Closing Bell - Closing Bell: Navigating the Volatility 2/12/25

Episode Date: February 12, 2025

What is the best strategy to navigate a more volatile market? Trivariate’s Adam Parker, Requisite Capital’s Bryn Talkington and Wells Fargo’s Chris Harvey reveal how they’re trading this space. Plus, Light Street Capital’s Glen Kacher tells us how he is playing the Magnificent 7 and the AI arms race. And, Former Dallas Fed President Richard Fisher reacts to today’s hotter than expected CPI. 

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 this resilient market, which is mostly looking past today's hotter than expected inflation report. Even as some suggest, the risks for the Fed and for this rally are only increasing. We will discuss with our experts in just a bit, including the former Dallas Fed President Richard Fisher. In the meantime, take a look at the scorecard here with 60 to go in regulation. We're mostly rebounding from that early morning CPI sell-off. In fact, the Nasdaq's now positive, and the others are well off the lows, too. It's tech that is helping, as you see.

Meta, wow, on track for its 18th straight day of gains, the longest run ever for any megacat, for any member, for that matter, of the Nasdaq 100. Thank you, Apple, as well. It is higher. And coming up, we will talk to Morgan Stanley's Eric Woodring on just why he defended that stock this week yet again. We're watching the automakers, too, on where they might be exempt from reciprocal tariffs. There's the reaction in the market. GM up two and a half. Tesla's been a tough stock of late, but it's getting a nice boost as well. It does take us to our talk of the tape, how best to navigate what could be a more volatile market ahead. And let's ask our panel. Adam Parker, he is the founder and CEO of Trivariate Research and a CNBC contributor.

Bryn Talkington of Requisite Capital, also a contributor for CNBC. And Chris Harvey, the head of equity strategy at Wells Fargo Securities. No contributor for you, but you know what? There's always a chance someday down the road. One day. It's good to have you nonetheless. I'll give it to you first, Harvey. This market pretty resilient, don't you think? It is, right? And it's going to stay resilient until we see something, some sort of crack up or some sort of liquidity event in the credit markets. Credit markets are supplying a ton. It's something that people don't look at, but underlying everything, a ton of liquidity something that people don't look at but underlying

everything a ton of liquidity that's keeping volatility low the system's working really well and any sort of volatility spike i think will be short-lived in the first half of the year so we're underestimating or not um risks that could be out there do you think we are i mean larry summers the former treasury secretary posted on social media we now, I'm quoting from his thing, we're now in the riskiest period for inflation policy since the early Biden administration. That's following today's CPI. Ken Griffin yesterday at a conference down in Florida talks about the rhetoric from the White House about tariffs, which he calls, these are his words, bombastic.

He says the damage has already been done. It's a huge mistake to resort to that form of rhetoric as it pertains to trading partners. What do we think? Does any of that matter or is it just noise? I think it matters. You know, our call for the first half of this year was the market would be lower, you know, choppy and lower. It's the first time we've had sort of a negative view in a long time. And two of the reasons you just highlighted there, one is I think we're closer to the end of dreaming that the accommodation is bullish for equities.

Just like at the end of 22, people said, you know what, we've been hiking a lot. We're close to the hiking cycle. We can get bullish again. It feels like we're getting close to the other side of that, or it's harder to dream that the Fed's going to be a huge tailwind on the front end. And the second thing is it's hard to know what policy to listen to and whatnot and what it does to the earnings of companies. If you're the CEO of a big company and you have employees and customers in certain other parts of the world, I think you're a little bit worried about how to price your product and the like. So I think we're in a bit of a volatile spot. I do. But it was right to be bearish when we were at the beginning of a hiking cycle. Right. Why is it right to be bearish if we're at the end of the cutting cycle? That means that

we're good, that we're getting back to normal, that earnings are good and the economy is good enough. What's wrong with that? Harvey Shakey agrees with me. Look at him. Sounds good to me. As usual, you find somebody to beat up on me. No, I mean, and Britton, you'll follow and you'll talk some sense into these guys. So, you know, to me, I think, look, you don't fight the Fed at the beginning of the cycle because you don't know when the accommodation is going to end. At some point where you're closer to the end of cutting, you can't dream, you can't say, oh, I also have this Fed tailwind. So I think the challenge would be if you get a couple of hot CPIs, they're going to cut less than you thought. It's not as bullish

for the multiple as it was before. I think historically there's been a pretty strong relationship between the change in perception about rates and the change in multiples for growth stocks. So I don't think it's like a disaster, but what you're saying is they stopped because growth's going to be awesome. Or not, you're saying, but that's implied. So I think that's what we need to believe, and a lot of our stock selection stuff is around where is revenue accelerating,

because I need to believe I'm going to get accelerating revenue. I hear you. I mean, I guess part of my point, Brent, is like, all right, enough of the multiple expansion. Great, we got it. We know why we got it. Now we actually can stand on the back of earnings. And that's all that matters. That's why the market's been resilient.

That's why it hasn't fallen fully out of bed over tariff talk and a CPI today that was hotter and rates are up a bit. So we're looking for, let's separate the seven companies from the 493. And if this comes to fruition, the 493 are expected to grow earnings at 9% for 2025 versus, I think it was around 1% to 3% last year. While the MAC 7 is decelerating from the mid-30s to the 16. And if you actually even peel that back, it's mostly Meta and NVIDIA of the seven that are growing earnings. And so I think that we're set up this year for broader participation because to earnings growth, you're getting a much bigger effect from 24 to 25 from the rest of the market while MAC-7 is decelerating. But also if you look at history and look at rolling three-year returns,

so unlike the Kansas City Chiefs, who couldn't do a three-peat, the market actually on a rolling three-year return goes up about 80% of the time. But it's very, very, very rare. It happened in the 60s and the 90s when that third year had a 20 handle on it. And so I think that you definitely have a tougher sledding this year because of all of these dynamics And so I think that you definitely have a tougher sledding this year because of all of these dynamics. And I think that look for earnings, look for broadening out. But I do think it's a really positive sign that we saw the market completely shrug off the CPI number, especially in some of the higher beta names like that I follow and own, like the Palantir, the Hoods. Look at Uber today with an 80 handle, an eight handle. So I think this is a really positive sign, I'll say, for animal spirits

that we could shrug off today's CPI, which I thought was somewhat jarring. Maybe, Harvey, it's time to be bullish because the Fed's finally out of the way. I think it is. Since like 2009. I think it is time to be bullish. We just got through earnings season. Earnings season was very good. If we're not worried about multiple expansion, but we're worried about growth, we got it. And we'll continue to get it.

And what did we get today? We got the belief or the possibility that maybe we have resolution in the Ukraine. We have resolution in the Ukraine. What happens? Oil likely goes lower. Inflation goes lower. Rates go lower. That's pretty good. Sitting on top of strong fundamentals, tight credit spreads, M&A that's picking up, deregulation, and a Fed debt might be cutting by the end of the year if inflation comes down.

So the big call you had, I think it was last week, was sell some MAG-7, what some have termed now to be the lag seven because they haven't done well. Right. To start the year. Tech's been the worst performer. And you look at the breakdown of performers out of the sectors. Now, you know, comm services is number one. Thank you. Meta. Right. In large part. Health care, financials, staples, energy, materials, industrials, utilities, all doing pretty well. Yeah. Does that Is it a pairs kind of thing? Do you lean into the other areas as you sell some Mag7? We've been on here three years saying you've got to be at least market weight Mag7. Sometimes you said even overweight.

Yeah. You're way overweight even if you're market weight because of the beta. Exactly. And this is our first sort of underweight view, which we published Sunday. And I look at earnings season, and you said, all right, put all the earnings season into your computer. What came out of it? One of the main highlights to me was just the CapEx numbers from the big tech companies. And two things can't be true. Like, you can't take a business that had 6%, 7%, 8% CapEx of sales and tell me it's now 14.5% and nothing changed. Their gross margins are going lower. The usefulness of that CapEx is three, four years.

So either, like, I guess what I'd ask you is which funds are out there raising money for a margin contracting, decelerating revenue stock? Like none, right? So you need to believe that there's just a short window they do that and they're back to having lower CapEx forever, or their margins are going lower. And the market's telling you, I'm cool with Meta's CapEx, I'm not cool with Google. Like, the market's already worried about it. So you've got super high CapEx, you've got really high beta, which you saw in the deep-seek day, and it doesn't feel like you have the certainty of revenue growth and stability.

I mean, this deep-seek thing 16 days ago made everything go down a ton. Most of the names, not Meta, but most. So I think when you look underneath, it's just riskier than it has been for the MagSav. And I'm not saying you own none, but if you own 30%, maybe you own 22, and you find some healthcare and some industrials and some other names, I think that's probably consistent with what the other folks are saying. What do you think, Harvey? We love the communication space. Again, you have meta in there. We don't like the hardware space. You're paying a premium price for not a premium product at this point in time, non-premium fundamentals. The market should broaden out. It is broadening out.

You're talking about like Apple? Premium price for non-premium fundamentals? Yeah, that's one of the names in there, right? And so, but I will say one of the things that's… I would ring about that. One thing I will say about this cycle versus 99 is the commercialization of the technology is so much faster. The curve is exponential. I was out last week in California and all we're talking about is how are you using AI in your process? We're using it for RFPs. We're trying to use it

in back office. We're doing it for trade settlement. We're doing it for quarterly letters. The productivity and productivity enhancements we're about to see over the next 12 and 24 months are phenomenal. And that's not even priced in. Right. And so everyone talks to us about, oh, inflation is going higher. Inflation is going higher. No, inflation is pretty much flatlined and may be coming down. Inflation expectations at two and a half percent. That's fine. And again, if we're going to have at some point in the next 12 or 18 months resolution in Ukraine, you should expect oil to come down and that should push inflation down as well. And that's a pretty good backdrop to equities.

Bryn, what about this call that Adam has made to lighten up, to sell some Mag7? That maybe now is finally the time to actually do that for all the reasons that he said. I mean, it's important to you. You own Apple, you own Microsoft, you own Nvidia, you own Tesla, you own the Q's. So you have a lot of exposure. Yeah, I think there's going to, I agree with Adam. I sold half my Apple at the end of last year. I think there's going to be a ton of dispersion within these names. I do think the market looks forward and say, is your growth decelerating? Even though their growth is growing, it's decelerating. And that's what the market looks at. And so I think you're going to continue to see this disparity between the names.

I think with a Meta and a Google, with both their CapEx spends, what they didn't break out, and so this is why we don't know the answer, how much are they spending for CapEx within their certain businesses? So for Meta to enhance their advertising through AI and Google the same versus how much are they spending for CapEx within their certain businesses? So for Meta to enhance their advertising through AI and Google the same versus how much are they spending on speculative, potentially questionable return on capital? We don't know that yet. And so I think that the market will penalize a Microsoft and someone in Apple, and they have rewarded a Meta. I think in regards to Tesla, I mean, I've been a huge fan. I own the name,

obviously, of selling calls because there's just such massive premium on the name because of the volatility. And so when the stock was at 420, I sold April 460 calls and got 40 bucks. I've already closed those out because the stock has pulled off, sold down. So I think there's different ways to buy the stocks instead of just directly buy and i'm taking advantage of the call premium that you get in names especially like a tesla yeah i just want to be clear like if if you're long when we try to beat the s&p 30 is in the seven names on a on a beta adjusted basis it's 44 so i'm just saying oh more like 21 22 so that that gives you the beta at 30 so 21 22 in seven, you're still going to own positions in them because they're way too much risk to own non. I'm just saying you don't have

to be to the gills like you had to be the last couple of years. And I think it's because of the CapEx that in the earnings season, I started to change my mind. Chris, last to you. Are you the one with the target of like 7,005 or 7,007. 7,007. 7,007. All right, so... The James Bond market? That's right. Assess how you feel about that as we, you know, here we are, what are we, almost six weeks into the year?

Yeah, we're feeling pretty good. Market's up. A lot of things that we expected to happen are happening. Today, again, everyone's focused, oh, it's a hot CPI print. And then we kind of laugh we don't quite laugh it off but we trade it off now there was some news geopolitical news that that kind of rallied the market but overall we're sitting in a situation where you have less regulation m a is going to kick up the ipo market is going to kick up more animal spirits

the underlying fundamentals are still good. The momentum trade is still there driving things along. And I think there's still too many dollars chasing too few assets. I mean, if you just said 7,000, people just sort of yawn. I like it. They don't even pay attention. I hope they give you an Aston Martin over there at Wells if you're right to think it up. All right, guys.

Thank you, Chris, Adam, and Bryn. We'll talk to all of you soon. All right, let's talk you, Chris, Adam, and Bryn. We'll talk to all of you soon. All right. Let's talk tech now with Glenn Kacher. He is the founder and chief investment officer of Light Street Capital. Get his insights on part of the conversation that we just had. Welcome back. It's nice to see you.

Great to see you as well. Is now the time to take some chips off the table in the mag, what some are calling lag seven now? Well, I think Adam's got a great point there that definitely we're seeing increased capex spend. And the move that we made as far back as a couple of years ago was to shift a lot of our funds into what I call the AI5. So those are the companies, the big semiconductor companies that are really taking advantage of this CapEx spend from the Mag7. So that includes NVIDIA, TSMC, AMD, Marvell, and Broadcom. And those are lagging as well this year.

They're about in line with the Mag7, but last year they outperformed by quite a bit. I wonder then, I mean, if you're leaning into what has been part of the eye of the storm from DeepSeek, right? We had the huge sell-off in a lot of the chips, NVIDIA included. I mean, how much clarity do you have in your own mind as to how that trade is going to do and the threat that this all could be? Well, look, you start, you go back to the basics. There's nothing in the technology pipeline right now that can match the innovation of generative AI. Generative AI creates a customized answer for the user based on real underlying data. And this is a brand new method of computing. It's created a

massive investment cycle, over $200 billion a year of CapEx and growing in order to deliver on what is just an incredible technology, unlike anything else we've seen in my lifetime, certainly. And, you know, this is, you know, if you look back to the deep seek scare, look, a month or two earlier, we were worried that things weren't scaling. And then we saw a big scaling event. And now everyone's scared that we're scaling too much. We expect more software scaling. And after the deep seek fear, we saw Meta and Microsoft come out and say, look, this is how much we're going to spend. We're not slowing down. I mean, the Meta run has been unbelievable.

The Microsoft, not so much. Enough that you got out of it completely, right? You swapped it for another name. Yeah, we got out of Microsoft last year, still on the meta. I think it's, as Bryn was saying, it's very clear how they are benefiting from their CapEx spend with the matching of content to users and then matching of ads to both content and users. So that's been very clear and you know for us we continue to you know really want to have that exposure to semiconductors. If you

look at what's happened to the multiples over you know since the summer the semiconductor SOX index is basically flat and over that time the S&P 500 is up 15%. Meanwhile semiconductor fundamentals are continuing to improve. So the multiples now are much better for semis. The multiple for the SOX is down about 20% since July to 24.5% and the multiple on the S&P is up 9% since July to 22%. So we've really closed the gap there. The relative multiples have compressed by 30 percent in six months. So in our view, semiconductor investors are irrationally bearish at this point. And we're seeing, for instance, short exposure of hedge funds, very high, up to a five-year high in the semiconductors.

I mean, you've scaled your position up in Taiwan Semi, right, to be your largest position of anything. Is that right? It's been one of our largest, yes, for a lot of the year. So, yeah, we do trade around. And we look at that company and say, you know, if you look at the SMH, which is a great way to play what I think are the best semiconductor companies in the industry. You've got NVIDIA and TSMC as the two largest components of that ETF.

You see NVIDIA has dropped from 40 to 30 times earnings. This is 25% below its five-year average. You look at TSMC, they grew earnings 36% last year. And you're buying it for 23 times next year's earnings, which is an expected growth of 30 percent. I think they'll do better than that. They're the number one maker of advanced logic semiconductors in the world. And you can buy it for 23 times earnings. Sign me up for that. What have you been doing with your Apple position?

I mean, do you still have it, number one? Have you pared it down at all? If not, why? We own Apple. I mean, I think it's an expensive multiple for what it is, for the growth that it has today. But longer term, they are a key distributor of this technology, AI, to its massive user base. And we've seen how that worked out for them with search and how much of a tax they were able to extract from the leader, Google, in that category. And I expect a similar kind of arrangement to happen in AI in the future. Lastly, I'm just curious from your vantage point out there, 3,000 miles or whatever it is from D.C., the Silicon Valley's move into a more prominent position, I think it's fair

to say, within the circles of the White House, and also the Musk versus Altman battle and how you personally are viewing how all that is going on, whether you're an investor in either XAI or OpenAI? We're not an investor in either one of those. I'd say we are more focused, as we've been talking about, on the semiconductor business. It troubles me a little bit when I hear quotes about Taiwan has stolen the U.S. chip business. It would be great if we had a former CEO of a semiconductor manufacturing company in the White House or in the Commerce Department. We need someone in D.C. that knows the difference between a Blackwell chip and a potato chip. And, you know, TSMC has been an incredible company, and they could be an incredible partner for, for instance, Intel. If Intel chose to outsource their manufacturing and essentially give up on trying to compete there,

they could go back to making sure they don't miss the next two big turns like they did in the last 20 years in semiconductors, the move to mobile and now the move to GPUs instead of CPUs. So I'd really like to see, you know, Washington, D.C. focus a little bit more on the nitty-gritty of technology and the enablers of AI. As far as, you know, this doesn't it's not that different from what happened with Bill Gates and Steve Jobs back in the day. There's always going to be a big rivalry between the the leaders and kind of expect to see that. Yeah. How about lastly, I actually thought of another one as you were talking, just because we're talking about the convergence of the Valley in D.C. What the vice president had to say in France about AI regulation and warning against excessive regulation, almost a let's wait and see what actually happens approach.

You agree or disagree with that take? A hundred percent agree. You know, I think laissez-faire is the way to go. Trying to control a new technology when it's developing is, you know, fraught with risk. And I think it opens the door for other countries that have less regulation to close the gap with us or even take the lead. We don't want to see that happen. So I think the more we can get government out of the way and allow the technology to develop and allow our leaders and innovators in Silicon Valley to apply that technology to new problems, the better we're going to do as a country and the better, you know, we're going to do as a as an economy. All right. We'll leave it there.

We covered a lot. I appreciate you and your time, Glenn. Thank you very much. We'll see you soon. Sure thing. All right. Glenn Kacher to Christina Parts and Nevelos now for a look at the biggest names moving into this close. Hi there. Hi. Well, let's start with CBS on pace for its best day in over 25 years. The year that Fight Club movie came out, as well as American Pie. CBS sees meaningful recovery in its Aetna business, which provides health insurance plans. The new CBS CEO, David Joyner, also defending pharmacy benefit managers at the start of the earnings call. And this came as President Trump recently called for further scrutiny into those PBMs, like the firm's Caremark unit. You can see shares up almost 16 percent right now. And promising growth in Biogen's breakthrough Alzheimer drug treatment.

Not enough to lift the stock, though. The pharma giant warning of revenue declines as sales of its multiple sclerosis products continue to struggle in a competitive market. Biogen down almost 5%, Scott. All right, Christina, thank you. Back to you in a little bit. Christina Partinellos. We're just getting started here on Closing Bell. Coming up next, former Dallas Fed President Richard Fisher.

He is back. We get his first take on today's hotter than expected CPI. We're just getting started here on Closing Bell. Coming up next, former Dallas Fed President Richard Fisher. He is back. We get his first take on today's hotter than expected CPI and what it really means for Fed policy from here. We are live at the New York Stock Exchange. You're watching Closing Bell on CNBC. We're back. Today's hotter than expected CPI, potentially complicating the Fed's road ahead. For more on what it all means, let's welcome in Richard Fisher.

He's the former Dallas Fed president and a CNBC contributor. Welcome back. It's nice to see you, as always. Thank you, Scott. When you saw the print today, what was your first reaction in terms of how you think it will be absorbed within the Fed? Well, I'm not surprised. We expected a little bit of pressure to begin to show its face. And I think if I watched, as I did, Powell, his Senate testimony, his House testimony today, they should be sitting still for some time. And you notice the markets have now started to discount a little bit further out as to when they might make a single cut this year. We'll see.

But I think they're in a good position. Scott, you and I have talked about this so many times. It is interesting how rates backed up, including the 10-year and the 30-year, the 10-year over 460 now. But I do believe that's also, this number sort of shakes the confidence that inflation is going to be brought down quickly by this administration. And we watched the 10-year bond auction today. It was a little bit off, not too much, but it wasn't the healthiest one I've seen. So in terms of rates that affect businesses and how they finance themselves and capital structure, the 10-year, the 30-year, other longer issues beyond the belly of the curve,

the Fed has no influence there. And I think Powell's been very clear about that. And I agree with him. So I'm wondering I'm wondering whether you agree with what Larry Summers had to say in a social media post in which he said, and I quoted this before and I'll do it again for you. We're now in the riskiest period for inflation policy since the early Biden administration. Even without tariffs, immigration restrictions, deficit bloat and attacks on the Fed, there would be serious grounds for inflation worry. I mean, is that hyperbole or is there truth to that? How do you see it? Well, Larry is whip smart. And by the way, a very close personal friend. So there may be a little hyperbole there, but I think he's serving notice. This is a risk that we face.

And we have to be very careful here. The tariff announcements, for whatever reason, are being put forward. You and I have talked about this too, Scott. If you're a business operator, woman or man running a business, particularly small businesses, you're going to have to protect your margins. And you're going to have to swallow that tax and pass it on to your consumers or whatever you produce, a service or a good, in a way that allows that to protect your margins. So the steel issue is very tough, by the way. It's also very, it's very tough on Canada in particular. We have had this before. We did it when I served in the Clinton administration. We did it on pipe and wire. And I can tell you that the result of that cost the taxpayer more

or the economy more than the jobs that we saved. So we know from this example, we'll have to see what else there's a lot of uncertainty, Scott, right now in the market. And uncertainty is the enemy of decision making. So you back off. and i think that's what's happening with rates right now so you agree with with ken griffin then who made these comments yesterday that are similar to yours where he said the uncertainty and chaos created by the tariff dynamics between us and our allies is an impediment to growth he said other things, about the difficulty in multinationals being able to plan, whether it's, you know, 5, 10, 15, 20 years out. And he sort of chastised and criticized the president's, quote, bombastic rhetoric.

You agree with Ken Griffin? Well, first, he's richer than I am, and he has very blue eyes, by the way. So he could be a teller of truth. I do agree with him with much of what he said. Now, let's be fair. We're going to have to see what comes out of the budget negotiations on Capitol Hill and whether or not they can credibly reduce the deficit, start bending the curve, or if it's going to expand. What they've talked about so far adds another $2 trillion to the deficit, start bending the curve, or it's going to expand. What they've talked about so far adds another $2 to $3 trillion to the deficit. The issue now is the interest that's

paid on those borrowings by the U.S. Treasury. And we pay a trillion dollars a year in interest. We only take in $4.96 trillion in terms of revenue, 19.3 percent or so of everything, all the sales, fees, taxes, tariffs, whatever it may be that the government levies, goes to paying interest. That's the Achilles heel. And I think Larry has raised a very good issue here, and I agree with Ken as well. This is the risk to our economy. We'll hopefully have it mitigated by this new administration. We'll have to see. The Fed chair has really tried his best to stay out of the political fray. But I'm wondering whether you think, though, that it's inevitable that President Trump and Fed Chair Powell are on a collision course. You had the president again talking

about interest rates, quote, interest rates should be lowered. He posted something which would go hand in hand with upcoming tariffs. Let's rock and roll, America. Your thought here about the potential collision course between these two men? First of all, I love rock and roll. As you know, I grew up during that period of the 50s and 60s. So the birth of rock and roll he just about two weeks ago or less than a week ago the president said he agreed with the fed's decision to hold

and very important lee his sector the treasury mr bennett came out the same thing that's rather uh... i think he's talking about longer term rates here because that's again what affects capital structure what affects mortgages to ten of the Powell himself said he can't, they can't do anything about long term rates. I agree. I've been saying this to you, Scott, for the longest time. They cannot influence those rates. Those are based on expectations of long term future. Right now they're rising. There is concern about

deficit growth still, even though they plan to have some offsets. And we'll have to see what happens to the cost to carry for the U.S. government, which I believe is out of control. And if you talk to some really, really smart people about this, not me, and you talk to John Paul Tudor Jones, one of the smartest people I've ever met, and he talks about the fiscal framework that's underway. So they're going to have to bend the curve. I do hope they do it. I hope they're successful. And I'm praying that they will be. I have one last thing for you. I'm sure you saw the news today of the New York Stock Exchange, Texas Exchange, the NYC Texas, they're calling it. They front ran you guys. You're planning the Texas stock exchange. You're a special advisor. I guess they thought it was a good enough idea. They wanted to do it before you did. No, no, no. First of all, it recognizes the incredible power of the economy of Texas.

We are the empire state now, with no offense to my friends in New York. That period has passed New York. So that's the one thing. I'm going to read you what TD Securities sent out just a minute or two ago. It says, quote, the fact that New York Stock Exchange is making the change of its NYSE Chicago medallion proves that it too believes the new tech exchange is a legitimate threat to the U.S. listings duopoly. Add to this point, I'm quoting, the support of large investors like BlackRock, Citadel, and board members for the TXSC that include a former governor. And it's clear this new upstart means business. We think there is room, TD said, for a third listings exchange for the U.S. and expect Texas to pose

a significant threat to the incumbents since demutualization in the 2000s. Overall, the U.S. and expect Texas to pose a significant threat to the incumbents since demutualization in the 2000s. Overall, the U.S. is winning the global battle for listings, further suggesting a third venue for the U.S. listings may be viable. Scott, these exchanges, I have great respect for the New York Stock Exchange, but the fees that they impose are onerous. We've heard this from different companies over and over and over again. And the restrictions that they imposed and they were imposing and the NASDAQ, who also is moving their office to Dallas. So I think this competition is good. I think we'll be very good competitors. The NASDAQ has too many small

companies that they keep trying to keep for fee purposes, if nothing else. And we expect to be competitive. Now, time will tell. We don't expect this overnight. I look 20 or 30 years out, and I do expect this exchange to be one of the most prominent in the U.S. And I expect to have a good deal of listings. I'll chair that listings advisory committee, and we'll report back to you, Scott, once we're underway. All right. You're making a lot of friends up this way, Richard. We may have to have a conversation with the Dean of Freedmen and Lynn Martin, to say the least. Remember, who's backing us? BlackRock, Citadel, Schwab, TD. All these people are backing us.

Doesn't say we can't coexist. I'm just saying we're offering an alternative, and I'm grateful to the New York Stock Exchange for recognizing how powerful the Texas economy is and how important we are to the future. All right, to be continued, to be continued for sure. Richard, thank you. We'll see you soon. Richard Fisher. Thank you. Joining us once again. All right, up next, Apple on a win streak this week,

but it is well off its December highs. Now, Morgan Stanley's Eric Woodring, he says he is still betting big on that stock. He tells you why after the break. Apple heading for a third straight positive session, still down, though, nearly 10 percent from its December peak. Now, Morgan Stanley's Eric Woodring arguing this week the stock is still a buy he joins us now to tell you exactly why welcome back it's good to see you as always thanks for having me scott what what compelled you yesterday to put the note out you you did um essentially uh doubling down on this this name sure so i think the news that we got yesterday from the information that apple is partnering or in the process of partnering with Alibaba

to bring AI features to China is very important. It should not be under looked, right? Last time we were speaking, Scott, we talked about Apple and the China problem that they have. They don't have their advanced AI technology in China. To put some context to that, when we did our smartphone survey in November, Chinese consumers ranked access to AI technology as the fourth most

important feature that they were looking for in a new phone. That was the highest it's ever been. And more than 50% of Chinese consumers that did not purchase a new model iPhone said that they did not purchase it because they could not get access to Apple intelligence. Third is when we ask those consumers whether they would want to pay for Apple intelligence if it was available to them, 90% of them said that they would spend some amount of money, on average about $10 per month. They've never even had access to this technology. My point being, China is a market that is very technology forward. They're looking and searching for AI features from Apple. Apple has not delivered them to date. In a partnership with Alibaba, the largest e-commerce provider in China, could be monumental in at least shifting that

China narrative. That's what I think was extremely important about the announcement yesterday. Sure. But of course, I know you would agree with this, a report of a partnership and even a partnership itself is far from a turnaround in a place that's really been a drag. And you need it to pick up significantly because you're so used to getting, what, I don't know, 17 percent of revs, 15, 20 from from China? Sure. But China has been a headwind for the better part of three years. We now have two catalysts that have happened in the last, let's call it month and a half that have started or at least should work in Apple's favor. One is the fact that the Chinese government has enacted national subsidies for devices up to about $820. Every iPhone outside of the 16 Pro and Pro Max are eligible for that. And what we have heard through our channel checks is that the

trajectory of iPhone sales in China has improved. So clearly that is at least helping sell through year to date. We think those subsidies could last for the entirety of the year as of right now. And then you're right, Scott, a potential partnership is really just the beginning. But you have to start somewhere, right? We heard Tim Cook on our last earnings call talk about that there was no timeline for getting approval of AI features in China. Now we have reports of a partnership, reports that both companies have submitted the features to the Chinese regulatory authorities, and that that review process is underway. That's more positive than it has ever been. So again, I don't want to get too far out

of our skis. In our note, we wrote, you know, is China turning the corner? And my answer is it's too early to say. But what we do know is that Apple loyalty rates in China are back to historical highs, that Chinese consumers want this technology, and that we are at least somewhere on the path to potentially getting this into China. That's better than it was yesterday. Sure. I got to go in a second. But what Chris Harvey of Wells Fargo Security said at the top of our program about Apple and his problem, quote, you're paying a premium price for non-premium fundamentals. That's hard to contest. And I think that's been an argument for the better part of 15 years outside of a few years where you've had, quote, super cycles. Right. We can probably look back over the last 10 years and said Apple has grown double digits in less than five of those. Yet we still pay a premium for Apple. Right. When I started doing this job, people argued that 15

times multiple was too expensive for Apple. And look where we are here. So to me, it is still about the fundamentals. If you get a growth acceleration, if you get positive earnings revisions, this multiple will only expand from here, quite frankly. Gotcha. All right. We'll talk to you soon, Eric. Thanks, as always. That's Eric Woodring. Up next, the biggest movers into the close. We're back right after this. About 10 from the bell back to Christina now for the stock she's watching. Tell us. Extreme weather and power outages boosting Generax results. The firm, which produces portable generators, saw sales increase 16 percent year-over-year, with residential sales jumping 28%. Generac's CEO

saying in a note that power grid pressures continue to heighten demand, and that's why shares you can see are climbing over 8%. A struggling housing market dragging on Zillow's outlook, as analysts point to rate volatility as well as low housing turnover for softer than expected guidance, growth in the firm's rental segment, and new Redfin partnership not enough to boost this stock share's falling over 10% right now, Scott. All right. Thank you very much, Christina. Still to come, what to watch for when Robinhood reports an OT. We are back right after this. All right. Coming up next, we'll tell you what to watch for with Robinhood and Reddit

reporting OT that's in the market zone. It's coming up next. We're in the closing bell market zone. CBC Senior Markets Commentator Mike Santoli here to break down these crucial moments of the trading day. We are on earnings watch as well. Kate Rooney with Robinhood. Julia Boorstin with estimates for Reddit. And Kate, we begin with you on Robinhood. Yeah, Scott. So it's going to be all about increased market activity that's really expected to show up prominently in Robinhood's results. Retail trading activity has surged at least after the presidential election. So watch transaction based revenue for Robinhood. Investors want to see the breakdown as well between equities options and then crypto, which has been contributing

a bit more lately. And we will see which adds the most to the bottom line. Crypto has become a larger part of the business. It's likely to be boosted in the quarter by Bitcoin's all-time highs. And then look for some guidance around net interest income and the rate environment, plus more clarity on Robinhood's plans in sports gambling after its Super Bowl contracts were pulled last minute. Account growth and assets under management are also going to be key. Robinhood has been offering incentives for investors to transfer out of other brokerage firms. Stocks up about 350 percent in the past year, 40 percent just this year.

So expectations pretty high going into the print, Scott. All right. Thank you. Kate Rooney, how about Reddit, Julia? Well, Scott, Reddit shares are up 170% since its last earnings, and they're up 530% since its IPO last March. Key numbers to watch to see if that momentum can continue. First, revenue growth. We'll see if it can keep up with the 68% revenue growth it reported last quarter. And user growth is expected to report 103 million daily active users from 97 million in the third quarter.

Reddit's ad business is expected to benefit from its new ad options and perhaps from some uncertainty around TikTok. It's also expected to report growth from a recently launched AI-powered search tool called Reddit Answers. And it's also going to be talking to us about its new business of licensing data to AI companies. Now, analysts are largely bullish. 61% have a buy, 35% have a hold. Only 4% have a sell, despite the stock's massive run. Scott? All right, Julia, thank you.

Julia Borsten, the mic's in totally now, 90 seconds left. What's your big thought for the day? The market finds a way to find offsets to the obvious negatives. And it's been doing this. The kind of accumulated exposures in the options market around this index level, we've been around 6,000 for weeks, means that we're kind of bounded on the indexes. I do find it interesting that you push out the likelihood of a next Fed rate cut, but you already didn't have one price until September. So it enabled the stock market to sort of look through the CPI a little bit.

You hear a lot of people say, you know, it was only 0.45 on headline without rounding, not 0.5. All that stuff kind of built together. I think also you can't escape, we're going to hear from Robinhood after the close, just how much of this wild,

high velocity action is happening in the Nasdaq. 40% of Nasdaq stocks are down today, but actually 60% of stocks are down, but only 40% of the volume is down because a bunch of penny stocks trade 100 million shares on the upside and Palantir is going nuts again. So I do think that's an interesting thing. We're leaning on defensive stocks and really risky concept stocks to stay afloat. Yeah. And I mean, in defensive, things like Apple, which is still looked at as such. There's no doubt Apple has that defensive property. JP Morgan. I mean,

Walmart is absolutely part of it as well. Not to mention Tesla gets its first decent little daily bounce in memory to help the index. All right. Good stuff. I'll see you tomorrow. Mike Santoli, thank you very much.