Closing Bell - Closing Bell: Crypto Under Trump & Netflix Earnings 1/21/25

Episode Date: January 21, 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, guys, 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 stocks on the move as President Trump spends his first full day back in the White House. Let's show you the majors with 60 to go in regulation. Green everywhere, as you see here, as no announcement comes of any tariffs just yet. And that's been welcomed by both the bond and the equity markets. Yields were down. Stocks have been up all day long. Take a look there at the 10-year, specifically 457. Individual stories today. Oracle shares are jumping on news. It's planning a joint venture on AI infrastructure. That announcement, according to our own Eamon Javers, coming 4 p.m. Eastern at the White House. We are also counting down to Netflix earnings after the bell in OT.

That stock's been on a huge run lately. So we'll ask our experts, including a shareholder, how much more it can actually run from here. It does take us to our talk of the tape, the road ahead for stocks in a new Trump administration. Let's bring in our panel to discuss. Liz Young-Thomas is head of investment strategy at SoFi. Anastasia Amoroso, chief investment strategist with iCapital, both here, as you see, at Post9 with me. Ladies, welcome. It's good to see you. Liz, you surprised by this reaction in any way? I mean, what do you think it means about where stocks are heading from here? I wouldn't say I'm surprised. I think the timing of it was beneficial, right? We had inauguration, this is first day of new administration,

on the heels of the 10-year down back closer to four and a half, which we know was sort of that friction point where stocks stopped liking it, and two inflation prints that didn't scare us for the end of 2024. So I think we're coming into this with the momentum intact from a sentiment perspective and the expectation that this is going to be a friendly and pro-growth business environment. And then the domestic focus that I think we all expected has also remained intact. So that's why you're seeing some of the industrials doing really well today, some of the more domestic focused material stocks, things like that benefiting from this. Anastasia, is this about no tariffs principally today? Because the commentary from the street is don't get too complacent for too long about that. Wolf today says,

our view is still they're going to be big, but slow. What matters more, the size of the tariffs or the implementation of them? I think all of the above. And today, Scott, I think partially the market reaction has to do with no tariff announcement just yet. But I think today is also about this enthusiasm about supporting critical themes for the United States, like artificial intelligence. That's why you see some of the AI baskets do really well. But to come back to the point on tariffs, I agree that we shouldn't completely not care about the tariffs. I think they're coming. I think they're coming. They might be staggered. They might be differentiated. They might be negotiation tactics. But I think one thing that I've been hearing loud and clear from the administration officials is they believe tariffs are the way forward. They don't believe

they're going to stoke massive inflation because there might be currency offsets. There might be countries lowering their prices. So I wouldn't get complacent about this yet. And I certainly would expect, if not a universal tariff, but tariffs on China, maybe Europe. I mean, yeah, everybody's found religion, I guess, on tariffs over the last however many months. And by the way, it's a revenue offset. As we talk about budget deficits today, we collect something like $76 billion in tariff revenue. If you scale all that up to universal or China tariff, that's $300 like $76 billion in tariff revenue. If you scale all that up to universal or China tariff, that's $300 or $400 billion in revenue. So that's why people

care. What do you think about the issue as it relates to the market activity today? Like, if we would have gotten an executive order about tariffs yesterday, you think the market would look like this? No. I think today it's been a relief, right, that we didn't get something stronger than we were expecting. I absolutely agree. Don't be complacent. I think today it's been a relief, right, that we didn't get something stronger than we were expecting. I absolutely agree. Don't be complacent. I would add to that, the last time that we went through this, there were a lot of retaliatory tariffs. And that's what actually drove a lot of the volatility in the market, too. So there could be more announcements that come if and when we decide that we are going to place tariffs on that are more concrete,

then you get this retaliation effect from other countries. And that drives a lot of the issues in markets. So I still think that that is coming. But right now, this momentum is here. And I think the enthusiasm, as Anastasia pointed out, is still intact because we haven't gotten news that has surprised us to the downside. I don't think there's anybody in the market, though, who's expecting that tariffs will disappear, right? I think we still expect that something is going to come. We just were expecting something more painful. You have this offset, I guess, by the view, Anastasia, that you have what many people are calling animal spirits in the economy,

in banking, in dealmaking. Mary Erdos, J.P. Morgan used those words. Stan Druckenmiller was with Becky on Monday. He talked about animal spirits as well. He said the economy looks very, very strong for at least the next six months. I'm sure he doesn't know what the translation of that is for the market because the risk in all of that is that you do have bond yields going up on the notion of tariffs and more inflation. But does that feeling of animal spirits, this new administration here on full day one, we're going to have many days that look like this as a result of those types of policies and that kind of feeling? I think that is the feeling today, which is this is an administration with an extremely pro-business stance,

almost trying to run the country as you might run a corporation. And, you know, it's an administration that also seems to care about thematics, whether it's cryptocurrency, whether it's artificial intelligence, and that plays right into investors' hands right now. But I would broaden this out as well and say,

look, coming into the year, we view this market as having solid economic underpinnings. And that's not because of deregulation. That's because of the consumption pattern that's finished the year very strong last year and that's carrying over into this year. But Scott, you add on top of that deregulation for the banking sector. One thing that really was striking to me as I was looking at bank earnings last week is, fine, everybody expects a rebound in capital market activity, but you know what few people expect? A rebound in net interest income. Few people are looking for net interest margins to improve and lending activity to improve. But if those same animal spirits actually stoke lending activity, that's more

upside to financials, that's more upside to the economy. And again, the pro-business stanza we're sensing so far, day two, that's what's lifting markets. Is that, Liz, the area that we need to pay attention to most? I sort of paraphrase what Mary Erdos of JPM said. She talked about banks being in, quote, go mode because of lower regulations and things that the banks are going to be able to do to maximize their profitability that they just couldn't do in the past. And they're going to be rewarded by

shareholders who ostensibly are going to get rewarded as well. The banks are going to be able to, you would think, we talked about dividends and buybacks and the shackles are off. And that's the view, I think, across that industry. Well, I think go mode is going to be different depending on which types of banks we're looking at. So go mode from a capital markets activity standpoint, absolutely. Go mode from a shareholder-friendly standpoint probably is going to give more tailwind to that. And then you move down the cap structure. And the concern for much of 2024 was, are we going to go through a painful credit cycle? Are we going to have, because there were so many consumers who were levered up, credit card debt had hit its highs,

and we were worried that that would start to take its toll. And we didn't. And we didn't. That's right. have, because there were so many consumers who were levered up, credit card debt had hit its highs, and we were worried that that would start to take its toll. And we didn't. And we didn't. That's right. So then move down the cap structure, and we don't have this fear about a painful credit cycle as much anymore. So then those banks can kind of take their foot down on the pedal a little bit more and say, all right, we don't have to protect as much because the consumer balance sheet is in better shape than we thought. The economy is in better shape than we thought. And the real key to that has been the labor market staying strong. Consumers can absorb and continue spending as long as the labor market stays strong. And that happened to be the case. What about tech? I mean, front and center prominent in the rotunda yesterday. I don't

need to tell you because everybody has seen the pictures of Zuckerberg and Pichai and others. Tim Cook was there, too. What does that mean for where this trade can go from here in what was, you know, a fairly onerous administration before on these companies or all sorts of regulatory actions that were either underway or threatened? And here, you definitely have at least a relationship difference that we need to assess and what it's going to mean for the ultimate share price. It has been a very drastic change, I would say. And I would say it's very symbolic to see some of those big tech billionaires really at the Capitol, because one thing that we put on our wildcards list for this year is that what's going to happen with big tech regulation.

And historically, President Trump was not all that favorable to some of the social media companies. But the fact that you do have this representation, they do. The fact that you have the new SEC chair and new leadership in the DOJ actually might mean more supportive environment for technology. Also, obviously, one thing administration cares about is the AI momentum. You really can't deliver AI without the support of some of these big tech players. So I think that's creating an interesting backdrop for that investing. That's true for big tech companies. I would also say it's true for smaller tech companies. And Liz talked about the consumer side of banks and also to pick up on the capital markets activity. We are expecting 20, 30 percent growth in capital markets this year.

So if you're a smaller tech company, you might get acquired, you might IPO. So that's very supportive. Well, tech and all things AI are certainly going to be front and center within the next hour. You guys stay with me for a second, because President Trump is set to announce billions of dollars in private sector investment to build AI infrastructure. With Masa San, Sam Altman of OpenAI, Larry Ellison of Oracle, all expected at the White House around 4 Eastern, we think. Kate Rooney and Seema Modi are both following that story for us. Kate, you want to talk to us first about what this means for OpenAI. Seema's going to talk to us about Oracle, but Kate, you first.

Yeah, Scott, let's kick it off. So I have confirmed with sources that Sam Altman is going to be at the White House today. It is a major win for OpenAI, which has really been pushing for the U.S. to spend big on AI infrastructure. I've been on the phone with some sources talking about what led up to all of this. One thing I'm hearing is it's more evidence of an increasingly close relationship between CEO Sam Altman and SoftBank founder and CEO Masayoshi Son, the Japanese conglomerate, first backed OpenAI in October. Since then, I'm told Altman and Son have spent even more time together. I'm told they both really recognize and sort of bonded over the needs of AI infrastructure in the U.S. and the mega spending it's going to require globally as well. As one source put it, they are not incremental thinkers who think quarter to quarter.

They're talking about more of a decade-plus time horizon here. SoftBank so far has invested $2 billion in OpenAI. I'm also told Altman has been spending more time with Larry Ellison as well, the Oracle founder and other entrepreneur really known for big-picture thinking. Oracle and OpenAI first partnered back in June of last year. And this kind of flew under the radar. But at the time, they partnered on cloud infrastructure. And it was the first time that they had done something their OpenAI had that was not exclusive to Microsoft.

So this could be read as a signal that OpenAI is diversifying away from Microsoft, which is one of its biggest backers. And then there's some questions and have been questions leading up to the Trump presidency over Altman's rivalry with Elon Musk. And if that would hinder OpenAI's ability to do big deals like this and really be relevant in this administration, right now it's looking like that feud, at least, is not going to prevent OpenAI from being a core piece of the U.S. AI strategy, Scott. Yeah, certainly not when they are, you know, pledging to be investors into the United States, something President Trump is going to make a big deal of whenever he can. Quite honestly, I mean, we've seen a little bit of that. Kate, thank you to Sima Modi now on what

all this means for Oracle. Well, Scott, what we're hearing is that this announcement will involve a huge data center and a cluster that's a network of supercomputers in Texas using Oracle's infrastructure and servers. This partnership certainly serves Oracle's interests. It's in the process of building supercomputers powered by NVIDIA's graphic processing units. And remember, founder Larry Ellison met NVIDIA CEO Jensen Wong for dinner last year, pleading him for more chips. We've seen shares of Oracle higher ahead of the official announcement that's expected this afternoon. Ellison remains a close confidant to Trump. He was one of the few tech leaders to support the president back in 2016

when Silicon Valley at that time leaned left. So no surprise Oracle is involved in this data center deal. I would point out he also has a very close friendship with Elon Musk. Scott. All right, Seema, thank you. We see that stock again. We can take a look once more. Shares of Oracle really spiking on that news. And again, we will see what happens with this announcement a little bit later this afternoon, as I said, expected in overtime. But that's at the highs of the day. Oracle shares up seven and a quarter percent. Thanks to both of you. Back to both of you here with me. This trade, we're going to get earnings next week of these large cap tech companies. Is that where the rubber meets the road on what the real staying power of this rally is when you get the mega caps starting to

report uh not necessarily i mean most of the mega cap names are forecast to report somewhere between 15 to 20 earnings growth for the next several quarters and maybe that doesn't sound all that impressive first of all as versus what we've got in 2024. But the other reason, Scott, I say I don't think the linchpin is these big tech companies is because the rest of the 493 are actually supposed to deliver 9% earnings growth, which is scaling up to about 15%. So, you know, it's been a great start to the reporting season. I would say it's very strong. You've got 79% of companies that are beating and the average surprise is about 9%.. So obviously it is important that they meet expectations, but I don't think the market solely hinges on them. We should show shares today as well of NVIDIA if you want to show an intraday. Show the market cap too, guys, if you can, between NVIDIA and Apple, because it was

earlier today, Liz, that NVIDIA once again topped Apple in terms of market cap. How would you assess that question? Earnings, what they mean, these particular stocks mean to where this rally can go from here? So earnings for the companies that are tied to AI directly, I think they matter, obviously, from a sentiment standpoint. And we're at a point in the market cycle where even in the second half of 2024, investors had gotten really critical of those companies for how much they'd spent on AI. So now it's you've got to show me the profit. I think we're still in that place, but there is a lot of other opportunity to make money in markets.

I mean, look at how well financials have done already in this earnings season. There are other sectors. Healthcare is one that's supposed to be the second strongest sector from an EPS growth perspective in 2025. So I think there are other places to find that growth, other places to find attractive valuations. We just need these big companies to not miss, right? The expectations are high. They need to not miss in order to keep sentiment. Well, I mean, you have to figure that. And I think there was, I can't remember the firm that came out last week with this Anastasia who suggested that, you know, the days of the huge

beat and raise from the likes of NVIDIA are probably over. How much does that matter? If at all, as long as you have a good earnings report and good enough guidance. Doesn't have to, I mean, NVIDIA has shocked us at times with the quality of their guide. Do they still have to? I don't think they have to. And I don't think that's the expectation anymore. I mean, if you look at even some of the AI semiconductors, NVIDIA, or just semiconductors in general, they've really not moved all that much in the last six months. So I think that has made investors pause and sort of reassess their expectations. They're not so lofty anymore.

But the thing that really keeps me encouraged about the durability of the artificial intelligence theme for investors, it is broadening. And I think this announcement from the administration and the consensus of companies is important because it's not just investing in chips anymore. It's really investing in data centers and investing in power that's going to power those data centers. So if I'm an AI investor, I have so many more opportunities to participate in a theme through utilities, through software, as well as continuing to stay with some of the semis. We will leave it there. Anastasia, thank you. Liz, you as well. We'll see both of you again soon because we have another Nasdaq stock to talk about, Netflix. Those shares rising ahead of the company's earnings in

just about an hour. Stocks coming off a strong year, too, rising more than 80 percent. Joining me now to discuss Odyssey's Jason Snipe, Big Technology's Alex Kantrowitz. Both are CNBC contributors, and it's good to have you both. Jason, how high is this bar given that very big move? Yes, Scott, I mean, as you know, and you just mentioned it, I mean, the stock was up 83 percent last year. And I think the street has really liked all the pieces that they have hit, they've rung the bell on, ad-supported tier, password sharing, and their foray into live sports. And I think where my real focus is, is what are we going to hear about updates from the

live sporting events? Because when I think about live sporting events, that spells to me advertising dollars. And I think that's where Netflix is obviously going, is looking to move forward. They've highly focused on profitability and engagement, you know, over the last year. This is the last quarter they're reporting streaming numbers. Obviously, the street is looking for a little over 8.9 million new subscribers. But we're moving on from that. So what's really going to be important to me is the ad-supported tier, live sports update, what's going on there, and how Netflix continues to move forward in that arena. Alex, Jason makes a good point in that we used to be obsessed over subs.

That's all that really mattered, we thought, as this company was growing not only here but worldwide. Are ad revenues now the most important? I think they will be going forward, but I think in this quarter, weirdly, subscriber numbers are the most important number. And I'll tell you why. I think the Paul Tyson fight was the biggest event that Netflix has put on and almost changed the narrative around Netflix. This is a company that can now create a spectacle.

A hundred million people tuned in globally to watch that fight. And the fight wasn't that good, but it showed the promise of the company to be able to attract such a large audience for events that it manufactures. So I think subscriber numbers are the most important thing to watch today. Let's see if those people stuck around. And then if they can do that, then we look forward and we look at revenue. They're going to double profit. That's expectations. Double EPS this quarter.

Revenue is expected to be around $10 billion. But to me, subscriber numbers, can you create a spectacle? Can you bring in a lot of people? If they show they can, that's a very big deal for Netflix. Of course they can. But, I mean, a spectacle comes with a price, doesn't it, Alex? I mean, if Netflix is going to make this a key part of its future, what does that mean for the economic dynamics

around this company and what that could translate to from a share price? Yeah, great point. Look, if those subscribers stick around, then that price will pay off year after year, as those people say. And they say, what's the next thing Netflix is going to do? And that's why I'm looking at subscriber numbers, because if they just tune in, they pay the whatever it is, ten, twenty dollars for Netflix and then go away. Then that money isn't a worthwhile investment. Jason, what about price hikes? I mean, they got to pay for this somewhere, you would think. Is that something you expect there? There's no doubt about it. And listen, they haven't had any price hikes since October of 2023. And that was for the

standard standard tier and for ad supported tier. They haven't had any price hikes price hikes since November of 2022. So I do believe that is definitely in the cards going forward. You know, I think the point that you also made on on the expense of live sports. I mean, listen, I mean, we also saw those NFL games on Christmas Day. Those are about $75 million a pop for the licensing for those deals, for those games. So eventually, they are absolutely going to have to raise prices. And I think they will do so because, again, their focus is more along the lines of profitability. I hear, Alex, on the ad-supported tier.

Again, we're going to hear from them for the last time this quarter. but I think it will really go to towards ads. And I think that's going to be the story. Do you think we could get that today, Alex, a price hike itself or a lead, a lead on that we may get it in the very near future? Definitely, because as they stop reporting subscribers, they're going to want to hand something to Wall Street, hand this little token to say, hey, listen, we're making this shift in reporting and there's a reason why. Profitability, revenue is going to go up. And of course, they're going to need to try to maximize as much as they can, because if they're not able to jump subscribers the way they have in the past, right, even the way that they're expecting subscribers to come in this quarter is going

to be less than it was in Q4 2023. So they're going to have to show that they're expecting subscribers to come in this quarter is going to be less than it was in Q4 2023. So they're going to have to show that they're going to be able to make more money off of those subscribers. Of course, I'm expecting them to beat subscribers. But if they don't, then that price hike makes all the difference in the world because it shows that they'll be able to be more profitable on similar subscriber. Always a fun watch are these earnings and we will be fixated once again. Guys, thanks so much, Jason and Alex. Appreciate that. You stay with me, though, because Apple shares, they are weighing on the Nasdaq today after two downgrades on Wall Street. Steve Kovach has those details for us. It's rare to see one, now two. Two in one day and also no longer the most valuable company in the world. Let me

show you what's going on here. Oh, by the way, it's not just two downgrades, Scott. It's one other firm lowering their price target. And remember, I was on your program just about every day in December, this exuberance around the stock just hitting those all-time highs on basically no news. Well, the story really hasn't changed since then. And we're still getting a lot of the kind of crummy signals on iPhone sales that we've been getting since the beginning of the iPhone 16 cycle back in September. And piling on to all that is Jeffries and Loop downgrading Apple today, and JP Morgan is lowering its price target. You have Jeffries saying Apple's going to miss its revenue growth guidance for the December

quarter, and the firm is lowering its expectations for the iPhone 17 cycle based on lackluster AI response. And then over at Loop, iPhone 16 sales, quote, not amplified by Apple intelligence launch. Also saying that Apple sold 5 million fewer phones in 2024 than they did in 2023. And then JPM lowering its price target by five bucks. And then there's China. The troubles just keep piling on over there. You have counterpoint research out with a new report today on China saying Huawei continues to gain share against Apple. Huawei having 18 percent market share last quarter with unit sales up 15 and a half percent

year over year. Apple was third behind Huawei and the Chinese brand Xiaomi in the country with 17.1 percent share and its unit sales down in China down 18% for the quarter. All these brands that I was showing you on that last screen, they grew in China. Apple was the only one that we saw decline based on this data. Next up, we have Apple earnings on January 30th. That's next Thursday, next week. And one thing that may help out with this iPhone slump that we've been talking about so often is the new iPhone SE. That's the entry-level cheaper model, costs a few hundred dollars less than what the iPhone 16 has. That's expected this spring. That might help a little bit there. But still, we're seeing Apple shares off to a really tough start for the year, Scott, down about 12% year-to-date right now.

Makes those earnings next week even more critical. And the guidance. Steve, yeah, no doubt about that. And the intelligence that you always get in and around that. So we'll look very much forward to that. And the guidance. Steve, yeah, no doubt about that. And the intelligence that you always get in and around that. So we'll look very much forward to that. And I'll just reiterate what I said earlier today. That stock price is the reason why today, down near 4%, why NVIDIA is now back above Apple in terms of overall market cap.

Let's bring back in the guys, Jason and Alex. All right, Jason, what do you make of the downgrades? Yeah, I mean, listen, I mean, obviously, last year, when you look at WDC, there was, first of all, Apple had a very strong year from a price action standpoint. And when we heard the announcement from WWDC on Apple intelligence, obviously, there was very positive, really great sentiment around the stock. China has not done well. I mean, it's down almost 20%, as Steve mentioned. And obviously, they're losing market share to Vivo and Huawei, which is collectively bringing down the stock. So for me, I always looked at the iPhone 17

as a potential upside cycle. You know, I think the 16 is kind of a beta test. Obviously, the consumer is looking for applications where they have not found as of yet know, I think the 16 is kind of a beta test. Obviously, the consumer is looking for applications where they have not found as of yet. But I think 17 and going forward, potentially, we might see a little bit more upside. So I'm staying patient with this name. Obviously, the price action hasn't been great year to date, but I'll be patient here and see how it rolls out over the next few quarters. Alex, is China now the biggest risk to this story? I mean, you could talk about AI upgrade cycle, loss of market share, tariffs, which who knows, there could be carve outs. You never know. But the degree to which China is the biggest risk is what? I think it's a major concern. I mean, if you think about it, China, 20 percent of Apple sales,

give or take. If you have 18 percent decline in iPhone sales in the quarter, that's not really good. In China, it's obvious. The Huawei Mate 70 is a phone that has not parity features with the iPhone, but it's good enough. And the government has told government employees, the Chinese government has told employees, look, no iPhones in government jobs. That's a massive employer. And not only that, it's a big point of pride, right? If you're in China, you want to use Chinese-made goods. You don't want to use the iPhone.

And the government has signaled that to the citizens. That being said, you know, your question is, what is the biggest concern for Apple? And to me, I think number one is the inability to deliver on the promise of Apple intelligence. You know, we sat at WWDC. I said that I was mildly underwhelmed with the presentation that Apple put on at that point, and they've under-delivered based off of the presentation that they put on. They have to get their act together on this. This is their marquee offering.

They didn't deliver as they promised on the Vision Pro. Again, Apple Intelligence, we're seeing the same pattern. This is not a pattern, not a routine you want to get into. If you're Apple, you need to give people something to make them go to the iPhones, to the Apple store and buy a new iPhone because these phones are so similar. And so what is that that they're delivering? And the fact that Apple intelligence hasn't brought in the super cycle or even a meaningful bump as expected for the 16 is an issue. We'll see if it eventually does. And many think it will, starting with the 17, obviously, but we shall see. Alex, thanks.

Jason, you as well. And I'll see both of you again soon. We covered a lot. We're just getting started, though, here on Closing Bell. Up next, the high net worth playbook. Morgan Stanley's Sherry Paul is back. So tell us how she is positioning client portfolios as Trump 2.0 gets underway. We're live at the New York Stock Exchange. You're watching Closing Bell.

Dow's up near 500. All right, we're back. Stocks are rallying, as you know, to begin President Trump's second term in office. Joining me here at Post 9 with our outlook is Morgan Stanley, private wealth management's Sherry Pauls. Good to see you again. Great to see you. You surprised by anything? You know, good week last week, and now we're off to the races as we begin Trump 2.0? Yeah. No, I'm not surprised just because there's been so much talk. It kind of reminds me what the

Fed usually does when they're trying to talk either rates up or down and prepare us for change. But I think that the pace of change may be taking investors a little bit off guard. And that means that central to portfolios right now, you've got to be liquid and dynamic and ready to make change and then make change again and then, frankly, change again. Yeah. I mean, if you get a tariff announcement, you know, overnight, is the market just like this, but in reverse red? Well, is that what we're kind of like bracing for? Does it? Well, how do you think about that whole issue? Well, I'm glad you asked the tariff question up front because, you know, Morgan Stanley, even if our analysts think even if all the tariffs are implemented, it's probably a 0.3 percent of GDP.

It increases inflation, which, you know, maybe by 1.3 percent. But the bigger story that tariffs sit within, which I think is the thing investors need to focus on, is deglobalization is happening. So it's not just a debate or a discussion. And the best way to invest in that is to understand the whole point of why we globalized in the first place.

Deglobalization is the opposite, which means things get more expensive. It's fundamentally inflationary. But the antidote is going to be the other moment, which is this deep innovation that allows AI to take on the role of some of the

human labor complexity and the manufacturing reimagination. So does that mean that you're investing in, I guess, a purely exceptional USA rather than looking abroad where there's going to be some potential, you know, more acute issues? Yeah, you know, I'm talking to investors about just resisting being lazy with diversification. Just because you're supposed to do something doesn't mean it's actually the right thing to do in this moment. And so U.S. exceptionalism is real. It's the centerpiece of innovation centered on AI manufacturing, reimagining how we're going to download a new way of being in the world just as we are deglobalizing the old world order. And so, yes, so we're overweighting U.S. right now from a market cap standpoint. being in the world just as we are de-globalizing the old world order. And so, yes, so we're overweighting U.S. right now.

From a market cap standpoint, we're staying large cap, minimizing small cap exposure just because we think that rates, while they're going lower, will probably stay higher for longer. And the international markets and the international scene is really where weakness is around the world. And so it makes a lot of sense. And when you say stay large up the cap space, are you talking beyond just mega cap tech? And if so, what areas? Yeah, well, I think the other reality we need to embrace is we're going to continue to have very narrow corridors of performance return. And so

stock selection is going to be crucial. But we're broadening into these other thematics that are centered on this administration, really around materials, defense, energy, because with deglobalization comes also military uncertainty. And so those themes obviously should do well this year. And we're already starting to see some bumps in that. I mean, it sounds to me that you kind of like everything with the nuance of everything big. And, you know, the sector plays that you have AI that obviously speaks to larger cap stocks, financials, you like the big banks, health care, the larger companies within that space, industrials and materials. What is there something you don't like, even if it's a larger company?

Well, I've never been a big fan of the oil play, just because it's such a policy and political football that can change on a dime. And so what we're really investing in are these enduring thematics that sort of transcend party politics and policy. Health care is a perfect example as a space that, regardless of what happens around the debate around vaccines that could find its way into policy, we have all these other enduring epigenetic breakthroughs that are happening that are going to help with longevity, for example. And then within the financials, I think what we want to be doing is looking in the subsectors that are going to benefit from deregulation as an example. I thought that Jim Cramer had a really good take on this this morning, that even though, you know, you have the president with a drill, drill, drill mantra, the energy companies have said, no, no, no. Like, we don't really want to drill more. We'd rather take that cash and return it to shareholders because they've seen how beneficial that change

in thinking has been to their share price. So while the president is going to talk a lot about, and he's declared this energy emergency in the United States already, is that how you're thinking of it too? Because you could sit and say, well, he's pro-energy. These stocks are going to do really well. You say not so fast. Well, I love that you brought this up with Jim because there's a lot of talk and then we want to focus on earnings reality, right? So a third of these energy companies

have reinvented themselves into natural gas companies, for example. And so we want to focus on three things, earnings, innovation, and inflation. And those three metrics are going to basically equal what we think the market will do this year. And what will weigh on the inflation number will be tariffs, deglobalization. I believe that the policymakers, though, are thinking that the antidote, right, because remember, the incentive of tariffs and deglobalization is to onshore manufacturing here in the United States. And that costs money. And so the antidote to that will be tax policy, taking the corporate tax rate

from 21 down to 15 as a way, I think, to provide companies with that earnings spread that they need to buffer that transition. Very different, though, than growing your earnings based on innovation, which is why we're encouraging investors still continue to stay in tech. All right. Enjoyed the conversation very much, as usual. Sherry, thanks. We'll see you soon. Welcome. That's Sherry Paul of Morgan Stanley coming up. A new era for crypto, Bitcoin hovering just shy of its record high as the industry hopes for a more friendly policy from the new administration. We'll break down what's at stake for you after the break. Bitcoin inching closer towards its record high from yesterday.

CNBC.com's Tanae McKeel is following that story for us. This is hard to keep up with because it's been so volatile lately. Yeah, Scott. Well, Bitcoin got a nice bump this afternoon on the news that the SEC has launched a crypto task force to help create a regulatory framework for crypto assets that will also address issues related to registration with the SEC of different coins. Commissioner Hester Purse will lead this group. That is music to the ears of the industry. She's really seen as an ally to crypto and the voice of reason at the SEC when it comes to crypto. And Scott, it is so hard to overstate what a big deal this is for the industry, given the lack of clarity

that they got under the previous leadership. And crypto really needs rules more than ever right now, because while we might be entering a so-called golden era of innovation in crypto in the U.S. under Trump, it could be messy, chaotic, to use Bernstein's, a word from Bernstein's note over the weekend. So we did see Trump launch his own meme coin on Friday night. Many argue this is a bad look as the industry tries to distance itself from the days of ICO bubbles, NFT booms, celebrity endorsements, what have you. And Bernstein says, and they're not alone, that that may be, but it is a short-term price to pay to have long-term regulatory support of the more valuable, more serious parts of the ecosystem, Scott.

They have to be thinking about exactly your point. The risk of making a mockery of what is trying to become a more grown-up investment or asset class, if you will. Exactly what they're saying, Scott. Taneya, thanks. We'll talk to you soon. Taneya McKeel up next. We track the biggest movers into the close. Christina Parts of Nevelos is standing by for us with that.

Hi, Christina. Hi, Scott. Well, you have two iconic American brands defying Wall Street expectations, strong holiday sales, and a surprise turnaround pushing both stocks higher. The market reaction when we return. We're 15 from the bell. Let's get back to Christina now for the stocks that she is watching.

Tell us what you see. Let's start with gap shares because they're climbing today after CEO Richard Dixon touted the retailer's turnaround progress live from Davos on CNBC early this morning. The company is seeing stronger margins and more shoppers in stores, even as tariff concerns linger. Here's what he told CNBC. We've diversified our footprint from a manufacturing perspective quite nicely over the last few years. Only 10 percent of our product is coming out of China. So we really feel very confident about the footprint that we have. Nice coat. 3M shares switching gears surge today on surprisingly

strong results powered by robust holiday sales and gains in industrial electronics and aerospace divisions. The company's comparable sales also jumped 2.1%, which is its best growth in recent years. 3M also announced it has largely wrapped up its restructuring program that began back in 2023. Shares up over 4%, Scott. Stocks on the move and fashion reviews you don't miss anything with me definitely not christina parts and nebulas thank you so very much thank you still ahead it is the moment of truth for united airlines one of the top s p 500 performers over the back on the bell just after this. Quick programming note, do not miss Interactive Brokers founder and chairman Thomas Petterfie

coming up on overtime. We'll get his first comments after the company's fourth quarter earnings just after the bell. First, though, you're set up for Netflix, the key metrics to watch. We'll take you right up to earnings in the market zone next 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 a pair of earnings reports in ot we are watching closely phil lebeau on United Airlines, Julia Borsten on Netflix. Michael, begin with you. Highs of the day as you sit with me, up 550 on the Dow. Pretty good all the way around. Yeah, no doubt. It's

pretty solidly across the board. In fact, stronger below the surface than above. And I think what it tells you is we continue to emerge out of this multi-week shakeout. The S&P 500 closed at 60-50. We're just about, we're exactly right there on December 17th. That's the day before the Fed meeting. And that was when we still thought we had strong economy. Fed has room to ease. Bond yields are tame.

You know, all the stuff that we think is the formula for going higher was in place. And then we got tested by higher yields, by changing the Fed policy outlook and all the rest of it. So I feel like this rebuild has done what bull markets do, which is it gives you a little bit of a scare. It gets positioning a little more defensive. And then, of course, you have the overlay of new administration. And there's that many fewer reasons perhaps to be super concerned.

So you give the market a little bit more leash. I think that tells you the story of where we got here. It's been a pretty consistent characteristic of this bull market in reality over the last couple of years. A couple moments of worry, market self-corrects to some degree and then restarts again. No doubt about it. Every time we have to test the market and the economy's resilience for a higher threshold of yields, we've done that again.

You know, I don't know that anything got settled here. It wasn't like some huge high momentum run off of a major low. This is much more about the market getting back into gear for the moment. But I do think you have to be open to the idea that we're going to be chasing headlines in both directions as they come out of DC. All right, Mike, thank you. Back to you in a moment. But I do think you have to be open to the idea that we're going to be chasing headlines in both directions as they come out of D.C. All right, Mike, thank you. Back to you in

a moment. Speaking of headlines, we're going to get some in O.T. related to earnings. Phil LeBeau is looking ahead to United for us. Phil. Scott, the street is expecting big numbers from United, given what we saw from Delta a couple of weeks ago. So what do you look for if you're an investor when it comes to the United fourth quarter earnings? How strong was the end of the year? Yeah, we know it was strong. Can they give us some perspective there? Corporate and premium revenue, how much was the growth in those two areas? And then there is the Q1 in 2025 guidance. The magic number to look for as you take a look at shares of United, which, by the way, are tickling their all-time high. They're at $110. That may even be an all-time high.

$3 a share. That's what the street is expecting for the fourth quarter. And don't forget, tomorrow morning, squawk on the street. Squawk on the street, I should say. We will have an exclusive interview with United CEO Scott Kirby. A couple of minutes away, Scott, we'll tell you how United did in the fourth quarter. All right. Thank you.

Look forward to your interview as well with Mr. Kirby. Stock was a double last year, so there's a lot to live up to. We shall see. Julia Borsten, speaking of stocks that have done quite well, Netflix, that's done really well. I know we'll look at a chart while you're telling us what we need to look out for most. Well, Scott, this is the final quarter that Netflix will report its subscriber numbers as it works to refocus investors on profitability and it builds out its advertising revenue stream. Now, the company is expected to nearly double its earnings to $4.19 per share, while revenue is projected to grow nearly 5%. The company is projected to add nearly 9 million

subscribers in the quarter, but investors will also be looking for an update on Netflix's ad supported monthly active users, which was most recently announced at 70 million. There are some other key areas of focus for the earnings call, upcoming price hikes, Netflix's strategy around investing in live sports, and the question of whether Netflix could be interested in M&A, given the movement we've seen in the media landscape. Now, Netflix shares are up about 23% since its last earnings back in October, and analysts are still largely bullish. Sixty percent have a buy and 33 percent have a hold. Scott, we'll see what happens, Julia, and we'll look out for you then. Thanks so much. That's Julia Borson. Back to you, Mike. I mean, we know tariffs are coming. We at least we think

right based on what we've been told often. A slower rollout, though, is more palatable to this market, clearly. There's no doubt about it. And slower rollout, you know, have them be a little more conditional as opposed to just sort of acts of aggression. Actually, the market wants to hear less about how much revenue can be generated for the government through tariffs, because that seems like not the approach that would meet the lowest friction way to do it. So yeah, you'll have to navigate it. Everyone, I think, keeps falling back, though, on this relatively nonspecific but very closely held idea that deregulation in itself can kind of pay for a lot of these things. You know, you want to get a little more detailed about that, exactly what that means.

It doesn't really mean lower corporate tax rates. 2017 was a really clean story. It was you could just do the math on what lower corporate tax rates were going to mean. So I think this is where we I think the good thing is such a strong starting point for the market and the economy that, you know, we can probably handle. We have a cushion against some shocks and it's probably something we might need at this point. But of course, also growth expectations, evaluations are also a bit more elevated than we had four years ago. So that's going to be, I think, the tension beneath the surface. Bell's going to ring in a moment.

End of the stub. Really powerful close here. Dow is at the highs of the day, 532. What we're doing across the board, it's just a strong day and a broad one for stocks. We'll send it into overtime and those key earnings right around the corner.