Closing Bell - Closing Bell: Record Energy Demand in 2025? Bitcoin Highs & The Fed's Next Move 01/17/25

Episode Date: January 17, 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.

Welcome to Closing Bell. I'm Mike Santoli in for Scott Wapner. We are live from Post 9 at the New York Stock Exchange. This make or break hour begins with stocks on pace to finish a strong week with a flourish. Several days of retreating bond yields, encouraging economic data, healthy bank earnings and softer inflation readings have revived risk appetites after more than a month of anxious churn. Here's a look at the scorecard with 60 minutes to go in regulation. The S&P 500 is trying for its first close above the 6,000 mark so far this year. It's right at that level right now. I think it was December 26th was the last time it closed above. Unlike yesterday when weakness in big tech obscured some underlying strength in the majority of stocks, the mega cap favorites are doing their part to lift the Nasdaq composite today by about a percent and a half. The 10-year Treasury yield, it's little changed on the day, but down substantially from about 480 to 46 in three days or so since that softer core CPI report.

That takes us to our talk of the tape. Does this week's strong bid in both stocks and bonds have the bulls back in charge? And what should Wall Street expect in the early days of a new administration? Let's ask 314 Research co-founder Warren Pies. Warren, great to see you. Thanks for coming on and finishing the week with us. Yeah, thank you for having me, Mike. So, I mean, obviously Goldilocks, a bit of an overused term, but it seems as if there was a pretty decent mix. The interplay between growth and yields and inflation this week. And I guess we had already had this internal pullback.

What's your read on the week's action? Yeah, I mean, I think it's very constructive. So I think really the next few months is going to be dictated by the data. The Fed action, Fed policy is going to is going to ultimately be responsive to the data and we got some really important uh news so the cpi came in cold this is what we were expecting i think you and i talked about this a couple weeks ago uh shelter disinflation leading the charge there was also um reduced the super core inflation so that's positive on the fundamental side that gave gave the relief on yield. You had Waller come out and kind of reiterate some sanity in the forward outlook for the Fed policy, in my view. And so, that kind of calmed yields down, allowed equities to find their footing.

In the background, I think this sell-off, we've now retraced. We went back to January 13th. We retraced the entire post-election rally. And if you look at some just bread and butter sentiment indicators, you'll get like AAII, the spread between bulls and bears had gone from extreme bullishness right after the election to the most extreme pessimism that we've seen from individual investors since fall of 2023 when the market was making a significant bottom. So yeah, I think it's been a nice sentiment reset. And I think

the near term is going to be pretty constructive for equities. Yeah, I was mentioning earlier that it felt as if as we got toward the end of last year, there was a consensus building that it was a buy the election, sell the inauguration type of trade. That probably was a little too cute. We actually got the selling into the inauguration, sort of front loaded it, I guess, after two huge up calendar years in stocks. But I wonder if, though, you know, the acceptable range of, you know, how fast growth can be, where yields can get to exactly when the Fed might respond to all that is narrow at this point, because you did see we got a pretty good sell off on that strong jobs number on Friday that had to be rebuilt this week. Yeah, I think that's that's true.

I mean, I do think we're still in a little bit of a tenuous position on yields. That's why I say I think the data is going to really dictate things going forward because it's going to the data is going to dictate the Fed and the Fed is going to dictate the the bond market. Contrary to kind of what I think has become consensus out there that the bond market is moving in to the Fed. So yeah, I think there is a bit of a narrow window. But I think CPI was so important, and Waller coming out was important. I think it gives us at least a clear runway where yields won't go back to, I think, above 4.8 for the next bit of time. We're going to at least consolidate this move. And if you look back kind of to the things we've talked about in the past, I think really it is a lot of times for the equity market, it's about the pace of the move higher in yields that gets the market in trouble. And so if we can consolidate

this move and then we look back to where we were last time the market was at 6,000 post-election, yields were much lower. So even though the market's back here at 6,000, yields are a little higher, but it's been a little bit of back-end filling and rearranging sentiment at the same time. So I think that's a good roadmap for the time ahead until we can get more clarity on Fed policy. Yeah, you could even dial it further back and say, you know, at one point we thought 3% on Treasuries on the 10s was insurmountable. Equities couldn't handle three and a half. I mean, all the way up, you eventually make your peace with that level if nothing breaks along the way. You've mentioned Waller a couple of times. Let's actually, you know, hear what he had to say and perhaps why it struck the market

as fresh information. We got a shock with inflation in January and February. They kind of put us back in terms of our progress for cutting rates. I'm hoping that doesn't happen again so that if we continue getting numbers like this, it's reasonable to think that possibly rate cuts could happen in the first half of the year. Yeah, which is funny because, you know, if a month ago with the S&P 500, let's say a percent up from where we are right now, if you said maybe we have a rate cut in the first half of 2025, it would have been taken as bearish. And now all of a sudden this is actually seen as a sigh of relief. Yeah, absolutely. I think the sentiment has swung so much on the bond side. It's kind of

ridiculous to watch. I mean, you had people screaming for emergency rate cuts back in the summer and now saying, we don't think we're going to have any cuts from here and the Fed's probably done. Maybe the next move is a hike. I mean, I think Waller has taken some heat from what I've seen on social media and stuff, but I think he's really kind of the bellwether for the Fed. And so if you go back, this whole big market rally that started with the Fed pivot really began in November of 2023. And it began with a speech that Waller gave where he said he was more or less ready to consider a real Fed funds rate regime for policy. And that was like a turning point. We got much more bullish on equities at that point at 314 Research. And so I think it's really good to have him coming out and expressing his view. It aligns with what we

think. We see four cuts out of the Fed this year. Yeah, I think the path could be a little bit bumpy here in the first half as we get into Q2, but it makes sense. What he said aligns with everything that we believe that CPI is likely to move lower. I do think he also highlighted the risk that last year we had residual seasonality in January and February in the data. And does that come back to bite us again this year? So there's a little bit of nervousness around the earlier data. But for the most part, I see it exactly how he does. And I think it's reassuring to the market. So how much headroom do you think there is for, you know, at the index level for stocks? You said maybe there's some some bumps into the second quarter, but how much progress do you expect?

Yeah, I mean, I think here in the near term, I think we make new all time highs. That's what I would guess in the near term here coming off the inauguration. I think that Trump is going to there's going to be a revitalizing of positive vibes. Sentiment, like I said, has gotten really it's crazy how negative sentiment has gotten. I mentioned AAII. CNN fear greed is down to 30. A reading of 30. Look for that to break back above 40. That's like a great indicator. We watch inverse ETF volume. Inverse ETF volume had gotten really optimistic, showing retail participation. And that's kind of reset, too. So everywhere I look, I see sentiment is set up for a near-term rally. I also think with the CPI out of the way, we don't have a lot of pressure from rates. And so

I think it's going to be kind of, quote unquote, good vibes for the next month, make new highs. I wouldn't want to overstay my welcome. I do think we're going to have a growth scare, like I said, late Q1, early Q2, watching the housing data for that epicenter. So that's why I see new highs in the near term. And just for everyone's mental accounting, I mean, so far, intraday record high for the S&P 500 is 6099.97. So if we touch 6100, it's less than 2% up from here. You've obviously made a new record high. Let's bring in Christina Hooper of Invesco and Peter Cecchini of Exxonic Capital to the conversation.

Welcome to you both. So, Christina, you also, I guess, thought that maybe this inflation scare was not really going to have legs and maybe you'd have this good combination of maybe easier Fed and decent growth. Where does it go from here? Absolutely. I think it was an overreaction to the jobs report last week because we saw average hourly earnings moderating. And that, to me, is the most critical inflation indicator we can look at. So where do we go

from here? I do think we're going to have some good vibes. A lot will be dictated by the policy announcements next week once the new administration comes in. If it's focused on tariffs, then that could be problematic and create some short-term headwinds. If it's focused on deregulation and other pro-growth policies, then I think we see animal spirits and the stock market could have a nice rally. Given the indications we're getting that there will be a barrage of executive orders, maybe it's going to be all the above, right? Or something to hit all those boxes. You never know. It could very well be. I think, though, that those pro-growth policies, if we do start to see deregulation, for example, that could be a very powerful counterbalance to anything that's perceived to be negative. So I think the net effect would be positive and, again, would fuel some kind of

rally, especially on the heels of that more cool core CPI. Where within the market would seem to be the sweet spot in terms of harnessing whatever happens to deregulation? I mean, if you just look at the banks, they've been really kind of the strongest cyclical area of the market for a while, arguably. That seems a pretty linear path for benefiting from deregulation. But just in general, where does it seem like it makes most sense? I think financials makes the most sense when we talk about the deregulation story. But beyond that, I think what we're likely to see is a re-acceleration in growth this year. And to me, at a certain point,

we're likely to see a discounting of the small caps, of that acceleration in small caps, in cyclicals. Those are most sensitive to the economic cycle, and I would anticipate they perform better. That doesn't mean that tech is left out in the cold, but clearly tech is rallying as a reaction to the 10-year yield and that easing. Yes. And I guess just the muscle memory of them being the ones you grabbed for. Peter, I mean, are you in agreement that we have kind of this refreshed expansion at this point, that the cycle has more

life to it and you should bet accordingly I would agree with uh a few of the points that Warren made um you know regarding the first quarter I think I think it's tough to to fight sentiment in the first quarter um what's interesting though Mike and you know we've known each other a while um I I tend I tend to play devil's advocate in a lot of cases um what what bothers me most I think, is when I look at sell-side research reports, when I hear strategists on shows like yours, everyone's talking about sentiment and good vibes and nary a word of valuation or discount rates. If, in fact, there is growth this year, we have to figure out, well, why is that going to happen? If there's deregulation, OK, that typically means there'll be a re-leveraging and that, you know, financial conditions will remain loose. And perhaps that happens. But it feels to me that when you're looking and you're searching for risk-adjusted returns in markets, it's much harder to find them in the equity markets. And this has been – look, this has been true for, been true for well over a year now. But I just have

difficulty staying bearish into the second half of the year, given how much is priced into equities in particular. And I would make the same argument, frankly, Mike, about high yield, 300 basis points on CDX high yield that's pricing in in roughly a one year forward future default rate of three percent. So we actually need a decrease in the default rate of about 100 basis points. So it's easy for me to stay bullish in the near term, but a little bit tougher for me to wrap my head around that throughout the year. Yeah, I guess it depends on how you approach it, Peter, because, you know, the tight credit spreads and high yield and I guess essentially the low level of compensation you're getting for taking that risk is exactly one of the bullish talking points for equities. Right. We're saying, hey, we're not seeing any macro stress in credit. And those are usually the smart money. So why should we worry about about it ourselves. Yeah, no, I would agree in that, you know, five, ten years ago, that might

have been my logic. But when you have changes in market dynamics and fundamentals, and one of those things, okay, is insurance money. And insurance money has come in and it has really bit up the IG market. And when IG spreads become tighter, even though some insurance companies, many insurance companies won't dip into high yield, it leads to a tightening in high yield vis-a-vis the relative value channel. And so that's one possible reason why 300 basis points on high yield is mispricing the probability of future defaults. And by the way, Mike, it usually does. You know, high yield spreads are usually tightest before the default cycle actually starts. Right. Yeah. It's not as if there's always a super early warning system.

I actually think 2007 was was rare in the sense of kind of showing you the the potential damage on the way. Warren, you mentioned in brief that maybe the housing market is not necessarily going to be able to really thrive so much in here. How much risk is there on a macro level and how rate sensitive are we in that in that realm? Yeah, I mean, I think that despite the new starts day to day, which I think there is a little bit of an over reaction to how, quote unquote, strong that was. I think most of the strength is in multifamily, which multifamily has been in an outright recession. It was 87,500 new starts in single family, which is kind of, in my view, still a model of long territory.

So what I see is a housing market that's struggling under the weight of plus 7% mortgage rates. And also, that data was from December when I think that the full effect of higher rates hadn't really come to bear. So I think there's a lot of dry kindling there that is going to be a problem. And to me, that's an early indicator, a leading indicator of the economy. And that's how we look at it. It's our framework. So I think once we get to March, April, there's a lot of vulnerability there. And the extent to which that bleeds into the markets is going to come back to the Fed. And if the Fed is reactive to that stress, or if they want to push it farther and talk about terminal being higher and let the market run with those narratives.

And so to me, that's going to be where the rubber meets the road for the correction, potential correction in the markets a little bit later down the road. And it's going to stem from housing. Gotcha. And Christina, you mentioned, you know, the sequencing of these policy measures maybe are going to matter a lot. Do you think if there is really a kind of lead with broad tariffs type effort, is that something to genuinely fear because the economy can't take it or is it just you're going to get a scare and then we should buy the scare? I think it's you're going to get a scare and you should sharpen your pencils and be ready to buy on that scare because there will be opportunities created. I think it will be

very analogous to 2018 where we saw significant volatility, but it was very short-term in nature. Ultimately, the S&P 500 ended down that year, but only modestly. We had a strong 2019. I think we could see something very similar shape up this year. I understand that we could very well see some easing in growth in the coming months, but I think it's really critical to be following the labor market. To me, that is the linchpin to this story. And thus far, we've seen a very, very strong labor market. And I don't

see those cracks forming there in any significant way. But I will be vigilant about that. No, with labor income growing the way it is, banks didn't seem to have any consumer credit concerns in their report. So obviously, hard to have the market get in too much trouble if that remains the case. We'll see. Warren, Christina, Peter, thank you so much. Appreciate it and have a good weekend. Let's send it over to Christina Partsenevelos for a look at the biggest names moving into the close. Christina.

Well, Intel shares, they're surging right now in heavy trading volume following two separate deal reports. Semi-accurate claims an unnamed company, not Qualcomm, is exploring a potential acquisition of the chip giant. While Bloomberg reports U.S. officials had previously examined the idea of an Intel Global Foundries merger. Intel, I reached out, they declined to comment on either report. Shares are up 8.5%. Sticking with the world of chips and semiconductors, Corvo shares are rallying after activist investor Starboard Value revealed a significant stake in the company. Corvo has responded, saying they look forward to, quote, constructive dialogue with Starboard about potential changes at the company.

Shares up at Corvo 13.5%. Morgan Stanley analysts see Robinhood shares as a top pick with a new price target of $64. They believe Robinhood could participate more aggressively in the crypto space given potential deregulation under President-elect Trump. The hire for longer U.S. interest rates could also bode well for Robinhood's loan division. Shares are up over 4%. Mike? All right, Christina, talk to you again in a bit. We are just getting started. Up next, the recent volatility in quantum stocks has everybody talking. But what is a quantum computer. Kate Rooney is taking us behind the scenes with one of the leaders in quantum computing. Kate.

So Mike we talk so much about quantum computing I'm going to show you what one of these computers actually looks like. It's kind of like a chandelier here. Not like any sort of normal computer you probably ever looked at. We are going to tell you why. One of the reasons these things have to be stored at some of the coldest temperatures on the planet. We're going to break this down. Why there's so much hype around the space and what's going on here in Silicon Valley when Chloe Kimball comes back. The rally and recent crash in quantum computing stocks has brought this once esoteric technology into mainstream investing conversations. Kate Rooney here with more on what a quantum computer actually is.

Tell us, Kate. Hey, Mike. Yeah, so we are here behind the scenes at PsyQuantum. It's one of the venture-backed startups here in Silicon Valley building high-powered computers. Investors expect to be the next transformational technology. And this is really, you've heard about the hype, Mike. We mentioned it, the industry. And all of that is based on potential, that potential to solve some really complex problems, ones that wouldn't be possible with classic computers. It all hinges on quantum physics. So hence the name quantum. It uses quantum bits. They're also known as qubits.

That makes it possible to explore multiple problems at once. That could be groundbreaking for things like drug discovery. Think of aerospace, encryption, science, energy, and a lot more. So in order to make the physics work, these machines, they've got to be stored at some of the coldest temperatures on Earth. They're using liquid helium to get temperatures down to negative 455 degrees Fahrenheit. That's about as cold as it is in deep space. Companies are also manufacturing custom chips to do all of this. So Psi Quantum is making those materials in-house. And that's adding to what is already quite a capital-intensive business. You've also got the deep-pocketing

tech giants doing the same. Amazon, Intel, NVIDIA, Google, they're all racing for a commercially viable quantum computer. You've also got the publicly traded names like Regetti, IonQ. Those names were up as much as 1,000 percent last year. And then NVIDIA's Jensen Wang took some of the air out of that, saying that it's still going to be 15 to 30 years until these are really impactful. The co-founder of PsyQuantum, Pete Shadbolt, thinks the timeline is more realistically within the decade, but he does say skepticism, It's warranted around these. These computers, they're not live yet. So it's really

still all, Mike, in the test phase right now. Back to you. Right. It's just massive amounts of this R&D, some speculative conclusions about what it might mean. You mentioned the extreme conditions, right? We're talking about the interactions of sumatopic particles, right? And it's got to be super cold. What ultimately is the power demand for that? I mean, we already got through the whole AI build-out. Now we're talking about how much power that's going to suck up. Now there's conflicting ideas on this.

Maybe down the road it might be more power efficient. It's interesting. It doesn't seem to be as – the power demands aren't as high as cooling in entire data centers. These are sort of more small scale. They're using liquid helium. I was sort of thinking, oh, you've got to cool the temperature down because like these data centers, they overheat. It's actually, like you said, you're going down to the particle level.

You're sort of manipulating material the size of atoms to really make the physics work. Yeah, exactly. So that's really actually why it needs to be that cold. But again, not the talent. You've got to think about the people. There are a handful of engineers, quantum engineers, who know how to do this. They're hiring a lot of people from sort of old school energy,

oil and gas, that know how to do this. So it's sort of a different capital demand, but the talent is something else. They're really hiring from some of the old school industries and from academia. All of the CEOs you meet out here that are doing quantum and AI, for that matter, they're PhDs, they're academics, and they've been doing this for a long time. They're not sort of riding the wave. These are folks that have been doing it for more than a decade. Yeah, I know this has been kind of a long-lived dream at this point, but fascinating

stuff. So since you're in the quantum world, are people calling you Schrodinger's Kate? That's about the nerdiest dad joke I could ever come up with. Or Quantum Kate probably rolls off the tongue a little better. Yeah, a little bit less morbid. It used to be Crypto Kate. Now it's Quantum Kate.

But we'll hope that takes off. Appreciate it. Talk to you soon, Kate Rooney. Good to see you, Kate Rooney. Good to see you, Mike. All right, crypto getting a big boost ahead of President-elect Trump's inauguration on Monday. Tanae McKeel is here with more on pretty dramatic market move.

Yeah, really interesting week, Mike. Crypto up today on reports of a possible executive order that could cover the Crypto Advisory Council that Trump has promised and potentially a national Bitcoin stockpile. So Bitcoin is heading for its best week since November 15th, the broader crypto market outperforming Coinbase and Robinhood. They're gaining. They, of course, benefit from big crypto trading volumes, as well as that potential for clear regulation. Bitcoin proxies, MicroStrategy, Merrill Holdings also having a good day. And I do want to distinguish crypto

beyond Bitcoin does arguably stand to gain more from better regulation just because it's been more of a target of SEC lawsuits and alleged banking discrimination under the outgoing administration versus Bitcoin. If you look at Bitcoin, it's been more macro driven since that December Fed meeting, which raised concerns about inflation that were somewhat assuaged this week after that December PPI and CPI. So its correlation with the S&P 500 has jumped in the past couple of weeks. So it moved more around the data releases this week, but joining the crypto party today on optimism about a potential stockpile. And investors now expect any announcements from Trump next week to send Bitcoin higher.

So, Mike, starting as a macro trade and, you know, ending with Trump next week to send Bitcoin higher. So Mike, starting as a macro trade and, you know, ending with Trump at the end of this week. It's fascinating because you have this repeated pattern of we expect some great messages that are bullish for crypto coming out of the Trump camp. The good messages come and the market hasn't already discounted. In other words, usually it's kind of a sell the news response. I do wonder what does it mean to elevate it to a national priority? And what do we expect out of any potential reserve? Because it could just mean the government's not going to sell the Bitcoin it has.

Yeah, exactly. We don't really have clarity on whether it is a stockpile and we are just not selling all of the Bitcoin that, you know, the U.S. already has versus if we're going to be buying and how much we're going to be buying and how much we're going to be buying and if we're buying in any kind of meaningful amount. It's going to be an interesting quarter because we do still have that kind of conflicting Trump crypto trade where we're worried about inflation because of tariffs and other policies that could really kind of dominate the Bitcoin narrative, which, you know, we saw the post-election rally. And I think that the optimism around the pro-Trump crypto trade

really kind of overshadowed those macro drivers at the beginning of this year. But it's going to be volatile. And in terms of, you know, actually seeing policy come out of this pro-crypto Congress and White House, it really could take nine to 12 months. So we're going to see. Plenty of wait and see right ahead of us for sure House, it really could take nine to 12 months. So we're going to see. Plenty of wait and see right ahead of us for sure. The strong dollar hasn't held it back either. So that's another interesting way it's got these correlations upside down today. Thanks. All right. Up next, we are drilling down on energy. What could be in store for that space

amid a second Trump administration? We'll discuss after this break. Don't forget, you can catch us on the go by following the Closing Bell podcast on your favorite podcast app. We'll discuss after this break. Don't forget, you can catch us on the go by following the Closing Bell podcast on your favorite podcast app. We'll be right back. Welcome back. Energy getting another boost today with the sector on pace for its best week since November 8th. Those stocks leading the market so far this year, up 10 percent month to date as a group. Joining me now with his energy playbook and expectations under the new Trump administration's policies is Tortoise Capital's Rob Dommel. Rob, it's good to see you. I wonder just in terms of trying to connect the dots, you know, what the promise of the new administration's policies are probably more production, maybe lower regulation and freeing up supplies. So why should prices be higher?

Yeah, well, I think I think your answer is, Mike, what you talk about every day, which is actually. So I really is redefining the energy sector. It's for the it's the first time in my career that I can remember when the energy sector is really intersecting with the technology sector. So this is creating a whole new growth opportunity for the sector. And we're going to need a lot more terawatt hours of power. But what that also means from our tourist perspective is we think we're going to need billions of cubic feet of natural gas as the fuel to generate a lot of those terawatt hours. And so we see a significant opportunity, especially in natural gas, but in the overall energy sector as the AI, as AI merges and really develops over,

not just over a few years, but really over several decades. I mean, as you suggest, that's mostly a natural gas story, right? I mean, in terms of directly powering and creating more electricity. How much do you think has already been more or less figured out by the market here? I mean, I was just taking a look at, you know, the LNG plays, which I know you've been involved with Chenier. I mean, that stock is rocketed higher on these expectations that it investors have rewarded the energy sector and a lot of the energy infrastructure companies at all much for the opportunity and the growth opportunities related to AI. So now remember, there's no AI without AI. So there's no AI without energy infrastructure.

So companies like Chenier, in Chenier's case, they're exporting energy to other companies or to other countries around the world that may use that natural gas. If you look at Chenier, well, it's got high quality cash flows, long duration, high quality cash flows, a management team that's done an excellent job of allocating capital. And so when we look at Chenier and its stock price, yeah, it's done really well, but it still has a long way to run with the high quality cash flows, the growth that we expect, and even potentially higher growth that could be coming down the road as natural gas is consumed more and more really around the world. You do mention that energy infrastructure is your area of focus. So what other ways would you recommend people position at this point?

What are the beneficiaries in the energy food chain? Yeah, so if you look at a company like Williams, it's an energy infrastructure company. It's a pipeline company, operates hundreds of thousands of miles of pipelines. It's one of the most strategically located pipelines. It's really hard to, you never see these pipelines, but they're really, really essential. And so if you look at where the Williams footprint is, it's impossible to replicate that footprint. But as AI data centers develop, whether it's in northern Virginia or the southeast or even Texas, you're going to need natural gas to generate the power ultimately. And so Williams naturally will have a kind of

a first mover advantage, a big economic moat to be able to provide that. So that's one example. It's got a good dividend yield, a little over 3 percent. It's going to grow another 6%. Another example is maybe like an energy transfer. Energy transfer is trading below 10 times enterprise value but you can't find a lot of these discounted stocks like that left in the market as you know because the market's been up so much everywhere but not in energy not in energy infrastructure. So it's a six and a half percent dividend yield it's going to grow its dividend three to five percent. It's a 6.5% dividend yield. It's going to grow its dividend 3% to 5%. It's going to benefit, obviously, from the AI and the distribution of natural gas, but also exporting other commodities like propane, ethane, even crude oil to a certain extent. So these energy infrastructure companies, investors are starting to really understand.

But what I think investors really need to understand is how essential they are, how important they are. And if you understand that and you look back at their valuations, these stocks still look really compelling and really undervalued. I mean, energy transfer was a $16 stock on Election Day. And now we're more than 25 percent higher than that. I mean, what's the I guess the pace of potential benefit from what might come down the road in terms of policy that's being that's being discounted by the market here? Yeah. So you mentioned a couple of things. So, first of all, you know, the U.S. is the largest producer of energy in the world. And so we're going to the

world needs more energy, the world. And so the U.S. will continue to produce more and more energy. The world and so the U.S. will continue to produce more and more energy. We'll still have oil growth in production. We'll still have natural gas growth in production. And that will be important. But more importantly, exports. The world needs more U.S. energy. And so exports have really been it will be the opportunity. That's probably where under President Trump we'll see a little bit of a step change. For instance, in LNG exports, liquefied natural gas exports, we had a pause on new approvals for future LNG exports. That's probably going to go away, and it's going to set up the natural gas industry to be exporting energy and doubling and probably even more than doubling LNG exports between now and 2050. So that's going to be probably the biggest impact that you'll see from

the Trump administration. All right. We'll be tracking it, Rob. I appreciate it. Thanks for the time. Thanks, Mike. Up next, we're tracking the biggest movers as we head into the close. Christina is back with those. Mike, a drug maker's stock tumbling on news its blockbuster weight loss treatments could face price pressure. And a Wall Street titans shares climbing after revealing an eye-popping pay package for its CEO. Lots of money. Those stories and more when we return. 18 minutes till the closing bell. Let's get back to Christina for a look at the key stocks to watch. Christina. Well, shares of Novo Nordisk falling and dragging rival Eli Lilly lower as Novo weight loss drug. Wagovi, as well as Ozempic, topped a list of prescription drugs that potentially will be subject to Medicare price negotiations.

The negotiations are part of a Biden's Inflation Reduction Act, which gave Medicare the power to directly hash out drug prices with manufacturers. And you can see shares of Novo down 5%, Eli down over three, almost 4% lower. Goldman Sachs paying CEO David Sullivan $80 million to stay put for at least the next five years, $80 million. The board also plans to raise the CEO's pay by 26%, up to a whopping $39 million, this according to a new filing. Shares of Goldman Sachs are up 2% on the notion that he will be at

the helm for the next five years. Maybe DJ Soul will be back in the Hamptons soon enough. Yeah, stability at the top, I guess. The market's happy to see it, Christina. Thank you very much. We are also tracking shares of Salesforce today. Seema Modi here with more on that stocks move. Hey, Seema. Hey, Mike. So analysts at Cowen raising their earnings estimates for Salesforce after conducting a pretty extensive survey on how companies are thinking about artificial intelligence budgets going to 2025. And they found that Salesforce ranks right behind Microsoft and Amazon, referencing general excitement around the company's agent force, which is its AI agent platform.

Cowen also sees new tailwinds, including opportunities for Salesforce to grow inorganically that they think will contribute positively to the company's position in AI. And that investors are willing to be patient with seeing the return on investment for Asian Force. The stock, as you know, has had an epic run over the last year, gaining about 27 percent and higher by around 2 percent on this upgrade, Mike. Inorganic growth. Salesforce, no stranger to that, right? Buying up other companies seems like part of the plan. Thank you, Seema. Still ahead, we'll tell you what the TikTok ban could mean for the rest of the social names. We're back on The belt after this break.

Contribute to a health savings account to pay for medical expenses with tax-free money. If you're enrolled in a high-deductible health plan, you can put up to $4,150 for yourself or $8,300 for your family into an HSA by April 15th. And your contribution will be tax-deductible. For CNBC, I'm Sharon Epperson. Up next, regional banks rallying today. The KRE is up 8% this week. We'll break down what's behind that bounce coming up. And don't forget to tune in to CNBC's coverage of the inauguration

of President-elect Donald J. Trump. behind that bounce coming up. And don't forget to tune into CNBC's coverage of the inauguration of President-elect Donald J. Trump. That is on Monday, starting at 8 a.m. Eastern, right here on CNBC. The Market Zone is next. We are now in the closing bell Market Zone. Julia Boorstin shares what the latest on TikTok could mean for the rest of the social space. Plus, Leslie Picker on the regional banks, fresh off of earnings and Gabelli funds. Co-CIO Kevin Dreyer breaks down the crucial moments of the trading day and shares some of his top stock picks. So, Julia, hours later, how's the market viewing the shakeout of this Supreme Court decision? Well, there are still a lot of unknowns, and we'll see what the incoming Trump administration does. But the social media giants Meta, YouTube, Snap and Positioned are

seen as incredibly well positioned to draw user engagement and add dollars if TikTok is to be shuttered. Now, if TikTok were shuttered, 29 percent of users indicated they would reallocate their viewing time to Meta's Reels up from the year earlier period, while another 23% said they would shift their time over to YouTube Shorts. That's according to a TD Cowan consumer survey in the fourth quarter. And we're seeing those numbers play out in the ad projections as well. Meta is projected to be the primary beneficiary of TikTok's ad dollars, with a projected $19 billion in incremental ad revenue if TikTok is banned. That's according to Wells Fargo. Ad dollars would then benefit YouTube and Snap. But as Snap is the

smallest of these players, by some estimates, it would get the biggest percentage boost in terms of ad dollars. It is worth noting that Snap shares are down today, likely on the expectation that incoming President Trump will save TikTok. Back over to you. Yeah, exactly. A bit of a of a sell the news response there as people assess the probabilities. Julia, thank you very much. Leslie, we've moved on from from the big money centers to hear from the regionals what they have to say. Yeah, you're right, Mike.

Following the six big banks earlier this week, the calendar now comprises many of the regionals. Today, we heard from Truist. We heard from Citizens, Huntington and Regions. Truist shares really gaining today thanks to better deposit performance and better than expected profitability guidance. Truist also announcing a half a billion dollar buyback. Citizens and Huntington's performance a bit more tempered due to some concerns surrounding expenses. Regions kind of followed largely slipping today in part due to lackluster guidance. But there's a lot more in the pike. Fifth, Third, KeyBank, Capital One and Zions are all on deck for Tuesday and Comerica will be next Wednesday.

Against the backdrop of all of this company news, of course, Mike, is an environment that could be pretty beneficial for regionals. They tend to trade better when the yield curve is steeper, although more so if that's the case due to a strengthening economy versus concerns about inflation. There's also a notion that smaller banks are entering into a friendlier environment to merge and one with less onerous capital requirements. Mike. Yeah, exactly. Leslie, it feels like that's one of the things that's behind this very strong bid in the regional banks. This idea that you might have some consolidation. Anything we're hearing with any specificity from the companies themselves or even from the analysts about the likelihood of certain mergers? Yeah, we've definitely heard from analysts because one of the key trends within regionals lately has been that buyers and companies that are perceived as prospective buyers,

regional banks specifically that are prospective buyers, they have been doing better than other companies. So that signals to the market that it's supportive of this type of M&A activity taking place. And there have been a few analyst reports that are actually recommending that investors buy some of those acquirers within the regional banking universe and others that are likely to do some acquiring. We've heard from PNC, for example, that they are on the prowl for some consolidation and there are others as well. Yeah, that's a good sign. People think there'd be value creation if there were any

combinations. Leslie, thank you very much. Kevin, obviously, we've gotten a firmer start to this year in the broad markets. I know you're a value guy. You're looking for stock by stock. It feels like it's been relatively easy to identify value, less easy to get paid for it. Yeah, I mean, that's why one of the things we do with our methodology, which we call private market value with a catalyst, we're looking for catalysts or events that can surface value in a stock. Big one for us tends to be M&A, takeovers. And that's one thing with the new administration. We think certainly they'll have a lot of pro-growth economic policies that are good for everybody. But specifically on takeovers, we think they're going to be a lot friendlier. Last year, takeovers were up about 10 percent, 3.2 trillion globally, but still well off the peak.

We think that's going to accelerate into this year. And we think that we're going to identify a lot of targets. I mean, M&A volumes as a percentage of GDP, as a percentage of stock market value, really pretty low versus history, right? So what pockets of the market or what individual names do you actually feel like are pretty ripe in this scenario? So we're looking across the board. We do see some areas that are particularly ripe for consolidation. What I'd say is the food industry. They've struggled of late. There are some headwinds, inflation, just a tighter

consumer. The threat of GLP-1 is coming in. We did have the Kelanova deal announced last year by Mars. But I think a lot of the bigger food and beverage companies, they need growth. So when they're going to buy that, they're going to look for these companies like, say, Bell Ring Brands or Simply Good Foods that have have healthier snacking shakes in growing areas of the food market. Those would be particularly ripe for consolidation. Others in the industrial area, we think, are pretty teed up as well. Just one second, Kevin. We'll get back to you. We do have some news out of Walgreens that Seema Modi has for us. Seema.

Mike, we're just seeing here that a Justice Department has filed a nationwide lawsuit alleging that Walgreens knowingly filled millions of prescriptions that lacked a legitimate medical purpose. So reading through the filing here, I would point out shares of Walgreens were down about 2% prior to this headline, now down about 2.17%. We'll keep you updated on the company's response. For now, back to you. Interesting. Okay, yeah, it seems like a lot of legal action coming out of the executive branch in the last moments here, the last few days. So, Kevin, you were saying in terms of these smaller food companies could be tuck-ins for

larger companies. Are you still in the mode of thinking that the average company can continue to outperform because we've had so many fits and starts where it looked like the market was broadening out that we revert right back to mega cap growth leadership. Yeah. I mean, we don't invest in the average company. We invest in terrific companies, but they tend to be less followed than the broader market, those mega cap ones. I mean, for us, aerospace is another area.

We've seen deals. We had command bought last year. Barnes Group is in the process of being bought. So smaller aerospace suppliers like a Dukkhamen, like a Triumph, those would be good consolidation candidates and they're also going to benefit from the ramp of Boeing's production through this year into next year as well. And what about, I guess, maybe more neglected parts of manufacturing and things like that? I mean, think about the auto food

chain and all these other areas where there's not a lot of mop-up M&A that's happened. Yeah, no, there are a lot of opportunities within that. The water space is one that in particular for us, we've got a lot of investments in. Again, Mueller Water would be a small company that we like a lot. We're actually hosting a conference with a bunch of companies, pump valves and water systems, next month right here in New York, highlighting the opportunities for a lot of those companies, too. All right. You're previewing it here. Absolutely.

Pretty hot ticket. All right, Kevin, thanks a lot. Thank you. Good to talk to you. Appreciate it. 30 seconds left in the trading week. It has been a strong one. The S&P 500 continues to flirt with that 6,000 level, up about 1%.

Might be falling just short of it right now. The Dow, you see, up 0.8% to 1%. The NASDAQ can pause the outperformer on the day, up 1.5%. We also have the volatility index going down below 16 to finish the week ahead of a three-day trading weekend. That's going to do it for Closing Bell. We're going to send it to overtime with John Corr.