Closing Bell - Closing Bell: Stocks, Rates & Risks Rising? 11/15/24

Episode Date: November 15, 2024

Where might the run for stocks and rates go from here? The Wharton School’s Jeremy Siegel, Hightower’s Stephanie Link and Ali Flynn Phillips of Obermeyer Wood break down their forecasts. Plus, star technician Jeff DeGraaf tells us how he is navigating the semi space ahead of Nvidia’s report next week. And, we tell you what to watch from all of the retail earnings coming up.

Welcome to Closing Bell. I'm Scott Wobner, live from Post 9 here at the New York Stock Exchange. This make or break hour begins with the future of this rally as big earnings loom next week. We'll ask our experts, including the Wharton School's Jeremy Siegel, over this final stretch, what's at stake for the post-election pop for stocks. Let's take a look at the scorecard here with 60 minutes to go in regulation. We've been in the red all day. Perhaps as Fed Chair Powell told that gathering in Dallas yesterday, you saw it here live. The Fed in no rush on cutting rates yields at the short end moved up on that.

We're watching all of it closely today. There you go. Ten year, 426. Two year, though, almost 430. All right. We're keeping an eye on NVIDIA as well because it reports earnings next Wednesday. That's going to be big. You'll hear a lot about that. It does take us to our talk of the tape, the run for stocks and rates and where both might go from here. Well, let's welcome in the Wharton School's Jeremy Siegel. It's nice to see you as always. Welcome back. Thank you, Scott.

How concerned are you about this backup in rates? It's not surprising and uh because of the strength of the economy because of uh the trump program um which i think is negative for rates could be positive for stocks but not positive necessarily for rates it's got i'm looking at uh what the the june fed funds futures now said, I mean, looking at the month of July for that June meeting, only two cuts are built in for including the December meeting. So if we're going to have a cut in December, the market is saying only one cut in the next four meetings to get us to the middle of next year. Over 100 basis points of cuts have been wiped out of the Fed easing process since that September large 50 basis point cut. Are you good with that?

Yeah, that's troubling the market. Are you good with that? Or you don't really think they needed to overdo it in terms of cutting, right? You know, look, I think the Fed says the long-run Fed funds rate is 2.9. That's way too low. I've been saying that for a long time. I think it's somewhere between 3.5 and 4. Now, we're 4.58 now, so we still got a little ways to go.

But one has to remember that if we're going back to normal interest rate structures, the 10-year on average is between 100 and 150 basis points above the Fed funds rate. So even if we get to 3.5 to 4,, that still says the 10 year is going to five. And if Trump enacts every single tax cut that he wants to, if he puts those tariffs on, then we're talking about potentially higher. So that is a headwind for equities in 2025. To what degree? To what degree is it a headwind? Does it change your whole forecast or just temper it slightly? What do you think? I haven't made it 2025. Listen, there are a lot of very positive. There's a lot of very positive things about the Trump. And first of all,

the extension. Now that the Republicans have taken the House, I think there's no question that we're going to get an extension of the 2017 tax cuts. And that's very positive because, as we know, the Democrats were chomping at the bit for raising the corporate tax rate, cutting the capital gains rate. None of that's happened. That is very, very positive. Less regulation is very, very positive. In general, I think we need a lot of mergers of small and mid-sized banks. We need a lighter hand on other mergers, although there's some ambiguity about whether, you know, Trump is how anti or pro-merger he is. I mean, but basically

that, you know, Trump is the most pro-stock market president in our history, in the sense that he judges his success or failure as a president more by the stock market than anyone that I ever remember or have ever read about. So he's not going to do something purposeful that is going to tank the stock market. Now, that doesn't mean that they're not going to be a bear market or that he can prevent a natural, you know, ups and downs of the business cycle and unintended consequences in geopolitical events. What I'm saying is that he always keeps one eye on the stock market. That is a very, very positive factor for the stock market. But the bond market is concerned about very different things. Real growth growing up. That's good for stocks. But actually, that means higher interest rates. We still don't know about tariffs. We still don't know what is going to go on with the deportation and the situation really could rock some major industries. I mean, take a look with the vaccine manufacturers today, kind of out of left field, where no one had predicted that that, you know, Trump victory could tank those stocks. So there are still a lot of uncertainties.

I think, listen, we've had two years of 20 percent gains. That's way above the average. And, you know, my feeling is that, you know, we should be satisfied with a 5% to 10% gain in 2025. I think that the higher interest rates and optimistic earnings estimates on some of the firms, we're talking about 12%, 13 percent increase for 2025 when they started hitting reality that we won't have another 20 percent in 2025. You think there's just too too much ambiguity right now on exactly what the new president is going to get done, how quickly.

And then you juxtapose that, I suppose, against the prospect of higher rates. I mean, at what point do you feel like you've got enough clarity to make what you feel like is a well-educated view on what you think stocks can do next year? Well, we did get some clear. I mean, I think, as I said, I think at minimum, the 2017 tax cuts can be extended. Now, there are other tax cuts, a lot of them that Trump has promised. They're going to be much harder. But the market is, I think, sighing a relief. Again, as I said earlier, it looks like the corporate tax rate certainly is not going to go up. I mean, Trump is going to try to get it down further whether he succeeds or not. It's certainly good it won't go up. Capital gains taxes won't go up.

So that uncertainty has certainly been resolved. However, the uncertainty concerning tariffs and the potential effects on how hard they go on deportation and how that affects certain industries quite a bit, agricultural industries, construction industries, as we know, housing industries, which are already going to be challenged by higher interest rates. I don't think the 30-year mortgage rate is going to go down in 2025 at all. So there are still some outstanding uncertainty. We got some certainty. Thank goodness we got a process

that everyone agrees that Trump is the winner. We don't have that problem. We have the tax cuts to be extended. But that certainly doesn't clarify everything. And I think that Trump will have to act on clarifying everything in the next two or three months. OK, I appreciate your perspective, Professor. Stay with me and let's broaden the conversation, if we could, with more guests. Stephanie Link of Hightower Advisors, Allie Flynn Phillips of Obermeyer Woods, Steph, a CNBC contributor.

Allie, it's great to have you here with us on set. What do you make of what the professor has said? Well, first, it's great to be here. The professor brought up a lot of very good things. I mean, one thing, even with this week, 2024 has been an incredible year. It's really been so because you've had the soft economic landing, lower interest rates, and really solid earnings in both technology and other sectors.

So first, we really pause on that. The other thing is history has our back. So if you look at presidential time between inauguration days and presidential elections, for the last 50 years, there's only been two times when the market's been down. And that was 2000 and 2008. And that was when you already were in a recession and a severe bull market. How much do you think we've pulled forward, though, because the burst was so sudden and big? Now, it's cooled off, obviously, this week, but we did have a pretty large pop off of the result of the election. We did. But to us, it was more of a relief rally. It wasn't necessarily endorsement of the result of the election? We did, but to us, that was more of a relief rally.

It wasn't necessarily endorsement of the new administration's policies. It was more the fact that you actually had a fair election. You actually now have certainty, which is good. So from that point of view is we think this pullback actually is quite natural this week. Again, like the market got a little bit rich, we're back to something more normal. But the key thing more than anything is picking your spots, finding great opportunities going forward where you have trends that are not based purely on administration, but really in terms of long term trends and really good companies. Steph, what do you make of those points of view? Yeah, I think I agree with a lot of it.

I think that, look, the market is digesting what the Trump administration, what does it mean for growth? What does it mean for inflation? And now you all of a sudden have a Fed that's probably going to be much slower in terms of rate cuts. Here we go again, right? I mean, I can't believe we didn't learn our lesson back this past year. When we started in January, everyone was thinking seven cuts. So we have to just kind of digest that. That all being said, Scott, we're still up 2% in November, both the NASDAQ and the S&P 500.

So you're still having a pretty good month. I think that there is a big misinterpretation in terms of the inflation data. I mean, I think, yeah, the core CPI and the PPI in the threes is not great, but it's because we are growing faster. And I will take faster growth and a little bit more inflation from an investment point of view any day versus the reverse, because that gives companies pricing power and it also helps the margin story. And if you have a mid single digit revenue growth in a two, two and a half percent GDP world and margin expansion, you can get to eight to 10 percent earnings growth for this year and also for next year. So I just think we have to just settle down and realize we're growing faster. We have a little bit more inflation.

Maybe the neutral rate is at 4.5%. We can live with it because, by the way, we have a consumer that just won't quit. I mean, those retail sales numbers this morning, if you think about it on a year-over basis, running up four point six percent. You had an ISM services number a month about a month ago, no near 60. And this is really a good time for the consumer, even in the face of higher inflation. And so I think, yeah, you want to pick your spots for sure. I love that we're seeing the broadening out. I mean, the Russell 1000 growth is actually down two percent today. The Russell 1000 value is only down 40 basis points. And so you are seeing an expansion into participation. And I like that. I mean, what do you think about that, Professor, that, you know, if rates go up,

they're going up for the right reason, have a little more inflation, but you're going to get a lot more growth. I mean, we can some would certainly take issue with the notion that the neutral rates at at 4.5. I mean, that may be 50 bps heavy to some of the other projections that I've heard, but that's neither here nor there. I think it's between 3.5 and 4, yeah. Yeah. But what about the idea that we can tolerate higher rates if it's for the right reason?

Well, I agree with Stephanie 100% about stocks. Stronger real growth is great for stocks. But is it great for bonds? No. Long-term bonds, if stronger real growth brings higher interest rate, again, good for stocks, good for the economy, all right, but not good for the bondholders. So that is, you know, everyone who was telling me, oh my goodness, in September, we're going to have mortgage rates back down and, you know, four and a half, five percent or something, not for long-term mortgages. You got an adjustable rate mortgage, yeah, that's still going to go down a little bit, but most Americans don't

want that. So, you know, this, you know, extreme bullishness that we had seen about, you know, housing because of the Fed lowering rates. I don't think that that is looking so favorably now. OK. All right. So I mean, we we don't. I think everyone knows how how much construction is done by immigrants, legal and illegal immigrants. How is that going to suss out? That's a big question. You talk to people in the real estate industry, they say, yeah, we need some clarity on that particular issue there. Housing is a really important industry.

So we need clarity on a number of things. Tariffs, we need clarity on the immigrants. We need clarity on a number of those. Tariffs. We need clarity on the immigrants. We need clarity on a number of those factors. We got it on some. That is very good. But there's still other questions that we have to answer. Ali, do we end up in a competitive environment, cash versus stocks? If, let's just say, the professor's right, maybe you don't want to hold bonds,

given if rates continue to back up, they remain higher for longer. What about the idea, though? I mean, higher rates can be good once again for cash to some. But then again, you know, if you have the prospects of a faster growing economy, you still may get some cuts. You're probably going to get cuts. Right. I mean, that's the baseline. Earnings are going to live up, and then stocks can do pretty well. They can. And one thing is also you want to have balance. So you want to have those stocks, which we all know is a great inflation hedge over time.

That's really in terms of where you create real values in terms of owning high-quality stocks. And we can go into the housing sector, which the professor just talked about. But the nice thing is also in terms of it is good to have some bonds. I just don't want people lulled into a 4%. That is not a competitive rate over time. But just going into some stocks. So for instance, in the housing sector, it is one of those cases where we are at a 40-year low in terms of turnover.

Equity in houses has nearly doubled since 2019. And so for people to be able to tap that and to be able to upgrade that really important asset to us is really critical. And that's something for like a Home Depot would do very well in that. A Sherman Williams, think about in terms of paint. It's a low cost, high value added thing to be able to upgrade your home. And those are sorts of opportunities we see on the equity side. Steph, I mean, that's your space this year, right? Wasn't that one of your

top ideas? Yeah, Home Depot, it's one of my largest positions as well. I mean, can you imagine when we do have a favorable rate environment and mortgage rates do come down, hopefully eventually below 6%, what the pent-up demand is going to look like? And in the meantime, Home Depot has done an amazing job in terms of profitability and improving their same-store sales. They made an acquisition in SRS, so they're increasing their pro mix. That's good. I think that the valuation is the only thing that's a little stretched. But if you believe in a recovery in housing, that means your earnings are depressed. And so I think that this is a great story. And I expect, by the way, next week, I think Lowe's is going to be just fine as well. And I think right now you want to own the improvement companies over the builders. The builders have had a great couple of years, but I still look to buy weakness in something

like a D.R. Horton for sure. Professor, pretty ugly day for mega cap stocks as I look at them here. And we spin the conversation forward towards what's going to happen next Wednesday when NVIDIA reports. NVIDIA is down today. Obviously, it's had an incredible run. It's up still eight percent or thereabouts over a month I mean how do you look at what you think they have to deliver I don't need numbers but in terms of the degree of which they need to be to make those stocks look like the place you really need to be well we know when you sell 35 times earnings or more, there's no room for error. Even matching expectations is not enough.

They have been bringing home the bacon. They have been beating them. I think the AI store is still intact. But again, there's very little room for error. And they are also affected by long-term interest rates as as they are long-term assets, these mega-cap stocks. I mean, I think about it. I mean, even though I think that interest rates are not going down as much on the short end, they will go down. Money funds will be going down to the low threes next year.

And I'll tell you, dividend-paying stocks, there are a lot of them that are 3.5%, 4% well- well covered with inflation protection and growth possibilities. And we know how many trillions of dollars are, you know, on the sidelines in those money funds. So there's still gunpowder there, I think, to propel the stocks forward. But I think there are going to be some headwinds of those uncertainties and those higher long term rates that we have to we have to navigate through. Steph, a new position for you this week was Rockwell Automation. Why? Yeah. So, you know, I've been on the reshoring theme for over two years now. I think it's a $10 trillion opportunity. Most of the stocks that I own, that you know I own, is Quanta Services, Eaton, GE, Vernova. They're up 50% plus year to date. They've had a nice run reflecting a lot of

this good news. Rockwell is actually down 7% on the year, one of the best in class companies in the business with a really strong management team. A new CFO, by the way, who has a very proven track record in terms of margin expansion and product innovation. Their end markets are bottoming. They're taking costs out. They have very conservative guidance and easy comps ahead. So I wanted to try to find another thing, another name on this theme, but that it wasn't reflected in the valuation just yet. OK, Ali, GOP ones, given the degree of uncertainty that exists around health care policy in this country, some would suggest maybe that ante was upped, if you will, with the expected nomination of RFK Jr. Do you still like those stocks? How are you

thinking about those stocks? Because they're on your list. We do like them because you think about obesity is still a global issue and globally people really want to address it. And as we know, it's tied to so many other severe health issues. And these are finally drugs that are able to battle those things. Both Eli and Lily Novo-Norris, they have first mover advantage. They have huge moats in their business. They'll likely buy the drugs that are competing with them. And it's one of those cases where they actually have a better return on investment because they don't have to build out marketing infrastructure. They already have that.

So particularly with this most recent correction, we really like these companies. Even with what may be a changing political calculus, you factor that in, in the way you're thinking about these stocks at all? I mean, some are suggesting maybe the goalposts are moving as we speak as it relates to not only these kinds of stocks, but the vaccine makers, et cetera. To us, it's always a great reminder. These companies are run by really smart management teams that can pivot as we have new policies come to fruition. So if you look at those long-term trends, you identify issues that really need to be tackled over time, and you find companies that are trying to target that, that to us is a great long-term holding. It might be sideways for the next six months, but the key thing is they're creating great value over the next couple decades.

All right. We'll leave it there. Allie, thank you. Steph, thank you. Professor, when you have your outlook for 25, you give it to us first, OK? I mean, that's our deal, right? We'll be there. Thank you. You bet. Appreciate you as always. Professor Jeremy Siegel. Let's send it to Pippa Stevens now for a look at the biggest names moving into this Friday close. Hi, Pippa. Hey, Scott. Palantir hitting a record high after the software provider

said it is moving its listing to the Nasdaq from the New York Stock Exchange, effective Tuesday, November 26th, at which point it will also be eligible to join the Nasdaq 100 index. Palantir overtaking Vistra today to become the top S&P stock this year. And Bloom Energy is on track for its best day on record after announcing a supply agreement with American Electric Power, supplying up to one gigawatt of fuel cells to power data centers. Piper Sandler upgrading the stock to overweight, saying the agreement provides proof of concept that the company's products can power large-scale data centers, though shares up 59%.

Scott? All right, Pippa, thank you. Back shortly, we're just getting started here. Up next, our technician Jeff DeGraff is back with us to tell us how he's navigating the semi space ahead of NVIDIA earnings next week. Give us his overall market view, too. We are live at the New York Stock Exchange and you're watching Closing Bell on CNBC. NASDAQ leading us lower today. Tech, the worst S&P sector. This as the post-election pop pulls back and investors brace for NVIDIA earnings next week.

Let's bring in Jeff DeGraff, Renaissance Macros chairman and head of technical research. Welcome back. What's your message here on what you're seeing? Let's just say the rally as it stands today. Well, the rally as it stands today, Scott, thanks for having me, first and foremost. Little overbought internally in a trend market, not a momentum market. Well, the rally as it stands today, Scott, thanks for having me first and foremost. Little overbought internally in a trend market, not a momentum market. So this move that we've seen after the election didn't change any of our momentum work that would suggest that we're kind of in an escape velocity. I think we're in another leg higher, but I don't think it's going to get away from us.

That implies that we're going to have consolidations. You want to buy those consolidations as they get oversold or as they get into good support levels. And I think we're still more in a, you know, cyclical bias or tilt, if you will, versus defensive. I still think that that's the right call. I will say it's tricky because semiconductors are not really holding up and that's a pretty big cyclical sector or industry group. So that's one area that's inconsistent with what we're seeing. But I'm still bullish and I think we're going to be in a decent spot through the end of the year, probably into the inauguration, and then we'll reassess how some of these things have held up.

It's been a really interesting view of how semis have traded versus software, for example, the latter up, the former down. You say that you want to rotate out of semis broadly. Can you be more specific on why you think that and how broad? Yeah, look, I mean, it's relative performance for us, Scott. That's where we draw the line. And so we've seen most of the trend conditions in an equal weight relative performance on the semiconductor index for the Russell 1000. Really, with the exception of, say, Texas Instruments, Broadcom, and NVIDIA, there's a lot of bad charts there. That's everything from Qualcomm to Microchip to Micron, for that matter.

So NVIDIA is kind of the exception to the rule, and that always makes us nervous when one stock is swimming against the tide of the entire group. Forget the market, but when it's swimming against the tide of its own group, that's usually something that we try to avoid in mass. So we're a little bit more cautious on NVIDIA probably than you might otherwise expect given the chart. I mean, is one tide, though, if NVIDIA delivers a blowout quarter, is that enough in and of itself to raise all the other boats? It might be, but your previous guest hit something, Professor Siegel hit something really important, right? It's priced for upside. And so there are high expectations. And that's usually a point, particularly when you have

deterioration in the group, that you want to be careful. I'm not overly bearish on NVIDIA. I just think it probably trades closer to 120 before we're all said and done. I would say if we get a good oversold condition in NVIDIA, that might mark the interim bottom or interim low for the group. So that actually be kind of exciting for us to see that because they'll usually take out even the leaders by the time the group makes some type of low. So seeing an oversold condition in NVIDIA might actually be a cleansing process, not all that bearish. So I just keep that in mind. But I'm not going to swim against the tide of the group with one name, even if it is a dominant player in AI, given the expectations where they are today.

And you mentioned software. I mean, a lot of the software names are improving. They look better. We think that it makes a lot of sense to reallocate dollars away from some of these deteriorating semiconductor names and look at some of these software names that are starting to break out because they do have good momentum there. What do you see in the retail charts that make you optimistic there? Well, you know, the good news about the overall market, Scott, is that there are a lot of breakouts. There are a lot of good looking absolute charts. I can't say on a relative basis that the retail space is table pounding by any means, but at least on an absolute basis, it's holding up. So if you look at the XRT or some type of ETF equivalent or even the industry group, we do see that these names are improving. They appear to be

troughing out. That's what we hope to see. We'd like to see a little bit more relative strength here with these names. But obviously, going into the Christmas season, starting to get a little bit of a boost out of these names would be helpful. It's part of the cyclical call that we have. And again, I think that those charts on an absolute basis look fine. I'm hoping to see a little bit more relative performance between now and year end to provide a better runway for 2025. Since health care is a popular topic today for a variety of reasons, some obvious, some maybe not. You look at a biotech where you suggest it's oversold to the point where it's bullish, you think? And how soon?

Look, this group has been the bane of our existence for 2024. We call it our top contrarian play for 2024, back a year ago. And the biotechs were working up until about a month ago, and then they just kind of gave up the ghost. The others haven't really done much. So it's been a struggle. I would tell you that the three-year performance, risk-adjusted performance that we see in the group is as bad as anything we've seen over the last 45 years. Obviously, healthcare is not going away. So I like that setup. But we broke the relative performance of biotech earlier in the week. That, to to us is a bad sign, not a good sign. I would become a contrarian in that group if we saw excessive ETF outflows, if we saw the option

positioning in a better spot, but we just don't see it yet. I think there's a lot of concern about this nomination of RFK. We'll see if that kind of sets some type of low from a sentiment standpoint. There's a lot of concern around that. But I don't see it yet in the numbers that we look at, which is we really want to see some type of cleansing or washing out of that group. And unfortunately, until we get that, when we see relative strength breakdowns, you're better off to step aside until you see some type of more vigorous activity of people trying to price things to the downside and just giving up on the group. So we're not quite there yet, unfortunately. Do you think the nomination, expected nomination news is the reason for that, the way the chart looks like it does today? I think there's, I

certainly think there's some of that. I mean, it's really come to the fore here in the last week. So I do think that there's something to that. It's clearly not the entirety, but it's an easy thing for people to get emotional around and make decisions around kind of big picture stuff that really doesn't have a long-term impact. So those things are always interesting to us. I mean, we've talked about it before on the show that policy uncertainty is almost always best to be used contrarily.

So the more concerned the public is about those things, the better you are to be bullish and be on the other side of that. So I don't think that has reached fever pitch yet, but that's something that we'll be watching for as we go forward. Good weekend. We'll see you soon. Thanks, Jeff. Thanks, Scott. All right, Jeff DeGraff. Up next, tariff talk dominating earnings calls as companies prepare for a second Trump term. The details and the industries that could be impacted the most we'll discuss after the break. We are back on the bell. The amount of publicly traded companies mentioning tariffs on earnings calls has soared recently, as you might expect, as they gear up for a second Trump term. Megan Casella here with more on that developing story. Still, Megan.

Scott, that's right. We combed through the transcripts to get a sense of how much of an issue this is becoming for companies. And with help from CNBC's data team, you can see here the number of S&P 500 calls where tariffs came up more than doubled between the second and third quarters this year. More mentions in Q3 than in all of last year combined. And executives are talking about different ways of handling the tariffs, shifting production, boosting domestic manufacturing or rerouting supply chains to minimize their impact. But we also found no shortage of companies talking about passing the cost on to consumers through higher prices. And this is just a sample, but all the companies you see here, some auto companies, personal beauty brands, industrial suppliers, consumer goods, all talking about lifting prices. And it raises questions, Scott, about inflation,

but it also runs counter to what we've heard from the pro-tariff camp, this idea that foreign countries will be the ones to pay the price. Scott. Megan, thank you for that setup. Megan Casella. Let's get a closer look now at how those potential tariffs could impact one key importing business, the wine industry. Joining me here post-9 is U.S. Wine Trade Alliance President Ben Aniff. Welcome. Thank you, Scott. I mean, it's Friday, so people are thinking about this, I suppose. I mean, you've seen this movie before, correct? Under the first administration, you had 25% tariffs on European food and beverages. So does that experience make a difference in how the industry itself is preparing to deal with the potential of it again?

I think it really does. But I think it's a learning opportunity both for businesses here in the United States, but also for the Trump administration and the U.S. trade representative. They are starting, we believe, to understand that when they put tariffs on products, they need to ensure that the damage stays in the target export markets overseas and limit damage on products that are particularly dependent upon by small businesses here in the United States, like restaurants. So that first round of tariffs, which you referenced around the illegal subsidies to Airbus, devastated the U.S. restaurant industry.

It's a particularly sensitive and complicated business, and we're hopeful the administration understands that the next round of tariffs need to avoid that damage. Okay. You say it's complicated. So let's explain why so, because I'm not sure everybody understands just what happens from producer to your glass tonight, wherever you may have it. So you're a French or Italian wine producer, for example, okay? You have an importer who sells to a distributor, who sells to a store or a restaurant. It's the importer who pays the tariff, passes it off to the distributor, who then passes it off to the customer. Do I have that chain correct?

You're exactly right. Effectively, this is the Dom Perignon wine store problem. There's no such thing as a Dom Perignon wine store. A French or Italian wine producer has to sell it to a U.S. importer. The U.S. importer has to sell it to a U.S. distributor. I mean, those are the laws you're describing. Exactly. This is the three-tier system of distribution,

and those businesses have to sell it to U.S. restaurants and retailers. And because of this, U.S. businesses, mostly small, independently owned, make $4.52 for every dollar they send back to France. This is incredibly different than a whole swath of choices the U.S. TUR will have. I'd contrast it, for instance, with, let's say, French fashion goods. A French producer can manufacture it. They can import it themselves into the United States. They can set up their own store in North Park Mall in Dallas or the

gallery in Houston and take 100% of those revenues back to France. So when the USTR is making choices about what products to tariff, they have to begin understanding which products damage export markets and which products damage small businesses here at home. Okay, I'm going to solve the problem. I'm just going to have a glass of cab, right, tonight instead of the Italian red that I was going to have. But it's not so simple, is it? Absolutely not. Those same U.S. distributors, by law, they distribute U.S. domestic producers. So when U.S. wine distributors are damaged by tariffs on imported wines,

it means they don't have the financial capacity to bring on new domestic producers. So it actually hurts the sale of U.S. wines. Does it raise the cost of U.S.-produced wines? The real problem is they lose access to market. And this is why, you know, the Napa Valley Vintners are against wine tariffs. Wine America is against tariffs. Tariffs on imported wine do damage to hundreds of thousands of small businesses in the U.S., including domestic wine producers. of inflation overall and supply chains, things like storage facilities, the cost of storing wine. You know, importers and then distributors store a lot of wine in facilities before they

reach the retail or the restaurant level anyway. How have you seen costs impacted on those? Look, supply chain has been a disaster. Costs everywhere have risen. Small businesses around the country have been heavily impacted by inflation. And these are the types of things that the Trump administration and the USTR is going to have to really consider as they start to implement tariff policies to try to impact discriminatory trade practices overseas.

They can't do it at the cost of American workers. You run a merchant here in not far from the stock exchange, correct? That's right. Tribeca. You anticipate having to spend a lot of time in D.C. over the next few months making your case? We do. I mean, the good news is small businesses all over the country are starting to tell

their story. And people in Congress, I think, are really interested in hearing how important these products are to businesses in their own hometowns. We'll leave it there. I appreciate you coming on with us. Really appreciate it. That's Ben Aniff, U.S. Wine Trade Alliance president. Up next, we track the biggest movers into this Friday close. Pippa Stevens is back with that. Hi, Pippa.

Hey, Scott. One chip stock is getting a big side of dip after Outlook came up short. The name to watch coming up next. We're almost 15 minutes from the closing bell. Back to Pippa Stevens now for the stocks that she's watching. Pippa. Hey, Scott. Alibaba shares are sliding after the Chinese e-commerce giant posted mixed Q2 results. Earnings beat estimates, but its revenue fell short of expectations amid weak consumer spending in China.

Shares are still up about 13 percent on the year. And Applied Materials is in the red. Q4 earnings beat on the top and bottom line, but Outlook for the current quarter fell short of estimates. Deutsche Bank calling it a solid report, but said the company failed to meet a more optimistic investor bar. Scott? Pippa, thank you.

Pippa Stevens still ahead. New data showing some serious strength in the retail sector. We'll drill down on those numbers and break down what to watch for from retail earnings next week. It's coming up next on The Bell. Up next, we will tell you how President-elect Trump's pick for HHS could impact pharma stocks. That and much more inside the Market Zone next. We are now in the closing bell market zone CNBC senior markets commentator Mike Santoli here to break down the crucial moments of this trading day plus Angelica Peebles with the very latest moves in pharma today and there are some big ones and Courtney Reagan looking ahead to retail

earnings they are out next week first take though goes to Mr. Santoli right here with me. What is your what is your view here as we end this week? Mostly relatively orderly kind of retracement back to some pretty obvious levels for the big indexes, I would say. Russell 2000 is back below where it opened the day after the election. The S&P 500 has really been sitting all day on the pre-election highs from mid-October. So it's one of those. Let's see if this was for real. Even within that, it's very rotational. You've been talking about just the heavy pressure on the familiar mega cap growth leaders of the NASDAQ.

You know, one third of stocks are up today. So it's still this market that's trying to sort potential winners from losers in this cyclical moment. We know treasury yields are pretty close to where we think they might start to press a little harder on stocks. Maybe they're not there yet. Is that what this is about, you think, more than anything? I think it's all part of the same mix, yeah. I mean, look, we're pricing out a lot of what the Fed was thought to be doing in terms of rate cuts,

in terms of degree and pace. But it's happening alongside, you know, better than expected economic performance and maybe an accelerant to that if some of the policies come through. So not for bad reasons. You have the U.S. dollar index up to the very top of its two-year range. All that stuff says something very similar. I also think this pullback is probably better than just kind of uninterrupted sprint momentum chase higher, because that was going to start to get unstable based on what some of the speculative parts of the markets were doing. It felt like it was heading in that direction until, you know, the backup in rates,

and then maybe it took a little bit of the sizzle out, which, you know, you suggest is a good thing. I'll come back to you in a minute. Angelica Peebles is watching pharma stocks today, which obviously are moving on the discussion about whether RFK Jr. is going to be confirmed as HHS secretary. Exactly, Scott. And right now, though, I'm hearing a lot of people saying that we need to assume that he will be confirmed and go off of that. And so that's why you're seeing vaccine stocks getting hammered today just across the board. And there's a lot of anxiety about what will happen, what this will mean for the rest of the pharmaceutical industry. Right. HHS controls not any of so many different agencies across the board, FDA, CDC. And so people are really concerned about the uncertainty that this brings. Today, the XBI is down about five percent.

And this just speaks to the fact that people don't really know what's going to happen next. It is early. We have to see exactly what he would do, again, if he is confirmed, if he does get that seat. But again, a lot of anxiety here today, Scott. Okay. Angelica, thank you. Angelica Peebles to Courtney Reagan watching Retail Force. We have earnings coming next week and some data today. What do we need to know? Yeah, Scott, you know, the total retail sales were stronger than expected, but the core retail sales actually fell slightly in October from September. And remember, many retailers again offered early holiday sales in October this year. So that's in those numbers, too. Sales at electronic stores rose 2.3 percent month over

month. Online sales jumped slightly, but sales were lower at clothing stores, furniture and sporting goods stores. So when it comes to the big retail reports ahead next week, we've got a lot. Walmart certainly looked at as a proxy for the broader consumer. Home Depot, that was better than expected, but it's still fighting against high rates deferring big home improvement projects, which is likely going to be a similar story we'll hear from Lowe's next week. TJX, it's been a top pick for Citi. TD Cowan hitting all-time highs ahead of Eats report. Overall, though, of course, market watchers want to know if this uncertainty that executives have cited for months now has alleviated, maybe at all, in the early days of the fourth quarter now that the election is over. It may be too soon to tell, but we're going to ask those questions anyway. All right. Yeah, we will. Thank

you, Court. We'll talk to you soon. Courtney Reagan. Mike Santoli, NVIDIA, next week. Let's go. Next Wednesday. The trade hasn't done well. What do we think? It hasn't done well. It's been hanging around now really at the levels that were the highs from back in the summer in June. What I think is fascinating is if we didn't have an election to kind of preoccupy ourselves and all the attendant issues, I think we'd be having a much louder debate about AI and whether, in fact, it's hit a wall. I know there's been a lot of this chat, a sell side notes are trying to play one way, one side or the other. But some folks inside these training models have been saying, you know, the next generation has just not been as big a leap as we expected or as the other ones. Now, question is, does that mean you just have to throw more hardware at it and make sure that you redeem what you've already invested and that would be favorable to NVIDIA? I think it's going to be trading off of 2026 demand estimates

once we get these numbers on Wednesday. Not so much about what the latest quarter reported. But, you know, as Jeff DeGraff was saying, overall semis have been a big liability for this market. And the question is the other platforms, right? I mean, you have some of the other, you know, the Amazons and the Microsofts have been very, very, you know, had a hard time getting out of their own way. What's your take on what's been happening in the Bitcoin and crypto space? I ask you this as Coinbase, two minute warning here, Coinbase is up another 10% today. It's up 56% in a month and a big portion of that has been since the election.

And, you know, Robinhood too. I mean, what you can know about this frenzy is that volumes have gone through the roof. Interest has gone through the roof. And Coinbase, whether in fact it makes all the sense in the world and whether the price can hold up here of the coin itself, that level of activity is beneficial for Coinbase. I've had a hard time getting a clear answer on, OK, what precisely is likely to change in the new administration that makes Bitcoin headed higher? That means that the industry can flourish even more. And mostly what you hear is, well, the line between fraud and no fraud or something that's okay with regulators and not okay is going to move in favor of the industry.

It doesn't mean that that suggests better products, more products, more uses. It just means as a store of value and as a hive for just capital to find itself. It's one of the ultimate deregulation trades. Well, true. Think about that. Right. Right. But less regulation clearing the way to do what?

Right. And if the argument is that later, that's the point. If the argument is, well, maybe some institutions have had to hold their nose and or maybe not get involved because it seemed like the SEC could just kind of wipe it away, then maybe they're back in and they can sustain it. But 90K is an interesting number. Yeah, it is. 91.5 as we speak.

It's another 4% today. We'll go out decidedly negative, especially for the NASDAQ, which right now is down more than 400. That's a loss of greater than 2% today. Russell 2000 under some good pressure, too. Obviously, backed up yields affecting that trade. Everybody have a good weekend. Bells are ringing. We're going.