Closing Bell - Closing Bell Overtime: Stephen Tusa’s Industrials outlook; Novo’s Big Day 12/23/25

Episode Date: December 23, 2025

David Trainer of New Constructs on what fundamentals are really saying about today’s market. Stephen Tusa of JPMorgan breaks down the state of industrials and Alan Ratner of Zelman assessing real estate trends and risks. Our Steve Kovach examines whether artificial intelligence is becoming commoditized faster than investors expected. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Yet another closing high on the S&P. Indeed. That is the end of regulation. The Little St. Nick Foundation ringing the closing bell at the New York Stock Exchange. Granite shares ETFs doing the honors at the NASDAQ. Stocks continue to trickle higher into the holidays. The fourth street day of gains for the major averages following a stronger than expected GDP report. The Dow with a small gain, the S&P 500 up less than half a percent, but this will likely be a new all-time closing high. The NASDAQ the top performer today. Losses, however, for the Russell 2000. Communication services and tech among the best performing groups, a little bit of weakness in health care and consumer staples today. But one health care name is standing out. Novo Nordus getting approval for a pill for Wagovi for weight loss, giving it a first mover advantage over Lilly in the race to get the oral form of these drugs instead of injections. That's the scorecard on Wall Street. Welcome to closing bell over time. I'm Leslie Picker, John Ford, and Morgan Brennan. are off today. And two of today's biggest stories colliding the weight loss drug approval

and the GDP, healthcare spending, one of the big drivers of GDP, of course, but will increase access to these drugs make people healthier and bring costs down. We'll talk to Dr. Ashish Jah, outgoing dean of Brown University's School of Public Health, and tech and communication services are the best sectors this year, driven by AI, of course, but industrials, they're in third place, and AI also a big driver here. The top top two names in that group, Comfort Systems and GEVernova, also benefiting from AI spending. We'll get a top industrial's analyst take on the group's prospects for 2026. But let's begin with the markets as stocks closing higher.

Most of the Mag 7 hire led by Nvidia today. Christina Parts of Nevelis is at the NASDAQ with more. Hey, Christina. Hi, Leslie. Well, you mentioned GDP came in stronger than expected today, which raised yields and pushback rate hope, a great cut hopes, but that didn't stop markets from closing higher on this lower For volume day, big banks led some of the rally, J.P. Morgan, Wells Fargo, Bank of America at one point throughout the day, all of them hit all-time highs. You can see they closed

in the green. And all three banks are outpacing the S&P 500's year-to-day gain of about 17 percent thus far. Freeport MacMoran, sorry, was among the best performers on the S&P 500 riding the move in gold, which also hit a fresh record high today. Copper also closed higher. Freeport's a major producer of both. Bitcoin was the outlier. It fell sharply after the GDP numbers earlier this morning, but bounced back briefly. Still half a percent down right now. Crypto-related stocks, though, like micro-strategy, Coinbase, both closing at least 2 percent lower today. But the NASDAQ close half a percent higher led by chip names. You've got NVIDIA, Marvell, Broadcom, all of those adding to the NASDAQ 100, all closing roughly at least

2% or more. And if we zoom out on the year, I'll lead you with this stat. The NASDAQ 100 is up roughly 21% year to date. Those top 100 NASDAQ names have only had three down years in the last 23 years, Leslie. Wow. Only three. Christina, there's also some news today on the chips and trade tensions with China. The Trump administration is delaying new tariffs on Chinese semiconductors. Why? Yeah, it appears to be like a concession to Beijing. You can call it in all branch, but China really accounts for just under 3% of U.S. chip imports. And Chinese chips already face a 50% tariff that Biden put in place earlier this year. So President Trump delaying additional tariffs on a market that's already heavily taxed. These are legacy chips, older

technology and cars and appliances. And so we're still waiting for the results of a semiconductor investigation that launched back in April that could bring tariffs on chips from all countries. President Trump even floated 100% tariffs in August. Remembering we saw markets drop dramatically in the chip sector, but companies are still planning around all of this major uncertainty. Yeah, that is definitely the story of 2025 as we think about geopolitics in the chip space. Christina, thank you for staying all over it for us. Christina Parts and Nvelis there.

And now to the bond market following that better than expected GDP report, 4.3% growth compared to an expectation of 3.2, Rick Santelli, is in Chicago breaking it down for us. Hey, Rick. Yes, growth is zoom, zoom, zooming, 4.3%. That is the highest growth rate going back to Q3 of 2023. The issue is it was a company with a price index at 3.8%. That's nearly the highest in three years. So what's going on here? It flies in the face of some of the better CPI data we had last week, which makes it very hard to evaluate exactly where we are on the inflationary front. Confidence was on the weak side, but whether it's consumer conference from the conference

board or University of Michigan, it seems to have lost its correlation with equities. Many are now saying it really isn't something to pay that close of attention to. Look at the tenure. Now, this is basically a two-week chart. It reversed because it hit the top of that range, 4-19, 4-20, and it is down a bit. It's still up a smidge. curve is flattened. You have two, threes, five, sevens, all a little bit warmer or yields higher, tens closer to unchanged. 30s actually a smidge lower in yield. Now, let's look at the dollar

index. This is a big story today. That chart of the dollar index going back to early October. It's on pace for a close, the lowest close since early October. And if you look at some of the major currencies in Europe, look at the euro versus the dollar. It's at the best level since the 23rd of September, exactly three months. Now, let's roll in the pound versus the dollar. Exactly the same comp date, Cep of 23rd of this year. So both those currencies at three-month highs, despite some of those good data points on the U.S. economy. Leslie, back to you. Yeah, I was going to say, Rick, FX, really the story in terms of the reaction to the macro data today, Rick Santelli, for us in Chicago. Another positive day on Wall Street as AI stocks

continue to push the market higher in S&P 500 closing at a record. But our next guest sees opportunities beyond the MAG 7 in 2026. He joins us with names that should be on your radar. Let's bring in new construct CEO, David Traynor. David, so maybe we just get right to it. Where do you see opportunity outside of the MAG 7? And is it a safe bet to kind of diversify outside in a bigger way in 2026, just given the returns we've seen from some of these names over the past few years?

Hi, Leslie. Yeah. We think it's not just a safe bet. We think it's a smart bet. I mean, look, everything is concentrated into these very crowded trades. It's been crowded for a long time. We've helped clients, I think, do really well with some lesser known names like protronics and firms like that that are AI related, but not necessarily the AI popular crowd, which, again, those are all crowded trades. And so we would definitely recommend people look to diversify away from these winners. Now, they've been winners, yes, but they've been winners for so long that I think it's time to look for something else if you really want to be able to outperform. Okay. So what is that something else? What do you think is maybe next year's Mag 7 or MagS something else? Well, I don't know if there's anything that's going to come out of the shadows in terms of that front.

But I think, you know, when you're looking within the Mac 7, the one that we think that is the most interesting for sure is Google. I mean, it's the only firm that owns its own cloud. It has its AI. It has all the, it has its own processes for some of contractors. and it generates a ton of cash flow. So we think that one is going to be a winner. How many other winners there might be?

I'm not so sure. I think I see a lot of stocks, you know, whether it's Mac 7 or not Mag 7, that have been awarded valuations that assume they're going to be winners, but they don't have the assets and competitive advantages that a firm like Google has. And I think we're going to see a lot of that flush out here in 2026. Yeah, of course, alphabet up about 62 percent over the last year bolstered in part by that new Gemini model as well as the Berkshire Hathaway stake. In terms of just the overall posture of the market, you think we are in an AI bubble. Do you think that ultimately deflates or pops?

This is a 2026 thing. And what will cause it to do so? You know, Leslie, I think we may be past the days where we see major sort of bubble pops and corrections just because I think the regulators, the politicians understand that they can keep the masses is happy when the stock market is up, and that means keeping liquidity very high and at hand. So I don't know if anyone's going to be willing to risk the political backlash of taking away the punchbowls. So we call them kind of micro-bubbles where we look at a group of stocks and we say, look, these are the stocks whose cash flows can somewhat reasonably justify the valuation, and these are the stocks that can't. And so I think as opposed to the whole market going down,

and we're going to see the market just be a bit more discerning, as we've already seen. Like, for example, we wrote a piece a few weeks ago called the winners and losers for the tech bubble or the AI bubble. And, you know, we mentioned Google, as I mentioned before, is a winner. But, you know, Oracle, one of the ones we mentioned is a loser. We can see how it is already kind of taken a bit of a stumble or more than a stumble because, frankly, doesn't have the cash flows that Google has to keep up in the race. And then we're going to see more and more of that playing out because as heated as this race is, in terms of stock prices and valuations, it's also heated in terms of cash flow demand.

The amount of spending is so high that there's only a few companies that can remain at the table. And those companies that can't continue to ante up and keep up with the spending, e.g. Oracle, they're going to really struggle in 2026. Yeah. And the psychology behind that and whether the market rewards or punishes all of that spending in 2026 will also be a function of all of this. David Traynor, thank you very much for your time. Happy holidays. Thank you. Same to you. Take a look at Novo Nordisk. Shares closing up over 7% today, but off the best levels of the intradate trading. The FDA approving the first ever GLP1 pill for obesity. The pill is launching early next year under a recent deal with the Trump administration.

It will be available in one and a half milligram dosage for $149 per month. Our Anika Kim Konstantino spoke with Novo Nordisk CEO. and he emphasized the wide range of access options for patients. We will introduce the pill on day one together with our partners, of course, on our own online shop, NovaCare Pharmacy, as well as many partners that are out there will go first with us on day one, row, Weight Watchers, Costco, you name it, I think we have made partnerships with. So, of course, that will provide a very broad access to patients. meeting the patients where they want us to meet them.

With the insurance, I would also hope that eventually will be able to pass through a lot of the pre-authorizations and the hurdles that typically people have when they have insurance in U.S. Joining me now is Dr. Ashish Jha. He is the outgoing dean of the School of Public Health at Brown University and the former White House COVID-19 response coordinator. Doctor, thank you for joining us today.

So what do you see, just if we can take a step back here, is the total addressable market for a pill of GLP1. How big, ultimately, do you think this could be? Yes, first of all, thanks for having me back. I think this is a big deal. And let me explain why. I mean, more than 100 million Americans have obesity. We know these pills are extraordinarily effective for obesity. They're very, very good.

Or this drug, whether it's injectable or oral, is great for preventing cardiovascular disease, liver disease, lots and lots of problems. about 10 to 15% of Americans hate injections. Just hate it will not take an injectable. For them, this becomes much easier. The supply chain here, the ability to get it out to pharmacies, to get it out to Costco, all of that is so much easier with a pill that I see just a lot more Americans and people around the world taking an oral version of this drug. Americans, do you think there's obviously a global market for it as well?

How do you see the competitive environment shaping up here? Yeah, so Novo goes first. Lily is not far behind. We don't know exactly when Lily will get across the finish line, but I suspect probably three, four months behind Bogevi. You know, and Novo's job is to try to get as many people signed up as possible, because once they're on it and doing fine, they're going to be loath to switch. So I think you're going to see this very mad rush in the beginning to sign up as many people as possible before Lily comes out with this drug. It's possible, and I think likely the Lilly drug will be a little bit more effective. in terms of weight loss, but both of them are extraordinarily effective at getting people to lose weight

and getting all the benefits of that weight loss. If you see even just a 10 to 15% uptick, which you describe as the cohort of people who are loath to use an injection, so if you see that much more uptake here, if these drugs work and reduce obesity and other comorbidities, will that drive overall spending on health care down? I mean, what are some of the best case scenarios here in terms of? health care spending in terms of just longevity? Yeah, so those are two separate issues in my mind. What's going to happen to health care spending

and what's going to happen to longevity? Look, if a lot more people take this, there is no question in my mind that we're going to see huge benefits from a health point of view. One of the reasons Americans live shorter lives than Europeans is we have a lot more obesity in this country. And if we can cure that through a pill or an injection, that's going to have huge downstream benefits from health.

Up front, we're going to pay more. Up front, these drugs are going to be expensive, even if the prices come down, it's going to be a new cost to the system. So for the first few years, I think costs are going to go up. But, hey, health is going to improve, and that is really important. And hopefully down the road, five, 10 years down the road, we can get some of the benefits in terms of costs as well. But this is not a cost play for health care. This is a health play.

And I think it's good. Like, as a health person, I want to see people live longer, healthier lives. Yeah. Maybe a J-curve, as they call it in private equity, for the cost of this. and what it means for the whole system. Thank you, Dr. Ashish Jha. Appreciate your time. My pleasure.

Thanks for having you. Thank you. AI demand has been a big driver for stocks in 2025, but it's not just the hyperscalers and the chip stocks. Old economy names doing well too as someone needs to build

all of those data centers. Caterpillar, the top stock in the Dow this year. We'll look at the outlook for industrials in 2026. Next on overtime. Welcome back to overtime. Check out some of the names making all-time highs today. A couple of distinct groups Starting with the financials, J.P. Morgan, Bank of America, and Wells Fargo, all at records.

Also, consumer discretionary names hitting new highs, tapestry, Ulta Beauty, and Marriott, among the names on that list. Aerospace and Defense names also hitting all-time highs today, including Huntington, Ingalls, RtX, and GE Aerospace. Industrials is among the best performing sectors in the S&P this year, with names like GE Vernova, Howmet Aerospace and GE Aerospace, all driving the sector higher. Our next guest joins us with his 2026 Outlook, J.P. Morgan Senior analyst, Steve, Tusa. Steve, thanks for being here today. Help us break down this sector because I think it was maybe one of the more surprising winners of the year. Where within industrials do you see the most opportunity right now? Yeah, thanks for having me. First of all, great to see Jake Morgan making

new highs, but putting that aside. Putting that aside, this year was kind of like a tale of two halves where it was a lot of growth focus in the first half. Obviously, you had all the tariff dynamics. Things went up. They went down. And in June, we kind of made the comment the last time we were on saying things were basically back to where we started the year. But really in the second half, there was a dramatic divergence in performance. Obviously, everything in this group, you mentioned, G. Renova Caterpillar, I don't cover those stocks, but they're still part of the same trade. Everything starts and ends with the data center trade. And while there's been a little bit of concernation recently about, you know, the sustainability and duration of the cycle,

the demand for anything data center in the second half is absolutely off the charts and getting better through your end. So everything in this group and every, anytime you talk about industrials, it's going to start and end with data centers. Where the divergence was, is mostly around residential, HVAC names I cover, and actually some of the cyclicals, that have gotten cheap and are just driven by industrial production in general CAPEX, started to get a bid in the last really three months, and that's been a big divergence in the back half of the year. So, you know, Group has kind of performed below the S&P up 7% versus the SMP up 15, but significant divergence within and maybe a little bit

less concentration than we've seen in the prior year in 24. So then if you're an investor and you're looking to kind of shift or reallocate your portfolio going into 2026, do you stick with the winners here, do you stick with that AI data center buildout trade, or do you opt for some of the names that may have been more beaten down here? Well, my data center names that I cover, including something like Vertive, just recently went into basically bare market territory. So this is officially a pretty significant dip and is a very different value proposition than what we may have seen even two months ago on, you know, I would say, some news flow. I think news would be probably a generous characterization, a lot of speculation

on in a negative sense. I would stick with that on the growth side and then secondarily to kind of take all this debate about where the economy is going, we really like idiosyncratic margin stories and Johnson controls would be the other one outside of Vertive, still has some data center exposure, but a really tremendous operating improvement story where earnings can grow 15 to 20% for the next few years, and the stock is pretty reasonably priced. So those are our two, and you could call them two parts of the barbell, but they're both kind of data center related. So not quite as expansive a barbell as we've been in the past. Yeah, it sounds like you don't want to be completely void of AI data center exposure here.

What do you see? Definitely not. We want more on the dip. No question. I think if we were to look elsewhere where from a general economic perspective, Dover and DuPont, our favorite relatively cheap economic leverage plays. We're not quite looking yet at the residential HVAC stocks. Those are the ones that have, they're down 20, 30 percent in the second half of this year. So there's a little bit of value appetite there. But we think people were too early to try and time that. So maybe next year, second half will be more interesting on that front. But for now, really sticking with data center idiosyncratic margin, and then a little bit of economic leverage,

cheap economic leverage, where we can get it. How does the risk of overbuild affect some of these names? It sounds like sentiment has, you know, surrounding some of these issues has caused people to take a pause toward your end. But if there is a significant risk here, I mean, what do you see is kind of the downside scenario? There is no pause and on the ground activity when it comes to building data centers. Full stop.

It's actually better in the last several weeks than it was around the quarter and a third quarter where everybody realized that we're still kind of earlier in this cycle and there was a wave of order activity for the infrastructure-related players. I can't speak to what's happening down at the tip of the spear and the next model that's going to come out and how that's going to how that leapfrogging is going to behave. I'm not a tech analyst. but when it comes to on-the-ground order activity and everything the hyperscalers have said about their supply demand position in their most recent comments suggests we are still early in this cycle where supply is trying very hard with little success to catch up to demand. So I think this discussion of an overbuild, again, as we've said before, we all die in the end. I'm an industrial analyst. This is a cycle. But in year two of a build-out, that,

takes, I think, a little longer than just a few months. It's very hard to overbuild, and we still think we're a ways away from that. I haven't really heard of any dark GPUs lying around yet. So we're still pretty bullish, even from a cycle timing perspective. Yeah, McKenzie pegs that figure to about $5 trillion by 2030 in terms of the amount of CAPEX needed just specifically for AI data center. So quite a large sum there. We'll see if we ultimately get there. I think the underlying dynamic there is that people are counting on this 100 gigawatt pipeline. I think the bottom line, though, is that the growth, the valuation that's reflecting that growth in these stocks right now is not 100 gigawatts. If that actually happens, these stocks are going way higher

from here. So let's just keep that valuation backdrop in mind as to what's discounted today. It's not that number in these stocks. All right. Stephen, Tusa, thank you very much for joining us today. Appreciate it. We looked at all-time highs earlier. Now let's look at stocks making new lows today. Lamb Weston, the French fry maker, continuing to slide after its earnings, chlorox at a more than 10-year low, and Campbell's Soup falling to its worst level since 2009. Coming up, Mike Santoli will look at this year's risk on trend, which may be hurting those consumer staples.

We'll be right back. One of the 2025 market stories has been about a market animated by chasing risk. So what stocks have led the charge and what names have lagged in comparison? Senior Markets commentator Mike Santoli is here with some charts that may paint a better picture of market positioning, sentiment, and what could be next, Mike? Yeah, Leslie, so look, we can split the S&P 500 in many different ways according to these characteristics. And it's been pretty stark in terms of investor preferences. You talk about stability, safety, defense. That would be low volatility stocks.

Don't want it. Quality? It's nice to have, but still underperforming. The S&P 500 as a whole is up 17.5%. What we do want is high beta, the most fast-moving, aggressive, riskiest stocks, sometimes the most leverage that would be things like the memory chip makers, Robin Hood, a lot of the high octane software names, airlines, things like that. And then momentum, which is similar to high beta, but also much more about trending.

And you've seen there's been a bit of a reset lower momentum. so it's not been really a momentum-driven push to the highs recently. It has much more about just the more volatile stocks running things here. Now, take a look at a couple of other ways to talk about a bull market acting like a bull market. FPX, that's IPOs, recent IPOs, and you see up 42%, not quite back to its own highs, though. That's probably noteworthy. You want to see if that does catch up buzz, social sentiment, quasi-meam stocks. Very similar.

I do like how they kind of work in tandem here because it shows you they're feeding off the same kind of investor energy as, you know, as some of the other racier parts of this market less. Yeah, I was going to ask you about kind of the return to beam stocks, because I know as we talked about just the small caps over the course of the year, it was really driven mostly by some of these meme stocks that went, you know, kind of gangbusters amid the broader index. How does that position everything for 2026, especially as we talk about the IPO pipeline filling up, the potential for that, and it's a flywheel effect with the meme stock. mania as well. I don't think it takes much to activate that part of the market. You've seen that a bit in

recent weeks. But it also shows you that we've had these different lanes that the market has been traveling. Some of it has been mega cap, like long-term secular growth. We know the earnings are going to be there. And then you have this cohort of traders that's just willing to stampede into a lot of those meme-like stocks. A lot of it is space-related, drone-related, quantum computing, all of those kind of long-shot names where they benefit the most from the least fundamentals. If you have less expected of you fundamentally in the near term, they can just trade on flow and sentiment. A complicating factor is how crypto has really been left behind, and that usually is part of that mix,

hasn't been in the past couple of months. Yeah, that's a good point. Of course, if we get lower rates next year, how does that filter through into all of this? Is it going to be 2021 all over again? We will see. Mike Santoli, thank you. Time for AACNBC News Update with Steve Kovac. Steve.

Hey there, Leslie. While the Supreme Court handed the Trump administration a rare loss today by rejecting the President's National Guard deployment to the Chicago area, the Court's unsigned order says the President's ability to federalize the troops only applies to exceptional circumstances. The decision comes as the President has sent or threatened to deploy troops in L.A., Portland, Oregon, Washington, D.C., San Francisco, and Baltimore. Meantime, Pope Leo made an appeal today for Christmas to be a day of peace and expressed sadness after Russia did not agree to a Christmas ceasefire in its nearly four-year war with Ukraine. It comes after Ukrainian President Volodymyr Zelensky said Russia launched a massive overnight attack with hundreds of drones and dozens of missiles that caused at least three deaths.

Zelensky called for the world to apply more pressure on Vladimir Putin and force him toward peace. And President Trump offered his endorsement this afternoon for Wyoming Representative Harriet Hagerman hours after she launched a bid to replace retiring Republican Center, Cynthia Loemis. Lemmiss announced her retirement last week after just one term. Leslie, send it back to you. All right, Steve, thank you. The Fed cut rates three times late this year, but that hasn't helped the homebuilder stocks. Lenar, Pulte, and D.R. Horton, all down double digits over the past three months.

With fewer cuts expected next year, what are the first? prospect for these names. Overtime is back in two. Welcome back to overtime. Small gains for stocks today, but that increase for the S&P 500 was enough to boost the index to a record closing level of 6909. The NASDAQ up 4% over its four-session winning streak. The small caps not joining in today's gains. Invidia higher, though, today. And one of the best stocks in the S&P 500, Tesla was the only Mag 7 name in the red. Freeport Mac Moran, another gainer today, getting a price target boost from Wells Fargo, gold, silver, and copper all continuing their strong runs for the year.

And look at the move in Nat Gas up more than 10% today as the weather once again gets colder in many parts of the Northeast, which is dealing with snow and ice today. Housing market softness has been in focus this past month after weak earnings results from Lanar and KB Home and Home Builder's sentiment still negative, even though it inched higher this month. But National Economic Council Director Kevin Hassett said the Trump administration will share plans for affordable housing in the new year.

So could the housing market recover next year or will that weakness continue? Joining us now is Alan Ratner from Zellman, a Walker and Dunlop company. Okay, so we had this conversation with Kevin Hassett earlier and I was kind of probing him on what types of options they're really looking into. He declined to answer, said that all that information will come out later. But if you were advising this administration, if you were discussing the options that were most viable here to improve housing fordability, what would they be? Good afternoon, Leslie. Thanks for having me. You know, it's really a complicated issue. There's a lot of attention being spent here. And thankfully, you know, from what we hear, the conversations between the administration and the industry are collaborative.

They're being productive. and we're hopeful that something can come out from these discussions that can move the needle. But the real challenge that we've seen is, you know, that the real bottlenecks, the real inflation is occurring on the local municipality level, whether it's related to impact fees, delays in approvals and development timelines. And, you know, unless the federal government gets a little bit more comfortable wading into local politics, we think that anything done on the margin might be beneficial, but it's hard to really make a huge dent without the local involvement. Well, one thing that is done at the federal level, at the Federal Reserve, that is,

is controlling interest rates. Do you see any type of unlock that could come from a more dovis-dovish positioning going into 2026? Well, it is complicated because the Fed controls the short end of the curve, and the 30-year mortgage rate is really priced off of the 10-year Treasury yield, which, you know, that's a function of a lot of things, including inflation expectations, the deficit. And what we've seen up to this point, even though the Fed has cut several times here, is that we haven't necessarily seen a commensurate move in the 30-year mortgage rate. So there's things that can be done to improve rates, whether that's looking at LLP's, loan-level pricing adjustments, having potentially the Fed continue to buy MDS to tighten that spread

versus treasuries. And we think all of that is on the table, and it's in many cases already occurring. But I'm not sure that anybody hoping for a huge reduction in mortgage rate is likely, that's unlikely to come to fruition in 26. Right. What about tariffs? Just kind of brainstorming all the different possibilities here. How have tariffs played a role in lumber prices and just the cost of materials to construct homes? How is that impacting supply? And if there were some sort of reversal on tariffs, would that make a dent? Yeah, I mean, that's probably one of the good news. pieces of good news that we've seen this year. There was a lot of concern that incremental tariffs would raise the cost of producing homes

anywhere between $5,000 and $10,000 per door. That's what a lot of the builders communicated to investors earlier this year. And what we've actually seen is at least a large public builders have been able to use their size, use their scale to actually push back on the trades, push back on the manufacturers and suppliers and really keep those tariffs downstream. So we haven't seen that flow down to the home builder, and we really haven't seen it flow to the consumer. If anything, new home prices have been on the decline this year when you include the benefit of incentives like mortgage rate buy down. So I'm not sure reversing tariffs would necessarily be a benefit for the consumer.

It might be a benefit for the suppliers and the manufacturers that have eaten those added costs this year. All right. Well, it's a complicated problem. It sounds like we'll await more details from the administration, hopefully next year. but we appreciate you brainstorming and breaking down some of the key cross currents here in the homebuilder space. Alan, appreciate your time. Thanks for having me. Will 2026 be the year tech companies turn to the commoditization of AI into products that people actually want to pay for? We'll discuss straight ahead.

Plus, financials are the top performing sector this month and have been outperforming the S&P 500 all year. Bass Money's Guy Adami tells us whether you should still bet on the banks. in overtime. Welcome back to overtime. AI showing strong signs of turning into a commodity this year, but will 2026 be the year people finally start paying up for AI products? Steve Kovac is here with that story. I'm one of those people.

I pay for it. You pay for it. I mean, I use it all the time, though. And that's the thing. But look, this is this bubbling trend, Leslie, that I've been following all year with this AI model race. We always talk about who's doing what videos and image generation. They can code.

They can write for you. they all improve, but they all also generally do the same thing. And this is really that race towards commoditization. You have plenty of examples of that happening this year, but let's use Apple and Microsoft as case studies for this. Now, neither have a real frontier AI model, so they're actually partnering with outside models. For Apple, let's focus on them for a second. They failed to launch that AI version of Siri in the spring, and they started hitting that they're going to partner with others instead. Tim Cook was asked about this last July on the earnings call and asked if he thought LLMs were becoming commoditized.

He said commenting on that would give away Apple strategy. But boy, just a few months later, when I met with him, he talked about partnering with other LLMs. He told me in addition to the current integration Apple has with ChatGBT, quote, our intention is to integrate with more people over time. Now over to Microsoft, they started hosting Anthropic models this year and said they're going to be investing up to $5 billion in the company. using Anthropic for some co-pilot products as well.

And their new OpenAI deal that they signed this fall, it frees Open AI to work with other cloud providers, while Microsoft has more freedom to work with other models. Now, I caught up with commercial CEO at Microsoft Jutzen Althoff last month, and he told me customers have actually been asking for more model options. He also told me the reason Microsoft invested in Open AI to begin with was to make that an AI standard, and now he sees Microsoft doing the same thing.

thing with Anthropics. So let's spend all of this forward to next year. We're going to see some of this commoditization in action. That's perhaps best example of that will be Siri, which is going to be powered by a third-party LLM, perhaps Google Gemini, Anthropic, or maybe multiple that you can choose from. And you can also expect co-pilot over at Microsoft to adopt Anthropic for more and more features thanks to that new relationship. And it's really becoming that ultimate commodity. Think of it as the oil that runs the engine of all these AI apps. won't see what LLM they're using, but it's the product layer on top that matters. So that's what you like is that product layer and using it.

Think of other companies once Apple does it, once we see more from Microsoft, and even in the enterprise, that is where a lot more actions can happen next year. It reminds me of what happened with search, where you kind of don't ultimately just go to what you go to. Exactly. Or there was like Ask Jeeves and, you know, Yahoo, and now and you just go to Google. Steve Leaseman a couple hours ago made a really good analogy that he just stole. from him using the gasoline or the oil in the engine. And, you know, you don't know if you're putting Chevron or Exxon into your car. It doesn't matter. It still runs the same. You can kind of think

of it the same way with these LLMs, at least once these other companies start building into their products. Yeah, as long as your car doesn't stall out, you're good to go. Steve Kovac. Thank you. What a year it's been for gold up a whopping 70 percent. Up next, fast money's Gaidami on whether there's still time to go for gold as it races toward 5K an ounce. And later, Mike Santoli digs deeper into the better-than-expected third-quarter GDP report and why it could mean full steam ahead for cyclical stocks in the new year. Welcome back to overtime gold miner's ETF GDX on pace for its best year ever and taking another leg higher in the past few weeks as gold extends its recent strength. Joining me now is Guy Adami, co-founder of risk reversal media and a fast money trader and someone who always glitters just like gold. That's it.

You're right about that, Leslie. you dig you in that seat, by the way. I was told we got to be quick, so let's run through this stuff. Let's do it. So what do you think about financials, that sector hitting a record high today? Well, Goldman Sachs has been on fire. Congratulations to David Solomon and team, because as many missteps as they took, and there were many, there were many more things that they got right, and it's manifesting itself in the stock. The one that I like, if Tim Seymour were here, he's supposed to be wandering around. He would tell you correctly that the most undervalued in the group, I think, is Citibank. We had an analyst, oh, there's Tim.

There he is. There he is right there. Hey, Tim. Do you think I look like soda pop? Leslie says hi. Sotomopop or Steve Randall? Steve Randall and the Tom Cruise. Oh, sorry, I've got to be quick. City on valuation trades at one half price to tangible book that J.P. Morgan does. I would submit that it should be trading more along the lines of 1.7, 1.8. It gets you about 165-70-dollar stock. So to me, city's the most undervalued in the group. Sorry about that interruption. Oh, not at all. It's welcome. Leslie says hi, and it was welcome. It was welcome.

Turning to gold, you still think that one has room to run after this year? Absolutely, 100%. The story in gold has not changed. It's not people just buying gold at Costco. It's central banks for the last now. Four and a half years have been buying gold in record amounts, and that's not going to wane. The gold trade is alive and well. Silver now. is catching up, obviously has traded better than gold over the last month or so. But not only is gold doing well, but the miners have finally figured it out. And the mining stocks, despite today trading around flat, I think there's still ample room to the upside. So the gold trade for 25, yes, more so in 26. And continuing our gaining streak of talking about things that are up

today to health care, Novo Nordisk is surging after the FDA approved its Wagovi pill for weight loss. The first pill, the first GLP1 pill of its kind, but it's been through, it's been tough sledding for Novo investors compared to main competitor, Eli Lilly. You can see the gap. I think we have a chart that really shows it. Do you think this is the game changer that Novo investors have been waiting for? They've been waiting for it, but I don't know if it's a game changer. And last night, Melissa Lee, whilst hosting this show, saw that story break. She told Sandy Canald, we got to run with this, and we did. That's how it works here with Emily hosting the show.

I'll say this, though. Novo Bounces. I think it's going to be somewhat short-lived. I think Eli Lilly still is best in class. But in 26, you've seen some M&A in the space. You're going to see more M&A early 26. A lot of these smaller biotech names. We talked about structured therapeutics.

Look at the move they had about a week and a half for two weeks ago. Throw Viking in there. Throw Summit in there. And I think you're going to see a slew of deals early in next year. Yeah, you got that JP Morgan Healthcare Conference where a lot of those deals get done in about a month's time. In the shorter term, though, Guy, thank you. You can catch Guy and the rest of the fast moment.

I just want to tell you one thing, Leslie. This is what happens on this show. Tim and I in the group got gifts from like Nestle or something, and we're not supposed to know this, supposed to save it. But I am so excited. You know I can't keep a secret. No. This is unbelievable.

Our show starts at five. Our show starts at five. Mel's telling me to stop talking. Well, I'm excited to watch. I'm looking forward to it. And happy holidays to you, Guy. You too, Les. Appreciate it.

Up next, Mike Santoli explains why the market is maneuvering to bet cyclicals will outperform defensive stocks next year. And the market will close early tomorrow for Christmas Eve. So be sure to tune in to a special edition of closing bell overtime starting at 1 p.m. Eastern. We'll be right back. Welcome back to overtime. The headline on Q3 GDP strong, but zoom in and the engine of the economy consumer spending looks far more ordinary. So what does that say about the momentum into year end? Mike Santolius back to take a look under the hood of Q3 growth. Mike. Yeah, Leslie, so that headline third quarter, real GDP number above 4% was absolutely well ahead of expectations.

There's a lot of noise in there about imports and exports and other factors. This is sort of strips down. GDP to the core. It's the annual rate of real final sales to domestic purchasers. And what you see is it's at a 2.6% annual rate in the latest quarter. Again, that's kind of stale data for the third quarter. And it's pretty much in line with what we've seen, for example, in the middle of the last cycle and around where we've been for a few quarters now. So I would say it's certainly not alarming. It's basically telling you that there's a steadiness to the core consumer behavior, even though job growth has been somewhat weak. And even though health care spending seemed like it was an outsized influence on this number. Maybe people pulling forward some

health care spending ahead of losing some ACA subsidies. Hard to say, but basically kind of slow and steady is the story of a year-to-day GDP basis. Take a look here, though, how the market is positioned for the coming year, which is buying cyclical stocks and shunning defensive stocks. This has been a very consistent and striking theme for a while. So this is like an equal-weighted basket of cyclicals relative to defensive stocks. It's telling you a pretty decent, message about the growth to come. We all know about the tax incentives that are going to kick in and all the rest of it. I think the question is, are investors kind of overpaying in advance for this cyclical upswing that we're expecting? It would also point out it's kind of global as well.

Global indicators of growth expectations are also on the rise. You could see that to some degree in commodity prices, but also bond yields globally as well in the fiscal push. Yeah, it's kind of this idea of putting your money where your mouth is. Clearly, investors are suggesting that, you know, cyclical suggests that next year could, could bode well. But then the survey data still seems like sentiment is so light right now. Ultimately, does that catch up to one another? What's happened historically? They've been diverging for so long. In fact, a lot of the sentiment data and a lot of the business survey data even would have told you we would have had a recession. Let's say 2022, 23 sometime in there. And we didn't. Leading indicators also didn't work. So anything that was

sort of soft sentiment. Look, the country's in kind of a bad mood. There's polarization. There's been a lot of whipsaw effects after the pandemic. And I think we haven't really washed through those things on the surveys. Markets willing to bet, though, that things are going to firm up into next year with perhaps a Fed that's, if nothing else, has a slight easing bias. Yeah, absolutely. Well, Mike Santoli, we appreciate it. Happy holidays to you. Thank you to our Mike Santoli. All right. Well, that does it for overtime.