Closing Bell - Closing Bell Overtime: SoFi Slump, Tesla Deliveries, and Tech’s 2025 Playbook 1/2/25

Episode Date: January 2, 2025

Markets kicked off the new year with a volatile session, ultimately finishing the day lower. Vital Knowledge’s Adam Crisafulli and Hennion & Walsh’s Kevin Mahn break down the market reaction. Our Hugh Son analyzing SoFi’s sharp drop, while RBC’s Tom Narayan offers insights on Tesla’s latest delivery numbers. Plus, Megan Cassella reports on the latest developments in the China Treasury hack, and Tony Wang of T. Rowe Price shares his tech playbook for 2025. Angelica Peebles on the latest in the bird flu outbreak, and Terry Haines weighs in on the political gridlock as the House Speaker vote looms.

That's the end of regulation. Statement Arts ringing the closing bell at the New York Stock Exchange. Daray Bioscience doing the honors at the NASDAQ. Well, stocks giving up early gains, finishing in the red to start the year. We saw at the lows a 100-point swing in the S&P today. Some pockets of strength, though, including energy, utilities, and the chips. That's the scorecard on Wall Street, but the action is just getting started on this first trading day of 2025. Welcome to Closing Bell Overtime. I'm Morgan Brennan with John Port. And coming up on today's show, will Tesla's rally hit the

brakes in 2025? Shares falling today after the company reported a drop in annual deliveries. We'll ask an analyst if this is the start of a bigger pullback or a good buying opportunity. Plus, Apple also taking a dip today as the company offers iPhone discounts in China, and analysts raise concerns about sales. T. Rowe tech portfolio manager Tony Wong tells us he's also seeing red flags for that name. And we'll talk about the key House speaker vote coming tomorrow in Washington, how it could set the tone for the Trump agenda this year. And that's certainly in focus for investors. But first, let's bring in Vital Knowledge founder Adam Christofoulian, Henion & Walsh Asset Management President Kevin Maughan. Great to have you both here on a day that had ups and downs to start the new year. Kevin,

you're sitting here on set with us. So I'm going to kick this off with you because after two years of 20 plus percent gains in the S&P, you could argue that a third year of really strong gains could be unlikely. You've only seen it one other time in history, which was the mid-90s. You're calling this the year of opportunities. Where do you see the opportunities? Yeah, I'll start by saying it looks like the Grinch got in the way of the Santa Claus rally this time around. And I think this is a bit of foreshadowing of what likely stands ahead in 2025. Look, you just pointed out we've had, since 1950, nine times the stock market has rallied by 20 percent or more in consecutive years, this being the 10th year.

In eight of those nine instances, the stock market was higher the following year, but only by an average of 3.6 percent. So investors will need to be a lot more selective in 2025 to find those growth opportunities. I think there are many growth opportunities ahead, but expecting another 20% plus return in 2025 is highly unlikely. Okay. Adam, I want to get your thoughts on this, especially given the fact that Jonathan Krinsky over at BTIG put out a note today and basically said that what the market's facing right now is a three-body problem. Dollar and yields continue to exert upward pressure, and breadth remains poor, And until that changes, he sees downside volatility for stocks

continuing here. I mean, the dollar index, just to give one example, is trading now, as of today, at a more than two-year-plus high. How do you see the market set up for this new year? I know definitely the dollar is going to be a headwind, you know, as we start to get our energy reports in a couple of weeks for reported EPS and reported revenue. You know, I think the market is still digesting some key macro events from a couple of weeks ago, specifically the recent Fed decision, where you did see a hawkish shift in the forward guidance with just 50 basis points of cuts guided for this year. And then importantly, what happened with the stopgap, you know, that whole drama really caused expectations to fade a little bit on some of the

initial Trump enthusiasm. If you kind of look at what the market has done since the election, we've reversed a lot of that initial post-election rebound. And we're going to have to watch closely tomorrow to see how the speaker vote goes. You know, investors are very much on edge about the ability of Republicans to unify and pass some of the key pro-market pieces of the agenda of the Trump 2.0 agenda, specifically on the tax front. You know, so I think those two factors, the Fed and Washington, have been weighing on sentiment. But going forward, I think you're going to see kind of a broadening out of the rally.

So for the S&P, you know, the gains may not be, probably will not be as terrific as they have in the last couple of years. But beneath the surface, there still are some big pockets of the market that are trading well below the headline multiple. And the current macro setup, as far as just growth and inflation, are still in a relatively positive position, specifically on inflation. Some of the recent data has shown an important cooling in in core services inflation. Okay. So, Kevin, let's talk a little tactics. I hear a lot from investors who are tempted really to time the market here, tempted to sell, which sounds dangerous. But at the same time,

there are a lot of people whose portfolios are probably way out of whack, given the gains that we've had over the past couple of years, unless they were constantly rebalancing, which a lot of people don't do. What does rebalancing mean in 2025, especially for people close to retirement or beyond it? Yes. Rebalancing and trying to time the market are two very different things. Trying to time the market is often an exercise in futility. Rebalancing your portfolio can help you achieve your longer term returns and keep you in line with what your true risk tolerance is. So as I look at the next two years for the stock market, they're likely to look very different than the last two years

as we will continue in an environment where interest rates are becoming lower, where economic growth is going to become more stagnant, and the leadership of the prior two years is likely not to be the leadership going forward. So take some of your gains in those areas that have led the markets over the last two years and reposition them into different areas of the markets that will potentially lead going forward. One such area, how about biotechs? Look, one area that Democrats and Republicans agree on, perhaps the only area these days, is the need to lower drug prices. And as a result of that, large cap pharmaceuticals are going to have to become acquisitive

to replace that lost revenue potential. I think of a company that we hold in our portfolios, Axum Therapeutics, a $4.3 billion smaller cap biotech company that actually is developing therapies to treat central nervous system disorders, a great opportunity that large cap pharmaceutical companies will likely look to add to their own pipelines. So that's just one area of the place that you could potentially rebalance to in 2025. Makes a lot of sense. Now, Adam, at the same time, there are a lot of investors as we start 2025 long this market with leverage. And, you know know, historically that can mean volatility. What do you expect? Yeah, no, definitely.

I think, you know, especially as we look through, you know, I think Washington and U.S. fiscal policy are really going to be the dominant events, at least for the first half of this year, if not all of the year. And you have some key deadlines coming up, you know, with the budget expiring in March. And then you have the debt ceiling. And like I said earlier, tomorrow's speaker. But you have a lot of key binary events in Washington that are certainly going to create, you know, a lot of volatility being to surface in this market. Absolutely. All right. Kevin, Adam, thank you.

My pleasure. Happy New Year. Happy New Year. Now let's turn to senior markets commentator Mike Santoli. He's going to set us up on where the markets might go from here. Mike. Yeah, John, at least on paper, there are the makings perhaps of some kind of a relief trade for at least the majority of stocks. This shows you how many stocks within the S&P 500 are on a technical basis oversold versus overbought. Bespoke tracks this daily. All this really means is how far a stock is below or above its 50-day moving average. You see, we came into this year with about half of the S&P technically

oversold. Therefore, it doesn't mean they're going to go up from here, but it does mean often that essentially they have a bit of an upside bias on a tactical basis. Probably more, actually, more oversold stocks than there were in these ends of these pullbacks that we got last year in the spring and the fall. And of course, the obverse of that is very few stocks technically overbought. That really just accentuates how below the surface there have been significant pullbacks. So in theory, we should have the ingredients of some kind of dip buying coming into the first month of this year when you do get new flows into equities usually. Now, what this also means is if the market doesn't respond to this soon, you might have a bigger reason to worry in terms of the macro message. Morgan mentioned the rampaging

dollar index. It's going higher again, more than a two year high, very steep angle right here. This U.S. exceptionalism trade is being kind of accentuated, not just by our growth rates and the fact the Fed might not cut rates very much, but also the idea of trade frictions are net positive for the dollar or negative, I should say, for things like the euro. And that's shown in the dollar index. This index throughout its very long history has essentially never been higher, except for a couple of month period in late 2022 when the Fed was kind of radically going to be raising rates to chase inflation. So, Mike, if the debt buying doesn't happen, what does that mean? It probably just means we need kind of a deeper and more comprehensive pullback that that would would reset sentiment and technical conditions and maybe just get things even more oversold. So this, relative to the 50-day moving average, is not in itself like a super washed out market.

It just shows you that a lot of stocks have pulled back appreciably from their highs. Just to put some numbers on it, coming into today, the median stock in the S&P 500 was down 6.5% over the prior month. So even though it seems like we didn't finish on such a negative note for the broad indexes, that's because it was somewhat covered up by the defensive strength of the mega caps. Got it. All right. Mike Santoli, thank you. We'll see a little bit later this hour. Now let's turn to one of the biggest decliners of the day. SoFi falling more than eight percent after a big run up late in 2024. Hugh Son is here. He's got a look at what's behind the move. Hugh. Hey, Morgan. Yeah, so shares of SoFi fell by about 8% today after a KBW analyst downgraded

his view on the company, saying that valuations has become stretched and that it wasn't justified even if it hits its targets. KBW's Tim Schweitzer put an underperformed rating on SoFi with a price target of around $8, which is well below the stock's current price of about $14. That's because, according to Schweitzer, both SoFi's short and longer-term financial targets will be, quote, difficult to achieve thanks to headwinds tied to interest rates and the way SoFi accounts for its loans.

Now, keep in mind, shares of SoFi have surged about 100% since September on enthusiasm for lower rates and regulation. And for two years before that, the sector had been out of favor during the Fed's interest rate hiking cycle. The fate of fintech firms like SoFi will be closely watched by investors this year ahead of the planned IPO of the new bank Chime, guys. So, Hugh, this has had such a strong run through the last three, four months of 2024 into now. I remember when it was around seven bucks a share. Now, even after today, it's at about 14.

How does the hire for longer narrative, even though rates are kind of going down, how does that affect a stock like SoFi where when they're talking about the business, the CFO is talking about the business. He's talking about these, you know these three loan portfolios that they have. I mean, Hire for Longer puts pressure on the consumer. So if you think about it, Hire for Longer actually helps their case. They're basically banking the underbanked American who has a hard time making it from check to check. So, I mean, on the balance, it helps them a little bit. It also helps on the accounting issues. If rates fall too quickly, then they have some hinky

accounting on their loans. I think the bigger debate here is, is this a bank? All right. Does it require the valuation of a bank or does it require the bank, the valuation of non-banks and more of a tech? And that's the debate that probably take a while to kind of play out. You just mentioned the fact that we could see an IPO from Chime, for example. Just in general, with the incoming Trump administration, there's so much focus on deregulation, particularly in financials and with the banks. And you've seen the run in the bank stocks because of it. But I do also wonder if it's being overlooked what that dynamic is going to mean

for fintech writ large, the SoFi's of the world, and maybe the startup landscape as well in terms of creating new opportunities for new companies to come in and present financial services differently. I mean, the view out there is that for the fintechs to have broken through, so Chime has broken through, SoFi is the first of the neobanks to break through and has some matter of scale, that it's going to be better for them, that their advantages are ultimately going to be sort of, you know, entrenched and that, you know, for the smaller ones that are out there, yes, it's pro-innovation,

but at the same time, you know, that ship has sailed potentially in terms of getting scale at the moment that we are today. Okay. Lots to watch in this new year. Great to have you here. Doing it for us. Well, coming up next, we're going to talk to an analyst about Tesla's year-end delivery numbers, which sent the stock tumbling today, and discuss if you should be buying this pullback. Plus, we've got your tech playbook for 2025. T. Rose Technology Portfolio Manager joins us with his top picks for this new year. And if he thinks Apple's new iPhone discounts in China are a red flag for the stock,

overtime is back in tune. Tesla was the worst performer in the S&P 500 today after reporting a drop in annual deliveries, its closest stat to sales. The stock has been under pressure in the last two weeks, now falling in eight of the last 10 sessions. Shares are down some 20% since the slide started on December 18th. Joining us now is RBC Global Autos analyst Tom Narayan. He has an outperform rating and a $313 price target on the stock. Tom, happy new year. So Tesla didn't get up here price-wise on deliveries expectations. So any reason to think it goes lower on the miss? It could definitely go lower. I mean, this stock is up like 30, 35 percent since the election.

A lot of it is on things like animal spirits, is the term I've heard. You know, not really necessarily running based on fundamentals. So the other thing folks are looking at is the Q4 margin. That could be lower than maybe expected because they had this benefit from FSD deferred revenue in Q3, which doesn't reoccur in Q4. So this thing could definitely go lower, but we still think compared to the rest of autos and what's happening in 2025, there's reasons to own it. It's just that maybe you want to wait a little for this to kind of flush out. OK, so wait a little. But how long before we get more real signal of the sort that's going to put a floor under the stock? There's an expectation that the Trump administration regulations around self-driving are going to help Tesla more than its competitors,

I suppose. Any clarity on when we'll know enough more that the market can feel good about that? Yeah, I think that while I think it's definitely helps the sentiment, we have to just make sure we understand regulating self-driving is a state by state local type item. On a federal level, they can do things like take away steering wheels and pedals, which is definitely great, lowers the cost. But ultimately, to get robot taxis deployed, that's done on a state and local basis. But still, I do think a formal announcement there would help the stock. I think what folks are really waiting on is the new car, right? The new, whatever they call it, Model Q, I think is what was kind of in the press

talked about a potential name. This is the affordable car that's below $30,000. Some people think it could look like the cyber cab, which a lot of people like, you know, if this reignites volume growth, then whatever they just did now, you know, today's number, which was a slight miss, you know, that's all forgotten, right? Because now you have growth. Remember, these guys haven't had a new model in years. It's just been Model 3, Model Y. And now finally, we get something really compelling. So, you know, that could be a catalyst for shares, especially with this pullback. I just think like this margin number that we're going to get in Q4 earnings, which I think is Feb 29, I think folks may be waiting for that just to make sure they don't buy into another pullback. But yeah, certainly the news of this new model affordable car could be another positive catalyst.

Okay. So certainly items to watch here into 2025. I'm curious though, because you do have this outperform rating, but you got a $313 price target. Stock closed at $379 and changed today. Does your price target need to come up? And I know you talked about fundamentals, but I'm going to ask maybe it's a really basic tongue-in-cheek question, but has Tesla ever traded on fundamentals? No, and you nailed it. Exactly. The way the Tesla trades, it's on narrative, right? And, you know, very easily I can come up with a much higher price target. My price target is very conservative. I only value autonomy with certain market share assumptions, FSD with certain assumptions.

I don't give any, very little, I give very little credit for humanoid robot, which some folks, you know, you could do the math on that. If it becomes a consumer appliance, it could be trillions of value. So I understand the question. I totally get it. I think my upside price target is above where the stock is trading today. So I think it trades more on sentiment and also it's a relative rating is what we have. Autos right now, it's a very tough place to be. Lots of uncertainty. So in that context, I do think it's worthwhile owning Tesla, especially given a pullback scenario. So quickly then, I realize this is a small piece of the Tesla portfolio, but the energy storage business, those numbers were actually pretty decent today and they've been pretty, they've been better than expected in the

last couple of earnings reports as well. Should we be paying more attention to that? Yeah, definitely. It's worth like over a hundred billion of valuation for my valuation, which for most companies would be amazing. The thing is Tesla's market cap cap is $1.2 or $1.3 trillion. So while it does matter and it will impact numbers, financials now, you saw a huge monster number in Q4. In aggregate, this is still going to be important, but a small piece of the overall valuation, especially at such a high valuation point. All right. Tom and Ryan, I appreciate the

time today. Thank you. After the break, new year, new tensions with China. We've got fresh details on the Chinese backed hack of the Treasury Department and what exactly may have been compromised. And later, we're just a day away from the first tasks for the new Congress electing a speaker. And it could foreshadow just how much President-elect Trump can get done in his first year. That story and more when Overtime comes right back. Welcome back. The Treasury Department announcing this week that a state-sponsored Chinese hacking operation had breached its computers in what it called a, quote, major incident. And we're learning more about what may have been accessed. Megan Casella joins us with the latest. Megan.

Morgan, that's right. Some new details coming out now, including new reporting from The Washington Post that it was the sanctions office specifically within Treasury that was breached during last month's hack. That's the office, of course, that decides which companies or entities should be blacklisted or hit with financial sanctions. The Post says that Secretary Yellen's office and the Office of Financial Research were both targeted as well. Treasury did decline to comment to CNBC on the specifics of that Post report, but the agency says that only unclassified documents have been accessed. Now, congressional Republicans today calling it unacceptable that a Chinese state actor

was able to access these systems, saying it raises serious questions about protocols for safeguarding sensitive federal information. The top Republicans on the Senate Banking and House Financial Services Committees are asking Treasury for a briefing on the attack by January 10th at the latest. Treasury tells me it has offered briefings to Capitol Hill, so something to watch for next week. We might learn some more details then. And then finally, speaking of sanctions, China earlier today hit 28 U.S. companies, mostly in the defense space, with new trade controls, partly over arms sales to Taiwan. Raytheon, Boeing, Andrel, others you can see here as well. China is stopping all exports to these companies effective immediately. And a Chinese embassy spokesperson saying

in a statement to CNBC announcing the move that Beijing will continue to promote high level opening up while also safeguarding its own legitimate rights and business interests. All highlighting here, guys, an increase in these U.S.-China trade tensions even ahead of any new tariffs that might take effect this year. I would imagine some of these defense contractors are going to shrug. Maybe not everybody that was on that screening, especially those that have a commercial aviation business as well. But in general, I suspect many of these defense contractors are going to shrug at some of these moves by China, just given the fact that they don't do business in China or not connected to China in any way. I want to go back to this Treasury hack, though, for a moment, because it comes on the heels of the salt typhoon telecom hack that took weeks to be rid of in our telecom infrastructure as well.

When you look at Treasury, have we seen examples like this either in that agency or across other departments in the federal government that have been so sensitive and so high profile and so public in the past? And if so, how have they been reacted to? It's something that we see periodically, right? You're right about the hack of the telecom companies. Also, both major presidential campaigns were hacked by what officials said was China as well. So when we see something like this, you often see a big uproar from the Hill. The agencies say that they shut it down. Where I would say there is a lot of focus now is on these third party companies. Treasury says there was a third party company that was actually breached here. It wasn't a treasury system or a federal system on its own. So I would say that's where a lot of the focus has been and

will continue to be because of the nature of this. It might require a change in regulation. It might require, you know, using different third-party agencies or maybe bringing more things in-house if the government feels that they could address some of this on their own. And I will say, Morgan, on what you were saying on the defense companies sort of shrugging this off as well, a lot of this can be symbolic. But then when it comes to the hacks, if they're actually taking even unclassified information, it does make you question what might be on those documents, what specifically might have been accessed. Megan Casella, thank you. And time now for a CNBC News update with Pippa Stevens.

Pippa. Hey, John. The FBI says the U.S. Army veteran who drove a truck into a crowd in New Orleans on New Year's Day, killing 15 people, planted two functional improvised explosive devices near the attack site. Senior law enforcement officials said the bombs were made of pipe and contained nails inside, along with receivers to remotely detonate them. It's unclear if the suspect tried to detonate the devices or what his plan entailed. Authorities say they are waiting for DNA confirmation that the body found in a Tesla Cybertruck that exploded outside the Trump Hotel in Las Vegas was that of the man who rented the truck. Local officials also said that Matthew Liversberger sustained what appeared to be a

self-inflicted gunshot wound, which killed the decorated green beret. And White House National Security Advisor Jake Sullivan presented President Biden with plans to strike nuclear facilities in Iran if the country moved towards the construction of a nuclear weapon before January 20th. That's according to Axios, citing sources familiar, who also said that Biden did not make any final decisions on the matter. John, back to you. Pippa, thank you. Well, tech starting the year on a downbeat note with Apple dragging on the sector after reports of iPhone discounts in China. Up next, we'll discuss if it's a sign the company is facing a broader demand problem.

Plus, a year ago, the overwhelming majority of economists were predicting an imminent recession. But the picture has changed dramatically over the past 52 weeks. We'll look at where consensus stands now when overtime comes back. Welcome back to Overtime. Apple ending the first trading day of the year in the red after reports said it's offering iPhone discounts in China. And UBS out with a note saying winter is here for Apple following another month of soft iPhone sell through. Joining us now is Tony Wong from T. Rowe Price. He manages the firm's science and technology fund, which counts Apple among its top holdings. Tony, happy New Year.

So Apple's newest iPhones don't really have a killer app until Apple intelligence launches in China sometime this year. We know the consumer there is suffering. Seems to me it would be more concerning if they were cutting prices three months after Apple Intelligence launched in China. What's your take? Yeah, well, I think that China is a very competitive market. And management's called this out before. And so I think that, you know, it's not surprising they're doing a little discounting, especially since Huawei is like a really formidable competitor. I think that looking at the last quarter, Huawei grew significantly in unit share and then Apple kind of stayed more stagnant.

And so as we look at the features, a lot of times the China market has phones that have supercharged, like fast charging batteries and really nice OLED displays. In addition, when you think about like the ecosystem, you know, a lot of the China apps are, you know China apps are native to China, like WeChat. A lot of people use WeChat instead of the Apple ecosystem apps. And so I think that this is something that we've been watching and management's called out. I do think that Apple continues to have a really good position where they are a premium brand and you can't count them out. But they do, I think, need to continue to innovate as this market is really fiercely competitive. And the China economic picture, as you mentioned, is a little bit bleak right now. at enterprise, at what point do we get the moment of disillusionment that affects valuations in enterprise software, enterprise tech companies with AI? I mean, even if AI does turn out to be big, it seems like most technologies, you know, in the markets go through this trough of disillusionment.

Yeah, I think it's a great question, especially after we've seen big stock moves over the last kind of three to four months. And so I think what's a great question, especially after we've seen big stock moves over the last kind of three to four months. And so I think what's really exciting, though, going forward is agentic AI, where you have these more autonomous acting AI agents that can make decision, do decision making and do a lot more than just kind of routine automation. And so when I think about like the valuations, most of software isn't at extremes. And so I think there continues to be like more reasonable expectations. And if agentic AI does really take off, you know, we could see like a lot more kind of excitement around the AI at the application layer specifically. So you'd be shifting more of your AI investments there. I ask because I know capital spending by hyperscalers reached an annualized level of more than $200 billion in Q3, and Goldman's estimating that AI spending

will rise another 35 to 40% this year. Yeah, I think like there are, I think it just depends on where you go. You know, can't make a blanket statement that every software company is really well positioned, but I think that over the next five to 10 years, what matters is that what platform companies you use to build AI on and have their data

that is not just siloed in a specific area. So companies like Microsoft or ServiceNow and maybe Salesforce have a lot of the customer data and can stitch that together to drive ROI for customers. So I think that one thing that I've been thinking about is just like probably the companies with a lot of data, a lot of compute, a lot of scale and customers can do well. And the risk of disruption may be a lot less than people thought a year ago because of the cost to kind of deploy AI and train the models.

What are the other big tech trends or moments of innovation that you expect to come to fruition now here in 2025? Yeah, I think that it's really exciting. 2025 is another year of AI at the application layer. And one thing that I'm looking at is kind of autonomy and just specifically with Tesla and Waymo doing self-driving cars. And, you know, version 13 at Tesla looks really quite good. And the interventions are, I expect, can even drop. And, you know, I tested out version 13. It's very much so kind of a smooth ride. You know, I think that generative AI

has really supercharged FSD for Tesla. And then I would also say that on the humanoid robots, I think that a year ago, I thought that would be really far out, maybe a decade or plus. But I think that just seeing the progress that Tesla has made on humanoid robots, you know, version three,

where they're like really integrating the whole kind of system and making their own actuators is super impressive. And that, to me, looks like another area where, you know, for Tesla, you know, they've had three different S curves. One is EVs, the second one could be FSD, and the third one could be humanoid robots, which I think the market, you know, kind of is aware of, but perhaps doesn't fully appreciate over the long term. OK, we'll be watching. Tony Wong, thanks for joining us. Happy New Year. Thank you. Up next, Mike Santoli's back. He's going to break down whether the falling risk of recession this year will lead to great expectations for market returns. And later, could rising geopolitical risks throw a wrench into any potential bullish news heading Wall Street's way?

We'll find out when Overtime comes right back. Welcome back. Economists see minimal risk of recession in this new year. But is that really a good thing? Let's ask Mike Santoli. Mike? Yeah, Morgan, it's not as simple as saying, oh, nobody expects a recession. Therefore, we're more likely to get one. But we definitely don't have the benefit of a big wall

of worry among economists that we did have the prior couple of years in January. So here is the kind of consensus economist expectation for recession risk in the forward looking year. So it's down around 20 percent right now. See, a year ago, it was up above 50 percent. That's obviously because the Fed was tightening policy. You had an inverted yield curve. A lot of the inputs into what often brings on a recession were in place. Now, we've obviously had the economy outperforming. Consumers seem like they're in decent shape. We still have job growth. And I would point out, too, that just because expectations for a recession are low does not mean we're going to get one. You see, through the entire 2010s, you know, we didn't have economists saying we were going to relapse into recession after the great financial crisis. And we didn't. So that's OK. I do think,

though, that it might take a little bit more to please investors and economists based on the incoming data than it did in the past two years, where we really did have this benefit of just better than expected was really kind of depleting that reservoir of skepticism and keeping asset markets buoyant over the course of it. I know there are quite a number of inputs that go into economic modeling and ultimately the consensus that we do see from the economics community. But given the fact that you've had certain, I guess, inputs that historically have always signaled a recession, I think about inverted yield curve, I think about, you know, leading economic indicators and some of

the charts we've seen there, the fact that they haven't come to fruition this time around, how much does it speak to the fact that maybe it's time for the economic community to be revamping their models and or the fact that this is such an atypical cycle to begin with? Yeah, I really lean a little bit more on that second point, Morgan, where it just was such an unusual cycle that in the flash recession that we had in 2020, you had such a stimulus response that consumers exited the recession with better household balance sheets than they did going into it. There was a massive debt pay down. You did not have a debt problem.

I do think if you wanted to look for some risks ahead from here, just the housing market and how it might respond for any further increase in bond yields or less Fed easing. That's something that really is pretty central because the housing cycle often really does feed into the broader cycle. Things like construction employment could be vulnerable. And if you have less labor supply, whether it's because of crackdowns in immigration or some other reason, that is going to mean just sort of less raw material for growth in the future. You need people to be able to hire to keep unemployment where it is. Got to know the risks. Mike, thanks. Thank you. Up next, bird flu now impacting everything from eggs to pet food. The federal government faces increasing pressure to fight it. And check out shares of Constellation Energy. It's one of the

big winners in the S&P 500 today after winning contracts with the federal government worth more than $1 billion to provide electricity from nuclear power to several agencies, including the Federal Reserve System and the Transportation Department. Shares finished up more than 8.5%, 8%. Welcome back. Bird flu fears are driving up egg prices. Post Holdings, one of the nation's largest egg producers, said an outbreak impacted one of every eight egg-laying hens. But it's not just the eggs. It's the cats and the dogs. L.A. County health officials warning residents to stop feeding

their dogs and cats monarch raw pet food after bird flu was found in some samples. All this is putting pressure on federal health agencies to do more. Angelica Peebles has the latest. Angelica. Yeah, John, the CDC says the risk to most Americans is still low at this point, but the risk is much higher for people working with livestock. In the U.S. so far, we've seen 66 cases of bird flu in humans. A CDC analysis published this week in the New England Journal of Medicine found that among 46 of those cases, all but one person was exposed to sick birds or cows. Officials from the National Institute of Allergy and Infectious Diseases calling for a balance between business as usual and more vigilance. Things like better surveillance of infected animals to detect any mutations

that could be harmful to humans. I asked CDC Deputy Principal Director Nirav Shah if he feels like there's more pressure on the CDC and the entire U.S. response. I absolutely concur with our NIAID colleagues that where we are right now is shifting. It's definitely not business as usual, but it's also not a situation where we want to lose our cool. We're continually assessing in a stepwise manner what more we can be doing.

For now, the focus is on protecting farm workers and monitoring the virus, John. Angelica, we've seen bird flu outbreaks before. I was just saying in the commercial break before, I was the bird flu reporter back in 2015, flying back and forth to the Midwest, to all these farms as they were culling their egg-laying hens back then. What makes this particular outbreak so much more worrisome? Is it the fact that you do see humans contracting it? And now some examples, I think of this Canadian teenager who is hospitalized and has since come

out and recovered. The mutations associated with it? That's exactly right, Morgan, is the fact that we're seeing it go from birds to cows, now even cats and humans. And the risk with every infection is that it could become more transmissible, it could become more severe, and that could ultimately spark a pandemic. And especially now, being that it's seasonal flu, the time of year that the seasonal flu goes around, those two viruses circulating at the same time leads to an even greater risk. And it doesn't take much to go from not a big concern to a pandemic. We are not there yet. I want to be very clear, but that is the risk that we all need to

take seriously. Okay. Angelica Peebles, thank you. Up next, Pangea policy founder Terry Haynes on why 2025 will be the year of no in Washington and on Wall Street and how that could impact your investments. And tomorrow on Overtime, don't miss Steve Leisman's exclusive interview with Fed Governor Adriana Kugler, her first U.S. TV interview since joining the Fed more than a year ago. Also, don't forget, you can catch us on the go by following the Closing Bell Overtime podcast on your favorite podcast app. We'll be right back. Welcome back to Overtime. The first vote of the new Congress is expected around noon tomorrow

as House Speaker Mike Johnson looks to return the gavel. But just two no votes from Republican representatives could derail his reelection. And a messy vote could set the tone for the new Trump administration. So joining us now is Terry Haines, Pangea Policy founder and former Evercore head of U.S. policy and political analysis. Terry, it's great to have you on. I'm going to start right there. How much hinges on this vote, given how action- the first hundred days of the Trump tenure is expected to be? And given the fact that we already saw a shakeup over the continuing resolution that investors reacted to going into Christmas.

Right. Good to see you, Morgan, and Happy New Year. I think rather a lot more is at stake here here than the dissenters realize. This is intramural political squabble. I think Johnson eventually becomes speaker. There may be a little pain associated with it. But for markets, it's a very big deal, because if you can't organize the House and you can't organize Congress, then markets are going to scratch their heads and conclude, and to some extent rightly already, well, what is it exactly that these folks are going to be able to accomplish? They might not be able to do the tax deal. They might not be able to do a bunch of other things that are very market friendly. So, you know, the negative is really an outsized negative

for markets. And I think that's not completely appreciated in the House today. I know when we did get the outcome of the election, there was a lot of hay made about the fact that we had a red wave. And now this is going to be a big policy push and maybe a clear path, at least from investors. And what was pricing into the market initially on the heels of the election result. But to your point, you're going into you have a GOP House majority that's essentially going to be 217, at least to start. So when you talk about the fact that maybe there is more uncertainty here, how messy could this be? And when you're talking about taxes, trade tariffs, immigration, and oh, by the way, nominations that have to go through the Senate, I guess how delayed potentially could this be? Well, let me, I think all those are

valid questions to ask. Let me knock out confirmations right off the bat, since as you point out, they're Senate only. And tariffs largely are up to the president himself. But beyond that, all those things require the assent of Congress and the active work in Congress. I do think the tax bill remains pretty likely. And the reason why is the Congress wants to achieve those things. But the margins are very small. I've been warning markets since before the election that if you get a Republican trifecta, you know, expect it to be more fragile than it looks at first blush. You know, unfortunately, that's what we're getting. And, you know, that redounds to Trump's detriment, frankly.

It's a different branch of government. But the whole Republican trifecta idea, Trump is the glue that holds that together. And if if people are going to flake even before the first day, even before Trump is is acknowledged in the electoral college as the winner, which happens on Monday, things are going to look very messy very quickly. Okay, so you can expect tax cuts to be sustained, of course, but then what about this Department of Government efficiency, about Doge? Does it get much done? Can it get much done without addressing entitlements? Well, you know, two things on that, John. Firstly, look, I've been in Washington and around Washington for a very long time. I'm in favor of half of whatever Musk and Ramaswamy want to do,

and I don't even know what it is. I mean, there's just, you know, that much bloat and that much difficulty in how Washington works. But beyond that, you know, it has no authority, firstly. Secondly, Musk and Ramaswamy can't even agree on, you know, the purposes of it or what it might do. Trump's really staying at arm's length from it. And, you know, where the rubber meets the road on this is Congress. And Congress is not about to buy a pig and a poke, as they used to say. And with the idea that any bad thing that happens as a result of efficiencies gets blamed on the members of Congress. That's not smart for congressional reelections, particularly in the House coming up in two years. So there's an awful lot of reasons why the Doge is more

of a mirage than anything else. Well, to that point, it doesn't take a couple of Washington outsiders, you know, founders, entrepreneurs to, you know, enlighten Washington to the fact that there's a lot of bloat. There have been a lot of people around Washington pointing out that very thing for a while. It's just that nobody wants their stuff cut. Right. How does that change? Well, it doesn't very much. You've summarized it very well. You know, it doesn't very much. And, you know, think about it from a perspective of a constituent. Constituents, when they're told that some major government program is about to, you know, administered, is about to change completely, but don't worry, everything will be all right.

You know, what they remember is how the Affordable Care Act got off the ground, the website got off the ground or not. Maybe their Social Security checks didn't come. The, you know, the government's forever getting, forever on the edge of not being funded. All these things are attributed to Washington, and, you know, they're not miraculously going to go away. But a couple of smart guys have new ideas.

Maybe it'll work this time. Terry Haynes, thank you. Morgan, first trading day of the year. Couldn't get a sustained rally, but, you know, there's a lot of year left to go and a lot of expectations that this economy is going to hold up. We saw more than 700 points swing in the Dow at the lows. The good news is we did close off those lows of the day for the major averages. But we've got to also remember, we're still working our way through what is a holiday week, thin liquidity, thin volumes. Tomorrow, ISM manufacturing, that's going to be the first sort of big macro data point to watch that sets the scene. But also you get this revival of Fed speak as well. We mentioned we've got Governor Kugler coming on this show tomorrow. That's going to be one to watch,

but also Daley and Barkin making comments tomorrow. So monetary policy still in the background or I guess in the forefront. Yeah. Yeah. And we'll continue to see, of course, how this A.I. trade plays out in video. So important to the markets last year. Yeah. Trillion Dollar Club added the most right to trillion. That doesn't first hear it over time.