Closing Bell - Closing Bell Overtime: 12/29/25

Episode Date: December 29, 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. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

That bell marks the under regulation. Norax ringing the closing bell with the New York Stock Exchange. Fiber Children's Foundation doing the honors at the NASDAQ and stocks are lower across the board. The Dow down about 250 points. S&P 500 off about a 30%. The NASDAQ down half a percent like the Dow, similar loss for the Russell. Energy, the best performing sector, oil and net gas, both moving higher. The worst performing group is materials with the air really coming out of the metals trade.

Gold, silver, copper, all lower. And look at that decline for platinum. down almost 14%. Newmont and Abramarle are the two worst stocks in the S&P 500 today. That is the scorecard on Wall Street, but winners stay late. Welcome to closing about overtime. I'm John Ford. Morgan Brennan is off today.

And just two days left in the year, this year's top-down performer is not an AI-driven tech stock. It's a classic old economy name, Caterpillar. But AI and data center demand are a big reason. We will talk to one economist who says this trend could continue to drive growth. And it's been a rough few months for the cybersecurity security stocks. Nearly every component of the CIBR ETF is lower this quarter. Could AI be a boost

for these stocks next year? And finally, we're caught up on data from the last government shut down, but another one could be coming. We'll tell you what Congress has to accomplish in the first month of the year to avoid that. But let's start with more on this down day for the markets. Christina Parts of Nebulas joins from the NASDAQ. Christina. Yeah, the stocks did fall. As traders really pulled back primarily on tech mega cap names heading into year. and threatening the so-called Santa Claus rally we've spoken about. The NASDA got hit the hardest dragged down by NVIDIA and Tesla. NVIDIA shares fell over 1% despite last week's pop on that $20 billion grok with a Q licensing deal.

Tesla, you can see on your screen, also 3% lower, but still up at 14% this year. But that's trailing both the S&P 500 as well as the NASDAQ and NASDAQ 100. The pullback, though, comes despite some optimism last week that those favorable seasonal dynamics were kicking in. Still, even with today's losses, the major averages remain on track for a third straight year of double-digit gains. One bright spot, digital bridge, jumping nearly 10% today after SoftBank announced it's buying the data center investment firm for $16 of shares, so roughly $4 billion total. Shares have jumped as much as 35% in pre-market trading this morning before the official announcement. Traders now watching whether this is just your end profit-taking

or maybe just a broader shift in the mega-cap trade. John? All right, Christina, thanks. the bottom market with yields falling a little today, Rick Santelli in Chicago. Rick? Yes, John, all yields seem to be sliding right into year end. A two year right now is on the low yield of the session hovering at 345 and they closed last year at 424, which means they're down 79 basis points year to date. And that's really fascinating because we've had three quarter point cuts from the Fed, which equals 75. basis points, and the two-year is doing what two years are supposed to do. It's right there with the movement of the Fed. Now, there's one maturity on the yield curve whose yields are near

unchanged actually higher on the year. One maturity. That's the longest maturity on the curve, the 30-year bond. 30-year bond closed last year at 478. Right now, it's hovering at 479. And what's interesting here is, if you look at the spread between twos and 30s, right now at 134 basis points separating them, it's the widest in four years. Why should that matter to you? Because when you open up the distance between these maturities, especially as you get to the longest ones, that's usually a sign that long-dated maturities are on the sticky side, and that fits for the type of trade I expect for 2026. John, back to you. All right. Rick Santelli, thank you. Now let's turn back to the broader markets, what to expect for

26. My next guest says the Mac 7 and the AI trade are still going to be important areas of the market, but with some caveats, joining me now is Barbara Duran, BD8 Capital Partner, CEO. Barb, happy almost new year. Let's get right into it. You like Broadcom. It had quite a run for a while. It was up more than Nvidia this year. Why is it still worth buying? Well, I think the stock, when you look at the growth rates on this, they keep accelerating. Their backlog now is at some $73 billion. their AI revenue is up over 70%. And the management is looking out the next 18 months, see chips doubling and growth continuing strong. So I think that what you're seeing is that people are concerned about overbuilding this bubble, which it is not a bubble in my view.

I think we are still in the very early stages. And certainly when you look at some of the stats about corporations and how many have fully implemented AI, it is still single digit. So this in 26 is going to be a year where a lot more corporations who are in the testing phase, trying to figure out what they need will be fully implementing. So the demand is just huge. And of course, the more things are created, the more people get involved. And that's corporations, that's individuals. So it's a virtuous circle for now. And so I don't see that ending in the next six months. The internet's impact was very real, but there was an internet bubble. What convinces you that we're not in an AI bubble? Well, because I think when you look at where we are, and again,

the stats I just said about corporations, and there is so much demand. You look at all the data center building this going on, the concerns over energy shortage, that is not just based on a hype and a dream. And again, when you look at what is happening in terms of the usage, whether it's Gemini or Open AI, and the usage is just exploding. I think Gemini is now up to 650 million users a month, and that's, they're just beginning, you know, to continue that climb, and they're taking share from Open AI. So I think this is, this is sustainable. One of the more risky calls that I see you making here is that you're bullish on Starbucks. I've used Starbucks. I've used Starbucks, to Nike as being these similar big brand turnaround stories in progress. Why are you picking

Starbucks here and not Nike? Yeah, I think, you know, I think there's a big question for both of them. Both have sort of broken models. And Nike, though, when I went really to an extreme. When they tried to go direct to consumer, they cut out their wholesalers. They lost a lot of shelf space. And that, in my view, brought in a lot of new competition, which has been eating share. And they lost their innovation chops there, which they had done for many years. And so I think they have a long way back. Even though in the past, they have righted the ship. But this time, they had made, I think, a serious wrong turn. So I think it just takes that much longer. Starbucks, as you know, they brought in the star CEO. He turned around Taco Bell, turned around

Chipotle. And he's put a lot of initiatives in place. But a lot of the initiatives will not really take hold until 26. And yet, in the last quarter, when they reported, it was the first time in some seven quarters, two years that you saw positive same store sales, both in the U.S. and globally. So to me, that is very encouraging that what they're doing in terms of stores and the customer experience and operational efficiencies and staff is really starting to take hold here. Nike, of course, has had a lot of expectations built in, and they, once again, in their most recent quarter, disappointed. I just think they've got a longer, longer road to help. Metals have looked pretty shiny this year. You're still excited about gold because you're

expected to mostly hold its value or actually go much higher in 26? Yeah, it's a good question. When you anything gets up like 70% year to date, you always say, well, is that it? But I really think there's longer term structural forces in play here. Gold in the past has really been used in times of nervousness or inflation fears and this sort of thing. But I think there's a real change that's happened. Really kicked off in earnest in 22 when Russia's foreign reserves were impounded because of their invasion of Ukraine. And central banks everywhere said, hey, wait a minute, we need to diversify a way so that we're not hostage to other countries and pounding our assets. And so you've been seen steady buying it. I don't see that's going to decrease

anytime soon. And certainly when you see some of the stats that we can get hold of, whether it's China adding to their stockpile or other countries, particularly in emerging markets, I think that trend should continue. Now, that's a little bit different than we're seeing with silver and copper, nickel, I think, and aluminum. These are things that are really being driven, I think, by the data center buildout, and that is the AI drive. And that's going to be, if I'm right, this next few years, that's going to continue to unfold so the materials can continue to move higher, even though they also have had a great run this year.

All right, a lot writing on that. Thanks for sharing your study notes, Barb Durant. Thank you. Happy New Year, John. Happy New Year. Well, look at the moves for the major averages off their lowest levels of 2025. All three major averages hit lows on April 7th on tariff fears, but they bounced back strongly, nearly 60% for the NASDAQ,

as the worst fears about tariff impacts were not realized. Are Steve Leasman here now with a look at what happened instead? Steve? Hey, John, yeah, one of the downsides of tariffs was always going to be that companies would be forced to lay off workers if they couldn't pass along their added cost or absorb them in profit. But Morgan Stanley in a new report suggests the inflation this year, especially in the third quarter, shows companies can and did pass along,

tariff costs and preserve their profits. That means layoffs were more muted and could be avoided more next year. Morgan Stanley writing, we read the Q3 U.S. GDP data, pardon me, as suggesting U.S. corporas took a significant step towards recovering the cost of tariffs. In turn, this should mean less downside risk to the labor market and lower recession probabilities. In Morgan's analysis, tariffs were absorbed in Q2, which meant to hit the profits, was partly responsible for the soft payroll growth in the price.

past two quarters. But then, guess what happened? Between the third quarters, Morgan Stanley found that while tariffs increased costs, companies reduced unit labor costs, raised prices enough to actually boost profits more than costs increase. Tariff price increases could have one more quarter to go before easing next year in Morgan and other economists' estimation. The eventual easing of this inflation and pressure on balance sheets could allow for pickup of jobs in the second half. The risk is that consumers end up balking. at higher price. And of course, this analysis is on average for companies. Some fared better with tariffs and others, for example, small businesses, John, fared worse. So Steve, who paid for the

tariffs? And, you know, since it seems like companies didn't fully take that hit and lay off workers? Well, what's interesting about this analysis is it shows a change. It was first absorbed and then passed along. There's some indication I've been talking to some people that perhaps foreign suppliers absorbed a piece of it, then companies absorbed a piece of it, and then it was passed along. I think you could find along that spectrum of those three different groups, a piece of the tariffs. I've seen numbers, for example, John, about 60% of the tariffs being passed along. I think, though, the jury is still out a little bit, John, because all of the tariffs have not worked into the system. Companies were still selling out of inventory or pre-tariff goods,

so we'll see if those are replaced. And we'll see, by the way, John, what happens? if when the price of something goes up because of a tariff, do consumers balk and the end up reducing the production or the input or the import of those goods? Okay. So it sounds like a little bit of everybody along the chain paid something, but we still have to wait and see how it plays out. Steve Leesman, thank you. Well, check out the heat map of the Dow 30 this year. 23 up, seven down, the lower right, United Health, Nike, and Salesforce, the best performers in the upper left. names you might not expect, IBM, Johnson, and Johnson, and Goldman Sachs.

But the best performer in the Dow this year is Caterpillar. Up next, how data center demand is power in cap, how it could boost the whole economy. Overtime's back in two. Welcome back to Overtime. Shares of NVIDIA up about 40% this year, as demand for its chips and systems for AI remains strong. 40% is not bad, of course, but not enough to make it the top stock in the Dow in 2025. That honor belongs to Caterpillar. Up right around 60%.

Also getting a boost from AI demand and the data center buildout. Sima Modi joining me now with more on Caterpillar. Caterpillar hasn't had quite the multi-year run that NVIDIA has, but Strong 25. This is a huge year. I've covered this company for many years, John, a 60% gain for Caterpillar

and is predicated on this whole idea that data center developers they increasingly need access to not just power, but consistent power, right, in order to make the servers run. They cannot afford servers to not be able to run on consistent power. So that's why Caterpillar's backup generators are seeing huge demand, up 30% in the third quarter year over a year. That's helping the company's backlog

reach a new record of nearly $40 billion on this whole idea that if we're going to be able to build this AI ecosystem, you can't run it without power and the access to equipment like these backup generators. So that's why Caterpillar is investing more. They're putting over $700 million into its Indiana plant to increase capacity. It's recognizing that this is a big opportunity with new customers coming in from the hyperscalers to other data center developers, which CEO Joe Creed talked about at the company's Investor Day last month, what a time to join the company. He's been at the company for 28 years.

He actually led the company's energy and power business, then became CEO in May of this year, and the stock has continued this epic run. The whole question now going to 2026, if you look at the average price target, John, $606. The street remains very bullish that this company can continue to grow. one of its biggest competitors is Cummins, which also has a similar business. But the street likes it, and has really been able to transform the story around a company that has been, for years, hung up on China and construction and mining, still two very big businesses, but the excitement right now is around power. I think the question for investors must be, is this an iPod

type moment for Caterpillar where the very nature of the company is shifting? That's what happened with Apple. It wasn't any more about the PC. share that they didn't have. It became about this whole mobile ecosystem that they were growing. Or is this sort of a bit of the AI hype that they're latching onto getting a pop but that that could fade? There's two

things there to think about. At one point, at some point do these backup generators get commoditized? Do prices start to drop? Do they become less in demand over time? Hard to say given that there really are only two major players that have these backup generators. And even though a data

center, as I'm speaking to a developer about this, you may not use it, you know, a lot. Actually, the hope is you only have to use it once if there's a power outage. But even then, these developers, they need it because these data centers are so expensive. They can't afford to have any type of hiccup in power. And to your other question, you know, I think people are, the market is assuming that Caterpillar is going to become even more innovative on the types of backup generators they develop in the coming years. They're going to become more tech savvy. They're going to have gas turbines that are able to deliver even more. As you know, some of the most powerful chips now on the market require twice

as much power. So the equipment is going to need to get better, too. Yeah. You don't put a baby in a car seat because you want to get an accident. It's just in case. So backup is important. Seema, thanks. True. And speaking of AI, more than $61 billion has flowed into data center deals this year, according to S&P Global. And what they say was a global construction frenzy. So could all of that spending make data investment the new macro hero of the economy. Joining me now is Paul Gruenwald. He is the global chief economist at S&P Global Ratings. Paul, a lot of excitement around this.

How durable is it? How sensitive does this make so many different companies in the economy to even some slight fluctuations in the growth and buildout expectations of data centers? Well, hi, John. Thanks for having me on the show. Yeah, first of all, this was a big surprise in 2025. We all knew it was happening. But I think the speed and the scale caught us up all by surprise.

To answer your question, you know, we're in the middle of a big build-out of infrastructure around data centers, as you mentioned. And it's more than just the physical buildings, right? It's the software, it's the hardware, the servers, and the racks. And as your colleague just said, it's on the energy as well. So this is probably going to be a multi-year build-out, but then we have to get to the point where we see whether the credit story and the macro story play out. But it looks like in the near term, we're going to have a lot of demand to build these things out. Yeah, it's not a question so much for me about the overall demand, but about the strength of the demand continuing over time. How exposed does this make various portions of the economy to pauses or even intimations of a pause in the pace of a buildout, in the availability of power to make that build out worthwhile, et cetera?

Yeah, well, the question is, where's the constraint? where's the potential choke point, right? We shifted the financing from the balance sheets of the hypers onto the capital markets. We saw that big time this year. Now, another part of S&P Global, my energy colleagues are looking at maybe perhaps the energy is the binding constraint,

as your colleague just said. We're looking at backup generators, maybe nuclear down the line, maybe going off grid at some point, but lots of moving parts and lots of potential blockages and choke points. But again, as of now, it looks like it's full steam ahead,

but I think those would definitely be risks for us over the next couple of years. Where do you look for signs of air pockets if there is any kind of shift in the durability, an overall strength of that demand? Yeah, I guess you'd have to start looking at the earnings calls, right? We've got a lot of optimism built into these. We've got a lot of new debt. These hyperscalers are not historically big CAPEX entities, and they're doing the biggest CAPEC project in the U.S. right now.

So I think as we go through 26 and even into 27, we're going to have to, you know, focus on the potential stress areas. And I would think from the credit story or the macro story, we have to look at earnings and whether these investments are going to eventually pay off. I wonder, is the capital market propping up the AI spend? Or is the AI spend propping up the capital markets? Yeah, chicken and egg question. Like, as I said, the initial funding came from the balance sheets of the hyperscaler. There seems to be a lot of dry powder willing to finance this right now. We've had a big surge this year.

We've got more Cappex demands coming into next year. And again, we'll be looking at spreads. We'll be looking at access. We'll be looking at earnings and all those sort of credit fundamentals as we go into next year. Is anything shielded from this overall trend? Not really. I mean, I think we would probably look at some of the hyperscalers as having better balance sheets and financials than others. But, you know, right now, it's kind of everyone in there.

It's hard to distinguish between who the potential winners and, you know, losers might be. So, again, that's kind of a macro credit story that we're following for 26. Because we're just talking about Caterpillar. Once Caterpillar's in there, I mean, you know, normally it's ag equipment. Everybody's in, really. Yeah, you're seeing, we're reading stories and we're seeing, you know, deals in the business ourselves about, you know, companies repositioning toward the data center buildout rather than their traditional building. I don't know if that's a sign of strength and profitability or just everyone's jumping

on the same trade. There's a ton of momentum in that right now. But it does point to the shortage, right? The shortage of the resources to build these things out, shortage of capital, energy expertise. And as of now, it looks like we're in solid shape for the buildout. But again, as we go into the next couple of years, we'll be watching the fundamentals to see if we spot any cracks arising. Knock on wood. Paul Crowenwald. Thank you. Thank you very much. Well, the Fed has cut rates three times since the middle of September by a total of 75 basis points, but the 10-year yield barely moved.

Stubborn rates have been a problem for the home construction stocks as the ITB ETF is down 13% since then, but is there now a positive sign for these names, something to build on perhaps? Mike Santoli will be back with that after this break. A flicker of life in housing pending home sales ticking higher in this latest report is Is this a real sign of housing turnover coming back or just another head fake in a sluggish market? Let's get the read from senior markets commentator Mike Santoli. Mike? Yeah, John, still plenty to prove here with this move.

Now, better than expected pending home sales, these are transactions where there's been a contract sign. So it is sign of maybe a little more activity happening. But you see on an absolute basis, the pending home sales index has lifted to levels. It's also seen a couple of times in the last few years, but nothing obviously compared to the massive rush. for housing back in the pandemic years, 2021, 2022. This is all happening with rates relatively stable. You know, the 10-year yield today is almost exactly at the midpoint of its two-year range. Mortgage rates are more or less tracking in that direction. Ultimately, time is going to help unlock this market as more existing home supply comes out there. And obviously people just come

to terms with the idea maybe prices have to come down to some degree. Now, take a look here at Home Builder stocks relative to the S&P 500. They've given. given up this big lead they had generated. This is a five-year chart. So you see, just slipping behind, it's not an awful chart on this span, you know, over five years, but it does show that it has struggled to really get traction at these upper levels. And I do think that even if the housing market comes back, it doesn't always mean that the new home builders are going to be the chief beneficiaries. Who knows, maybe we can see an outbreak of better affordability next year.

That would be kind of a dream and also very unexpected. A dream if you're trying to buy, for sure, or if you're looking at, not if you're trying to sell. So I wonder how much of this is really just because of the enormous run-up in equity that so many have seen over the last several years. It has to be a part of the story. Yeah, I do think sellers are in a better position, naturally, because most of them either have the low rates locked in or because home price appreciation has meant that they have a cushion underneath it. I think one of the net benefits, if we're talking about the overall economy, is, that housing was not a big net contributor this year to GDP necessarily or to employment

and they have had their struggles with costs and labor supply and all the rest of it, so that next year maybe the bar is lower for whatever housing and home building can contribute to overall growth. Hidden issue here, I think. Technology has made it easier to leave a place and not sell your house, whether it's Airbnb or remotely managing something. Mike Santoli, thank you. Dark supply. Yeah, exactly. For sure. Time now for a CNBC news update with Kate Rogers. Kate. Johnny, Utah judge ruled today that the transcript and audio of a previously sealed hearing will be released in the case against Tyler Robinson. Robinson is charged with murdering activist Charlie Kirk earlier this year.

He's yet to enter a plea. A separate hearing is expected on whether to allow camera access to future proceedings. Kirk's widow, Erica, has said that she wants cameras allowed. Under a newly finalized regulation that was first drafted during the pandemic in President, Trump's first term, immigration authorities can now deny access to asylum seekers if they present a risk to public health. Effective Wednesday, it allows authorities to block asylum based on, quote, emergency public health concerns generated by a communicable disease. And there's a new celebrity billionaire, according to Forbes, Beyonce, has reached the milestone. She joins

the billionaire musician club, along with her husband Jay-Z, Taylor Swift, Bruce Springsteen, excuse me, and Rihanna, much of Beyonce's wealth comes from her music catalog, which she almost completely controls, John. Back over to you. Quite a household. Kate, thank you. She has a little lemon gaining today thanks to some help from an old friend. That story is coming up.

Plus, the three big cybersecurity ETS have all had a rough end to the year all down this quarter. So what could get those names going again? Overtime, we'll be right back. Welcome back to Overtime. Let's take a look at the Cybersecurity Group, one of the earliest litmus, for investors navigating the impact of AI. The CIBR ETF underperforming broader tech this year, especially over the last three months,

but under the surface, it has a tale of haves and have-nots. Cloudflare and CrowdStrike, for example, posting strong years while Sentinel 1 and Fortinette struggling. Let's talk more about what 2026 could bring for cyber stocks. Joining us now is Peter Levine, Evercore Enterprise Software analyst. Peter, welcome. So I was noticing that CrowdStrike is higher Z-scale, is higher, rubric is higher. How much of this is a paradigm shift that's happening in cybersecurity,

not just some overall sector weakness that investors should be thinking about? Yeah, so that job found me odd. You know, I think there's a lot, even within broader assault, right? I think, you know, you saw more of investor focus towards like the picks and shovel names, which is the hardware, which is some of these names. I think within security, cybersecurity, it's, you know, I think why I'm bullish in cybersecurity and why I think it remains where the most defensible, you know, sub-sectors within software is that the underlying pinnings of security, like, structurally have not changed. There are benefits, I think, to security that are industry-specific, right, than any other software category that has. So,

like, the underpinnings of some of the demand drivers, you know, it's not just the fundamental demand drivers, but it's also like the budget allocations. If you think about the underpinnings, which is, you know, there's rioting, you know, geopolitical tensions, China or Russia, like, warfare is out of cyber warfare. You're seeing the shift towards AI enterprise environments, increasing attacker, you know, sophistication with the use of AI, ransomware, you know, extortion methods. You also have regulatory requirements. So there's a lot of demand drivers, but I also think you didn't really see as much AI monetization

across a lot of the cyber names, but I think that's going to change perhaps in 2020, in next year, but Peter, what I wonder is, is there a concern? consolidation wave that's about to sweep even more through cybersecurity, where some of these platform names like a Z-scaler, like a crowd strike, are going to roll up some others. We see what's happening with Sentinel One. We see the rise of some of these backup and recovery names. Rubric I mentioned, Com Vault is out there shifting its approach, and we expect to get cohesity coming to market pretty soon, maybe in 26. I mean, is there a shift happening in the market where all of of the boats might not get lifted by this AI tide?

Well, I mean, also misservice now. They acquired Armist, a private security company last week for $7 billion. They also acquired an identity company. So you're seeing a lot of, you know, untraditional software companies moving into security. I do think there is a trend towards consolidation, which is why I think Palo Alto for me, it's one of my top picks going to 26, which is the consolidation trade is playing out. So you are seeing, you know, CSOs and organizations trying to, you know, kind of streamline, consolidate what they have internally.

It also helps on the AI front, having all your data from one vendor. So I do think consolidation you should likely see that continue to happen. So are you saying that's a good thing for the likes of a crowd strike because the prices that they're going to have to pay are relatively cheap because so much of cybersecurity has been struggling stockwise recently? Yeah, you've seen a lot of startups. And, you know, have you seen the fundraising and it becomes tougher? But you're also seeing that, you know, with AI,

that you create these, you know, it makes it harder for organizations to have all these siloed systems, even within security. So if it's their endpoints, it's their identity, if it's network, a lot of companies want to have all this data within one bird view. So I do think that there is a benefit to CrowdStrike, there is a benefit to Palo, there is a benefit of the Z-Scalor. And you have seen them make a lot of acquisitions over the past 12 months to kind of create this consolidated, you know, cybersecurity play. I would say Palo is probably one of the few, one of the only large-cap cybersecurity names that has the entire cyberstack now, assuming the cyberarch closes in the second half, I mean, that's going to give them a pretty good

advantage because they will own the entire cybersecurity tech stack. Well, watch closely. Peter Levine from Evercore. Thank you. While President Trump is making some headlines, our Amen Javers has the details. Amen. Yeah, John, that's right. The president taking some questions from reporters down at Mar-a-Lago in Florida.

He was asked about the situation in the Straits of Taiwan. Take a look at this graphic that was posted on social media by the Chinese embassy. You see those, I guess, they're pink squares surrounding the island of Taiwan. That's where the Chinese government says their military is conducting live fire exercises. And you can see the encirclement really militarily of Taiwan there. That's causing some eyebrows to be raised, some attention to be paid to tensions in the Taiwan Strait. Of course, the concern is that the live fire military exercises could be used. used as sort of a ruse to engage in some actual military operations.

So the president was asked about all that today just a few moments ago, and he sought to project some confidence. Here's what he said. Oh, well, we don't have the soundbite from the president, but in effect he said that he's not worried about the situation in the Taiwan Strait. He said he had not heard from Xi Jinping and was not concerned overly about that. He said military exercises have happened in that area for about 20 years. The President John was also asked about Jay Powell and the Fed.

He said he's going to make a decision at some point in January. He re-upped his complaints about Jay Powell and the Fed and its building program. He's said once again that he's considering suing Powell for gross incompetence. He expressed real renewed frustration about the chairman of the Federal Reserve saying that ultimately he's, deeply frustrated with him, but suggesting that he's not going to move ahead with any attempt to fire Powell because we're so close. That means we're so close to the natural end of Powell's tenure. He says he does believe that Powell should resign as a member of the board, even after he steps down as chairman of the board of the Fed, John. So the president continuing to hammer home that

point that he's deeply frustrated with Jay Powell and suggesting he is going to nominate somebody soon, but not giving any indication one way or the other who that person might be, John. Okay, and Powell, metaphorically, at least, continues to wear a hard hat. Amen, thank you. That's right. As Yogi Berra once famously said, it's deja vu all over again. Now we're looking at another possible government shutdown. Up next, we'll look at what's at the top of Congress's to-do list in the new year.

And will the spectacular year for silver repeat in 2026, or is the medal being set up for a stunning fall? Breakdown the charts coming up on overtime. Welcome back to overtime. Lululemon's a big winner in the S&P 500 today, but not too big, as founder Chiff Wilson launches a proxy fight. Wilson's one of Lulu Lemmon's largest shareholders. He's nominating three candidates to join the company's board and proposing all directors be elected annually rather than the current rotating cycle. The board responding in the past hour saying it was in discussions with Wilson, but he declined to provide names of his nominees. The board's saying now that it has those names, it will evaluate the candidates.

All this comes less than three weeks after the company announced CEO Calvin McDonald will step down at the end of January. They have not named a successor. Louis Lemon shares have lost nearly half their value this year and are among the biggest S&P losers in 2025. Well, Congress has a huge to-do list in the new year. The problem is lawmakers are notorious for not getting those things done in an election year. That's especially troubling because we're already facing the prospect of another government shutdown. Emily Wilkins has the details. Emily. Hey, John. Well, look, yes, funding the government right at the top of the list for Congress,

the majority of government funding runs out on January 30th. And Congress has struggled this past month to pass some of these individual funding bills. Even so, several Democratic senators told me that they don't expect another shutdown this time around. Senator Peter Welch said the last shutdown was able to get health care affordability in the spotlight as a key issue. It's a different time frame. And the reality is that shutdown came where there was a real urgent issue to get health care on the front and center of the agenda. I think we accomplished that.

So I haven't heard people talking about another shutdown. Now, the health care issue isn't going away. When the House gets back, rank and vile members are going to be forcing a vote on a three-year extension of the Affordable Care Act tax credits. Now, that bill is expected to pass in the House, but senators from both parties say it's likely den on arrival in that chamber. However, a group of senators is working on a bipartisan plan before the break, but we have yet to actually see a physical plan come from that group. A few other issues that could cross the finish line next year, including crypto legislation,

a funding bill for highways and permitting reform that could help boost energy production and speed data center development. John? Emily, if I recall, and I'm not certainly watching this as closely as you're as knowledgeable as you are, they were in a way defection. from both parties around the last shutdown. The Democrats kind of starting to bring it to a close, and then the Republicans recently forcing this health care vote. With the midterms coming up at the end of last year, how does that set the stage for the prospect of a shutdown?

Is there consensus on who won or lost the last shutdown cycle? I mean, John, you can ask different people who won or lost the last shutdown, but it just doesn't seem like, at least right now, the appetite is there. But you're absolutely right. When it comes to the midterms, the big thing that's going to be on everyone's mind is affordability. That played into the last shutdown debate on health care. It'll play into what we'll see next month when Congress comes back and tries to deal with health care. It'll be very interesting to see as the rest of the year continues, usually election years are not great for getting big legislative packages done, but both sides want to show that they are first and foremost on affordability.

So I'd be looking for ways that both Democrats and Republicans can use the first part of the. year to start making the case. So in the second part of the year, they can go to voters and say, hey, we're the party that's trying to keep costs low. You should vote for us. Okay. We're going to watch that for sure. Emily, thank you. Well, transports have been underperforming the broader market this year. Up next, a top technical analyst explains why you should be riding the transports for the long haul and the stock he thinks will lead the way. Plus, mind the gap. We're going to discuss whether the divergence between the Mag 7 winners like Alphabet and losers like meta will widen in the new year.

as investors demand payoffs from massive AI spending. Be right back. Welcome back. The remarkable run in silver showing some tarnish today, down some 7% after the CME raised margin requirements on precious metals trades. That's after it crossed above 80 bucks an ounce for the first time in overnight trading. Silver's still up 25% in December, nearly 150% for the year. Let's take a look at the technicals on the trade.

Join me now is Jay Woods, Chief Market Strategist at Freedom Capital Markets, CNBC contributor, buddy from the stock exchange, about a decade ago. What do you say? Good times. What do I say? Wow, when looking at silver, I mean, this move is parabolic. It broke out of a 15-year base, and as a technician, this is exactly what you want to see. It's following in the footsteps of gold.

But what we've had over the last two weeks, this run-up, excessive would be an understatement. When you look at it from a technical perspective, the RSI hitting 90, the amount percentage-wise, it was above the 50-day moving average, over 45%, 95% above the 200-day. A bit extreme. And then when we saw the CME put those margin requirements in, that kind of got rid of some of the riff-raff, and it's pulling back. I don't think the pullback is over. I do like it on a long-term basis. Great breakout.

But I would wait to the mid-60s to get back into it. And then there are other concerns. When Silver's breaking out, Elon Musk tweeted this weekend that, you know, this is going to have ramifications on a lot of these technology sectors, stocks. copper breaking out nickel breaking out platinum palladium we don't talk about those also euphoric coming back in i think the trade for now is over let's see if uh the pullback so jay there's so much risk in this market i mean the vix is down what around 15 uh but there's so much risk and we're just talking about how caterpillar had this great year because it's part of the data center story now and and there's nothing that's exempt from this story how does that set us up for 2026 how cautious

are you, or how bullish do you continue to be? Well, I'm cautiously bullish, if that's a term. I'm looking for about 3 to 5 percent, you know, below average year of returns. But what you're going to see, we're going to have these pockets of euphoria. We saw it with nuclear trades. We see with the AI buildout. We just seen it with some of these commodities spiking. But now we need to look at the bottom line and find some stocks that have done okay, but still have room to run.

And so when I look under the hood, today, no one's talking about this. ExxonMobil hit a 52-week high. Broke 120. All right, this stock has knocked on that ceiling. Technical resistance level just broke out with crude under $58 a barrel. It's telling me something that this stock has room to run. And then if you're looking for something from a risk-reward point of view, this is a good name to be in because my downside risk,

if it breaks 120, 117, I'll get out. The trade didn't have legs. But when you look at pockets of momentum, we saw it with commodities. It could be energy next. So watch that one. Transports? Transports. Love the transports.

broke out long term. Tesla and FedEx, you know, Tesla is not a transport, consumer discretionary. Yes, they build cars, but it's not a car story. I think that is a stock technically that's poised to make a nice run into 2026, breaking out on a one year and a five-year term basis. And then FedEx, watch FedEx, 300. It's knocked on that door several times. We're in the 285, 290 range right now. If it breaks out, it's only up 7% near to date, made a hell of a run. That's the next one to move, and then watch the coattails. UPS, starting to turn as well. So I like the transports, especially FedEx, UPS, and some of the shippers. What stock or commodity, whatever it is, is the canary in the coal mine for this market?

Is it Bitcoin? No, I still think Oracle has to prove us, you know, that debt issuance issue is a red flag. And technically, it's broken down. It's made it back, but that's more of a relief rally. I'd like to see Oracle another solid quarter. It's got new leadership there and debt problems. These are things that I don't like when picking stocks, and it's in a downtrend. So, Oracle's the one I'm watching.

Meta, let's see if that can come back. That's another one that's broken down. We don't talk too much about how that reacted after last earnings. The earnings were solid, but that AI spend is being punished, not rewarded now. So those are the two that could be the canary in the coal mine to take us a little lower and drive technology lower, which would be a stumble for the market overall. But I still think the broadening is the story. And we're going to see it in some of those names, like the transports, like energy.

All right. Jay Woods. Thank you. Good to see you, my friend. Well, up next, we're going to discuss whether the cracks in the MAG 7 we started seeing this year could further separate the AI winners from the losers next year. And don't forget, you can catch us on the go by following the closing bell overtime podcast on your favorite podcast app. Be right back. Welcome back to Overtime.

As Jay Woods just mentioned, we were seeing a divergence in Mag 7 stock trading. Could it carry over into next year? McKenzie Segalos is here. Mac, what do you see? Hey, John, so the Magsevon is no longer trading as a monolith. Alphabet and Invidia are leading the pack. Amazon is in last place, and 2026 could widen that gap. The divide comes down to margins. Alphabet owns the full stack, chips, cloud, distribution, and Gemini,

with cloud margins expanding thanks to its custom silicon. Invidia is winning because everyone else's CAPX flows through its chips, with gross margins north of 70%. Now, the laggards tell a different. story. Amazon is up just 6% with AWS growth trailing Azure and Google Cloud and KAPX exceeding operating income. Meta has poured tens of billions into AI talent, reorg the unit at least four times this year, and still no clear payoffs. Shares underperformed the S&P this year. Now the setup for 2026. If models keep converging, distribution matters more than

who trained the best model. Apple may be near the bottom this year, but if the model race commoditizes, and we're seeing signs of that happening right now, it's 2.3 billion-plus devices could become the competitive moat. And if you want to know where the AI trade is really working, look past the MagS7. Micron has tripled. Western Digital up almost 300% this year. Seagate over 230 percent, so those memory and storage names are beating the headline names.

John? Mackenzie, so I wonder, really, I guess it comes down to in 2026, does the story continue to be driven by AI excitement and the revenue at the top line, or does it move into efficiency and results at the bottom line? Because if it does, and if Amazon, say, with Bedrock, with its models, is able to show some efficiency, does it matter less if its revenue number, raw revenue growth number, isn't the same as some of the others? Absolutely the latter. So you already saw that halo effect of opening-eye deals wear off in the context of Oracle now trading below where it was,

before it announced that OpenAI run up. And so looking ahead into next year, it is completely about how do you turn those CAPEX Ben into immediate ROI. And with META, I mean, you saw them, you saw shares there have their worst single-day sell-off in three years after they announced that CAPEX boost without showing a commensurate boost to their ROI on AI outside of their ad strategy. And so in the context of Amazon, you mentioned Bedrock. And that's how they sell different large language models.

So they also offer theirs, which is Nova. really the people are, their customers are accessing open AIs models and anthropics models through bedrock. And so it's less about who has the most competitive model. And it's more about who has the marketplace where it's easier to buy them. And that works best with AWS customers. Well, we'll see how it all plays out. Mack, thank you. That's going to do it for overtime.