Closing Bell - Closing Bell: Rally Roadblocks vs. Catalysts 11/20/24

Episode Date: November 20, 2024

Live from the Schwab Impact 2024 Conference in San Francisco Charles Schwab’s Liz Ann Sonders tells us what she thinks could be next for stocks. Plus, Malcolm Ethridge of Capital Area Planning Group and Odyssey Capital Adviors’ Jason Snipe tell us what they are expecting from Nvidia earnings out in Overtime. And, we break down what’s behind bitcoin’s big run.

All right, guys, thanks so much. Welcome to Closing Bell. I'm Scott Wobner, live from Schwab Impact 2024, the conference here in San Francisco, California. Schwab's chief investment strategist, Lizanne Saunders, is going to join me in just a moment with her outlook for the new year ahead. And later, we'll talk to the company's incoming CEO, Rick Worcester, as well. In the meantime, let's show you the scorecard here with 60 minutes to go in regulation and 60 minutes to go until NVIDIA reports its critical earnings. Stocks are mostly lower today, although a few sectors like health care materials and energy have been higher throughout the day. Loss is not big, but nonetheless, it's a bit of a down day aside from those sectors there. Most mega caps, including NVIDIA, are lower today as well. We're watching yields, too, as Fed Governor Michelle Bowman suggests

progress on inflation has stalled. We'll talk more about that. It does take us to our talk of the tape, the road ahead for stocks. Let's welcome in Schwab's chief investment strategist, Lizanne Saunders. Nice to see you. Nice to see you, too. Welcome again to Impact. It's good to be here, as always. Let's talk markets, OK? Your outlook is pretty good, at least in the near term, which you say the momentum still favors the bulls, correct? It does. And momentum as an actual factor has been dominating. And the good news is I get a lot of questions about, doesn't this alarm you? Because the last time momentum was this dominating as a factor was in the late 1990s. But the fundamental factors most highly correlated to momentum now

are things like strong balance sheet and a strong free cash flow versus in the late 90s, the factor most correlated to momentum was negative earnings. I do worry a bit about the sentiment backdrop. I think there's a little bit of frothiness. In and of itself, that doesn't suggest a problem, but it does mean that if there's some sort of negative catalyst, the pain can be a little bit more severe. So I'd put that sentiment in the risk column. It's funny you say that because it's picking up a little bit of steam. Chris Verone, who comes on our program often from Strategia, says equity flows starting to bubble. One of the tactical risks we see percolating for early 2025 is sentiment. I

mean, there's a reason why sentiment is positive. And there's a reason maybe why sentiment has grown more positive since the election result. Do you feel that? And is that justified? And have you changed in any way your view of the markets for the new year as a result of the election? So I think what's been characteristic of this market that goes beyond the election, because it started back in mid-July, is we're in a backdrop now of much more fierce sector rotations in a relatively condensed period of time. So measured by things like sector dispersion is really kicking into high gear. I think that's likely to continue. And I think increasingly as we get to inauguration and thereafter, a lot of that will be policy-driven,

tariff-driven. So I think it's going to be a tricky environment to try to trade around sectors. I think there'll be more sort of common threads at the factor level than at the sector level. Cyclicals over defensives. In other words, I mean, the things that have been working are going to continue to work. That's your view? Well, yeah. I think momentum will continue to do well. But the rotations at times since mid-July when this really started have at times been into the more traditional defensive areas.

You've got a day like today where health care is at the top of the leaderboard from a sector perspective. So I think we will have these fierce sector rotations that at times will have money heading back and interest back into the MAG-7, the mega cap names. But at times, based on maybe skittishness in terms of an uncertain outlook with regard to policy, you might see some money snuggling more toward those classic defensive areas. So it's not really a broadening out in a traditional sense because it's these fierce whipsaw rotations. And I think that continues to be the name of the game,

certainly in the first half of next year. Do you think NVIDIA tonight, without talking about NVIDIA as a specific stock, does it have the potential to either lead us back into the mega caps in a larger way or underscore exactly what you're talking about, the dispersion that's taken place and a movement back to more economically sensitive areas, industrials, financials, and things like that? I think, you know, a stock like NVIDIA, its earnings could always be make or break. That's just the nature of the popularity. But

it's not just NVIDIA now. You know, you're seeing huge action in microstrategy, and Palantir is actually performing better. So it is still that AI story. And I think if we can kind of keep the momentum in the numbers, that supports that theme within markets because demand outside of AI and tech is not great. So it really is an AI story, and you have the bellwethers that either allow that to persist or maybe throw a wrinkle in. I don't have an opinion on what NVIDIA is going to report. I don't cover the stock.

But I think in terms of the traditional cyclicals or maybe the ability for manufacturing to rebound, I think that's at the mercy of uncertainty with regard to tariff policy. And obviously, we're not going to get that cleared up until at least the start post-inauguration. And we have to remember that in 2018, the goal, obviously, of tariffs is to boost domestic manufacturing. But using the ISM Manufacturing Index as a proxy, once the trade war started, ISM Manufacturing Industry, ISM Manufacturing Index cratered. Now we're in sort of this lull in manufacturing at a low level.

So maybe you don't crater from here, but it's hard to envision a lift in advance of knowing what tariff policy is going to be. And I would apply that to things like capital spending, too. There's just a pause. Businesses are probably going to pull. They have been pulling back on CapEx, on M&A activity. And we don't clear up that uncertainty for a couple of months. What has been your take as you've watched what some would characterize as the more

speculative parts of the market? Those things around crypto, for example, as you know, Bitcoin's at ninety five thousand have really taken off since the election. Is that is that a sign of frothy sentiment? Is it a sign of too much speculation? Is it completely justified because of policy changes that are going to happen in Washington? Well, even on the regulatory side, although we can make an assumption that there's going to be less strict regulation applied to crypto, we don't have the full answer to that yet. But, yeah, that's arguably one of the more fundamental reasons why you've seen that excitement there.

But it also, I think, is indicative of some fraud. Now it's sort of in the crypto space. It was the meme stocks a couple of years ago. And as a sign of frothy sentiment, it has to be in that potential risk column. Momentum carries until it doesn't. And the downside of that is more severe than if you don't have that frothy piece of the recipe.

How much of a wild card do you think yields are to where the market may go? We're obviously sensitive to movements that we've seen. I bring it up because, you know, the headline earlier today from Fed Governor Bowman, I thought was about as hawkish as we've heard directly from anybody, certainly of that stature, right? A Fed governor, where she says inflation progress appears to have slowed, greater risk to price stability for Fed's mandate, possible we see a deterioration in the labor market. I mean, while she's making the case that she's an independent thinker on the board, that's pretty hawkish, right? So if we're resetting our expectations for rate cuts

at a time where we're already having a backup in yields, how much of a risk do you think that is to the outlook? So I think, you may know, I think we've probably talked about this. We've been of the view for a while now that we're in a very different secular era than the great moderation period, an era where inflation is likely to be more volatile. That's not the same thing as saying inflation is high, it's going to stay high, but bigger swings in inflation. And I think we're in a secular backdrop that looks a little bit more like the 30 years that preceded the great moderation, the period from the mid-60s to the mid-90s. And that was a period where bond yields and stock prices moved inverse to one another,

the opposite of what was happening during the great moderation. That's because bond yields were more connected to what was going on in inflation. So yield moves up, reflecting inflation being let out of the bag again, negative for equities and vice versa. So I think yields connected to the growth trajectory without attending concerns about another lift in inflation, I think the equity market does fine in that. Okay. So what you're saying is yields going up for the right reason. It's good for equity. It's acceptable. Yields going up on the inflation side of things, I think would be a tougher digestion. So it's really what that connectivity is, whether it's the growth connectivity or the inflation connectivity, I think is a driver of the impact that bond yields have on equities. I mean, there still probably is a limit, though, to which the stock market would accept.

Yeah, I think they're psychological and maybe they're more psychological and technical. I think, you know, four and a half on the 10 year next would be four, seven on the 10 year. I think that would probably be some periods of indigestion on the part of the market, as we've seen somewhat recently. But beyond just those short-term psychological trigger points, it's that what are bond yields connected to, which side of the equation. Do you think the number of rate cuts matters for next year to what the stock market can return? I think it's sort of the terminal rate that matters. You know, Kathy Jones, who you know, my colleague, our fixed income strategist, she and I do a podcast and we just taped one early this morning. And we got on the subject of at least the next Fed meeting.

And we're both in the pause camp. Oh, for December? Yeah. Given what we know now. Now, we've got important inflation reports between now and then, and we've got another jobs report between now and then. So, but given what we know now, I think there's a case that the Fed just takes a step back and says, let's wait. But again, that needle is going to move in terms of things like probabilities based on the Fed fund's future market, based on the

incoming data. We've got PCE, we've got CPI, and we've got a jobs report. So tell me what those are going to read. And I could say maybe more definitively that the Fed's going to move or not. Oh, we'll see. Markets obviously still pricing in December. And then after that, it feels like it's anybody's guess once you get the turn of the calendar. We'll see. And we'll talk to you many times, I'm sure.

Lizanne, thanks. Good to see you, Scott. That's Lizanne Saunders joining us here at Schwab's Impact 2024. We are counting down, of course, to NVIDIA results out in overtime today. Let's send it to Christina Parts and Levels now for a look at what to watch for from that report in one hour, nine minutes, and a matter of seconds. Christina. Exactly. And what to watch for?

NVIDIA's guidance for the January quarter. It's the focus because it reflects a ramp up in the Blackwell chips. That's the latest iteration of NVIDIA's coveted graphic processing chips, GPUs, used in AI systems and what everybody's talking about and spending money on. If that number doesn't hit the $37 billion consensus, then that tells investors that there are issues with Blackwell shipments. Supply concerns really have been looming over the last few months, and that's also why the stock has pretty much moved sideways just over the last three. But to drill it down even further, the whisper guidance number, you know,

the number that's shared with clients, that's closer to $39 billion. Last quarter, NVIDIA failed to hit that whisper number, and the stock actually fell 6% the following day. The whisper number is higher this time around, $39 billion billion to reflect a ramp in Blackwell sales and a higher networking mix, another source of income for Nvidia. The second important number is gross margins, which are likely to come down as per Nvidia CFO Colette Kress. The street is expecting about 75% for Q3 and then 73% for this current quarter. It's dropped because Nvidia does have to deal with lower yields of Blackwell chips. You know, it takes a little while to ramp up for this more complex system. And so overall, you got guidance and gross margins along with color on whether the Blackwell chips

will hit full production, any issues with overheating. We know that that was a story just two days ago with the information. And then if there's a plateau for large language models, also known as the scaling law, another debate within the AI world. It sounds really complicated, but this quarter could be, quote, the least important quarter in two years for NVIDIA, as Bank of America puts it, because fundamentals are really understood by a lot of people in the market. Blackwell is expected to hit full production in the April quarter, so it's coming. And then you also have the narrative that there's other things that are working in the market right now, not just NVIDIA, especially post-Trump. So it may be boring, as I saw on OneNote from a numbers perspective,

but it'll be important for a greater market impact, given the over 7 percent weight in the S&P 500 and the 8 percent weight in the QQQ, Scott. Do you get a sense, Christina, about the overheating issue that it's much ado about nothing? Or is there the potential that we are going to be more concerned about a supply issue as a result of that? So two things. First, NVIDIA did damage control the moment the information article came out with only three sources. They had Dell CEO as well as Core Reef CEO tweet out that they're excited about the shipments. Some of these chips have already been shipped. So that's showing that NVIDIA is going to try to downplay the overheating problem if

there is a problem. And then the second part is all of these channel checks that come from analysts. They're checking out their suppliers. They're asking, are you seeing overheating? And the vast majority are saying it's not necessarily an issue, especially because the full ramp of these chips are supposed to happen in April, not right now. So they still have a little bit of time before we may see any type of impact to revenues if there's a slowdown. So again, the ramp up is only expected in April, which is why we're calling this boring right now. Yeah. All right. Good insight and perspective there. Christina, thank you.

That's Christina Partsenevelos. Let's bring in Malcolm Etheridge now of Capital Area Planning Group and NVIDIA shareholder Jason Snipe of Odyssey Capital Advisors. Both are CNBC contributors. Great to have you both. Jason, I'll go to you first because you're the shareholder here. What are your expectations going in? you are you concerned in any way no i'm excited scott i mean one of the things that's super interesting to me i mean this stock has had seven straight triple plays beat on the top and the bottom line and raising of the guidance you know as christina said respecting 83 percent revenue growth year over year um of a double on data centers almost 100 growth year over year so i think on data centers, almost 100% growth year over year. So I think it is about the guide going forward. Again, the whisper number, as Christina mentioned, is 37

billion. I think they'll be above that number, which will be positive for the stock. And I think the market is really leaning into this because there has been obviously a little bit of digestion since the Trump blitz in the market. And I think going forward, this could be the next catalyst for the rest of the year. So I'm excited about the print. I think it'll be solid. And I think we'll see our eighth triple play for NVIDIA. Yeah, let me just ask you about the whisper number. Because, you know, whenever you talk about a whisper number, it means that expectations are incredibly high, right?

You're not just able to reach the number set by the street. You've got to reach an even higher level. And they've been able to do that, right? As you said, the triple play. You beat on earns, you beat on revs, you beat on guide. But it shows you that the bar for this company remains especially high. Let's not forget, these stocks as a group have stopped trading like a monolith. This stock has extended itself from the others,

which I would say makes the bar even higher. A hundred percent, Scott. I mean, what's another interesting note, you know, if you remove them from the equal weight semiconductor index, you know, obviously Nvidia's up 190 plus percent. That index is actually down 4 percent. You see ASML, AMD, Lamb Research obviously down, not trading as well, clearly. So, yes, the bar is very high for this stock going forward. But, you know, when we've

heard from all the hyperscalers throughout this year about the CapEx spend on AI compute, that's not slowing down. We continue to see that guide continue to raise in terms of spending. And all those beltways lead back to NVIDIA. So that's why I think this will be a strong quarter. And to Christina's point, I think the next quarter will be even stronger. So that's what we're excited about. When you look at these stocks, Malcolm, you've de-mega capped yourself for the most part, right? You don't own NVIDIA. I mean, you own Microsoft, but you're one of the few investors who actually come on our shows,

and you don't own the whole basket. Why not? Well, I think Jason and everyone else who's been on the network today has made a very strong bull case for why NVIDIA can continue to go to the moon, right? But I also think you have to consider he just mentioned that all of the spending that's happening in the name, all the spending that's happening in the space from all the hyperscalers, some of that is going toward creating chips internally that will compete with NVIDIA, right? So the moment that we get a headline from a Microsoft or whoever else that they've successfully Created a chip that has the same level of compute power for half the price. It's more eco-friendly blah blah blah there goes half

Potentially of Nvidia's market share right there So what how realistic is that to happen in any time soon? I think it's very realistic if you consider how much money is being spent by AMD in partnership with all of those hyper skill as we're Talking about you got Google on their roster you got Microsoft on the roster Consider how much money is being spent by AMD in partnership with all of those hyperscalers we're talking about. You've got Google on their roster. You've got Microsoft on their roster. You've got Amazon on their roster. All of those companies are working on separating themselves from being so dependent on NVIDIA.

And NVIDIA is very dependent on four names, four hyperscaler names. Let me just interrupt the conversation for a moment. We do have some breaking news now on the sentencing of the founder of Archegos Capital. Our Steve Kovach has that for us. Steve, what do we learn? Yeah, Scott, Bill, Bill Wong of Archegos, he has been sentenced to 18 years in prison. This just happened moments ago in New York, handed down by a judge. The prosecution was looking for 21 years in prison. He's only getting 18 here. And of course, the defense recommended no jail time on the idea that he would not be a repeat offender. There you see him walking into court earlier today, Scott. But 18 years in prison here for Bill Wong of Archegos. Scott. All right, Steve, thank you. Appreciate the update there. That's Steve Kovac. Let's get back to our

conversation, Malcolm. I mean, what I said said earlier these stocks are not trading as a group, as a monolith anymore. They've differentiated themselves. But how much of the results tonight are going to dictate how they trade from here forward? Yeah, I don't know that everyone is going to pin the rest of the mega cap tech names to what NVIDIA does. It's pretty much a foregone conclusion among traders that NVIDIA is going to do well, right? The options market is giving it something like an 8% uptrend from here. Yeah, 8.5% either way. Well, realistically, looking at Taiwan, Semi, and everything else we can infer from what

we've seen, the breadcrumbs we've seen to this point, the whisper number as you're talking about, it's probably going to be to the upside. And that probably tells us that somewhere from a 144 price point today, after I was trading, we go north of 155 that to me is an extremely attractive exit point not necessarily fully from the position but a place to start trimming that position for folks who are literally just trading the momentum not the people that are holding on to that name for dear life jace you have a sense of the same kind of question because you have apple you have amazon you have nvidia as we said you got microsoft you have Apple, you have Amazon, you have Nvidia, as we said, you have Microsoft, you have Alphabet.

What's riding on those stocks tonight? Yeah, so I think Malcolm makes a great point, and you as well. I think they absolutely do not trade as a monolith. Every one of those companies has different idiosyncratic stories to them. And, of course, I own most of them with the exception of Meta. And I do think going forward with this new administration, I think part of this story, the theme that's been playing out has been deregulation and what's going to happen with the DOJ. Obviously, there was news earlier this week about Google and the decoupling of Chrome and what that potentially might look

like for the stock. You know, that's a Google story. There's other stories for the rest of them. But I do believe, you know, as large lingual models continue to grow and we start to see the second derivative move of software and starting to see the use cases. And we've seen some of these software stocks move over the last couple of weeks. I do think the hyperscalers do well going forward because I just think that technology, AI is still the story. I don't necessarily think we'll see the growth that we've seen over the last two years, but I do think they deserve a mainstay piece in your portfolio going forward. Malcolm, what about the rest of the market? You know, the idea that if there's this new optimism around a new administration, deregulation, more dealmaking, stronger economic

growth, that it's going to be better for cyclical stocks, that things that have worked are going to continue to work, industrials, financials, some of the other areas. What do you think? I hear that argument that kind of harkens back to that Trump trade, right? We talked immediately after the election, all the names that were going up in the right direction were based on the assumption that deregulation is going to be great for energy and health care and so forth and financials but I think that more importantly we need to look at individual names right a name that I'll give you that's going to be really important tonight for me personally is

going to be Palo Alto right I think that Palo Alto is realistically going to have more upside next year potentially more upside than Nvidia will I know that's a bold statement I know you think I'm crazy to say it. But the reason that I say that is if you look at an administration that is extremely hostile to China and you look at how much action there has been with China trying to penetrate our important infrastructure from a cyber defense perspective, Palo Alto is going to be very important in helping to protect that. And I can imagine the federal budget has to increase exponentially. Palo Alto has the highest number of federal contracts right now. All of that annual recurring revenue that comes from the Fed is going to flow again to Palo Alto.

So I think that's a more attractive story than a lot of the others that we're talking about from the incoming administration. Chase, you're in this space. You have Palo Alto, too, don't you? I do. I do. And I love everything that Malcolm just said. You know, in terms of the platform strategy that they've recently employed and moving from billing to the annual reoccurring revenue model, I think it's going to be fantastic for the stock. It's up 31% year to date. And, you know, all this talk, we're talking about AI and AI compute. I mean, cyber is absolutely going to play a significant role as it relates to all that CapEx is spending and those models continuing to grow. We need to protect these models. And, yeah, I mean, the new wars we're fighting today are data wars, right?

So cybersecurity continues to play a role there and absolutely agree with the fact that there's space in the government business. And if government spending continues to move forward, Palo Alto will continue to take value and appreciate as a result. Guys, we'll leave it there. I appreciate you very much. Jason, thank you. We'll see what NVIDIA delivers. Malcolm, I know we'll talk to you again soon, but it's good to see you here in person at Impact. Malcolm Etheridge here.

All right, we're just getting started. Up next, incoming Charles Schwab CEO Rick Worcester joins us here. He'll tell us where he's seeing opportunities for growth at the company as he gears up to take the helm. He'll join me after this break. We are live in San Francisco at Impact 2024. You're watching Closing Bell. We're coming back right after this.

Welcome back. We're live today at after this. Welcome back. We're live today at the Schwab Impact 2024 conference here in San Francisco. Joined now by Rick Worster, Charles Schwab's president and incoming CEO. It's nice to see you out here. Nice to see you, Scott. You've got a lot of people here. You've got about, what, 4,500 attendees.

What do you really hope to accomplish here other than having everybody gather in the Moscone Center? Well, when we gather here, to me it feels more like a family reunion than a business conference. Together our industry is aligned on making a big difference in the financial lives of clients and we gather once a year to celebrate that and to talk about how we're going to continue the progress and the success we've had in helping millions of everyday Americans. Let's talk about how you're going to do that, because you're going to take the helm in about six weeks from Walt. How do you think your vision for this company is going to differ in any way from his?

Well, I have big shoes to fill. Our company's been around 50 years, and for 49 of those 50 years, we've had two CEOs, Chuck Schwab and Walt Bettinger. And when Walt took over the company, we were an $18 billion market cap company, $1 trillion of client assets. Today, we're a $140 billion company with $10 trillion of client assets. So I think the story here is one of continuity. Forty-three million client brokerage accounts. I mean, which part of the company do you see as the biggest growth opportunity moving forward? Well, we see growth all over the firm.

There's a bull market for advice in our country, so supporting independent advisors we see a big opportunity there. We also see an opportunity to do more for our retail clients, to help them with their wealth needs, to help them with their lending needs. Anything we can do to help a client on their financial journey, that's what we're committed to doing and when we do it well we're gonna grow as a company. Okay you put that interesting, A bull market for advice. You're obviously not the only ones who see that, okay? The landscape is becoming more competitive and more crowded. I spoke earlier with John Beatty of your advisory services, and we talked about the upstarts coming after the incumbents like you. Robinhood does a

deal yesterday. I mean, how do you view that competitive landscape only increasing from here forward? And what does that mean for you? Sure. Well, we invite competition. What we care about is the success of the everyday investor. And the more competition, the more that forces great outcomes for clients. You know, we've been in this business since 1987. No one has been more consistently committed to the RAA community than we have. And in that time since 1987, we've seen lots of new entrants. They come in, they're attracted to the growth of the independent channel. But then they realize the platform that we've built, the capabilities that we have, and how much it's going to take to invest.

And then they realize also that we don't charge any custody fees for all of that. And so often there's exits. So we've seen a lot of people come in and come out of the industry, but we've been there consistently since 1987. Let's talk about some of the issues facing the company, at least as the analyst community on Wall Street sees it. I saw a number of notes out today or recently which seem to be still concerning about your cash sorting issues. Customers who are cash sweep,

who are moving from lower yielding and higher yielding accounts for you to higher yielding accounts which are not as profitable for you. Redburn Atlantic today, they reiterate their sell rating. They say they remain cautious on that issue. Deutsche Bank recently talks about that risk as well. Bank of America reiterates underperform on Schwab.

And they all talk about that issue. Is it, how big of an issue do you see that for the company going forward? And what do you still need to address to turn some of those negative ratings on your stock into more positive ones? First, as it relates to cash, the ones helping clients transition from bank sweep to money markets where they can earn higher yield is us. We, for the last 18 months since rates increased, we have been out there telling our clients to get a higher yield in money funds or to go into fixed income. Because ultimately, we want what is best for the client. And if we know we do right by them, we're going to succeed as a company in helping them achieve their goals.

But you make less money on that move. We do make less money on that move. But we make lots of money across our business. We consistently have 40 percent margins. From our standpoint, we do see we believe we see a bottoming of cash levels. What we want in Bank Sweep is what's truly transactional cash, what individuals need on a day to day basis to for their stock purchases, for whatever they may need that cash for. We want investment cash to be in a place where it can earn the highest yield. And we think we've gotten to the levels where that's relatively unbalanced.

And what we've seen the last two months is actually our bank suite balances grow because we feel like we've been at those levels and now we're seeing stability. The issue, though, is what happens if interest rates remain higher for longer? I mean, yields have obviously backed up, potentially leading some to move to higher yielding accounts. Well, our cash sweep has grown in the last couple months, and we remain in a high interest rate period. At some point, there's a level of transactional cash

that clients need in their account in order to live their life. And that amount of money is regardless of where rates are. And we believe we're at that position or near that position. And that's the behavior we're seeing from clients. Our Leslie Picker interviewed Goldman Chair and CEO David Solomon today, who sounded pretty optimistic on the outlook, deregulation, the idea of doing more deals under a new administration. What's your own view on what 2025 is going to hold for the markets with a new Trump administration?

Well, I'll tell you, we just surveyed our trading-oriented investors, and two-thirds of them were bullish on stocks, and 65% of them were bullish on the economy. So what we hear from our clients and what we see in the market is optimism for the future. What about your own view? Well, my own view? Well, my own view, you know, I listen to Lizanne and Jeff Kleintop.

You had both of them on today. I mean, I know, but you're CEO of a financial institution. Well, I'm very optimistic about our business. Our business is growing very steadily. We're number one or number two in the two fastest-growing segments of our industry. We're focused on serving the needs of 43 million clients and doing that exceptionally well. Do you feel like it is consolidation in your industry done? And if not, is the environment going to be more conducive to it under this administration? Well, I don't know that consolidation is done.

I don't think it likely is. I think some of the smaller competitors will likely need to consolidate to have a chance of competing against some of the big firms because scale and efficiency is really important in our industry. But it's something we continue to lean into as well. Well, we'll see what happens in the year ahead. Rick, I appreciate your time. Thanks for having me. Thanks so much. Best of luck to you at the beginning of the year. Thank you.

When you take the helm as CEO. Up next, we're breaking down what's behind Bitcoin's big run and what that might mean for the rest of the crypto space. The bell's coming right back here at Schwab Impact in San Francisco. About 20 minutes to the closing bell. Bitcoin on a tear, as you know, recently, almost $95,000. Now let's send it to Mackenzie Segalos for more. This has been unbelievable to watch, really, since Election Day. It really has been, Scott. You got Bitcoin pushing to yet another record high, this time near $95,000 as Wall Street launches more ways to bet on Bitcoin. New options on spot Bitcoin ETFs are going live on the Nasdaq and NYSE this week, which is really the big unlock that institutions

have been waiting for. Galaxy Digital's trading team tells me that they've observed significant volume in BlackRock's iBit ETF options, which just listed on the NASDAQ on Tuesday, with notable trading activity extending out to January 2027. That's the midpoint of Donald Trump's term. More than 80% of options volume on day one were call orders to buy Bitcoin, meaning that investors are expecting

further upside to the trade. And BlackRock's $44 billion spot Bitcoin fund is just the first of the U.S.-based asset issuers to offer options. The other providers are set to list on the NIC this week. And this is key because creating a new margin framework for Bitcoin where you can hedge positions and make leveraged bets is how you amplify your returns, which is a big draw both to retail and institutions. Bitcoin's fresh all-time high also hitting as the president-elect reportedly considers adding a crypto position to the White House, the latest in a string of bullish promises to the industry. We've seen inflows to the spot crypto ETF surge since Trump's decisive win. Those spot Bitcoin

funds now collectively holding over $115 billion in AUM, Scott. We'll see what happens, too. It's going to be interesting to watch this between now and the end of the year to see what levels we might be able to reach. Mackenzie, thank you. Mackenzie Segalos with the latest there. Up next, we're tracking the biggest movers as we head into the close. Christina Partsenevalos is standing by. With that, Christina. Well, this time we have a tale of two retailers, Target and Williams-Sonoma. Shares moving in opposite directions. One says shoppers are cutting back. Another says sales are great. Why the difference? We discuss next. We're approaching 15 minutes before the closing bell. Back to Christina now for a look at the

stocks that she's watching. What do you see? Well, you have the biggest earnings miss in more than two years with shrinking profits, and investors are punishing Target. Shares are of the retailer on track for their third worst day ever after the retailer also cut its forecast heading into the critical holiday season. The company said despite their lower prices, people just aren't spending as much when they shop,

and that affordability is still a major concern for consumers. That's why shares are down 22 percent. Meantime, Williams-Sonoma, though, shares are soaring and on track for a record close after it reported a beat and lifted its guidance. So literally the opposite of Target. The home's goods retailer said it saw market share gains and improving sales despite this, quote, difficult environment.

Shares up 27 percent. Also, tune in to Mad Money Tonight for an interview with CEO Laura Alba later on this evening, 6 p.m. Eastern. Scott. All right. We will. We will. Christina, thank you. Christina Partsanova. Still ahead, top chip analyst Stacey Raskin is back to break down what he's going to be watching for when NVIDIA results hit the tape in overtime. Plus, we're going to run you through what to expect from Snowflake's earnings at the top of the hour as well. We're back on the bell just after this break.

All right, coming up next, we get you set up for NVIDIA earnings hitting the tape in almost 30 minutes. 31 minutes and 30 seconds or thereabout. Star chip analyst Stacey Raskin standing by with everything you need to be watching for in that report. Take inside the market zone next. We're now in the closing bell market zone. CNBC senior markets commentator Mike Santoli here to break down the crucial moments of this trading day.

Plus top chip analyst Bernstein Stacey Raskin and what he is expecting from NVIDIA's report. Just moments in overtime. And Sima Modi looking ahead to Snowflake, also reporting, by the way, in overtime. Mike Santoli, to you first. Tell us what's on your mind as we wait for this big report today. You know, the broad market, Scott, the S&P 500, it's really just been in this orderly, tight little band for four or five days, honestly just waiting for the next incremental thing.

Obviously a big one coming after the close. But as the broad market is kind of just churning and rotating around, trying to stay above the election day close, which is where we are now by a couple of percent, I think there's this adrenaline junkie type action going on in more speculative parts of the market. You look at Applovin, MicroStrategy, Lemonade on a month today basis, they've doubled on, you know, obviously the crypto excitement. But it seems as if there's this meme-ification of one part of the market. So you have those speculative juices flowing and the rest of the tape is just kind of hanging out in a very, very benign way, just trying to consolidate and wait for the next fundamental move.

I mean, when you think about what NVIDIA is going to mean, you know, what are your thoughts on that? I mean, mechanically, the market is implying an 8 percentage point move in reaction to the numbers. That's what the options market says right now. It's 7% of the S&P. Mathematically, the 8% move is material to the overall index. And I do think it is also about, you know, confirming of timelines, of rollouts, of next generation. All that stuff is going to get penciled into the 2025 outlooks, which we've already done to some degree, of the spenders, of the investors, the CapEx sources on all this stuff. So it matters a lot in the short term, I think more tactically in the longer term.

Meanwhile, outside of NVIDIA, semis have had a rough patch. So you just sort of wonder if there's going to be any coattails at all on what it might have to say. No, that's a good point you make. Come back to you in a minute. Let's bring in Stacey Raskin now, a star analyst from Bernstein. It's good to have you with us on this important day. Most important thing going in is what? Look, everybody's going to be looking at the

data center number both in the quarter and more importantly I think in the guide that's that's that's all that's mattered for Nvidia I mean for for quite a while like that that's what matters um to build to that number I mean I think you alluded to it um it's it's the ramp of black well that's supposed to to start in Q. People are going to want to see where that is. And importantly, like where that can go into the beginning of next year and beyond, especially as the crossover happens from Hopper to Blackwell. I think the other thing that people will be watching is gross margins. That was the issue that kind of hit the stock last earnings. And they sort of suggested gross margins were ticking down a bit into the back half just because

of some of these new platforms are launching. They're very complicated. They've got more high bandwidth memory. They haven't optimized cost yet. And so people want to get some comfort that the gross margins are not going down too much and that, importantly, as you go into next year, more of those platforms ramp that they aren't going down even further. But in general, I mean, what's going to drive everything is just what is that data center? Where do they pin the data center number into the end of the year? And that will sort of drive the exit rate when people start to shape their calendar 2025 estimates.

Yeah, I mean, the estimates, I don how meaningful, if at all, it might be the work you've done on it yourself? What can you share with us? It does not look like it was meaningful at all. And look, so that article came out, suggested that there were some overheating issues at the rack level that may potentially cause delays down the line. Not long after it came out, like Dell and some others actually put out their own announcements that they were shipping. And then there were some news reports yesterday that suggested that issue, when it occurred, was several quarters ago. So it was old news anyways. You have to remember, as you're ramping these new platforms, and again, they're very complex, things like this are always happening.

So the big question was, was it something out of the ordinary or was something more normal? It does seem like it was more normal. And again, it seems like it was an issue that was sort of long settled anyway. So it doesn't seem like it was a problem. So I'm not too worried about that. Okay. We'll see what happens. Stace, I appreciate your time as always.

The insight's coming in. And we'll talk to you in the days ahead. It's Stacey Raskin. It's a big report. So is Snowflake, Seema. What can you tell us? Let's not forget about this important report tonight. Yeah, it's not all about NVIDIA, Scott.

When Snowflake reports earnings, investors will be looking for two things. Are more companies migrating their workloads into the cloud? And if so, are they willing to pay a premium? So in other words, is demand along with pricing holding up amid competition from the likes of Microsoft? Snowflake has gone from IPO darling to a big underperformer in the software sector, prompting its CEO to leave in February, succeeded by former Google ad chief Shridhar Ramaswamy. The goal now for Ramaswamy is to convince Wall Street that Snowflake is benefiting from the AI craze. The information reporting today that Snowflake is in talks with open AI rival Anthropic about getting customer access to its large language models.

That would be a vote of confidence with the stock down about 35 percent this year going into the print, Scott. All right. We'll look forward to that one, too. Seema, thank you. Quick programming note. Don't miss my interview tomorrow. Altimeter's Brad Gerstner. He's going to join me when we're at one market on the Halftime Report at noon tomorrow. So that'll be big as well. Mike, you know, you think about what's going to blow this market in either direction. And thought it was interesting at the top of our show to bring things full circle. Lizanne Saunders

saying, you know what? I think a pause in December. And then you put the Bowman headlines on top of that. And maybe that's more important than anything because rates have backed up. The market's been a little sensitive, to say the least, about that. And now if you're going to start getting a more critical debate in that room about the number of cuts we get in the new year just makes things a lot more interesting. Right, it does. If the data are ambiguous enough in the next few weeks where it really does feel as if December is a 50-50 or if it's a play or if you start getting Fed rhetoric trying to lay the groundwork for a pause, it does suggest we're in just this little bit of a limbo state. It's not

so much that the market can't handle fewer rate cuts. We're already doing that. We've already priced out a lot of cuts. The market's near highs. But what it is is this period of you don't quite know how the policy priorities are going to be set. You're not exactly sure about where yields will go in a less rate-cutting environment. So I do think it just creates a little bit of a shadow. Again, fourth-quarter tailwinds should be in place.

There really wasn't that much beyond the initial burst of a broad election buy, but there was a ton of rotation under the surface. So I do think you do have the makings for a little bit of a rethink happening on an ongoing basis. Again, the market itself isn't doing anything in the way of missteps or suggesting that the trend is changing. But, you know, we already were up at 22 times earnings and up 25% for the year. So you might need some incremental positives rather than the absence of negatives and just pure vibes and momentum to get us appreciably higher from here.

All right. Well, we'll see what happens with NVIDIA, obviously. Michael, thank you. Mike Santoli, our senior markets commentator. We'll go out mixed. I mean, we've had a nice little move here into the close. S&P may, in fact, settle positive, but all roads lead to NVIDIA, obviously.