Closing Bell - Closing Bell: Hunting for Highs 12/5/24

Episode Date: December 5, 2024

As records keep falling, should your exposure to stocks keep increasing? JP Morgan Asset Management’s Gabriela Santos, Virtus’ Joe Terranova and BMO’s Yung-Yu Ma discuss how investors should be positioning. Plus, Mark Okada from Sycamore Tree Capital Partners tells us what he thinks a second Trump term could mean for your money. And, we tell you what’s behind the big drop in Uber and Lyft today. 

Kelly thanks welcome to closing bell of Scott Walker live post nine here at the New York Stock Exchange this make or break hour begins with the hunt for more highs whether it's stocks or Bitcoin watching some big round numbers today all over this market Dow 45 K of course getting that close above that level for the first time ever yesterday Bitcoin 100 K it's sitting just below that now S&P 6100 just below that and then NasQ, we're on 20K watch now inside of that round number. Apple, Meta, Amazon all hitting new highs. We're watching Tesla, too. It's back above a trillion dollars in market cap. And it's remarkable run since the election just continuing. The big reason why discretionary is the best sector today between Tesla and Amazon. That's what you get better than 1%. Look at Applovin

up another five percent today, now up a staggering nine hundred percent on the year. It's hard to believe, but it's true. It takes us to our talk of the tape as records keep falling. Should your exposure keep increasing? Let's ask Gabriela Santos, global market strategist for J.P. Morgan Asset Management, with me once again at Post 9. Welcome back. Thank you. Good to be here. I guess people are, you know, asking themselves a question, right? It's, gosh, I keep watching the stock market go up.

Should I just keep getting more long because this is going to last for a while? How do you answer that? Well, we really tend to see historically that actually strength begets more strength, right? You tend to have more all-time highs following all-time highs, especially once you've had a bear market, of course, related to the pandemic and rates there briefly. And now we're at the start of a new bull market.

And for next year, we still expect a pretty decent, pretty normal economy with a recovery in earnings across various sectors that had a bit of a tough go there the last two years. So that's still an environment that's supportive of equities. But if you think about should you be adding, I think you really should ask, add what exactly? And the odds are that there's probably a heavy amount of exposure to a handful of stocks. We all know and love them within the growth style, within the AI tech theme. And really what we've been seeing since July is much more opportunity in other sectors and in

market cap, like mid caps. So you have even more conviction today in the broadening story than you did prior to the election. Is that fair to say? That is fair to say. And I think one reason is just the earnings delivery that we've had from other sectors. We're now seeing three quarters where we've had alternated between eight or nine sectors seeing positive earnings growth after an earnings recession last year. You are seeing signs that margins do seem to be stabilizing for sectors outside the MAG7. So more conviction in that earnings delivery continuing next year.

But then post-election, I think a lot of the expected impact in terms of a slight boost to nominal growth or deregulation, those tend to be much more beneficial to your value sectors and to a lower cap. And a good sweet spot for us is the mid-cap sector. One of the points you make is that, and it is directly related, I think, to the election is it's a fiscal policy story now more so than a monetary policy one. Right. We've adjusted our expectations on what the Fed is going to do and when it's going to do it. And now we think because of the result of the election that you're going to get more fiscal policy, which is going to be towards that growth story. And I think that's exactly right. I think for now, this month, next month, we're still going to continue playing the Fed parlor game. Exactly how many cuts do we have left? But they're telling us pretty openly that they're closer to the end of the rate cutting cycle, which is fine. It's closer to the end of the rate. I mean, even if they pause, I don't

know that they're necessarily close to the end. They just started. But I think that there's a broad understanding within the Fed and in the market that the neutral rate is substantially higher than it was. If you look at the range in the dots, which will get new ones in mid-December, it ranges between a two and a half and a three point eight percent neutral rate. And that's because of the resilience of the economy, the improvement in productivity. So we might be getting close to that plausible estimate of neutral three rate cuts from now. And then maybe it's a pause. Maybe it's just the end. But as long as it's because it's resilient, that's fine. Where I think we'll get a lot more volatility in action is related to the tax bill next year. How much in addition to the expected four trillion in extended tax cuts do we get? And that's something that could keep the 10 year between

a four or five percent range. All right. Let me break away from the conversation just for a moment because we've been watching pictures all day of Elon Musk on Capitol Hill. Well, his XAI has some new news or at least news that confirms some earlier reporting that's been done, Steve Kovach. Yeah, that's right. That's including reporting by our own David Faber. Now officially, XAI, Scott, is raising $6 billion. This is an SEC filing that just crossed confirming that amount. That brings the total amount of fundraising for that company to $11 billion.

And by the way, so much of that money, Scott, is being put into what Elon Musk calls his Colossus supercomputer. That's in the Memphis, Tennessee area that is just packed with those NVIDIA chips. By the way, that's where a lot of that funding is going towards, just buying the NVIDIA chips and the land and infrastructure for all of this. So that is what's going on now.

You see Elon Musk there talking to members of Congress today about his Doge plans. But this is another part of his empire just continuing to grow. David Faber reported that this is going to bring the valuation of XAI up to $50 billion. Wall Street Journal last week also reported XAI is expected to launch its first consumer product based on that Grok chatbot. Eddie, pretty soon here, and we had Sam Altman on that Grok chatbot. Eddie, pretty soon here, and we had Sam Altman on with Andrew Ross Sorkin yesterday saying he sees XAI as a real credible competitor. So things are really heating up here. You have Anthropic at a slightly lower valuation. You have XAI here in the middle. And then about three times that valuation,

you got OpenAI, Scott. Okay. Steve K kovac thank you very much that was a live picture by the way as musk makes his way through capitol hill today in the many hallways in those shots that we've already seen multiple times and who knows maybe we'll see even more but it brings us back to our conversation about the market where you want to lean into and it brings me i think of no surprise to tech ai related trade there's a resurgence going on in these stocks. And there are notes starting to come out that say tech is going to lead again in 2025, even as we keep hearing more calls, including ones like yours, that it's a broadening story to focus more heavily on now. And I think really it's broadening still implies that tech still does well. I think it's just about moderating a little bit the pace that we've seen over the last two years,

as well as more dispersion within the early tech winners. But it's more of a broadening out in the positive sense of a little bit more catch up in other sectors, which we've seen this year since July, right? Best performing sectors include utilities, include financials as well. So more of a continuation of that benign broadening out. What we hear from a lot of investors is a little bit of fatigue with the AI investment story, looking much more for the second, third, fourth derivative of that story. And a lot of the conversation we've been having is around electricity generation required to power all of these data centers.

For now, AI data centers represent about 3% of our energy demand. That could go to 12% by the end of the decade. How do we fix that problem? And including investing in things like electrical industrial companies or industrial REITs or infrastructure projects, all related still to the theme of AI, but in a way that's much more expansive than it's been the early part. If we're worried about tariffs and whatever impact, if they even go into effect to the degree at which they've been speculated on,

does that just force money back into what has been considered to be a more defensive, aggressive still part of the market, tech? I mean, if you go into this thing, and well, the economy is going to, it's an extraordinary economy. Those are the words from the Fed chair yesterday, not me. Okay? So the economy's good.

Tariffs are kind of unknown. Maybe they're going to have an impact on certain spaces within the economy more so than others. So if I'm a believer in the big long story still, to be bullish, why wouldn't money just continue to flow back to those kinds of stocks, the mega cap tech names? I think it's a continuation of a lot of money flowing to the U.S. equity market. And that's because when we think about tariffs, we have a fairly closed economy. Only 10 percent of our GDP is exposed to exports versus other markets where it's 40, 50%, like a Europe, like an Asia. It doesn't mean along the way that you can't have some risk aversion that affects U.S. markets as well.

But I think it's much more of a theme of this is something that impacts probably the rest of the world more than the U.S. And then certain pockets of the U.S. equity market like retail, for example, like perhaps auto, auto parts. So it's much more specific impact in the U.S. versus the rest of the world. The last thing I'll say is watch inflation expectations next year to see if this impact starts becoming broader and mattering more to U.S. markets. The Fed said this last time, 2018, during the trade war 1.0, we're not going to do anything. It's a one-time price level shift that can work itself out unless inflation expectations get unanchored. And then we could be back to inflation watch all over again. All right. Well, we mentioned about nine and a half minutes ago

the significant story of Bitcoin topping 100,000 for the first time ever. Sitting just about right there. Let's send it over to CNBC.com's Tanae McKeel for more. As you marvel like everybody else at this move, especially since the election. Yeah, Scott, Bitcoin, like you said, just sitting below 100K now for the last 20 minutes or so. Giving back much of its gains today, but nevertheless, a really exciting day for Bitcoiners who, you know, have faced ridicule as they have held through several 70 percent drawdowns from the cycle highs over the years. The enthusiasm did not carry over into stocks. Coinbase and MicroStrategy have been in the red here.

But nevertheless, there is a lot of runway for Bitcoin as well as the crypto stocks. Several analysts I've talked to are calling for $200,000 by the end of next year. And if that still seems a little crazy to you, just remember that this is a having year. So the Bitcoin network just slashed its own supply in April. And you're seeing all of this new demand from individuals buying ETFs, the states and nation states and the U.S. itself looking to establish Bitcoin reserves. So it's not going to be a straight line up, of course, but there is a lot of optimism as investors hang their hopes on President-elect Trump delivering on some of his very pro-crypto promises into next year.

Scott? Yeah, good stuff, Taneya. Thank you, Taneya McKeel. I mean, Wolf today, overbought but far from over. Standard Charter, $200,000 achievable. Maybe next year, let's bring in Joe Terranova of Virtus Investment Partners and Young Yuma of BMO Wealth Management. Joe's a CNBC contributor.

It's good to have you both. You've been riding the wave of this, Joe, through Coinbase that you own in the Joe T. It's been extraordinary. The gains that you've seen in the shortest period of time. 79% since Halloween. That's the entry point for Coinbase, and that's what the return is as of now. More to go? Look, this is the purest form of momentum that you could find.

This reminds me of trading futures back 20, 25 years ago. This is momentum at its best. I think it's clearly what's going on right now. I do think fundamentally there is a change. The new administration and the economic team places a put underneath the market. I do think that you're going to see very strong support when ultimately the correction unfolds. And I think the last thing that's interesting, I've heard a lot of people talk about the store of value reasoning behind owning

Bitcoin. And if you think about where we are as an economy, we are an economy that values the intangible asset, right? The algorithm, the artificial intelligence, the software. We don't value tangible assets anymore. And gold is a tangible asset. That is what gold is. If you think about what Bitcoin is, Bitcoin is now an intangible asset. So for the first time, you've introduced a store of value that actually reflects what the new technology economy of the United States is and how we price risk assets. So a lot of volatility ahead, but I think there will be underlying support. Young Yu, what is this move that we've all really been watching and, as I suggested,

marveling at? What does it tell us about where we are in this current bull market cycle I think Scott it's great to be here it does seem that the move does have fundamental underpinnings of course with the change in administration and policies and tacit support of further crypto so regulations loosening where does it mean where we're in the cycle? I think this is a very strong momentum trade. I think it means momentum is alive and well. It's hard to see in the near term what's going to derail the price from going up higher. It is speculative. We do think that if there's a correction in the Nasdaq, for example, Bitcoin would probably pull back as well. But it is an environment that is different

than a few months ago. The regulatory outlook going forward is more favorable. So there are some fundamental underpinnings and it's not clear what's going to derail this train going forward. I mean, we're asking the question on the screen, animal spirits versus risk on frenzy. I mean, can it be both? Why is it one versus the other? Isn't this a part of a sign of what people suggest could be an animal spirits environment, which then leads in part to the risk on frenzy too? So I think if we think about sustainable risk on and signs of sustainable animal spirits, we would look at things like business confidence. We have already started to see an increase in early surveys that have come out, like the PMI survey and manufacturing services, like the home builder survey, showing an increase in confidence,

especially over future output. So something to monitor to see if that continues to increase as policy comes into focus next year, and most importantly, whether that actually leads to more capex or more hiring or more deal activity. And a way for us to play this risk-on idea beyond just equities, beyond corporate credit, is also in private markets. I think that's our favorite way of thinking about deregulation and increasing risk on activities, much more through private equity, where you can finally start to see some deals take shape finally after it's been frozen for a few years and you get some liquidity back finally. What's your what's your best Joe risk on idea if we want to play it that way? Because that's what this environment obviously is.

And and some suggest it's not ending anytime soon. So what's the best idea? No, I well, look, if you look at momentum as a single factor, the purest factor of momentum, it's having arguably its strongest year over the last five years and it's made a return after being dormant for the last two years. So I think you have to respect that factor itself. And I think what it does, and in the case of Bitcoin and Ethereum, the introduction, the attempt to traditionalize it by having ETFs and having options associated with the ETFs. Now you have institutional participation, speculative behavior from a lot of non-discretionary funds that are running quant models that weren't there a long time ago. I think that's largely what's going on right now. So when you understand that momentum is at play, then you understand why you have stocks like Applovin that is up 800 percent year to date. OK, can you make a fundamental argument that that's justified? I understand the other side of that. And I think you risk manage around that trade, but justified, I understand the other side of that.

And I think you risk manage around that trade. But you don't fight the momentum. And I think we go into 25 carrying very strong momentum. But I don't feel like I don't feel like we got my question. The best risk on ideas now is playing the momentum, playing Bitcoin, playing them. No, no, no, no. And the for me, obviously, it's loving. No, for me, it's looking at the for me, obviously, it's loving. No,

for me, it's looking at the various sectors, looking at the various sectors and identifying three or four individual names in each sector in which you're seeing the strongest momentum. Identify the sectors that I need to be. So financials, obviously, you're seeing clear strength in a name like interactive brokers. You're seeing clear strength in a name like Interactive Brokers. You're seeing clear strength in a lot of the private equity names like Apollo, like Arch Capital. You could turn your attention to industrials. Guess what? In industrials, you know what has really strong momentum right now? The airlines, which is remarkable because it's kind of counterintuitive to what we thought over the summer when it wasn't going to be there. Even in health care, you could look at a name like intuitive surgical. Again, strong momentum. So all I'm saying is it works. As you've

said, Scott, it works until it doesn't. And right now it's working. It's a dominant factor in the market. And I just urge people, don't fight it. Don't fight the momentum. Don't try and go against it. Don't try and short it. Young you, you want to address that as well in terms of the best places to look right now? I asked the question top of the show. People see the market running. They feel the momentum, as Joe is talking about. And they're wondering whether they should just continue to get, you know, even longer stocks because it's going to last for a while or not. What do you think? Well, I think it's fine to stay long and even potentially get longer. But that is the question of where to get long.

And I think an area that continues to look attractive for us right now is mid-cap growth and mid-cap technology. We do see the technology trends spreading out to a broader section of companies who are going to benefit from AI, benefit from tech spending. And we think that mid-cap growth space, if we're to pick sort of a targeted area where we might add funds to, that's probably an area that's going to do well here

as these trends permeate the economy more so than they did in the past year. In the past year, it was all about these mega cap tech names. And now these mega cap tech names, they're going to be battling it out with their large tech names. And now these mega cap tech names are going to be battling it out with their large language models and really the benefits we think are going to accrue to the next level of companies down that can use some of these models, use this technology

to help benefiting companies in terms of gaining efficiencies and productivity. So that's where we play mid cap tech, mid cap growth. That's probably an area that has a lot of room to run here. I like that. I like that. And I think three names that come to mind, Twilio, which I own personally and I keep adding to as it rises. So, yes, I'm buying the momentum. DataDog, which is in the AI tools that's going to simplify the need to read through complex, long contracts and documents. And we've seen in earnings that it's beginning to be accretive. So those are three names that I like.

I like that emerging software play. I like that mid-cap technology play. Lastly, larger cap or small cap? In between, mid-cap. I think, you know, if you think about valuations, of course, the most extended are in large cap. So that's, you know, starting points do matter here. And if you think about some of the discussion we've been having about a certain improvement in certain parts of the economy and earnings by virtue of being more oriented towards economic sectors. You add a little bit of cyclicality in mid caps without going full cyclical, unprofitable companies like you have in small caps.

And then lastly, you get some exposure to companies that have floating rate interest rate sensitivity. But again, not all the way like you have with small cap. All right. All right. We'll leave it there. Gabriela, thanks. Joe, you as well. Young, you will talk to you soon. Everybody have a good rest of the day. We're just getting started here. Up next, Sycamore Tree Capital's Marco Cotta back with us with his 2025 playbook, why he thinks the second Trump term could what he thinks it could mean for your money. Join me after the break. it's been a strong start of the year uh it's been a strong year i should say for investors in a number of asset classes everything from equities and credit to gold and crypto rallying, as you know. Our next guest sees another constructive setup for risk in 2025.

Mark Okada, the co-founder and CEO of Sycamore Tree Capital Partners here at Post9. It's good to see you again. You were walking up and I said, hey, what's up? And you said everything. That's right. It literally. Yes, that's true. Does it keep going?

Well, I mean, the setup's great, right? I mean, Trump is inheriting an economy, both a market economy, so the Wall Street economy looks good, obviously. I mean, we're talking everything's up. The Main Street economy looks good. It's coming, it's softening, but from a very high place. And I think with all the animal spirits we've been seeing in the last, you know, post the election, we may not even land. There's no landing, right? That's possible.

We've kind of been in that scenario for a while now, thinking, right, forget the soft landing. This looks to be a no-landing economy. When you have the Fed chair yesterday himself using the word remarkable to describe the economy. Scott, that was our call, right? I said that earlier. I don't think the Fed's going to cut. Things look too strong to me. I mean, they cut a little bit, but I mean, maybe they paused.

But inflation's in a good place. Liquidity is amazing. Everyone said when they start cutting rates, we're going to see all this money flow out of the morning markets. It's up. So yeah, everything's up. That's all good. The setup's up.

Good. So the credit guy is still bullish. Yeah. And now, Mr. President, just don't screw it up. What do you mean by that? How could it get screwed up? Well, the valuations are high everywhere, right? So who really wants to own it at this price, right?

I think that's the reason why you have so much dry powder out there. We like dry powder. I think that's one of our themes. Take a page out of Buffett's book. It's not a bad page. He's much larger than we are, but if you can sit in CLO AAA and earn five, five and a half, six, seven, eight, whatever it is. I mean, this year for us is going to be closer to eight, but that's going to be much better than T-bills. But that's safe, inflation protected, volatility protected.

Rate vol takes off when you get a sweep. In the four instances in the last 15 years. You mean a sweep on the hill? Yeah, you get a lot more rate ball coming out of that because of the things that potentially could go wrong. And all the scenarios are on the table, Scott. Stagflation, depression, a recession, a giant peace dividend and another growth and another round of inflation. Or hopefully we just stay in this Goldilocks thing, which would be wonderful for me.

I mean, you say these are the words you gave to our production team. An untethered Trump means all scenarios are possible. Geopolitics, bond vigilantes, rate volatility, deportation, recession, trade war, reflation, meme implosion. Yeah, that's a long list. And they're real. They're all possibilities. They're all possibilities at a time when things are very priced nicely But do you fit do you listen to all that now when nothing has happened and the fundamentals look so good?

I don't I don't think so. I think we we stay long our credit plays We stay long our wrists that we like we keep some dry powder but I'm gonna do it to dry powder like dry powder? If you have a growing amount of dry powder, you mentioned Buffett and those folks at Berkshire, they're on like a Mount Everest of dry powder. And some are wondering, why do they keep sitting on it? And what are they going to do with it? Maybe valuations are prohibitive to them doing anything with it. So what are you going to do with yours? Well, for us, right, it's really saying, what is fixed income supposed to do?

What is your fixed income allocation supposed to be in a balanced portfolio? It's supposed to be the money you can count on to rotate into risk assets when that happens. Now, it's kind of weird saying that now when we're so bullish, right? But the things that keep us up at night say that at some point, maybe some of this happens. The 15% case is what's priced in now for inflation. 85% of the time, we get another bout of inflation. So I want to sit on dry powder for that, right? In case.

You mean in case we get another, a reflation through, in part from some of the policies that we're talking about. Which is the base case, which is probably what happens. You get wages that keep up with inflation a little bit, but not enough.

And those, you're seeing a lot of that labor want more wage inflation. They want higher salaries. They want more pay. That's going to happen, especially when we start kicking the people out of the country. So I think what we're headed for is probably something like that. It's not now. I don't think it's now. But some of these other policies, they can go either direction, big time. You could get much more stimulus, which probably is the case we're talking about,

or you can do something that really, really hurts the economy and puts us in stagflation. And we haven't talked about tariffs, but one of the things I was thinking about is the Trump administration this time is coming in hot. They're not coming in— Oh, they're coming in hot, all right. Right? They're not coming in where they don't're coming in hot, all right. Right? They're not coming in where they don't really know how this works, right? This is not his first rodeo. It's his last rodeo.

And that's why he's untethered. And so they've got all these ideas, but using tariffs as a blunt instrument, right, is really...and tying them to other things, saying, we're going to throw these tariffs on you unless you do this or that. That's that's that leaves you open to someone else saying the same thing. What if China says basically, you know, hey, no chips out of Taiwan? I mean, those are kind of the scenarios where it gets really, really ugly. What is the self-professed credit guy? You call yourself that. What does the credit guy think about what's happening in Bitcoin? Do you wish you were a Bitcoin guy?

Now, so I'm an investor. In Bitcoin? No, I'm an investor. Oh, and generally speaking. So investors take fundamentals and they analyze them and look at scenarios and outcomes. Bitcoin is not that. Bitcoin is not finance at all. Bitcoin, to me, is speculation. And it's clearly a scarcity play. So I'm not in it. It's interesting to watch.

And certainly it's meaningful to what's happening globally. But I'm not in it. I'm an investor, not a speculator. Well, I mean, some say it's moved from the most speculative of asset classes to a legitimate one with more fundamentals now behind it, in part because of the election result. You saw who the SEC appointment is going to be, someone who's more crypto friendly. OK, so the old man. You don't have any FOMO?. Okay. So, so the, the old man. You don't have any FOMO? No, I don't. I'm an old man. And so I got into investments because finance, the essence of finance is taking savings, giving them to borrowers and building something. There is no finance going on here. There is no use case for it until at some point,

maybe it gets there and then it's an alternative currency. But it breaks the basic rules of finance. You're not building anything. There is no real use case for it except for speculation. And then an alternative currency, which seems to be happening. I'm not judging it. I'm just saying why I'm not involved in it. And yeah, have I missed out on that?

Sure, but I'm not worried about that. And yeah, have I missed out on that? Sure. But I'm not I'm not worried about that. All right. No, it's good. I'll stick to my principles. It's good to have both sides. Certainly. It's good to see, as always. Yeah. Thanks for being here. It's Mark Okada, Sycamore Tree, joining us. We do have breaking news related to Eli Lilly. Angelica Peebles has the details for us. Angelica. Yeah, Scott Lilly announcing a three billion dollar investment to boost production of GLP-1s. The company will expand a manufacturing facility in Wisconsin that it acquired earlier this year. Lilly's saying that the goal here is to help meet the growing demand for its medicines for diabetes, obesity, and possibly other diseases in the future. The focus of this plant is manufacturing Eli Lilly's injectable medicines, so doing things like formulating medicine and putting it into those pens that you need for GLP-1s. Now, this is just the latest from Lilly in its race to scale

up supply of those GLP-1 drugs. Scott, the company has now committed $23 billion to manufacturing since 2020. But remember, these things don't happen overnight. Lilly expects to start construction on the expansion next year and to start actually making medicines here in 2028. Scott. Angelica, thanks. That's Angelica Peebles. Up next, star technician Jeff DeGraff is flagging one part of the market he says is showing animal spirits, and it is not Bitcoin.

He explains after the break. We are back. Bitcoin just below 100,000. We'll continue to watch it. 98 and change, almost 99. It did hit that milestone, of course, earlier, 100K. And it's not the only corner of the market showing animal spirits, according to our next guest, Renaissance Macro Research Chairman and Head of Technical Research, Jeff DeGraff.

Good to see you again. Welcome back. Hi, Scott. Thanks for having me. What else do I need to be, I don't know if wary of is the right way to say it, but what else do you suggest is showing what you think is animal spirits? Yeah, well, look, that's an important part of the bull market. Obviously, you want to be a part of those animal spirits as they're building. You want to be wary of those animal spirits as they're building. You want to be wary of those animal spirits as they get frothy. And I don't think we're there yet. We can certainly talk

about that. But we look at a lot of different aspects of the market, one of those being the IPO index, right? So how are new issues doing relative to seasoned issues, because obviously they tend to be more speculative without the track record and the battle scars, if you will. Those are making new highs. That index looks actually really, really impressive to us. Another aspect of this would be high beta versus low beta names, particularly on a sector neutral basis. So even high beta, say, utilities versus low beta utilities are outperforming and that

tends to be good news. And then finally, just to put a pin in it is cyclicality. The cyclicals are outperforming the defensive names. That tends to be good news historically. So I like the building of the animal spirits. I do think sediment can be an impediment at some point, but I think that's after the beginning of the year. I think that's sometime probably starting in February or late January. But until we start to see more evidence of that, I think the signposts are still pointing towards this bull

market being intact. I mean, when does it get excessive? Do you have numbers in mind? I mean, you must in certain levels as a technician. What makes you say, OK, now it's getting a little crazy? Yeah, it's less about levels. Unfortunately, I'd love to give you a hard level. It's really more about the data that we look at. And so, you know, we'll look at the option pricing. we'll look at some of the sentiment survey. And really, for us, what becomes interesting is if the sentiment is out of line versus the historical returns. And so, if we see a lot of bulls, but we really haven't made much price progress in the market, that becomes a dangerous sign. That's not happening here. We're still in

good shape. We have about the same number of bulls that we'd expect given the types of returns that we've had over the last couple of months. So I think we're still okay there. But I do suspect, I mean, about 60, 65% of our sentiment indicators are flashing some type of warning sign. They usually are early at a top. So again you know, again, I think seasonality is is a more important indicator here than than those sentiment signals. But it's certainly worth watching. And I think it will be important at some some point in time, probably in early 2025. What do you notice in tech's resurgence? That's interesting to you. NASDAQ's up for up two and a half percent on the week. It's leading the market by

a bunch, and it's the leadership group as well over the last month. Well, I would say a couple things really jump out. Semiconductors continue, particularly anything that's not associated with AI, continue to lag and continue to, frankly, be an anchor around the neck of tech investors. So those charts still look weak to me. The NVIDIA chart is okay, but it's just okay. It's not outstanding, but it's decent. Even today, what started to happen is Microsoft is starting to break out. The relative performance is still lagging. So, I'd like to see that kick in. But generally speaking, Microsoft has been one of the weaker software named in that space. So application software,

system software, those are certainly much better charts and they look really, really good to us. So I think this next leg of tech is being led by software names and that's been building for a while. That's nothing that's terribly new. I mean, I'd say it's new in the last two months, but I think a lot of those have been long consolidations over, say, the last nine months or so, which really sets up bullishly for 2025. Well, I want to ask you a little more deeply on that. I mean, it's longer than a couple of months. If you go back six months and we've been doing this on the shows, the IGV versus the SMH is pretty telling that the way that the lines diverge. You're suggesting that that's not going to change

anytime soon? Correct. I think that that's in play for a while. I'd say at least the first half of 2025. The relative performance is there. You've got a lot of work to make up with a lot of these semiconductor names. And I think that's going to be just a long building process. And frankly, the sentiment in many of those names has not changed enough to get to the point where we think that we've actually cleared the decks and can get a fresh start there. So I think that's still going to be a grind for semiconductors. And we're allocating capital more towards software at this point. Yeah. I mean, the lines look like they're going in that direction. What was just modest outperformance looks to be something developing more substantially.

It's good to see you. Thank you, as always. Jeff DeGraff. Thanks, Scott. All right. Up next, CNBC Sports' Alex Sherman caught up with the Major League Soccer Commissioner and hear what he has to say about the league's deal with Apple. We are back on the bell.

CNBC Sports' Alex Sherman caught up with the Major League Soccer Commissioner. He joins us now with the highlights. What did he tell you? Hey, Scott. Yeah, we talked about a number of different things. We talked about Lionel Messi's effect on the league and on attendance. Believe it or not, MLS actually had the second highest total attendance of any soccer league throughout the globe this year, in large part due to Messi. We talked about the MLS Cup coming up on Saturday, and we spent a lot of time talking about the MLS's media rights deal with Apple, which is very unique among all the sports media, all the sports companies out there with their

media partners. The MLS struck a deal with Apple that gives Apple all of the MLS's games. So they have an exclusive contract there, very different from other leagues that have sliced and diced it among many different media companies to maximize revenue. But one thing we have not learned is how many subscribers actually sign up

for MLS Season Pass, which costs $15 a month. So I asked Don Garber, why haven't you disclosed the subscriber number? Here's what he had to say. We have more subscribers than we and Apple thought we would have. We have more people watching our games. Remember, we have every single game is like a national game.

So think about the difference between a local viewer and a local sports regional, and now having that Seattle game was playing Vancouver broadcast around the world. At some point, there'll be more transparency. Apple and other streaming services aren't distributing subscriber numbers, but we'll see how that looks in the future. So the takeaway there is that the MLS wants to tell people how many people have subscribed to this because they say it's a good number and that it's Apple and Apple's policy of secrecy that has prevented that number from getting out there.

You can watch the full interview on CNBC.com slash sport. Also, that interview and every weekly videocast we do with another member of the sports business community can be found in your inbox by signing up to the CNBC sport newsletter also at CNBC.com slash sport. I just want to make sure I heard you correctly because I'm surprised by it if I did. The second highest attendance of any global sports league is the MLS. Presumably it's the Premier League in the UK that's the number one. But that's pretty surprising, no? Higher than Bundesliga, higher than La Liga, exactly. That is the Lionel Messi effect.

And yes, you are right. Premier League is number one. So I think that does speak to the fact that the MLS has really gained traction in this country. And by the way, another interesting note, I think, that I learned through the course of this interview, the viewing audience is really young. 75% of viewers of the MLS are 45 and under. So I think that is another benefit, perhaps, to this partnership with Apple, which is maybe steering the MLS toward younger viewers rather than an older viewership that still hangs on to traditional linear TV. Yeah. Interesting stuff. Alex, thank you.

Thanks, guys. Appreciate that. Alex Sherman, still to come. Shares of Uber and Lyft are sinking in today's session. We'll tell you what's behind that big leg lower today. We're back after this break. Coming up next, what to watch for when Lululemon reports in overtime, that and much more when we take you inside the Market 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, Steve Kovach on what is behind the drop in Uber and Lyft shares today.

Courtney Reagan looking ahead to Lululemon reporting in overtime. Steve Kovach, you first. You want to tell us about Uber and Lyft? Yeah, well, first it starts with Waymo because Waymo is going to Miami, and that appears to be sending those shares of Uber and Lyft a lot lower today. Waymo is going to start offering rides in Miami with human supervisors next year and then launch the full autonomous robo-taxi service in 2026. Now, Waymo robo-taxis, they already operate in San Francisco, Los Angeles, and a few other places. Though it's worth noting, Uber is also a Waymo partner. They're going to

offer Waymo rides in Austin and Atlanta next year, for example. Still, you have Uber and Lyft off at least 10 percent on that news today. Scott, I'll send it back over to you. All right, Steve Kovac, thank you very much. Hey, Court, what about Lululemon? Yes, Scott. So this one, this time around, the focus for Lululemon investors is going to be around its ability or maybe lack thereof to stand up against competitors like Allo and Viore. They both seem to be gaining ground.

They're private companies. But the yoga wear retailer's comparable sales, they're still growing, to be fair, year over year. But they've been decelerating each quarter for over a year now. And while some of that may be from the growing competition aforementioned, some of it also might be a little self-inflicted, from apparel that just frankly didn't resonate with its core customers. Last quarter, CEO Cal McDonald said it was, quote, fast-tracking some new styles, and analysts did agree that it needs some newness. We'll see if that helped during this quarter, it will report

today. Geographically, you want to watch for what Lululemon has seen in the United States, and then if international sales, including China, increase enough to offset some expected softness here in the U.S. Shares for Lulu done 32% year to date. That compares to a nearly 15% increase in the retail ETF, the XRT, over that same period. But Lulu shares are up 8% week to date, while the XRT is flat. So maybe some hopes going into this quarter, maybe some short covering, hard to tell. But I will tell you, when I was at the mall on Black Friday, there was the longest line outside Lululemon. And really, there weren't big sales to be had there.

Back over to you. All right. All right, Court, thank you. That's Courtney Reagan. We'll turn to Mike Santoli here as we'll go out. Dow's down 250. So we're peeling back from the round numbers. You said Bitcoin's off of 100K.

Dow pulling back from its big number as well. But got the jobs report looming in the morning. We do. It's hard to make too much of it except for that hesitation ahead of the jobs report. You know, on a week-to-date basis, two-thirds of all S&P stocks are down, yet the S&P index itself is up eight-tenths of a percent. So it's been this really almost painless cooling-off period after a very strong month coming into this week.

We're still seeing, you know, the hot money flows. You've been talking about that, how to know when we're due for some kind of a shakeout. Well, MicroStrategy is down 5% on the day that we went above 100K in Bitcoin. I would never want to declare that that's decisive. But be aware that there's been stuff that's just been running on pure adrenaline that at some point is going to have to take a breather. So we'll see if we're there yet. Santa Claus is on the balcony. Yeah.

Mr. Peanut is on the floor. Among others, the Energizer Bunny, the Coca-Cola Bear. You want to get your picture with anybody? I'm feeling underdressed in general because of all of that. Mr. Peanut's keeping it real for everybody down here. The top hat on the street Always works That's Mike Sanzoli

Bells ringing I'll see all of you tomorrow I'll send it into overtime With John Ford