Closing Bell - Closing Bell: Navigating Fragility & Volatility 1/7/25

Episode Date: January 7, 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, live from Post 9 here at the New York Stock Exchange. This make or break hour begins with NVIDIA and Apple, the former reversing, the latter slumping. As shares were downgraded to sell today, and both are dragging on the NASDAQ in this final stretch. Look at NVIDIA, it's down almost 5.5% now. We'll show you the majors here, and you'll see what I'm talking about with 60 to go in regulation. What started as a record-setting day for NVIDIA following Jensen Wang's speech at CES has turned into the worst day for shares since September. And he is speaking again this hour, and we're watching that, of course. Most of the other big names in that space are also lower,

including Tesla, got smacked with its own sell call today. That doesn't happen very often either. Rising yields, well, they could be part of the problem with the market today. Some stronger economic data sending the 30-year to its highest level in more than a year. The 10-year today is also moving higher. It has been lately almost 470. Now, something to watch closely. We will, of course. It takes us to our talk of the tape.

Today's price action and arguably the two most popular stocks on the street, Nvidia and Apple. We have reports on both. We begin with Christina Partsenevalos, who is following the chip, Nvidia and Apple. We have reports on both. We begin with Christina Parts and Novelos, who is following the chipmaker and that decline. Christina. Yeah, you mentioned it, the stock making a U-turn today, down about five and a half percent on the heels of CEO Jensen Wong's keynote, which is last night. So there's a lot of flash, sparkle during the presentation, new products and tech in the gaming and robotics space. But some analysts argue there wasn't enough substance around data center production and deliveries for Blackwell

and their upcoming Rubin platforms. And data centers are the biggest contributor to revenue, over 85% as of last quarter, so people care. Keep in mind, this drop does come after the stock closed at an all-time high just yesterday, so it could be a reflection of profit-taking post-keynote and not anything necessarily worse than that. Other companies that got a name drop from the chip giant like Micron, Aurora are in the green.

Aurora up, what, 30 percent. But NVIDIA just really hasn't been able to make its own positive move today. Shares, though, could rebound. And I say that could in the next 30 minutes or so. Once the CEO and CFO collect crests sit down for an analyst Q&A, traders are hoping for more details about those Blackwell shipments and data center growth heading into 2026. So it's going to be all about sustainability. Scott? I mean, if nothing else, it shows you, Christina, how high the bar now is,

right? When you have this substantial double-digit growth that we've had over the last little while blowing out of the park with every single earnings report. Of course, expectations are high and now sustainability is a major concern. Yeah. All right. You'll let us know what he says at the bottom of the hour. Thank you, Christina Parts and Novelos. All right. So Steve Kovac now for a look at Apple and a really interesting downgrade today. You do not see a sell call all that often. And they're really looking at that rise that the stock had since we sat together at WWDC and saying kind of punk based on what? Yeah, that's exactly right. And this is coming from Moffitt Nathanson. They're putting their price target at $188. That would be about

22% downside from where Apple's trading about now. And it's blowing up that bullish narrative that Apple intelligence is going to spur a growth cycle for the iPhone business. They're basically saying it's already baked into the price before the Apple intelligence launch. Also saying consumers are lukewarm on Apple's AI features that have launched so far. That includes stuff like the chat GPT integration

and summarizing your notifications. Also saying there's no evidence of an AI upgrade cycle, adding, quote, consumers are unmoved by AI functionality. And then the challenge in China, casting some doubt here that Apple will be able to get Apple intelligence approved by the government, which needs to happen before Apple can launch Apple intelligence in that country. Huge, important feature, obviously, for Chinese consumers over there. And on top of that, pointing out other recent headwinds that includes Google losing its antitrust trial, which puts the billions it pays to Apple every year at risk. That's going to take many years to work its way through the courts, though. Despite all these

drawbacks, Moffitt Nathanson still saying Apple is a strong company, just overvalued and too expensive, especially related or in comparison to the other Mag7 names we talk about so often. Also praising Apple's relatively low CapEx spend on artificial intelligence compared to companies like Microsoft that are spending tens of billions a quarter, Scott. And on top of that, we just saw this huge run on Apple shares in December, just basically on no news. And Moffitt Nathanson here in this note just pointing out, well, there's some disappointing little bits and nuggets that have come out over the last several weeks that people weren't paying enough attention to, hence their downgrade. Yeah, 188, the new price

target from Moffitt Nathanson. Steve, thank you. Thanks. It's Steve Kovach. Let's bring in so far as Liz Young Thomas now talk about this. Interesting price action, certainly in these stocks, but also in tech, which was such a winner a day ago and now such a loser today. Yeah. So if we rewind to the day after the election and look at the tech sector broadly, 81 percent of the names were trading above their 200 day moving average. Today, that's at 41%. So there's been a serious deterioration in the number of names at least trading above that average. But the sector itself is up 0.6% over that same period. So what does that tell you?

It tells you that concentration has returned, right? The average stock and some of the internals actually weaker over that period, but concentration is here, and that makes the rally more fragile. So there are a few things that you can think about. There are also the idea that overbought territory, so 4% of tech is in overbought territory. The only other sector with overbought names is consumer discretionary. So what does that tell you? It tells you that you could actually still get a better entry point into some of these tech stocks. Then the question becomes, do we want to buy them? Right. Is this the beginning of something a little bit more sinister or is this some of somewhat of a buying opportunity?

What do you think it is? Well, more the former, the latter, because there's nothing really to suggest that this is the former. Something more sinister. I mean, I just told you Jensen Wong was on the stage in Vegas. Not like he said anything was wrong. In fact, he underscored why things are great. That's right. So I think right now this is a pause in sentiment, and I think it should be a pause in sentiment. So what's happening, if you just look at yields, we all know that the 10-year yield has risen considerably over the last few weeks, and the yield curve has steepened. The rational response to that is that growth stocks should pull back as yields go up.

That's not what happened yesterday, but that is that growth stocks should pull back as yields go up. That's not what happened yesterday, but that is what's happening today. That's not what happened for certain periods of 2024, but I think in 2025, that will be the norm. You have to rationalize the valuations with where yields are, especially with the 10-year above 4.5%. I just think that the trend is still positive, people think. The narrative is still overwhelmingly positive because of the new administrations coming, tax cuts and everything else that we talked about a thousand times already. So that higher rates aren't necessarily going to be such a binary impact on tech.

While rates go up, tech goes down. It doesn't necessarily work that way. And it certainly doesn't appear to work that way anymore. You are just going to the benefit of the doubt stocks, if you will, in any period of uncertainty. VIX goes up. It's up 8%. It's north of 17. But you just go to the tried and true stocks in any period of uncertainty.

I don't know that that relationship between rates and tech really matters as much anymore. So what I think, where I think it does matter is what we're giving back is some of the multiple expansion that's occurred over the last year or two years in especially those bigger names. And that's the part that is the most fragile, especially in a yield environment like this. So what we've seen is the yield curve has steepened for six straight weeks in a row. Over that same period, the S&P is actually down one and a half percent. So we've given back some of the froth. We've given back some of those really expanded valuations. And the performance of the S&P, although broadly down one and a half percent,

cyclicals have outperformed defensives, which is, again, something that should rationally happen, especially if our expectation for 2025 is that we'll have this pro-growth, pro-cyclical environment. So it's not to say that tech is suddenly going to fall out of bed. It's that there's probably opportunity in a yield environment like this for other sectors to do better. So tech can still be held. Even if in a yield environment like this where yields are elevated? Because I would suggest that that's not going to happen.

If yields continue to rise, how's the broadening of the market going to happen? Well, it depends why they're rising. If they're rising because we're engaging in some really detrimental trade wars that are limiting supply, that are going to limit demand, that are going to limit investment for businesses, then equities probably feel the pain of that. If they're rising because demand is still strong and maybe we've got sticky inflation,

but inflation that's not necessarily out of control, then you've got pro-growth, pro-cyclical. Growth can still stay stable as well. Investors start to look for valuation opportunities in places outside of tech that aren't at all-time highs. What if they're rising on the expectation of a more inflationary policy stream coming out of D.C.? Even if you're going to have better-than-expected growth,

but you're still going to have the potential of more inflationary policies, like inflating the deficit even further. So what I think that does is it keeps a lid on the return potential. We're not going to have another 25% year in that case, but it still allows some of these other sectors to look more attractive on a valuation basis. So for example, what's happening today, yields did spike in response to that ISM services prices paid component. We're almost 5% on the 30-year, by the way. Right, right, which is, that's a big move, and it was a big move in the 10-year too. So yield spiking on that expectation is an inflationary response, right? The expectation for Fed cuts went down quite a bit afterwards. But still, the main pain in the market is in tech,

because that's where the discount rate hurts the most. So as the discount rate stays elevated, it hurts growth stocks. But if this is, again, a pro-growth, pro-cyclical environment, if you're worried about valuations, there are some cyclical sectors out there and industry groups that look pretty attractive at these levels, even with elevated yields. All right. Let's bring in Michael Baffis now of Vios at Rockefeller Global and Ayako Yoshioka of the Wealth Enhancement Group. It's nice to see you both. Michael, it's good to have you on our set today. What do you make of what Liz had to say about this market? Thanks, Scott.

It's great to be here. I think the markets are struggling with two main components that really matter. We're going from a rotation of seven or eight names that drove the markets for, let's say, two years into some of these value names that have really traded at very discounted valuations. At the same time, technology still matters. I mean, if you look at our world today, names that have really traded at you know very discounted valuations at the

same time technology still matters I mean if you look at our world today we're in the middle of something that is historical and we always joke about it we want to come back for one day in 200 years and see how much technology really changed our world so there is a rotation from the growth to the value names that are paying dividends in this environment. At the same time, everybody in every household, in every office, everywhere you go, the main focus is technology. I mean, think about how many Apple devices. Sure, but can you have that rotation in an environment where yields are going to remain more elevated than maybe we thought and the Fed's going to be cutting a lot less than we expected?

Yeah, I think we try to separate equities and yields and fixed income. And I know historically what's happening, it has been that way. But I think this is a super abnormal time in history. The way technology is changing our world, which is it going to be AI? Is it going to be nuclear energy? We're in the middle of some expansion on a technological revolution that really, I think it's outside of any historical focuses that we've had relative to yields, relative to rates. And so if in this world, we separate what rates do versus what equities do and what companies do, I think you can have expansion of these companies, especially in the value companies. Think about it. These names haven't moved for

whatever, three years. At the same time, you still have 12% growth, I think you mentioned on NVIDIA. And so everybody's trying to figure out, the markets are trying to figure out, the environment is in such a unique place and an abnormal place that you can have both happen at the same time, which is unlike historical times. Aya, is the positive story here still intact? I think so, Scott. You know, in terms of the overall market outlook for 2025, I think you're still going to have positive returns in 2025. I think most people believe we're somewhere in that 8% to 10% kind of return year. Nothing like the 20% plus returns we've seen in the last two years. But I think you're still going to get decent returns. I think the other thing, though, is that the path to get there is just going to

be very different than the last two years. It's probably going to be more volatile. We have so many different cross currents, whether it's on the growth side, the inflation side, you know, policy changes. So those are going to probably rattle markets at times, but I think they're going to be overall just buying opportunities in the long term. How are you looking, Liz, at the volatility? Despite all of the optimism about, you know, the new policies of the new administration, it is likely to be more volatile.

Because, I mean, Mr. Trump, the president-elect Trump, he's just more volatile. I mean, right? Social media this, social media that. This is true, that's not true. Things can change in an instant. But the overall story is deemed to be very positive. But with the caveat of probably more volatility. At least for the first quarter and maybe the first half, because we're in this weird waiting

game right now. So there's still headline risk. There's still comments happening. And they're moving markets in the meantime. But we don't have clarity. We don't have certainty about what the policies will actually be. We've seen this movie before. We have seen this movie before. And I think there's actually a good debate going on right now about will this administration look the same as the first time he was in office? And can we rely on those same stocks to do well? Can we rely on a rising dollar in a trade war? Can we rely on cyclical sectors to do well? Should we not be buying energy? Everybody expected energy to do well, and it didn't actually do well. So that's really the debate that's going on and what markets are grappling with in this period where we haven't

gotten to inauguration yet. We don't have cabinet members confirmed. We don't know what these policies are and how much of them will actually get through Congress and be enacted, and whether or not the policies will actually be as strong as what the market has already priced in so there's a real risk out there that what the market is expecting doesn't come true and that can be good or bad depending on which policy we're talking about so the volatility right now I think is the market trying to figure out which direction a lot of this is going to go you think Michael we put too much of the cart before the horse that everybody got as as I said, all

bulled up about what's likely to happen in their minds. And maybe it's going to be a little more choppy. Maybe it's going to be a little more volatile. Maybe 2025 is a two half story. One is good. One's bad. You just have to decide which one is going to be such. I think it's a great point. I think the market's got a little bit ahead of the economy and of the horse in this scenario. And, you know, like we spoke about earlier, is for our clients, the allocation that matters is an allocation to alternatives. That's how you limit the volatility. You need 20 to 30 percent in alternative investments. And that's where, when this volatility happens and when it's really happened in the past, especially in 22 when everything was down, you see alternatives outperform.

And everyone's chasing the hot dot. Everyone's chasing all these investments that really are getting great returns. Like private credit? Private credit, hedge funds, market neutral funds, anything that's non-correlated to the markets. Sports? Sports. Yeah, I mean, look, we do a lot with athletes and entertainers, and what's going on with NIL right now is crazy. And there's many very smart CEOs who are talking about the going forward world of college sports

is you're going to have private owners of college sports teams. You're going to have private equity companies, private billionaires running and owning college sport teams. And now everything is happening so much sooner. These kids are getting recruited and throwing money, eighth, ninth, tenth grade. I mean, I don't care where you come from, what kind of background you have.

Nobody knows what to do with that money at that young of an age. But you're trying to give your clients exposure to that new investing universe. 100%. That's a crucial component to the development and the evolution of investments. I mean, think about how investments have evolved over the last 40 years, 30 years. It used to be one equity, one bond. And now we're talking about a whole expansive world of 20 to 40 percent of people's portfolios are outside of their core business is going to be an alternative investment.

That's right. I mean, I 60 40 forget it at this point. I mean, I've seen you and your colleagues from Wealth Enhancement Group at all conferences. Right. You're thinking about this for your clients as well. So what does the best portfolio do you think breakdown look like for this new year and this new world? Sure. So, you know, instead of a 60-40 portfolio, we've definitely seen a little bit of a move more towards a, you know, 50-30-20 with that 20% being in alternatives. And that 20% can reflect a similar allocation. So, you know, you can have private equity and private credit within your 20% allocation, you know, split up in that 60-40 realm.

So, you know, we are seeing a lot of that get reflected in many of our client portfolios simply because both the return stream could be better and, you know, overall that volatility side of things really gets dampened by that private exposure. Yeah. You have a thought on this? I mean, in terms I know we talk equities almost all the time, but there were times where you really liked credit, you know, parts of credit. Now people say that's more attractive again with yields going up. Now you have competition once again for stocks and maybe you're thinking about alternatives too. Yeah, I mean, as yields rise and if they stay stuck at high levels, you can really get paid in credit. And I think that is an option. Gold continues to be my alternative of choice.

That surprises nobody. Not Bitcoin, but gold definitely does. And gold has really taken it on the chin as the dollar has risen, as it should. But I still think that it's an important allocation in a portfolio, especially if we think that geopolitical risks and currency risks are going to stick around. All right. We'll leave it there. Liz, thank you. Aya, thanks as well. Michael, thanks for being here. Thanks, Sean. That's Michael Bappas. All right. We're just getting started here. Up next, venture capitalist Rashawn Williams. He is back with us breaking down his forecast for the tech sector in this new year.

Just after the break, we're live with the New York Stock Exchange. You're watching Closing Bell on CNBC. Welcome back. We're getting some new details now about AI startup Anthropic and its funding. Kate Rooney here with those. Kate. Hey there, Scott. So I'm told Anthropic is raising a new mega funding round at a $60 billion valuation. This is according to a source familiar with that deal. It's a $2 billion financing being led by Lightspeed.

I'm also told it's ongoing, so those numbers, especially in private markets, could shift throughout. And this is now one of the most valuable AI names, jumping from an $18 billion valuation to a $40 billion price tag last year, now $60 billion. Anthropic was started by OpenAI founders. It's backed by Amazon as well, which has invested roughly $8 billion into this startup. It does compete with OpenAI, as I mentioned, Google, Meta, and others. It's known for its cloud chatbot and then underlying large language models. An anthropic spokesperson declined to comment in the journal first reporting this news earlier. It does mark, Scott, the latest frenzy in AI funding out here

in the Valley. It's a signal of demand, too, for some of the quality AI firms. Think of OpenAI, Databricks, XAI. Those are among the companies that raised mega funding rounds late last year. Scott, back to you. Yeah, big, big money. Kate, thank you. Kate Rooney. Let's bring in top venture capitalist now, Rashawn Williams.

Welcome back. It's nice to see you, and Happy New Year. Hey, Happy New Year. Good to see you. So there was a lot of optimism, obviously, coming into 2025 about a rebirth of IPOs, animal spirits and all of that, which we talked about several times over the course of 24. Do you think that was unfounded optimism? You know, I don't think so. There's so many things that have to go right for the tech IPO space to open back up.

All of these things have to align perfectly. And unfortunately, they didn't. So we still have to hold on to it because so much is riding on it. Although I will say the secondary market, which was a stepchild to primary market liquidity events a few years ago, is really creating liquidity for VCs and founders and employees. And there's so much funding in a private market. Guys just have a war chest of capital to last through this kind of downturn on the tech IPO side. What's the most interesting thing to you right now in your world of the capital that you have and where you're trying to deploy it? What seems to be the most interesting thing to you these days? I'll tell you, I've never

felt more popular as an alternative investment manager than I have in the last 12 months. I was just listening to some of the other folks on your show, and everyone's allocating alternatives as a core part of their portfolios now. And we've been kind of playing that drum for a long time. There are two things that everyone's talking about in my world. You just talked about it with late-stage AI companies. So late-stage tech, specifically AI and cyber, driving activity in my world you just talked about it with late stage ai companies so late stage tech specifically

ai and cyber driving activity in my personal portfolio and in our funds and then sports teams you already know it's a non-correlated or low correlated asset class or reoccurring cash flow trading at revenue multiples just like software companies were five or six years ago and those two asset classes are generating the most interest with investment advisors and with retail investors that I'm seeing in several years. I mean, you're an LP with the Falcons. Let's just get that out there. We've mentioned it many times, but just so people remember your pullover, notwithstanding your quarter zip that I noticed you have the logo on yet yet again. But do you do you see an endless runway for valuations in sports? And do you think at some point there, you know, it gets into bubble like territory?

I mean, how do you view it when now seemingly, as you just referenced yourself, everybody's talking about it? Yeah, this is the same conversation I had eight years ago about late stage tech. Remember when there were only four companies that were valued over a billion dollars and none of them were profitable and everyone kept calling it a bubble. And now we have trillion dollar companies and over a hundred companies that are valued over a billion. And we created a whole term for it called unicorns. We're kind of in that space with sports franchises. What's the key to this whole equation is not the valuations. I know it's going to sound crazy.

It's revenue. So revenue is driving valuations. The multiples are staying the same. All the revenue is coming from national media rights. So the streamers and the media companies are all paying these sports teams because the top 80 to 90 of the television broadcasts are all live sports events and politics, right? So it's driving all of the viewership, which is driving these big mega deals that you just saw with the NBA, which is increasing revenue. And these are 10-year deals. So if I'm an investor and I'm looking at a stream of cash flow

with a tier one creditor that is not correlated to the stock market and it's kind of exciting, I want to have my assets in some type of basketball, baseball or football club if I can. Outside of that, if you want to ride the wave of AI and get access to this next generation of companies that are private, that are going public, you want to look at some of these private AI companies that are hitting the market. But I do not think we're valued. The multiples are stable. It's such a brave new world when you really think about it. You know, now private equity has access to the NFL in a way it never did. Now we're hearing about, as we were just talking about with one of our guests prior,

the opportunity to invest in college teams and programs which never existed before and expecting some sort of return from that. Is that attractive to you? Not me specifically, but it is to certain investors. I prefer bond like risk and private equity like returns. I consider the college frontiers more emerging growth stage or early stage. I like the sophisticated leagues that are dominant monopolies and not the the areas that are on the fringe. Right. But if you are a sophisticated investor and you can look at a stream of cash flow and you can look at the risk associated with the creditors of that stream of cash flow, that revenue, and you can underwrite, I think it's a huge play or a quasi-capital structure arbitrage on the media companies who are paying the media rights. Forget about the colleges.

Who are the colleges receiving money from? What type of contracts do they have over a 10-year period? What are the credit worthiness of those particular counterparties? That's what you underwrite. And that's why everyone's excited about this asset class. You guys find your quarterback of the future in pennix look i love all of our quarterbacks i i don't have an opinion about who we work with as long

as we win i think what author blank and the team has done has been amazing and i'm telling you i didn't understand how big of a deal football was but it is a really big deal. And that's why you see all of these investors flocking because of the viewership. It's just a dominant industry, but it's very exciting league. And we're so proud of all of our players and everything that we did. Hopefully, you know, we're back at it next year doing even better. All right. All right. We'll talk to you soon, Rashawn. Thank you. I appreciate it. As always, Rashawn Williams, sticking with sports now and football for that matter. CNBC Sports is Alex Sherman, he just caught up with the two-time Super Bowl MVP and Hall of Fame ballot quarterback, Eli Manning.

What did you talk about? Well, you just heard Rashawn talk about how everyone wants to become an investor in the NFL. Well, I asked Eli Manning, do you want to become a minority investor in the NFL? Tom Brady already did it. Take a listen here. What do you have to say? I think it'd be, you know, an interesting opportunity to pursue. I think there's probably only one team I'd be interested in pursuing. And it's the one I played for for 16 years and it's local and it makes the for 16 years and it's local and makes the most sense but it's got to figure out if they would ever sell a little bit or how that might

happen for the Giants. So the Mara family has owned the Giants since 1925, its founding. I did reach out to the Giants. They said they declined to comment so I don't know if you know the Mara family is seriously thinking about this or not. Though based on that answer, it certainly sounds like Eli Manning has thought about it a little bit and has already narrowed his focus down to the team he's most associated with. I mean, I know what he says, that that would be the only interest that he would have. But if you look at, say, Tom Brady, for example, the team that he took the stake in, the Raiders, who he had no affiliation with.

And he is only at the beginning of what I think is going to be a long runway where he has more and more say in where the direction of that franchise goes. You know, I asked Eli about that a little bit, too. And he said he's still looking for a passion, sort of a post-football passion. Of course, he's involved with a private equity firm, Brand Velocity. The NFL has limited the amount of private equity firms that can take a 10% stake. His private equity firm is not one of the seven that they've chosen at this point, so any investment would have to be an individual one. And I think he narrowed it on the Giants because that's where his passion is.

So as he thinks about what he wants to do post-football, he's involved in the Manning cast. He has a P.E. play. A minority stake in the Giants would probably round out his own sort of passion project while also being a good investment. All right. Good stuff, Alex. Thanks. That's Alex Sherman. Up next, our technician, Jeff DeGraff. He's flagging a big potential risk to stocks thanks to one key part of the market. We'll tell you exactly what it is next. Welcome back. Treasury yields today putting pressure on the market.

The 10-year hitting its highest level since late April earlier today. Our next guest digging into the charts to see how much more pain the bond market could inflict on stocks. Renaissance Macro Research Chairman Jeff DeGraff joins us now. Is that that's the main culprit here? You think this backup in yields in both the 10, the 30? I mean, almost all along the curve. I do. I think it's I think it's important. And you're seeing it in those areas that are most sensitive to two rates, the two exceptions being banks. But I think that's a deregulation story and utilities, which I think is a little bit of an AI story. But

other than those two one-offs, you know, our sensitivity work that looks at, you know, what gets most impacted by rates and one deviation moves in rates is pretty consistent. I mean, it's obvious the kinds of sectors I suppose that you would look at, utilities, REITs, and things that are proxies for yields. But how deep does this end up going, do you think, if rates remain either this elevated or back up even further? Well, I mean, that's the billion-dollar question right now. That's why I'm asking you. You got the billion-dollar answers. Of course. So we have to get through 475, right. And that's why I'm asking you. You got the billion dollar answers. Of course.

So we have to get through. We have to get through 475. Right. So that's a pretty important number. And I know we're right there. So that's an important number for nominal yields. I think one of the things to watch right here, and this is good news, actually, is we're not seeing these higher nominal yields push their way into into credit spreads. Right.

So if we look at BB versus BBB spreads, they're still very close to the cycle lows. If we look at just corporate spreads versus the Treasury, those are also very close to the cycle lows. So what that says, sooner or later, that's going to, higher nominal yields will start to hit aggregate demand. And that then starts to slow things down and you start to see those spreads widen. That's not happening yet. But I do think that, you know, the elevated risks of a policy mistake are certainly in play, probably the highest that we've seen, if not for the cycle, at least for the last six or so months since the Fed first cut rates back in September. So, you know, I think we're right

there. And I think the market is telling us that, you know, it's teetering on this differential, if you will, in terms of valuation and earnings yield and what you're able to get from the Treasury with obviously substantially less risk. Tech's getting just destroyed today. NASDAQ's down 440, as I i asked you that question saw two and a quarter percent many of the biggest names obviously we led the show with nvidia hitting this record high crossing apple for the largest market cap company in the world now i look at the lows of the day down more than six percent where's this trade going from here according to the charts well i'll tell you nvidia is really the standout for semis

right when we look at semis and we've been we've been more cautious on semis for at least a quarter now Nvidia kind of being the exception to that rule that's still an uptrend I think there's a ton of support down around 125 so that's good news but when we look at semiconductors, you know, holistically from, you know, everything from Qualcomm to Intel to NVIDIA, the group's not that strong. And so I think there is a cyclical component to it. They're as overvalued as they were in our work back in 2000. You know, then NVIDIA barely existed. It was more the Qualcomms and the Intels of the world. So just as a reminder to viewers that, you know, technology is cyclical. There are new winners and new losers in every cycle. But I do think that

of what we're seeing in technology, I do think semiconductors are one of the more vulnerable spaces. We're focusing our efforts and suggesting to our clients to remain in software and to look at adding to exposure there. They look better. Do you think the market in any way is on to, if you will, what's about to happen over the next handful of months and the volatility that could happen as a result of the new administration coming in, new policies that he wants to get done quickly, tariffs that could happen sooner than people maybe are willing to believe,

or the size of which, the scope of which, the strength of which could be a little more unsettling, what the talk of tax cuts could mean for rates going up even further. I mean, do you think the market's on to that? As positive as the outlook still feels like it is, I'm not saying the trend is all of a sudden going to reverse itself, but the market seems to be on to something. Look, I make my living by believing that, right? So I believe that the market is a discounting mechanism that, you know, it might not be obvious to us today what the market is pricing in for next month or even next year, but but the market is omnipotent in

its wisdom. And so I do think that there's something there. Now, the good news is we look at what we call the Policy Uncertainty Index, or we don't call it, we use it, out of Stanford. It's called the Baker, Bloom, and Davis Policy Uncertainty Index. What's refreshing, Scott, is when you look at policy uncertainty, when this is spiking, right? So uncertainty is high. When we look at that out three, six months, it's actually very bullish for the markets. In other words, by the time uncertainty hits us today and we can kind of quantitatively analyze it, it's too late to do anything about it. And you actually want to be an investor in those high

uncertain times because usually it ends up ameliorating itself over time. So I look at policy uncertainty and that unknown actually as being a little bit more bullish. Now, we are, and we did start the year off from an oversold condition. So that's good. It's a minor oversold condition. It's not a deep oversold condition. So I like that. I actually think probably the biggest impediment to equities for 2025 is just this wall of worry that's been extinguished over the last year. We started 2024 with a lot of skeptics, a lot of skepticism in the market. We were pretty bullish for 2024. We're starting 25, not in that same mental state. And I think that expectation game is probably going to keep us into more of a consolidation slash correction in the first

quarter. But I do think that ends up resolving itself for the remainder of the year. Yeah. I mean, I just don't know that, you know, last September, many people had much, much higher yields on their bingo card at that particular time and what we have in front of us now. Jeff, we'll talk to you soon. I appreciate you, Jeff graff joining us once again up next nvidia ceo jensen wong speaking at ces got the highlights after the break we're back on the bell right after this We're less than 15 from the closing bell. NVIDIA CEO Jensen Huang speaking as we speak at CES. Let's send it to Christina Partsanovalos now for more of what he is saying today.

Yeah, your guy Stacey Raskin was the first person to ask a question asking specifically about shipments for Blackwell as well as Hopper. That would be the previous iteration of GPUs. Stacey wanted to know if near-term guidance was going to change. Jensen Wong said, quote, we are not changing our guidance. I thought we did a pretty good job describing it. The CFO, Colette Cress, that you can see on the left-hand side of the screen, she also said that both Blackwell and Hopper are shipping this actual quarter, which fiscally ends at

the end of January. The total of both categories is growing. And she said, quote, they're shipping several billions of dollars, but she wouldn't provide an actual number. And she also said, but we'll probably do a little bit more. So that question was in regards to guidance

and how much they're actually going to ship in this current quarter, because they said they were shipping more than they previously anticipated on the last earnings call in November. And then he did get asked a question about why were they using MediaTek to work with MediaTek. This is a Taiwanese company.

Jensen Wang said they have no trouble partnering with other companies and other people. And so the conversation has now shifted over to the PC opportunity. But I'm on air, so I can't listen. Well, go listen. We'll let you off air. Christina, thanks. Thank you. Christina Fartz, all right. Thank you.

Still had Bitcoin falling. We'll tell you what's behind the big dip and how the rest of the crypto world is faring right now, right after this. Okay, coming up next, Tesla shares are slipping in today's session. You see the decline there by near 5%. We'll tell you what's behind the drop inside the market zone next. We're in the closing bell market zone now. CNBC Senior Mark commentator. Mike

Santoli here to break down the crucial moments of the trading day. Tesla under pressure as well today after a downgrade at B of A. Phil LeBeau with those details in a moment. Tanaya McKeel digging into the big moves in crypto as well but

Michael. We'll start with you on a pretty ugly day. Yeah I mean this market has been really unable to settle down to lock into gear take advantage of seasonal tailwinds new new January money. We know why. The source of the pressure you're talking about coming from yields and also just apprehension as to what the yields are telling us and whether it's really going to force a test of whether the real economy can handle rates at this level. I think that's the kind of sort of self-reinforcing anxiety here.

Very weak breath over the course of the day again. In other words, started strong and then it weakened out. That being said, you still can't get away from the idea that there's this new year churn, buying laggards, selling last year's leaders. The best three stocks in the S&P last year were Palantir, Vistra and Nvidia, all down big today. The three worst stocks last year's leaders. The best three stocks in the S&P last year were Palantir, Vistra, and NVIDIA, all down big today. The three worst stocks last year, Walgreens, Intel, Moderna, all up today. So energy's up. So you do have this weird mean reversion instinct alongside a real lack of confidence and conviction that's colliding with everybody being positioned behind a bullish consensus for the full year. So, Phil LeBeau, tell me about Tesla today, which got downgraded at Bank of America to neutral. I misspoke earlier. I said it was sell. It was most decidedly not. It was neutral from buy.

It's neutral. And we'll go over this note in just a little bit, Scott, because it was not like the B of A was coming out and saying, hey, get rid of this stock. It was hardly that at all. Really, three headwinds against Tesla today. The B of A downgrade, the National Highway Traffic Safety Administration launching a new investigation into Teslas, and then you had a battery supplier, a supplier for Tesla in China

that is in focus for potential ties with the Chinese military. But let's talk about the downgrade by B of A. They cut it to neutral, but they are raising the price target to 490 from 400. And they are essentially saying, look, a lot of this is already built into the valuation because of the anticipation of the robo taxi. That said, there are a number of things that are uncertain in the future, everything from the development of the robo-taxi to autonomous vehicle technology to what happens with Tesla as it faces more competition. Put all that together, and that's what you have in the B of A note.

As for the NHTSA probe, it is looking at the Smart Summon technology. You know, that's where you can say, hey, my car needs to go park itself or needs to come back and pick me up. NHTSA says there have been 12 incidents that they are looking into. We have historically seen, Scott, over the last year, year and a half, if NHTSA launches a probe into Tesla, it gets attention. But it certainly does not have a long term weight on the stock. OK, Phil, thank you. Phil LeBeau, Taneya McKeel telling us about crypto now and crypto stocks. What do you see?

Yeah, Bitcoin sliding below 97,000 today, Scott. So about 10 percent off of its recent record. Investors of this asset class are sort of anticipating this. It's got such a strong setup for 2025 with the promise and the hope for clearer crypto regulation. And history shows bull market pullbacks of 30% are normal for Bitcoin. So the speed bumps, you're going to see those come from the macro. And, you know, like today, specifically concerns about stickier inflation. The Bitcoin loss, you know, today is more mild compared to the broader crypto market that is down about 7% as measured by the CoinDesk 20 index.

Smaller, riskier coins in the meme coin and decentralized finance sectors leading this market lower. And you can see that reflected in Coinbase shares, which are down 8 percent now. And that said, two stocks that are more closely tied to Bitcoin versus the broader crypto market are standouts today. MicroStrategy and the mining company BitDeer, both down double digits all day. All right, Taneya, thank you. That's Taneya McKeel. I mean, we're going to be a prisoner, Mike, to yields until we're not. I mean, as you said, you've got to decide why they're going up. And if you can get past this uncertainty now to say, well, they are

going up for the right reasons, then maybe the market psychology turns. But who knows? And, you know, you're at these levels where I keep saying it looks like on on the charts this move should be kind of exhausting itself. You should be attracting some buyers with real yields up here. And we do have Fed minutes, more Fed speaks, jobs number. Maybe that's going to clarify the situation enough to where you do actually get a little bit of relief on that front. We just have to wait a day or two and see. We'll go right across the board to the finish here. NASDAQ leading with a giant of near 2%. We'll follow it all. I'll see you tomorrow in the OT with Morgan and John.