Closing Bell - Closing Bell: Make or Break Moment for Apple? 1/30/25

Episode Date: January 30, 2025

What is riding on Apple results in Overtime? We discuss with Malcolm Ethridge from Capital Area Planning Group and Bryn Talkington of Requisite Capital. Top financial advisor Rich Saperstein from Treasury Partners tells us the one sector he is betting on in the wake of the Deepseek drama. And, we drill down on the big move in Caterpillar’s stock today. 

All right, guys, thanks so much. Welcome to Closing Bell. I'm Scott Wagner, live from Post 9 here at the New York Stock Exchange. This make or break hour begins with what might be a make or break moment for Apple shares. Earnings a little more than an hour away now as questions about the iPhone and AI continue to swirl. The stock up nicely this week into the print, even as it's been hit with more downgrades. We will ask two shareholders coming up what they need to see tonight. In the meantime, let's show you the scorecard here with 60 to go in regulation. Mostly green, though the unevenness in tech today is weighing a bit on the Nasdaq. It's still up, but not quite as much as the other majors.

Importantly, yields are falling a bit as well. A day after the Fed chair told markets they're going to be patient in making more moves on interest rates. It does take us to our talk of the tape. All that is riding on tonight's results for what is, by the way, once again, the biggest market cap stock on Earth. NVIDIA's slide, Apple's gain, Microsoft's pain, making that happen once again. Bryn Talkington is with Requisite Capital. Malcolm Etheridge with Capital Area Planning Group, both CNBC contributors. And both join me now. Bryn, you first. All right. Apple is once again the top dog as it relates to market cap.

What do you need to see tonight? Well, they're expected to have 4 percent revenue growth. Four. Right. So this has been my issue for a while is this revenue growth is still so anemic. I think the market wants to see excitement around what's happening in China. right? So this has been my issue for a while is this revenue growth is still so anemic. I think the market wants to see excitement around what's happening in China. They are losing market share, but they're still, what are their sales in China? What's going to happen with a 17 phone? We know they're going to make billions of dollars. We know services will be strong, but to me it's like, what are we need to get excitement around the stock?

And ultimately, I still think it needs to be more than 4% revenue growth. I think Apple will be a market performer or slight under market performer this year because I just still feel there's too much cloudiness about we need to have a refresh cycle. It's not going to be the 16 or it doesn't seem to be. So now I hear analysts are already talking about the 17 phone. We need to have revenues with the phones that we have today to start actually thinking about getting margin expansion, which I just don't see happening this quarter. Malcolm, I do not remember a time in recent memory where we have had this much negativity about this particular name going

into this particular report like we're going to get tonight. You say that Apple has a lot more to prove during this earnings report than they've had in the past four quarters. We're talking about one year. Why is there so much pressure on this company tonight? Well, Scott, I think Monday's sell off proved why Apple is so important and why Apple has to justify this lofty valuation and share price that it has. If you look at the mechanics of what happened in the market, Nvidia traded down and instead of putting those dollars to work in treasuries or something else significantly safer, those dollars flow to Apple. And so Apple has two problems. One, they're still the safe haven trade and they still have to justify this higher share price. Two, they've had four quarters of declining revenue and shareholders are growing tired of having to wait to find out whether Apple intelligence is actually going to be something meaningful.

Or if it's just really splashy graphics and PowerPoint presentations that got everybody's attention away from chat GPT and whoever else was dominating the news cycle. I don't hear anybody excited for the most part about buying this stock ahead of the print. Malcolm, is that how you feel as well? I wouldn't be buying this stock right here. I think that the share price is significantly elevated above where it probably will be following this earnings report. However, I wouldn't be selling either because I definitely think that Apple has something up its sleeve. I've been making the case for a little while now that this will be the year for fintech. And I think that Apple might be one of the companies to participate in a meaningful way. So to Bryn's point about them needing to diversify the mix and increase services revenue away from just relying on handset refreshes, I think that financial services is one way that

they can do it. And I think that Apple is poised to make that happen for a ton of reasons that are happening under the surface right now. Aren't you confident, Bryn, though, that Apple is going to get this refresh cycle? It's just going to be rolling. It's not going to be what it always has been. They drop a phone. We go to the September quarter. The numbers are gangbusters.

And it's just going to be different this time. What's wrong with that idea? Well, there's nothing wrong with that idea. And I think that's what we have right now. But ultimately, when you look at Apple three, five years from now, where you can't just rest on just upgrading the same phone, because if people are not upgrading faster, then it just comes down to services. And so I just think that Apple's in this unique position right now where we all have iPhones. Because the technology is so good, we don't need to upgrade as quickly as we used to in the past. And so then you say, well, you know, what multiple do I want to pay for that long term? What are my other options? And for me, the reason why I sold

half my position in December is I said I would rather own more Robinhood. I would rather own Uber. And so there are other names I want to deploy capital to outside of Apple, which growing at 4% doesn't get me excited about the company, regardless of the moat and the C-suite and the great team they have there. There's other places I think that are going to earn a better return. Speaking about would rather own, I wonder if both of you would rather own Meta today than Microsoft, because neither one of you are in that name and both of you are in the latter. Malcolm, what's your takeaway from these earnings? Yeah, I am very impressed that Meta continues to find itself in the right place at the right time.

Right. We saw Meta shares sell off, I guess it was early last year when Mark Zuckerberg made it clear that he was going to invest about 25% of their revenues into building out AI capabilities and the market turned on him. And then we found out that he was in the right place at the right time. Now we find out that by building open source instead of deciding to go closed like OpenAI and others, Meta happened to be in the

right place at the right time. And so I find it interesting that this company continues to defy gravity and continues to show strong growth in advertising revenue specifically. I do wish, to your point, that I had held on to my shares a lot longer. I bought it as a trade when it sold off, thought that I was getting out at the right time, and apparently I sold too soon. Brynn, what about you? You don't own it either. Yeah, I mean, yeah, I obviously have a big position in the Q's and JEPQ. So own it through there. I think this week, what was really interesting were Mark Zuckerberg and team get a feather in their cap is with DeepSeek. It really goes to the entrepreneurial spirit of all of the coders and developers about open source versus closed source. And so as Meta continues to build out

Lama, and I'm sure they're looking at DeepSeek to see what they can learn from that, I think that's another area that people are getting excited about Meta. And ultimately, if you look at Meta, they're an ad company, but they're expanding the Ray-Bans, you know, not meaningful to revenue, but really great product. Instagram, Facebook are going to continue, and WhatsApp, going to continue to be advertising juggernauts. And as they continue to build up their AI, I think they're going to be able to convert the clicks from Instagram, WhatsApp, and Facebook into more revenue going forward. So it's definitely been a wonderful name that I think this week gets even stronger with their whole bet on open source versus open A.I.'s closed source, which obviously hurts Microsoft as well.

Bryn, I'd be remiss if I didn't ask you about NVIDIA. It's been a horrible week, as you know. You've been a longtime shareholder of this name. We're talking about one of the worst weeks in many, many years for NVIDIA. How are you thinking about it today? You've had, you know, 72 hours or so now to process this news about DeepSeek, what it's going to ultimately mean. You heard some CapEx numbers that are still being held to by a couple of the hyperscalers? This, to me, is a sentiment shift. And as we've talked about, ad nauseum, the stock's been flat really since June. June of last year, you've now switched negative, where even though if I look forward, it has a 30 PE,

it's still probably going to grow revenues 40 plus percent this year. The market is saying that we have had a pivot in the market, sentiment shifted, and we think people are going to do more with less. Now, as an investor, you have to look out and say, do I think those market expectations are right or wrong? Right now, to me, what I want to see, the stock has support at 116. It's got to build a base here because now it's really a broken chart technically. And so I respect that. And so I want to see this stock base out here.

I sold some calls. I already had some 168 calls that I had sold before the sell-off. So I can probably close those out at a large profit. But I think it's not going to be a revenue-generating trade until at least earnings come out in February. But in the meantime, you really got to watch the technicals because it does look very weak. Yeah, we have to wait a minute for these for these earnings. We always need to remind people of that as you get the flurry of mega caps and then many weeks later you get NVIDIA. So we're not going to have some real answers and commentary. We don't think there's a quiet period, obviously, ahead of earnings. So you're not going to really get

a good picture until the numbers and the guidance and the call actually happen. So from NVIDIA, I'm going to ask you guys to stay with me for a moment, too. I want to talk about OpenAI, which is reportedly in early talks to raise up to $300 or $40 billion at a $340 billion valuation. $40 billion at a valuation, Kate Rooney, of $340 billion, which presumably would make it one of, if not the most valuable, of private companies that we have ever seen. Scott, that is what I'm hearing from a source that OpenAI is in discussions right now to raise what, as you mentioned, would be a record-breaking funding round in private markets,

would value the company at roughly $340 billion. This deal is ongoing, so that could change, but this is according to someone familiar with the deal, the person telling me SoftBank is going to be leading what is expected to be a roughly $40 billion round. Others are expected to participate. We don't have names yet. Some of that, I'm told, would also go to some of the AI infrastructure announcements like of Stargate. And we did report earlier today that SoftBank is looking to invest up to $25 billion, just SoftBank alone, and would replace Microsoft if that does happen

as the biggest shareholder in OpenAI. The Journal was the first to report this news, and OpenAI and SoftBank did decline to comment, Scott. But record-breaking number would make this maybe the most valuable private company in the world. It was last valued around $157 billion this new round. Almost doubles that. If you think about ByteDance for context,

that's the TikTok parent company, $225 billion. SpaceX, Elon Musk's company, $200 billion. If this deal closes at the levels we're talking about, OpenAI is going to break a record here and be the most valuable company, at least on paper, in the world. CEO Sam Altman, meanwhile, was here in D.C. today addressing DeepSeek, some of the challenges there, and then speaking to lawmakers and administration officials, says DeepSeek shows very real competition from China and that computing power is more important than ever. OpenAI, as some context here, has been

accusing that Chinese competitor to chat GPT of basically ripping off their AI models to build another version at what seems to be a lower price. I spoke to Kevin Wheel, too, the chief product officer. He said it's not the first time that China has tried to copy US IP, hinted at a new model coming as well, Scott. But that is the latest from OpenAI. Yeah, a lot of news today, which is why you're in D.C., because Altman was there. And then we learn about this incredible raise in valuation. Kate, thank you so much.

That's Kate Rooney, as I said, live in D.C. Forrest, let's now bring in iCapital's Anastasia Amoroso. Bryn and Malcolm are still with us, of course. It's nice to have you. Good to see you. Does anything that happened this week, be it earnings or the deep-seek news, shake your resolve in any way on mega-cap tech as a place to be? No.

Maybe on Monday it did a little bit, but I think we've learned a lot this week. And I think what we ultimately learned is that some of the big tech capex on AI is not going away. And we've got some really reassuring results, I would say, from Microsoft and also Meta, especially on AI is not going away and we've got some really reassuring results I would say from Microsoft and also meta especially on AI capex because Scott as you mentioned the part of the AI trade that really was shaken up this week it was the AI power and the AI semiconductors but the fact that some of these mega cap companies are not budging and they're not changing their capex that really re underwrites the story that a lot of investors have bought. And the other nuance that I really saw from some of those earnings reports is that they actually might accelerate and pivot more, skew their spending towards more GPUs, towards more server chips, and towards some of the custom silicon. And that's why I've seen companies like Broadcom, for example, do quite well. So that has not shaken that conviction. And, you know, the other takeaway I always say I had from this week is that. As generalist investors we were surprised by

the efficiency gains but I think. If you are a tech analyst if you are a power analyst. You've actually model some of these efficiency gains into your models and yet the results were still. Expected to have higher power-

consumption for years to come so. I think some of the efficiency gains have been baked into the models. And as a result, I think we have a much better entry point in some of the AI power plays, for example. I mean, you'd be a buyer of these pullbacks, right, in both power and semi? Yes, I would. And it took a little bit of time to gain that conviction to work through it. But once we got those CapEx numbers, I am certainly a buyer of these names.

I think there's really three things that really benefit right now. It's artificial intelligence software. And we've seen that kind of have a pullback and certainly today. But the application layer is what's really going to gain the most from lower costs and quicker cost of training. And we get faster to the product element of it. So I would be buying software in a pullback. I would be buying some of the AI semiconductors, again, the custom ones. And also think about the networking.

One thing that I didn't see the analysts change also is their data center projections. They didn't come out and say, we're going to reduce the demand for data centers. So that means all the equipment that was required to build out those data centers and the interconnect and the networking, that's still the case. So I would be buying those names. And yes, the power generation, that's tied to data centers. So buyer of that as well. Hey, Bryn, are we going to look back at what happened this week as one of those, you know, carry trade like moments in the market where there was like full blown panic for a little while. And then people came to their senses and realized that the environment is still good. And they went back into stocks and we hit new highs. And we don't really talk about that anymore. Are we going

to look back at this moment this week in the same way? I think so. I think I think broadly for the market. Yes, because, you know because the market writ large was up, right? It was really the AI trade. I do think we're so early in this AI evolution of where we're actually going to go. I still feel like investors should have more questions than answers. There is no way that DeepSeek did this for 6 million, 10 million. There's just no way. That's absurd. And then, but to me, where I find I'm at a little bit of a question mark here is, as you guys were talking about with K Rooney, so OpenAI is going to raise 40 billion. What are they going to do with that 40 billion? I can probably assure you a lot of that goes to NVIDIA. We talk about, you

know, the data centers. About 50% of the cost of the data centers is for GPUs. Where does that go? NVIDIA. So I can walk all these things that investors sure already know, but guess what? NVIDIA is still down this week. So I think it is a curious time that we still have to distill through and look to see who the winners and losers are going to be over the next couple of years. Because right now, while Vistri and Oracle are up huge today, you know, NVIDIA to me should be a recipient of this, but they're not. And so I still have more questions on where you want to be positioned for new securities to add going forward. What about, Malcolm, what transpired 24 hours ago? We had a Fed chair come out. No move, as was expected, of course.

But Jay Powell was very much, we're going to wait and see. We're in no rush to do anything. They have a luxury and he had a calmness and a coolness about where he thinks that they are right now. They think they're in a good place. And the market today, after initially reading yesterday as hawkish, seems to be in a decent place, too. Yes, Scott, I think Jerome Powell did us a favor by just removing one of the variables that we knew we had to worry about during this earning season from the table. Right. So we still have to worry about all of the developments that happened in A. I agree with at least half of what everyone else has already said regarding our overreaction and need to take some time to sift through all the data that's come out related to AI.

But I think that the Fed chair basically telling us we're going to remain right here for longer, not necessarily higher for longer, not necessarily cutting rates, but right here in the middle. We're going to stay here for a while. Kind of aligns with the thesis that I had coming into the year that we would probably get those cuts toward the second half of this year, simply because there was no reason to come into 2025 with cuts already pre-planned. We were getting too much conflicting data around things like core CPI, right? Still energy costs, still food costs, still shelter costs. All those numbers were conflicting each time we got them. And so it just wasn't enough to convict, to improve the Fed's convictions to say now is the time that we need to be cutting without having

to be fearful of the fact that inflation could crop right back up at any moment. And here we go again. I mean, that's why, you know, many have sort of taken their view of the number of cuts we're going to get way down, including Jeffrey Gundlach, who spoke with us, as he always does once the Fed chair is done with his news conference. Can we listen to that, the prediction from Jeffrey Gundlach on how many cuts we're going to get? Maximum two cuts this year. And when I mean maximum, I'm not predicting two cuts. I just think that's the most you can possibly think about. And at the present moment, if you had made me pick a number, I would say now one cut would be the base case.

And maximum two, though, still. One cut. What do you think? I think one or two sounds like the max is as correct. Look, the Fed is not concerned about the labor market at the moment. Some of the recessionary fears that we had back in August, they've been all wiped away. And the Fed is not overly concerned about inflation, but maybe they're a little bit hawkish in terms of how they view it. You know, they've removed that language, say we're making progress. And tomorrow we get the core PC number looking at two.8 percent.

One thing that Fed Chair Powell said that was really interesting, he said they're focusing on that year over year number because they can cut through the seasonality. Well, that year over year number has stayed stubbornly around 2.8 percent. So if that doesn't move much, you know, that's why we may end up with zero one or maybe two cuts. But but I would say, Scott, that that's OK for markets. You know, the reason why, Scott, that that's okay for markets. You know, the reason why yesterday was a non-event for markets and not much talked about is because we have a solid economy. The GDP came out today, and we have some rate relief that's working its way through the economy.

I think we're managing just fine. How about, Bryn, lastly, the comment from Fed Chair Powell on valuations? I'd say they're elevated by many metrics right now is what he said. Now he qualified it, of course, that he was talking mostly about tech and AI, but his comment about valuation I thought was interesting. Really anytime the Fed Chair is willing to comment

on the current level of equity prices is notable. They are elevated. If you look at CAPE, you look at any of the numbers, they are elevated. So I think he was just talking factually. And so this is not 2012 when these stocks were cheap, especially tech stocks. And so I do think that as we continue to get earnings from companies across sectors, but especially within tech, if you're not going to deliver, the market's going to punish you because these multiples are high in general. That being said, there's a few outliers like a Tesla where the

market really doesn't care what your multiple is. It's still going to say the future looks bright. Guys, thank you. We'll leave it there. Brynn, we'll see you soon. Malcolm, of course, you as well. And Anastasia, it's good to have you back here at Post 9. To Pippa Stevens now for the stocks, the biggest ones that are moving into the close right now. Hi, Pippa. Hey, Scott. UPS is sinking to a more than four-year low and on track for its worst day on record after guidance came up short of expectations, with the company saying it plans to slash Amazon deliveries by more than half. CEO Carol Tomei telling CNBC, while Amazon is their biggest customer, it is not their most profitable.

Our revenues will decline by about 2%, but our profit will increase by 14.5%. We are going to grow in the parts of the market that value our end-to-end network and value the capabilities that we have been investing in that differentiate us from the rest of the market. And service now sinking 11%. The software giant's Q4 results were in line with estimates, but the full year forecast came in below expectations. Still, Evercore ISI calling it a solid quarter, saying it was a sensible guide against elevated expectations. Scott? Pippa, thank you. We'll see you in a little bit. Pippa Stevens, we're just getting started. Up next, top financial advisor Rich Saperstein is back with us.

He's going to reveal the sector he thinks could be a big buying opportunity thanks to DeepSeek. That's just after the break. We're live at the New York Stock Exchange, and you're watching Closing Bell on CNBC. We're back. We're green across the board as stocks continue to extend their rebound from the deep seek sell off earlier in the week. And by the way, yesterday's post Fed sell off as well has Has it created a buying opportunity? That's what our next guest is wondering. And outside the tech sector, joining me now is Rich Saperstein of Treasury Partners. Good to see you again. Likewise. So you've liked mega cap for a long time, even when you were negative on the market. It's how you were kind

of hiding out in munis and cash and in the mega caps. Has any of your view changed as a result of the events of this week? Not at all. In fact, it creates opportunity. Why so? Look, if the cost of training these AI models goes down, it'll only increase adoption and search, right? So that adds benefit to large cap tech and utilities because large cap tech now will have a lower CapEx cost going forward. So it becomes more efficient and in the power sector there's just tremendous opportunity right now. What if you just need less power to deal with all of this?

If you don't need the most expensive and most powerful chips, maybe you don't need the most power that you thought you did as well. That's where the market's getting it wrong because 60% of the future power needs are actually going to come from non-AI related consumption, meaning electrification, onshoring of new factories, electric vehicles. So that portion from AI is going to actually increase because adoptional increase. They'll still need Blackwell chips. And listen, if you listen to the Microsoft call, they said, what are you constrained in? It's not only GPUs, it's power. And this is where the opportunity is that the market has missed this week. So if anything, you would look at some of the sell off and buy it rather than get overly worried and sort of move out of any of these names. Well, take Vistra.

You've been in that a long time. That's a utility that last year was one of the best performing stocks in the S&P 500. It was up like 400 percent or something to that degree. That story hasn't changed at all? So we bought the stock initially in 2021 in the 20s and it went up to 200 last week. It was up eight times and it came down about 30 percent. Now the cash flow is still 12 percent operating cash flow. There's tremendous opportunity in announcements they can make and that opportunity in Vistra is still there. And we added it to it earlier this week after it came down. You did.

So you think this sell-off, particularly as it relates to those power stocks, was way overdone? Because they were all down and all down a lot. And it was a single great opportunity. It still is today. We added to not only Vistra, but the power area, the independent power producers that are generating cash flow that can co-locate data centers that have nuclear facilities. Those are the ones to focus on. What about the rest of the market? Are you happy with where we are? Do you feel opportunistic on where we're going? Here's what we're talking to clients about.

Stocks are at 22 times earnings against the backdrop of a strong economy, solid employment, declining inflation, and a Fed on hold. So the backdrop is strong. Yet stocks are expensive. And we're overweight, large cap tech. So clients that have an allocation to equities of 40 percent, and it's now 50 percent, we're talking to them about trimming and moving that money into 4 percent tax-free bonds right now. So keeping a core allocation, but taking advantage of what the opportunity is in municipal bonds. So you still like munis? Yeah.

And you really think 50% of your portfolio in equities is too high right now? It depends on the client. If your client is set up with an asset allocation of 50%, it goes up to 60%, it's time to discuss trimming it back. Now, that's not saying this could be one to get out of the opportunity of artificial intelligence. I mean, we have seen in the last 20 years everything from digitization to mobility to internet to mobile to the cloud, and now we're at the forefront of artificial intelligence. We're not looking to step off of that. OK, so it's important

to keep a position in large cap technology, but look at the overall risk every client wants to take. But you're making what is essentially a valuation call. So do you not I mean, I get the idea that, well, you can't really have any more multiple expansion. I mean, how are you going to do that? Are you doubtful that earnings are going to be good enough to justify more moves higher that sort of justify where the multiple currently is? The earnings expectations are elevated, 14% growth this year and next year. And you think that's too much? I think the economy is doing very well.

It's possible. But the decision to trim very slightly for clients is just simply some clients really have a focus on the return of capital is more important than the return on the capital. Well, that's because you have very, very wealthy clients. That's why, and you do well, that's why you're number four on the, I think you're number four on the top 100 financial advisors list last year for Barron's. We have all sorts of clients. Thank you, though. And our job is to really align portfolios with their risk metrics and how much volatility they want to take. What about the broadening story? Do you believe in it? Not so much. You just said the economy is strong. Our overweight is in utilities and large cap tech. We do own a value component in our portfolios, but we're long-term holders

of technology. And it has been amazing. It will continue to be amazing. Did the Fed chair say anything yesterday that caught your eye, that said, you know what, that's important. I need to pay attention more to that. No, the Fed actually is a big yawn right now, which is good. I don't think the market needs rate cuts to go higher. It needs earnings. That's the bouncing ball. Earnings and operating cash flow is what to follow. So the Fed could be on hold, and that, to me, is perfect.

I mean, if you think the next move is eventually going to be another cut, isn't that good for stocks? Potentially, but here's the issue. For years, we were worrying about the Fed wrote tight in 500 basis points. Is it going to cause recession? What's it going to do to earnings? So that was 24 and 23 story. In 25, we're concerned about actual Washington's policies and how it will impact different sectors in the market. So risks have changed.

Economy's strong. Fed's out of the picture. Let's focus on what's coming out of Washington and new policies. Take care of those very wealthy clients of yours, OK? Looking forward to you being one. Number four on the Barron's Top 100 Financial Advisors list of 2024 is Richard Saperstein of Hightower. It's good to see you again. Likewise, Scott. All right. Thanks. Up next, hedge fund Elliott issuing a warning on crypto today. We do have those details next. About 25 from the bell back to Pippa now for a look at the stocks that she is watching.

Tell us what you see now. Well, Scott, Hewlett Packard Enterprises in the red after the Department of Justice sued to block its proposed $14 billion acquisition of Juniper Networks, saying it would eliminate competition and raise prices. In a statement, the company is saying they strongly oppose that decision and shares of Juniper Networks are down about 2%. And Las Vegas Sands jumping double digits. The casino's Q4 results were mixed, but the company did see strong results

out of Singapore and a boost of optimism surrounding China's economic recovery that is lifting shares of other casino names, including Wynn, Caesars and MGM. Scott? Good stuff, Pippa. Thank you for that. Pippa Stevens up next, hedge fund Elliott raising the red flag on crypto. We've got the details Bell Hedge Fund. Elliott out with a new investor letter with a warning on crypto. Leslie Picker following that story for us. What are they saying, Les? Hey, Scott. So the Financial Times obtained a letter from the $70 billion hedge

fund to its investors. And in it, Elliott is once again alarmed by crypto, which the firm says is, quote, ground zero for the speculative frenzy across markets. Elliott said the, quote, inevitable collapse of the crypto bubble could wreak havoc in ways we can across markets. Elliott said the quote, inevitable collapse of the crypto bubble could wreak havoc in ways we can't anticipate. Elliott takes particular issue with the threat crypto may pose to the dollar and its standing as the reserve currency. The letter said that marginalizing the dollar was profoundly dangerous. Elliott highlighted the millions of dollars spent helping crypto supporting politicians get elected in this latest cycle, according to the FT. Singer has long been a foe of crypto, going back to at least 2014, having historically called it a fraud and a scam.

But Bitcoin in particular has surged since President Trump was elected, more recently leveling out around the $105,000 mark. The president signed an executive order to promote leadership in digital assets and also launched an epitomous meme coin. Trump media said yesterday it would expand into financial services that would invest in crypto and other assets. So clearly providing a boost to Bitcoin and other crypto areas. Scott, it's interesting because I believe, and you probably know this better than me at this point, Paul Singer, who runs Elliott, I'm not sure if he's been a supporter of President Trump financially

over the past couple of years as he was campaigning for another run at the White House, but I believe he was supportive of him in some ways, at least has met with him, which is interesting in and of itself that one of the reasons you've gotten the boost in crypto, as you said, since the election was because of the Trump White House support of it. But yet the red flags and the alarm bells going off inside Elliott. Yeah, no, I was I actually double checked open secrets just to make sure I had my facts straight.

And he is still indeed he donated to Trump and a PAC related to the Trump reelection campaign in 2024, as well as a whole host of Republican candidates as well. So clearly this is an issue that they disagree on. And he's joined by a lot of hedge fund managers who have come out against crypto over the years. Some you hear kind of a more friendly tune ever since. Others, such as Singer and probably I would put Diamond in that camp, too, saying that, you know, they they don't believe there's much to it, you know, under the surface. Leslie, thank you. It's interesting, as I'm just going to talk directly to the control room here, because stocks have turned negative. That's Leslie Picker. Can we show the market, guys? Because I see a headline here as the Dow

is now red. We were even thinking about the possibility of a new record closing high for the Dow. I'm seeing headlines that the president is going to announce tariffs on Canada and Mexico of 25 percent because of fentanyl. It has obviously had a impact. If we could even show an intraday chart, guys, Megan Casella, I'm going to bring her in right now. She has more information on this, but I just didn't want to wait as I saw the market sort of falling apart, Megan, on this news. Scott, absolutely. And we have just a little bit more information. So the president right now is signing executive orders in the Oval Office with reporters.

We have not yet seen a video feed from that press event, but he was asked a question on tariffs. This is as the deadline is looming for Saturday when he had previously threatened 25% tariffs on Canada and Mexico and according to the pool reporter he was asked this question on tariffs and he says I will be putting the tariff of 25% on Canada and Mexico. He said oil would not be a part of that and that it was because of fentanyl but Scott that is all we know at this point so we don't yet know if that definitely will be taking effect on Saturday. We don't yet know if negotiations, as I had previously been told, with Canada and Mexico are still ongoing to try to avoid those tariffs. So still some gray area there, but clearly a market reaction

now that Trump is saying he will be putting that 25 percent tariff on our North American neighbors. Yeah, it's all it's, you know, many times a headline driven market, as we've learned. Megan, thank you for the update there. You'll keep us posted, certainly on anything more that you hear in that regard. But nonetheless, just the mere talk of tariffs potentially being put in place. Canada has already talked about retaliatory efforts on that in that regard as well. So the Dow, as you see here, has taken that turn lower as we had about 15 from the close. We'll take a quick break. When we come back, shares of Caterpillar are sinking after its report.

We drill down on that next. Up next, we'll set you up for Intel results top of the hour. We'll take you inside closing bell market zone. CNBC Senior Markets Commentator Mike Santoli here to break down these crucial moments of the trading day. Plus, Caterpillar heading for its worst day since September. Sima Modi is going to tell us exactly why. And Bernstein's top chip analyst, Stacey Raskin, is looking ahead to Intel earnings. You can see how excited he is for those numbers, which are going to hit at the top of the hour. We'll talk to him in just a minute. We do begin with Mike Santoli, though. It's the aftermath,

as we said, and the look ahead. The aftermath to Meta and Microsoft and the Fed share, if you want, and then the look ahead to Apple. Yes. All of that. What's very interesting to me is the market's been able to deal with some of the big guys not having great reports, Microsoft being a big downside weight today and still find a way. You know, before we got those tariff headlines, you were mentioning we're back to playing tariff tetherball on headlines. This was an unusually comfortable day in the market because you had both very positive breath and mostly mega caps participating as well, aside from Microsoft. So it was all to the good. I still think earnings are kind of good enough, but investors on across the board are going

to be tough to please. A lot of stocks getting really punished on bad numbers, including Caterpillar and UPS and Comcast. Still our parent, Comcast, yeah. And yet we're finding a way of rotating away. Banks are up nicely. So, so far, so good. I still think, you know, it's not going to be a slam dunk that we just vault back over the old highs, which is up 1% from here. Yeah. Well, we've come back from that initial tariff knee-jerk headline, as we showed you, Dow's back positive by more than 100 points. Caterpillar not helping, though. One of the worst days in a while.

What's going on, Seema? So, Scott, this was not a strong quarter for Caterpillar. The weak spots being construction and mining. The big story here is that U.S. manufacturing is just not seeing a pickup in activity. That's leading to more inventory being on hand, plus negative pricing on equipment. Caterpillar did not formally release guidance, but its outlook for 2025 on sales was lower than what Wall Street was anticipating. There is a bright spot, though, here, Scott, and that's generators that are used inside data centers as backup. They saw sales grow 22% in the quarter.

Executives at Caterpillar recognizing that this is an area of growth and one that they hope to capitalize on and this as we wait more details on whether trump puts those tariffs on canada and mexico on trade ceo jim appleby said he was a bit more positive on tariffs saying quote we will deal with it adding that caterpillar produces region by region and that they have dealt with this story before shares downares down about 4% at this hour. Seema, appreciate that. Thank you. To Stacey Raskin on Intel. You just tell me what's most important here, Stacey, to you.

We've talked so much about the problems with this company. Where do we go from here? It's an interesting print because we'll see what happens. I don't think the fundamentals in their markets look great, but really, does it matter? Like, what's more important, if they, like, beat or miss on PCs or servers in the quarter, or who's going to be the new CEO? And, like, what does that new CEO and the board of directors actually have in mind

for what to do with the company? What does the whole thing look like in a year or in three years? I feel like those are much more important questions than just any of the near-term business dynamics. And to be honest, I don't know that we're going to get any answers to those questions unless they happen to announce a new CEO tonight, and I'm not really holding my breath for that at this point. I mean, how soon do you need to know who the next leader of this company is going to be?

I mean, I guess as soon as possible, right? It's very hard for them to, I mean, clearly the board of directors wants to change direction. I mean, presumably they wouldn't have gotten rid of Pat, Mr. Gelsinger, if that wasn't the case, but it's very hard for them to change direction without somebody at the helm. So,

I mean, as soon as possible, that would be great. But again, I'm not really, we haven't heard anything. Like, there's been a lot of chatter and names thrown out, but we haven't heard anything in terms of like who might land there. And we're not really expecting to hear from that tonight. I don't even, I don't, I don't really think there's anything else to talk about, honestly, as it relates to Intel. Let me just ask you about NVIDIA before I let you go. Do you feel like enough dust has settled now that you have a clearer view of what all this means this week? Yeah, all the deep-seek stuff.

I mean, look, we've been of the view that I don't want to knock deep-seek. They've actually done some really phenomenal things. The models are great, but I don't think what they did are miracles or secrets to the rest of the industry. The whole $5 million number was blown completely out of proportion. And, look, I'm firm in the belief that over time, if efficiencies are getting better, it drives adoption. And frankly, I think we need efficiency.

We've gotten them. Inferences, inference costs have come down a thousand X over the last two years. Like GPU performance has gone up by leaps and bounds. We need this sort of stuff if we're going to get to the types of compute levels that I think we need if AI is really going to be prevalent. So I'm firmly of that belief. Now, clearly it's impacted NVIDIA because there is a lot of, you know, narrative now that's out there and it's, you know, it's hard to prove a negative. You can't prove it won't be an issue. But I do think after the decline in the stock, like it started to look quite attractive down here, where it was 120 bucks, give or take. And yeah, I actually, I do

think even if there's a little more noise over the next couple of quarters, I actually think it's looking attractive at $120. I think that the whole deep-sea thing, all the fear and uncertainty and doubt has been a little overdone. All right, we'll leave it there.

Stace, I appreciate you as always. That's Stacey Raskin following Intel and, of course, NVIDIA 4. Back to Mike. You heard the two-minute warning a little while ago. It's all about Apple tonight, which is, once again, as I said at the top of the show, top market cap company again, thanks to the NVIDIA slide and Microsoft pulling back, too.

It is true. Look, they're all kind of bunched together in that 6.5% to 7% of the S&P 500 range. Apple's had this interesting ride where, you know, it kind of looked like it really had fallen out of bed. You've regained about half of it. Still kind of rich on an evaluation basis, but maybe expectations are low for the current quarter. NVIDIA, by the way, is up 5% off its low. Why? Well, if there's going to be another $40 billion being handed to OpenAI, guess what they're going to do with it? They're going to go shopping. And that's been kind of the, I think it's sort of maybe muted some of the concern about the long-term demand. Meanwhile, if OpenAI gets a $340 billion valuation, that's what Salesforce is valued at right now.

It's been public for 21 years. We've never seen this level of investment in a private company, especially over this short amount of time. It is astounding, to say the least. I'm glad you ended with that point. Mike Santoli joining us, of course, here on Closing Bell. We'll go green say the least. I'm glad you ended with that point. Mike Santoli joining us of course here on Closing Bell. We'll go green across the board. We're not going to get that record close on the Dow and we'll see what else

develops with these reports of baby carrots coming real soon. That does it for us in the OC.