey, let's hedge this if yields get, let's say, above 5% on TLT as a yield equivalent. So that's one way to do it. You could play around with sector weightings as well. But, you know, our view is run long core equity, have that tail risk hedged if you are concerned about it. And I think TLT is a quick and easy way to do it. You see the Russell 2000 since we're talking about, you know, if you want to run long equities, like you said. I mean, is it time to really run long with small caps finally, you know, go deep? Hopefully, yes. You know, it's funny because people have been wanting to play this broadening trade for six or nine months. Right. And over the summer, it caught a little bit of a bid on the inflation data and it actually broadening out of earnings. It does feel like there's more of a runway there, particularly

because financials and energy are such a big part of small cap. I would say, though, the thing clients seem most interested in is, yes, owning small cap, but owning the profitable, high quality small cap. I think people are a little hesitant to kind of go way down the cap structure. But, you know, profitable small cap is a really interesting kind of place to live right now. Do you like profitable small cap over, say, larger cap, which may be more in the crosshairs of a more serious trade war again, for example? Yeah, I think, I mean, it's funny you mention that. It's like a sneaky benefit of small cap, right, is it's domestically facing.

Yeah, exactly. That's what I'm thinking. Yeah, exactly. And I think financials as well. Financials is cyclical, but domestically facing. So I think people do want to be in that domestically facing cyclical place as long as that recession risk doesn't pop up. The problem is for like, you know, as you said, the regional banks, you're more susceptible to pain from higher rates. Yeah. So what benefits you on one side of the trade kills you on the other? I mean, look, if it was easy, everybody would be doing it, right? But no, I mean, these are the tradeoffs.

And over the summer, it was the same tradeoff. It was, I want to be in small cap, but then growth started to slow. And you were thinking, geez, can I be in small cap if U.S. economic growth is slowing? Now it's the opposite. I want to be in small cap, but I'm worried if rates are rising. And again, I think this gets back to the why. If rates are rising for growth reasons, you want to be in small cap, but I'm worried if rates are rising. And again, I think this gets back to the why. If rates are rising for growth reasons, you want to be in small cap. If that fiscal tariff thing gets triggered off, then I think you don't want to be in small cap in that environment. And

that's why in Arby, you still have to be a little careful here. This is not an all out. How are you thinking about non-traditional assets? I mean, I know you're the equity, you're head of equity trading strategy, but like Bitcoin's going crazy and you're going to have more interest and you're going to have a wider investor pool, which now believes that there's something there from somebody that people are already calling the, you know, the Bitcoin president, for example. How do you deal with that? Yeah, we don't look at Bitcoin specifically, but I would say I'd put Bitcoin into the same category as gold or other kind of risk sentiment trades, right?

I mean, you're not owning Bitcoin, most likely, unless you're pretty convinced that the economic growth backdrop is pretty decent or that the policy backdrop is super supportive. You are all just talking about Tesla before. I know Bitcoin is different than Tesla, but these are also trades that you have to have confidence in the policy platform being there behind you, I think, to be in there. And to your point, that's where we are right now. So it's not something I step in front of. Let's put it that way. All right. We'll leave it there.

Stuart, I appreciate your time. Thank you. Thank you very much. Appreciate it. All right. Up next, we track the biggest movers into this close. Pippa Stevens is with us once again with that. Hi, Pippa.

Hey, Scott. A health care merger is no more, and that is sending one stock higher. The name to watch coming up next. All right. We're less than 15 from the closing bell. Back now to Pippa Stevens for a look at the key stocks that she's watching, Pippa. Hey, Scott, Cigna is jumping after saying it will not pursue a merger with rival Humana, but did say it remains committed to its established M&A

criteria, only pursuing acquisitions that are strategically aligned, financially attractive, and have a high probability to close. Cigna also reiterated its 2024 and 2025 guidance. And shares of Salesforce hitting a record high as the software company reportedly readies to hire 1,000 people to sell its Gen AI product. That's according to Bloomberg. Jefferies also reiterating its buy rating and lifting its target to $400,

noting a pickup in demand, saying that large deals are coming back. Scott? Thank you very much. Pippa Stevens still ahead, grinding higher. Starbucks shares popping today after bullish commentary from the company's CFO. Bringing you the details after this break. Welcome back.

We're now in the closing bell market zone. CNBC Senior Markets Commentator Mike Santoli here to break down these crucial moments of the trading day. Plus, Kate Rogers on why Starbucks shares are rallying today. And Julian Borsten looking ahead to Live Nation and IAC earnings out in overtime. So the rally, for the most part, continues, though not in every part of the market today. No, it continues in a similar fashion, which is mostly about rotating toward these perceived, you know, improved growth, cyclical beneficiaries. Definitely not been an across-the-board indiscriminate buy,

even from the beginning. And you could take that as a good or a bad. It's obviously the markets being selective and discerning about what's going to work. The other piece of it, though, is it's just not a washed-out market where you get one of these massive breath moves that creates its own self-fulfilling momentum. That's usually when you're coming off a big correction.

But, you know, it's part of the action today, aside from the cyclical continuing to work and the mega cap tech retreating, is this flight from quality. I mean, crowded shorts are getting run up. I mentioned earlier. You mentioned memes, right? The meme stuff. Anything that seems like it's got just a real leverage to just high spirits and maybe the bulls asserting their dominance in the short term?

High spirits or high places. I mean, DJT up 5% today, up 30-something percent in a month. We could get the first close above 44,000 today. We're going to get that. We haven't gotten a close above 6,000. We're a few points away, so we'll see how we settle out. Yeah, we're playing around with these levels. And I would also point out the Russell 2000 is like seven points from a record high, We haven't gotten a close above 6,000. We're a few points away, so we'll see how we settle out. Yeah, we're playing around with these levels.

And I would also point out the Russell 2000 is like seven points from a record high, which was set almost exactly three years ago. So, you know, that's a long time coming. If we do get a breakout, you're going to have some people kind of, you know, banging the pots and pans about that. I want to acknowledge the fact that the United States Marine Corps is here today on this Veterans Day. We're surrounded by many servicemen and women today on what is the 249th birthday of the Marine Corps. So they're going to be on the podium today here at the New York Stock Exchange for the honors. And we salute their service, of course, as I said, on this Veterans Day. Kate, why don't you tell us what's

going on with Starbucks today? Hi, Scott. So Starbucks shares were up just under 3% today. Best performing stock in the restaurant space. TD Cowan out with an update note today after a fireside chat it hosted with CFO Rachel Ruggieri, focusing on Brian Nichols' back to Starbucks plan. TD has a buy rating with a price target of $110 on the stock. Now, in his note, Andrew Charles, the analyst, wrote, quote, we get the sense that management is moving with a sense of urgency to improve traffic via improving speed of service and broadening marketing or key tenets of Chipotle's success during Mr. Nichols' tenure. Now, a reminder, the company did suspend its 2025 guidance due to both the CEO change and the business performance. Earlier this month, Starbucks also announced the hiring of new chief brand officer,

Tressie Lieberman, who worked with Nickel at both Chipotle and Taco Bell. But they say it should take about two quarters for those marketing efforts to really pay off. Scott? All right, Kate, thank you. On the same day that Chipotle gets its formal CEO today, too. So there's plenty of news on your beat. To Julia Boorstin, who has some earnings coming up on your beat. Thank you. That's right. Well, going into has some earnings coming up on your beat. Thank you.

That's right. Well, going into Live Nation earnings, those shares have gained about 5% over the past week since the election on expectations that a Trump administration will give it a higher chance of settling the lawsuit by the DOJ. Now, Live Nation's revenue is expected to decline 5% and earnings per share to fall more than 10% on some tough comparisons. But 87% of analysts rate LYV a buy, citing robust demand for live events, the expectation of more stadium events in 2025 driving ticket volumes, and the opportunity to improve per-fan monetization. Meanwhile, for IAC, analysts expected to show a 17% decline in revenue and a much smaller loss than a year ago of 22 cents per share.

IAC's digital ad division, that's Meredith.dash, is expected to benefit from operational improvements and a pretty strong ad market, and also to show ongoing challenges at its Angie division. Meanwhile, investors are going to be looking for indications of where IAC plans to deploy its cash. We have an exclusive interview with IAC CEO Joey Levin that's coming up in closing bell overtime. Scott. All right, Julia, good stuff. Thank you, Julia Boris. We've got less than a minute left, Mike. I mean, you get a reprieve today on bond yields. Bond market closed,

obviously, for Veterans Day. We're right about 430 on the 10-year. So we'll see how that progresses in this week as well. No news is good news. I still think that you have a little bit of room. Let's say you go up to four and a half. I think right now you have the cover story of, hey, everything's happening because growth expectations are going higher. So you can sort of rationalize away the next little bit of bond yields if you so choose. For that matter, that's also distracting people away. In fact, the 2025 earnings estimates have been on the decline for a while. The market's not getting any cheaper. But for now, it doesn't much matter. We're trying to get that first close above 6,000 with the United States and the report here on Veterans Day. We might just get it, too.

The Dow's going to go out above 44,000 for the first time ever. So a big day in what is a big bull market.