Closing Bell - Closing Bell: Rally Back on Track? Apple's Climb to $4 Trillion 12/24/24

Episode Date: December 24, 2024

From the open to the close, “Closing Bell” and “Closing Bell: Overtime” have you covered. From what’s driving market moves to how investors are reacting, Scott Wapner, Jon Fortt, Morgan Brennan and Michael Santoli guide listeners through each trading session and bring to you some of the biggest names in business.

Welcome to Closing Bell. I'm Scott Wapner, live from Post 9 here at the New York Stock Exchange. We're an hour away from the close on this holiday short in trading day. Stocks higher on this Christmas Eve, the day when the so-called Santa Claus rally is officially supposed to begin. Apparently, it is. Yields, they're higher today. The market games out the Fed's next move. Nonetheless, stocks are withstanding that for the moment. We are on Apple 4 trillion watch as well. The stock on a tear lately. It needs to reach two hundred sixty four dollars to hit that milestone. We will follow that and have a special report coming up as well.

All of the other large cap tech names higher as well. You take a look there. Microsoft top your screen meta up near one percent now north of six hundred bucks does take us to our talk of the tape. The bull market, which keeps on chugging. So how far can it really run? Let's ask Dan Greenhouse, Solus Alternative Asset Management's chief strategist with me here at Postline. Welcome back. Good to see you and happy holidays to you.

Merry Christmas to you and happy holidays as well. You're pretty optimistic still about next year, right? Yeah, I am. Listen, we had a terrific run all year, a terrific run off the summer, off the October lows. Some give back into the end of the year was not what I expected.

In previous shows, I talked about going out of the year somewhere around 6,200. That obviously will not be the case or presumably will not be the case. So I'm a little surprised. But in the context of what's happened, I don't think it's that big of a deal.

And thus far, it doesn't really change my outlook for next year. So what were you thinking was going to happen that didn't? Why do you think we're going to disappoint your high expectations to finish the year? Not obviously, but it seems like a lot of this has to do with the Fed meeting and the adjustment in interest rates and the Fed seemingly suggesting... The hawkish cut. The hawkish cut, if you will. That's right. And I thought that the market would have known that to be the case.

And obviously, it was not. I mean, obviously, futures pricing was already looking for somewhere around two cuts next year instead of the four that we've been talking about for much of the year. And so the adjustment since then admittedly caught me by surprise. I don't think it's new news per se, and perhaps maybe the market is overdoing it a bit. But it does appear that the market wasn't as prepared for it as I thought. The backup in rates, right? That's partly what we're talking about here, because the Fed was more hawkish. The outlook is a little more hawkish. They're going to cut, but obviously less than we thought. Rates have backed up significantly from September when they did the jumbo cut. Right. But if they're going up for the right reason, is that OK?

Yeah, listen, I think so. And that's been my position for many years now. This idea that that let's just I mean, to boil it down to the to the core of the issue here, it's not going up. Yields are not going up because there is some inflationary outbreak. There's obviously concern about incoming president, former president, soon to be President Trump's policies and whether that's meaningfully inflationary. That's a separate conversation. I'm not so sure it is. Is it a separate conversation? I mean, that seems to be what the market and frankly what the Fed are both trying to figure out. I mean, the Fed has said as much, right? They don't really know what the impact of prospective tariffs are going to be. Some Fed officials did seem to incorporate

President Trump's policies into their forecast. They're trying to. They're trying to assess it. Listen, my view on this is twofold. One, taking it on its own, tariffs are inflationary, for lack of a better word. However, there are other mechanisms in place here. Demand can shift, which is presumably what obviously the goal of the tariffs are to do. You can have a currency adjustment, which perhaps mitigates some of the negative effects on prices with respect to tariffs. And I would also add, when you look back, and I'm a dead horse, but when you look back at the previous period of tariffs, yes, goods prices adjusted, but headline prices did not. And I think too many people say, well, there was no effect on on prices because the headline number was down. It is true to say core goods prices, which had been declining for many, many years, ceased doing so.

And actually, but it's different this time, right, because you're starting from a base of higher inflation than you were then. So without a doubt, but and higher prices, let's be honest, right? Because you're starting from a base of higher inflation than you were then. Without a doubt. And higher prices, let's be honest here, right? Well, of course. That's the bigger story anyway. That is right. But I would also add a stated goal of incoming President Trump is to lower oil prices. And to the extent that, and listen, oil prices have already been coming down, prices at the pump, gasoline prices. I haven't looked in a couple of days, but last I looked, we're somewhere around $3 a gallon. Not great, but not terrible either. If you can somehow engender higher oil production,

either domestically or more likely overseas, you can start to put some downward pressure on oil prices, which presumably would help out on the inflation front. So I'm not as universally negative as a lot of other people on the tariff side of things. You say the consumer's fine. Yep. And you expect positive fundamentals to reassert themselves. The positive fundamentals being what? And how do they need to be reasserted if we already have positive fundamentals is one of the reasons why we're rallying. And we may have started another one here as the Santa Claus

rallies beginning today. That's right. So let's address those one by one, the consumer and then the fundamentals. On the consumer side of things, Darden just reported Olive Garden, Longhorn Steakhouse, Chewy's, Yardhouse, a mall-based, anyone who's been in a mall knows Yardhouse. Darden had pretty good things to say about the consumer. That's our latest fundamental bottom-up look at consumer spending. Obviously, we've got tons of macro data that corroborate that. Everyone talks about the retailers. We know Walmart and Costco, but the retailers in general. I prefer, with respect to the consumer conversation, to look at American Express, Visa, MasterCard, Capital One. All those stocks are doing pretty well. The commentary continues

to be pretty strong about the consumer, and we know what's going on with the labor market. So I'm not at all worried about the consumer through the vantage points of which I view things. The fundamentals of reasserting themselves, I'm saying right now, the narrative that we have on the network and in these conversations is largely focused around the Fed and yields. And that is the dominant narrative right now. What I'm arguing is when the calendar turns and we start getting additional data and then eventually earnings season, those fundamentals, which I still perceive to be quite strong, are going to become part of the narrative, not the dominant part of the narrative. And we can move on from the Torsen-Slock conversation about hiking rates. Right. The 40 percent chance that he gives. The 40 percent chance he gives to the 10-year going to

5 percent. By the way, I would put a higher probability on the 10-year going to 5 percent than I would on the Fed actually hiking rates next year. I think they're two different things, although they're related. Torsen's obviously phenomenal. I have great respect for him personally and professionally. I'm not so sure that they're hiking rates next year. My point is just that's become the conversation as opposed to the fundamentals driving stock prices higher. What happens if the 10-year does rise above 5%?

What happens if the 40% actually happens? The probability 40% comes to fruition. I think it's probably going to be a little tricky for stock prices in the short term. Obviously, the 10 years now, we call it 460. We're certainly north of that. I mean, the rates are up again today, by the way, as we said at the outset. There's 461. Yep, 461.1. We need that extra decimal. We do. We always do. So the bias is clearly higher for yields right now. It feels like momentum wants to go higher into the 475 area.

I'm not making that call. I'm just saying that's what it feels like. And that would be tricky. I think the point, listen, we saw this once already when we whisper touched 5% a couple of months ago. If we put up a longer term chart of the 10-year, you can see we did tick 5%. And it was a little tricky for stocks. And then as soon as yields started coming off their highs, that coincided pretty much with the bottom in stocks, as we know. And I think it's not unlikely that something like that happens again. We're back to a more top heavy move in the market, right? This latest leg of the rally has been more top heavy. NASDAQ is up

1% today. We're looking at a record high for the tech space. Apple's at a record high. A lot of these other names have been rallying as well. Is that story going to change anytime soon? Yeah, I go back and forth. At the beginning of the year, I was one of the people who said, no, you're going to make your money elsewhere. That proved for much of the year not to be the case. Solus as a hedge fund, as an investor, are looking for the non-Mag7 type investments. We own a number of companies in energy and consumer in a number of areas in crypto adjacent that are good fundamental stories that are doing quite well, although you have to give credence to the fact that Apple and Broadcom, Tesla, Netflix, those types of large tech, although Netflix has consumer obviously touch points, as does, I guess, both Tesla and Apple. Those large mega cap names are doing phenomenally well.

And I know you've had conversations like with Rob Seachin and the Halftime crew about the earnings growth really slowing down for those names and what that portends. My hope is that the broadening out that, that to some degree has happened, continues because of that slowing earnings growth. And I don't know that I would, I don't like loop grouping the 493 together because I think that's too broad, but I think there are clearly stories here.

Again, I mentioned on the consumer side of things in particular, that investors can find fundamentally attractive even if those larger names continue to do well. The other thing that Apple is doing, it's closing in on $4 trillion in market cap. It needs about $7 of share price to get there. $2.64 and change is what we're talking about to get to that milestone. Steve Kovach joining us now with a look at what's driving this recent rally it's really taken off since we sat together at wwdc we've said that so many times on the expectation and excitement around ai and an upgrade cycle

that really has yet to come to fruition which is what makes this move all the more remarkable yeah that's exactly it's kind of melting. And let me give you the magic number, though, to look out for. Like you said, $264, to be more specific, $264, and let's call it $0.63 if we're going to round up there. And look, the holidays are kind of a moment for reflection, so it's worth taking some time to look back, like you mentioned, Scott, how Apple started out the year. It was vastly underperforming its peers, Microsoft, Meta, Amazon, Alphabet, all of them. They had AI stories to tell investors, even if they weren't really seeing sales from that story quite yet. Apple was late to reveal its plans, at least a year late. But all it had to do was show off

Apple intelligence back in June at WWDC to get the stock positive again for the year and on its way to the $4 trillion market cap we're talking about now. Also helping, of course, that record-breaking buyback, $110 billion. That probably helped a little bit, too. Now we see shares are up 33% on the year. It's been just quite a turnaround, but I'm always looking at the next step, and we have to see how Apple's AI story, whether or not it can prove itself out and drive sales growth. We just really haven't seen much evidence of that yet. We talked to so many analysts on this program who just say that it's going to be a kind of

lackluster season here for the iPhone, maybe a little bit of growth in the single digit percentages, but we really won't know for sure until we get through this December quarter and hear from earnings. But before that, though, something else I'm watching that could impact the stock, and that is President-elect Trump's proposed tariffs that he has promised sweeping across the board, especially in China, where Apple makes most of its products and imports to the United States. Apple would be one of the worst hit companies if that does actually happen. What case does Tim Cook make to President-elect Trump to convince him he deserves an exception for Apple from those tariffs yet again, Scott? Yeah, it's been really a leap of faith move in the stock,

right? Looking forward to what might be and what hopefully will be rather than what is today. And then we're going to have to wait and see. I mean, the first earnings report of 25 is going to be critical. Yeah, and that's exactly it. And I guarantee you, when I sit down with Tim Cook and have a discussion on those results, one of the things I'm going to be asking is, what evidence are you seeing of sales growth from artificial intelligence? That's the question on everyone's mind.

We did not get a clear answer from Apple on that last earnings, only because the period we were talking about then only represented a week and change of iPhone 16 sales, so there wasn't really enough data to go on. We're gonna have that data now. We're gonna have a full quarter of iPhone 16 sales to really see if this narrative is playing out,

or if we do see some sales growth. Is it just because people needed new phones? We're in that cycle after so many years of people hanging onto their phones. The last big cycle we saw was when 5G hit about four years ago, Scott. All right. Good stuff, Steve. Thank you. As always, Steve Kovac. Let's bring in Adam Parker now of Trivariate Research and Sandra Cho of Point Wealth Capital Management. Adam, a CNBC contributor. It's great to see you both. Happy holidays. Sandra, I'll go to you first. You do like tech. Do you think it's going to have a great year or how would you characterize the kinds of returns that you see in 25? So, yes, I mean, tech has had a really great run and we do see that continuing into 2025. We like certain names. We're looking at Taiwan Semiconductor and Palantir.

You know, tech has a hold on America with AI. And you can see from Apple, which you just spoke about, with their launch of the iPhone 16 and the platform, the iOS 18.1 free upgrade that they have, I have five kids, yes, a plethora of kids, and two of them are getting an iPhone 16. So if that's an indication of the broad market as far as iPhone 16 growth, it's pretty good. Adam, 33% year-to-date gain for Nasdaq. What do you think is reasonable to assume for next year? Less than that. But it's hard to be, you know, directionally positive on the equity market and not be at least market-weight tech. You know, we've talked many times, Scott, you have to own the big names.

I don't make that big of a deal out of Apple being $4 trillion. All that means is it started the year big and it's up the same amount as the NASDAQ and actually less than all the other Mag7 except for maybe Microsoft. So I don't think the $4 trillion matters. What I think matters is do you get any proof cases from big companies in the first half of the year that they're driving margin expansion by basically saying, hey, we used analytics in a way we didn't in the past. If you get that from a Walmart or a McKesson or some big company, you'll get another big leg up in these tech stocks. Sondra, it underscores really, you know, as these stocks have moved up,

as we said at the outset, the market's gotten a little top heavy. It's also exposed breath in the market that recently has been terrible, right? We went through a 14-day or so stretch where you had more down stocks than up, and the ones that were up were largely mega caps. They're so big by market cap that you can still carry the S&P 500 and the NASDAQ by doing that. But do you see that as a sign of weakness to think about or be concerned about? So I'm not concerned about that, because if you look at the slight rotation that there's been in 2024, you look at the Mag 7 and there's only one name, Nvidia, that is still in the top 10% of stock

market growth in 2024. We do think that there is going to be more broad market participation next year. And as a result, we are more equal weighted than, you know, than large cap growth weighted, for example. And we do think also, and we've been seeing it, that there's more participation in the smaller and mid cap. And we are definitely pro, you know, more pro mid cap than we have been of late. You know, we started, Adam, Dan and I did by talking about the Fed and the market's uneasiness with what may happen next year. Fewer rate cuts. Maybe we'll have inflationary policies out of the new administration. We just really don't know. You ask several questions heading into the new year, one of which is when is it time to fight the Fed? Why do you ask that? And what are you thinking the answer is going to be?

Well, I mean, I think we learned toward the end of 2022 when they were still hiking that you could say, wait a minute, they're closer to being done hiking than starting and we can be bullish again. Right. And that's why you really look back the last trading days two years ago right now. It seems crazy, but Meta and Nvidia were both down over 60%. They're huge amounts of 2022, and you had to buy them immediately on Gen 1 23. So the question will be, are we almost, you know, are we halfway done, or a little bit more than halfway done,

then maybe we can't be as bullish, and we think about all the things that make us bullish, maybe that piece of the, that leg of the stool is a little bit more challenged now, because we're probably halfway done with this interest rate cycle. And so I think it's soon. I think the answer is in the first half of this year, you'll no longer be able to say, first half of 2025, you'll no longer be able to say that the Fed accommodation is one of your bullish points.

On the breadth thing, Scott, look, I kind of disagree with how people describe that. I was just looking down at my notes. 71 stocks in the S&P 500 are up 40% or more this year. 119 are up 30% or more. And 77 stocks are down 15% or more. I don't know if you can get a better breath and a better stock picking environment than you had in 2024. I expect it to be tougher to pick winners from losers next year than it was in 2024. Yeah. On the breath thing, I think Adam's right. I mean, listen, the stats are the stats. So Adam's obviously right about that. I think the breadth concern that someone like I might have, if either Adam or I were back at our sell side strategist days, I might say, well, listen,

the S&P is up 30% for the year. I'm rounding. To Adam's point, only 119 stocks have outperformed. You'd expect that to be much more 250, 250, 260, 240, something like that, than quote unquote just 119. And I've done the work before about previous years that are up similarly, and you've seen something more along those lines. I don't think Adam's wrong. I just think if you're a stock picker, I agree with Adam.

There's a lot of variation and variability here, but I would have expected more stocks to be up, and which speaks to the concentration, yeah, which speaks to the concentration of those large stocks and the work that they're doing. You want to address his idea of when it's time to fight the Fed, right? I mean, if we find out, I think we are finding out, and the process of dealing with that, that the Fed's going to be less accommodative in the new year, at what point is that a problem for stocks, if at all? Maybe we don't need the Fed to be as accommodative as we once thought because the economy is more resilient

than we expected. I don't think so. And I'm sure Adam agrees. Narratively speaking, the Federal Reserve does a lot of heavy lifting. Well, the Fed's cutting. That's good. The Fed's raising rates. That's bad. And obviously some points are better than others for each of those arguments. But we are to the point expecting, I don't know, it's going to be nine to 15 percent earnings growth next year, something like that, assuming the economy unfolds the way that the consensus expects. I think we're north of 14 percent is the expectation. Something Joe mentioned on yesterday, I think it was whatever he was looking at was at 14.4. The Bloomberg consensus is like 12, whatever the number is.

It's somewhere in that range. If the Fed pauses, so to speak, for the right reasons, inflation is not going up, but it's not coming down per se. At a baseline, you're starting with an expectation for something like 10% stock appreciation next year, assuming the multiple doesn't contract. And if you're going to make the argument that you're not going to get 10 percent appreciation, let's say, then you've got to explain to me why the multiple is going to contract. And I think if the economy unfolds the way that I expect it to, and largely speaking, the way that the consensus does, I don't know. I just I don't think it's far fetched to expect something like 6,800 to 7,000 next year. I don't think that's egregious. Sandra, I don't feel like you're looking for great returns next year, right? Mid-single digits,

maybe low double digit. I mean, I guess that would sound like a great year relative to what we've done, but not relative, obviously, to what we've done the past couple of years where, you know, we feel like, well, I mean, we do 20%, 25%, 30%. That's great back-to-back years. Yes, I mean, we're definitely looking for moderate growth next year. But, you know, look, if profit margin expansion happens, then we're looking at higher double digits. So it really is going to depend. And, you know, to what everyone is saying about, you know, inflation and whatnot,

I think that we have yet to see the market really kind of digest where inflation is going to be heading in 2025. There's a lot of question marks, right? So whether it be the Trump trade and inflation ticking up a bit or really moderating, leveling off, at the end of the day, if the Fed, like we expect, lowers interest rates, you know, by three, you know, three times by 75 basis points, then, you know, it's, and the market believes that it's still trending down, then, you know, that's going to bode well for the market and for fixed income. So, and, you know, you look at right now, you look at shelter costs coming down as a share of CPI. You look at wage growth actually going down and job growth cooling.

So you really do see that inflation, all the boxes that have to be ticked off in order for inflation to come down, that's happening. And that could really bolster the market. Adam, what's your best buy idea to finish this year and this conversation? Well, Scott, it's probably you. You're my buy idea. Okay. I love your program. Wow. But, you know, honestly, I think it's healthcare.

Are you pandering trying to get healthcare next year? Are you upset because you're remote today and not on set? Yeah, I really mean it. It's been a great year being on your program. I think the answer to your question is healthcare. The producers are throwing up in the control room as we speak. You know, that's out of envy. I think for healthcare, the estimate achievability looks to me above average. It's the one area of the market where everyone believes the Trump policies will be, as he states them,

immediately implemented and destroying a lot of the earnings, yet nobody's really worried about the earnings being implemented by other parts of the policies. So it feels to me like sentiment's negative. I love healthcare services in particular, McKesson, Sankora, Cardinal. I think that theme works. And I think if they show some – I love these businesses, Scott, that have high revenue, you know, $350 billion revenue, low margin, and they can just show a little bit of progress on margin,

and then they get the multiple expansion. So I think there's a ton of things to own. You know, we do our Outlook on January 6th, so I'll look forward to buttering you up and getting back on your program right after that. All right. We can't wait. Let me tell you. Adam, thanks.

Sandra, if you will. Good to see you guys. Happy holidays, everybody. Dan Greenhouse, thanks for being here. Happy holidays. All right. To Pippa Stevens now for a look at the biggest names moving into this short and trading close. Pippa.

Hey, Scott. Well, shares of American Airlines were covering their earlier losses after the FAA issued ground stop that halted travel for all the carrier's flights was lifted this morning. Americans saying in a statement it was due to a vendor technical issue, but that all flights have resumed and there were no cancellations related to the issue. And shares of ServiceNow moving higher after analysts at Raymond James initiated the stock with an outperformed rating and a price target of $1,200. The firm said the software platform deserves an elite valuation given its rare blend of both high revenue growth and free cash flow. Scott? Hi, Pippa. Thank you, Pippa Stevens. We're also keeping an eye on the banks today as some of the industry's biggest names are now suing the Fed over its stress tests.

Steve Leisman has those details in what was a pretty interesting development this morning, Steve. Yeah, Scott, the biggest banks are suing the Fed, contending that the bank stress tests violate the law, even though those stress tests are in fact mandated by law. The Dodd-Frank Act of 2010, the way they're administered, created and judged, along with the resulting decisions the Fed makes about bank capital levels, they are not. They're the product of decisions made by the Fed to implement the law. The Fed yesterday conceded a lot of what the banks look to be after. It said it would disclose the models used to evaluate the stress test, average the results over two years instead of one, and allow public comment on the scenarios themselves. But the Bank Policy Institute and industry lobby group made up of the biggest banks

joined by others sued anyway, preserving its right under the statute of limitations. The bigger story may be this. Business groups are emboldened to challenge industry regulation these days in the wake of the Supreme Court's June decision that overturned the Chevron precedent, which gave some deference to rulemaking agencies. That could be a good thing in the long run, reducing regulation and increasing transparency. The trouble for the stress test is they're a test. Fed officials have worried for years about giving out the answers ahead of time, thinking the banks will just game the system. So an interesting conflict here, Scott. Yeah, it seems to be more about the process, right? The way the process itself is handled than necessarily the result of the test. Is that how

you see this? It is, Scott. But, you know, hey, give me the answers. I'll tell you how, you know, I'll ace the test every time. That's been the concern that goes back to Dan Tarullo when he had this job it continued even through Randy Quarles who was more sympathetic to the banks and and it continues under Michael Barr these are the vice presidents of as vice chairs of bank supervision so look I think the Fed is going to do this and that means the stress test may be less meaningful, but also from the bank's perspective, less chaotic and might result in them needing less capital on hand, which these banks argue are extremely high. Good stuff, Steve. Thank you, Steve Leisman. Sure. We're just getting

started. Up next, intelligent alpha founder Doug Clinton is back with the tech names he says could outperform in 25. You might be surprised with who's not at the very top of his list. We're live at the New York Stock Exchange. You're watching Closing Bell on CNBC with the Dow Jones industrial average of 300 points with about 30 to go. Much like it has all year, Nasdaq is leading again today thanks to gains in Apple and the other mega caps. So how will these stocks do in 2025? Let's ask Doug Clinton of Intelligent Alpha and Deepwater Asset Management. Welcome back. Good to see you, man.

You too, Scott. Merry Christmas. So we Merry Christmas to you as well. Thank you. We did tease the fact that, you know, the stock that you think may not be at the very top of the list next year. And it's NVIDIA. Not that you don't like it. You just think others may have their moment. I do. I think if you look at the last two years, Scott, in terms of the AI trade, it was all about the hyperscalers spending billions of dollars on CapEx to build out really general purpose AI compute. So that was them investing in NVIDIA's top of the line chips to train the models, the AI models that they're building. I think as we go into 2025, that theme shifts to one of custom silicon. And the reason for that is now that all of these companies kind of have built out their general

purpose infrastructure, I think they'll start to leverage a lot of the custom chips that they've already been building. So Google with TPUs, Microsoft, Meta, Amazon with Tranium, they all have their own custom silicon that they've been developing. And I think they're going to be more aggressive deploying that next year. And ultimately, what that means is it's good for suppliers like Broadcom, who works with most of those companies. And it could be good for companies like Marvell as well, which is another stock we own at Intelligent Alpha. Even so, what happens at the moment that NVIDIA fails

to live up to the amazingly lofty expectations? I think that if you look at just the AI trade relative to the dot-com trade, people often make parallels. And I think sometimes they're useful. And in this case, you look back to the dot-com era, Cisco, I think, was sort of the poster child. NVIDIA is our poster child today. And it is generally, I think, a barometer of just how people are thinking about the trade. And so what I think we could see happen is at some point next year, and again, NVIDIA is still a top holding for us, but at some point I think you could see NVIDIA maybe falter a little bit. And some of these other names like a Broadcom or like a Marvell might pick up a little bit more momentum. The sentiment then

may be that, hey, the AI trade's over. NVIDIA is done and therefore it can't keep going. I think that would be a mistake, though, because the AI trade is not just about NVIDIA. It's about many other companies. And as it continues to evolve, I think we kind of broaden out and see more companies work just like NVIDIA has the last couple of years. I mean, do higher rates hurt the growth trade or do they just push people back to the biggest stocks in the market like they are right now? I think it could push people back to the biggest stocks,

but also I think it will push them to some of the AI players that have the most growth potential as well. So again, if you look back at that dot-com era, for most of the 90s, the interest rates were 5% to 7%. The 10-year was around 5% to 7%. So well within where we are today, in fact, a little bit higher. And so there's no rule that says we need low interest rates to have technological innovation happen at a great scale. But I think if you look at what are the companies

that can push through potentially higher rates or persistently higher rates than we've seen for the last couple years, certainly it could be the mega caps. They've already shown that they can do that. But I also think you could look at potentially some software names that start to get an AI bid. Snowflake is one example. Again, another holding of ours that has talked more about an AI story. And I think companies like that who can say, you know, hey, we do have a play in AI. We're on the software side. Customers are starting to deploy us for AI use cases. They might have a case to work next year, too.

What do you like most outside of tech? We always identify you as a tech investor, and I feel like 99% of our conversations are about that sector and those stocks. What do you like outside of there? It's certainly where I spend most of my time. But at Intelligent Alpha, we do use AI to look much more broadly than just tech. And one contrarian idea that AI has been on for the last several months, it hasn't really worked out so far, has been the energy trade. And in using our AI models to make predictions going into 2025, one prediction that AI has made is you could see oil hit $100 a barrel.

I don't think anybody has that on their roadmap. And so it's certainly contrarian. If it happens, I think the oil trade or the energy trade in general probably works in a big way. But stocks like GE, Vernova, not dependent entirely on oil. But I think in terms of infrastructure build out, green energy will continue to be a theme. And then Schlumberger are two that are larger holdings in our portfolio currently. All right. Doug, thanks again. Merry Christmas. We'll see you soon. Doug Clinton. Thanks, Scott. All right. Up next, break out the neck brace. Ed Yardeni is making the case for a volatile start to the new year.

He is sizing up the rallies road ahead when we come back. All right. Welcome back. Our next guest, bullish stocks in 2025, which is really nothing new. Ed Yardeni is the president of Yardeni Research and joins me now. We kid, of course, but it is true. You are a so-called perma bull, unapologetically so, I might add. Unapologetically. Is that right? That's correct. I think, you know, if you look at the market since World War II, if you stayed in the market, you would have been wrong 14 percent of the time, maybe. It's been a bull market for quite a long time, and I've tended to counter the perma-bearers, looking for some balance anyways. Well, you've done it well. So why do you think this is going to continue for a while?

Well, I think that we just, over the past three years, had the most widely anticipated recession ever that didn't happen. It was the Godot recession, the no-show recession. And it kind of made sense to a lot of people that it should happen because interest rates went up so much. But if we couldn't get a recession over the past three years with the Fed tightening,

I think the outlook remains pretty optimistic for the economy. And on top of that, we're expecting to see productivity make a significant comeback here. It's already made a significant comeback here. It's already made a significant comeback. We think it's going to continue to grow maybe two and a half to three percent, which is pure gravy for the economy, for economic growth, keeps inflation down. It's great

for corporate profitability and it keeps wages rising faster than prices. All good. I mean, essentially, you think the debate over higher interest rates or higher for longer or a slower Fed is overrated, that we don't even need the rate cuts that some suggest we can't live without. Yeah, I think the economy over the past three years has demonstrated that it's resilient, that it can live with these interest rates and that these interest rates may actually be normal. I mean, I recognize the Fed tightened dramatically from 0% to 5.5% over the past couple of years, but that's from zero, and I view that as the abnormality. Normal is, I think, where we are now, 4.5% plus minus 25 basis points for the bonds,

and I think the so-called neutral Fed funds rate is pretty much where we are right now. They do pressure the multiple, though, right? I mean, there is an impact from higher interest rates. So you have to use the strong earnings, the strong economy that we have to continue to generate strong enough earnings to offset the higher interest rates, which would pressure the multiple, making it really hard to have multiple expansion again. Well, I wouldn't really want to see much more multiple expansion. I'm expecting that this bull market will be increasingly driven by earnings over the rest of the decade. I think the important point about multiples is that, they're impacted by interest rates inflation

rates but I think first and foremost they're impacted by the perceptions of how long economic growth is going to last how long earnings are going to continue to grow and I think that's why we have such high multiples here is because the market's going to come around to our opinion that the resilient economy is probably not going to have a recession I'm not that doesn't come with a money-back guarantee Scott but I think that between now our opinion that the resilient economy is probably not going to have a recession. That doesn't come with a money-back guarantee, Scott, but I think that between now and the end of the decade, the economy is going to continue to perform quite well. It would take a major increase in oil prices, I think, to cause a recession, and I don't see that. It would take a trade war similar to Smoot-Hawley, and I don't think that's where this is all going to wind up.

We are going to have some tariffs, obviously. Well, Smoot-Hawley didn't end well. I mean, obviously. Right. Obviously. That's not my scenario, right. But why does it have to be to that degree? I mean, if you still have the introduction of tariffs

and you do have even modest trade wars, you could have an impact on the overall economy, right? Absolutely. But I think Trump is using some of the heavier handed threats on tariffs to negotiate better deals with Mexico, Canada, China. I think his proposal to increase the tariff by 10 to 20 percent across the board is really meant to raise some revenues to reduce the deficit or stop the deficit from expanding. And that could lead to a currency war. I don't know that it leads to a trade war. If tariffs are raised, let's say 15 percent and the dollar is already up 8 percent, maybe rises another 5%, 10%. That would offset a lot of that, and the impact would be on foreigners, foreign exporters. If the dollar doesn't budge much, then Americans will pay that, and that'll have some inflationary consequences.

So, look, I think, as you point out, there's a lot of known unknowns, a lot of volatility up ahead here in terms of the economic data and policy moves. And that could create some volatility in the short run. But I think in the long run, the economy is resilient. Earnings will be $285 a share next year. And I'm at the top end of the strategist outlook for earnings next year. All right. We'll leave it there. It's been a fun year visiting with you. Happy holidays again. Same to you. All right. We'll see in 25. I'm sure of that. That's it. You're a Denny. Up next, we track the biggest movers into this close today. Pippa Stevens is standing by once again with that. Tell us what you see. Well, Scott, more than 20 stocks in the Russell 1000 have doubled this year. And up next, we've got the key names to watch. We're less than 15 from the closing bell. Back to Pippa Stevens now for the stocks that she is watching.

Hey, Pippa. Hey, Scott. Over 20 stocks in the Russell 1000 have more than doubled this year with the AI wave providing a big boost for many of them. So here are the top five, starting with App 11, rising more than 760% this year, thanks in large part to the mobile app company's digital ad segment. Next up is MicroStrategy, jumping 470%, gaining a big following amid a record rally for crypto

following President-elect Trump's win in November. In third place, we've got Palantir, up 370%, as AI and defense demand send the stock to record highs. Next up is Carvana, 320 percent. The firm has cut costs and restructured operations following bankruptcy concerns. And then rounding out the top five is Vistra. It has tripled in 2024 as the energy company fuels power demand driven by AI. Scott? All right, Pippa. Thank you, Pippa Stevens. Still ahead, game day for Netflix. The company streaming two NFL contests on Christmas Day. We'll break down what's at stake with the stock near record highs.

We're back on the bell right after this. All right, I'm next. Wrapping up a big quarter for discretionary. The winners and losers when we take you inside the Market Zone next. We're now in the closing bell Market Zone. Seema Modi on discretionary stocks leading during a critical time for retail, plus a big Christmas Day bet on football, of course, for Netflix. Julia Borson with that story.

And Edward Jones' top strategist, Angelo Korkafis, shares his outlook into the new year. It's good to have everybody with us. Seema, you first on discretionary. Yeah, the timing is interesting, Scott. Amid the holiday shopping season, consumer discretionary stocks outperforming today with names like Starbucks, Amazon both trading higher. Tesla among the standouts up another 5% today. And then travel and casino operators, Caesars, MGM Resorts, booking holdings, posting gains at a time when market watchers are assessing the health of the U.S. consumer following that drop that we saw in consumer confidence data that came out yesterday. For the year, it's worth noting Decker's Outdoor, the best performing name in the sector, up 86 percent. New data out from Visa showing that

of total retail spending this holiday season, 77 percent of payments were made in-store and just 23 percent were made online. On the flip side, Nike and Lululemon, among the worst performing consumer discretionary stocks on the year, Scott, down double-digit percentage points. Okay, Seema, thank you. Seema Modi. All right, Julia, tell us about Netflix, this big, big Christmas Day football day. Well, Scott, Netflix's NFL games offer a window into this company's future. More bets on sports, It just announced a deal for

the next two FIFA Women's World Cups and a growing focus on ads. Netflix shares are up over 90 percent in the past year, in part on optimism about its ad-supported lower price subscription tier and sports drive engagement that attracts ad dollars. Oppenheimer estimates that Netflix is generating $150 million in ad revenue for tomorrow's games. That's the same amount that Netflix is reportedly paying for them, while the games also offer subscriber acquisition upside. And for the NFL, Netflix helps grow its international audience ahead of its record eight international games next year, up from five this year. And the league is considering doubling that number to 16 games in the future. Now, sources say Netflix would be a natural partner for those or other NFL rights, assuming, Scott, that the game is streamed without a hitch.

But they say that they're very confident about their technical capabilities. All right. We'll see what happens. Julia, thank you. Many are going to be watching. We know that. That's Julia Borson. Angelo, good to see you. Got a nice little move here before the Christmas holiday. How's next year going to look? we have to keep expectations for returns and volatility realistic. About half of the gain this year has been driven by valuations and half from earnings growth. So as we think about the year ahead, likely it's going to have to be earnings that do the heavy lifting. But the positive is that the outlook looks good on that front, with potentially S&P earnings growing about 10%

or slightly higher, more than that. Do you think we'll get the broadening that some are clamoring for quickly? I think it's going to be prudent to have a balance between the mega cap tech companies and some mid and small cap stocks. We still favor U.S. domestic equities based on a stronger momentum. But there's a couple of reasons to believe that the broadening might finally be realized in 2025. We have earnings growth that are also broadening, accelerating for the rest of the market versus

the magnificent 7. We have domestic and value-style investments that are more, derive more of their revenue from the US domestically, so they are less exposed to the trade headlines that we're unlikely to see. And also, we have cyclical sectors like financials and industrials that could benefit from pro-growth policies. All right. We're going to leave it there.

Happy holidays to you and everybody. As the bell rings out, and we are green across the board on this holiday-shortened trading day. Merry Christmas, everybody. Happy Hanukkah.