Closing Bell - Closing Bell: Navigating an Indecisive Market 11/19/24

Episode Date: November 19, 2024

What are the key forces that will tilt this indecisive market one direction or the other? Solus Alternative Asset Management’s Dan Greenhaus, Merrill and Bank of America Private Bank’s Marci McGregor and Bryn Talkington of Requisite Capital Management break down their market takes. Plus, top technician John Kolovos tells us why he thinks Bitcoin could hit $200K. And, Doug Clinton of Intelligent Alpha tells us what he is expecting from Nvidia’s report tomorrow after the bell. 

Welcome to Closing Bell. I'm Mike Santoli in for Scott Wapner. This make or break hour starts with stocks finding their footing after overnight geopolitical headlines had the indexes wobbling into the open. Here's a look at our scorecard with 60 minutes to go in regulation. The S&P 500 bouncing off of its post-election low this morning. That was a level it's hit a couple of times in the last week or so. You see it up about only about a quarter of a point right now, down two-thirds of a percent at the lows. The giants of the Nasdaq have been catching a bid. That's been driving the Nasdaq higher by eight tenths. NVIDIA, the biggest upside contributor to the S&P by far, about 25 hours ahead of its earnings release, renders a verdict

on the overall AI trade. You see NVIDIA up four and a half percent right now. Mixed signals on the consumer with Walmart running to a new high on strong results and guidance, while a weak housing starts number and a softer quarter from lows pressures some housing related names. Now, both the 10 year Treasury yield and the U.S. dollar index backing away from the top of their recent ranges takes maybe some of the pressure off of equities, while the S&P 500 does hover below its closing level from the day after the election. So that takes us to our talk of the tape. What are the key forces now that will tilt this indecisive market one direction or the other? Here to help us answer that is Solace Alternative Asset Management's Dan Greenhouse. Hey, Dan.

Hey, thank you for having me, sir. Sure thing. Now, we've obviously been, you know, there's a lot of rotation under the surface of this market. But in aggregate, we've kind of been on hold for about a week and a half, as I guess we try to get some clarity on a few things. Are any of the reactions after the election or even just the trends before that, did they seem overplayed in the short term? Does it feel like the market has it roughly right here? Yeah, I mean, I don't think anything's been overplayed in the short term? Does it feel like the market has it roughly right here? Yeah, I mean, I don't think anything's been overplayed. I mean, listen, we obviously don't know exactly what policies are going to be implemented. We don't know when the tariffs, any larger trade war items, any additional tax cuts beyond an extension of the TCGA.

So there's a lot of uncertainty here. I think, obviously, markets should have rallied in the wake of the election. Obviously, that's the most business-friendly environment you could hope for the the red wave, so to speak. But and some digestion of that, given where we were, not the worst thing in the world. I mean, obviously, the markets have gone straight up, both equity and credit for some time now. So a week and a half of trading sideways, hardly the worst thing in the world. Yeah. And I guess, again, I keep coming back to the point that the starting level in many ways was just not as if, you know, we were springing ready to spring ahead. Right. I mean, the market was up a lot. You pull back a little bit.

Sure. But going into the election, people had degrossed. We knew this across the street. Hedge funds had taken down gross exposures, even net exposures. And so you had everybody have to ramp back up after the election. And that's why you saw in small caps, mid caps and other election related plays such a strong post-election rally. Now that we've settled in and we have a better idea that the red wave is indeed a thing, the House obviously has been called. We can take a minute and digest and see the cabinet appointments and the likely path for policy. The thing that it absolutely does, though, it really focuses maybe in excess of attention on these individual possible impacts. I'm just wondering, the pharmaceutical sector as a whole is down 12 percent in a month. Food stocks getting blasted because of what might

or might not happen in terms of, you know, food ingredients and everything, you know, with all the headlines. And, you know, as was just being said, Intuit getting slammed today on the hint that we might have a free way to file our taxes. It just feels as if a lot of these this twitchiness in the market is is a function of people thinking like it should be a policy driven market, whether it is or not. You know, listen, it probably will be as RFK at HHS, not to mention crypto. Not to say I can't ignore that. RFK at HHS. Not to mention crypto. That's right. Can't ignore that. RFK at HHS could be a game changer. There's no doubt about it. And I don't want to speak to the validity of the vaccine makers being down,

as it seems, as a starting point, a safe bet to make. But listen, we'll have to see exactly what unfolds. I highly doubt the way government operates in a sclerotic, molasses-type way makes it very difficult for anybody, be it Elon and Vivek on the outside or RK on the inside, to rapidly affect wholesale change. But we'll see. But I will say, the idea that you would have these adjustments in a number of names, not just in health care, but on the positive side as well, really is, I would argue, justified. Because in many respects, the incoming administration is going to be, the hope is that it's going to be a game changer. And if it is, then a lot of these plays have much more room to rally. I will add, though,

when we talk about the market as a whole, there's a lot going on that's not just technology, that's not just policy. You have United Rentals doesn't stop going up. Obviously, that's about the broader economy. You've got continuing with the industrials. You've got Eaton, Train Technologies, Howmet. They're not all the same, but they keep going up. There's any number of different slices of the market. I mean, that all feels like data center build-out.

Well, yes. I mean, Vistra and Eaton and the HVAC plays are a silo of AI. But even beyond that, the OTAs, Netflix, I mean, obviously that's a technology name, but it's really a consumer name. There's any number. Listen, the S&P is up 25% year-to-date, called 25%. There's 200 stocks, 175 stocks, whatever it is, that are doing better than that, that are up 45, 55, 60%. And they're not all AI. They're not all policy-driven plays. There's a lot otherwise going on. I do wonder if on the other side of that,

I mean, whether in fact people are taking their eye off the ball. The housing starts number was weak. It's been a weak part of this economy for a little while. And it is maybe a little bit of a test of whether that part of the economy can handle 7 percent mortgage rates. Yeah. Listen, the builders are all off their. Well, Toll Brothers is not. But the builders are off their highs. And we did get the sentiment number today, which tends to track with activity. And and it was and it. And it's doing well. I think it's at a seven-month high. The builders have had a terrific run.

Mortgage rates at 7% is obviously less optimal than mortgage rates at 5%. But at the same time, I think that we've entered something of a steady state here. When you listen to what the builders have to say on their calls and on the regional data that comes in from the non-public builders, it seems like there's still demand there, even at 7% mortgage rates. How much of it is on the hopes that in the next year, mortgage rates are closer to 6% than 7%? I can't say. But in general, builders have proven that they can be successful in an environment of higher interest rates. Demand is there, not as much as we would like, obviously. But based on the stock prices, obviously, they're telling you they've been successful at managing this environment. The fact that rates have not come down as quickly,

less optimal, but they're still doing OK. Sure. All right, let's bring in Marcy McGregor of Merrill and Bank of America Private Bank and Brent Talkington of Requisite Capital Management. Brent, of course, a CNBC contributor. And Marcy, let me just get to you, because I imagine, you know, in the lead up to the election, as you talk to clients, the message is typically, look, don't really let the election result, whatever it might be, dictate your investment strategy. And yet we're in this moment where it seems like that is top of mind for everyone. And it seems like it's what's animating the market. How should right now an investor think about the policy inputs and then

just the broader setup for investing? Yeah, absolutely. I keep telling our clients for the broad market, it's not about policy. It's actually about corporate profits, because in my view, when we look ahead to 2025, that's the number one factor that has the potential to drive markets higher. Our view is all 11 sectors get to positive EPS growth and join this party by spring of next year. That's going to be a powerful force for the overall market. Now, of course, policy can drive rotations. It can drive sector views. But I think this is going to be a profits driven market when we think about 2025. So less about multiple expansion, maybe multiples are a little stickier next year. But really, the market that's driven by, in our view, the potential for, you know, low double digit, but double digit profit growth.

And how does the Fed kind of filter into that equation at all? If it does, if you feel as if the market can hold its multiple here, have earnings kind of do the work and presumably, you know, things like yields and inflation don't get out of hand? Yeah, I think the risk here now on the policy side is that inflation appears to be a little bit stickier. You know, we've seen CPI and PCE kind of stall out for the last few months. So progress on cooling has slowed for sure. So I think the risk is now less Fed cuts, higher terminal rate. I would argue that's what the yield on the 10-year is telling us right now. But the Fed is still cutting. I think you probably have, you know, call it three more cuts in the hopper here between now and the middle of

next year. So you still have a Fed that's recalibrating policy because the economy is strong. So they're cutting while profits are accelerating. That's a really unusual combination for markets. And I think investors should pay attention to that. Bryn, you're obviously involved broadly in the markets, but specifically in some of the areas that really have started to run a bit hot, right? I mean, crypto, Tesla, there's been a liveliness in certain parts of this market. Does any of it feel uncomfortable yet, or is it just what you'd expect and hope to see out of, you know, the energy of this market moving in that direction? I love your word, liveliness. I think that's an understatement. I mean, I think there's definitely, there's a lot of froth, a lot of speculation.

I think you see in, whether it's crypto-specific, the crypto derivatives, like a micro strategy, the leverage strategies that are in ETFs. I mean, you're seeing 20, 30 percent moves in a day. And so I think these animal spirits are high. I think there's some fundamental backdrop to that. I think that when you have, you know, Trump meeting potentially with Brian Armstrong. And so I think a lot of some of it is I think this deregulation is going to be positive. But also like when Tesla to me is up yesterday because maybe we're going to have some some national movement on autonomy. Well, that's really not that has not really the issue of Tesla right now. Tesla, which I own, needs to get their own autonomous ready to then go to get that license. And so I definitely think

animal spirits are alive and alive and well. And I think we can have a rally into year end. But I do think investors need to be mindful that, you know, some of these stocks do look quite parabolic after the election. Yeah, that's actually another great example, Brian, of that kind of reflex move on some kind of a hint about policy with Tesla and then Uber on the other end of it. And it's sort of a, you know, it's a trade first and then figure out the details later type of market, which I guess, by the way, bull markets always run through these phases. Sure. And I think that when you look at the Uber Tesla pair trade, it's like these are both going to be winners. And this is where you see, to me, more algorithmic trading, hedge fund repositioning. As an investor, I think just because Tesla is

winning, in no way, shape, or form means Uber is losing. And so I think that this Uber pullback is actually a good entry point. I just bought Uber recently and then sold calls. And so I think that's a good opportunity to take advantage from some of this algorithmic trading that to me is just short term. Yeah, I'm sure if you sold the calls before yesterday, you're in good shape on that one. And Dan, I guess the big picture really does all kind of line up in a favorable direction, as we've kind of all been suggesting here. So credit spreads crazy tight. Obviously, earnings growth moving in the right direction. The Fed, maybe they do one in December. Maybe it doesn't matter how much more they do if the economy's going to hang in

there. You know, let's go looking for something to worry about. Where would you go? Yeah. So the funny thing you say, let's go looking. It feels to me like for the better part of 15 years, there's people are looking for something to worry about. There's an article in the Journal today. It's all quiet. I forget exactly what the story is, but it's all quiet on the credit card default rate. Too quiet. Why is that a problem?

I mean, listen, credit spreads are extremely tight. You're at 80, 90 bips in IG, wider in high yield, but at exceedingly tight levels. The financing markets are open. The economy is doing fine. I disagree a little bit with Marcy, and I think with the consensus on the rate cut path, December is probably 50-50 at this point. Let's say they cut. I don't know that they get four next year or, as Marcy said, three by the middle of next year. The tariff story, the immigration story has yet to play out. What effect that has in a macro sense remains to be seen. But you alluded to, even then, if we don't get the cuts that Marcy mentioned or that the market's

expecting, I don't know that that's the big deal. And we mentioned earlier all the different things that are working in the market. And we brought up Tesla as another one. But look at the office rates. I know Josh Brown on the Halftime Show was talking about CBRE. Pull up a chart of SL Green or Vernado. That has nothing to do with anything that we're talking about. I mentioned United Rentals earlier, and there's a whole host of industrial and construction-related names that are doing very well. Some of that is data center construction, and some of that is just construction in general doing well. And to the corporate profitability argument, I think this is obviously the most important. I don't know that we get any additional corporate tax cut. So when you look at what the financials did post the election, a lot of that is on the M&A front, particularly the overcapitalization

front. If Basel III is at least held steady, let alone watered down, a lot of these banks have way too much regulatory capital relative to their market cap. But there's all these different plays that can be put to work here, whether the Fed cuts or not, whether the corporate tax rate cuts or not. And the market as a whole is benefiting from it. And, you know, it's been a couple of months where we can say this. It's not just AI that's helping. I would agree with that. I would also just point out, though, I mean, I know you like to say for 15 years we've been just kind of harping on the potential negatives.

But in that 15 years, you had two bear markets. You had three other near bear markets. COVID doesn't have a chore. OK, whatever. The price is reset one way or the other. You had three other near bear markets. COVID doesn't have a chore. Okay, whatever. The price has reset one way or the other. You're right. My point is, and you couldn't have seen it coming. I agree with that.

But the point is, it's not always close your eyes and expect great things. No, that's fair. What I'm talking about is, and we'll use John Paulson as the example, it's felt to me, and I've expressed this on air previously, it feels to me like everyone is looking to be the next John Paulson. And that's been the case, or Nouriel Roubini, for the last 15 years. And even when things are doing well, as they were at different points in the 2010, and as they've been in the post-COVID environment, there's always people citing the worst particular outcome. Well, this random mid-cap company said the consumer's weakening. Well, this random mid-cap company said the consumer's weakening. Well, I've got Walmart that continuously quarter after quarter tells me the consumer's

doing fine. And you need like a million gaps to do one quarter of revenue that Costco does or that Walmart does. And as long as those companies are telling me everything's fine, I tend to feel that they're fine. And I would just add before I let you before I let Bryn go, look at the credit card companies. If there's something wrong with the consumer, pull up a chart of American Express or Capital One or a Visa and MasterCard. Obviously, there's no sign of turbulence anywhere. We should just be able to say this is a pretty good environment. What sectors will do better? What parts, what industries, et cetera. Fair enough. Marcy, let's go into what parts and what industries, in particular on the big picture choices among U.S. versus rest of the world,

because that's a pretty clear consensus in favor of the U.S. right now. And then, you know, is it actually the broadening trade? Is it going to also pull in smaller companies at this point? Yeah, it's a great question. You know, I think U.S., relative to the rest of the world, is a relatively easy call in my view. I think, you know, when we see the profit cycle, again, a Fed that I do think will still march forward in a strong economy, it reinforces U.S. competitiveness and attractiveness, especially with artificial intelligence really. Being a disruptor in twenty twenty five and beyond so- when

I think about what sectors drive the market I like financials from here I think they are showing real market leadership relative highs if you go under the hood of the sector- there's a lot of new highs on there so I think

that's a real positive they can benefit from deregulation. And a strong economy I like consumer discretionary as well you know I would argue. The consumer is still showing solid momentum my- friends at the B of A institute did their

annual holiday survey. And it showed that holiday spending plans are up seven percent over last year so. A consumer that has a wealth effect going on in a strong labor market- he's a nice that has a wealth effect going on and a strong labor market paints a nice picture, I think, for discretionary. And then utilities, which is, of course, the AI ecosystem. I think, you know, technically speaking, small caps are showing some

good signs of breaking out. I think we really need that profit story to come through. I think rates stay a bit steady from here as we look at next year. The 10-year rate keeps kind of testing resistance and coming back. I think that'll be good news for small caps. And then finally, as someone mentioned it earlier, a merger and acquisition cycle will benefit small caps, too. So I do think they join the party in a more sustained way. And I think it's all about the U.S. over the rest of the world in 2025. All right. And Bryn, round us out here with a word on what you're expecting out of NVIDIA and also just how central that might be for the broader market or whether it's going to be kind of filtered through a lot of other factors. NVIDIA is the AI circulatory system, right? And we're all really clear if you listen to

Amazon, Google, Microsoft, they all implied or explicitly said, we're spending more. Satya said during the earnings call, hardware cannot keep up with demand. And so as NVIDIA being this AI circulatory system, I think you're going to hear about Dell, you're going to hear about what they're doing in NVIDIA, about XAI. You know, Jensen likes to sprinkle in all these other companies that they're working with. And so I think this is going to be another wonderful quarter. I think that everyone already knows that the rate of beats is slowing. I don't think that's any new news. The market's pricing in plus or minus 7%. I mean, NVIDIA is basically at an all-time high here. So there's

definitely a lot of optimism going into the print tomorrow. But if you take a step back, this company is still just eating everybody else as it relates to the AI space. Yeah. So yeah, it is basically at an all-time high, although interestingly, it really has been sideways for a few months. We'll see if that ends up having gathered up strength one way or the other. Appreciate the time today'll see if that, you know, ends up having gathered up strength one way or the other. Appreciate the time today, everybody. Dan, Marcy and Bryn, we'll talk to you all again soon. Let's send it over to Christina Partsenevelos for a look at the biggest names moving into the close. Hey, Christina. Hi, Mike. Well, super micro shares continuing to skyrocket

today, now up more than 50 percent just over the last two trading days on optimism that the stock will keep its Nasdaq listing. The server maker named BDO as its new auditor and submitted a plan to Nasdaq detailing how it plans to regain compliance with the exchange. And that's why shares are up 33% just today. Shares of C3.ai, not too far behind, they're up about 23%. The company announcing an expanded partnership with Microsoft. They plan to speed up the adoption of C3.ai's enterprise artificial intelligence offerings They're up about 23%. The company announcing an expanded partnership with Microsoft.

They plan to speed up the adoption of C3.ai's enterprise artificial intelligence offerings on Microsoft's platform. This deal positions C3.ai as the preferred AI app on software provider for Microsoft Azure and establishes Microsoft as the preferred cloud provider for C3.ai. So quid pro quo. To hear more about this deal, tune in to Closing Bell Overtime for an exclusive interview with C3.ai. So quid pro quo. To hear more about this deal, tune in to Closing Bell Overtime for an exclusive interview with C3.ai's CEO. This is coming up at 4 p.m. Eastern time. Mike. All right, Christina, thank you. Thanks. We are just getting started. Up next, one top technician tells us why he thinks Bitcoin could be building toward 200,000. He'll join me at Post 9 and make his case after this break. We're live

from the New York Stock Exchange. You're watching Closing Bell on CNBC. The S&P and Nasdaq getting a boost today with tech leading the way. My next guest sees even more upside in the market from here, calling for a robust rally into year end. Joining me now at Post 9 with his playbook is John Kolovas of Macro Risk Advisors. John, good to see you. Good to see you, Mike. How are you? So, big picture, I mean, we've had this little burst higher, kind of settled back below those levels of last week. Where do you think we're set up just in terms of the broad index? Yeah, I think shorter term, robust rally, like you said, 6,100 to 6,200 by the end of the year. And then from there, I'm thinking next year,

low end 6,600, high end 7,700. And the reason being trend. Nothing wrong. Higher highs, higher lows. It's very textbook. Every time I've come on, I'm like, the moving averages are in the right direction. It's a sloping positive, no discernible top pattern. So I have to give the trend a benefit of the doubt. Yeah. The market isn't making any obvious missteps in that regard, I guess. Now, it has been a lot of sort of rotation or maybe some, you know, leadership shifts, at least subtly speaking. Where does that kind of play out right now in terms of we've tried to decide if semis are broken and whether, in fact, it's going to be cyclicals over tech? Totally. There's a lot of nuances.

I mean, you got an hour to talk about these parts here. So I would say first and foremost, like why hasn't high beta just ripped? Why hasn't low quality just taken off? This market doesn't necessarily have those animal spirits that they did in 2016. I think a lot of it has to do with, well, the equity market is much more mature than it was then. The economy is a lot different. And we also have a fiscal issue as well, right? So how do we position it? I think we're going to be a little bit more risk averse on this leg of the market higher. I don't necessarily think that into next year, it's going to be like the most robust, I'd say speculative move, but I think we can continue

to grind higher. Leadership should still continue to be within the financial space, but a good point on the semis. I think tomorrow's a big day when it comes to NVIDIA, for sure. In terms of being able to, what, rescue the trend? Rescue the trend. So first, rescue the stock. The stock broke out early this month, again, above that 140 level. It was about a four-month consolidation. That should project it much higher. So now you have earnings, and technical things happen for fundamental reasons. So we have to have earnings to confirm this breakout. Number two is if you take a look at the SMH index itself and you look at it since March,

you have a bit of a head and shoulders top. And I think folks are going to be looking at it and be like, wait, NVIDIA looks one way. Taiwan Semi looks like NVIDIA. But the rest of the semis don't look like them. They actually have been quite weak. So tomorrow will be an important day. I think you've said this before. The market likes shiny things to play with and it needs that. And I think

tomorrow could be a huge catalyst to get us going to next and end of the year. Now, to your point that, you know, the risk appetites maybe have not been fully unleashed and maybe you don't expect it to be a very speculative market. I mean, maybe crypto is hogging all that energy because I mean, that's been an undeniable move and it's like strength upon strength and getting strength. So where do you see that headed? I love Bitcoin, big bull on it. My longer term count is somewhere around the 200,000 area, maybe even 240. Hope I don't jinx it by saying that, but it is, it's quite remarkable. It's trend in itself. And how I get there is a couple of different ways. If this year was just a consolidation of 2023's massive rally from a measured move perspective, that gets you to about 200. The last three years in itself

was a consolidation in itself. So it's like a base upon a base. And that even gets you up to like the 300s area. So trend is undeniably strong within the Bitcoin. I want to side on there. And perhaps that will be where we get the speculative excess but it's also what's fueling a lot of the software stocks as well they're actually been quite strong and taking the relative strength baton from semis because of this particular breakout you think that it's feeding off of the actual crypto move or it's just sort of they seem to be moving in sim i i gotta i gotta be careful yeah yeah it's in sympathy but also a lot of the software names in there, like the Mars of the world, they're in the ARK, right? So let's take a step back.

Let's think about ARK. ARK's been a big base for the last two and a half, three years. Big bases. ARK Innovation Fund. ARK Innovation. Higher into space it goes, right? That kind of makes me very encouraged about next year when I see those types of bases. Tie that into the old Bitcoin.

Yeah, I think you can continue to see. I keep pointing out that the four-year charts are like crazy on so many of these things, right? It's sort of like mountain down to the flats and now it's kind of building. Right. And it's important to put those into perspective, right? We always get short-term-itis, right? But if you take a step back and you're like, wait, this breakout we're having in Bitcoin

is just a little blip on a four-year chart. It could actually project quite a bit higher. Do treasury yields, the dollar, any of that at this point, if they keep moving higher, present a little bit of a challenge? Yeah, I think so. We're almost at that uncle point right now when it comes to interest rates. One, the 20-day rate of change on yields has gotten to a point where equity markets have struggled in the past. So that's number one. And number two, the dollar.

The dollar is bumping up against a multi-year resistance. It's supposed to fail and roll over. If it doesn't, you know how bases work. And when you have a long-term standing resistance, once that gives way, up, up it goes. It's a coiled spring. That, to me, is probably a good spot to do your macro hedges, just in case it doesn't roll over. You break out the dollar, you're likely to get yields to rip higher with it, have a risk-off event, and quite possibly see gold rally on the heels of a stronger dollar. That's a classic risk-off. Yeah. And then I guess just finally, is anything that's moved to an extreme?

I know you want to stick with the trend. Yeah, yeah. But if you look at something that's gone straight down, like parts of health care, I mean, does it get to a point where it's kind of so bad it's good or it's so washed out that you can take a shot? Yeah, I think a lot about that, Mike, right? care. I mean, does it get to a point where it's kind of so bad it's good or it's so washed out that you can take a shot? Yeah, I think a lot about that, Mike, right? So on the one hand, you've got to say to yourself, why are these making new lows, but the rest of the market is making new highs? So something fundamentally has to be wrong with staples and health care. Why are they doing that?

But on the other hand, yeah, like, isn't that a sentiment extreme? Like, I kind of feel like, wow, yeah, we should be long financials. But if things start to roll over, I could totally see the staples area. So I think that may be the setup play for the beginning of next year, just some sort of mean reversion into safety. Because I kind of have the sense that once we get to the 61, 6200 level, we're going to wobble in the beginning part of next year. I could totally see that part of the market kind of stabilize and then roll over. Yeah, it's often a characteristic of January anyway,

is you get a little bit of that reversal. Yeah, you get the rally, and then you get overbought, and you consolidate into February and into March. So I think that could definitely work its way through. I think it's a good point, Mike. You get that oversold part. Well, we'll have you back and see if it plays out that way, John. Thanks very much. Appreciate it.

All right, up next, investors anxiously awaiting NVIDIA results hitting the tape tomorrow. Intelligent Alpha founder Doug Clinton is standing by with what he'll be watching from that report and what it could mean for the rest of mega caps. 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. Tech stocks outperforming today as investors prepare for NVIDIA's critical earnings report tomorrow. Let's bring in NVIDIA shareholder Doug Clinton, founder and CEO of Intelligent Alpha here at Post9. Doug, good to see you. See you, Mike.

So it's interesting. There's always this sort of underlying confidence in the overall story with NVIDIA. We know what supply-demand is. We know they're, you know, the only game for a certain part of this market. On the other hand, there's all these sort of doubts that filter in, whether it's about the pacing of the rollout in the next generation, the overheating stuff, whether, in fact, return on investment is happening. How does that all come together into tomorrow? I think tomorrow is it's almost like deja vu.

I mean, to your point, right, last quarter, the issue was Blackwell. Were we going to get a delay? We did get a delay. It was about a quarter. And if you look at what Nvidia stock did after that, you know, it was kind of well of well rumored but still the stock sold off 10 plus percent it was a pretty decent sell-off yeah and so i think going into this quarter the big topic is going to be this blackwell issue with overheating i don't think this issue is nearly as serious so just to kind of put the two in context the first issue is really about delaying the entire rollout of this product line. The overheating issue is a little bit more limited.

So this is about a specific product, the GB200. It's their top-of-the-line server product. Meta, Microsoft, these are the customers of that product. Even if that gets pushed a month, a quarter, I don't know that that's going to be that big of a deal for this particular report, but it could be something we hear more about into next year. And then you keep hearing that investors really crave some kind of visibility toward even after next year. I mean, in other words, how much life is behind these demand trends? And into that comes this debate about whether, in fact, things have slowed down in terms of improvement of all these AI models. And what does that mean for the investment pace? I think that's going to be topic B tomorrow. And I expect Jensen will get a question about the AI scaling laws. Yes. Right. And so the

scaling laws, just to give the quick 101, is over the last few years, what we've seen in AI model development is the more data that you put into these models, the more compute you use to train the models, the better the models get. Very predictable. And what we've seen in reports more recently from OpenAI, from Google, is that the most recent models that they've trained haven't quite been as good as they expected based on the scaling laws. And it's kind of been a hot topic of debate in Silicon Valley. Even Sam Altman tweeted about it just last week. He said, there is no wall. So maybe it's not an issue. We'll see. But I think Jensen really does need to address that question because that's the 18 to 24 month picture. Do we get to a point where these companies need to spend on something other than just compute? How is that coloring your view on just the broader kind of opportunity

set within tech for companies that have some leverage to this trend? I mean, I'm even thinking about Microsoft. Stock has really been dead money for a while. We did have Sachin Nadella on earlier saying some pretty optimistic things about uptake of Copilot and things like that. But what are the implications, I guess, of this debate about scaling? So at Intelligent Alpha, we use AI to make investment decisions. We're obviously fully bought into this AI trend. What I would say is two things.

Meta, Microsoft, I think they're still both stocks that are in a good position to benefit in the near term from AI. Customers are actually using it, right? Meta's using it to drive engagement, better ads. Microsoft is selling OpenAI to its cloud customers. But I think if you expand out longer term view, two to four years, we still feel very

confident we're going to be in an AI bull market. It doesn't mean there won't be pullbacks here and there, but I think we've got a long way to go because companies are really just starting to adopt AI and we'll start to see those revenues over the next year and after that. And then, of course, you have the policy and regulatory side. You don't really know who exactly all the personnel are going to be or what the priorities are going to be. Does it scramble the picture at all for you in terms of whether tech is going to have more or less leeway? A little bit. And I think anytime you have an administration change, that does beg more questions because we don't really know. But I think the net of it is this change. It can't be much worse than the regime we just had in terms of scrutiny on big tech.

And I think if you kind of read between the lines of what the current administration, or the new administration, rather, has said about big tech, I think they're balanced in the reality between making these markets more competitive, but also that we are in a race with other countries to develop AI. We don't necessarily want to weaken our best companies, which are our best chance to win that race. Yeah, I mean, if most of the priorities are about like, hey, loosen up the content moderation function, I mean, it doesn't seem like that's really existential for anybody. But we do have the alphabet news today about the idea that the government might look to separate out Chrome. How does that impact your thinking about that name, if at all? My guess is if there was a betting market, if we go to CalSheet, right, or PolyMarket,

everybody's betting on things now. I would have to think that the odds are that it's not going to happen versus it would happen. So the smart money is still, it probably won't happen. Even if it does happen, I mean, we've done some math on this in the past. If you look at breaking up some of these components that are stuck in big tech, you might even get a little bit of a value unlock in the near to medium term. And so for Alphabet, splitting out Chrome, I don't know that it's going to be that big of an issue, and I wouldn't expect it to be something to really weigh in the stock in the near term. Yeah. Yeah. And I guess the other ones in the crosshairs are ones that have been for a while, right? I mean, that's your basic take?

I mean, there's nothing new that I think we're going to learn about antitrust and how these companies have acted and how the government views that. Or export restrictions on certain chips that's already in place. That's right. I mean, I go back to what was the baseline and are we going to go higher in terms of scrutiny? I don't think so. At best, it kind of stays where it is. Maybe it goes a little lower.

Okay. Doug, good to talk to you. Thank you. Thanks, Mike. All right. Up next, we're tracking the biggest movers as we head into the close. Christina, standing by with those. The robots are coming. Shares of an AI robotic firm are up 27%. I'll explain why after this short break. About 16 minutes till the closing bell. We'll get back to Christina for a look at some key stocks to watch. Hey, Christina. I'm watching App 11 because shares are hitting a one-year high today

after the app marketing firm said it plans to restructure its debt by eliminating secured credit arrangements as well as establishing a new $1 billion unsecured revolving credit facility. In other words, this transition is going to replace their existing secured debt structure with an all-unsecured capital approach. And that's why shares are up almost 7 percent. And shares of Symbotic are soaring after the AI robotic warehouse company posted a revenue beat in the fourth quarter and offered strong guidance. That has analysts clamoring to publish bullish calls.

KeyBank, Needham, Northland Capital all boosting their price targets. And that's why shares are up 26 percent. Not too shabby. Yeah, quite some some moves in small cap land. All right. Thank you, Christina. Still ahead, Walmart and Lowe's moving in opposite directions after reporting results. We'll break down what's behind those moves. Closing bell. Be right back. Welcome back. A quick programming note. Don't miss a first on CNBC interview with the CEO of Qualcomm. That's live from the company's Investor Day coming up on Overtime at 4 p.m. Eastern time today. Up next, we'll break down what's behind the big bounce in GE Vernova.

That and much more when we take you inside the Market Zone. We are now in the closing bell Market Zone. Two big retail names moving in opposite directions. Courtney Reagan has the details. Plus, Seema Modi on the deal sending GE Vernova shares higher. And Steve Kovac on what's behind Intuit's swing lower on the day. So, Court, a couple of big ones we got today. Yeah, biggies. So, we're starting to get these retailers always at the tail end, right, of the others.

But right before Black Friday and this really big holiday season kickoff, like you said, Walmart lows. They both actually reported better than expected results, but the shares are going in opposite directions. We'll start with Walmart posting stronger earnings, revenue, comparable sales, as well as increasing its guidance going into this all-important holiday quarter. And the retailer even noting positive sales in general merchandise. That's the second straight quarter of gains there, which turns around 11 quarters where that category saw sales fall. But still, Chief Financial Officer John David Rainey told me not much has really changed with consumers. At least in his view, he thinks Americans are still being discerning with purchasing their spending, but only really where it makes sense for them. Now, low is also beating across the board, slightly upping its forecast going into the fourth quarter, but this is after slashing it in August. CEO Marvin Ellison told me

the retailer is still seeing softness in consumers' willingness to take on those big projects, like we heard from Home Depot. But Ellison believes it's still a deferral, not a cancellation of those improvements to come down the line, which is similar to what we heard from Home Depot. He just sort of said, we just don't know when that will come, when that deferral will no longer be a deferral, waiting for mortgage rates to normalize, whatever that means for him and his customers. That actually is a huge question as to whether there's this sense out there that either consumers capitulate and say, I guess this is the level of rates and I'll have to do what I can, or if everyone believes Fed's going to be cutting and it's worth waiting.

Yeah, it seems like at least the executives of these big home improvement retailers seem to think their customers are waiting. They're not giving up and they're waiting. Will they be right? I don't know. How long can you wait, right? Sometimes when you need to update a bathroom, you just got to do it. That's been the hope for a while is that time will force these decisions.

Just real quickly, too, though, hard to ignore the continued weakness in the dollar stores. And you just sort of wonder if that's just a read-through from Walmart. It is so interesting, Mike. I want to say this is back post the great financial crisis where we kind of saw the opposite thing happen where the dollar stores started picking up shares from Walmart when people were using dollar stores more as these fill-in trips.

And Walmart since then has really done a lot of strategy overhaul. So in a way, it's a little hard to tell. Is it retailer-specific or does it have to do with the macroeconomic environment? And then sort of pinching pennies. I mean, I think the sales trajectory that Walmart has seen is very interesting. They also noted higher income consumers really helped drive in the quarter. I'm not sure that that's what the dollar stores are seeing. That's a fair point. Although I was looking, you know, I think 40% of U.S. households are $100,000 or above in household income. So it's a huge chunk of the market when they say $100,000 and up.

That is a very good point. Yeah, exactly. That cohort has had a lot. Got to adjust our mental metrics there a little bit. I know, our reference for household income has probably changed over the years. All right, Court, thank you. Thank you. Seema, GE, Vernova, what is behind this move? Yeah, Mike, the smart grid company that has

seen its stock rise more than 150 percent this year is out with a new acquisition, Woodward's heavy duty gas turbine business. It's a deal that is expected to close in 2025. It does provide aftermarket services for natural gas turbines, and that's where GE, Vernova makes about 40% of its revenue, a strong growth business while wind continues to play catch up. In fact, last month, CEO Scott Trazak telling me that he's partnering with hyperscalers to provide equipment and access to energy sources to fuel their data center ambitions, most recently revealing a new deal with Amazon's AWS. One of the reasons the stock has outperformed this year, it's seen as one of those AI beneficiaries. And we're looking at the stock up another 4% today, Mike.

It is fascinating, Seema, given that the business mix of GE, Vrnova, and then, of course, harnessing this sort of AI-driven trend has almost liberated it from being kind of, I guess, cast as a alternative energy or green energy type play, which the market at this point is not as fond of. You're exactly right. Since that spin-off from GE, GE Vernova has been really smart about positioning itself as one of the players within AI that can help the hyperscalers figure out their energy ambitions and how to actually build out a lot of their energy sources across the country because it has that business already in place, 80,000 employees and a lot of infrastructure there to back it up. Yeah, no, it is fascinating. It's also a fun game to add up the market caps of the components of

old GE and see just exactly how vastly that has outstripped what stood before the spinoffs. So yeah, it's one of those models that a lot of industrials might be looking toward. Thank you, Seema. And, Steve, Intuit, pretty sharp drop on really some familiar headlines in the sense of something that's been considered a threat for a while. Yeah, that's exactly it. And it's not just Intuit, by the way, Mike. It's also H&R Block, both of these names following after The Washington Post today reported President-elect Trump's Department of Government Efficiency,

a.k.a. Doge, is considering a mobile app for people to file their taxes. Now, of course, last week, Trump appointed Elon Musk and former Republican presidential candidate Vivek Ramaswamy to run Doge, which will operate outside the government. And it plans to make all those recommendations for cuts by 2026 for the federal government. Now, the IRS is already experimenting, like you hinted at, with a free online tool to file taxes. That started this year with a relatively small group. Intuit, of course, makes the TurboTax software, and H&R Block has its own software, plus a slew of those human accountants to help people file their taxes.

Still unclear how much authority Doge is ultimately going to have, and that includes what cuts need congressional approval and what can be done by executive order. We see Intuit down about 5 percent and H&R Block down about 8 percent, Mike. It is remarkable, Steve, given all that you lay it out there. First of all, the recommendation is not coming for a year and a half plus. Right. And then we're not really sure what the actual influence those recommendations might have. And then we've already had this kind of effort to perhaps give people an option for filing electronically for free. It's just an interesting thing that the market wants to

read through a lot of these little developments with regard to Doge and say, look out. Yeah, it's not just a new idea, too. And by the way, keep an eye on this. Keep an eye on Elon Musk and Vivek Ramaswamy's X feeds, because they're just kind of out there posting various ideas of what they think this Doge agency can do. Right now at the top of Elon Musk's feed right now is a pinned tweet about cutting Medicaid and Medicare. So that's on the line, too. Yeah, well, and we know what's what's happened to some of those health care contractors that are levered to that revenue flow.

We'll see if the fear is warranted. All right, Steve, thanks very much. I appreciate that. Forty five seconds or so until the close. You have the S&P 500 up a bit more than a third of 1%. It hit its low of the day around 10.30 this morning after that initial stirrings about geopolitical headlines. The Nasdaq Composite up 1%. NVIDIA certainly the strongest piece of that, but it has become more inclusive. Microsoft went from losses to gains over the course of the day. Market breath has

also improved. You have more stocks up than down right now. You have, in fact, about a, you know, two and a half to one on the NASDAQ deposits. That is a strong day. Small caps up three quarters of 1%, and in fact, micro caps outperforming small caps, and ARK Innovation outperforming those. A little bit of a speculative undercurrent there.

That's going to do it. The closing bell.