Closing Bell - Closing Bell: Market Choppiness, DOGE & Trump on Interest Rates & Tariffs 02/13/25

Episode Date: February 13, 2025

From the open to the close, “Closing Bell” and “Closing Bell: Overtime” have you covered. From what’s driving market moves to how investors are reacting, Scott Wapner, Jon Fortt, Morgan Brennan and Michael Santoli guide listeners through each trading session and bring to you some of the biggest names in business.

All right, welcome to Closing Bell. I'm Scott Wapner here at the New York Stock Exchange. That, of course, the president. That was tape playback of President Trump announcing reciprocal tariffs on U.S. trading partners. They charge us a tax or tariff and we charge them. That's what the president had to say. Could be additional ones as well, said President Trump. Importantly, and the reason why the market is probably acting the way it is and is actually higher now than it was when all of this began is because these tariffs, these reciprocal tariffs will not go into effect right away. There will be a study, Howard Lutnick, the proposed commerce secretary, saying that that study should be done by April

the 1st. So we're watching all of that. Eamon Javers was in the room at the White House. He joins us now. Frankly, Eamon, at it it felt like you had a chair up pulled up to the resolute desk because i heard numerous questions from you obviously about terrorists but a number of other topics as well what can you tell us yet look the president up for an hour there took our questions and just a small group of reporters gathered around the desk.

We were standing, not in chairs, but yeah, I mean, top of the head, no notes, any topic we wanted to fire a question at him, he was happy to take them. A couple of interesting nuggets to me. One is I asked him about Elon Musk and his role in this government, because there's this question of conflict of interest with Elon Musk. Elon walked across the street from the White House today to go over to Blair House, where Prime Minister Narendra Modi of India is staying in advance of his meeting here this afternoon. Musk had a meeting with Modi earlier, CEO to head of state. And I asked the president, when Elon Musk, given his role here now, has a meeting with Narendra Modi, is he having that meeting as the CEO of Tesla or is he having that meeting as a representative of the American government?

And that gets to this, you know, conflict of interest question about what Musk's role is exactly in this White House and in this world, frankly. And what the president said there was, you know, he's representing his company. When when Modi comes to meet with me, that's when he's meeting with the U.S. government. But I followed up and asked, you know, how does Modi know that when they sit there for that meeting, whether this is a person who represents the government or represents Tesla? And it just gets to that murky relationship and the murky role that Elon Musk has here and how all that's going to be sussed out. One quick item for you, Scott. Just as that was happening, even more news. Reuters is now reporting that the Trump administration is going to want to renegotiate some of the deals under the CHIPS Act, that Biden-era law that pushed out all of that money on semiconductors.

They don't like the fact, according to Reuters, that a number of companies took the money and then expanded their operations in China. They want to renegotiate some of those deals. So that's something else to watch for. You heard the president there in the Oval Office saying that he feels that Taiwan took the chips business from the U.S. He's very focused on making sure those chips come back to the U.S. Scott. Scott Pelleyman, I appreciate it. Well done. Eamon Javers at the White House here bringing us the very latest as we heard about those long talked about and now formally announced at least there will be a study. But the plan is to put on those reciprocal tariffs on our

trading partners. Let's bring in Dubrovko Lakos, head of global market strategy at JPMorgan. least there will be a study. But the plan is to put on those reciprocal tariffs on our trading partners. Let's bring in Dubravko Lekos, head of global market strategy at J.P. Morgan. He's with us here, as you see, at Post 9. Is that your takeaway as well? Yes, a lot of tariff talk, nothing really implemented today. And that's why the stock market looks the way it does. Yeah, I think you summarized it very well. I think there's a lot of prepositioning that's taken place around tariffs and around the uncertainty there. So I think a lot of books have been sort of hedged, especially when you look at the long short side, when you look at the momentum factor, people are hiding in a lot of these, I call it high quality names. So I do think that there's a bit of a coil spring in the market, not the market overall,

but especially a lot of these, call it laggards and value segments of the market, that I think could start to work quite well if we start to see that the situation on the tariff side is not going to be perhaps as bad as feared. What happens if, though, we have a more pronounced trade war of sorts? You know, they come back with a report. Secretary Lutnick gets confirmed as Commerce Secretary, gets the report on the president's desk by April 1st, he implements them shortly thereafter, then it spurs a whole bunch of responses from

our trading partners around the world. Volatility. I think you're just going to get increase in volatility, and I think that's going to be a challenge for risky assets, and probably in that environment, the market is going to have a hard time squeezing higher, and if anything, you could see some pullbacks. But again, I think the bigger question still remains on the economy and the fundamental side, the demand side, which from everything we're seeing remains a pretty robust picture. I mean, we're pretty resilient, wouldn't you say?

And the reason being, I would think, is because earnings are delivering to a degree that some may have doubted they would. And you could make the argument that they really had to deliver. And that trumps everything else right now. So I think earnings, and I think there is still room for earnings to surprise to the upside. Even from here? From here, I think because you're seeing still a very strong nominal growth environment. And I think the terminal growth rate for the U.S. generally, if anything, has been squeezing higher. And for as long as the Fed doesn't spoil the party and start moving into

some form of hiking process, for which I think that's a pretty high bar for the Fed to get there, you have this sort of period of, call it, reflation, which I think bodes well for stocks and for earnings, and a Fed that still remains relatively, you know, not constraining the environment. Liquidity remains ample. Availability on the credit side still remains quite ample. Pretty amazing. I mean, we're only nine points or so on the S&P from a new closing high. Would you have thought that that would be the case if we're, you know, talking about tariffs every day? You had a couple of hot reads on inflation. You know, the Fed is backed way off its plan of cutting numerous times this year.

That doesn't seem like it's likely at all. And here we are on the doorstep of yet another closing high. Yeah, I would have thought that maybe there would have been a bit more of a pullback, that you've seen more than just like a 3%, 4% pullback. But I don't think that so far that really changes the big picture. We do have a price target of 65, which I would say is lower versus the street, to some extent reflecting the fact that we could enter a period of uncertainty tied to tariffs. So, yeah, we've been in a period of digestion, I think, right now.

And given the shift, not just so not given the uncertainty on the tariff side, but also given the shift in expectations around the Fed yes the market has been pretty darn resilient so only 6500 is where you think it's is that your your base case is 65. that's a base case i think it's really hard to sort of come out with forecasts a year out that's just the reality there's so many unknowns uh and so many sort of second third order effects that are hard to sort of forecast so we're we're going to stay open minded. And if the situation gets better, we're definitely going to look to revise higher. If it gets worse, we'll do the opposite.

But we think 6,500 is a good place to be. One of the biggest stories of the year thus far is you have every sector right now, of course, is green on the S&P. Year to date, everything is now green. But, you know, things like tech have dramatically underperformed. You have pretty good performance spread out throughout almost every sector. What does that tell you about how you want to play this market now in the months ahead? So for me in the months ahead, I still see pretty elevated crowding in the momentum factor and the momentum stocks.

So to me, the thing to really think hard about are the laggards and the potential for broadening out. I believe we talked about this a number of weeks ago when I was here. And in the meantime, yes, we had to digest volatility and some news. But I still think that's the key narrative. And I think that's something that could very well be tied to an opening up on the capital market side and deal activity. Because again, the momentum trade that we're seeing in the U.S. has been highly correlated to the size effect, big over small, and to the quality effect, high quality over low quality. I've been doing a lot lately on the momentum trade as a factor. It is remarkable. I mean, we're talking about a lot of widely held,

large cap stocks. Your firm included is on this list of the Goldman's, the JPM's, broad sectors as well. Do you think that continues? Why have those worked so well, do you think? I think it's just where people are hiding. And I think those are the easier ones where you see some stronger fund. There's greater earnings visibility. Some of them are participating or benefiting from these called secular tailwinds. If tariffs were to go higher, if rates were to go higher, a lot of these names, I don't think they're going to get affected in a meaningful way. And that's where people are basically hiding. And on the flip side, they're basically shorting or shedding a lot of these called more sensitive, vulnerable names to either tariffs or to interest rates.

What sort of risk do you think is there around interest rates? I mean, what do you expect the Fed's going to do? One? Two? Our house call is still for two cuts. We think that even the prints that we just received recently didn't really change the picture much on the PC front, which is really what the Fed cares about. And we're calling for the next cut to be in June.

And between now and June, it's a lot of time. But you still think you can get two cuts? And you still would be at 6,500, seems reasonable to you, even in an environment where you get two cuts. Yes. I think for as long as the Fed remains in pause or some form of easing, given the strong nominal growth environment, I think the market can continue to do well. The reason why I would sort of say why you could get two cuts is I think many people are basically talking about 10-year breaking out, five, five and a half, some even sort of floating the idea of six. But we forget about the fact that we're seeing changes on the immigration side.

Immigration has been a huge boost also to U.S. growth over the prior years. And also what's happening on the government side in terms of some of these cuts, you know, freeze on the hiring side. All of these things to me suggest that perhaps this really, really hot economy expectation may end up turning into something that's more of a normalized economy. What do I want to do lastly before I let you go with big tech, which has, you know, not performed all that well other than Meta, which is just this runaway freight train. It's going for 19 in a row.

That's the longest streak than any of these, you know, NAS 100 stocks has ever done. What about these as a group? Momentary pause? Is it just a matter of time before people go back in to these names? I think it's very hard to short this complex, not in the current environment and in an environment where actually things like antitrust is only going to get easier, not tougher. I would really be focusing more on the other 490 in the S&P. So not the big 10, but the other 490. That's where I think there's a lot more value opportunity. But even if rates remain a little elevated and tariffs, you know, just create uncertainty, doesn't that hurt a large part of this market away from the MAG7?

No, I think it does. But I think a lot of that is priced in. So that's where I think you're seeing this pretty widespread in terms of how the big big are trading versus the less big. Good having you here on a very important day and fast moving one too. Dubravko, thanks. Thank you for having me. Dubravko Lekos, JP Morgan. Up next, value investor Bill Miller, the fourth, is back with us. He'll break down where he's finding the best opportunities today. Of course, we'll talk crypto as well

just after the break. We're back after a big run following Donald Trump's election. Bitcoin cooling off a bit lately. Our next guest is still a big believer and a big investor. Bill Miller, the fourth, is Cio and portfolio manager of miller value partners welcome backs good to see you awesome thanks for having me scott why the cool down do you think of late in in bitcoin 96 little over 96 is where it currently stands 96k well it's tough to call every 10 twist and turn in a new technology like this sc Scott. But it seems to me like traders and people that are more focused on short-term outlooks may be looking at Doge and saying, well, they may be actually eliminating some of this profligate government spending, which is bad for something

that effectively will be the check and balance on that. But when you actually dig into the math on Doge, I think reality is eventually going to get in the way here. And that if you just look at the USAID situation, right, 60 billion, let's say all of that goes away. Well, that's only one 30th of the deficit. So you got to do that 29 more times and they're not going to be able to cut all of that. And then when you actually look into what can be cut, there's a real limit to it. So I think in the short term, Bitcoin is bumping up against some of that outlook perspective. But in the long term, it's inevitable. I see a bunch of headlines regarding tariffs and Bitcoin asking the question, should you stay away from crypto because of

tariffs? What do you make of that? And is that any of the reason for the recent weakness? Well, tariffs at the end of the day are inflationary. It's hard for me, again, to say what every twist and turn means. But again, we look at it from a value investor's perspective. So there's really two elements to the investment thesis here. One is the conceptual valuation framework. I mentioned before, it's probably the new monopoly or will eventually get to that level as a check and balance against profligate government spending.

And so gold has historically served that role. Bitcoin is going to serve that role in a much better way as it's automated. It's more transparent. It's transportable and more secure and has a much more clear supply protocol. So from a conceptual valuation perspective, gold's valuation is $20 trillion. Bitcoin's at $2 trillion. So that would imply a fundamental intrinsic value of about a million dollars of Bitcoin today. Then second, there's a game theory aspect to it, Scott, which is at a $2 trillion market cap today, it's approaching 1% of the

global basket for financial assets. And so if you don't own any Bitcoin today as an allocator, you're now effectively short the best performing asset for the better part of the past two decades. And then the other game theory way I think about it is the U.S. monetary policymakers have an explicit goal to devalue everything you own that's priced in dollars by 2% to 3% a year. So why wouldn't you take 2% to 3%ue everything you own that's priced in dollars by two to three percent a year so why wouldn't you take two to three percent of everything you own and stick it in a system entirely outside of the fiat system and i think that's why a lot of companies are doing it you know if you look at the global landscape today in public markets a lot of companies are converging

on a bitcoin standard there are now 70 companies on publicly traded exchanges around the globe that hold Bitcoin on their balance sheets. Everyone knows strategy and some of these other companies that are much larger. But we have things like Tesla out there holding Bitcoin. There's Mercado Libre, Alliance Resource Partners is a coal company. So there are people adopting Bitcoin treasury strategies more and more every single year. And as other companies see companies do this and outperform, they're going to want some Bitcoin. So there's only a certain number available. So two to three percent maybe is worthwhile, you say. What jumps out to me, too, is the zero percent

that you have in the MAG7. You don't own any of them. No. You look at their spending plans. they just announced $300 billion of CapEx plans collectively over the next year. So part of the investment thesis for a lot of people buying these names is, well, they have effectively a massive marginal free cash flow margin on all their additional revenues, which is going to flow to their bottom line. Well, maybe not if they're going to need to invest all this money in other stuff. And if you look at the valuation of small and mid and value names relative to the overall market, we're looking at a historic opportunity, I think, for a lot of small and mid cap names.

Your second largest holding in your ETF is Crocs, which is interesting to me. Why? Take a look at this. Two of my favorite things all rolled into one. We love Crocs. And you know what's interesting about it? Even though it's up 25% today, it's still a pretty cheap stock. So it trades at a 14% free cash flow yield. This is a company that's been on public exchanges for 20 years now. And it's been derided as a fad since day one. But the management team has been relentlessly focused on execution and that's all they keep doing. So again, at a 14% free cashflow yield,

this thing is a staple. I mean, it generates cashflow pretty much every single quarter. They just re-up their stock repurchase authorization. I personally believe that Crocs is worth much closer to its all-time high of 180 than its current price of 110. Well, I was gonna say, I mean, even with this kind of move today, you're staying long.

Love it. Yeah, absolutely. Bill, I appreciate your time. I got to run. I had some breaking news, as you know, at the top of our hour today from the White House. I appreciate you. We'll have you back sometime soon, I'm sure. That's Bill Miller, the fourth joining us. Up next, top strategist Ryan Dietrich. He is here to tell us why he's bracing for some volatility over the next few weeks. Tell you why next. Expect more choppy trading as February nears an end. That is the call today from our next guest, Ryan Dietrich.

He's chief market strategist with the Carson Group. It's good to see you again. Why is that your call? Yeah, thanks for having me. I thought you were going to bump me there with the president, but thanks for having me back, Scott. You know, listen, I think listeners should know this. February historically isn't that great of a month. Okay, that's fine. Post-election years, it's the worst month on average. But here we are, you know, doing pretty darn good. Like you mentioned in the previous segment, we're only like eight or nine points away

on the S&P from a new high. What I think really matters, though, it's that second half of February, right about now, right about Valentine's Day. Happy Valentine's Day, everybody. You start to see kind of a banana peel, if you will. Now, you don't blindly, Scott, invest just on seasonals and seasonality, but I think it's really important with all this news that we're having. We've had big down days on Fridays and Mondays because everybody's worried about what might happen over the weekend. I know President Trump just talked. Obviously, we're bouncing now. We know that can change in a hurry. So I think what I'd feel more comfortable with if we started to see more strength on Fridays, but the reality, again, just be open

to the idea next couple of weeks might be more consolidation, a little choppy, perfectly normal. It's just important to know that. Do you think a tariff-related pullback is inevitable? Yes, I guess is the short answer. You know, we're going to continue to get the headlines. We're going to continue to get the worry that's out there. I know I'm sure on your network earlier today, people talked about that AAII sentiment poll, the highest level since right after that 10% correction, late 23, before that regional bank crisis, before that, the end of the bear market in 22. So investors are very, very worried right now when you look at that. But the flip side, Scott, I look at then I look at put the call ratios. There's some actually some calm and maybe too much optimism there. So it's like this barbell. Everybody's kind of

confused. The reality, though, we probably see more volatility. I mean, to think last comment on this, to think this year was going to be the only year without bad news, without bad days, without probably a 10 percent peak to trough correction. We think it makes sense. I'm still bullish, but only two years say we're in a bull market. Surprises happen to the upside of the bull market. Just prepare probably for more volatility. Honestly, the first half of a post-election year, that's usually when you get it. I mean, you're still expecting a big year. Maybe not quite as good as what was delivered in 23 and 24, but 12 to 15% upside from here is your call? Yeah, that's exactly right. I mean, we said start of the year, 12 to 15 percent total return, kind of like some

of your previous guests before I came on. We think that broadening out is going to happen. I know everyone's saying one cut, you know, from the Fed. We think it's going to be more like two or three because we do expect inflation to improve. I mean, what we just see last week, we saw hundreds of thousands of jobs just evaporate in essence. But GDP has been revised higher. What's that tell us? Stronger productivity. Go look it up, everyone. In years with strong productivity, you tend to have higher upside economic surprises and strong stock markets. We still think, you know, this bull market's livened well, but small, mid, industrials, financials, those are the areas that will probably do a little bit better when all is said and done. Well, I mean, you better hope you get a good February CPI report, right?

I mean, early March is going to be really critical for this market, especially after what was just delivered. This next read can't be equally as hot or we're going to have a problem. Well, we very well, that's true. We very well could. Let's just history don't repeat itself. Often rhymes, Mark Twain. What have we seen three years in a row?

That January CPI number can be hotter than expected hotter than expected no other guests have talked about this even last year february came in a little hot too so you know maybe we do see that a little bit but again the the underlinings on the rents have been improving look at today's ppi some of the components that go to the pce bunch of letters i get it that's the one the fed looks at looks better that's why we're rallying today we We rallied before the president spoke, and obviously he said maybe kick the can on tariffs, at least for today. That's why we're rallying. But the reality, again, inflation is probably still going to improve. Might not do in February. It might be later in the year, but it's still going to be a positive. And our big, I guess you would call it,

call here is there are going to be more cuts, right? We've actually added some treasuries. We added some tips, some of the models we run for our Carson partners a couple weeks ago. So we think the longer-term treasury makes sense. Longer-term treasuries make sense. The Fed cuts a little more than is being priced in right here. What about Meta? Meta's run, NVIDIA earnings, and the way that a lot of the mega caps have traded lately. Yeah, you know, well, obviously, Meta's in a world of its own.

But I know I've come up with you for well over a year saying we're more neutral large cap tech. We're more neutral Mag7. Trust me, we have exposure to those areas. We just think, you know, the bar is awfully high. Look at the reaction to earnings from the majority of those Mag7 names. Solid earnings, making a ton of money, but they kind of sold off a little bit. So that's okay. We're more neutral tech.

We just think that that baton is passed. The lifeblood of a bull market is rotation. We're seeing rotation. That's a great sign. Yeah, I mean, Meta is positive again today. It lifeblood of a bull market is rotation. We're seeing rotation. That's a great sign. Yeah, I mean, Meta's positive again today. Could be 19 in a row. I mean, no mega cap's gotten close to that. Hey, Ryan, it's good to talk to you, man.

I'm glad we could fit you in. We'll see you soon. That's Ryan Dietrich. I appreciate it. Carson Group, Chief Market Strategist. Up next, we get to set up for Airbnb and win results in OT. We'll do that in the Market Zone next. All right, we're now in the closing bell Market Zone.

CNBC Senior Markets Commentator Mike Santoli is here to break down these crucial moments of the trading day. Plus two earnings coming out in OT on our radar. Julia Boorstin on Airbnb. Contestant Brewer on Wynn. Mike, I'll turn to you first. We're not that far away, as I said, from a new closing high on the S&P. Presumably because we didn't get these actual tariffs put into place today. Just a study.

We've got to wait. And the market appears to be soothed at least a little by now. Yeah. You know, as I was saying to you in the noon hour, the market wants almost nothing new to happen relative to what we expected on December 31st in terms of the fundamentals. The market does not view tariffs as like a battle we have to fight. So if we defer it, if it's not across the board, if it's not very punitive, if it doesn't seem like it's going to add too much friction, that's all the better. Meanwhile, the indexes, the S&P has been hanging around the basket, right? It hasn't really been able to buckle in a sustained way. This is our

seventh time touching the 6100 level in the last three weeks. Whether that softened it up or not, we'll have to see. I still do think, you know, you're seeing some evidence of low conviction. My gauge for low conviction is Walmart and Costco keep going vertical. And they're up another 1% today. And those are the stocks, as Dubrovko was saying, people are kind of hiding it. It's high quality. You can't argue with it. It's momentum. It's quality. It's macro defense. It's all at once. And so we'll see if that changes anything, if that creates cracks elsewhere,

if it's just going to be one of these effortless rotations that we've seen before. Julia, tell us about Airbnb. What do we need to watch out for? Well, Airbnb's revenue is projected to grow 9% as the company is expected to benefit from strong booking as well as rate increases, continuing the trend it saw in the third quarter. Earnings per share are projected to fall over 24% as the company manages costs and has committed to investing in the business to grow share and expand its platforms to offer more different types of bookings. On the call, we are hoping for some guidance on when Airbnb will open its website to sponsored listings. And with the stock pretty much flat since the last time it reported earnings, analysts are split. Twenty nine percent of a whole. I'm

sorry. Twenty nine analysts have a hold. Eight have a buy, and 7 have a sell. We'll see how they shift after these results. Back over to you. All right, Julia. Thanks so much, Julia Parson. Contessa Brewer, tell us about WIN. Two things, Scott, that investors are going to look for in WIN earnings. Las Vegas performance against some really tough comps and the Macau outlook. Now, the street is looking for $1.8 billion in revenue for the quarter, $1.22 in adjusted earnings per share. We got a peek into Vegas and Macau with MGM's earnings report yesterday.

Its share today on pace for the best day since April 6, 2020. There was a lot to like. Look at that, up 17.5%. In Las Vegas, MGM saw its strong month for convention bookings, 43% higher, they said, than previous record month. Well, of course, that would benefit Wynn and it would benefit Caesars. Caesars also on the move today, up nine percent. So we'll be looking for more detail on what this scenario is like in Macau and in Las Vegas. All right. You'll let us know when those numbers hit. Contessa, thank you. That's Contessa Brewer. Mike, I turn back to you. Six thousand one hundred eighteen point seventy

one. That's where we need to get you for a new back to you. 6,118.71. That's where we need to get you for a new closing high. Three points away. Very close. And a lot of these mega cap techs, like NVIDIA is up 3% today. How about this meta run is just remarkable. They're helping on this. 19 in a row if it closes green today. Yeah, it's actually almost like kind of a video game because it started lower and we're finishing higher.

Palantir started in the hole. It's also going to finish higher. So I keep pointing to it. Ryan Dietrich talked about it. You do have this kind of army of optimists that just keeps kind of battering these same stocks with buy orders. And it's working. That said, MAG7 as a group or NASDAQ 100 in total relative to the overall market. It peaked in July and then had a secondary lower peak in December around Christmas time.

And since then, it's been a much more mixed story. And I think you could treat that as a net positive. Market's kind of hanging around the highs, maybe going to make a new one without necessarily it being more concentrated. It does get you back to that idea, though. How tough is the math? If these companies aren't going to trade, you know, in line with their earnings growth this year or better, it does put the burden on the rest of the market. I think, you know, it's OK. We're at this decent equilibrium right now. Very mindful, too, of what I keep saying about next week. You get the expirations. Maybe it's going to loosen up the way this market moves around a little bit,

raise some volatility at the index level. Ryan Dietrich's talking about that, too. Seasonals and flows, maybe they become less favorable. But right now, the market isn't displaying any kind of behavior that says it's really on the brink of something worse. Let's see what NVIDIA earnings deliver. That's the next sort of line. Couple weeks. But the companies have already told you they're unbelievably big CapEx numbers. Yeah. So you already have. And by the way, since those earnings and we learned of those very high numbers, NVIDIA has been in a nice move. It's yeah, there's no doubt about it. I think this is going to be six in a row. It's being seen as the as obviously the net beneficiary coming off

a relatively low base. Who knows what it's all going to mean for Taiwan Semi. I mean, that stock's now kind of in the crosshairs of the president, but we'll see if that plays through. There's the bell. This will be about two and a half points from a new closing high on the S&P. Meta looks like it's going to get the 19th straight day of games. Into OT with Morgan and John.