Closing Bell - Closing Bell: Riding the Rip 11/25/24

Episode Date: November 25, 2024

How long can this rally last as investors game-out what the new Trump administration will mean for the markets? Morgan Stanley’s Chris Toomey and NewEdge’s Cameron Dawson break down where they see stocks headed into the end of the year. Plus, Vista Equity Partners’ Ashley MacNeill breaks down her 2025 software playbook. And, Kenny Dichter – Real SLX Founder – discusses the big business of sports betting. 

All right, Kelly, thanks so much. Welcome to Closing Bell. I'm Scott Wobner, live from Postnight here at the New York Stock Exchange. This make or break hour begins with record highs for stocks, both the Dow and the S&P hitting those new milestones earlier today. Let's take a look at the scorecard here with 60 minutes to go in regulation. We are green across the board. The Russell is actually the outperformer today. It's been up nearly 2 percent, sitting right about there right now. Most sectors today, too, are green with the exception of tech and energy. Utilities have been fluctuating a bit. We'll watch all of that.

Markets are clearly liking the expected nomination of hedge fund veteran Scott Bessend as Treasury Secretary. Yields lower. Oil lower. You can take a look at the yield complex there. We'll show you oil, too, which is down. WTI is by some 3 percent. Let's take us to our talk of the tape. How long can this rally last as investors game out what this new Trump administration will mean for the markets? Well, let's bring in our experts. Chris Toomey, top 10

private wealth manager with Morgan Stanley and Cameron Dawson, chief investment officer of New Edge Wealth, both here at Postline. It's nice to see you both. Thank you, Cameron. You get the ball first here. So as we look towards, you know, 2025, OK, now we know the Treasury Secretary is going to be. We think we know what the kind of policies are going to be and what he's going to champion along with the president. What's it going to mean for the market? It's a question of what that translates to for earnings, meaning are these policies actually going to change the earnings tide where we see a lift to earnings estimates going into 25. If we don't, meaning that these policies may take more time to play through into the market, actually get enacted, then it's a question of how do we tolerate high valuation, stretch

positioning, stretch sentiment going into 2025. So I think it's definitely a question mark of how much impact he can have in the short run as we round the year. Yeah. How are you thinking about this as you advise your clients on what this new year is going to bring? I mean, I think the base case is pretty in line with the rest of the street right now, expecting probably above average growth with regards to earnings. The economy continue to do well. We're expecting about 75 basis points worth of cuts in 2025. So it's probably a pretty normal environment from a return standpoint. Investment grade, treasuries, all the fixed income should do well. I think what's really interesting is what's going to happen in the tails, right? So we're in a situation right now where 2024 earnings came in a lot better than expected.

GDP came in a lot better than expected. We're in a situation where we went from hard landing to soft landing. Now we're in a soft landing to no landing situation. You've got a new administration. We saw how powerful fiscal spending can be with regards to pushing the economy into the next level. We're really in a situation where you get animal spirits going, you get M&A picking up, you get IPO market picking up. You could be in a situation where maybe the Fed cuts in December, but come in 2025, you could be in a situation where the Fed has to be a little bit careful with regards to reducing rates. And you're in a situation where the U.S. is situated where they're holding higher and the rest of the world is taking rates lower.

And so that could be a really interesting dynamic going into 2025 that's not necessarily your base case, but could be an interesting case within one of the tails. Maybe the Fed should be taken off the front page because if you're going to stimulate higher growth, you're going to have lower taxes and lower deregulation. I mean, lower regulation. Maybe you don't need to be so reliant on these rate cuts, which some suggest aren't even needed

to the degree as as the market once hoped and thought and to the point that it could actually be a risk if you deliver more rate cuts if you're cutting rates as aggressively as what the dot plot currently has forecasted it could be throwing lighter fluid on a fire given how easy financial conditions are you're at a point where these markets aren't begging for rate cuts because valuations are high, credit spreads are tight. Then the risk is if you don't get those cuts and everybody else is cutting, you could have that stronger dollar, which then creates these wild cards of what it means for U.S. stocks versus international stocks. So there's a lot of different ways that a Fed that's not as easy as expected could impact these markets. Your bull case, Chris, is 7,400. Exactly. That tells you how much, I guess, in your mind,

maybe the goalposts have moved for somebody who's been relatively cautious and more positive after a while. But now it feels like that's a goalpost changing call. Yeah. I mean, I think that's my point with regards to the extremes, that that higher extreme and that lower extreme are really starting to become more probable versus the base case. So you could have a situation where you get that M&A activity. To Cameron's point, you start getting in a flood of dollars coming into the U.S. You've got a lot of dollars sitting on the sidelines coming in

and a lot of chasing into the U.S., you've got a lot of dollars sitting on the sidelines coming in and a lot of chasing into the market, that could lead to some euphoria that could really push these markets significantly higher. The flip side to that, higher for longer isn't great for everyone. And so as we get closer and closer to that maturity wall, you're going to really see a difference between key winners and key losers. Sure, but maybe we're not going to be as higher for as long as we thought, right? I mean, rates have come down. What we think we know about the kinds of policies that Mr. Besant is going to pursue is a higher level of growth, and thus more growth is going to impact the deficit, which theoretically will take some of the edge off of rates. Is that right? That's how it should work.

He might want to pursue those kinds of policies. I think it's a really good question as to how he can pursue those policies. Why so? If they just re-up the tax cuts and they're going to cut regs, doesn't one sort of feed off the next? It certainly helps. And the question is that he did talk about wanting to extend the tax cuts. We might not get a further cut to corporate income taxes or corporate taxes,

which just means that we stay at that level. We don't get that extra boost. The question is, do you see Treasury being able to impact energy policy to get 3 million more barrels a day? Treasury doesn't control spending. They don't control taxation or spending. They fund the deficit, but they don't control the deficit. No, but we're already on the good side of supply- supply demand, at least what we're producing here. We've never produced more. So the current projections of the deficit to GDP actually assume that the tax cuts

don't get extended. So it's an incredible journey from the 6.9 percent where we are today to 3 percent. So it's a question over what time we actually get to 3%. And if you get a lot of government spending cuts that actually would weigh on growth in the near term, simply because you're pulling back on government support for the economy. But you could get, you know, using the words pulling back, you could get pulling back on regulation fairly quickly. That's the one thing that could happen pretty quickly. You could, but you also have to remember that this is our second round of Trump. And there were a lot of trade policies that were enacted in 2016 and 2017 that

are about to get renegotiated in the next year. And so I think one of the key issues you're going to have to deal with, and Cameron talked about this, is sequencing. Where do you see the tax cuts? Where do you see the tariffs coming in? Because I think that's going to really drive specifically the path with regards to returns within the market. If we're in a situation where we have tariffs coming in, we have trade issues coming in, that could create some real pressure on the market before we even get to these tax cuts. And the question is, is are we even going to be able to get there? So I think a real big part of this is going to be understanding exactly what the administration

is going to be able to accomplish and what that's going to do with regards to our trading partners. Yeah. You know, if you look at parts of the market, you take the Russell, for example, today, Russell's up 11.2 percent in a month. Is this just getting started ahead of itself? It's obviously gaming out what might lie ahead. Technically, respect the trend. It's in an uptrend. It broke out to its first high since 2021. Relative performance is turning. The one thing to watch is that EPS forecast for 2025 for the Russell 2000 now stand at 51% growth. So maybe we don't question those forecasts today or for the next month, but at some point, maybe when we get into first quarter earnings season, by the time we get to April, that 51% is a very high bar. But for now, it seems there is a catch-up trade.

There's a chase for positioning. A lot of people underweight and the technicals are turning. Well, and then the other piece of that would be the fact that so much of the Russell is unproductive, right? So many of these companies can't actually even meet their interest requirements with regards to the amount of money that they're making. So you have to really be selective with regards to what you're looking in the small cap world. But I think the flip side to that is looking at that deregulation that you were talking about should provide some real uplift and tailwinds with regards to certain areas within small cap and mid cap, which is an area that we are exploring to add more exposure. I mean, if you want to talk for a minute about financials, right, people look at the Russell and they say, well, you know, there's such a big part of financials. We know about the smaller bank issues that we've had over the last 18 to 24

months. Financials are the best performing sector since the election. I mean, for the obvious reasons, right, if you're going to have more growth and if you think you're going to have more capital markets activity, you're going to have more M&A. Maybe rates are going to come down. You take the edge off of that side of the smaller bank equation. Is that a place to keep running with? Yeah, we're optimistic about the financials because you're not at the point yet where valuations are stretched. You have seen people be underweight financials as well. And so if you desensitize some of the credit issues or the worries about credit from financials at the same time as you get that boost in M&A activity because

of optimism, we haven't seen IPO activity come back. Let's see if that starts to materialize in 2025. But then I think we still have to ask the question is, is higher for longer rates bad for people who are refinancing debt? And that's the big question of how much were people counting on the Fed coming to bail them out in 25 and 26. If we don't get as many rate cuts, we could see those refinancings come in at much higher levels. Sure. But what if you have a stronger clip of growth and then fewer regulations on the space at large? Does that cancel out the idea of it's not like interest rates are so insurmountably high that, you know, neither the market nor the economy can function under these current levels? I mean, historically, let's be real.

Yeah. I mean, I think it all comes back to the fact that we haven't seen a recession. We're not making a recession call. So this economy has been able to tolerate higher interest rates simply because you are seeing incomes grow faster than those costs of debt are growing. So as long as that maintains, as long as we have that pro-growth policy, then these cyclical areas like financials can do well. It's a question of if you start to see the economy deteriorate, we're not making that call. But if you see it, that's when the story changes a lot. And I think it's a question of if you start to see the economy deteriorate, we're not making that call. But if you see it, that's when the story changes a lot. And I think it's a question of just knowing what you own, right? I don't think all these financial companies are painted with the same brush.

Some of these, if you look through their loan book, are probably just fine. But if you look through some other loan books, you're going to say, wait a second, this is going to be a problem. And I think financials doesn't necessarily just have to be regional banks or big multinational banks. You could look at other opportunities like the alternative space, which we've talked about before. Oh, well, private equity stocks have ripped. They're better than most technology companies. For obvious reasons, though. And if you look at those business models, I mean, you're looking at cash flows that are probably 12 to 15 percent for the next 7 to 10 years.

Yes, they've moved a lot. Yes, they're probably pricing in some of that. But still, if you then get a healthy IPO market, that's going to be pretty attractive for those types of names. The valuation of the market went 21 and a half times. What seemed overly expensive to some a month ago, is it reasonable today because of the idea of these more stimulative policies that are going to lead to higher growth, thus higher earnings? If you do all that and you can get rates to stay where they are, if not come a little bit lower, is that multiple justified? I mean, our work has shown that basically it is. If you can be in a situation where earnings are above average, average is probably 8 to 9 percent,

if you're looking at kind of 12 to 13 percent over the next two years, and you're in a situation where monetary authorities are cutting year over year, historically, that's an environment where you can hold a higher P.E. ratio over this time period. The question really is... Can you expand it? In our view, we wouldn't expect it to expand it. I think the good news is if you look at, you know, the MAG-7 and one of the most important names in the MAG-7 that was trading at 40 times is up over 400 percent. That P.E. is actually contracted because earnings have been so strong. So if you get the stronger earnings overheated economy, you have a situation where rates have to stay higher, exuberance goes higher, you could be in a situation where that lower tail becomes a real issue and there's no margin of safety when you're trading at these levels. How about the valuations? So valuations aren't a timing tool. And we wouldn't make the argument that they are overwhelmingly sustainable or attractive at today's levels,

but we also aren't making the argument that they can't go higher because in this environment of fiscal support and monetary support, there's no saying that they can't push to new highs and really retest the ties that we got back in 2020. If we go much higher, though, we think we would be in that bubble territory and melt up territory where valuation becomes a risk in and of itself eventually. But again, it's not a one year timing tool. It's two, three years out. What's the message since, you know, Chris had mentioned the mega caps and I know you were alluding to NVIDIA when you were talking about, you know, a valuation that had come in because the earnings have gone up. The underperforming today is the Nasdaq.

It's underperforming over a month. What do we think about this space? I mean, look, I think part of that is that there's probably more opportunities that people are paying attention to with kind of a pro-cyclical aspect with regards to this next administration. I think you're looking at opportunities in the market that we've been talking about probably for the last six months that are starting to get really fully valued. Financials is another good example of that. I think the other thing that you've got to think about is understanding the private markets where we haven't had IPOs over the last three years. And you're in a situation where you have a lot of buyers that historically

would be buying these that aren't and are hiding in these MAG7 names. You could be in a situation where they're looking to kind of create some liquidity to take advantage of either deals on the private market or when these companies come public. So I think that's something else that you could be seeing. There are some bets on a roaring 20s just starting a little bit later than planned, that these new policies are going to usher in a higher level of growth, better prospects moving forward. Thus, you know, financials, industrials, more cyclically oriented sectors are going to do better than tech and that the trade that's been working is going to continue to work. That there's no reason to believe that the mega cap trade is all of a sudden going to start overtaking and outperforming once again. Is that correct? Mega caps face two headwinds when we go into 2025. They're very

popularly owned. So positioning is crowded and they have a big second derivative slowdown in their earnings growth, meaning that where they delivered really strong earnings, about 60 percent growth this year, that slows down to about 30 percent next year. So the question is, is how the market digests that kind of regardless of valuation. And then it's a question of can the 493 pick up the slack that gets put to the test this quarter. The 493 is expected to go from 0.1% growth last quarter to 12% growth this quarter for 4Q. So when we get to January, we will be testing this broadening out thesis of if these other companies can deliver on the earnings growth. Yeah. The question is, can we can we pass the test? Right. If a big test is coming, can we pass it? Because the market is

placing its bets that the grades are going to be pretty good. I think that's part of it. But I think the other question is, is does what happens to the S&P 500 if the MAG 7 isn't driving that growth? Because it's such a significant part of the index. Right. So if you're in a situation where people are not necessarily buying into the growth of the MAG 7, the MAG 7 isn't performing. You know, that really becomes more of a stock pickers market where you're looking at for those opportunities that aren't necessarily the lion's share of the S&P 500. What about outside the U.S.? You mentioned the possibility of our central bank being at a much slower pace than some of the others, whether it's ECB, Bank of England, etc. Does that matter? Do those markets in Europe, for example, have a greater potential upside than we do? Partly

for those reasons, Now they're starting at a much lower base. And it probably carries a little more risk because the economies are certainly more uncertain than ours appears to be today. In order to make a bullish non-U.S. call, you have to make a bearish dollar call. So unless you are confident that the dollar is going to turn lower and sustain to turn lower, which is a hard call to make in the face of a potentially less easy Fed, as well as the potential for tariffs, which both things typically support a stronger dollar. So our call has been is that we don't feel comfortable making a weak dollar call, which means that we're less confident of a turn in international. But we have to acknowledge

those stocks have been absolutely pummeled in the last month. They are very cheap. But again, valuation not a catalyst. Also watch the earnings. Earnings are significantly underperforming in non-U.S. markets, which explains the majority of the underperformance. How would you address that when you look outside the U.S.? You know, I can't say ditto, but I think it's very similar to what Cameron's saying. I think in our mind, I think you're in a situation where most of these markets, they've got political quagmires in most of them. You're in a situation where economic growth is coming down, and they are forced to actually have to reduce their rates.

So I think it's really hard to come up with that dollar negative call. And from our standpoint, all we do is see more and more flows coming into the U.S., whether it's on individual side or on corporations that are now dual listing at a place like the New York Stock Exchange or moving their listing to the U.S. just because there's so much money flowing into the country. What are your clients talking to you about as it relates to Bitcoin and crypto? What kind of exposure do you have them in now, if any? Well, look, I think from our standpoint, there's obviously a lot of tension around it. And it's obviously moved pretty dramatically.

You could make a case that it's twofold. One is the issue with regards to fiscal deficits around the world and looking for another kind of alternative to the dollar because it's not the euro, it's not the yen, it's not Chinese yuan. And so maybe this is a store of value. of alternative to the dollar because it's not the euro it's not the yen it's not chinese one and so maybe this is a store of value the other is is that you're in an administration that's a lot more accommodative with regards to thinking about it for sure so from our standpoint we haven't necessarily made a direct call on one cryptocurrency or another we're probably playing it more so with

regards to the infrastructure do you look at it as it just should be a piece of whatever thing you suggest should be the basket of alternatives that one has in their portfolio, that that falls into that basket rather than talking about it as an asset class of its own? We're not necessarily at that point yet. I know that there are a lot of clients that want to have that conversation, but we're not at that point where we're saying this is an alternative to the dollar. Yeah. I mean, we talked a little bit about the more speculative parts of the market. You know, there's a lot of stuff from yesteryear, if you will, that has been going crazy. Meme stocks, you know, and crypto kind of feeds into that a bit.

Point of concern or not? It's probably too early to be a concern at this point. We are seeing this speculative fervor really start to boil up. Look at ARK up 20 percent, unprofitable tech up 20 percent. Look at the surge in leveraged ETF on single stock volumes. Look at call volume surging. All signs that speculative behavior is coming back. But we've been in it for a month. So the question is, how much longer does it go? And we saw it last over a year back in 2020 and 2021. Yeah. Well, we shall see as we watch Bitcoin creep towards $100,000. Guys, thanks. That was fun. Cameron and Chris Toomey, right here at Post 9. To Christina Parts, another of us now for a look

at the biggest names moving into the close. Hey, Christina. Hi. Well, let's talk about target shares. They're surging, what, 5% after Oppenheimer added it to its top picks list, suggesting shares are near bottom. And it actually comes after the retail giant plummeted last week on a major Q3 earnings miss, and they actually lowered their Q4, as well as full year outlook. Shares are still down around 8% year to date. And I want to stick with retail because Macy's right now is dropping about 3% after it announced it would be postponing the release of its Q3 results after it said an employee purposefully hit up to $154 million in delivery expenses. Of course, the employee is no longer working for the company.

Macy's was supposed to report before the bell on Thursday. No longer the case. Shares down 3%. Scott. All right, Christina, thank you. Christina Partsenevelos. We're just getting started here on the bell. Up next, Vista Equities Partners. Ashley McNeil is going to break down her playbook for the software space in the new year right here at Post 9 Next. software stocks have outperformed semis over the past six months by almost 30%. But can that momentum continue into 2025? Let's ask Ashley McNeil, head of equity capital markets at Vista Equity Partners, back with us at Post 9. Nice to see you again. You too. That outperformance has been pretty unbelievable. What do you attribute that to?

I think it's a few things, but I really do think it's on the back of this quarter's earnings. We saw some real momentum in software driven by consistency in the revenues, disclosure around CapEx and generative AI, and most importantly that I think got a lot of excitement going was the contribution of generative AI to the top line revenue growth as well as margin efficiencies. And that, you think, has legs to it into the new year? How do you assess it after what's been an incredible run? Look, I think there's been a fair amount of pull forward in valuation.

But if you look at all software multiples, right now we're trading around the 10-year average. So it feels that there is sustainability going into 25. And I do think 25 is set up to be a great year for software. Yeah, I mean, you know, for what you guys, this is your wheelhouse. For those who don't know, I mean, the firm specializes in software. I mean, it's a great time to be a seller, theoretically, because valuations have gone up so much. What you guys have done so well, what Robert Smith has made his living literally and figuratively on, is buying low and selling high. We've seen the value of the portfolio companies

go theoretically way up. I mean, you guys don't disclose that, but I think we can make that assumption. What now, though, as we look into the deal-making crystal ball into 2025, what do you see? Look, I think 2025, and you've heard me say this before, is going to be a very robust year for deal-making. I think it's going to be a robust year for IPOs, but also for M&A and for private placements. I

think it's time that people start deploying capital. I think we've got over $4 trillion in the private market of dry powder. We've got $6 trillion sitting in money markets on the public side. So I think it's going to be a really robust year. And we're really excited. And software is starting to show some real proof points for being investable, particularly as you think about generative AI. Have you changed the way you're looking at capital markets prospects from the result of the election? Have the goalposts on that regard moved in your own mind? I think there's been some pull forward evaluation and expectations. And I still think that we're very much in a wait and see mood post the election.

And so I think that there's still going to be a lot of things that need to play out as we understand how people and this administration prioritize things and what things they actually decide to pursue with vigor versus maybe address in later years. The idea of more IPOs. You know, a more robust capital market can obviously lead to that. But pushing against that is the fact that companies are staying private longer, especially within the technology space. Why? Well, at least in one regard, because the access to capital is better than it's ever been. That's why every private equity firm is tripping over themselves to get into private credit. But the benefit is to the smaller businesses that have access to capital. They don't need the public markets.

When does that paradigm change? So I think that paradigm is starting to change. I just went through the numbers of the differential between what's available dry powder-wise on the private side versus public side. But I think the big differential will also be the duration mismatch you've seen with companies, particularly in technology. So as technology companies evolve their companies and their business models and those durations start to match public investor expectations, that's when you see the IPO market really open up. You have to have in your mind, if you're a software company, either a gen AI type play or something related to data center?

I mean, we just did an interview last week out in San Francisco with a portfolio company that really is taking advantage of the big play in investing in data center. Yeah, Logic Monitor, it's at the epicenter of generative AI ecosystem. And it's really, it is from a software perspective, kind of at the forefront of the generative AI ecosystem and it's really it is from a software perspective kind of at the forefront of the generative AI innovation I think that look software is the ultimate beneficiary of generative AI and so you need to be able to articulate to investors what your your plan is for embracing this technology and then find real monetizable data points that is

that is what is going to get the generative AI narrative interesting. And we're still waiting to see a standard metric for this generative AI for software. And once we start to see that, then I think it'll be less about what's your gen AI narrative and more what are your proof points? What is your monetizable attribute for this technology? What's the one risk that would concern you in the 25? Is it growth not as robust as we once thought? Is it interest rates remaining higher than we think?

I mean, what is it in your world? I think what we're most focused on is sort of the euphoria that you spoke about just earlier about the market getting ahead of itself expectation-wise, as well as the ability of companies to articulate their business models and to provide data points for investors to understand how investable their software is. I thought all you had to say was we're in Gen AI or data center. That's the extent that you had to tell people what you were about. You mean there's more to the story?

I think so. I think so. You need to be able to show contribution, revenue enhancements, how it has margin efficiencies. You're seeing companies report that now. I mean, this past quarter, you saw someone like a HubSpot say 1% to 2% of revenues in 25 will be attributed to generative AI. All right. We'll leave it there.

Ash, thanks. It's good to see you. Ashley McNeil, Vista Equity Partners, joining us back at Post 9. Up next, Real SLX founder Kenny Dichter is announcing a new partnership today with two sports betting industry titans. He'll join me right here at Post 9 next. Welcome back. From the Super Bowl to the Masters, our next guest is betting big that high-end consumers will want to take in those marquee sporting events in style. So much so that he's partnered with two betting powerhouses

to truly up the ante on the experience of attending the big game. Joining me now in a CNBC exclusive, Real SLX founder and chairman, Kenny Dichter. It's good to see you again. Welcome to our show. Super grateful to be here. Thank you. So this is a sports and lifestyle club, right? Sports, lifestyle and entertainment club. A membership. What does the membership cost? It doesn't cost. If you engage with our platforms,

and again, the best clients on their platforms are going to be able to work into our events. And, you know, again, we're just looking forward to taking care of these people. You're just looking forward to being, in essence, I guess, a high-touch membership group where the same kinds of clients you had, whether it was with Wheels Up, which founder, obviously, and prior to that, Marquee Jet, right? So you're used to dealing with high end clientele. You're used to probably transporting them to these sporting events. So now you're just trying to make it even more high touch of an experience? Yeah, and at the end of the day, we're curating. You know, why did we choose FanDuel, part of Flutter, the leader in the world,

as it relates to experience, as it relates to technology? And why did we choose BetMGM, the partnership between MGM Resorts and Entain, gives us physicality in Vegas. And, you know, a lot of our stuff, Scott, is physical. Who's your target market? I mean, how would you describe from here forward who you go after? Well, in the aviation business, the TAM was 500 to 1,000 people and businesses. The TAM for real is 20 times that.

You know, when you think about the wealth distribution in our country, there's 21.95 millionaires in the country. All of them are folks that we think we can provide some great services for and some incredible partnerships, too. Give me an idea of, I mentioned just at the outset, Super Bowl, Masters. What else are we talking about here? Well, I'll tell you, really exciting, women's Final Four. So we had a choice, men's or women's. We looked at the ratings, and the women outrated the men last year.

We're going down to Tampa. We have a commitment from Rios, our big partner there, to come down with us, and we're going to put an amazing event on down in Tampa for Women's Final Four. You go to Ryder Cup, U.S. Open Tennis, Augusta Week, Tournament

Week down in Augusta. We're going to be there for all of them. It's funny you say that because now you got me thinking. So had you been, you've done a lot of private events, right? Have you been at a premier women's event before? And if not, what have you witnessed about the evolution and popularity that we've seen? Obviously enough so that you're going to the women's final four. But more broadly speaking, you've been to all these sporting events to begin with. There's a movement happening.

By the way, dad of three girls. I was at Taylor Swift this week. And you want to know about an event with a powerful woman. You think about women's sports. You think about women in entertainment. The trend is your friend there, Scott. And I'm going to follow the value of the franchises. The women's franchises are, you know, they're rising along with the men's franchises, all driven by your business, TV rights. How would you assess, because you have sort of boots on the ground view, the experience economy in general? How does that look to you right now? I'll give you my business model. Dr. Maya Angelou, it's not what you do, it's not what you say, it's how you

make people feel. It's not the goods anymore. It's the experience. It's the social media post. It's going out and doing things. I think this is a little bit of a reverb from the COVID. Everybody's inside. But bigger than that, I think people are really valuing their life by the memories they create, the relationships they have. And there's no capital like relationship capital. So, you know, we're going to provide that. I mean, because, you know, I don't know, a few years ago, we had, you know, the way we looked at, you know, retail related stocks or different sort of experiential investing.

It was all about that, right? People didn't want sort of tangible things so much. They wanted to have experiences after being kept in their houses for, you know, the duration or at least a fair amount of the pandemic. What you're suggesting to me is that that's in no danger of slowing down. Not only no danger, if you take sports,

which is a big piece of what we're doing, and you take the experience economy and you cross those two, I think live sports is one of the only unifiers for live entertainment. You know, people have an innate desire to assemble. And if you cross those two, I think that there is not only a trend, but it's a macro trend. This is 20, 30, 40, 50 years. Let me ask you, how does your business make money then? If it's not a membership fee, how does it all work?

So we have relationships with our partners. For example, you and I talked about the Four Seasons. We were recently tapped by the Four Seasons and the Ritz-Carlton Reserve brand to work on a project in Belize, their first private island, Four Seasons, Cape Chapel, and Nauka on the west coast of Mexico, right a half hour north of Pointe de Mida. If we introduce or do events down at their places, there's capital to make. So that's really how we're going to work this. And at the end of the day, I think that people appreciate that if they want to use one of these platform partners, that there's a way for them to get access to our program, our platform.

All right. Well, good luck with the new business. Marketer extraordinaire, ladies and gentlemen, Kenny Dichter. It's good to see you. Scott, good to see you, man. Thank you. Real SLX is the name of that sports and lifestyle club. Up next, we're tracking the biggest movers into the close today.

Christina Partsenevelos is standing by with that. Christina. Thank you, Scott. Well, coming up, we'll take a look at a stock that's grown nearly 200% year-to-date, and Morgan Stanley seems to think there's still room to grow. Can you guess? I'll have the answer after this. We're about 15 from the bell.

Back to Christina now for a look at the stocks that she is watching. Tell us what you see. Well, you were talking about it earlier, but it's the revival of animal spirits and possible crypto deregulation that drove Morgan Stanley to more than double their price target for Robinhood to $55. Shares are trading at $37.75 right now. They cite stronger post-election revenue growth and improved expectations of stronger retail trading into next year. Robinhood is about 50% higher since just the election early November. Analysts move in a lot of names today, including Arm Holdings.

UBS arguing that AI is about to ramp up, and Arm will see its IP licenses expand as cloud customers actually look for more power-efficient chip blueprints and that's where they go to Arm. Arm's valuation may seem a little high right now, but UBS thinks the market wants even more growth and they see the stock hitting 160. Shares trading at 138.84 right now. Scott. All right, Christina, thank you. Christina Partsanova, still ahead. We'll tell you what's driving the big move in hims and hers today.

It's coming up on the bell next. All right, coming up next, we're breaking down the big bounce in Bath & Body Works today, plus the retail names you need to be watching in the days ahead. That and much more when we take you in the closing bell market zone cnbc senior markets commentator mike santoli here to break down these crucial moments of the trading day plus brandon gomez on another big swing higher today for hims and hers courtney reagan on bath and body works latest quarter plus the rush of retail earnings later in the week. Mike, what's on your mind today? And a pretty good broad market move, all sectors, but two are green today. It is broad and sort of an accelerated version of one of these rotations we've seen for a while.

It's both out of large caps and into bonds. Bonds, for multiple reasons, caught the bid. Obviously, the best news, but also economic surprise coming a little bit off the boil. Month end, you had this reallocation trade as well because stocks had outperformed by so much. At some point, you know, my mantra that a broader market isn't always a safer one. Sometimes it's more erratic. Sometimes you have less trustworthy anchor bellwethers leading the way.

But for now, it is pretty strong. You actually have things coming way off the boil, like Tesla, like Netflix, like MicroStrategy. Some of these things that really just needed to have the fever break, they did. And the money's flowing elsewhere within, you know, 70 percent of stocks are up. So all to the good so far. You do wonder just exactly how much headroom there is on the indexes in the very near term, the way they traded right off the highs today. You look at the Russell. Yeah. It speaks pretty loudly of the broadening. By the way, I mean, the Russell's up 11 percent a month. Yes.

I know that there have been some really unbelievable calls for gains in that space for this year that didn't come to fruition. I'm Tom Lee, right? Sure. However, it shows you how quickly that that group of stocks can go up really really that's for sure and so it was kind of this kind of spring-loaded effect people thinking and thinking and wanting and wanting it to happen and then it happens now yields that came in for it um it looks now still like mean reversion it still looks like hey we we had a lot of you know uh money left on the table here in the short term wanting to see some to see some, you know, this build towards something, wanting to see it follow earnings estimates, things like that. But for now, it's really the market we're in, which is what hasn't participated to this point. Let's buy a

lot of it in a hurry. All right. Hims and hers. Brandon Gomez with us here at Post 9 to tell us what's going on here. Why this big move? What is it, 23 percent today? Yeah, that's the name we're hearing more and more. Right. I mean, shares are surging now another 20%. The stock has more than tripled in 2024. Fueling today's rally, though, well, the week of the weekend, President-elect Donald Trump announced his pick to lead the FDA. And that is Dr. Marty Makary. Now, he's a surgeon at Johns Hopkins.

More notably here, though, he is the chief medical officer at Sesame. That's a telehealth company that sells compounded semaglutides competing with Novo's Ozempic and Wagovi, similar to Ham's. Now, we've been talking about those drugs a lot. Is there a shortage? Isn't there a shortage? Well, there's still a pending decision by the FDA and supply. While it's not clear, though, if Dr. Macari will be confirmed or if the FDA would take a more positive view on GLP-1 compounding, investors see a potential D.C. ally here. I will note Wall Street more cautious, though, be confirmed or if the FDA would take a more positive view on GLP-1 compounding. Investors see a potential D.C. ally here. I will note Wall Street more cautious, though over half of analysts have a hold or sell rating on the stock. All right. Appreciate that. Brandon, thank you very

much. Courtney Reagan, you want to tell us first about Bath & Body Works and then the look ahead to these other retail names we need to know? Yeah, big day for that one, Scott. I mean, Bath & Body Works on track for its best day in two years after it beat expectations, and people weren't expecting much. In fact, they reported the first quarter of sales growth since the first quarter of 2021, the first above-consensus guide in five quarters. And that's particularly of note because the holiday quarter is typically responsible for more than 40 percent of Bath & Body Works' annual sales and a little less than half of its earnings for the year. But also, first gross margin miss in two years. BMO Simeon Siegel says, look, Bath & Body Works has, quote, seesawed from investor love to feared. And while lighter margins mean it's not out of the woods yet, there's a lot to like about where it's going, especially into holiday. So generally, retail stocks surging,

going into this last big day before retail earnings, which, of course, is just ahead of this critical five-day stretch from Thanksgiving to Cyber Monday. So investors are going to be curious about the outlook for consumer electronics from Best Buy going into holiday, and then how demand for apparel is trending at Nordstrom, Kohl's, Abercrombie, Urban Outfitters. They all have very different operations and internal workings, though they may all be clothing sellers. And Dick's Sporting Goods has been on a winning streak. But has that continued? There's lots to learn tomorrow. And then it's really off to the races from the unofficial start to holiday.

But all of those shares are really trending higher here into these critical days this week. Back over to you. Yeah. All right. Well, thank you, Courtney Reagan. You want to touch on discretionary for a minute? I mean, I know the gains look outsized because of Tesla. Obviously, it's 10 percent for the sector. But I mean, most doubts about this space at every step along the way have been diminished after a reasonably short period of time. Yes. Usually the actual spending numbers

supersede the fears that confidence has been an out retail sales number. Monthly has been an outperformer more times than not. I'll tell you that. Yeah, there's no doubt about it. And, you know, I think that in a sense, we might have been overreacting to the suppressed confidence numbers for a while. Now that they've sprung higher, maybe we're going to overreact and it's going to be this gangbusters spending season. But to me, the bottom line is, even if you look equal weight, consumer discretionary, it's been very strong relative to defensive parts of the market. So it fits right into this idea that the market is really believing that we're in a strong part of the cycle, or at least the cycle gets extended a little bit from here. So the big cap market

still does nothing really to give you a lot of doubt that this is a decent trend. You don't want to stand in the way of the kind of holiday week stuff. The VIX gets now down below 15. Well, the market's only open two and a half of the next six days. So that's one of the reasons it's going to slow down. Beyond that, you do have to be on the lookout for people's eyes getting a little big about 2025. You had another 7,000 S&P 500 target today. Yeah, you did.

Pretty much everybody is 10% or higher from here in terms of their targets, the ones that we've heard so far. So that can be a challenging hurdle to get over once we get into the new year and you kind of engage with some typical, like your first pullback of January and see how we weather it. See what yields do, right? I mean, today was a big down move. Yeah.

Maybe, I don't know if you want to call it a sigh of relief in some respects over the Besant name and the things that he is going to hold near and dear to what he wants to accomplish. The good part of it is it happened at a place, at a level where it should have, right? You actually had excessive bearishness in the surveys toward treasuries. You had the 10 year yield right at the 200 day average. So you have some buying in there that maybe has more to it than just the headline reaction. All right. Good stuff. So we'll go green across the board and we'll have a new record high for the Dow Jones Industrial Average. It's a gain of more than 400 points. 44,722 is what I see at the moment.

We have to settle out. We'll do that in overtime.