Closing Bell - Closing Bell: New Month, New Momentum 12/1/23

Episode Date: December 1, 2023

After the best month for stocks in nearly a year and a half, is there now enough reasons to get more bullish? Trivariate’s Adam Parker and Hightower’s Stephanie Link weigh in. Plus, BTIG’s Jonathan Krinsky is “betting on the losers” this month. He explains why. And, Paramount shares popped today. We tell you why Apple is responsible for that jump… and what it could mean for the rest of the media stocks. 

Guys, thanks so much. Welcome to Closing Bell. I'm Scott Wapner, live from Post 9 here at the New York Stock Exchange. On this Friday, this make or break hour begins with what else? The rally. And whether a new month will bring more of the same for your money, we'll ask our experts over this final stretch. Here's your scorecard with 60 minutes to go now in regulation. December really beginning as November went out with stocks in the green. Nearly every S&P sector is in positive territory. Industrials and materials both up nicely. But there you can see it's pretty broad-based. Mega caps, always check on them, of course.

They're a bit mixed today. Apple, Amazon, NVIDIA up. Meta, Alphabet down. Yields, well, they're falling even further today. Bonds just scored their best month since the 1980s. Look at the 10-year, 422. That takes us to our talk of the tape. After the best month for stocks in nearly a year and a half, a move that's been as broad-based as we've seen in

a long time is there are now enough reasons to get more bullish. Let's ask Adam Parker. He's the founder and CEO of Trivariate Research, a CNBC contributor. As you see here, post nine, welcome back. Thanks. I guess that's a question of the moment as we turn the calendar. Is it time to get a little more positive than people have been? Well, I don't know what people have been doing. I mean, to me, it was pretty clear we were going to have a rally. We wrote about it, I think, November 1st, right, that in years the market's up 10 percent or more the first 10 months of the year. It's like a very high hit rate. It happens for the last two months. Why? Because people weren't positioned for it, and they chased the performance up.

People I talked to were wondering, you know, when they need to start sort of twisting for something that could change in January. I mean, this past year we saw a huge reversal in NVIDIA, in Meta, in Tesla. After they got killed in 22, they've been monster good stocks in 23. So I think people are trying to figure out when do they fade and get more negative. I don't sense people I talk to think I'm going to get incrementally bullish now, at least the conversations I've been having. Why not? Because I think there's a lot in the price.

And I think people are worried about maybe a rotation in January or February. So I don't think people are thinking, oh, we have a great year end and we have a great January effect and it's just everything is great. I think people are worried. Because really this last month has thrown cold water all over the idea that, oh, it's not broad-based enough. Yeah, banks have been great. The quality is bad. I'm looking at the Russells up 11% over the last month.

I mean, all of these sectors have done quite well. Except energy. Except energy, yeah. It's the laggard. Energy had, I checked this today, at least in the last 25 years that I checked, we haven't seen a month where the S&P was up 7.5% or more and energy was down. This is like the worst month for energy in a big uptick in a long time. I'm confused by that.

It feels to me like demand recession is the energy sector, but a demand recession is nowhere else in the market. That seems incongruous to me. So, you know, having been wrong about it recently, I still like energy as a great risk-reward going forward. But that's a notable laggard. That's a good word, by the way. PhD in statistics gets you incongruous.

Incongruous? I don't know. I feel like there was a math test I took with the congruity word in there back in the day. Let me ask you this. If I say, like Nick Timoros writes in the Journal today, Fed interest rate hikes are probably over. Officials are reluctant to say so. We don't expect them to say so anyway. But why is it not time to get incrementally more bullish here?

If you think that rate hikes are over, over, and you think rate cuts are coming, and they're coming for the right reasons, not the wrong ones. The right ones being that inflation continues to trend down. Look, you know we were pretty much bullish this year, starting off the year. And the best scenario is the consensus is negative. You're a contrarian bull and you're right. This is a dream scenario. As you look at the year ahead outlooks from the large firms again this year, I don't see them having upside to the year end 2024, where we are now. I think most people, 4,200, 4,500, 4,00 46 i don't see a lot of sites there's a chance you could be a contrarian bull and be right again but i mean there are a lot of 24 there are

a lot of price targets though that are like 5000 5100 you know some are as high as 5500 okay i haven't seen i you know i'm not on that side of the world i haven't seen any that high i do think that the goldilocks scenario continuing would be they don't cut and earnings are okay. I don't think if they're going to start really cutting, I think you'll see a more negative impact on earnings first and therefore a bit of a reset before that happens. So I'm not of the mindset right now where I sit today saying it's bullish all the way through the downward revisions and negativity that then are the prerequisite for the cut. I think there could be a bit of a sharp hiccup before that.

So I'm not trains left the station, get on board. I mean, the NASDAQ's up 35 this year. We're up big numbers already. So I wouldn't say this is the time I get incrementally bullish. I think it's if you're correctly bullish all along, you're trying to be prudent about, you know, good risk-reward going forward. Well, I mean, you've had to be bullish in the right places for the better part of the year, as we obviously know. Is it time to get more incrementally bullish about the places that didn't work as well

because we think they are going to work better? Value stocks, more cyclical things. It just didn't work like mega cap tech did. And, you know, take this last month of a run out of that question. You know what I mean? In the broader sense, is it time to get more bullish there? I could see people selling some of the winners and going into those parts of the market. I think it could be energy. It could be health care, which is lagged, you know, materially and people think doesn't work in election year. It could be some of the staples. We have seen a bit of a catch up in some of the stuff that we talked about.

But I thought was oversold on GLP-1 fares. You have seen at least Brown Forman and Koch and some of those names catch up a lift a little after selling off. So I think you could see a rotation in some of those laggards. But what's happened this month to me is just one of the highest correlations between bonds and stocks we've seen in 15 or 20 years, the everything-is-work rally. And I highly doubt that that will continue all the way through next year. Why does it have to be a rotation from the winners like mega caps into those loser areas, losers of the year? Why can't it be a rotation if yields continue to collapse?

Why wouldn't it be a rotation from cash money markets into equities? It could. And bonds for that matter, which, by the way, I just said had the best month since the 80s. It could well be, but I just don't think it'll be in the banks that finally did really well in an uptake because they don't really make any more money in the core part of their business if interest rates continue to fall. So there's a bit of a disconnect there. I didn't want to say incongruity twice and then get repeated incongruity. Then I would have said you're showing off.

I went disconnect, yeah. So I think there's a bit of a disconnect between the best interest rate environment for banks and the recent rally. They just got cheap. They were too cheap for where we are. But now I'm looking at it thinking maybe that isn't my first place for the rotation next year. Banks. Yeah. I'd rather do energy.

I'd rather do health care. Why health care? Because everyone hates it. The estimates are very achievable. They have pretty good pricing power. And I think their valuation is pretty compelling. So the combination of the chance for upper revisions, flows and valuation make them one of the better risk award sectors where I sit today. All right. Well, let's bring in CNBC contributor Stephanie Link of Hightower Advisors to join the conversation. So I hope you heard what Adam said. It's now really not the time to get incrementally more bullish. I feel like you

actually have. So how do you feel about his view of the market? I do think it's time to get even more bullish. And, you know, I was pretty bullish in the middle of October expecting a year end rally. And we obviously got a great November. I'm very encouraged about the broadening of the market, which is what you guys have been talking about. So year-to-date, the equal weight S&P has underperformed the S&P by 15%. In November, that kind of reversed, started to reverse. The equal rate actually outperformed by almost 100 basis points to the S&P market cap weight. So I think that's encouraging and it does speak to the broadening. And the reason I'm more bullish is, yes, all the things you talked about in terms of inflation has peaked clearly. The interest rate environment has peaked clearly. Whether the Fed eases or not in

the first quarter, we just don't know. Powell said today we're all data dependent, but it looks like they're going to go sometime in the first half of the year. That's positive. And the economy is holding up. The Atlanta Fed GDP tracker is running at about 1.5%. 1.5% to 2% is good for top line. It's good enough for top line for earnings for next year. And on the margin side, we're seeing, obviously, I just mentioned all these things, inflation is down and rates are down.

And that helps corporate margins. And then you have operating leverage as a result. And then I would just simply point out how cheap the 493 in the S&P names, the non-megas at 14 times forward compared to 20 times for the overall S&P. There is value to be had. And in November, the value and the places where people saw value was real estate, financials, discretionary, and industrials. And you know, I've been in pretty much all of those areas, not so much real estate. But I do think that there's upside to those estimates. And I think that's why people are starting to chase it. Okay. What do you think? I think the word incremental is what I was reacting to. If you've been correctly bullish and participated in the market ripping this year,

I think the word incremental is maybe where I depart. I think you can be optimistic that the risk order could be decent next year. You can be a bit of a contrarian bull in certain parts of the market. But see, that's the word I want to pick on. Cont. Contrarian bull. Right. Maybe is it more prudent to be, I mean, if you're a contrarian bear, maybe. Why do you have to be contrarian to be a bull? Because I don't think. Steph just told you all the reasons why it's prudent to be a bull. I think, I don't think Steph is the consensus. I think she's more bullish than the consensus person I talk to right now.

I don't know if Steph, you agree with that, but I think she's more bullish than the consensus person I talked to right now. I don't know if, Steph, you agree with that, but I think she is. I don't think everyone's thinking, wow, we're going to have a big 10%, 15% up year. I think most people are thinking this year was a surprisingly good year. It'll probably be more muted next year. It's hard to schedule out our earnings growth. And maybe some people agree with what I just said, that if we're going to get the Fed cutting, it's going to come after a bit more damage into the earnings in the economy than is in the price. I think that might be more consensus, what I'm saying, than what Steph is. But if she's right, then she's going to continue to do well. Well, Steph, I mean, it all depends, too.

Like the broadening that you mentioned, which is one of the reasons why you've grown more bullish, has to be sustainable. It hasn't been. Now it remains to be seen if it will be well we'll see and look i'm not looking for 10 to 15 percent in the s p i'm actually looking for much more in some of these contrarian sectors these unloved sectors where no one is in everybody is in in the MAG-7. You know, even I'm in some of the MAG-7. You couldn't afford not to be. But I think there's so much upside in these other sectors. And it's not going to take much to get them to move higher. Does that move the overall market, Scott? I don't know. I think if you have a lot of sectors participate, there's a good shot. You'll be up mid-single digits. I'll take mid-single digits. But if these other sectors go up double or triple what the overall market does,

I'll be pretty happy at that point. The Russell's killing it, too, by the way. I'm looking right now. I see the Russell up almost, is this right? Almost two and a half percent on the day. I think my thing's right. 2.4, yeah. So I read one note today where someone called the small caps a value trap. I don't know if Steph is specifically referring to those types of names, but that's one area where you would think if Steph's outlook on the economy is correct, that small caps would do well. Some say, well, there's value there, but it's a trap. What do you think?

So for Steph to be right, and I'd say there's a decent probability she is, so you know, I'm not, you know one of my biggest weaknesses is when somebody says something I disagree with I can't hide it on my face. Steph and I know each other and like each other a lot, so disagreements, you know, reasonable people can have. I think for her to be right, you need to have, and she said this and I agree with it, you need to have margin expansion, right? That's how we can get a positioning rally on rates going lower and the small caps go up because there's less kind of financial, you know, worries for some of these smaller businesses, their cost of capital is improved. There's real reasons they should have this initial phase of the risk on trade. For it

sustainably to last for a year or six months or a sustained period. I need to believe their margins are going up more than everything else. That could happen, but it's going to require better pricing or better mix on the revenue side. It's going to require a better wage environment, better input costs on commodities, lower depreciation. That part, I personally think, is a little tougher right now. I think this rally in small caps is about interest rates and that fewer of them will have financial troubles as they go to refinance. The biggest companies don't have any financial problems. Apple has, I don't know, you tell me, $5 trillion of cash. I'm kidding.

They don't have issues. They almost have $5 trillion. But people have been going there. It feels like they do. People have been going there for those reasons, right? Balance sheet security in many respects. So the highest correlation we've seen between bonds and equities in a long time, or among the highest, is because these companies no longer have as much financial risk. So for her to be right, you need to have yields come lower. You need to have margins expand. I probably think that's a 40 percent. For me, it's not the base case, but it's certainly not unreasonable. Okay, Steph, did I bridge that okay, Steph? But yeah, no, I mean, I understand what you're saying, but you have gasoline prices that are down 15% from their highs. You have rents that are starting

to roll over. You have companies in the U.S. that are masters at cutting costs if they need to. And I think that they will continue to reorganize, restructure. That's just what they do. And then you have pricing power. Companies have had pricing power for the last year and a half. Maybe it's not going to be as strong in 2024, but I don't think they're going to be so quick to pull back on pricing, especially if the demand side doesn't fall off a cliff, which I don't think it will because I think the economy is going to hang in there. So it really depends on what you're thinking about for the overall economy. In terms of small caps, Scott, I'm not involved in small caps. I don't think the transparency

is there. I think they're very volatile in general. There's limited sell side analyst coverage. So you don't get a lot of information and a lot of ways to analyze. But I do think the same factor of small caps is value. And the Russell 1000 value right this today is trading at 13 times forward. The Russell 1000 growth is at 24 times. I just think there's better risk reward in value versus growth. But, you know, I do have some growth names it's not all value i'm core by definition well on that note um i see that you this right you trimmed meta that's kind of surprising to me again because you've been i mean you trimmed it all for i don't know over the last eight months i think you bought alphabet again but why are you trimming meta because i'm up a lot. I mean, it's up 170% year to date. It's had a multiple re-rating

from 13 times to 23 times. I think the story is still great. I still own a bunch of it, but I didn't have a cash to buy a new position that I wanted to buy. And so I trimmed a little bit of meta. It never hurts to take a bit of profit. And I still own some of the other MAGA 7, but I just feel like I bought Sherwin-Williams and I like that risk reward way better, especially if rates continue to come down. I want to have housing exposure in 2024. You know, Adam, we said kind of in passing that one of the reasons that people have gravitated towards these names is because they have these balance sheets that feel like, if not fortress, darn close. Right. One of the notes out today was from Savita Subramanian over at Bank of America, who says

one of the reasons why it's OK to be bullish is because corporates have already gone through their earnings recession and they've cut costs. So, you know, their balance sheets are going to look a lot better moving forward. How would you address that? For the S&P 500, you know, bankruptcies are very unusual. A lot of the businesses have approved their balance sheets and termed out their debt. I think the issue is different as you get smaller and that's why the small caps are cheaper. A lot of the small cap universe is banks, right? It's a different constitution. A lot of the small caps are profitless biotech.

So you've got to apple to apple that stuff when you compare it. I don't know if I agree that as nominal GDP declines some, that these companies will have the ability to cut out a ton of costs and have margins expand a ton. I think part of her point is they've already gone through the exercise in anticipation of something that may not come to fruition to the degree that they've already planned for. Yeah, I think there could be some examples of that. Where I guess the tension is, or the investment controversy, is we had the highest nominal GDP in our lifetime 18 months ago. When you have a high nominal GDP, you produce stuff in your factories, at industrials, et cetera, and it's beautiful for your margin structure. All your fixed costs get spread across all the things you're producing. As the nominal GDP has slowed,

it's harder for your utilization in your factory to be as high. It's harder for you to have the same pricing power. I think companies do have pricing power. I agree with Steph. Coke has pricing power. UnitedHealth has. The big guys do. And I think that's where she's trafficking more, as she said. But I don't think these smaller ones have as much pricing and have the ability to have their costs. So I think the cost will be a little bit more under pressure in 24 for some businesses than they were in 23. And I don't think these smaller companies can fire all the same people and cut wages and the like. It's not that easy. Steph, I'm going to end by just spinning it towards next week. And only because Adam,

you know, used to be a semiconductor analyst. And I know you have Broadcom, which reports next week. It's going to be one of those moments as we look at AI and where growth is going to go and all the focus has been on NVIDIA, et cetera, et cetera, et cetera. What's your outlook for that next week? Yeah, I mean, I think it's going to be fine. I think it'll be good. They've got a great track record of executing, beating and raising. And I think what I like about Broadcom really is its diversification.

It's not just AI, although that is certainly a big piece of their growth engine, but it is cloud and it is networking and it is Apple exposure. But I think more importantly next week, we're going to hear more about the synergies from VMware. And that's important because that's the company's going to have 55 percent of their revenues in software and recurring revenue. And that is really good visibility and kind of a multiple enhancing event. I also think they've got a good track record of increasing their dividend in the fourth quarter each year. So I expect them to increase dividend, to increase buybacks. You know, they have about 7.6 billion left in their buyback program. I think they're going to

lift that, too. So the only thing is a stock always trades badly on the earnings report for whatever reason. And if it does, I'll buy more. Last comment to you quick. No, I don't disagree with their comments there. I think we're probably more aligned on that than earlier parts of the conversation, I'd say. Yeah, but you didn't even disagree that much on that. No, we don't. Look, I think buybacks are always tricky because companies generally don't do a great job of it. And a big part of what we do at Triverity is give advice to corporates about buybacks and M&A and spinoffs and IPOs and all that stuff. And in general, companies buy the stock when it's high and they don't buy it when it's low. So most of them destroy value doing it. But we'll see. But I don't disagree with their broader comments about the business model diversification being a positive. Guys,

that was fun. Good to see you. I appreciate it very much. That's Stephanie Lincoln, Adam Parker, right here, post nine. Good weekend to you both. Let's get a check now on some top stocks to watch as we head into the close. Christina Partsenevelos is here with that. Hey, Christina. Hi. Well, JP Morgan analysts don't like bio and tech telling investors to sell the company as it continues to face challenges with weakening covid vaccine demand, as well as few advances in its oncology pipeline. You can see the stock is down almost 2% today, but down about 34% on the year. Shoppers just don't want to give up their perfumes and skincare routines as third quarter sales rose for Ulta Beauty. The beauty retailer even raised its full year sales and earnings guidance,

given the season is, quote, off to a good start for both value as well as, quote, splurge worthy items. Ulta shares are up nearly 11 percent right now. Scott. All right. Christina, we'll see in just a bit. Christina Partsenevelos, we are just getting started here on Closing Bell. Stock seeing gains to start the month. And up next, the CEO of Janice Henderson joins us here at Post 9. Tell us where he sees the rally heading from here and the three main drivers he says could shape asset management for the next decade. You're watching Closing Bell on CNBC. We're back and we're off to a strong start in December. All of the major averages are in the green. There you see it there. Take a look at the Russell leading the way up nearly two and a half percent. The Dow hitting a 52 week high.

Joining me now post nine, Janice Henderson, investors, CEO, Ali Dabaj. He's ringing the closing bell today in honor of their ETF suite reaching $11 billion in assets under management. Congratulations. Welcome, Scott. Thanks for having me. So these are mostly fixed income ETFs that we're talking about. So then give me your outlook for what you these are mostly fixed income ETFs that we're talking about? Yes. So then give me your outlook for what you see ahead for fixed income in 2024. Yeah, look, I think if rates tend to go down, which is what most people are trying to think about over the course of 2024, that typically means that the economy slowed a little bit.

What that means is you have to stick to higher quality and longer duration in the fixed income side. And certainly on the equity side, you really have to parse out what's going to be a good company versus a bad company. Rates will come down a little bit. They probably won't go to zero, Scott. And so the haves and have nots really play out because there is a cost of capital that will not be zero going forward. What if rates are just getting back to, I hate to use normal because, I mean, they were so abnormal for so many years, but just not so elevated to where they have been. What if it's not a sign that the economy is slowing? It's just merely a sign of the times that inflation isn't what it was. Well, honestly, I think that's a great time. That's a great time, particularly

for people who are stock pickers like us or security pickers like us. It's a time for people who actually spend time to be real investors. And Janice Henderson, that's what we pride ourselves on. We're real investors who know the underlying assets better than anybody else. Are you saying that it's real? Is that because you're active, because these are actively managed ETFs? Correct. Yes, that's exactly right. So these ETFs in particular are active fixed income ETFs.

There's flavors of them for all kinds. For example, we have AAA CLOs. That's crossed over the $5 billion mark. The suite of them, which are JAAA, we have an MBS CLO, we have a BBB CLO, as well as Securitized Income CLO, all of those together are now making us number four on the league table in a very, very short period of time. And what we've done, Scott, is sort of the essence of what Janice Anderson is.

I was saying we're investors. What we do is we really bring differentiated insights and disciplined investments that we would bring to an industrial kind of institutional client and bring that to retail. That's what these ETFs allowed us to do, really democratize a whole world of investing that's been unattainable by the numerous folks out there who can now reach it. Because of the seat in which you sit, I mean, what is your general view of the markets for the new year? Yeah. Look, I actually think that the pivot point will obviously be the consumer.

So what does the consumer do over the next little while at these rates? So far it seems pretty healthy. Could it be a little bit of a slowdown? My guess is it could be, but I don't think you're seeing a really tough time over the course of the next little while. I feel more and more comfortable with where we're at. Are you expecting a recession or not? Do you think rate cuts are going to happen in 2024? How do you view

that? Because, I mean, it all comes to play in how we should think about the products that you offer. Well, it does. But the good thing is, Scott, is that we offer all products for all seasons, right, essentially. So some things that we think will not change and there are kind of longer term themes. For example, the cost of capital theme. There is now a real cost of capital, exactly to your point. Over the past 10 or 12 years, there was no cost of capital. Buying a good company or buying a bad company didn't really give you alpha. In fact, now separating a good company and a bad company does deliver alpha. That's what us and many other people do as well.

We separate those out. Just buying passive isn't going to save the boat anymore. All tides won't lift all boats. You really have to sit there and separate things out. So to your question, the world will be much more difficult. There's no question because the cost of capital is higher. That doesn't mean there aren't opportunities in the investment realm. And that's what Janice Henderson does.

It brings you a suite of opportunities, including the active fixed income ETFs that we have today that we're celebrating by closing the bell and other suites of products that we can bring to bear. Well, congratulations on your milestone and enjoy the ceremony. Thanks. Holly Dubage joining us. He's the CEO of Janus Henderson Investors. Up next, we're charting out December. Top technician Jonathan Krinsky is back with us. He's going to tell us why he's betting on the market losers as we kick off a new month. And that's just after the break. Closing bell right back. Well, stocks are rallying to kick off the new month of trading.

Our next guest says it's time to bet on this year's market losers as we look ahead to the new year. Let's bring in Jonathan Krinsky of BTIG. Welcome back. Okay, so then you think this broadening out has legs. Well, Scott, we were on with you about two weeks ago talking about the rotation we thought that was going to happen from mega cap tech into small caps. And, you know, it's been subtle so far over the last two weeks. I think small caps are up about three percent. Mega cap techs, you know, flattish, maybe up half a percent or so. And you're starting to see that broaden out there. right? So regional

banks up 5% today, the REITs, you know, just some of the absolute worst areas of the market are really starting to outperform. And, you know, in some cases, starting to break out of small bases or even medium term basis. So, you know, we think it's kind of a double edged sword, right? Because on the one hand, it's nice to see breath broaden out and you know we want to participate in some of those areas that are playing catch up to the upside on the other hand we're also starting to see some of the froth and optimism come back um as as represented you know the mean stocks are having their biggest 15-day rally since since january um and some of the more speculative stuff is starting to to really um go to the upside so

it's it's good on one hand, but we're also, you know, medium term, you know, also seeing that as a bit of a yellow flag as well. Yeah, but I mean, I know you're referring to things like the ARK Innovation Fund, which I believe just had its best month ever, which really isn't a surprise given the dramatic move that we had in interest rates. And as I said earlier, bonds just had their best month since the 80s as rates have collapsed over the last 30-day period. Do you think the broadening, though, in the areas that you mentioned is sustainable? Because that's going to really answer the question of the durability,

in some respects, of this market, not just over the next four weeks? You know, I think ultimately we don't think it's sustainable. You know, if you again, if you look at even the data today, you know, slowing in the ISM. Right. So I think, you know, right now the market's in that, you know, a lot of people use the Goldilocks period in between when the Fed is done raising, but hasn't yet cut. And so we think this speculative part of the rally can continue for a bit. I think as you get into next year, that's when you're going to start to see the flip of where bad news becomes bad news. And ultimately, that's going to be an issue for

most stocks broadly. But I think right now it's all about the rotation. You know, we're seeing a stalling in mega cap tech and FANG stocks, MEG-7. I think that has a bit more to go on the downside. But yeah, to your point, ultimately, it's, you know, seeing the absolute worst, the junk, if you will, rally like it is, is nice if you can participate. But ultimately, it's probably not the best sign. Are you negative on the market for next year? You know, yeah, I think if you think about where the data is going and ultimately what that means for stocks, once we get past this Goldilocks period, I do think it's going to be a headwind. Again, you're also seeing the crowdingness, whether you look at institutional or retail side of things.

The top seven names are, in some cases, historic highs or multi-year highs relative to the portfolio. And so that's another headwind for next year. But we're taking it one step at a time. I think right now our conviction is that you want to stick with this relative trade. So regardless of overall market direction, we think small caps over large for the foreseeable future. And then we'll see how that transforms as we get into 24. But one comment you just made, if you look at where the data is going, those were your words. People who are bullish would say, I am looking where the data is going and the data looks just fine. Well, what happened today with ISM?

Well, it's like one report, but I mean, there are other reports that have certainly pointed to an economy that's performing just fine in the same sense that inflation continues to come down. Nothing is screaming economy slamming on the brakes by any stretch. I know you would agree with that. Yeah, no, for sure. And I think that's why you're seeing the risk rally right now. Right. I mean, the whole rally that started off in November was predicated on some weaker data and therefore the Fed might be closer to being done. Right. So that's why you get these these Goldilocks rallies. And look, you know, the soft landing, you can't be disproved at this point, which is why you're seeing now some of the riskiest parts of the market start to rally.

So again, it's one of those careful what you wish for moments. And like we said, the double-edged sword. We'd also highlight on the sentiment side of things, you look at something like the AAI bears, fewest amount of bears since January 2018. Put-call ratios are back to low as we've seen this year. So people are getting on board with this and that can persist for a little while, but ultimately, as we get into next year, I think that'll be a headwind. What does the VIX at 12.6 do to you? Well, the VIX typically on a seasonal pattern tends to bottom in late November. And you actually do see a bit of a rise in volatility into December.

So we think we'll get that again once we get through this kind of rotationary period. The VIX is also, it's funny, it's mean reverting until it's not, right? So for most of this year, 13 VIX was a place to sell stocks. You could look back to 2017 when the VIX was routinely below 13. So, you know, it's kind of one of those situations you can view it either way. We think volatility ultimately will rise next year, but for other reasons simply than just the VIX is being low.

Good weekend. Thanks for being on. We'll see you soon. Jonathan Christie, BTIG. All right, up next, we're tracking the biggest movers as we head into this Friday close. Christina Partsinello standing by with that. Christina.

Diarrhea and upset stomachs. Not all weight loss drugs have the magical touch. After the break, I'll reveal the company behind that failed clinical trial. And, of course, much more. Our approaching 15 minutes left in this session on this Friday. Let's get back to Christina Partinevalis now with a look at the stock she's watching. Christina. Well, upset stomach, diarrhea sounds like a Pepto-Bismol crucial, but those are the common symptoms.

For patients taking a Pfizer experimental weight loss pill in a mid-stage clinical trial, more than 50% of people taking the full dose of the drug dropped out of the trial because of gastrointestinal issues. Pfizer will not advance this particular trial, but said it plans to release data on a once-a-day version of the drug in the first half of 2024. And that's why shares are down 5%. Shares of software firm Samsara are surging right now, up about 25% after the company not only beat earnings expectations for the quarter, but also posted higher guidance. On the earnings call, the CEO said the company saw strong momentum with larger accounts

and posted a $1 billion annualized revenue run rate for the first time ever. Shares are up 25%. And speaking of the CEO, Sanjit Biswas will be on closing bell overtime in just a bit. Scott. All right, Christina, thank you. Good weekend to YOU. GOOD WEEKEND TO YOU. CHRISTINA PARTSENEVILLE IS UP NEXT. IS THE IPO MARKET HEATING UP? IT LOOKS LIKE ONE FAST CASUAL CHAIN COULD BE HEADING FOR A BIG MARKET DEBUT. WE'LL GIVE YOU THE DETAILS AFTER THIS BREAK.

CLOSING BELL IS RIGHT BACK. Welcome back. Panera confidentially filing to go public again. Leslie Picker here with those details. What do we know, Les? Hey, Scott. Yeah, I spoke with a source familiar with the deal. They confirmed that Panera filed confidentially for an IPO. That confirms earlier reporting by the FT today and also insinuates a debut no sooner than the first quarter of next year and marks the latest in a string of companies dipping their toes into an IPO process. The appetite for new issues has been mixed with few exceptions. One is another fast casual company, Kava, which is up 66% since its June debut. JAB and BDT Capital took Panera Private in 2017 in a $7.2 billion buyout. They attempted a listing via SPAC a couple of years ago, but ultimately pulled it due to market conditions.

So a confidential filing for traditional IPO appears to be the sponsor's latest attempt for an exit in an environment where there may be some pent-up demand on the sell side, but still a little bit of trepidation on the buy side, although that can change pretty quickly, Scott. I was literally going to say that exact same thing, just depending on what the market conditions look like as you turn the calendar. Leslie, thanks so much. Have a good weekend. Leslie Picker. You too. Up next, Paramount popping that stock now up nearly 10%. We'll tell you why Apple is actually driving that name higher,

what it might mean for the rest of the media space. That and much more when we take you inside the Market Zone. We're now in the closing bell market zone. CNBC Senior Markets Commentator Mike Santoli here to break down the crucial moments of this trading day. Phil LeBeau has the latest read on the automakers. November sales data is out. And Julia Borsten on how Apple is driving Paramount shares higher today. Mike, a turn to you. Came on the air at three here and yields just continue to move lower.

And not a surprise, stocks are at the highs of the session here. Yeah, it's getting a little bit extended on the yield side, just in terms of the magnitude and the speed of the moves. But it's all self-reinforcing. And there's a little bit of indication of some surrender out there. I mean, if you look at a 2 and a half percent pop or better in the Russell 2000 and you see all the laggard groups, it looks like, you know, forced rotation. People are basically running out of reasons to fight this idea. And I think it's important to keep in mind

if you came into this year or let's say six months ago and you said economy is going to hang in there. Fed's just about done. You know, inflation's on the way down and should be supportive. Earnings are going to turn for the better. You've been right, but along the way you've overshot. So I'm not saying we've overshot yet in terms of the upside. This rotation certainly has more to go just to close the gaps in performance that we've seen all year. But it's getting to that point where people are believing again. And you need that for a sustainable uptrend. But, you know, sometimes you get a scare that comes along.

I'm glad you use the word sustainable because I was going to ask you about the sustainability of the broadening of the market. And that's going to be a big tell as well. Absolutely. Well, the makings are there for it, as you can see, and especially if the economy hangs in there. And if we don't have to get the fed rate cut exactly on schedule as the market projecting but if it seems like we're on track for that probably we can keep that in balance I was just looking

back though. Near the July highs. We and everybody else at CNBC read headlines saying the broadening trade is underway. So I think you have the makings of it I also a mindful of the fact. That we've had mirror image years. Twenty twenty two

was the exact opposite of twenty twenty one of what worked and the direction we went. This year is the exact opposite of 2022. It's just mirror image. So if we get that next year, then it would mean we have a broadening year. And when the headline indexes maybe don't maybe need a lot more stocks to work. So I guess I put that out there and say, financial conditions staying easy mean we should have that broadening. On the other hand, so many people want it.

How many people come here and say, don't love the Magnificent Seven, really like the cyclicals and the neglected parts of this market and the equal weighted S&P? So maybe people have been wrong enough for long enough that we can start to have that work. I got one more thing.

I mean, there was a time where, you know, this market would have taken the comments from the Fed chair today as hawkish. And it just also speaks to where we are, whereas they were brushed aside after an initial, hmm, what do you say? And now we're right back to, you know, what looks like that narrative. And I think it's because the inflation numbers have been that friendly for this long and we can somewhat handicap where they're headed from here based on the known variables that go into it. So I think that that's been the bottom line all along. If inflation is going in the right direction, the Fed's not going to try to tighten financial conditions just for its own sake,

just so people stop having fun if inflation is doing what it's supposed to do. All right, Philip Oh, I mean, the automakers, you know, they've been in the news more lately. I'm speaking really of General Motors, not so much for their sales, but for their buying of their own stock. Right. And when you look at the November sales, Scott, what have we been saying for months now? Hybrids are hot. I bring that up because when we get monthly sales numbers, we only get them from the foreign automakers in this country. Hey, these are the top three automakers Toyota definitely leading the way in terms of hybrid sales, and that's reflected in November. By the way, all of these companies reported big pops in hybrid and electric vehicle sales.

So that demand is there, and that's reflected in the stocks as you take a look at the stocks. By the way, they are at the current, the way sales are going right now, we're on pace for the best year since 2019, about 15 million in annual sales. That is the expected sales pace. By the way, Scott, we get Ford's numbers on Monday. I haven't been told, but I know from talking with Ford dealers this week, hybrids are in demand. Watch for them to have a big hybrid number two. All right. I suspect we might see you then. Phil, thanks. Good weekend to you as well. Julia Borsten, Paramount popping, and a lot of it has to do with Apple. That's right. Paramount shares up more than 9% on a report that the media giant is in talks with Apple about bundling their streaming services. Now, no comment from either company, but this would make sense given Paramount's track record with partnerships, including with Walmart Plus, Delta, and internationally with Sky in the UK, Italy,

and Germany, and Canal Plus in France. Now, Paramount and Apple TV Plus are working together right now. Paramount is doing the theatrical distribution of Apple's Killers of the Flower Moon movie. CEO Bob Backish saying last quarter, quote, the power of partnerships is also a meaningful contributor to our momentum. Now, there is a negative factor that could be in play here as well. Apple TV Plus and Paramount Plus both have more than 7 percent churn that's ahead of the industry average of 5.7 percent. Scott, this could be seen as a way to team up together to reduce churn. All right. And we'll keep our eyes on both of those stocks.

Julie Borsten, thanks so much. I turn it back to you, Mike Santoli. You talk about Apple's 191 and change. We'll see what that does in the weeks ahead. Determine in some respects if there's a rotation out rotation out of mega cap and keeps this broadening going. Yeah, it's interesting that Microsoft has served chiefly as the source of funds for this, you know, rotation into the lesser performing names over the past week. Apple kind of doing its own thing, hanging in there a little better. Microsoft, though, just get it was just such a consensus. Everybody had to own it. And as I was saying earlier this week, on some level, these are the defensive stocks in the market.

So do they hold up when people are feeling more relaxed or risk appetites are rising? The economy seems OK. There's a little bit less that there seems to be to worry about. That is the question. Apple hanging in there. We're talking about two stocks that are together, 14.5 or so percent of the S&P 500. So it's tough for the market overall to do anything if they don't hang tough. Two stocks that are together, 14.5% or so of the S&P 500. So it's tough for the market overall to do anything if they don't hang tough.

But I really have been keeping much more of an eye on Microsoft in that equation just because it seems like it's the one must-own stock. And everyone acknowledges the fundamental story and is willing to pay up for it. But maybe that's now migrating money into the other software names. Speaking of money migrating, is it too early, do you think, to talk about money migrating out of money markets and into stocks? I don't think it's too early. I mean, you saw a decent inflow into growth stocks in particular, but it's not necessarily all coming out of cash, at least retail money market funds. I think that there's a little bit something structural about it, where it's replacing

bank deposits, as we've been talking about, the banks you know kind of disgorging all that deposit flow and it probably takes time i think we get to new highs um you know even back in the 2010s when when the mantra was there is no alternative it was really only one year in 2013 when we got to a new all-time high that you really saw heavy inflow and rotation from bonds and cash into equities. After that, it was just kind of like, you know, steady as she goes. It wasn't really a binge of buying. So I think we're well-supported in the sense

that retail is not over its skis. I don't think there's a lot of excesses that we immediately have to wring out, unless you want to talk about Microsoft, you know, trading for 40 times cash flow. But right now, I don't think you don't necessarily need, you know, people to really hoard their cash holdings and throw it into the S&P. What do you think about ARK coming off its, the Innovation Fund coming off its best month ever?

Pure reflection of the unloved, people looking for something that looks like it hasn't participated, rates coming down. It really tracks all the retail stocks through the retail ownership, high ownership stocks, and short squeeze stocks. Is that not something? No, look coming down. It really tracks all the retail stocks through the retail ownership, high ownership stocks, and short squeeze stocks. Is that not something? No, look at that, 37%. Yeah, but still down 80% or more people. You always put the right perspective on everything. Mike Santoli, thank you. Good weekend to you. All of you as well. I'll see you on the other side, Endo O.C. with Morgan & John.