Closing Bell - Closing Bell: December to Remember? 12/2/24

Episode Date: December 2, 2024

Why are stocks still likely to rise in December? Cheryl Young of Rockefeller Global Family Office, Hightower’s Stephanie Link and Invesco’s Kristina Hooper debate where they think stocks could be headed into the new year. Plus, top technician Jason Hunter is raising the red flag on one key part of the market. And Citi’s Kristen Bitterly tells us where she thinks investors should be positioned in these final few weeks of 2024. 

Welcome to Closing Bell. I'm Scott Wapner, live from Post 9 here at the New York Stock Exchange. This make or break out begins with another record high for stocks as a year full of milestones begins its final stretch. We'll ask our experts today where the markets are likely to head in the months ahead. In the meantime, take a look at the scorecard here with 60 minutes to go in regulation, looking a little more green as we edge towards the close. You'll see the Nasdaq is the standout today. It's good for about 1%. Many mega caps are catching a good bounce with Meta, the outperformer. Another update for Tesla, too. That stock getting an upgrade, a couple of price targets, price target bumps, and it's been bumping up big time

since the election results, up near 4% again today. Intel shares, well, they're now lower after getting an initial pop on news that CEO Pat Gelsinger is out. The stock, as we said, was up about 5% earlier today. Not anymore. And it's down 50% this year, too. It does take us to our talk of the tape, why stocks are still likely to rise in December. Let's welcome one of this country's top private wealth managers, Cheryl Young, the Rockefeller Global Family Office with me here at Post Night, a member of the Barron's Hall of Fame. Put there in 2023.

Welcome back. Thank you, Scott. You feel pretty good about the markets where we are? Not especially, actually. Well, you hesitated there. I thought it was maybe a rhetorical question, but you say no. Why? Well, you know, I'd like to think I'm a good electron.

The last two times I've been on your session, the markets have hit their all-time peaks. All right. Well, we did again today. Looking good again today. We're trading at pretty high multiples, Scott. And the last time we saw these numbers was in around March 2000. And that makes me a little bit nervous, honestly. Okay. Gold posts have moved, some say, though, with the results of the election. Economy's still good. You're going to get deregulation. You're going to get a re-upping of the tax cuts in some form. What some would suggest is a friendlier business environment.

Doesn't that justify where multiples are if you get higher earnings to match all of that? If. There's a big if you get higher earnings to match that. That's the question is, can the earnings continue to expand going into 2025? Are you doubtful? You know, I think you have to be careful because if we look at when Trump took, you know, the presidency last time, 2017, the P ratio on the S&P was trading about 18 and a half. We're trading over 25 right now as we speak

for looking next year, 22 and change. And, you know, so I would argue that we're about 44 45 percent higher than when he took office last time so it's not the same market so what does that mean I mean what do I want to do then as a result I I would just be adding a little bit of hedging at this point I mean I'm a wealth manager so I don't want to just sell all my mega cap stocks and as you know technology is about 44% of my portfolio. You're a professional hedger. I love hedging. What's the best way to do it? I right now

am selling at the money calls and a lot of my mega caps. I'm using some of those proceeds to bind to small caps financials. Financials are up about 13% since the election so it's getting a little bit rich there too for me. I think health care is the only area that's really lagged. It's down almost 4.5% since election so you can make an argument. Time to look at some rotation. So you think that the broadening trade, if you want to call it that,

which so many areas of the market are up, especially since the election, it's hard to find sectors that have really lagged and maybe they've lagged for a reason. Yes, yes. Are they the ones to really lean into for the new year? You have to be careful there. Healthcare tends to struggle before elections. It's happened pretty much every time. I think the last three, four elections.

And so they're they're cheap for potentially a reason. However, compared to the S&P, maybe a little bit less cheap. If I look at the MAG-7, all but one is trading well above the S&P. There's one bargain out there. I can't call individual names, but there's one trading below. All right. We'll do our math and try and figure out which one. I think I have an idea, but I won't bring it up. But if I look at the spread, you've got 20p on the low end, you've got 163 on the high end. So that's a big spread on our Magnificent 7 in terms of where they're trading. So you can't say everything's equal, right? This is a market where I would be a stock picker, not necessarily an indexer. You told our producers watching traders pile

into riskier parts of the market while the VIX is calm is, quote, of grave concern. Why so? VIX is trading around 13.5 right now. It's very quiet out there. It feels a little bit like the quiet before the storm. We have to have everything aligned so perfectly over the next year to see the kind of expansion we need on earnings to support these multiples. And it could happen. Look, we could get no noise from tariffs. I do expect tax cuts to be extended. But we had a lot of supply chain issues last time. Some of that was COVID.

Some of it was around the tariffs. And so when that slows things down, we look at the semiconductors, which have been on a tear this year, and they're usually the first to lead down. But they haven't been on a tear of late, right? I mean, it's been software has crushed semis. Crushed semis, which, by the way, I predicted my last time I was on the show. All right. So what happened? That worked out well for us. What happens now? What happens now? I hate paying taxes. You know, it's not one of my favorite things,

and it's definitely not one of my clients' favorite things. So we're selling calls. We're using some of those proceeds to diversify, again, looking more of an equal weight index, looking more into some of the broadening sectors, but also buying maybe a little bit of puts just because if things don't go smooth, there could be some surprises ahead.

I'm surprised to hear you say, to some degree, that things have to be perfect, or things have to go so perfect in 25, because I don't think that's what people necessarily would agree on. Yeah, that maybe the you know, you're going to still get the ramp up in AI. Right. We're still at the beginning stages of that. You're going to have deregulation. You're going to have deregulation. You're going to have more deals, right? You're going to hopefully stay with at minimum what the current growth rate is, if not even pick up further. You're going to have more tax cuts. You may get a lowering even further of the corporate rate.

That doesn't sound like, I mean, that sounds like almost baseline. It sounds like almost baseline. And I think people are counting on that. The euphoria we've seen since the election troubles me. Let's take deregulation just for an example. Let's talk about self-driving cars. What happens if we start deregulating the rules around self-driving cars? I live in the Bay Area where most of the data is compiled and testing done. And I can tell you, in the MAG-7, the number one winner in that space is definitely not the number one winner in terms of the amount of data

or the number of tests that are being done. And so I'm not sure that's the clear winner. And I just would be very cautious crowding into some of these crowded trades. Okay. Well, let's broaden out the conversation and bring in Hightower's Stephanie Link and Invesco's Christina Hooper. Stephanie is a CNBC contributor. Stephanie, you go first. What'd you hear that you liked?

What'd you hear that you might want to take issue with? Well, the market is expensive at 22, 23 times, but I think that there are other sectors in the market that are actually much cheaper than that, and they think there are opportunities. I love the stock picker's comment because I think that's the case as well. So you have to be very clear on your fundamental analysis. But I think there are plenty of ideas to be had. We had three great data points today. We had a consumer holiday spend at 3.4% year over year.

Online up 10, and in-store up one. Doesn't matter where they're spending, but they're spending. And the consumer remains resilient. That's 75% of U.S. economy. ISM manufacturing grew 200 basis points. Still in contraction. I get it. But it's on the rise. And new orders are very important.

That was up 300 basis points. So the one area of the economy that has been kind of mixed in manufacturing, it is starting to recover. Those two pieces are like 90 percent of our economy. And we haven't even begun to see some of the mega projects, Scott, you and I talk about all the time in terms of onshoring, reshoring. One point eight trillion around the world and only 16 percent have been completed or started rather. So the third point is the GDP Atlanta tracker to 3.2 percent. It's an economy that won't quit. Adding it all up, earnings will be better than expected. They have been better than expected at running 8 to 10 percent. I think the momentum will continue under the Trump administration, pro-growth. I think tariffs are overly concerning to people right

now, not as much to me, because if you look at inflation in Trump 1.0, the inflation number was 1.9%. I think a lot of it is kind of just tactical and commentary regarding immigration and all that kind of thing. But then why do you declare it a stock picker's market as if you have to be so selective? You're painting a view where a lot of things can go up under what you're suggesting. They have. But that's the whole point. A lot of things have gone up. The S&P 500 is up 5 percent. It was up 5 percent in November. Small caps are up 11 percent. NASDAQ up 4.5. So I'm just saying it's not as easy just to throw a dart at the S&P ETF. You can if you want to. Dollar cost average. I'm all about that, too.

However, I think the better opportunity, and there are plenty of them, to buy stocks that are trading below the market multiple that have good or turning around fundamentals. Well, Christina, you've been telling people for a while to go into small caps and mid caps and leaning on that idea, even when others disagreed with you. The Russell's up more than 10 percent in a month. More to go? Oh, absolutely. I think there's certainly the potential there. We need to see some improvement in earnings. So right now, probably mid caps are the sweet spot because we're seeing better earnings there. But I think small caps will follow. Now, I think it's important to recognize I don't have a Pollyanna-ish view. I recognize that there are pros and cons that come with the Trump administration policies.

In the positive column, we've got tax cuts and deregulation. In the negative column, we have tariffs and immigration. I don't think tariffs are going to be a really big issue. I am worried about immigration, but that is going to take some time. So we'll have to wait and see. Deregulation, though, let me focus in on that. That has the potential to release animal spirits, not just for the stock market, but for the economy. And so we can't discount that.

No, but I mean, the market hasn't really been. I mean, that's why financials, for one reason, have ripped since the election, right? Absolutely. It's already anticipating that. Absolutely. And that can continue. I think we could see more spending, more CapEx, more M&A activity. I think for the most part, what we're likely to see is, yes, some concern about policy uncertainty, some concern about what might happen. But that really put on the back burner as companies are encouraged to spend more, to invest more. And quite frankly, the Fed easing will help.

I feel like all three of you have, you know, concerns, different levels of, but playing it, the market, it that is, through similar ways. You've been adding to financials. You've been adding to small caps and industrials. Everything that we heard already on this desk that we like. Tell me more. Well, again, financials are up about 13.5%. If we break down the deregulation play, again, you can look at just, for example, cryptocurrency.

Huge winner since the election. And yet it's really the smaller coins that will probably benefit by deregulation, not the large coins. It doesn't help them. They already have ETFs around them. So I think that there's been a lot of euphoria and a lot of rushing into trades that don't necessarily logically make sense. So, again, we have to separate the noise from the reality. And it's just really going to be important over this next year to look at the earnings, to look at the quality of growth from the companies that we love and be a little bit more cautious. I'm not saying it's time to

get out, Scott. I'm just saying it's time to be a little bit more cautious. And I just don't see how we get another 20% plus a year on the S&P. I think 7%, 8% would be a fantastic year for us. What do you think? Well, I mean, I think fee growth is continuing to rise, and that was the surprise in the quarter, in the third quarter, for all of the big six. That's one. M&A pipelines haven't even begun to even come into the marketplace. IPOs have been kind of not even out there, right?

They haven't even come to the market. So there's that. I think wealth management will benefit from higher asset prices. And we haven't seen a net interest income cycle in years. That is what the 2025 story is. I'm not so sure you're going to see massive M&A, Scott, from deregulation in the banks. I really don't. That's not the reason I own the banks. You're going to see more than you've had. Well, Basel III, I'll give you that. I've been talking about that forever. Basel III endgame, you get lower capital prices that they have to have on their books. Then all of a sudden, you have more M&A. And then you have more buybacks.

Bank of America has even talked about it. Once we get Basel III endgame, they're going to buy back $20 billion worth of stocks. Private equity is licking their chops to do stuff. I think everyone in financial, in the financial services industry are looking to do things. But don't you think a lot of that's in the stocks? No, I don't. Goldman's up 57% year to date. Trades at 14, 15 times earnings. Morgan Stanley a little more expensive at 18 times. And I like the combination of wealth management and investment banking. You have Wells Fargo. They have an asset cap catalyst coming up. And the stock trades at 1.4 times book value. Bank of America trades at 1.2. Trois Financial trades at one times book with a 4.4 percent dividend yield. And they have a turnaround story. So I think you can pick your

spots back to the point of pick your stocks. Doesn't necessarily have to be financial services in general. Is there Fed risk at this point or the markets already kind of come to grips with itself that we're not getting as many cuts as we once thought, nor are we going to get them as quickly as we figured? Does it matter? I think it still matters to a certain degree, certainly not as much as it did pre-election. But I think that what we're likely to see, I think the risk we run now is if there's a resurgence in inflation, that the Fed puts a halt to easing or actually hikes. I think that's very, very unlikely. But that's really the Fed risk for 2025. But you just said it's very, very unlikely. I mean, the chance of the Fed pausing, OK,

get it. The chance of the Fed hiking, really? I mean, I got to think about that? I don't think so. Really? I don't think so, but I'm just telling you, I'm laying out the risks. You've got certainly a more sure bet with the ECB. Economic data recently has been poor. There's more getting priced in in terms of easing there. So this is an argument for diversification. Increase your exposure to European equities, UK equities. But in particular, European equities, you've got a nice dividend yield. You've got significant monetary policy easing in the offing. European equities performed well last week, despite some economic headwinds. I mean, Bostick today is on the tape saying that, you know, it's not

preordained a December cut. And now we have comments from Fed Governor Waller. Right, Steve Leisman? Yes, we do, Scott Wapner. Fed Governor Chris Waller will say in a speech that he leans towards supporting a December policy cut, depending, of course, upon incoming data. He says he expects rate cuts to continue over the next year until we approach a more neutral setting. There's still some business to go until they hit that neutral setting, Waller says. On the outlook for policy, he says policy is still restrictive, that is, putting downward pressure on inflation. Cutting again means the Fed is not pressing on the brake pedal quite as hard. But still, he says, pressing on the brake pedal.

A December cut will not, quote, dramatically change the stance of monetary policy. There are some concerns he has. I'll get to those in a second. He says the speed and timing of cuts to be determined will be determined by economic conditions. Recent data raise the possibility, he warns, that inflation progress may have stalled. He says monthly readings on inflation have moved up, quote, noticeably, but he expects inflation to continue on the path to 2%, which is why he says he can support a cut coming in December, depending upon, of course, the jobs data this Friday. He mentions the jolts data tomorrow, also mentions the upcoming inflation reports and

retail reports that are coming before the next meeting. He does expect a rebound in that November payroll data. The labor market, he says, is significantly looser, but still is strong. The committee could be skipping rate cuts, just a conversation you guys were having, multiple times on the way to neutral, assuming that next year's fed forecast for a average forecast that is a 3.4 percent funds rate is still accurate so scott he's on board with a cut but says hey hang on a second we do have some data between now and then but he still seems to be leaning towards that december cut and i will check for you the probabilities that are now 10 points higher as a result of this for December. We went into it at 60.8. We're now

at 70.3 to be precise. And I can't do the math on all of it, but it does seem like that has kind of also raised the probability of a March rate cut down up to 48 from 43, less so down the road, Scott, but 10 points higher now on that December cut after Waller's remarks. Yeah. I mean, do you feel like, Steve, at minimum now, we'll just have a more vigorous debate in the room about maybe December is going to happen, but certainly after that, I mean, if you take, you know, Bowman against Waller and maybe some of the others, you you you're going to have more back and forth maybe than you've had over the last many months. For sure, Scott. But interestingly, I think the market is priced for that. If you look at the way it's priced, has the December cut with a 70 percent

probability. It's not a slam dunk, but it's closer to a dunk than anything. And then they have the pause built in in the futures market for January. That gives time for a lot of stuff to come through. Remember we had that pop at the beginning of last year. Now that could cut both ways. You may have a new round of beginning of the year rate price hikes come through. But you also have tough, easier comparisons with last year that could bring down the inflation rate. So they'll get a chance with the market built in for January.

They pause. They'll get a chance to get a little time to figure it out. Remember, you don't have another hike really built into the structure here. I can't do the math on the fly here. You were at 55% going in. It looks like you're like 57, call it 60% for May. So you don't have another cut built in till May. And then one other thing I want to check for you, which is the one year from now, the December, sorry, the November 25 Fed funds contract, that's 382. So what do you want to say? They bring it down another quarter. That brings you to 438. So there's another, call it 20, 40 basis points built in over the next year. So the way the market is set up, you get a cut in December,

and then you get this kind of very intermittent cutting going on. Then you can battle over where neutral is because they still don't know. Steve, thank you. Our senior economic supporter, Steve Leisman, with the Waller headlines. I mean, I bring up the neutral thing because Waller also says that he thinks there's still, quote, some distance from neutral. Right. That leads you to believe that he wants to cut, you know, a few times because he thinks we're far away. Others would say, well, maybe neutral is now much higher than we originally thought. So maybe you're not going to get as many cuts. How would you answer the question as to how many cuts does it matter at this point?

Do we need them? I think it does matter. I mean, if growth continues to be good, but you have to balance unemployment, which is at 4.2 percent and has gone up a lot in the last year, I think it definitely matters. With that said, look at what the markets are pricing in. We had a massive move in rates last week, 23 basis points on Treasuries in one week. It was one of the biggest moves we'd seen. So the markets are already pricing in and maybe have overpriced. So I think, again, we need to be a little bit cautious. I'm going to a little bit, I would say, you know, shorter on the yield curve because of that reason. I think maybe it's overdone in terms of the pricing. I mean, the move in rates lower has helped the

market, right? I mean, it's taken off the boil. Sure. Which was becoming, you had started to get calls that you're going to get 5% on the 10-year. You're not going to get 5%, but I'll tell you right now, growth is really what matters. And we're growing an economy in the 2.5%, 3% level. So maybe that means we don't get to 2% in inflation. But, you know, the core last week came in at 2.628 in the PCE, and I think that's just fine.

Remember, the peak in CPI was at 9? So we've come a long, long way. And so maybe the neutral rate is higher, 4, 4.5%. I think we can handle it, given the growth. Well, we've got a big week still ahead for data. We've got the jobs report coming up, ADP, more economic data, and then we'll see. We've got two weeks of the Fed meeting.

Ladies, thank you so much. Thank you. Good to have everybody here. Cheryl, Christina. Did you forget my name? No, no. Stephanie. I didn't. I wasn't sure which order I was, I felt like going in. It's all good. Thank you. Stephanie Link. A volatile day for shares of Intel. Following news, its CEO Pat Gelsinger has retired. Seema Modi here with those details. Hi, Seema. Hey, Scott.

The embattled chipmaker has formed a search committee and is working, quote, diligently to find a permanent successor to Pat Gelsinger. A hedge fund I spoke to this morning thinks Gelsinger's exit increases the chances of Intel's foundry being spun off, perhaps to private equity. Keep in mind, Apollo Capital and Brookfield have already injected capital into Intel's fabrication plants in the past. As Intel, though, attempts to rebuild its competitiveness, expect more focus on Intel's cost structure. Chief Financial Officer David Zinsner, who will act as co-CEO of the company, told me last quarter that Intel is tightly managing capital spending to drive better efficiency to make sure the quality of the balance sheet is in a good place.

And that Intel's goal of cost cutting $10 billion is pretty much done as it wraps up thousands of layoffs. That same hedge fund I spoke to said, however, you know, whoever is appointed CEO of Intel will need to spend more time in Silicon Valley, convincing hyperscalers to fab with Intel and time in D.C. President-elect Trump has been critical of the CHIPS Act in the past, and the company does need that money to make its foundry ambitions a success. Worth noting, shares started the day higher on that news of Gelsinger's exit, now down 1 percent, Scott. Seema, thank you. It's Seema Modi. We're just getting started here on Closing Bell. Up next, our technician Jason Hunter is back with with us he's raising the red flag on some key warning

signs that he's seeing in one part of the market he'll explain with us next we're live at the new york stock exchange and you're watching closing bell on cnbc we're back with the s p 500 and the nasdaq hitting all-time highs yet again today it marks marks the S&P's 59th intraday record of this year. Our next guest watching the bond market for potential signs about whether this run in stocks can continue. Joining me now at Post 9 is J.P. Morgan's head of technical strategy, Jason Hunter. It's good to see you in person. Welcome. Yeah.

You say the bond market holds the key to the whole market in your mind. Yeah, because we have a lot of macro uncertainty here. As technicians, you stop into the breakout that happened in September and you follow the trend, provided the trend still looks healthy, which it does. But when you're trying to get some type of foresight and you worry about inflation, reflation, disinflation, we really feel that the 10-year tips break-evens is the thing to watch. And for right now, it looks okay. It's contained in its range. So, like I said, things are constructive.

But if it breaks out of that range to the upside, reading that you could have a reflationary effect? Well, that would be more on the inflationary side. So we're looking at 10-year tips break-evens, 240 to 250s to find the range for multiple quarters now, really when that first inflationary panic started to come off the boil in 2022 and into 2023. Like I said, break-evens have been well contained below that 240, 250 area. This most recent run-up that we had into and after the election rejected that resistance again and fell off, suggesting that inflation expectations are contained and there's no real fears of inflation at the moment. So then you must be pretty positive

on the stock market then? That's correct. Yeah. And what's interesting is you're starting to see the breath broaden out, the Russell breakout, Russell-NASDAQ ratio pressuring its resistance has been in a range for the better part of 2024. That's constructive, especially if that starts to break to the upside. Do you feel like more broadening then is in the offing? Yeah, and you're already starting to see that, really. I mean, when you look at the ratio of something like Russell, which has really been underperforming, small caps underperforming for the better part of two years. Picking up, though, a lot lately, right? Yes, that's right. The Russell's up 10% in a month, as we said earlier in the program. Yeah, and it's not only been constructive in

absolute terms, but when you look on a relative basis, the Russell versus the Nasdaq performance troughed in July. And mega caps really underperformed to perform in line with Russell since then. So you're already starting to see that broadening and the breadth start to expand. Some have suggested you could get 6,300 on the S&P by the end of this year. I mean, just given where the trend is, what kind of numbers do you have in your own mind? I think the next big upside target is 6,195. I think that's my most likely target for late this year, early next year.

I think what you see if you get this continued rotation and mega cap continues to lag in that rally, naturally that's going to take some of the wind out of the sail for the S&P, given how heavily weighted those leaders have been in the index. So it's more, like I said, more of a Russell and S&P equal weight. Equal weight. I've got people coming out of the woodwork today, I feel like, talking about the equal weight for that very reason. Yes, yeah.

And there's a number of things, you know, seasonality, January effect potentially getting pulled forward here. There's a number of reasons why you could see that play out into early next year. Areas of the market that we really need to keep our eye on include what? Like besides bonds, what like asset classes? So I would say on a near-term basis, you know, watching the trends in equities is most important. But as we get into January, if we do hit those upside targets, the question is what happens next? So I think what you really need to see for that broadening to continue is some recovery in the global manufacturing story, where if you look at

it's been very much a U.S.-centric story across the asset classes, you can see that especially in FX. You'd want to see those, let's say, outside the US stories that generally have high correlation to the global manufacturing story. Things like the copper gold ratio, you know, EM equities, you want to see them at least catch their footing and base and start to move up. It's all part of that broadening breadth story. Normally that correlates with Russell outperformance of things like NASDAQ. We really want to see that unfold into early next year to really reinforce this healthy broadening type of advance. Do we assume

a continuing stronger dollar as a result of expected policies from the new administration? So there should be some more. I mean, if you look at our FX team's outlook, there is a continuation of the stronger dollar into the first quarter, at which point it hits an inflection, starts to top out, and things like Euro form a base and start to recover. What about commodities, then, as a result of that? So if you look at the commodity market, as far as from a technical perspective, and I think our fundamental view is very much in line for J.P. Morgan, we're expecting range trading.

I think the most important thing to watch are things like industrial metals versus precious metals. You want to see industrial metals start to outperform precious metals. And again, that's something that's very much in line with manufacturing. Well, that's what you're talking about, the copper-gold ratio, correct? Exactly. That's right. All right, Jason, it's good to see you here. Thanks for coming by. Thank you for having me. Jason Hunter of J.P. Morgan. Up next, Citi's Kristen Bitterly is standing by with how investors should be positioning as we head into a new year.

So join us right here at Post 9 after the break. We are back. Major averages up roughly 20 percent or more this year. So how should investors be evaluating and rebalancing their portfolios after back to back years of strong returns? Let's ask Kristen Bitterly, head of Citi Global Wealth at Work, back here at Post 9. Welcome back. Thank you. Good to see you. You pretty. I mean, I guess the general consensus at this point is positive. Trend is still up. Markets have more room to run. Do your view fall right into the line with that? I think so. I think, look, going into the end of this year,

we have basically one more week of economic data that could even that data. What are we expecting? Maybe a really robust jobs report that could push back one of the rate cuts. But even if that were to happen, I think the overarching sentiment is positive. And at this moment, I don't think we see anything that would significantly derail the rally that we've seen. I mean, we've already, as I said earlier, kind of come to grips with the fact that we're going to get fewer cuts. Yep. So when you look at what the market's pricing in for next year, it's only about two, maybe three. We do think we're going to get the 25 basis point cut in December. But I think when you look at

the backdrop of what we know to be true, right? So what we know to be true right now, you still have a lot of cash on the sidelines. You've had robust earnings. You've seen a broadening out of that earnings. And now looking at the new administration, yes, there is this healthy tension between deregulation and tariffs and what's going to dominate the markets. But I think there's more certainty around deregulation, which is why you're seeing those flows come into areas like financials, energy, but more specifically, industrials and infrastructure in that space. What's your base case for the market performance next year? So I think we're going to see a continuation of earnings growth. I

don't think there's anything from a market perspective that would tell us that we're not going to see continued earnings growth. I think the one major difference, though, is where are you picking your spots? So as we're talking about positioning going into the end of this year, some of the major things that we're discussing with investors right now, evaluate your cash positions. This is probably number one. A lot of investors continue to be significantly overweight cash. You could make this argument that cash had a strong yield, but when you compare that to what the equity market has done, I think we could actually have a very, very different outcome. I think the second thing

is take a look at where you have outsized positions and concentration. I think what's going to dominate a lot of the flows next year is not just blind flows into the market capitalization weighted index, but actually saying, let's look at S&P 500 equal weighted. Let's look at some of the profitable small and mid cap shares. Big, big theme today. Yep. Equal weight and small caps. And you're leaning in on that too? We're leaning in on it as well. But I think within small caps, you have to be a little careful because if we do have a situation where we have rates that are rates that are higher for longer, you're going to want some strong balance sheets. You're going to want profitable growth shares within that space. And you can certainly do that. You talked about earnings growth expected to be robust. Is it going to be robust enough to justify an expanding multiple. Some people are questioning whether you can even justify it now. But if you get multiple expansion, the valuation of the market continues to go up,

you better have earnings that justify it. You better have earnings that justify it. Are we going to get it? I think we will. I do. I don't think it's going to be one of those years. I think if you're looking at high single digits for earnings growth, that's a strong, solid year. But I think the bigger story is going to be this continued strength, continued broadening out. And I think it's going to be, when we talk about what could introduce volatility in terms of the market performance, that's really going to be policy, not politics being put into action and seeing, okay, what is really going to be the impact of tariffs? I think the market's trying to figure that out, but we don't know yet. We don't know yet. You think you lean into the winners, what's worked, or some of the laggards?

Like healthcare is by far the laggard. It's up 7.5% on the year, but when you compare it to financials up 35% or tech up 35% or industrials up 27%, you can go on and on. I mean, they're just astounding returns for some of these sectors this year. Which do you lean on? Healthcare is an interesting one because it's one that certainly we've liked for a long time in terms of investing in longevity. But I think when we talk about healthcare, people tend to assume that that's just one thing, right? So when you're talking about pharmaceuticals versus biotech, so what's one of the things that could actually drive stronger performance? We're all talking about increased M&A activity in 2025. That's obviously an area to watch in

terms of biotech. And so this is something that it's really more of an idiosyncratic story. But remember, not all health care is pharma. And while pharma sold off, you could even look at some of that sell off and say, are some of the valuations now good entry points? U.S. over international, you like. Yes. Is that view colored by the result of the election? Or would you have liked it anyway? Or how do you think about that?

I think there's a couple of things. So one, a lot of those tailwinds that I mentioned in terms of cash on the sidelines, in terms of strong earnings growth that we've seen, we think that that's going to continue. And so I think the international story, there's always this element of like, look at the relative valuation, but where is the innovation? Where is the growth happening? Where are a lot of the capital flows happening?

And that's going to continue to be, at least for the near foreseeable future, a very U.S. centric story. Now that doesn't mean that there aren't great multinational companies and stock selection isn't a good thing in terms of international exposure. We definitely have those positions within our portfolios. But if we're talking about what is going to be a relative outperformer, it's U.S. Chris, we'll talk to you soon. Thanks for being here. It's Kristen

Bitterly of Citi Global. Well, up next, we track the biggest movers into the close. Seema Modi is standing by with that. Hi, Seema. Less than 19 minutes left in trade, Scott. Accounting shakeups continue at Supermicro, while a bullish analyst calls sending cruise stocks higher to new highs. In fact, more coming up after the break. All right, we're 15 out from the bell. Let's get back to Seema now for a look at the stock she's watching. What do you see?

Scott, we've got to start with Supermicro. Supermicro surging after reporting that an external review of its business found no evidence of misconduct and fraud. And starting its search for a new CFO, the decision based on recommendations made by a special committee formed to look into Supermicro's accounting practices, stock up 28% and now up 60% in the past month. Let's talk about crew stocks posting strong gains as truest analysts hike targets on Carnival, Norwegian and Royal Caribbean citing a highly encouraging bookings outlook and strength in

European sailings. We're looking at Norwegian and Carnival hitting their highest level in two years and Royal Caribbean reaching an all-time high now up 91% this year, Scott. Sima, thank you. That's Simema Modi still ahead. Roku shares are popping today.

We'll tell you what's behind that big bounce and what could be at stake for the stock as we head into the new year. Closing Bell's coming right back. A quick programming note. Do not miss a first on CNBC interview with the CEO of Amazon Web Services. That is tomorrow right here on Closing Bell. We're excited about that one. Up next, we'll tell you what's driving Tesla stock higher yet again today. That and much more in the zone next.

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, Tesla heading for a 52-week closing high today. Phil LeBeau's got that move. Guggenheim floating a Roku trade desk merger. Julia Borson has the details for us. Mike Santoli first. Your thoughts on this trading debt here to start December? Yeah, upward drift is what history says to expect, and you're getting that today. Not really a lot in the way of market seizing on too much in the way of data, although

I'll say that the growth stocks carrying the way here here there's just no sellers that feel like they need to step in quite low volumes if you look at the big ETFs but that's not enough to to kind of keep the the indexes down kind of an uneven day below the surface but you have these upside gappy moves in meta and the semis it's been enough for now we'll come back to you in a second I do want to bring our viewers some unfortunately very, very sad news. Art Cashin, a longtime floor trader and friend, and as all of you know, a frequent guest of CNBC, has passed away at the age of 83. He was one of the most widely read and widely respected voices on Wall Street. Bob Pisani knew him better than anybody here. He joins us now.

Bob, I know this hits you hard. It hits all of us now. Bob, I know this hits you hard, hits all of us hard. I mean, there was one person who helped us understand the markets when we needed somebody's help the most. Prices, wars, changing political winds, and it was Art. Art Cashin had this amazing ability. He was a raconteur, a classic old school Wall Street raconteur. He was a great teller of stories. He was a market historian, but he was not an egghead. He was not an academic. In fact, he somewhat disdained academics, although he understood why they had to exist. His job was to understand where the market was going and try to explain it in a folksy,

simple way. And he excelled at that. When I got here in 1995, there were 4,000 people on this floor. Imagine what that looked like in 1995. And he befriended me and I'll never forget it. Because when Art Cashin said, you're his friend, you can trust him to 4,000 people on the floor, believe me, it made a difference in my reporting. Suddenly doors were opened to me. I'll never forget his generosity and his kindness. He was also one of the greatest guys on earth to have a drink with.

Believe me, I spent many, many nights sitting across the street at Bobby Vans and upstairs at the New York Stock Exchange Luncheon Club having drinks with him. He drank Dewar's on a regular basis, and he knew exactly what he was talking about. And every night, no matter how late he stayed out drinking, he came back and wrote Cashin's comments for over 40 years. One of the most widely read, Mike, you know, on Wall Street every day, no matter what he did, no matter how late he was out, he was that dedicated to his craft, as he called it. He liked to marinate his ice cubes. That is for certain, as he would always say. He would sign it off, stay nimble,

and he would always himself remain nimble, matter how uh how he did i remember trying to look into the big sell-off the stock market had in 1962 and i'm reading about it and art was like oh i could tell you how that felt i mean he was you know he basically had just gotten here around that time and he could give you uh exactly uh the dynamics and compare it to other cycles and other uh events that we were dealing with uh up to. Yeah, I mean, you know, we're so flush, Bob, at this point with information. You know, we have so much in front of us now and ways and things that we just didn't in the past. And he so often would be the guy that you literally would turn to to try and figure out what was happening. There have been so many amazing people who've worked on the floor.

And he's the one person that you visited with, I think year for the last gosh feels like 20 years yeah we had the we were trying to see if we could get to him in what he was in rehab for a long time to see if we could do it for this year we went across the street to Harry's and to to various places over the last 20 years to do an annual Cashin's look ahead. Towards the end of the year. Yeah, and we went to Harry's last year. And of course, it was wonderful to see him again.

The problem was he just couldn't figure out a way to do it. And unfortunately, he passed away very suddenly on us. And there's an announcement on.com for my obit on where you can send memorials. There is an Arthur Cashin scholarship fund that has been set up for him. So if people are interested, please check out Pro. There's an obit there to tell people where they can send them. I've always, Mike, admired and listened to those who have the really unique ability to take the most difficult to understand things and somehow distill it down to the easily understandable

knowledge that art would drop on you. Sure. All the time. There's people, just very few, can take whatever event is happening around the world at that particular time. Now, I understand it has the backlog of seeing and heard it all, but that was part of the genius, as Bob said. Yeah, you get to know the rhythms of exactly how the market sort of metabolizes new information, where to look for clues as to what people, maybe where they've been caught, surprised or not. I also, about the business of this place, of the exchange, I remember this one time when they had gone to trading in decimals,

you know, this controversial thing, what's it going to do to the floor? I remember him saying, look, it's like in a town and there's a bus, there's a bus that stops anytime somebody raises his hand. Is that more efficient than having bus stops at wider increments and having people cluster there? Don't you get a more? And that was a perfect way to illustrate the difference between having a little bit more of a spread and having the volume cluster in those places than just having it be a little more haphazard. I'll tell you what he really

was. Besides being a great market historian, he was a tremendous character. He refused to use credit cards. I never saw him use a credit card. I was out with him many nights. He'd whip out a huge wad of cash and pay for his bar bill in cash. And I said one day, why are you doing this? He said, I don't trust credit cards. I like being anonymous. He refused to use a cell phone. He had a born flip phone that he used for years that he rarely answered. He refused to actually type his notes out on a computer. He sent it to his assistant, handwritten notes to his assistant. He was that kind of character, and he firmly believed in that haphazard look that he had, but it was very carefully put together. Everything about it was careful,

although it gave the appearance that he didn't care about a lot of things. Rarely, if ever, missed the song that was sung down here at the end of the year, Wait Till the Sun Shines Nelly, right? He was at the front of the group with the old-timers who were down here, and that became a tradition in and of itself on the Stock Exchange, in part because of art. Even when the NYSE floor was greatly diminished after 2006. He led every year. He brought people up from Florida every year to St. Wade's and sometimes did it last year.

We'll go out with a green day today with a sad list here. As you remember, the great Art Cashin. Love to his family from all of us here at CNBC.