Closing Bell - Closing Bell: Is the Trend Still Your Friend? 11/22/24

Episode Date: November 22, 2024

How long will these favorable trends remain investor’s friend, as we enter an even stronger seasonal period with the bulls’ confidence riding high? 3Fourteen’s Warren Pies, Raymond James’ Tavis McCourt and Crossmark’s Victoria Fernandez break down their forecasts. Plus, Mithra Warrier from Citi tells us what she is expecting from hedge funds in the new year. And, Bitcoin closing in on $100K. EMJ’s Eric Jackson weighs in on what could be next for the crypto space. 

And welcome to Closing Bell. I'm Mike Santoli in for Scott Wapner. This make or break hour begins with a sturdy, somewhat stealthy rally carrying into the end of a winning week. Here's your scorecard with 60 minutes to go in regulation. The benchmark S&P 500, modestly positive. You see it up there a little more than a quarter of 1% on the day, though that is being restrained by some more sluggishness in some of the mega cap growth stocks out there. NVIDIA, in fact, the biggest drag on the index, falling, let's see, about 3% on the day and is now down below the closing price from before the company reported strong results and raised guidance on Wednesday. The Dow Industrials, they are outperforming.

They are up about eight-tenths of 1%. Actually, so is the equal-weight weighted S&P up about that much. While the Russell 2000 makes another run above the twenty four hundred mark. It's not far from what would be its first record high in about three years, helped by upbeat readings on the consumer in retail earnings and a services sector gauge this morning. And then there's the tireless run in Bitcoin. It is now trading above 99,000, 99,250. At the moment, it got actually even a little closer than that to the $100,000 mark as the buying frenzy rolls on. It's riding hopes for wider adoption under the incoming Trump administration.

We will keep an eye on that one for sure. That brings us to our talk of the tape. How long will these favorable trends remain investors, friend, as we enter an even stronger seasonal period with the bulls confidence riding high? Well, that's Warren Pies, co-founder of 314 Research. Warren, great to see you. Thanks for coming on today. Yeah, thank you for having me. So as I gather, Warren, you're kind of not in the mood to necessarily fight this this uptrend as we face the last several weeks of this year. It just seems like you have the fundamental case. The Fed is in this kind of orderly easing process.

Obviously, the market technically has held this nice trend. Is that accurate? I guess what would you be looking for to come next? Yeah, I think that is basically accurate. You know, the market's clear a lot of, I think, concerning hurdles here. And now we're stuck with like the most seasonally bullish period of the year. So the elections behind us, earnings for the most part now are behind us. The Fed is cutting. So that was all anticipated events. When you go back to the beginning of this year,

and this is the dynamic we've been talking about and been talking with you and on this network for the better part of this year, is that strategists, investors in general, were just pessimistic on the bull market coming in 2024. Strategists forecast back then one year ago implied 2% gains for the S&P 500. And so our view is that this was going to create a chase dynamic throughout the year. And so all the pullbacks are shallow. They're quickly bought. Everybody has to catch up. And now we're in the seasonal bullish window.

You can't fade this. I think that the market's set up to have a strong finish, even though we didn't get that Q3 correction. And so, yeah, I'm not going to fade that. But I am starting to look ahead at 2025 and see some risks out there. And we are showing this chart that you made that tracks the strategist consensus target for the S&P 500. And you have these end of year jumps in the projected target level, obviously, as strategists come out and refresh their outlooks for the coming year. Is this now at a level that you would be concerned, let's say the consensus looking for about 11 percent return to 2025, or is it just the fact that kind of everybody is revising higher? It is an area where I'm starting

to get concerned. And so let's just for a moment, we have to get all the strategist targets in there to to really have a full view of what's happening. So but the early returns are in. And like like I said last year, strategists made the mistake of being too keeping their targets too low and just being too bearish for 2024. And they're not going to make that mistake again, it seems. So the early targets we're seeing is like 6,600 for the 2025 target. And from current target levels, that's a 20% increase and 11% implied gain, as you mentioned, for the S&P 500. And both of those numbers are basically the highest we've seen at this point. You always get this rise at this point. This would be the biggest jump we see as we roll into a new calendar year. So we went from just skepticism coming in 2024 to a lot of optimism going into 2025. And that is the condition you see for, you know, don't want to be alarmist, but

that's what you see around major market tops. Every one of the bear markets we've seen for the last 25 years has started with strategists well above S&P 500 spot level. So if this is where the rest of the strategists come in on their targets, then, yeah, this is a concerning backdrop and it makes the market more. Yeah, obviously, the crowd becomes harder to please when everyone's expecting great things. If we do run into some kind of turbulence, maybe it's after the turn of the year. There is some historical precedent for some weakness into Inauguration Day, you know, in a post-election year, all the rest of it. Do you think that that volatility might come from another growth scare or is it going to be kind of the overheating yields going higher story? Yeah, I think it's a little interaction of both.

Right. And so I think under the surface, I'm not ready to say that the recession is here or anything like that alarmist. But what I can say is, again, go back to last year, 50 percent odds of a recession based on the Bloomberg survey of economists. That number has dropped to 25 percent. So basically, everybody is on the no recession kick. And when you look at the cyclical areas of the economy, they are weakening. And that's an interaction of interest rates weighing on things like housing. And so I think if rates don't keep moving down, and that's not my expectation on the long end, that is, then I think you'll continue to see see growth scares pop up. So

where we're at right now, the big question I have for 2025, can the U.S. economy handle, let's say, 7 percent plus mortgage rates? And right now, the evidence says not so much. It's not a great environment for those leading edge areas of the economy. I know you look across asset classes for your investment model, and I know you have gold in there and Bitcoin is kind of, you know, on gold's corner here and is dominating so much of the enthusiasm and the action. What do you make of this run in crypto, which also seems to have kind of kindled a little bit of an echo boom in some other riskier parts of the market. Yeah, that's absolutely right. That's the pattern we've seen post-election is just like go from

quality to low, low quality. That's been the swing in crypto. Bitcoin has been the leader in that in that dynamic. You know, how can you be anything but bullish on Bitcoin, to be honest? I'm not a huge crypto guy or a Bitcoin maximalist or anything like that. But when the administration throws their weight behind an asset like this, I think it's a big deal. And so it looks like this is going to be just an ultimate, an existential win for Bitcoin. And it's going to be adopted by the industry. I was talking to some funds that really specialize this at clients of ours and they they think that a huge portion of bitcoin's been lost

so some of the supply has been has been capped and they also think that in order for this to be a big enough asset for the industry it might have to go up to like three hundred thousand dollars or something like that so once the industry starts adopting it and you get this kind of narrative building, you don't want to stand in the way of the momentum. So, yeah, our model is at a 3% Bitcoin position, which is a max position for us. And the one question I do have is, can gold continue to thrive in that world where Bitcoin starts to lead? My view is that some of the gold sell off that we've seen, I know there's dollar strength and stuff like that post-election. I would chalk that up to this just crazy Bitcoin rally and it kind of winning the battle of what I'd say are debasement assets. Right. And of course, all happening with with the dollar actually very strong and at multi-year highs.

Yeah, I mean, the dollar gold's been down, though. The thing is, so dollar strengthening Bitcoin doing well, but gold's down versus every currency, even the euro, which is getting killed right now. Gold's down post-election. And so, yeah, I mean, it's I think it is when you have to take that dollar effect out. But when you look at it, you can see there is some real gold weakness going on under the surface. Yeah, and it definitely was timed right after that decisive election result. Let's bring in Tavis McCord of Raymond James and Victoria Fernandez of Crossmark Global Investments into the conversation. Welcome to you both, Victoria. I know that you've kind of been focused on kind of quality assets, maybe a little bit defensive in your mix. Has any of that changed based on conditions

over the last several weeks or expectations about policy or market action? We haven't had a huge shift, Mike, in our broader outlook. We still think there's warning signs ahead. Some of the things that you guys have been talking about, obviously, there's weakness in the labor market and we have to see how that comes to fruition or if it does in regards to the quits rate, the continuing claims going higher, companies talking about potential layoffs coming next year. And valuations are quite high. So we're a little concerned as to how much more room there is for this growth component in that market. But at the same time, just like you guys have been talking, I don't think you want to stand in the way of the momentum that we're seeing right now.

And there's good reasons for it. You've got the Fed, and not just the Fed, but central banks globally lowering rates. You have a more business-friendly administration coming in. Even if they don't get corporate tax rate cuts, they're not going to go higher probably, and less regulation. And then sentiment is just really strong right now. You look at bull bear ratio at a three to one. Advanced decline line is strong. You were speaking earlier today about all the money you see flowing into riskier assets. So I think there's momentum in this market. I

don't think you stand in the way of it, but we are still taking a little bit of a guarded approach for what we think may be coming next year. Yeah. And Tavis, I mean, just building upon that on some level, this is kind of how bull markets go, right? People have fun over here. And then the main core of the market seems to just be repricing to discount, you know, a plausible economic scenario. This market's been very rotational since the election. You know, banks working, cyclicals working, responding to better than expected economic data. Are you finding fault with any of that? Are you seeing any potential hazards bubble up? Not really. I mean, everything looks very Goldilocks right now.

The problem is we know it doesn't stay this way for long. Like if we don't have a period of labor weakness next year, by December of next year, this will be the longest period of full employment in the U.S. since World War II. So generally what happens is either we will fall into a recession or things will overheat again and the Fed will be forced to raise rates

and cause a recession. But it always ends the same way. And so I think everybody's playing a very similar game, which is momentum is strong. Right now, the economy looks good. And I think at the soonest sign of any weakness anywhere, you'll just end up getting an overreaction because the multiples have gotten so high over the last 12, 15 months. Right. There's no doubt about that, right? We're at 22 times forward earnings for the S&P 500. Now, that forward estimate does continue to tick higher, but no doubt we're at,

you know, pretty much close to multi-decade highs there. Now, Tavis, obviously, a lot of the folks want to rationalize that to some degree and say it's mostly weighted in these mega cap stocks that actually have underperformed over the last few months. We have had a broadening out of the rally. It's following earnings growth. Is that enough? Yeah, first, I would correct you. I do not think 2025 consensus estimates are taking higher. Fiscal is not going up, but 12-month forward, yeah. Yeah, 12-month forward is. But I think, to me, the biggest risk for next year is the two things that have been driving multiples across the index are AI and the infrastructure bill. So if you look at sector PEs versus where they were in 2019, every sector outside of energy is more expensive than it was in 2019. But if you look at the median stock across every sector, the only sectors where the median stock is more expensive than 2019

are technology and industrials. And it's all because of those two narratives. So as you said before, these cloud players have really started to unperformably, and I think a lot of that's because of CapEx anxiety. And if that just continues into next year and the infrastructure bill spending starts to, it's not going to fall off a cliff, but if it just starts to level off, we lose these two narratives. It becomes a very different market. And so, you know, I think the safer place to be is in the non-AI, non-infrastructure bill related names that are much cheaper, because I think that the overall economy outside of that looks decent right now. It's certainly better than I would have thought six months ago.

Yeah. And, you know, Victoria, I mean, the credit markets certainly reflect this idea that there just isn't that much macro risk, default risk, at least based on how things trade at the moment, which I guess should give comfort for some things like even smaller cap stocks. I mean, do you have a belief that some of those long left behind areas of the market are due for a chance to participate or has the window closed? Well, Mike, if we're going to have a soft landing, then those are the areas that need to kind of have a comeback and really support this economy. But you're right. I mean, we think of recessions historically, and it's usually a credit event that ends up pushing us into recession. You look at credit spreads right

now, high yield spreads are as low as they were before the great financial crisis. Investment grade are as low as they were back in the summer of nineteen ninety eight we are seeing no warning signs. Coming out of the credit market at all again I think that's feeding into this optimism that people have in this very bullish sentiment. But we do need to see some turning in

some of these other areas we've started to see a little bit. Energy has started to turn around a little bit. You took. Have been doing better but we need to see kind of a breakout relative to the market as a whole. And we're not seeing that yet. Staples, another one where we'd like to see a relative breakout and see some strength there. Then I think that puts

you on a little bit of a more sustainable growth pattern going forward. And then that would speak well to small caps. But for right now, that's a little too risky for us and our broad scheme for our clients. So we're staying with some of the larger names in the areas we like, especially financials and industrials. And Warren, before we go, I'd love to have you weigh in on oil here because it made a little bit of a move.

It seems like the street is pretty skeptical on anything lasting. But how does it set up in your work right now? Yeah, it's a little tricky. So our model is bullish, but I'm having a hard time personally getting behind that. I think that, you know, maybe we found a bottom here in the very near term and we're going to make a little bit of progress. Near term deficit still remains and there's a lot of skepticism out there in the futures market from hedge funds. I think the big dominant factor though and the reason why I think there's more downside than upside if we go out like three months on crude oil is the fact that we all know OPEC has to come back to market

with their oil and this is like we just said this is the seasonally strongest period of the year for the stock market. It is by far the seasonally weakest period of the year from Thanksgiving to the end of the year for crude oil. So, yeah, I mean, there are some things to like and we've stabilized here recently, and I think that could persist for a week or so. But once we get beyond Thanksgiving and into December, I don't want crude oil exposure. And just quickly, I mean, the energy stocks have actually had a pretty strong bid since the election. Is there anything to make of these periods when the equities really outperform the commodity, or is it just a natural gas rally story? It's a little bit of natural gas.

It's a little refining, and it's a little bit, I think, the Trump trade. So, like, everybody's throwing, throwing like just this cyclical low quality trade and oils and energy is getting caught up in that. You know, it goes back to what Victoria was saying, like if if this can actually be a true soft landing, like a beautiful, immaculate soft landing, then all those trades can work out. But, you know, we're year three of a bull market. It's kind of late cycle, in my view. I don't want to go in all in on that bet personally. So, yeah, I think it's probably more likely to be ephemeral. Something usually comes along to rebuild the wall of worry at some point. Warren, Tavis, Victoria, thanks so much. Appreciate it. Have a good weekend.

All right, let's send it over to Christina Partsenevelis for a look at the biggest names moving into the close. Hey, Christina. Hi, Mike. Well, Elastic is on pace for its best day in about a year after a reported surging revenue from its cloud unit and a better than expected earnings outlook. Analysts at Baird also upgraded the software company to outperform from Neutral, saying the company has made an unexpected turnaround and is becoming a leader in AI search. And that is why shares are up almost 15% right now. Meantime, Reddit shares are falling on a report that Advance Magazine Publishers is looking to establish a credit facility using as

much as $1.2 billion of its stake in Reddit. That's according to a person familiar with the matter. Advance owns Condé Nast and is offering Reddit shares at about an 8% discount to yesterday's close. And so that's why shares are down almost 8% today. Mike? Interesting. All right. That's kind of an interesting combo, advanced publications and Reddit. Thank you, Christina. We are just getting started here. Up next, Citi Smith, her warrior, is back and breaking out her playbook for hedge funds in the new year. So join me at Post 9 with her forecast after this break. We're live from the New York Stock Exchange. You're watching Closing Bell on CNBC. 2024 has been a strong year for hedge funds,

with long-short strategies on track to nearly double their average annual return of the last 20 years. Our next guest says next year should present even more opportunity. Mithra Warrior is Citi, North America's head of capital introduction. She's here at Post 9. Good to see you. Great to be here. You know, we're near the end of a year when the S&P 500 is up 25%. Do people not come to you and say, look, I could have owned that for a couple of basis points,

and why do I need to hedge? Why do we need some complex strategies out there? Yeah, 2024 has been a good year for hedge fund performance, and not just because the market has been up. If you remember, there was a fair amount of volatility in the summer and a ton of uncertainty leading to the election. If you think there's going to be continued macro uncertainty, if you think there's going to be geopolitical uncertainty, if you think there's going to be rates uncertainty, and if you think there's going to be fundamentals that are back in play, you want to be hedged. And what's interesting is post the election, our analytics show that gross leverage in the system among hedge funds is at 20 month highs.

Net leverage is also up, but not quite as high, which tells us that shorts are active. So you think shorts are active or did they come into this period maybe just a little bit defensive and they haven't caught up? I think it's a mix of both. One thing that we noticed, if you look at TMT, for example, our securities lending desk noted that last week, for the third week among four of the four prior weeks, TMT was the most shorted sector. And the view there is if you have to price in the impact of potential tariffs, potential AI regulation, and again, rates, you now have an environment where there's going to be winners and losers. And that's what hedge funds really do, is that stock picking and differentiating between the winners and the losers. So there is that stock picking and fundamental assessment that's happening. Sure. The other piece of it, I think, that is a pretty consensus expectation is that

deals of various kinds will start next year. I mean, maybe people don't talk about it so much, but IPOs are a tremendous potential contributor to hedge fund performance. Yes. And of course, M&A with arbitrage. Exactly. And that's the view that the regulatory environment next year is going to be friendlier towards the M&A environment, not just in terms of volume of deals, but also the left tail from deal breakage potentially being mitigated and being lower. And that should also lead to more optimism around the IPO environment. And exactly. Hedge funds are active participants in that deal environment. And just to circle back to the idea that, you know, an end investor has the choice between I will just ride the market with some proportion of my money. I'll have beta and I'll or I'll seek

to pay for alpha for some kind of a hedge fund strategy where you're differentiating. Do you not feel as if people say, look, the market's up 20 percent two years in a row. I don't have to worry about. I think they can certainly say that. I think it's again, what sort of headwinds do you expect? Do you expect dispersion and differentiation? You can just own the markets or you can own the right stocks and you can participate in shorting of stocks that could amplify some alpha to your portfolio. And that's what it is. If you look at your portfolio, it's you if you want to have diversification in your portfolio, you want to have those alpha generation opportunities. And you want to be hedged when uncertainty does come up. And especially, again, in talking to our clients,

the tech sector is really interesting because beyond the MAG7, we talked with your earlier commentator here that the breadth in the market is increasing. And that's, again, going to create some dispersion. And if you look at the supply chain, people are finding a lot of opportunities there. So, yeah, certainly you can own the market, but it's what are you anticipating for the future? I mean, if you have a differentiated view about the AI investment cycle and you think that everyone's wrong, I mean, there's probably plenty of things to pick out. I took note this week that Ken Griffin made public comments suggesting that the multi-strategy hedge fund world is maybe peaked, maybe the interest is waning, or not that it's played out.

Of course, he runs one of the biggest ones and most successful ones. But I just wonder if that matches up with what you sense out there in the market. I think there's been a ton of AUM growth in that space. And it's, again, what are the alpha generating opportunities compared to cash rates and risk-free rates and the interest rate environment? And again, if it's an alpha rich stock picking environment, do you need the hedge market neutral portfolio aspect that those firms offer? And if so, how big of an allocation is it into your portfolio? I think when we speak to our allocators, it's less about do we need multi-strat or not is what's the sizing. And that's the question. And what about globally?

Because you want to talk about dispersion. I mean, U.S. versus the rest of the world is incredibly split right now. So is there interest in there? Is it kind of people looking to kind of sift among the wreckage? Yeah. I mean, TMT is a global story, right? You look at the supply chain and Asia is a big factor in that. So certainly TMT is a global story. Energy is a global story as well. If you look at in Europe, energy security and energy transition, again, while green energy and electronification as a sector is maybe not doing well, again, there's winners and losers. If you look at AI, you need energy to power AI. And that's a global story as well. In Europe, it's a valuation story. That's what our clients are seeing. And in Japan and Asia in particular, a lot of our

clients seeing opportunities for engagement and governance. And so you are seeing global opportunities and hedged opportunities. And so we think hedge funds are a great place to be. And we seem not to be able to escape the crypto question. Does that even really come into play for the funds that you would look at? I think our clients look at every opportunity from an alpha generation perspective, and it has to fit their investment memorandum. It has to fit their liquidity profile. It has to fit the ultimate goal that they're trying to achieve.

So it's case by case. Yeah, okay. But probably not necessarily crypto-only hedge funds, things like that. Mithra, thank you. Thank you. Great to be here. All right, up next, Bitcoin bouncing, hitting a record high earlier today, now nearing $100,000. You see that within a few hundred bucks.

EMJ's Eric Jackson is standing by to break down that move and what he thinks is next for the crypto space. And don't forget, you can catch us on the go by following the Closing Bell podcast on your favorite podcast app. We'll be right back. Welcome back. Bitcoin on a tear since the election, hitting another record high today and closing in on $100,000. Joining me here at Post 9 Crypto Bull, EMJ Capital's Eric Jackson makes his case for more upside. Eric, it's fascinating. We've been talking all week about

how the kind of high risk, high reward parts of the market, whether it's kind of aggressive growth, you know, tech or, of course, crypto related, have really gotten a tailwind here. Talk about Bitcoin specifically. We think we know why it's here, but how much longer can this supportive action continue? Well, I think a lot of people that I talk to say, well, it's just going to kiss 100,000 and that's going to pull back. I mean, because it's a big round number and it's had a great run. But I do think there's a chance like that 100,000 milestone could be a rethink for a lot of investors, both institutional sovereigns, retail. And there are a bunch of catalysts still ahead,

I think. You know, Usually when we're in these bullish crypto periods, Thanksgiving becomes a springboard and not actually the nail in the coffin. So I think there's going to be a lot of discussion about it next week. And I think that could be a catalyst. Obviously, we've got the new SEC regime coming in. I think the strategic reserve, I think, is huge. I think there's going to be a lot of other countries sort of saying, well, if the U.S. is doing this, why aren't we? So that supports an underlying bid. I guess you have to get to a point, though, at some point where you genuinely believe there's going to be a strategic reserve, right? In other words, it can't just be the atmospherics of, oh, a much more lenient administration, and they seem to be in favor of this thing. Because the bull case fundamentally always comes down to just reasons for supply-demand

to continue to improve. Right. But there's no question that we're going to see some tangible names, you know, ahead of the SEC, you know, in charge of, you know, whatever the committee is going to be and so forth, speaking out over the coming weeks. And I think those names, you know, and's real structure that's going to be coming into place around crypto and Bitcoin, I think those will be catalysts in and of themselves, even before there's actually, hopefully, a tangible strategic reserve announced.

There's a little bit of irony, I think, in the fact that the original Bitcoin premise is like, this is kind of this perfectly engineered asset class, platform, et cetera. It's verifiable. It is what it is, and it's nothing else. And then you have all the derivative plays like MicroStrategy, which is essentially a leveraged version of Bitcoin. They're raising capital at high valuations to plow back into Bitcoin, and they're telling the market we're coming and buying more. They're not trying to get a great price for it, right? Right, right.

So what did you make of yesterday's really kind of ugly downside reversal in MicroStrategy? It's bouncing today, but why hold it in that form? I own it. I think yesterday was just sort of a culmination of, you know, really, it's almost like six or seven straight days of like massive, like 10 percent plus gains from MicroStrategy. And there had to be, you know, a bit of a pause. But do moves like that end gently? Well, I mean, you know, unquestionably it trades at a premium, but Grayscale traded at a premium for quite a while. And so I think this can continue. I think it does deserve to trade at a premium

given its size, given its kind of early leadership in this space. Are there going to be other corporates that come in to follow it? So I think that this tune can continue to play for the next couple of years. I own it. I still think it's going to be around.

It's the dominant. The fact that a couple of days ago, it had higher dollar volume than Nvidia and Tesla was remarkable. Right. But again, I guess I come down on the side of I would worry when you have so much hot money retail flow into a single name, which is telling you all we are is our Bitcoin balance sheet and it trades at four times the Bitcoin balance sheet. Yeah, but I think compared to 2020, 2021, we really haven't seen sort of like a craziness, crypto fever. Not a pervasive one.

It's been a Bitcoin rally to this point. Ethereum is sort of taking the off ramp. I mean, it's maybe participated in the last couple of days. Solana is really emerging. Meme coins are starting to heat up. And so but the altcoins, you know, besides them, haven't really done anything so far. So I think we've got to see a broadening out of the rally in crypto. That old Wall Street saying, before they wait until the altcoins start to rip before you get nervous. Right. Outside of crypto

and crypto equities, things like, you know, names you've known for a while, the affirms, the fintech stocks, the stuff that really was boom bust in early 2021 and then crashed. It's moving again. Right. Is that just muscle memory? Is it just an echo of what we saw before? What else is happening? There's been a false dawn a couple of times for the Russell and the ARK-like names. And so, you know, we'll have to see if this post-election rally in them sticks. But, you know, a lot of them really haven't participated. You know, about 18 months ago, I came on the program and I was sort of banging the drum for Carvana.

And it's had a huge run since then. But at the time, there was really, you know, the stock was down 90 plus percent from its highs. You know, high know, the stock was down 90 plus percent from its highs, you know, high debt, struggling consumers, you know, so they said, you know, where was the bull case then? But there are a lot of names like Carvana that are, you know, I think still depressed, you know, relative to their historical norms. But, you know, just on a multiple basis, you know, if they get a little bit of growth, many of them are now profitable or about to be profitable. And that was sort of like a key catalyst for Carvana. So I love Affirm. I love Upstart again. I love Peloton in particular. Peloton's been sort of forgotten about. They have a new CEO come in Gen 1. So watch them.

I think there are a bunch of these names. Root Insurance is another one that's sort of been forgotten about. So watch these names, I think, in the months ahead. Yeah, we saw Lemonade Pop this week. I mean, I know it's not different. I'd rather have, you know, the majority of my money in names like that as opposed to all on MicroStrategy at this point. Well, yeah, I mean, of course, Safe and Diversified and those other names. Really quickly, you said Upstart again.

Does that mean you didn't ride it all the way down from when you liked liked in 2021? No, I mean, I didn't top ticket for sure. But no, I was a big bull when it IPO'd in 2020. And obviously, it had an enormous run from there. It kind of got crazy micro-strategy-like almost, but did get out of it. And they've been biding their time. I mean, they and Affirm, I mean, a lot of people said, well, the consumer's struggling. How are these names going to do well? They are doing well. They are managing their downside well.

And there's a demand for their services. Sure, trying to prove the business model. You know, personal loans, you know, renegotiating them and so forth. A few years later. Gotcha. Eric, good to see you. Thank you. You too.

All right. Up next, we're tracking the biggest movers as we head into the close. Christina, standing by with those. Well, we have potential future Trump political players adding volatility to one biopharma name and a big stock reversal for a software name. I'll explain next. With 18 minutes till the closing bell, let's get back to Christina for a look at some key stocks to watch. Let's start with Moderna. It's one of the top gainers in the S&P 500 today after Jeffries said the stock could be due for a rebound following its post-election day slump. So shares dropped sharply following Trump's win and a selection of vaccine skeptic RFK Jr. for HHS secretary. But yesterday, Moderna shares actually turned higher after AG pick Matt Gaetz

withdrew, which is maybe a potential sign that Trump's other controversial nominees may experience the same fate. And that's why shares are up 6.5%. NetApp shares losing steam, though, and in the red despite surging after reporting results yesterday. It was a strong quarter overall, boosted by performance in cloud storage services. And there was a flurry of analyst calls today to Morgan Stanley, Barclays, Wells Fargo, all upping their price targets. We can see shares down almost 4%. But for more on this quarter, tune in the next hour for a CNBC exclusive with CEO George Kurian. And that's coming up soon.

Mike, happy Friday. Christina, thank you very much. Will do. Still ahead, Amazon making another big AI push, upping the ante in its funding battle with OpenAI. The details on that coming up. Plus, the next Barbenheimer. The box office is getting big on Wicked and Gladiator 2 this weekend. So what might it mean for theaters' bottom lines?

We'll discuss when Closing Bell comes back. Coming up next, a parade of retail results on tap for next week. We'll run through what to watch when Macy's and Nordstrom report earnings. That's coming up. And much more when we take you inside the Market Zone. We are now in the closing bell of Market Zone. Courtney Reagan brings us the big move in gap shares and looks ahead to key retail earnings out in the week ahead.

Plus, a big weekend for the box office. Julia Borsten on the key figures for two studio tentpole films. And Kate Rooney on the latest Amazon funding for AI startup Anthropic. So, Court, actually some pretty, I guess, positive responses to some of the retail numbers in the last day or so. What are we looking for next week? Yeah, absolutely. I think most were better than expected for the quarters, but with some caution maybe for the holiday season. So the retail ETF, the XRT, really outperforming the S&P 500 this week. Gap Inc., one of the names surging today following that better than expected earnings report.

And I spoke with Gap Inc. CEO Richard Dixon in an exclusive interview about the progress of the transformation. The apparel industry declined a point and a half. And we grew share in all of our brands. This is the fourth consecutive quarter of sales growth. It's the seventh consecutive quarter of share gains. So you're really seeing the sequential progress in our reinvigoration strategy driving top line. Now, Gap might have gained share in apparel, but Target called out weakness there. And Ross Store CEO said higher price necessities are pressuring its shoppers discretionary spending ability. Now, we'll hear from more apparel and discretionary goods sellers

next week when Dick's Sporting Goods, Macy's, Kohl's, Nordstrom, Best Buy and a couple others report ahead of that Thanksgiving weekend, which we, of course, have these associated shopping holidays. And Gap says that the early holiday sales it's seen are, quote, off to a strong start. While Target's quarter disappointed, but it did set sales records for its Circle Week. That's that early holiday event that they're now pretty much holding every October annually. Retailers said consumers will buy when they have a reason to. So, Mike, maybe it's the events of Black Friday and Cyber Monday that will get consumers willing to open up those pocketbooks a little for the discretionary items. You've got to give them a reason. Yeah, for sure. And that would seem to offset the kind of, oh, it's a short

holiday shopping season based on the old math of how many days between Thanksgiving and Christmas. Yeah. I mean, it seems like it sort of fills up whatever space is needed. Yeah, exactly. It's a discussion point. Right? And I think it just, it does have fewer days where maybe retailers are able to deliver for customers, literally and figuratively. But just because there's five shorter days doesn't mean most likely that people are going to buy one less toy under the Christmas tree at the end of the day. They just got to get their act together a little faster and retailers better be able to deliver that. Get it delivered. Yeah. Thanks very much. Thanks. All right. Julia, supposed to be a big weekend at the movies. Tell us about it.

Well, it's already starting off as a big weekend at the movies because Wicked has already grossed $19 million from previews and Paramount's Gladiators just brought in six and a half million dollars from previews. Now, those two films could give a much needed boost to the box office that's down 11 percent from last year and down 27 percent from the same period in 2019. But Wicked's massive marketing blitz is the new playbook to turn movies into cultural touchstones. Wicked has over 400 partnerships, which Universal says reach over 2 billion shoppers, partnerships ranging from Starbucks and Legos to skits on SNL. Meanwhile, Paramount's Gladiator 2 spent a reported $100 million on marketing, including six red carpet events, a faux coliseum that they built here in Hollywood, and a trailer that they released simultaneously on more than 4,000 networks,

digital platforms, and radio stations to reach as many as 300 million customers at the same time. Now, it's not just the studios hoping for a big weekend. IMAX and AMC will also benefit if audiences go out and see trailers for all the big-budget sequels that are set for release next year. They're trying, Julie. I wonder, I mean, people clearly have been trying to map the Wicked, Gladiator 2 duo along with, you know, Barbie and Oppenheimer from last summer, a year ago last summer. Are we seeing any evidence that people are actually doing the see both movies in one day?

I mean, that was such an organic phenomenon, it It seemed that just took on a life of its own. I think it's less about trying to get people to see both movies in one day. That's a big time commitment and more about just excitement to go out to see the movies in general. You know, people have a lot of time over the holiday weekend. Maybe they see one one day, one another day. And I think the other thing that's really key here is that these are movies for very different audiences. There may be one audience that goes out to see Wicked, another that goes out to see Gladiator. And yes, there could be some overlap. But just like Barbie and Oppenheimer were so very different films, they're clearly not competing with each other for audiences,

which is one reason why I think this idea of a Barmenheimer phenomenon or a Wicked Eater phenomenon, you know, they're not competing with each other. Everyone wins here. Right. Or in my household, it would be a dad movie and a daughter movie. Maybe we all go to both. But that's kind of how the breakdown is. Now, what are the chances that the slate that's remaining for the rest of this year can sort of rescue the box office for 2024? There was a bit of a log jam. You're going to have a rush of late year holiday timed movies.

Well, coming up before Thanksgiving, there's Moana 2 from Disney, which is expected to be a huge family film. And then towards the end of the year, you always get these Oscar movies. And so that's when you're starting to get some of these more prestige type movies that may not be massive box office hits over the course of a weekend, but could have more of a hold over the through the end of the year. The real box office numbers could come next year when we have this backlog of films, sequels to Avatar and Captain America from Disney. There's a new Mission Impossible movie from Paramount. And these films were all delayed because of the actors and writers strikes. So we're going to see the really big budget and potentially huge box office movies coming out next year. And I think there's a hope that you go to

see a movie this weekend. You'll see a ton of trailers. I feel like every time I go to the movies, I see more trailers. And that all is supposed to get you excited to see more movies next year. Yeah, that's that's the game, 20 minutes of trailers. All right, Julia, thanks so much. Kate, talk about this new Amazon investment in Anthropic. Yeah, Mike, it's the latest. So Amazon doubling down on its Anthropic bet, announcing another $4 billion investment into the AI startup. The total is now $8 billion, by far the largest outside

investment by Amazon in its three-decade history. This is really Amazon's horse in the AI race. Amazon, in this scenario, is still a minority investor and does not have a board seat, but it is a major endorsement for Anthropic. Mentioned it's a startup, it was founded by former OpenAI executives and is competing with OpenAI. Cash is a key way that these AI startups tend to compete. They are very capital intensive and access to cloud computing and chips are key for all of those. As part of this, Amazon is going to become Anthropix's primary cloud partner and they're going to use AWS semiconductors, which do compete with NVIDIA, to train their models. And on that point, Kate, it is interesting because on one level, you could view

it as, you know, Amazon essentially funding a very large customer of its own. And I know sometimes these payments, like with Microsoft and OpenAI, they were really in the, the investments were in the form of cloud computing time. That's been one of the criticisms of these types of deals in this type of structure, but it's becoming quite common. You mentioned Microsoft and OpenAI. One thing that people have been sort of chirping about, I've talked to a couple of folks out here today who said Amazon at least is committing to Anthropic as their horse in the race. Well, some have said that Microsoft is now sort of hedging, maybe moving away from the OpenAI relationship. The news today is underlined for a lot of people that the anthropic Amazon relationship,

yes, it may be fueling Amazon growth in some ways. Some have criticized that arrangement, but they are committing to sort of being, that being the one versus Microsoft maybe spreading their bets. Google, you've seen them do the same thing. But yeah, an interesting dynamic. And the regulatory environment is different. So it seems to give them a green light to be able to do this type of deal. Yeah, to do things like this and maybe experiment and see where it leads.

Kate, thanks so much. Have a great weekend. As we head into the close, about 40 seconds to go in the week. The S&P 500 hanging on to a gain on the day of about four-tenths of 1%. For the week, it is up 1.7%, but really is somewhat the laggard based on some of the weakness in NVIDIA and other stocks that lead that index.

You see the equal-weighted S&P vastly outperforming, up about 2.5% for the week. The Dow is going to go out on the day with about a 1% gain. There has been this pattern all week of late-day strength as a lot of ETF flows have come into this market, and they often do buy right at the close. That's going to do it for closing out.