Closing Bell - Closing Bell: Ringing the Register into 2025 12/31/24

Episode Date: December 31, 2024

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

Welcome to Closing Bell. I'm Mike Santoli in for Scott Wapner. This make or break hour begins with investors ringing the register before they ring in the new year. Continuing to take profits in the mega cap winners and driving a rare multi-day slide at the end of an otherwise stellar 2024. And Dubai is ringing in the new year. Take a look here. We're going to start to see the fireworks at the world's tallest building, the Burj Khalifa. Pretty impressive display right there. One of many to come. With 60 minutes left in the trading year here in New York, the S&P 500 under a bit of pressure. It is now down about a third of 1%. It's been down slightly more than that a bit earlier, but definitely to the downside.

Year-to-date winners such as Nvidia, apple tesla all of them backing off there's a little bit of sell the winners and buy the laggards effect inside of the index today still more stocks are up than down for the day and for the year the index is set for its second straight annual gain above 23 so this was a year when the world political and policy landscape was scrambled. And J.P. Morgan, chair of global research, Joyce Chang, will be here to talk about what it will mean for the global economy and the markets in 2025. But first, our talk of the tape with the indexes climbing to the finish, limping to the finish, really, after a great two-year run. Can stocks overcome elevated valuations, higher for longer bond yields in the new year?

Let's ask Charles Cantor, Neuberger Berman, Senior Portfolio Manager, joins me here at Post9. Great to see you, Charles. Thanks for having me, Mike. Happy New Year. So what is your read on, I guess, the most recent market action as it punctuates the year? You know, I mean, is the market having a little bit of misgivings about maybe the policy outlook? Are we not able to absorb easily the 4.5% 10 10 year yields or, you know, just straight profit taking? I think probably the mostly straight profit taking. I think the last month has has been tricky and and the value stocks have have been under tremendous pressure and the growth stocks have continued to perform.

And so to some degree, the last month has looked like the whole year. To some degree, the last month looked like the last two years. And a little surprising, I'd say, post the election results, you didn't see the flip of better value stocks versus growth stocks. And I say that's certainly one of the surprises as we finish off what's been, as you say, you know, a remarkable two years in the stock market, a remarkable year in the market this year. It was very difficult to lose money. Almost every asset class you made money in and some new asset classes you made

money in as well that haven't yet been defined. It was a year where diversification didn't help you. It hurt you. Risk. It was a risk environment. And the more risk you took, ultimately, the more reward you got. And I'd say, very surprisingly, against a very volatile geopolitical environment, you had very low volatility in the market.

And there's probably a warning there that on any one-year basis, it had very low volatility in the market. And there's probably a warning there that on any one-year basis, it's very difficult to predict the outcome on stock returns. Yeah, the maximum decline in the S&P was like 8.5%. It was there for just about a minute, and then we rebounded off of that. So as somebody who picks individual stocks, evaluates individual businesses, tries to get returns outside or beyond what the index is offering. It's obviously been somewhat of a tough go in terms of relative returns. But looking ahead, what do you expect in terms of the environment?

Look, it has been difficult because diversification hasn't worked and many of the indices have become less and less diversified. And the differences between the equal weighted indices and the market cap weighted indices are simply astonishing. And I don't think folks will believe the numbers when they look back 15 years from today. Look, I think as you look to 2025, I think we hope that it's much less about the macro and it's more about the underlying companies and their business strategies and their ability to take price and get price and reinvest into attractive return on capital type projects. And it'll be about management execution and less about, you know, what's

going on with interest rates, where are we in this COVID conversation? I'd say we finally through COVID headwinds, COVID tailwinds. I think from a business planning perspective, executives can model next year or this year without trying to guess anomalies and the like. And you're not going to have any cover from, you know, for example, the ability to take price because simply you have inflation. So I think we're hoping it's much more about the micro at the company level and much less about the macro as it relates to COVID and oil prices and interest rates and the like. A year ago, I think that you would say the economic consensus was that there was still perhaps seen as a 40 percent risk of recession in 2024. So there really was a high wall of worry to climb for the markets, for investors in general. We don't really seem to be there right now. I mean, you say maybe it's less about the macro. Does that mean because you think macro is just stable

and the Fed is not going to do much? Look, I think it's helpful to look back to 2024. I mean, I think one year returns are always a function of how good is the current setup. I think against a backdrop where the market cap indices are up close to 60% on a two-year basis, the setup is much more challenging. But I think it's going to come back to earnings and earnings growth. The big earnings drivers this year were mostly the magnificent seven. We can talk about the reasons behind that. You would hope that there's more earnings diversification across subsectors and companies. I'd say the other surprise about 2024 is the market at this time last year was pricing in seven Fed cuts.

I think we only got three. And despite that, you had a very strong market capitalized weighted return. But I think the truth of how companies feel about their stock price, I think, is revealing in the equal weighted indexes. Where on average, you know, those things are up 10 or 11 percent. And by the way, on average, they've had less earnings growth than the 11 percent and actually more multiple expansion. Even though on an absolute basis, the multiples today are, say, 10 percent cheaper than the large company indices. Yeah, that's right. I mean, it's interesting because a year ago, if you said, oh, I'm going to invest in the Equal Weight or the Russell 2000 even or the value index, the S&P, and you're up 10 percent

on all those things, essentially, you probably would have taken it a year ago, even though obviously it's just been dusted by the big cash. Look, I'm an absolute return guy. Yeah. You go to the bank with more money this year than you did last year. You may not go to the bank with as much money as you could have otherwise, God, had you invested somewhere else. I think you got a very reasonable return. 10% gets it done. Look, the other part of what we're not talking about is the consumer, right? The consumer balance sheets are up $14 trillion. They're the folks that own all the stocks. I've always believed folks spend their balance sheet and their prospects on how they feel about their current income. Their current

incomes today are finally growing faster than inflation. They want value still and they want convenience. And convenience has been redefined relative to me and you shopping at home versus what convenience used to feel like 15 or 20 years ago. And, you know, we're still doing this. And then I think it's worth talking about. I don't think you can wish away the Magnificent Seven. Yeah. I think when we think about the Magnificent Seven, I think folks say, well, they're just magnificent stocks. And then when you look at them, there is nuance across the seven.

And I think it's important to understand the nuance. In some of them, you've just got paid a huge amount of return with no actual earnings growth. In others, you've had a lot of earnings growth with return. But these, most of them are magnificent companies. And the reason they're magnificent companies, Mike, is because on average, they're spending 15% of their revenues on R&D. So think of that as future optionality on creating the next amazing thing. And while they're doing that, they're spending 10% of their revenues on capital. So they're building these generally incredible moats, future return opportunity.

The judgment will be, does the return, does the investment in R&D or capital produce anything? And they're doing that without taking on any financial leverage. I think when I started at Neuberger 25 years ago and someone said, go model that without financial leverage. And that was the test I would have completely failed. So there's reasons why they're so strong. But I think at the end of the day, we are quite hopeful that the micro will matter, even if it's the micro within a Google or an Amazon or Microsoft or an Nvidia, for that matter. And yeah, I mean, they're putting hundreds of billions of dollars in motion out of basically their cash and cash flow,

and it's going to other companies. And, obviously, it's probably not all misspent. So we're probably in okay shit. And it's been spent. Remember, the 15% on R&D has been spent in the earnings statement. That's right. And so there's an argument there that the earnings on balance are underreported versus overreported. And for folks to understand the magnitude of that, these seven companies have spent close to two hundred and fifty billion dollars just on R&D.

So think of that as an investment for the future. That is one and a half times more than the entire health care and biotech sectors combined. Wow. And we used to think about that as a comparison because those companies need to invest in R&D because their patents eventually run out and they've got to create new optionality with the research and development they do. Yeah, truly remarkable. We'll see how that theme plays. Charles, stay with me.

Let's bring in Anne Mileti of All Spring Global Investments and Citi's Scott Croner. Great to have you both here to finish out the year. Anne, we'd love you to weigh in in terms of just this moment looking into 2025, whether the recent choppiness in the market has been telling us anything worrisome about the macro setup or if you feel as if it's noise in the short term. I think it's noise in the short term and maybe some setting up for the new year. Investors looking a little bit more broadly, which I think it's noise in the short term and maybe some setting up for the new year. Investors looking a little bit more broadly, which I think is kind of a wise move.

The stock market has been led, as you've talked to well about, by a very concentrated number of names. And I do think diversification and a better mix as we go into 26 is really the theme that's going to play out for 2025. And so I think some investors might be setting up for that. But also some of these stocks have had a really amazing run since the election results came out. And letting off some steam from those types of returns that we saw over the last week is not surprising to me at all. And Scott, I know you've been focused on, I guess, what you might characterize as a little bit of a challenging starting point for returns in the last couple of months, whether it is valuations, what the market expected out of future cash flow growth and sentiment,

things like that. Where does it sit right now after we have had just this little modest reset in the last few weeks? Yeah, Mike, so happy New Year to you. So I think this is really important. So going into the election, our view was you want to be prepared to fade a Trump bump. We had targeted plus 5 percent post-election return. We had targeted 6,100 as our line in the sand. And a lot of the premise for that, Mike, was really that we expected as we went into the first quarter, we'd see more initiatives unfold as pertains to the Trump policy promise. But with that would also come some policy risk, whether it be tariffs, whether it be some noise around some of the appointees and the vetting process, getting into the deficit situation as well.

So our premise to sell into a post-election rally was basically centered on this issue that as we go into Q1, we're going to face a little bit more noise relative to the euphoria of the past several months. We're getting that pulled forward now, to your point. We pulled back, what, roughly 3% off the highs. And we do think this essentially is what we'd expected in Q1 happening a little bit more real time. Not a big surprise, given the way the market's been of the bias to pricing things pretty aggressively in a shorter amount of time. Not a big surprise, given the way the market's been of the bias to pricing things pretty aggressively in a shorter amount of time. Yeah, I mean, just for, I guess, mental benchmarking sake, the S&P is now trading basically at the mid-October highs. So essentially, you had this

bump and we've given most of it back. Been spending a lot of time in this area. And Anne, you mentioned you do expect performance to broaden out to a fair degree. We've had some false starts along those lines. I mean, some folks have said if yields come down, if the Fed really starts to cut, maybe you see some kind of acceleration in the economic surprise indicators. I guess none of that has happened in a sustained way. Do you still think that, I guess, just perhaps the evidence of earnings growth becoming a little bit more democratic next year is going to be enough? I do think that's guess just perhaps the evidence of of earnings growth becoming a little bit more democratic next year is going to be enough? I do think that's what it's going to be. It's going to be earnings driven and micro led. What we're seeing is earnings expected to decelerate

still good earnings growth in those big cap names. But deceleration in that growth. While you're going to see the opposite in some of the other areas like profitable small and mid-cap companies, that earnings is expected to accelerate and in certain areas where we just haven't seen that. I believe that is going to happen. It's going to be led by a lot of different things, including a lower line of base interest rates. Now, even though we believe that there is likely only to be two cuts, maybe even less than that, we do think that's good enough for the earnings acceleration. We also think M&A is going to be a big theme in 2025. And that really does help highlight the valuations within the small and mid-cap space as well. So that also will drive the breadth of the market.

Yeah, I mean, I guess that is one point, Charles, in that one source of returns for small and mid-cap stocks has been that they get acquired. But what's your other thought on that? I mean, the acquisition story is incredible because I think when I started in this industry almost a quarter of a century ago, there were 14,000 publicly traded securities. And now there's less than 5,000. So we've lived through this period where private equities got institutionalized and the cost of capital is cheaper where it's illiquid than where it's liquid, which is kind of remarkable to me. I do think that change in administration will help M&A. And I think private equity and strategic rationale will drive continued, you know, consolidation. And I'm hopeful that the IPO market returns in a broader way as well.

But it's a challenge there, too, because the pockets of capital available in the private markets, you know, are so very, very large. Scott, I guess the idea that we're pulling forward some of this unease with, you know, the policy outlook and perhaps just some of this deferred profit taking, it all does make sense. But is there a point at which you'd have to say that there's a little bit more of a worrisome message being sent by this market if it's either handicapping a Fed policy mistake or just the idea that, I don't know, if yields stay up here, we can't really unclog that, the housing market, something like that? Well, I think there are many issues, right? A path to 5 percent 10-year probably is not a great backdrop for U.S.

equities going in next year. We don't see that, but we have to be prepared for that risk. Sentiment continues euphoric on our measures, and we have to be aware that anything on the policy or fundamental front that begins to cloud that is also going to be a point of risk. But ultimately, under the surface, if I were to sum it up, I mean, 24 has been a year of show me the growth. And you've got the growth out of the MAG7 and NVIDIA in particular. The other 493, not so much. Expectations for 25 earnings have been falling all year long, and they haven't shown signs of bottom. We don't think we get that until we get into the Q4 reporting period. So you still have this dynamic where we're looking

for an earnings bottoming on this broadening thesis, which we do think will unfold next year. That should set up for earnings growth rate convergence, which leads to the broadening into small mid-cap, into value, and other like-kind positioning views on this. But the salient point is, yeah, we're watching policy, we're watching rates, but at the same time, we need to see a little bit more confidence come into the rest of the market. That other 493, that earnings growth expectations for 2025 are starting to stabilize and turn north. We haven't seen that yet. The PMI data we're looking at kind of throws a little bit of a pall on that. I'm not overly concerned about the consumer at this point. Lots of tailwinds there in our view. But under the surface, we need

to see the earnings growth traction kick in to play to this broadening thesis, which so much of next year is already being priced around. Yeah, I think 2024 was supposed to be a broadening thesis and it didn't happen that way. And I would just be sure folks understand that I'm very sympathetic to the 493 need to catch up. But where they can't catch up is in the amount of real dollars the large seven companies have spent in R&D and in capital, which gives them much more pricing flexibility and much more optionality versus the other 493. And oh, by the way, those seven are still going to grow double the rate of the other 493, even though the rate of change on a year-over-year basis inflects positive for the other.

So I think it's going to come down to the companies, Mike, and the large wines have built a lot of flexibility in their business. And the small wines that will win will be those driven by companies that have pricing power and attractive rates of return, which is always the story. And just quickly before we go, there are particular parts of the market that you feel as if would be particular beneficiaries sector wise of this type of a move. Yeah, we do think there are some. Healthcare is one area. We also, if I had to pick a dark horse going into 25, I would also look at emerging markets. It's an area where investors have really not had a strong allocation toward. And it is an area that we believe could start to see improvement if we see any weakness in the dollar. And we do expect

volatility, not just within the dollar, but within the economy for all the reasons that Scott pointed out earlier. It is likely to be a volatile year for investors who are willing to stay invested. There's going to be many opportunities to take advantage of those opportunities. So I would say look for those opportunities within certain sectors like health care, but also certain regions like emerging markets. Yeah. EM seems without a doubt non-consensus at this point. We'll see how it goes. Charles and Scott, thank you very much. And happy New Year. Appreciate it. Happy New Year. Let's send it over to Christina Partsenevelos for a look at the biggest names moving into the close.

Christina. Hi, Mike. Well, let's talk about Warren Buffett's Berkshire Hathaway making waves on the last day of 2024, affecting shares of VeriSign, which provides domain registry names like.com as well as.net. Shares actually hit a 52-week high earlier today. Over here you can see about three bucks off or so just since then. And this is after Berkshire Hathaway increased its stake over the last three trading days of the company. The buying spree seen here is a sign of confidence in the near-term growth of the

company, especially when Berkshire Hathaway gets in. And that's why I have to say shares are up, but they're still up half a percent because of low volume. Meanwhile, shares of U.S. Steel jumping about 9% right now, or no, 13%, on a new Washington Post report that Nippon Steel would be willing to give the U.S. government a veto over any decrease in U.S. Steel's production capacity. All of this is in an attempt to secure approval for the acquisition of U.S. Steel. The U.S. government just last week said they were concerned that the acquisition would lead to a decline in American steel output. The stock, though, you can see it's trading at $35.28 right now.

It's still about, what, $15 almost, or $13 away from its 52-week high, which was hit all the way January 24, 2024. So you can see it's a little bit off from there. Mike? Yeah, a little more of that buying of the laggers on the last day of the year. Christina, thank you. Thanks. We are just getting started. Up next, why one fund manager is betting one of 2024's biggest winners will see even more upside in the new year. That is after this quick break. We're live in the New York Stock Exchange. You're watching Closing Bell on CNBC. Welcome back. Tech stocks dominating 2024,

heading for a second straight year with double-digit gains. And our next guest is betting on even more upside for some of the group's biggest winners. Joining me now, Baker Avenue Chief Strategist, King Lip. And King, it's great to have you on here. I have to tell you, though, it's been a parade of investors coming on here and saying, you know, big tech has had its moment.

It's really time for money to rotate into other themes, smaller stocks, things that aren't so popular. Seems like you're not on board with that idea. Yeah, Mike, it's great to be with you. Yeah, well, we'll take the other side of that trade. And the reason why is, let's just say the recent weakness that we've seen in the tech sector, we think a lot of that just has to do with rebalancing. We don't see any fundamental reasons necessarily. We see it as more technical in nature. We think cash would go back to these winners simply because that's where the earnings growth is in 2025.

If you look at the tech sector, it's still looking to be the highest sector for earnings growth with over 20% expected in 2025. If you look at the tech sector, it's still looking to be the highest sector for earnings growth with over 20 percent expected in 2025. Right. Although I guess the argument is that the rest of the market is also going to have a big catch up move in earnings. And I guess maybe it's true that this is mostly technical or repositioning and nothing much has changed. But once you get these very large stocks up to 32, 35 times forward earnings, maybe that's kind of enough reason for people to reassess. It could be. And we're not bearish on the other call of 493 names either. We're expecting them to deliver somewhere around 13 percent earnings growth in 2025. But that's still going to be below that of what

the tech sector is expected to deliver. Having said that, we don't think valuation is out of line. In fact, if you look at the called the Magnificent Seven stocks, their valuations are within one standard deviation of their historical norms in the last 10 years. So it's hard to say that they're at levels that are not sustainable. In fact, if you go back to a lot of these companies, going back to their IPOs, it's not unusual to see these companies deliver multi-year strong gains, simply because that's where the earnings growth is. Well, there's no doubt about it. I mean, almost across any time period, just the NASDAQ 100 has been a remarkable source of returns.

Most interested in some of your specific plays and especially ones where you're essentially doubling down on an already great year like a Broadcom. Feels like that was a story everybody embraced recently, had a huge gain in market cap. Why can it keep working? Well, first of all, it's a wonderful company managed extremely well by Mr. Hochtan. I think Broadcom is an interesting name just because it does something that NVIDIA doesn't do, which is custom AI chips for their customers. This segment is growing just as fast as NVIDIA is. And the company itself actually has a lower multiple

than NVIDIA. Companies And the company itself actually has a lower multiple than NVIDIA. Companies like Palantir also look interesting to us. It's controversial because it sells at a very high multiple. We recognize that. But the company just became profitable just two years ago, but it's been cash flow positive. We think it's uniquely positioned in the incoming administration. Peter Thiel was a founder of Palantir, obviously a connection of Elon Musk there. And with the Doge efforts that are coming in to reduce government expenditures, we think Palantir is really uniquely positioned. I mean, clearly that is the collective conclusion of the market, that Palantir is in some kind of a privileged position that's gone vertical since the election. You mentioned the valuation issues. I mean,

it's above 50 times revenue at this point. There's been lots of top insiders selling shares into this ramp. I mean, why doesn't any of that give you pause at this point? You know, we'll be hesitant in terms of being buyers today. If it does pull back, say, to the mid-60s, it would be a lot more attractive to us. But given how volatile these stocks can trade, we think the opportunity is there for investors to participate in a name that's going to be, in our view, a big winner going forward. And also keep in mind, if you look at past winners in terms of multi-baggers, if you would, a lot of these names have sold at tremendous high PEs before they've had their big runs. So I think sometimes the market underestimates the earnings growth of what these companies can

potentially reward investors with. Yeah, I mean, clearly that's what a buyer around these levels would be betting on. Talk a little bit about NVIDIA. I mean, you mentioned why Broadcom might have certain advantages, but NVIDIA has been a very fascinating case because it built up all these massive gains in the first half of this year, and it's basically held on to those levels, but it has not been able to make further progress. What do you think is behind that? I think a lot of that is just about expectations. If you look at multiples, NVIDIA, again, now sells for roughly average forward PEs of the last 10 years. I think investors are sort of looking, waiting and seeing how the next earnings report will look like. We expect the company to continue to grow, just not at the rate that we've

seen the last two years. So I think investors are kind of this wait and see period for NVIDIA. Yeah, I've been waiting for a few months. We'll see if there are catalysts on the way. King, great to catch up with you. Thanks very much. Appreciate it. Thank you. All right, up next, JPMorgan's Joyce Chang is breaking out her global market playbook. She'll tell us where she's seeing strength in the new year and the big headwinds she's watching right now. That's after the break. And don't forget, you can catch us on the go by following the closing bell overtime or the closing bell podcast on your favorite podcast app. We'll be right back. The S&P is less than 30 minutes away from its best two-year return since the late 1990s,

but has more market volatility on the way in 2025, with global policy uncertainty on the rise. Let's ask Joyce Chang, chair of global research at JPMorgan. Joyce, it's great to see you. I'm really glad you could weigh in here. I'm thinking back to 12 months ago, and one of the big talking points looking into 2024 was some huge majority of the world was going to be going to the polls. And there's going to be the possibility of these kind of sweeping policy reorgs around the world. I guess we've gotten a lot of that. I wonder what you think now the implications are of all of it. It's great to be with you. Happy New Year's.

Well, I think it's still a story of U.S. exceptionalism. And what we're seeing is greater uncertainty in Europe and that we still have elections that are coming up there at the national level. Votes have no confidence. We've had the surprises that have come out in Korea as well recently. But the geopolitics haven't changed the overall dynamics on the macro side. The U.S. remains the global engine for growth. There are still a lot of reasons why the S&P 500 is going to be favored over other markets, even though we're seeing a less certain and more cautious Fed here. So we've seen the electoral uncertainty, some of that which will persist in Europe and in some other countries, but many fewer elections going into next year.

I think the focus will be on the U.S. market and particularly just what types of regulatory actions might be taken that would facilitate more market activity, as well as more discussion also on the fiscal outlook as we get further into the year, however. And that does remain a source of uncertainty. Yeah, I guess aside from, you know, the newly elected government, you do mention that the Fed, you know, may be keeping rates a little bit steadier than we thought a little while ago. So maybe only a couple more cuts and then that could create the possibility for divergences with central banks around the world. We already have a very strong dollar. We don't know what the implications of of tighter trade policies might be. So does this all go into the category of, you know, things to keep on your screen, but not trade off of?

Or do you think that that they have direct investment implications? Oh, I think you're going to see some direct investment implications. I mean, look, we do see that the Fed will pause in January and then continue in March. But other central banks are going to have to move rates lower. At the ECB, we see policy rates going to 1.75 percent. So you could see euro dollar crossed parity in the first quarter of the year. So stronger dollar, weaker emerging markets effects, euro-dollar crossing parity as well. So there are clear implications. I don't think that you're going to see as much policy rate cuts in the U.S.

as some had anticipated. And we've been in the camp that thinks that is high for longer is something that's here to stay. And that probably inflation is stickier here, you know, as well. So I wouldn't just say it's about the Fed's path. It's also about the growth outlook. And we've seen such solid U.S. growth compared to other parts of the world. Is there any room, do you think, for playing some kind of a catch up trade in terms of areas of the world. Is there any room, do you think, for playing some kind of a catch up trade in terms of areas of the global markets that have been either underperforming or underexploited or essentially where you might see some kind of convergence? I mean, I guess what I'm getting at is you mentioned all the reasons for continued U.S. exceptionalism. And it feels like the markets have already been positioned for that scenario for a while. And I wonder if it if it pays to bet against it on any

level. I think it still plays to be diversified. I mean, we remain and have had a call to remain overweight in Japan, where we do think they're going through structural transformation here. And we do see the BOJ hiking rates in January. On top of that, you have all of the corporate governance reforms that are going on, the exit from deflation, and also consumer spending and wage growth. I think the U.K. is going to do better than the Eurozone. They also have a fiscal stimulus program in place that means that growth probably should hold in better here. In emerging markets, I think you have to be very selective here. But some of the markets that do stand out, I mean, Turkey and Argentina are two markets that have stood out. There's been a lot more caution on Brazil and on China. And the focus is going

to continue to be on tariffs. So just going back to the U.S., I think there has to be much more selectivity within the sectors as well next year. We still think Mag7 is going to do well, but we would also be more diversified and looking at greater dispersion across sectors, across countries and across themes next year. And does China, its economy and markets, does it remain on the defensive going into next year because of all those factors? Or again, is there room to feel as if they might be able to kind of get the policy mix right? Look, our base case scenario, we do have an increase in tariffs to 60 percent. So that is a meaningful decline in China's growth from

the five percent target they have. We have growth just under four percent in China right now. I think that China will continue to put in both some more monetary and fiscal measures into place. But the structural problems related to the property sector and also consumer demand remain there. But you do see a really strong export performance right now. But I still think this is going to be a difficult year for China and emerging markets more broadly, where you could continue to see outflows just given the U.S. exceptionalism. You know, that's still high rates that are going to attract capital and then the threat from tariffs as well. Yeah. You mentioned the high rates in the U.S. on a relative basis and and perhaps that's attractive to global capital flows. Do you see that at all being in question if there are more questions about the fiscal situation in the U.S.? Do you feel as if that's just going to

be supportive of current, you know, sustained deficits here? Well, I think you're going to see more capital market activity, but the concerns about the deficits are not going to go away. You could see some signs of that as well. Just you see the debt ceiling debate is going to heat up. You know, we've even seen in the government shutdown, they're going to have to make some difficult choices. And market expectations could be getting ahead of themselves with respect to what really can occur with deregulation and with tax reform. So I think that is going to be more of an issue when we get towards the middle of the year. But for right now, the growth story is still one that is really differentiated in the U.S.

compared to the rest of the world, particularly when you look at the strength of consumer spending in the fourth quarter of the year, that was still around 3 percent. And some of the investment flows that are coming in and reshoring flows that continue to come back to the United States compared to other countries. Yeah, I absolutely have some momentum in that direction. Joyce, great to talk to you. Thanks so much. And happy New Year. Happy New Year.

All right. Up next, we are tracking the biggest movers as we head into the close. Christina, standing by with those. Well, we have one big buyer of Bitcoin pulling back on its spending. Still spending, but a little bit less. We discuss why after this short break. 15 minutes till the closing bell. Let's get back to Christina for a look at the key stocks to watch. Christina.

Well, we got to talk about MicroStrategy. Usually it's seen as a proxy for Bitcoin because it's heavily invested in the cryptocurrency. It owns about 446,000 coins. But its weekly purchases, which are released on Mondays through the SEC, have actually declined from the week prior, which is why shares were down about 5%. That headline, keep in mind, is also on thin volume, so that's why you're seeing a larger reaction. But just over the last little while, there has been quite a divergence. Starting from mid-December, you can see both going here, a little bit bigger of a gap in between both. And that's because MicroStrategy did announce plans earlier this month to issue new shares to fund its purchases of Bitcoin.

And that is causing a little bit of a divergence to see Bitcoin only down about 4 percent on the month. MicroStrategy, 26 percent. Switching gears, let's talk about Ralph Lauren. Shares are down to the negative, about half a percent. After getting some love from analysts at Argus, they're suggesting investors should buy this name with a price target of 250 bucks on a 12 month range. You can see it's about 19 dollars away from that. They say there's a bullish pattern with this stock. Reason being, over the last year or so, there's been some higher highs and some higher lows since September 2022. And you can just see on this chart over here, climbing higher, bullish sign, the company's margins also improving.

And of course, catering itself to the younger demographic, especially on a line with their latest collection. And that's helping shares. Mike? Yeah, quite a move. Christina, thank you. Thanks. Still ahead, utility stocks were far from boring this year.

We'll look at what could power those stocks higher in 2025. It's coming up on Closing Bell. We are now in the Closing Bell market zone. Apple approaching a pivotal moment in the new year. Steve Kovach shares why, plus Diana Olick on what the latest read on housing prices means for the group and Pippa Stevens on this year's big moves in the power and utility stocks. So, Steve, pretty strong finish for Apple in 2024, but what's the road ahead look like? Yeah, Mike, the Apple is down today, but looks like it's going to close the year up about 30 percent or so, despite this week's sell-off. It just had a really killer December so far. Apple started the year without an AI story

to tell, but it all turned around in June with the debut of Apple Intelligence. Still waiting to see if those features are driving iPhone sales, though. But they are top of mind for Tim Cook as he sets his agenda for 2025. He needs to launch Apple intelligence in China while dodging President-elect Trump's planned tariffs. Trump comes into office in a few weeks promising blanket tariffs up to 60 percent on goods imported from China. Cook managed to skirt tariffs during Trump's first term by developing a relatively cozy relationship with the president, as his peers, such as Jeff Bezos, took more antagonistic stances. Early in the year, keep an eye out for announcements from Apple related to job creation or manufacturing here in the U.S. as an offer for Trump to get

some tariff relief. Next, let's talk about China. Apple needs to get government approval for Apple intelligence so it can launch on iPhones in the country and fend off rivals like Huawei, Mike. All right, Steve, thanks very much. Diana, been a tricky period for housing data of all sorts. What are the latest price numbers tell us? Yeah, tricky to say the least, Mike. The much watched S&P Case-Shiller National Home Price Index hit its 17th consecutive all time high in October, according to the report out today. The gain was 3.6 percent down from the 3.9 percent annual return in September. So prices are still higher than they were a year ago. But the comparisons

are shrinking little by little. Prices are, of course they were a year ago, but the comparisons are shrinking little by little. Prices are, of course, not expected to go negative nationally next year due to still low supply and high demand. Supply is much higher than it was a year ago, but much of that is because homes are sitting a lot longer on the market, going, quote, stale, according to a separate report from Redfin this week. This is all for existing homes. So instead of talking about the builders, I want to take a look at stocks like Zillow and Compass. They outperformed this year despite changes in rules for real estate agents, as did home improvement retailers like Home Depot and Lowe's. And Jim Cramer named HD his favorite housing related stock, citing increased housing turnover for 2025. Mike, happy new year. Happy new year to you, Diana. All of those charts look okay, but pullbacks in December have been the rule. We'll see how that goes into January.

Pippa, somewhat unexpected source of strength this year. Talk about that. Yeah, Michael. Power stocks became interesting this year, fueled by the AI trade, with the utility sector up nearly 20 percent on the year. And to put that in perspective, going back 30 years, the average annual return is 4.9%, although the sector is roughly 8% below its November all-time high. Now, within the sector, the winner by a long shot is Vistra, which has tripled, followed by Constellation and NRG. All three are independent power producers and so have direct exposure to higher power demand since they're selling into competitive markets. Performance for regulated utilities has been more modest. American Electric Power, Southern Company, Duke and Dominion showing low single digit gains.

Now, looking forward, Mizuho is not optimistic on the space, saying they think 2025 will be one of underperformance as load growth optimism is overshadowed by macro headwinds. But on the flip side, Jeffries said, to focus on mid-cap utilities where data centers can truly move the needle, pointing to PPL, Evergy, and NiceSource names. Mike, as names to watch. Pippa, that's an interesting call to suggest that maybe people have gotten a bit overenthusiastic about the areas where so much of the new capacity and power is coming on. Maybe they won't be able to exploit it as much. I guess to me,

the big picture question is, are all the assumptions of runaway power demand, as far as the eye can see from these AI applications, can we actually trust them? Yeah, I think that we're going to see some of those estimates start to come down, especially since nobody wants to be paying so much for power. And so you can imagine that these applications will become that much more efficient. However, the AI trade is only one part of the demand growth when it comes to power. We've also got electrification as well as reshoring. And so there's no doubt that we will see power growth looking forward. But I think to your point, the utility industry is a slow moving one. And so, you know, you can have all of that forward looking demand. But then when push comes to shove, actually getting these projects off the ground is a whole other story. You think about the backlog in PJM is more than five years.

And so it's all great to say, OK, we're going to have all these data centers and now we'll see this gas demand grow. But on the ground, it's a little bit harder to get these off, you know, to get these up and running. One interesting thing is we are seeing down in Texas some Bitcoin mining rigs are being reconverted to data centers because they already have that power hookup. And of course, when it does come to data centers, Mike, the time to power is the most important thing. Yeah, that is fascinating, actually. We already had a little bit of this huge, insatiable demand of power for Bitcoin mining. And now who knows, President-elect Trump saying he wants it all to happen domestically. Who knows if that'll go through. Pippa, thank you very much. And Happy New Year as we do approach the final few seconds

of trading in 2024. S&P 500 on a one day basis, down about 40 basis points, 0.4 percent. Russell 2000 up a little bit. There has been some mean reversion trade going on today all day. Strong market breath actually more stocks up than down. Lot of the laggards for the year are working. We're going to go out at approximately a 23% year to date gain. Little more than that for the S&P 500. The second straight year of approximately that gain on a total return basis with dividends. Looking at 25%. So a great year almost any way you slice it. December has been rough, especially for cyclicals, industrials, and banks,

both down 7% or 8% in December. That is going to do it for Closing Bell.