Closing Bell - Closing Bell Overtime: Tom Lee’s Market Insights, Natural Gas Moves, and Real Estate Trends 1/8/25

Episode Date: January 8, 2025

Courtney Garcia of Payne Capital and Daniel Skelly of Morgan Stanley break down the market's action today while Fundstrat's Tom Lee analyzes yields and speculative stock trends, including why he says everyone needs quantum computing exposure. Breaking news includes new CEOs at Liberty Media and USAA. Plus, Bill Perkins of Skylar Capital discusses natural gas dynamics and wild swings in energy markets while Bravo's Ryan Serhant weighs in on real estate and mortgages.

And that's the end of regulation. Intercontinental Exchange ringing the closing bell. The New York Stock Exchange, WellHub, doing the honors at the NASDAQ. Stocks wavering between gains and losses as investors keep a close eye on Treasury yields and weigh the latest signals from the Fed. That is the scorecard on Wall Street, but the action is just getting started. Welcome to Closing Bell Overtime. I'm Morgan Brennan with John Ford. And ahead this hour, just how worried should the bulls be about rising bond yields? Fundstrat's Tom Lee out with a new note on that topic, and he'll join us with his advice for investors. Plus, energy trader Bill Perkins joins us with his take on the big swings for natural gas and how frigid weather, Trump energy policy, and geopolitics are impacting the commodities markets.

But first, let's get straight to today's market action with Courtney Garcia, Payne Capital Management Senior Wealth Advisor and a CNBC contributor, and Daniel Skelly, Morgan Stanley Wealth Management Executive Director. It's great to have you both here, especially as we did have the S&P basically eke out a gain, albeit barely. A similar situation for the Dow and the Nasdaq. But Courtney, just in terms of how important yields are to the equity picture, is that really what's driving things right now? Or is this a situation where there's a lot of sitting on your hands and awaiting earnings and other key catalysts like jobs later this week?

It's probably a little of both. But I think when you're looking at the markets, especially today, a lot of that is due to what's happening with the treasury and inflation is absolutely going to continue to be one of the headlines that markets are looking for, right? So we actually saw the 10-year treasury spiked. It did come off of some of those highs. You're seeing now the markets have actually kind of recovered as that treasury has come down. But really what the bond markets are continuing to tell you is that inflation is likely going to be an issue. You're starting to see this peak in when you see goods deflation is actually slowing. You're

starting to see these inklings of inflation continuing to peak its head here. And that's where the markets are really starting to see where those things are going. Because if interest rates keep rising, inflation is a problem. That's absolutely going to be a story here in 2025. Dan, how do you see 2025 shaping up? I know you've talked about this idea of a Goldilocks view, but you've also written about widening tail risks. So where do you see those risks and how do you prepare for them? Sure. Morgan, we're looking at a bit of a paradox this year within markets in terms of a unstoppable force, which is the idea of U.S. exceptionalism, that everyone wants to invest here. And we've got some of the leading secular themes meeting an unstoppable object of U.S. valuations

and potential earnings and interest rate and inflation challenges. And so the net effect of that paradox is just a choppier first half to this year. And so as you were talking about earlier, we need to see more clarity on earnings expectations being met or exceeded and more information around the nature of tariffs. Are they going to be universal or select? And what's going to be the sequencing of tariffs vis-a-vis some of these other, we would argue, pro-growth policies like deregulation? Okay. So, Courtney, you say that investors can buy cheaper valuations than the mega caps in the mag seven with high earnings growth. You also say you see opportunities in Europe. Talk to me about how to approach Europe when, you know, as Dan mentioned, there's a lot of focus on the U.S. economy and U.S. stocks as being attractive. What kind of value do you see in Europe?

Yeah, and don't get me wrong here. We absolutely still want to own the U.S. And the question is, is the Magnificent Seven going to continue to lead with the same kind of outperformance that it has been? And that's where I'm not sure that it is. So we're absolutely going to continue to own those things. But those things have done really well. So it's a good time to start to take some of your profits and bring it back to your target. And that's where with those profits, what areas do you want to look at? So that's where you can look at things like industrials and materials. Both had negative to flat earnings growth in 2024. Look at 2025. The earnings growth expectations are expected to be upwards of 18% and are obviously much cheaper than those mag seven. So that's where

taking some of that extra money, putting it there can absolutely be an opportunity. And Europe also is significantly cheaper than the U.S. trades about 13 times versus 22 times here in the U.S. But energy specifically in Europe is even more dramatic. It's about a 50 percent discount to U.S. So like Shell, for example, trades about eight times forward earnings versus Exxon is like 14 times forward earnings. And Shell also has a lot of liquid natural gas exposure. So I think a lot of those same themes you're seeing here in the U.S. are still in some of those companies in Europe. And I think you can absolutely take advantage of the lower valuations as we look forward to next year. OK, so, Dan, you say the near term U.S. economy looks good. It seems like, if I understand you, the question is the effects of more medium-term policy,

immigration, tariffs versus deregulation and tax cuts. But how exposed is the investor over 2025 to shifts in sentiment? It seems like the sentiment has remained pretty strong at this point, along with these high valuations. Might it be that a sentiment shift with the other facts not necessarily changing could have an impact on markets? John, I think you raise a lot of really good issues. So first, if we look at traditional long-only mutual fund positioning, cash levels are at near all-time lows. If we look at retail interest and retail buying, we obviously saw a ton

of interest post the election. We had $140 billion in net flows into the equity market in the four weeks following the election, which was a record four-week period of flows, right? So we could argue that there is a lot of excited interest right now, and flows are starting to confirm that. We've also observed the sell side has become more bullish this year after really not expecting much of anything a year ago. So to your question, I think if we do see some surprises or some more policy uncertainty or volatility, that could certainly drive a modest pullback in markets from here. I would also just add, lastly, I agree with a lot of Courtney's points

from a minute ago in terms of how to position vis-a-vis that outlook. And we would argue broadening out in earnings, a soft landing confirmation, which the Fed has essentially given us now via starting the rate cut path. Listen, the number of rates is perhaps changing at a moving target, but we're still cutting on net. And then last but not least, still question marks around the spending and the ROI around the MAG-7 capex is going to allow for some other sectors and leadership to do relatively better this year. Okay. Dan Scali and Courtney Garcia, thanks for kicking off the hour with us. With the Dow and S&P both finishing up fractionally higher, but the Nasdaq closing just below the flat line. Let's now bring in senior markets commentator Mike Santoli

for a look at some market trends that are testing key levels. Mike. Yeah, Morgan. Mid-cap stocks were a pretty popular call coming into this year. You can understand why. Not as expensive as the large caps that are S&P 500 driven by mega cap growth stocks. Also higher quality than pure small caps. Also sometimes beneficiaries of a good M&A environment. The S&P mid cap, you see it's kind of sitting up on this shelf. A lot of charts look like this. Kind of pressing toward highs and then a big burst higher after the election.

Now retesting those levels. And coming into today, we were sort of on this shelf that goes back to like a July high prior to well prior to the election. So so far, it's kind of hanging in there, outperformed slightly today. It's one of those benchmarks to keep an eye on to see, in fact, if the market can do any broadening out or hold its own in the absence of mega cap leadership. Now, within the S&P 500, market breadth has been pretty poor for most days over the last few weeks. And you see here, this is the percentage of S&P 500 market breadth has been pretty poor for most days over the last few weeks. And you see here, this is the percentage of S&P 500 stocks that are trading above their respective 200-day moving average.

Now, being above your 200-day moving average, broadly speaking, means you're in an intermediate term uptrend. This is just above 50% coming into today, like 53%. Probably weakened a little bit more today. So it'll probably be around that 50 50 level we were down there last in late 2023 that was associated with a comprehensive genuine full market correction not just this little below the surface pullback type stuff so it's not necessarily the mark of a very strong momentum market if this flags much further. On the other hand, it'll get oversold and watch on the next rebound rally to see if this turns higher and kind of gets out of the

danger zone. That'll be a sign of perhaps of whether the next bounce is a sustainable one, Martin. All right. So so, Mike, just looking at this, I want to go back to the fact that we've had some Fed speak that has kind of shifted today with Waller sounding perhaps a little bit more dovish. How much is that going to matter with all these different cross currents, with all these technical levels that we're talking about and breath and everything else? It mattered quite a bit this morning, I think, to just maybe change people's focus to some degree. Everyone since December 18th, since the Fed meeting, December 19th, has been fixated on this idea that neutral rates are higher than we thought before. We don't necessarily see much room for cutting. Maybe the policy moves under the new administration are

going to work against the potential for rate cuts. And that's fine. Orderly slow rate cuts or a Fed pause are fine unless you think the economy ultimately can't handle it or it will lead to the Fed to remaining too tight for too long. So I think it may be lessen the pressure on that to some degree. But of course, it's the economic numbers that are going to matter most because the Fed is data dependent. Investors are data dependent. And that's the way it's going to be for a while. All right, Mike Santoli, thank you. We've got some breaking news on Liberty Media. Let's get to our Julia Boorstin. Julia? That's right, John Lonesley. Liberty Media has named a new CEO, Derek Chang, who is currently a Liberty board member and the former CEO of NBA China will

become the new CEO of Liberty Media. One of his main priorities will be growing Formula One and looking at digital expansion. So this is a new CEO being named of Liberty Media. Back over to you. All right. Julia Boorstin, thank you. Now, meantime, Treasury yields capturing plenty of attention on Wall Street lately. The 10-year yield touching its highest level since April earlier today. But our next guest says the rise in yields could be a false flag. Let's bring in Fundstrat head of research and Fundstrat Capital CIO, Tom Lee. He's also a CNBC contributor. Tom, good to see you. OK, so let's start there with the yield impact. What might people be reading wrong, you think?

Well, I wouldn't say markets are necessarily reading it wrong, but I would say as uncomfortable as we are seeing yields at near one-year highs, I don't think that this is going to be the level we see a few months from now. And I think that's more important because ultimately, if yields begin to fall because inflation pressures are easing or if the job market is a bit softer than expected, it really puts the Fed put back in focus. So I guess what I would just say is it's not comfortable to be here where yields are. I don't think it really breaks markets, but I don't think yields are necessarily moving higher over the next few months. Well, it's particularly uncomfortable, arguably, for small

caps. Early last year, probably around this time, you made a bold call on how much small caps could rise. You've moderated from that since. But where do you see small caps going now? Why didn't the big pop that you projected for 24 pan out? Yeah, small caps have been disappointing. I mean, unfortunately, I think there's been a rug pull on those names a few times. So I think investors are going to be very wary. But to us, I think the roadmap for 2025 is still one where the opportunity for stocks

to have much better breadth widens, because not only do we have an incoming administration that is pro business, and I think it is going to boost CEO confidence. It's pretty evident now, even seeing it in both ISM readings recently, but that's going to be a better environment for mergers. So to me, while small caps have been big laggards, actually for the last 10 years, this 10-year underperformance to S&P is the worst in actually almost 100 years. So second only to 1998. And then from a valuation perspective, small caps are still much more attractively valued. The median PE is around 11 times, and that's almost 7.7 turns cheaper than the S&P. So it's been tough, John,

to be overweight small caps, but I think they're going to work in 2025. OK, I do want to get your thoughts on some of the riskier assets or the riskier parts of the market that or I'll use the word maybe potentially more speculative case in point, the quantum computing stocks. They had a huge move higher. Jensen Huang from NVIDIA comes out yesterday, makes comments saying that, you know, some of the supercomputers are still and the full, I guess, realization of supercomputers is still decades away. And you see all the stocks tumble. I know there's one that you like in your granny shots here. I believe it's IonQ. we've seen in some of these parts of the market and how to think about investing if you should

be investing in some of these more speculative or futuristic frontier tech like companies? I think investors do need to put a long term lens on a lot of these important mega themes. I think quantum computing is in the earliest days. I don't think anyone can judge really whether it's 15 years away or 15 months. And I think people have made many mistakes over the past 20 years looking at things like social media and underestimating the adoption rates there or internet or even AI now. I mean, just think about two years ago, how many people were saying AI was going to actually take far longer than expected. That being said, I do think the environment for stocks hasn't been great for the last three weeks.

I think it's really gotten people into a recency bias, thinking, look, we've neared a top or that stocks are just awful now. I think we're getting close to the point where you should be betting really and leaning heavily against that. I mean, even look at AI sentiment, it's almost back to negative. But Morgan, regarding quantum specifically, it is a pretty innovative technology. I think these are going to be high volatile names. And so until we get back to risk on, they are going to be tougher names to own. But I don't think that means you have to sit them out in 2025. OK, how about Bitcoin trading just below 100K?

Bitcoin's another name that I think or another asset class that we really want investors to have a longer term lens. You know, this is something that needs to be two to five. Tom, stay right there. We have some breaking news. We'll come right back to you. Stay with us. We have some news on Disney and Julia Borson has the details. Julia. That's right, Morgan. Disney-supported content monthly across Disney+, Hulu, and ESPN+, streaming for 10 seconds or more. Now, Disney is also rolling out new digital ad tools. Disney Compass is a new tool to aggregate first-party data, to analyze ad effectiveness, to help with decision-making, and a new standard for advertising in live sports and entertainment,

plus some new tools to buy ads in live sports. Take a listen. So you're hearing a lot this year about advertisers wanting transparency, understanding what they're buying, quality of audiences. And so at Disney, you understand the quality of the audience you're getting, you understand the content you're getting. Now you will have exactly what is the opportunity that you're buying. And that 157 million monthly active users speaks to the scale and the strength of that now to put disney's streaming ad scale in context netflix in november announced 70 million ad supported users and a different kind of streamer

fox's to be which is free and ad supported, has 97 million monthly active users. Morgan and John. All right. Julia Borson. Thank you. Tom Lee, we're going to go back to you. I just cut you off as you were answering me on Bitcoin. Still love to get your thoughts on that.

Not to mention, we've had a pretty busy week, John, with some of the media companies specifically, doesn't it? Yeah. Yeah, on Bitcoin, we're still very optimistic about the long term, and we see Bitcoin reaching $250,000 this year. But in the short term, our technical strategist, Mark Newton, actually has talked about Bitcoin being extended. So he thinks in the near term, we could be testing something around $70,000, even $62,000 near term for Bitcoin. But that would be a buying opportunity in our view. Wow. OK, that would be a bit down from here. So quite a buying opportunity,

I imagine you think it would be. Tom Lee, thank you from Fundstrat. Well, more breaking news this time from the insurance industry. Contessa Brewer has that. Contessa. John, big move here. Just announced Jim Williamson has been named the acting CEO at Everest Group, a publicly traded global reinsurer and insurer. He'll replace Juan Andrade, who's leaving to take over the helm at USAA. Andrade has been at the helm of Everest through the pandemic, a surge in political risk. Now he goes to USAA, which is the insurance company, of course, that serves military and veteran communities. Andrade will replace Wayne Peacock, who is retiring. Both will join me on Squawk Box tomorrow morning. And the big topic of conversation, of course, is those raging

wildfires in California and what's in store for the insurance market there. You won't want to miss that, John. Yeah, huge tragedy unfolding there, Contessa. Thank you. Well, Costco's December sales are out, and Christina Parts Nevelis has those numbers. Christina. Yeah, let's start with comparable sales for December. Company was up 7.4 percent compared to last year at this time, and then e-commerce was up 34.4 percent. But you have to keep in mind, last month in November, you had Thanksgiving, Cyber Monday, as well as Black Friday. They were all pushed out into December. So it added an extra 15 percentage points to that e-commerce number.

So it was up 34.4%. But you have to keep in mind they got an extra week of all of that holiday spending. Back over to you guys. All right. Christina Parts-Navalis, thank you. Jeffrey's earnings are out. And Kate Rooney has those numbers. Kate. Hey, Morgan. Yep. So these are the Q4 numbers here, Jeffries. The bank, first of all, increasing its dividend to 40 cents. That's about a 14 percent increase from the

prior dividend rate. We are not going to compare the estimates due to pretty thin coverage of the stock. Only a couple analysts cover this name. EPS, though, coming in at 91 cents. That was on bottom line revenue of one point nine six billion. They cite strong investment banking revenue of 73 percent for the quarter. Record quarter and advisory for Jeffries up 91 percent. Equity strong up 49 percent and then solid performance in fixed income. That was up about 15 percent. Guys, this is the first of the banks to report earnings and often a bellwether for Goldman, Morgan Stanley and the rest that we're going to get next week and see shares moving around a bit here after hours, but pretty much flat on the news. Guys, back to you. All right. Kate Rooney, thank you. If you think the action in equities has been

wild lately, well, just look at natural gas, which has been swinging sharply as cold weather blankets the country. Up next, energy trader Bill Perkins joins us with his forecast for prices and how a Trump administration and those policies could change the equation. And later, top real estate broker Ryan Serhat tells us why he's bullish about a turn in the housing market this year, even as mortgage rates sit at their highest levels since July. Overtime's back in two. Welcome back. Some potential merger news in the energy sector. Reports say Constellation Energy is in advanced talks to acquire energy generator Calpine for around $30 billion. Meantime, natural gas prices are popping again as cold weather grips the eastern U.S.

Investors also weighing uncertainty in energy production after President-elect Trump promised to do away with the Biden administration's offshore oil and gas development ban. And joining us now is Bill Perkins. He's CEO and president at Skylar Capital Management. Bill, it's great to have you on. Happy New Year. Happy New Year. Great to be back. NatGas, it has just been ripping. It was one of the best performing assets. Yeah, it was one of the best performing assets for the past 12 months.

Yeah, we finally got some cold weather. The producer showed some discipline cutting back supplies, and we didn't get into a containment situation until November where there was some warm weather. But with the cold weather, that really means a lot to producers, not just for winter pricing, but for the entire injection season. That makes a lot more space for gas to go into the ground. So we're less worried about prices dropping precipitously. That should improve their cash flows and their ability to grow production into the year. Okay. How much of this now hinges on weather and that drawdown on supply that's in storage? How much of this is tied to policies with a new administration coming in and potentially more LNG exports, especially as in Europe,

we're seeing some changes with the Ukraine-Russia LNG deal going away? In the short term and intermediate term, it's all about the weather. So the market's been chopping around with each run of the weather models. The AI models now go out 20 days, and so it's been pretty exciting in the front. In a little bit longer term,

policy starts to matter, infrastructure starts to matter. These LNG export facilities ramping up, whether they ramp up on time or early.'re hearing reports of placa mines facility two months earlier than expected um that adds to the demand picture and of course uh you mentioned about cow pine uh being bought by constellation that's all on the ai data driven demand that's out there. Electricity demand is skyrocketing, much more bullish than than anticipated 12 months ago, six months ago. And it seems insatiable right now. And so people are looking to take advantage of that. And so longer term policy infrastructure matters more. So, yeah, Bill, talk to me about policy.

President-elect Trump has been promising to boost energy supply as a way to reduce inflation. Is that a threat to energy prices? How do you factor it in? Well, I mean, if you remove the barrier to access, usually on federal lands, speed up permitting, a lot of it's just delay uh with permitting reform on federal lands and over the longer term uh producers will respond to that and we'll have much more supply and that will be bearish signal for longer term prices um it takes quite a bit to uh ramp up a program a drilling program so i wouldn't expect that to affect things in in coming year, but perhaps 26, 27, 28, we can see

a slightly more robust supply picture. Now, what about M&A? A lot of industries getting excited about the prospect of the, I guess, limits coming off on that in energy besides this Calpine thing that we're hearing about today? Should we expect a lot more of that? Yeah, especially in the Permian. There are some good producers there with great acreage. Efficiency of drilling is going up. And access to the

market, we're seeing new pipelines come out of there that are removing bottlenecks. There's a macro story of electricity demand going on that's going to play out over several years unless that that burst somehow. And so I would expect some of the larger players to look for strategic acquisitions in the electricity side, generation side and also on the fuel production side. How important is nat gas going to be as this bridge fuel toward nuclear, toward some of these other alternative and sustainable energy sources that have been talked about but haven't been realized in a meaningful way yet?

Yeah, I think it's going to be very important. It has been very important. Our emissions in terms of CO2 or particulate or any type of pollution per megawatt generated and on an absolute level have gone down largely in part because of the efficiency of natural gas generation and the lower polluting of natural gas. We've pretty much destroyed the amount of coal burned in this country, and it's done wonderful things for people's life expectancy and health and clean air. And so we have this abundant resource called natural

gas here in the United States of America, loosening regulations, encouraging drilling. And over here, it's the most environmental drilling you're going to have as opposed to overseas. And so I think it's extremely important in the interim. Bill Perkins, great to have you on. Thanks for being with us. Thanks for having me. Up next, just how much damage has been done to the bull market in this latest bout of volatility. We'll look at what the action has been in two defensive sectors and what it's signaling.

And our fortune's about to turn in the housing market. We're going to talk to one expert about why he's constructive on real estate, even as mortgage applications plunge and rates rise. Welcome back to Overtime. Mike Santoli returns for a look at how defensive sectors have been performing in this latest bout of market volatility. Mike? Yeah, John, both before this last little stretch of churn and since, we have not really seen much life out of the traditional defensive sectors, the consumer staples or health care. So if you were worried about the way the market in general has been kind of grinding its gears, you see some

cyclical sectors like industrials, consumer discretionary, they're 7 or 8 percent off their highs in just several weeks. You would wonder if that's sending a scary message about the underlying economy. There's really not a sign from these defensive groups that there is that kind of economic concern filtering into prices here. You see a little bit more of a bounce in health care. That's XLV over the last couple of weeks staples have been really just for sale the whole time that includes traditional kind of consumer package goods foods household products as well as you know some pullbacks and things like Costco and Walmart off of really high level so at least on this measure it's not as if the market is sending a signal that we have to really be concerned about the expansion, even if, you know, it seems like the rest of the market is trying to find the right level for where rates are. Mike, given where overall valuations are, especially among some of the largest stocks, tech stocks, is that lack of a defensive surge? I don't know.

Is that a signal in and of itself? I mean, it's a signal that for as much as valuations are a concern at the very top of the index, it's not something that has created this idea that there's money flowing to contrarian plays. I think what the market does when it does get a little bit worried is it buys quality as opposed to defense. And there's a subtle difference there. Quality is about financial characteristics, not so much how these companies perform in a given expansion. By the way, over this two year period, the S&P is up like 50 percent. So this is really profound underperformance for a long time. And of course, you could also start to tell a story about policy pressures on health care revenue streams or, of course, on could also start to tell a story about policy pressures on health care, revenue streams or, of course, on on consumer staples, things like food stocks, having some tough fundamentals as well. OK, Mike Santoli, thank you. Time for a CNBC News update with Bertha Coombs. Bertha.

Hey, or who? President Biden approved a major disaster declaration for California this afternoon, following residents allowing residents affected by the wildfires raging across Los Angeles to get recovery funds and resources quickly. The president at an in-person briefing with Governor Gavin Newsom on the fires said helicopters, air tankers and firefighters from the U.S. Forest Service have been authorized to assist. Meanwhile, on a post on X, L.A. Mayor Karen Bass said helicopters were back in the air, dropping water on fires from the fire department. They were grounded overnight due to high winds. It comes as the fire department said that it was stretched, then battling the blazes and requested help from nearby counties and states. As for the weather driving these fires, the extreme winds, which have top speeds over 80 miles an hour, along with the low humidity, are expected to continue to threaten L.A. County

into the evening. But the National Weather Service says the worst of the conditions is expected to die down overnight. Still, forecasters are warning that windy and dry conditions will continue through Friday. Folks going through a lot there. John Morgan. Indeed, Bertha, thank you. Well, after the break, we can't spell will I am without a I. We will hear from the rapper, singer, and producer from CES about why he's telling creators to embrace rather than fear artificial intelligence. Check out some big under-the-radar moves in the biotech space today. Small cap sauna biotechnology jumping 160 percent after announcing positive study results for a diabetes therapy and veer biotechnology popping nearly 60 percent

on trial results for early stage cancer drugs we'll be right back welcome back to overtime it's consumer tech week here on overtime and earlier in the week we showed you how the surge in interest in AI is impacting phones, PCs and even smart glasses. Well, Julia Borisson is at the Consumer Electronics Show in Las Vegas with a look at how AI is impacting electronics in your home. At CES, there are giant, often see-through displays everywhere, and AI is front and center. Here at the LG booth, one thing they're incorporating AI into are these smart speakers created in partnership with Will.i.am. They connect to Will.i.am's radio.fyi, AI DJs which answer questions and engage with listeners. I caught up with Will.i.am about why he's embracing AI. If you're that type of creative that gets haunted or you know, trembling, well then maybe you need to rethink

just how much of a creative you are. Because this is a realm that we're in that should catapult you. LG is also integrating AI into home appliances. Its fridge analyzes what's inside and suggests recipes. And AI-powered microwaves and stoves can record what's cooking. There's also growing interest in home robots, like this one from French company Enchanted Tools.

It aims to be a personal companion robot and is currently being deployed in places like nursing homes and hospitals. This year's CES comes amid growing concerns about tariffs. The Consumer Technology Association estimating the proposed Trump tariffs could lead to as much as a $143 billion decline in U.S. purchasing power and purchases of laptops and tablets as a $143 billion decline in U.S. purchasing power,

and purchases of laptops and tablets could decline by as much as 68%. Don and Morgan tariffs, along with potential regulation of these new AI technologies, are the talk of the town here in Las Vegas. I'll bet, thanks to Julia Borson, I want a fridge that tells me when it's time to throw stuff out. LG could work on that. I'll bet, thanks to Julia Borson, I want a fridge that tells me when it's time to throw stuff out. LG could work on that. Well, up next, luxury real estate broker Ryan Serhant explains why he's so bullish on the housing market despite a jump in mortgage rates. We'll be right back. Welcome back. Real estate continues to be under pressure as mortgage rates hit their highest

levels since July, and the Mortgage Bankers Association said applications to refinance and purchase homes fell from last year. Joining us now is Serhant founder, CEO, and broker Ryan Serhant. Ryan, good to see you. So inventory has been a major issue for a while, keeping prices higher. You expect a boost in inventory as sellers get used to rates this year. But what might, if anything, cause inventory to be higher than you expect to the point where it might pressure prices? Well, inventory is already increased. I think we're seeing total supply at about 10% higher year over year. And you have to remember, we just experienced back-to-back years of the slowest sales market for residential housing in the United States since the mid-90s.

So I believe that America is open for business, for housing. I believe that people should expect that long-term mortgage rates are going to be between 6% and 7%, even though short-term rates will continue to come down. And I expect sales to pick up due to pent-up demand that we've had sitting on the sidelines for the past couple of years as both buyers and sellers accept where rates are, accept the new normal, and have to move. We're already seeing that activity, even at our firm, in the first couple days of the year. It's been a lot. Okay. So there was this National Association of Realtors settlement affecting how real estate agents across the country get paid. Tell me about the complexity of being an agent now,

since that ruling, and how this new venture of yours, I think it's called RealtyCo, fits in? Yes. The job of being a real estate agent hasn't changed at all. If anything, it's just become more transparent, which is something that myself and our firms have always pushed for, that you have clear communication with your clients, whether you're helping them on the buy side or on the sell side. If anything, more homes will now be sold as more people are thinking about the process in which they purchase that home. The agent, though, as you think about their business, they're commissioned. They're not salaried. They live and die by selling this home or that home. If you sign a contract to buy a home that closes tomorrow and

there's a commission agreement that's signed on the buy side or the sell side, that's how they're compensated. If it closes in a year or in six months, you think about all the new construction homes, the towers that we sell in New York City, South Florida, all over the country. Sometimes you do your work as a real estate agent. You work 15 hours a day. You don't actually get paid for that work until it closes six months, a year from now or so. agents to be able to access their commissions for pending deals within 24 hours and a full suite of other success services every state around the country. Massive, massive news for our industry. Okay, that's one to watch. I want to go back to what you had to say about inventory, though, and the fact that we've seen a 10% increase in inventory. I mean, and the key question to

seeing deals get done, is it actually inventory that buyers want? Depends on how picky you are. What's interesting about the amount of inventory that we see out there is that about 50% of the active supply is considered, we can say, stale, which means that there's a pricing disconnect between the seller and the buyer because a lot of people sold at really high prices in 2020, 2021, the beginning of 2022. And those are your comps, right? Those have been set. But now 2022 closing prices are three years old. You have a new world now. We have a new administration coming in in two weeks.

You've got new interest rates. It's a new normal. And so you're resetting new comps and a lot of that stale inventory where sellers have been sitting out there that have been out of certain buyers price ranges. I believe you're going to start seeing a lot of reductions as people just decide to get on with their life, sell where the market is, if not at a good premium and move on. OK. And of course, given the fact that you really made your name and got your start in New York real estate, and I realize you've been expanding up and down the East Coast, but I want to get your thoughts on congestion pricing, which just kicked in,

and how some of these types of policies and hitting costs in cities like New York could affect real estate. Yeah, I think I paid it three times today so far. You know, I'm not a politician. You know, what I'll say is, is I think it's stupid. I think charging people to enter into the city has got to be one of the dumbest things that I've seen. And if there's a reason why it hasn't existed to this point, there's a reason why the bridges and tunnels have been free, because New York isn't just one island. You're just going to ostracize more and more people, and you're going to turn the outer boroughs into very, very large parking lots. Who do you think can afford the congestion pricing? It's the people who don't bat an eye at $9 or $27 a day who can afford it, the people who are going to try to figure out how else to get into the city. And so you talk about special services, right?

You talk about essential workers. You talk about creating affordable housing in Manhattan for people who actually need to live and work here, and yet you're going to charge them more money to get here. There is a mass disconnect between the people that make the decisions and the people that live in those decisions in New York City and in California. It's just like our housing market. There's a disconnect between the sellers and the actual demand for those buyers in the marketplace. And I think 2025, you're going to see a lot of that pent up energy come to a head. I don't think it's going to affect pricing in New York City. People are just going to pay the tax.

But I think 50 years from now, as you look back on the history of the city, it's going to be one of those moments where you're going to say, ah, yep, that might have been where it kind of started. Ryan Serhan, as a New Jersey resident, I wish the bridges and tunnels were free, but I take your point. Thanks for being with us. Well, breaking news out of Washington on chips are Megan Casella has the details. Megan. John Bloomberg News is reporting that the Biden administration is is considering or planning one additional round of export restrictions, specifically on the chips or the semiconductors used in artificial intelligence, specifically created by companies like NVIDIA, AMD, potentially an Intel could be caught up in this as well. They say this round of restrictions is coming before Biden leaves office just over a week from now, saying that the U.S. wants to curb

the sale of AI chips on both a country-by-country basis and a company-specific basis. This is part of Biden's push to limit the expanse of AI chips and getting them into the wrong hands, specifically China and Russia. In the fall, we did think that the Biden administration was considering this. At the time, it was reported to be focused on Middle Eastern countries. Now, Bloomberg News is reporting that this is going to be something of a tiered system, that U.S. allies will maintain access to AI chips, but adversaries would virtually be blocked, have almost no access to these AI chips. So we don't know yet specifically which companies, which countries will be named in these restrictions. They do say they could be released as soon as Friday. So more to watch

there on the details. But for now, we know that companies like NVIDIA, AMD are likely to be caught up in this. Guys. All right. Megan, thanks. I believe Commerce Secretary Raimondo has argued to you, Morgan, that these restrictions have been effective. She has. And in our conversation together just before the holidays, she talked about the fact that she was going to be working on things like this all the way up until her final day in that role in this administration. So perhaps not surprising when you think about it from that standpoint. She's also talked about the fact that dealing with China and countering China when it comes to some of these technologies has been something of a whack-a-mole. So not surprising, necessarily, to see more of these policies rolling out.

Indeed. Well, still ahead, why being the CEO of a publicly traded company is becoming an increasingly endangered job when an activist investor is involved with the stock. Plus, the markets are closed tomorrow, but Friday is shaping up to be a major day for investors. We're going to tell you why. That's ahead on Overtime. Welcome back to Overtime. C-suite changes are becoming increasingly more common when an activist investor takes a stake in a company. Leslie Picker has the details. Leslie.

Hey, Morgan. If you're a CEO of a publicly traded company and an activist takes a stake in your stock, there's a higher likelihood you're looking for a new job within a year. And that's true even if the activist doesn't explicitly demand it. During 2024, 14% of U.S. companies targeted by an activist saw their CEOs depart within a year of a campaign initiation, according to new data collated by Lazard. That compares with an occurrence of 9% in U.S. companies in the S&P 1500. Now, it may be a bit of a stretch to say there's a clear causality, though. Activists do tend to target names that are already facing their own operational

issues, and a change at the top may be seen by the board as essentially a way to refresh. Still, overt calls for management change are increasingly part of activists' objectives, happening at twice the rate of the historical average. The Lazar data shows there are several outstanding campaigns with calls to overhaul the C-suite, including one at Air Products, which just yesterday said it will announce a new CEO succession timeline by the end of the quarter, a plan they said was in place before its two activists got involved. Guys.

All right. Leslie, thanks. Well, the New York Stock Exchange and NASDAQ will be closed tomorrow to mourn the death of former President Jimmy Carter. But Friday will be a big day on Wall Street. On the economic front, investors will digest the December jobs report. Economists predict nonfarm payroll investors will digest the December jobs report. Economists predict nonfarm payrolls will rise by 155K. And investors will get their first taste of earnings season when Delta Walgreens Boots Alliance, Constellation Brands, and Tilray

report results as well. Meantime, mixed picture for stocks today. That's going to do it for us here at Overtime. Fast money starts now.