Closing Bell - Closing Bell: Rapidly Rising Rates, AI Trade 'Alive & Well' 1/8/25

Episode Date: January 8, 2025

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.

All right, guys, thanks so much. Welcome to Closing Bell. I'm Scott Wapner, live from Post 9 here at the New York Stock Exchange. This make or break hour begins with the backup and yields, the uneasiness in stocks. We'll show you both as we begin the final stretch here. We're watching the 30-year, the 10-year as well. Rates moving a touch lower right around 1 p.m., and that was after a pretty solid bond auction. But nonetheless, I mean, the 30-year is closing in on 5%. There's the 10-year near 470. The major averages, well, as a result of that, they've been pretty much unsettled for most of the week. I mean, the 30-year is closing in on 5%. There's the 10-year near 470. The major averages, well, as a result of that, they've been pretty much unsettled for most of the week.

And they are, as you see yet again today, a mixed picture. Not much movement in either direction. The Russell is the biggest decliner on the day-to-day, as you might expect. With yields going up, obviously the small caps are going to be a bit unsettled. It is worth watching several of the quantum computing names as well over this last hour. They are plunging. I guess that's the word for it, because look at that. Rigetti down 41%. D-Wave quantum computing down 40%.

Plunging on cautious comments from NVIDIA CEO Jensen Wang. He delivered a bit of a reality check on that space. Just huge declines across the board. We'll watch those, too. We are watching shares of Solventum as well, following our exclusive report earlier today that Triance Nelson Peltz has sent a letter to shareholders urging that company to focus more on its performance, says that stock price should be a lot higher than it is now and says it should be if they take the necessary steps to get it there. It takes us to our talk of the tape, rapidly rising rates and the future of this rally.

Let's bring in CNBC senior economics reporter Steve Leisman and CNBC contributor Bryn Talkington of Requisite Capital Management. Bryn, I'll go to you first. How big of a story is this now for the markets, the backup and rates? I don't think it's going to be a big story three months from now. I think maybe we move a little bit higher. We've seen these numbers before. We saw them in 2024 where we almost touched 5 percent, I think around 499. I think we will get a settling out after the inauguration. We have some more understanding around the policies and what's actually will happen or the potential to happen. But I think the bond vigilantes are sniffing out

like the economy's strong. We've got lots of unknowns from the new administration that seem on the surface to be inflationary. But let's just see what will happen. I think if we get rates continue to move higher, I think it's going to be a great opportunity to buy the dip because I do not think they will be there by the end of the year. I mean, the problem, Steve, is not so much the level. It's that we didn't think we'd be at this level when the Fed started cutting rates in September. And I'm wondering how much you think the Fed itself has been caught a bit off guard by all this. I think they weren't expecting this. I would have expected, Scott, that the improvement we saw from, say, April through September,

maybe we had overdone it a little bit. But right now, we've round-tripped that improvement. If you look at the 10-year over that period of time, it's interesting to me the stocks have remained relatively buoyant amid that pressure from the 10-year. And I think it does shift the risks around a bit, Scott, which is this notion that we thought we were kind of out of the woods on that refinancing thing because rates had come down. But there is a lot of debt that's going to be rolling over from the pandemic that was at very low rates.

So I think I have to go back and look at those charts again to see if that's an issue that's worth exploring in terms of risk to the system out there. People thought they were going to refi. And I think this gets to the heart of your question, Scott. People thought they were going to refi at lower rates. Well, now they're going to refi at the same darn rate they were at before. You know, Bryn, you make an interesting point that you think, you know, this soon will pass, that three months from now, this is not going to be a problem. And to Steve's point, you know, maybe stocks haven't completely fallen out of bed because of presumably what you think is the reason that this will all be OK in a few months, because there's a lot of

optimism about what this new administration is going to bring. Yeah, that's a that's a really fair comment. I think also on Steve's point about refinancing, Steve can correct me if I'm wrong. I don't think I am, though, but I think around 20 percent of our debts and T-bills. So whereas the long end has come up because that's the market, right? The Fed cannot control the market. The Fed controls the front end. So as it relates to refinancing, actually, that may be a slight positive because rates have come down on the lower end. And so I do think, though, your assessment about right now, the market is getting the benefit of the doubt that rates aren't going to stay at this level.

But I do think for certain sectors, like small caps which everyone a lot of people were were so bullish i think you need to rethink that because if rates do stay at this level i don't think we're going to see the algos high frequency traders etc moving into those small cap names as more interest rate sensitive names and so i still say stay up the cap cap structure if you're going to do a broad based you know play, play on rates. The R.S.P. equal way is very high quality. It's not that rate sensitive. And so I would say stay mid to large cap and still avoid that small cap sector. Steve, how do you think this is going to impact Fed policy, if at all? I can see some who, judging from the minutes, you know, thought maybe standing

pat was the best move anyway. So maybe they think the stickiness of rates or a backup in rates somewhat helps their cause that, you know, they feel inflation is not completely dead yet. On the other hand, there has to be members on the Fed who are watching this backup in rates and worrying that it might wreck the story that they think that they've written pretty well. I think that's right. And there is some at the margin, not from the Fed I'm hearing, but from some Fed watchers, Scott, the idea that if things go on the way they're going, that maybe the Fed dials back a little bit on QT. I have not heard yet, Scott, concern from the Fed about these high rates. I think a lot of them

may be in Brins camp here that a couple decent prints on inflation and some of this will go away. But I think, Scott, you need to get back to what you were talking about, which was the outlook for fiscal policy. On the one hand, it's very buoyant when it comes to things like tax cuts and deregulation. On the other hand, when it comes to trade and immigration. And look, it's a little hard. I'm not sure we should be doing this, but the idea that the president just yesterday would not rule out military action against three allies,

and that went along with a pop in interest rates. I don't know if that's directly related, but we want to make sure we don't normalize apparent insanity here. No, but it raises an interesting point that, you know, we've seen this movie before, so to speak, because Trump's been president before. We know how he likes to either negotiate, make threats, do policy. At the end of the day, you don't really know what's what until something is firm in place. The market has placed a lot of its bets starting on election day that this was going to be a boom. And now we're learning that getting from point A to point B may be a little bit rocky. I mean, if anyone thought they weren't going to break

some dishes when they came into this administration, you weren't paying attention. So I think this is what we'll have some of this for a while, right? This might be dumping over the China cabinet. I mean, this is not just a good dish. I'd be really happy if that's all we get is dishes broken. I'll be really happy. The proverbial dishes will say the proverbial dishes. So but I think you have to go back to. Well, first of all, you know, Trump wants to make a deal. And I think that's just been so consistent that he wants to make a deal. And so you can't tweet foreign policy.

But when it comes to the U.S., you do, you know, behind the scenes. So he's just like, you know, where he stands. And I think he likes to create some havoc and keep people off balance. to the U.S., you do, you know, behind the scenes. So he's just like, you know where he stands. And I think he likes to create some havoc and keep people off balance. And how that relates to us as investors is we're going to have some chop and there's going to be sectors that do well and do worse. But ultimately, I think we're going to get earnings growth this year, not only from the MAG-7, which we always talk about, but from these other 493. And so as long as that occurs, that is going to be the ultimate thing that drives stocks higher. And I think once rates settle, which I do think

they will over the next three months, this opportunity will be a buy the dip if we get any type of meaningful pullback, which really we haven't. Yeah. Bryn, I'm going to ask you to stick around. Steve, I'm going to thank you very much. We'll make your last quick point, Steve. Just one very quick thing. I got a chart here. This is not about inflation, this rise in rates. If you look at it, we disaggregated it. We looked at inflation expectations since the beginning of December. They're up 13 basis points.

The 10-year is up 50. So this is about growth. It's about productivity. It's about uncertainty. It's about the fiscal deficit much more than it's about a change in inflation expectations. Bobby, we did we did have some very strong economic data yesterday, too, which sent yields up. Steve, thank you as always. Our senior economic supporter. I said Bryn was going to stick around because we're watching shares of Palantir today under pressure all week down near 15 percent.

Last I saw was down maybe another four today. Seema Modi has more on this big move for one of last year's best performers. Scott, Wall Street seems to be souring on this name with more sell ratings than buys. An average price target of $46, which does suggest further downside from where the stock is trading, right around $68 a share. It does coincide with few executives at Palantir selling stock this year, including the company's chief financial officer, the chief revenue officer, all pre-planned. Also worth noting that ARK Fund's Kathy Wood has unloaded about $15 million worth of stock this week.

But let's not forget, this is the best performing S&P 500 name in 2024, gaining over 309 percent, driven by Palantir's growing role in building out artificial intelligence, helping enterprise and government clients synthesize complex data. And it's showing up in the numbers with a 30 percent jump in revenue in the last quarter. But the question is, what multiple are investors willing to pay with Palantir, trading at 146 times forward earnings? That is the seventh most expensive stock in the IGV software ETF, Scott. All right, good stuff. Seema, thank you very much, which leads me back to you, Bryn, as you hold the stock.

But you sold half of it to start the year because you were getting a little uneasy with where you saw not only the valuation but the meteoric rise that the stock had? Yeah, because, I mean, we all know that stocks always, well, certain stocks will go much, much higher and then certain stocks will go much, much lower than they should. And that's just like the mechanism of the market. But when I looked at the stock at the beginning of the year, I think it got up to 90 times 2025 sales estimates. And that's just so maybe it was 90. I think it's around 75 right now. That's just nosebleed. So I just couldn't. It's a great company, but I just think the valuation

just got irresponsibly high. And I think that's also why you saw Insider Selling just taking advantage of really the frenzy around the name. You know, they're going to come into earnings on February 5th. Their revenues and earnings are going to grow. I think we're looking at 27 and 40 percent revenue and earnings growth. But I think right now when you have a technical breakdown, it just traded below the 20 day, the 50 days in the 50s. I think you have to let it settle in because sentiment has switched on this name. And so let it settle in and find a new base before adding to a new position. Are there other Palantir-like names that you would have similar concerns about that you own? Well, I mean, I sold half of my Apple. It's not a Palantir, right? It's actually the opposite.

I don't see the revenue growth meaningfully making sense of the price to sales, which was a 10, which is historically, I don't think it's ever even traded at a 10 price to sales. It's like the last few years, it's been six. More historically, it's been four. And so I really feel within these names, you have to mind earnings and revenue growth. And so I think we're going to continue to see a real dislocation within tech this year of the haves and have nots. I don't think we're going to continue to see this rising tide lifting all boats. And I think investors are going to demand real revenue and earnings growth and put that against the multiple. And that's why I still think NVIDIA is pole position because I have like clear line of sight because everyone's telling us

all the one everyone buying from NVIDIA, they're going to continue to dominate both revenue and sales. Yeah, I was going to ask you your read on NVIDIA this week. You know, the price action has been really interesting on CES. I mean, you know, Jensen Wang speaks, the stock had already run up into, runs up a little after, then falls apart yesterday. And, you know, it's down a fraction today, but it's still down more than 3% on the week. Yeah. So, I mean, I have half of my position that I had a while back. I have February 160 calls. So I really don't want that to get called away. But if you listen to what Jensen said, he's like telling you the playbook of the names to own and the sectors to not own. And, you know, at the onset, you and Seema talked about the

quantum computing names, but it's like Micron, that's going to be a winner. Robots, robots, robots. It's like there's multiple companies, but for me, I own Tesla. And so it's like Nvidia is this company that's telling you what's happening within this AI space. And so I don't think it's long in the tooth with Nvidia at all. I just think the markets are choppy around it. And so I don't think it's long in the tooth with NVIDIA at all. I just think the markets are choppy around it. And also their earnings don't come out till the end of February. And so there's nothing to get like super excited about. And so I think that 150 remains that ceiling. And I do think at some point this year, it's going to break out of that because the revenue and earnings growth, I think will just demand that and will pull the stock up like it has the past two years. All right. We'll watch all of that. Bryn, thanks as always for covering all

that for us. That's Bryn Talkington. We'll go to the broader market now. Dow's positive, albeit barely. Everything else is red. Kevin Gordon of Charles Schwab joins me here now post-nice. Nice to see you. Welcome back. Hey, Scott. Nice to see you. What's your read on all this as you've listened to our conversation from the top? Well, from a sentiment standpoint, actually, I love what Bryn was just talking about in terms of, you know, when you get stretched valuations and you get really hot sentiment and then it flips, you know, a little bit on a switch, really, it can really send a name or an industry or a group of stocks in the other direction. And it kind of brings me to a theme that we've had for, you know, a couple of quarters now,

but especially heading into 25, where when you look at sentiment environment in 2024, a lot of the metrics that we track were sort of stuck in extreme optimism territory for a good chunk of the year. You really had only a couple of periods, whether it was, you know, early April to late April or into that midsummer drawdown where some of that froth got washed out and then it came back pretty quickly. So the environment and the ground is just a little bit shakier heading into this year because you had gone through a really long stretch of sentiment being in extreme optimism territory. So it's not a reason in and of itself for stocks to just sell off automatically. But when you have that kind of shaky foundation and you have a little bit more vulnerability, it opens you up to more of a drawdown when you do have some kind of negative

catalyst that enters in. I mean, do you feel like we're on the precipice of a narrative switch, of a sentiment change? Because as we also discussed with Bryn and Steve Leisman to start the show, there's still a lot of optimism about what's going to happen with the new administration, despite some of the concerns about sticky inflation and escalating deficit. Well, the problem is you have all of these cross currents. I mean, from a policy standpoint, you've got on the pro-growth side, less stringent regulation, maybe a rollback in regulation, maybe something that's more beneficial from a tax policy standpoint. But there's also a timing mismatch here because you have relatively aggressive tariff policy

that's being proposed. You also have relatively aggressive immigration policy that's being proposed. And, you know, I think it's human nature to look at all of these proposals and sort of take them at once and say, here's the ultimate hit that's going to happen. But we know that that's just not the case. So I think that's the benefit for investors and probably the benefit for the economy for most of this year, if not all of this year, where, you know, if you exclude tariffs, everything from an immigration standpoint, from a tax standpoint, takes a longer time to implement,

especially for taxes. I mean, that's not something that the president can do unilaterally. So that's why we focus a lot more or we are focusing a lot more on what could happen from a tariff standpoint and from an immigration standpoint. But probably tariffs gives you that first hit and then immigration follows on thereafter. So you have to look at the sequencing and what the result is. And I think from a growth standpoint, I actually have maybe it's a little bit more of a contrarian view from a tariff standpoint, but I think that the risk is more on the growth side, not as much on the inflation side. Unless you get some

significant retaliation from other countries and you really go into a full-blown trade war, the tariff increase itself is really more of just a one-time price level increase. I would look to the sort of knock-on effect after that from a business capex standpoint and see if that materially slows and then in turn takes a hit to growth. I mean, investors are clearly a little spooked by the move in rates. Yeah. Are you? Not as much because I think right now it's still consistent with a relatively healthy growth backdrop. It's not like we've seen some dramatic fall in, you know, now track or now now cast estimates for GDP growth heading into this year or even in the end of last year.

I think that if you got, for some reason, a material weakening in the labor market, so if Friday's jobs report was really weak, but then you got some heat from CPI and PPI and therefore PCE, then I would grow a little bit more concerned. But I think one of the reasons that you haven't seen as steep of a sell-off, even as the rate of change in something like the 10-year has really picked up and you're getting closer to 4.7 and breaking closer to 5%, I think one of the reasons is that because the growth backdrop is still relatively firm. And you have to keep in mind, too, if you kind of take a longer-term look at the 10-year, longer-term in the sense of the past three to four years, you have gone through these bouts, most notably probably that July to October 2023 period where the 10-year did

get up to 5% for, you know, a hot second and then it reversed. But when you got to that point, there was a significant pullback in the market. But over that time, we've obviously been able to move higher, not without a lot of drawdowns. So I think that the level is maybe not as important as the rate of change in certain instances. Well, the rate of change has been significant since September, I think, to the point where people are pretty surprised. Yeah, but in terms of the drawdown itself and the bull market coming to some sort of imminent end, the tough part about this, and you were mentioning this at the beginning of the show, this maybe being more to the benefit of large

caps than it is to small caps, that's, I think, where you see more of a dramatic, you know, sort of turn in the market is maybe more money moving into large at the expense of small if both the level and the rate of change for rates stays relatively elevated. Is that going to remain the case, right? I mean, you had this move back into tech a couple of days notwithstanding because of, you know, a little rate uneasiness. But, you know, materials% over the last month, real estate down 8%, staples down 6%, industrials down 6%. Tech had come back to life to some respects. I mean, how does the picture look over the next, let's just say, I don't know, three to six months? I think, you know, excluding industrials, the breadth profile actually for this cluster of sectors,

which has been really interesting for traditional defensives like staples, like healthcare, but also some of those more commodity sensitive, deeper cyclicals like materials, like energy, that grouping, those four sectors has been much weaker than it has been for things like industrials or financials, certainly for the growth trio of tech, communication services, consumer discretionary.

So I think that if you stay in this environment where growth is still relatively healthy, but inflation, if it's not reheating back to 2022 levels, which is definitely not our base case, but gets a little bit of a firmer underpinning, that I think can still work for some of the deeper cyclical parts of the market. But I think that once you start to introduce areas like materials, areas like energy, you would need more of a pickup in global growth ex-U.S. for that, I think, to really work. I don't really see that to be the case right now because the rest of the world is relatively weak if you compare it to the U.S. But, you know, by the end of the year, that could certainly change. Your story sounds to me to be one of

rates are going up for the right reasons, so it's OK. And you're sticking to that story until you're not. I mean, there are some calls for 5%, if not, you know, above that. We did get one of those today. I mean, there's certainly, you know, probably a psychological level of 5%, you know, maybe fear of 5% itself. And I'm sure there'll be a lot of narratives attached to that, especially from a fiscal standpoint. But if you just look at the growth backdrop itself, and it remains relatively healthy, then yeah, I think the market can do do well the one thing i will say that has definitely changed over the past couple of months and what we've been keeping an eye on is you know the breadth profile for the s p in particular has has deteriorated

deteriorated substantially as we were saying these other areas going down well tech you know becomes this almost monolith again yeah and it's deteriorated in you know drawdowns that we had in 24 even in 23 if you were looking at the percentage of companies in that index that were above their 200-day moving average, there was a significant washout, but the bounce back was also relatively strong. So I think what to watch for from our standpoint going forward when we do get another bounce higher and eventually when you do make another all-time high for the S&P, whether that's in a couple of days, whether that's in a couple of months, the breadth rebound from there I think think, is really important to watch. Because that,

if there was more of a divergence, to me, it would open up more of a scenario or a replay of what we had in 21, where the market was continuing to do well, lifted by the mega caps, but breadth was deteriorating out of the surface. That divergence, I think, would spell or would sort of look forward to a much more, you know, a much weaker scenario for the market. We'll leave it there. I feel like we covered it all. I appreciate you. Thanks for being here. Kevin Gordon. Nice to see you. Charles Schwab. All right. Let's send it to Christina Partsenevelis now for a look at the biggest names moving into the close today. Christina. Hi, Scott. Well, Boston Scientific shares climbing after announced plans to acquire

fellow medical technology company Bolt Medical. You can see Boston shares up four and a half. Boston has a 26% stake in Bolt and is going to acquire the remaining share with an upfront payment of roughly $443 million. And then they may have to spend another $221 million payments after it passes regulatory hurdles. Positive data from a type one diabetes treatment is sending shares of Santa Biotech soaring right now. And I say soaring, almost 200% higher. It was up more than 300% after the news yesterday. Its market cap now sits at about just a billion bucks.

Not too bad. Scott? All right. Christina, thank you. Christina Partsenevelos. We're just getting started here. Coming up next, intelligent alpha founder Doug Clinton is back with us. We'll find out how he is sizing up the tech trade after the recent rise in yields. The names he says could lead the next AI leg higher. We're live with the New York Stock Exchange. You're watching Closing Bell on CNBC. NASDAQ in the red today, adding to this week's losses, AMD, Micron.

And we told you about Palantir among today's biggest losers. Joining me now to discuss Doug Clinton, Intelligent Alpha founder and CEO. It's good to see you. Welcome back. Thanks, Scott. What do I want to do here with this tech trade, which I felt like was asleep, and now I feel like it roared back, and now I really don't know what to do with it because I see rising rates and some of these stocks are rolling pretty hard. It's been an uncomfortable start to the year.

It felt like we were kind of off to the races, Scott, and now all of a sudden people are maybe starting to the year. It felt like we were kind of off to the races, Scott. And now, all of a sudden, people are maybe starting to doubt again. But what we look at is just go back to the fundamentals. First, ask yourself, are these big cap tech names really that expensive? Are they overpriced? NVIDIA is trading at 32 times this year's earnings. The group of the MAG6, so excluding Tesla, trades about 27 times this year's earnings. It's not cheap. I don't think it's egregiously expensive. And as we look forward to the rest of this year, I still do have pretty great confidence that the AI trade is alive and well. I think NVIDIA can continue to work. That might shift later on this year. And I also think

Microsoft and Meta are the names that you can own out of those mega cap tech stocks. Well, you didn't say Apple conspicuously absent from your list. And there was that downgrade to sell this week, which I thought was pretty interesting. Basically saying that the move from WWDC to close to now was punk, that it was based on nothing that had to do with anything with fundamentals? I think that it's harsh, but I think it's also probably fair. And the reality for Apple is this. There's this incredible opportunity for all of these mega cap tech companies with AI. And Apple has shown that they are dipping their toes into AI, but they haven't really shown us anything yet of substance that should really move the needle in terms of people feeling like I really have to upgrade my iPhone. We probably won't get any more substance from that until this year's WWDC. I think that's kind of the key event for them to really become an AI player.

Wow. So we have to wait again to WWDC. So you're not counting on an upgrade cycle that just is rather than one big event just becomes this rolling deal that's going to be good enough. It's just going to take you longer to get to the destination you thought you'd be. I think that's probably the right way to think about it. I think that the bar is low, but I also think that Apple's, even if they don't get an AI tailwind, I think they have easy comps. I think that they've done enough with AI and other upgrades to the iPhone 16 that they can beat that low bar. I think the question in my mind, if you're really getting excited about Apple, is what does it look like for next year? You know, can they really exceed and get back into that strong double digit kind of growth for iPhone that we haven't seen in a long time? And that I think the people who are AI bulls really hope that it could accelerate to. But

again, we just won't really know what that will be, that AI story will be that could drive that kind of growth until later this year. What do you think about this backup in rates in general? Are you concerned that it's going to derail what seemed to be a pretty good market heading into this year? We use AI and intelligent alpha, Scott, to make predictions about the market. One of the predictions that our AI trio that we use, GPT, Gemini, and Claude, suggested for the markets was that we may see a correction. It predicted the back half of the year. So kind of a 10-ish percent flavor of correction.

And what it specifically called out was that we may have a recurrence of inflation and that may result in something that maybe looks a little bit like what we're experiencing right now with rates becoming more stable, maybe even rising a little bit. So maybe AI is wrong on the timing, but I wouldn't be surprised if we do eventually get some sort of market correction driven by a narrative around rates and inflation, because that's really what the market has been sensitive to for the last two years. And we've been lucky, in my opinion, the last two years, the markets have been relatively tame. I think we've only had one 10% correction. And so this is very unscientific. But you could also say maybe we're due. But if nothing else, at least in the near term, does it throw cold water on the idea that you

could have a broadening market? I mean, we portray you as a tech investor primarily, and you do have many of those big names within your holdings, whether it's within Intelligent Alpha or Deepwater. But you do have industrials you've got some consumer stocks you have retail that's right i mean i think that as we think about this rate picture and what it might do to markets i would separate that from the idea of picking individual stocks and that's really what we try to do at both intelligent alpha and deepwater is we are trying to be cognizant of what is the macro reality and how might that impact the markets. But fundamentally, what we're trying to do is really identify the great companies that hopefully have something that's more like a secular growth story

that we have high conviction in relative to just trying to play cyclical trends that would be more sensitive to rates. We'll leave it there. Doug, I appreciate you. We'll talk to you soon. Doug Clinton joining us once again. Coming up, we got the latest trades from five-star fund manager Kevin Simpson, including the one financial stock he's buying that's up more than 50% in just the past three months. The bell's coming right back after this. All right, we're back. Stocks are struggling for direction once again. That's after the sell-off yesterday because of rising yields. Joining me now to share his trades is Kevin Simpson, CIO and founder of Capital Wealth Planning. It's good to see you. So what are you doing? As a lot of people are sitting here worried about rates,

it obviously isn't keeping your hands, you're not sitting on your hands, I should say. So what's the most recent trade you made? Well, we definitely leaned into the volatility that we've seen really since the holidays, Scott, to be able to write covered calls earlier this week we sold calls on jp organ our flagship strategy and this is a stock that was down around 250 dollars mid-december came up here to 242. we sold a 255 strikes got 12 to the upside brought a dollar 10 in this expires in a little over two weeks.

And the call premium annualizes out about 8%. We like that a lot. Let me give you one in our growth strategy, because who doesn't like talking about the video? And the volatility there, especially this week, is off the charts. Yesterday, we sold a covered call expiring this friday so a three dollar forget the eight percent cash sold with jp morgan we brought in a column step in nvidia call expiring on friday and if you annualize out just that short time it's a 60 annualized return now obviously we're not going to sell and close on every three-day cycle, but it really illustrates what you could do in periods like this of great and intense volatility and some uncertainty in the broader markets. I mean, we really thought that the Santa Claus

sell-off and this volatility was a symptom of thin trading, low volume, window dressing, tax selling. And I stressed the word originally to change the things. Hey, Kev, forgive me. I got like half of that. And there's something wrong with your audio. And if I got half of that, I don't know what our viewers got. So we're going to work on that. Let me take a quick break and we'll come back with you on the other side if we can figure this out and get it fixed. We're tracking the biggest movers into the close. When we come back, Christina Partsenevelos is standing by with that. You want to tell us what you see now? We see a new member of the S&P Midcap Club and the bird flu is actually helping sales

of one company. I'll have details of all that after this short break. I have some news about Eli Lilly. Angelica Peebles has that for us. Hi, Angelica. Hey, Scott. That's right. CMS confirming to CNBC.com that Medicare can now cover Eli Lilly's drug Zepbound when it's used for people with sleep apnea. Remember, Medicare cannot cover obesity drugs. However, it can cover the drugs when it's used for other health conditions. Zep found last month getting approval for the use of sleep apnea. And so now CMS confirming that it can indeed be covered for that use. And take a look. Lily shares up about 2 percent, Scott.

Okay, Angelica, thanks for that update. That's Angelica Peebles. We go back now to Christina Partsenevelos for a look at the key stocks that she's watching. What do you see? Well, let's start with Instacart because it's joining a new club, the S&P Midcap 400 Index, starting next Tuesday, replacing Inovus. And other news also for the stock, you can see shares up almost 5%. The food delivery company said it's partnering with Ulta Beauty to deliver Ulta Beauty products nationwide. And you can see shares are up quite substantially, also known as Maple Bear, and have actually nearly doubled in the last year but let's talk about ulta it is down about three percent that has more so to do with the retirement of its ceo have you noticed egg prices higher at the

grocery store maybe barely any eggs available egg producer cal main warned that the supply keeps getting cut because of recent outbreaks of bird flu. It may not be helping your wallet, but higher prices and recent holiday demand did help CalMain boost its EPS earnings per share for 82 percent compared to the year prior for the second quarter. And I'm definitely having shell shock from these high egg prices and coffee prices, too. I guess I'll have to hatch a plan for breakfast. OK, I'm done. Scott. Very clever. Very clever. As always, Christina, thank you. Christina Partsenevelos. All right, Kevin Simpson, he's back.

He is the CIO and founder of Capital Wealth Planning. We think we figured this all out. So let's try this again. NVIDIA, you did what the other day? So yesterday, Scott, we tried to harvest the volatility that we saw in the pre-market. We wrote a call expiring this Friday. So for three days, the option brought in $1 per share. It's a 147 strike. So it gives us a little bit of upside. And if you annualize out the premium, this is a fun thing to look at. It's 60% annualized premium. So when we have markets like this that

are volatile, that are choppy, to your point, we're not going to sit on our hands. We're going to try to harvest that volatility. We have seven dollars to the upside and two days left in the option. JP Morgan trade was what? A little bit more boring. This one expires in two weeks. This is in our dividend strategy. We wrote a 255 call. The stock bottomed out around 230 in mid-December. It's come up here at around 242. So we have $12 of upside potential over the next two weeks. But it brought in $1.10. And when you annualize that out, it comes out to an 8% annualized premium. And that's really what we look for in our main strategy. The NVIDIA trade is super fun

to look at. But if you look at these blue chip companies and you can generate an extra four or five, six percent a year in option premium, it can really help, especially in a year like 2025, where things might not just automatically go to the moon again. And what do you do with Robinhood? Yeah, this is in our growth strategy. Also, I use this as the final trade on Friday and the halftime report. This is a stock that started off during the pandemic as a meme trading thing, cryptocurrencies, NFTs, things like that. And they're really maturing and they're looking at a long term plan in wealth management. They recently bought a firm called Trade PMR, which services the custodianship for RIAs. They're doing a lot of education online.

They're going after retirement accounts. This is a firm that recognizes the generational wealth transfer that's going to happen. And they've got the infrastructure to deal with the younger investors. And if they can capture just a bit of that market share in the wealth generation, this is a company to certainly watch. All right. We will. Thanks for bearing with us. We appreciate having you back. Kevin Simpson, Capital Wealth Planning. Still ahead, eBay shares are surging. Stocks having its best day in more than two years today. It is leading the S&P 500. We'll tell you why coming up. Still ahead, powering down. Constellation Energy is dropping today and reports the company's planning some major M&A.

We have those details ahead inside the Market Zone. We'll do that next. We're now in the closing bell Market Zone. CNBC Senior Markets Commentator Mike Santoli here to break down these crucial moments of this trading day. eBay's tracking for its best day in more than two years, which is why Julia Boorstin is going to tell us what's behind that move. And Pippa Stevens will cover the potential multi-billion dollar deal brewing in the energy space. We'll get to that in a minute, but I'll start with you, Mike, and what you want to leave our viewers with as we approach the close here on another uneven day for stocks. Yeah, really just trading this toggle between what yields are doing.

Are they breaking out? Are they starting to get a little bit calmed down? You know, the 10-year is actually about six or seven basis points off its high for the day. So there actually was a little bit of intraday relief. And unlike prior days when we started strong and then the average stock just really went south, we kind of started deep in the hole with really negative breadth today and recovered because it seemed like maybe the bond buyers were showing up. I don't know that the Fed minutes were really changing the story very much,

but it accentuated the fact that we're just kind of flying in a fog here in terms of the implications of policy. Maybe the auction at, what, I think it was 1 o'clock, story, right? It was pretty good demand, took the edge off. So maybe that helped a little bit. I totally think so. And I've been out here for days saying, OK, we're at levels where you want to maybe lock that in 2.3 percent real yields at this level. That's after inflation expectations. And yeah, we have supply, but we kind of know it's coming. And in theory, asset allocators want some. Well, the auction was a little bit of evidence that that kind of an idea was starting to take hold. Of course, you do have the bond market open for most of the day tomorrow while stocks are closed.

It's kind of a funny setup. So maybe stocks just didn't want to make any assumptions about what happens tomorrow. But going into the jobs number, at least we're kind of back from the brink. All right, we'll come back to you in a few. You mentioned eBay tracking for its best day in two years. What's going on here, Julia? Well, Meta Announcing will launch a test in Germany, France, and the U.S., enabling users to browse eBay listings on Facebook Marketplace

and then complete their transactions on eBay. Now, shares of eBay moving nearly 10% higher on the news today. This move to invite other sellers onto Facebook Marketplace comes after the European Commission in November fined Meta $840 million over abusive practices that benefited Facebook Marketplace. The EU saying that Meta breached EU antitrust rules and among other things imposed unfair trading conditions on other online classified ads service providers. Meta saying that it's working to address issues raised

by the commission's decision on Facebook Marketplace as it continues to appeal that decision. Back over to you. All right, Julia, thank you. That's Julia Borse. The fifth is Stevens now on this possible multi-billion dollar deal in the energy space, according to reports.

What do we know? Well, Constellation is off the worst levels of the day, but still down about 5%. Following those reports, the company is nearing a deal to buy Calpine, which is a private equity-owned independent power producer. Now, last year, it was reported that Calpine was exploring options, so perhaps not too much of a surprise that Constellation could be a suitor,

given Calpine's combo of gas and geothermal units fits Constellation's decarbonization narrative. Now, the price tag could reportedly be $30 billion, including debt, and some of the stocks downturned probably on worries that that price tag could spark incremental equity needs and therefore dilution. Now, Constellation is also one of the top S&P stocks in the last year, with shares doubling on the back of nuclear power enthusiasm. Constellation and Calpine did not return requests for comments, and Energy Capital Partners, one of Calpine's owners, declined to comment. Scott? Pippa, thank you. That's Pippa Stevens. I'll turn you back to Mike. I mean, I guess, you know, look, over the next 10 days, we're going to continue to game out the idea of this new Trump administration,

the pluses and the negatives, at least in terms of what it could mean for the economy, for rates, for the markets. And we may not have answers for a few weeks until we get some executive orders. We see what's what related to tariffs, what the possible implications are for interest rates. So we might be sitting on our hands for a little bit trying to figure this all out. Two days in a row, we had reports about the approach to tariffs that seemed like they got either countered or watered down or nobody was really willing to run with them. Yesterday, it seemed like more selectivity.

Today, it seems like national economic emergency going to be declared so the tariffs can be willy-nilly. I do think that it's OK that the market is kind of wait and see on those things. Interesting in the Fed minutes that some of the committee members were trying to build in some assumptions about inflationary effects of tariffs. But then Waller this morning, you know, he came out and said he doesn't really, isn't concerned about inflationary effects from tariffs that would be of use in making Fed policy. In other words, fine, there's going to be some frictional price increases, perhaps if you get some tariffs here and there. But it shouldn't kind of sway the Fed from the fact that underlying drivers of inflation would not be changing. And therefore, we're still far from what he thinks of as a

neutral rate. So that all says nobody knows what to make of it. You all have to have a theory of the case. But yeah, we're just going to, you know, going to have to wait. And then I really do think it's the behavior of the real economy on the way to getting those answers, that matters a lot. I don't think good news on jobs on Friday is in itself a negative unless it really gives a boost, a further boost to bond yields. And that's the market would conclude that the market couldn't handle those bond yields at that level. And I know the streets handicapped. And if we get a $200,000 payroll print, then the stock's S&P is going down 1%. Yeah. It is interesting how the psychology has changed a little bit from Election Day, whereas you felt like, you know, right after that was decided that all of the positives were on one end of the scale and there really weren't any negatives.

Now we're almost evening out. It's like, OK, you put deregulation and tax cuts on one side and then you go, well, tariffs on the other. Plus, I mean, are we going to try and take Greenland? Yeah, exactly. The Panama Canal? Those issues have to be making the market at least somewhat uneasy. It's just, I think, draining conviction out of the market.

And it's not to say it's making people overly negative, but it's definitely causing a rethink of what was a very, very bullish consensus coming into this year. It is a little bit of a trap that we had the 2016-2017 template out there. And one of the aspects of that template was, hey, you'd be surprised how the market can ignore erratic policymaking and growling about tariffs if they're going to get some good stuff along the way. I think the starting point now is very different, and there's a little bit less tolerance for a lot of the chaos. In case you didn't figure out, we have a big crowd down here. I don't know if you can hear me.

I can't hear myself, so it's all good. We'll see you in the O.C. with Morgan and John.