Closing Bell - Closing Bell: Tech Giants Under Trump, Bitcoin Rallies & TikTok Ban 12/16/24

Episode Date: December 16, 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 Scott Wapner, live from Post 9 here at the New York Stock Exchange. This make or break hour begins with surging tech, which is once again leading this market higher. Alphabet, Amazon, Apple, all hitting new highs yet again. So is Tesla. Star analyst Dan Ives is here in a moment, raising his price target even more. He'll join us in a moment to explain. In the meantime, the scorecard with 60 minutes to go and regulation looks like this. NASDAQ, as you might guess, is outperforming. It has been all month long. Dow's flat. S&P is getting a lift.

Why? Because mega cap tech, the biggest names of this market, are the ones leading today. Broadcom's rising another 10% as well today as Goldman raises its price target to $240. It's a new record high for Bitcoin. The cryptocurrency continuing its amazing post-election elevation. We do have a special report there coming up as well. It takes us to our talk of the tape, whether another tech run is just getting started. Let's ask Dan Ives, Global Head of Technology Research at Wedbush, with me here at Post 9.

Nice to see you, man. Great to see you. Should we be surprised at all at the fact that these stocks are once again surging, that they're hitting in many cases new highs almost every day? I think it's, look, it's get the popcorn out because it's just the start of what's going to be the AI revolution as the second, third, fourth derivatives play out. Me and you have talked about it. Trump administration in. That's a Goldilocks scenario for tech deregulation from FTC to NHTSA and others. And that's why when you look at Tesla and others, the street now is just starting to realize, I think, how this plays out. And that's why I think over the next 12, 18 months, NASDAQ 25,000. OK, so that's what this is primarily about.

The Trump administration being more friendly for tech. No surprise that you've got a parade of CEOs down to Palm Beach, a pilgrimage, if you will, to talk to the president-elect. I think there's two reasons. One, it's the multiplier. I mean, for every dollar spent on a video chip, there's an $8 to $10 multiplier across the rest of tech. So when you look at enterprise, when you look at software, you look at cybersecurity, other parts of infrastructure, I think now you're starting to see that trade spread out because it comes back to it's 10 p.m. in the AI party that goes to 4 a.m. Now behind the velvet ropes, Benioff and others are getting let into the party. But when you look at what's happening from a

deregulatory perspective in the Beltway, that's why this is setting up for what's going to be a golden era for AI. And now, from a deregulation perspective, FTC, whether it was dealmaking, NHTSA, when it came to autonomous, now it's just getting started to what we view as really what it's going to be, just a unique, special moment. Do you think that the cases that were either talked about or brought in the current regime of Washington, the White House. Are they going to disappear? Are they not going to be as onerous as maybe you once thought? I mean, game that out for me, because that still is an overhang. Look, the Friday the 13th and whatever the worst horror movie, Nightmare on Elm Street for tech stocks has been Lena Kahn.

Right. So with her gone from the FTC, I think 80 and 90 percent of what I'll say the overhang starts to get removed. DOJ and others clearly that's going to continue to play out when it comes to Alphabet, when it comes to Apple and others. But I think the antitrust, the concern, I think a lot of that starts to abate. But the biggest thing is this is just this is the beginning. Get the engines sort of roaring. Who wins the most? Who wins the most? Well, I think Microsoft is going to be, is going to win the most from an M&A

perspective, and they're going to get aggressive on M&A. I think you're going to see Alphabet and Amazon also continue to expand, not just from a cloud perspective, but when it comes to chips, and I continue to think the biggest winner in all of this, at the top of the mountain, is Musk and Tesla. They continue to be the biggest winner biggest winner in all of this at the top of the mountain is musk and tesla they continue to be the biggest winner it was a bet for the ages in terms of musk betting

on trump so let me break that down there's a lot there's a lot in there i want to get you first microsoft's your first answer as to who's going to benefit the most what's going wrong with that stock why is it so dramatically underperformed all of the others it hasn't hit a new high since the summer yeah i think the street is and i think a little is happening with NVIDIA as well, I think they're underestimating just what this enterprise demand is going to look like when it comes to more and more. Only 45% workloads in the cloud today. As more and more of these AI use cases get launched,

Microsoft's going to be a core beneficiary. I believe, Scott, we're sitting here a year from now for a trillion dollar market cap. That's why Microsoft, along with Alphabet, continues to be table pounders when it comes to large cap tech. OK, next, as it relates, I guess, in part to to Microsoft, Musk versus Altman, Musk versus OpenAI through XAI, right? Follow. Microsoft's such a big investor in Open AI. There's no potential fallout from a winner take maybe less than we originally thought because of Musk's big bet on the proximity to power in the White House. Yeah. Look, I think this UFC battle that's going to play out between Altman and Musk, I think there could be some fallout, but the fallout would be more from an OpenAI perspective

rather than Microsoft, because our view is that Microsoft is gonna gain more and more share when it comes to AI, when it comes to these workloads. And I think it's really more now about Musk when it comes to XAI going up further and further with Altman and OpenAI and their sites. And that's why i continue to view

tesla and must broader is is probably the purest play way to play ai when you think about that ecosystem and i think it's really through tesla and autonomy what what is apple's incredible run more lately attributable to look mean you we sat there at WWDC, right? The bears are all coming out of hibernation mode, saying that this is over iPhone 16 or 190. And now you look at it today because I think the streets are starting to recognize, even though the bears can't see AI in the spreadsheets, is that the consumer AI revolution, it's coming through Cupertino. iPhone 16 is just the start of this elongated super cycle that's going to play out. And I think what we're seeing now is more and more developers build hundreds of apps on the Apple ecosystem in terms of Apple intelligence. The consumer AI revolution comes through Cook and Cupertino, just like the enterprise AI revolution comes through the godfather of AI, Jensen and video. When you see that, you know, Tim Cook's down at Mar-a-Lago and he's dining with the president

and you know, he has had, um, a real deft touch, I think is fair to say in the way he's cultivated his relationship with then president Trump, now president elect and soon to be again, um, president. You think that's accounted for as part of this move in any way? I think maybe a small amount is accounted for, but not enough. Because Cook, 10% politician, 90% CEO, no one understands Beijing and China as well as Cook. And I think as this all navigates, the way I see this all playing out, you will have

carve-outs when it comes to tariffs for Apple, Tesla, and ultimately for Nvidia when it comes to chips. And that's why Musk is going to play a key role in these tariffs. But Apple, I think they're a winner on both sides. They're a winner in China and they're a winner in terms of what we see from this AI revolution. More and more, you look at Masa and all the innovation. Guess who's going to benefit from that? U.S. tech companies as more and more of this happens in the U.S. All right, let's talk going to benefit from that? U.S. tech companies as more and more of this happens in the U.S. All right, let's talk Tesla. We saved that for last. Your price target is $515. Is that right? $515. And again, that's conservative. Our bull case is $650. I believe we're sitting

here a year from now, it's a $2 trillion mark cap. And even though we've talked about on the show since trump that was obviously not just that was a lot of a ticket for musk right in terms of when it came to what that bet's going to be for autonomy i mean like like that's the spend of of like 275 million dollars or whatever the number ends up being is what musk spent um or contributed as part of the whole campaign. That's what you're talking about, the unbelievable return on investment. I mean, one of the greatest, I don't know, you want to call it a trade? One of the greatest trades in the history of the universe. A poker move for the ages in terms of ultimately what you saw play out because now the autonomous vision, it's going to play out.

And when you look at Nitsits and when they're going to do a sleep the leg situation relative to the bellways this all plays out and that's why autonomous alone we think is worth a trillion dollars and i think right now okay deliveries and you go through every quarter that's 10 of the story you look now at robotics autonomous what i've used the core ai play that's why i think 515 would be conservative 650 is the bull case and as this plays out the biggest winner from all this at the top of that mountain that mount rushmore is must do car sales even matter i think car sales at this point it's called 10 relevant the reason i say that the whole story now it's about 7 million vehicles out there what will

be 10 million vehicles next eighteen months what is that fsd penetration look like and then ultimately cybercab autonomous as it all plays out of engine detroit that three one three area code they're gonna be calling moskowitz comes o e m in that technology when it comes to ff and what about what was already falling demand for evs everywhere i think some of the impact on that? Look, I think in China, and I think even this quarter, we're seeing growth, and I think it's kind of come out from the abyss. We're seeing a stabilization.

The price cuts that were onerous have started to, I think, stabilize. You think that's done? I think 99% of that's done. Gross margins have now stabilized. And that's why if you're a bull, you're sleeping very, very well at night for Tesla because now that's all stabilized. You're going to have 15%, 20% delivery growth next year. And now the gold at the end of the rainbow, it's autonomous.

Let me ask you this. Had Trump lost and Musk made this huge bet, how much different would the story be in your mind? Let's just take Tesla. It would be dramatically different. I mean, that would be, it would be a much different story because a big part of the valuation of this Tesla story is autonomous. And given the 202 area code and Musk were never going to be doing any candlelight dinners, that was a huge overhang on the stock. Now the autonomous vision, the optimist vision starts to play out because now that Musk-Trump alliance is going to actually, I think, strengthen over the coming years, which is very bullish

for Tesla. And I think investors are now starting to recognize it. And hurt Uber, Waymo? I mean, how do you think that hurts? The 313 area code, GM, Ford, the big three, they're going to have to peel back a lot of that EV. Well, I mean, threats of tariffs have hurt those stocks. As well as also the EV tax credits when those get pulled in January in terms of their overall EV strategy, because Musk and Tesla are a winner. Ultimately, Detroit's a loser when it comes to those EV tax credits getting

pulled. Uber is going to be a net loser relative to what we view as the full autonomous vision playing out. And that's why that stock continues to have overranked, even though we like it long term. But right now, Tesla table pounder, tech table pounder, and even we believe we sit here, it's still just year three of what we see as a five to six year tech bull market. All right. We're going to leave it there. Dan Ives, thank you very much. I appreciate you being here. All right. Let's bring in Cameron Dawson now of New Edge Wealth and Elise Ostenbaugh, J.P. Morgan Private Bank, Samir Saman of Wells Fargo Investment Institute as well. It's nice to have everybody with us. Cameron, I'll start with you. Let's just play off tech. Are you at all surprised by the resurgence of this group? The fact that a lot

of these stocks are once again hitting new highs almost every day, and it is pulling the market forward. I think we have to appreciate that at the end of the year, we typically see the winners keep on winning, the losers keep on losing. So there is a positioning chase, mostly because of those tax loss selling dynamics. We can't ignore that the ratio of something like growth versus value has gone absolutely parabolic in the last couple of weeks. It is a straight line up. And we do know that when you get those kind of performance extremes, it sets you up for a potential snapback. So we wouldn't be surprised if things like value,

the dogs of the Dow, do a little bit better to start the year. The question is, can it be sustained more than just a couple of weeks as it was last year? Do you think that would be the case? We don't see the evidence in the earnings yet. That's the critical factor, is that value earnings need to turn and do better. You need to see an earnings revision cycle move higher, not lower for value as it has all year. So we do think that you have the potential for that snapback just because performance has become so extreme in factors like beta, momentum, low quality, growth, all areas that have been pulled to 95th, 99th percentile. So don't be caught flat footed if things start to reverse, even though the fundamentals, the narratives might be better for growth at the start of the year. I mean, at least one of the bull stories, maybe the biggest bull story, is that you are going to get big time earnings growth,

that you can't really get any more multiple expansion. We've been there, done that. But now you're going to get a tremendous amount of earnings growth and that's going to carry the market higher. That's exactly what we're calling for in 2024 or excuse me, 2025. We think it's going to be the first year in many years that you actually see all 11 sectors of the S&P 500 post-growth. And we are looking beyond just that growth complex for more opportunities. We've got our eyes not just on tech with an emphasis on software, but also sectors like financials, utilities, and industrials as a means of playing the next wave of the rally. Sounds like you want an everything rally. I mean, if you're telling me that all sectors are going to have, you know, really stellar

earnings growth, then where do I not want to be? Well, I'm not saying really stellar earnings growth, but just positive earnings growth for the first time in a long time. And I think if we were calling for an everything rally, we would be pounding the table on maybe the small and mid cap complex. But for now, we're somewhat agnostic between that part of the market and the larger cap part of the market. We do still think, you know, that Magnificent 7 cohort can do a lot of the heavy lifting and likely post stronger growth

numbers than the remaining 493. But I think a broadening of the rally and some degree of rotation should be expected in the year ahead. Samir, how do you see it? Yeah, I mean, look, I think you've got to kind of continue with the hot hands, right? I mean, we like comm services. That's probably the most reasonably priced of the three growth areas. We recently upgraded consumer discretionary. That's where you've got your kind of EV players and your e-commerce players. I think you've got to have a full weighting there. I think you have to have a full weighting of technology, right? That's kind of the epicenter where all this spending is happening. And then I think there's other spots too, full weighting of technology, right? That's kind of the epicenter where all this spending is happening.

And then I think there's other spots too, right? We like energy, right? If you're going to have all this AI power generation, it's going to be powered at least in the short term probably by natural gas, right? So energy has a much cleaner story than it has in recent years. We like industrials. We like financials. Both of those have to do with kind of the financing of AI and just the economy more broadly, along with just building out those data centers, that electrification. And so, you know, again, I think there's a lot of different things that are working. Probably the only thing we would fade would be emerging market equities and defensives within the U.S.

Because, again, I think there's a lot of growth in other places. Are you are you expecting that the run we're seeing late year in mega cap is going to have a January effect? Once the calendar turns, we start thinking about some tax selling and things of the like? You know, I've definitely heard investors talk a little bit about waiting until the new year to take gains. But I think the way you want to go into the next year is a lot of people are waiting for that type of opportunity. So I think you go in with those full weightings. And I think, honestly, if there is a pullback, you probably lean into that to add to some of these areas, because again, I think pullbacks will be very short and shallow, especially in the first half

of next year when all of this positivity kind of plays itself out. Is that what you think, Elise, that you're going to get, you know, if any pullback is just going to be bought because there's all this optimism about what a new administration is going to mean, deregulation, tax cuts, higher growth, more investment in the U.S., all the things that we hear about almost every day now. It certainly seems to be the case, at least on the equity side. But we're looking across asset classes for opportunities as well. You know, in core fixed income, it's probably going to be carry-like returns in the year ahead.

But especially given how hard the equity market has rallied this year last year we also want to look for other ways to renew portfolio resilience and make sure we're kind of like fleshing out the full portfolio would we be foolish to think that we could have another banner year in stocks because we've had two in a row it's happened the problem is after you've had three years in a row of really strong returns, what has typically happened is very poor returns in the following years. So if we get another year of 20% plus returns and it's mostly driven by multiple expansion as it was this year, you do run the risk that forward returns would drop precipitously. And so we do have to be aware that things like leverage are picking up a lot in this market. And this is one thing that could keep people from being able to buy the dip.

FINRA margin loan debt is up 45% year to date. You're seeing leverage ETF buying, options buying, all suggesting that people are starting to take on a lot more risk. So down markets are not as easily digested. Samir, biggest risk next year is what? The biggest risk next year is that inflation comes back sooner and goes higher than many anticipate. That would probably upset probably one of the most Goldilocks narratives, which is basically that the Fed can continue to cut. It may even bring, you know, some of the pauses, you know, the Fed has to implement forward. And they may actually have to start talking about rate hikes again. Again, that's not our base case, but if there's a risk, that's it. How would you answer that? So we do think that

the biggest risk would be higher inflation because it's not being priced in. But the question is, what about growth as well? So growth forecasts have been raised significantly going into this year. It's been one of the key underpning drivers of this market for the last two years. If you start to see a little bit of deterioration in growth, equity valuations at this level and credit spreads this tight do not contemplate any slowdown in growth whatsoever, which would just be a shock to markets that they're simply not priced for. When you talk about inflation coming back, Do tariffs fall into that? Is one a mechanism to the other, or are they two separate issues to think about? So we've been doing a lot of work on the tariff conversation.

We do think that it's going to add incrementally to U.S. inflation. We're penciling in an additional 40 basis points or so. The question, though, is the timing around this. So we've added 20 basis points to both our 2025 and 2026 core inflation forecast. But whether or not it derails the Fed, I'm not so sure. We're thinking that they cut on Wednesday, expecting four more next year. Four more. Yeah. At an every other meeting pace. But the risks are definitely skewed to fewer cuts, not more. Samir, how would you this a perfect segue? We talk about the risk of being inflation or tariffs. It all funnels back to the Fed.

First of all, do you expect a cut this week? Let's just get that out of the way first. We do. One this week and then one more over the next year. Only one more. Why just one? Again, look, our non-consensus call is that inflation comes back faster and goes higher than many anticipate. And again, that's going to probably constrain the Fed, which is why, again, we come back to,

I think the party can last. I think it's probably front loaded into next year. Again, doesn't mean that things have to necessarily fall apart in the back half of the year. But I do think that at least right now, the disinflationary story is probably one that plays out more near term than longer term. So you're but you're telling me we can get to sixty six hundred next year with hot inflation and only one Fed cut. Yeah, because I mean, if you think about what's driving that inflation, right, it's going to be a lot of growth. It's going to be and that's economic growth and earnings growth. And I think people forget. But look, if you have inflation living in the three to four percent range, which could easily happen next year, that's actually historically very good for equities. It's really once you get north of 4%

and or meaningfully below 2% that things start to kind of stumble because really inflation is pricing power for companies. You don't believe that. No. If inflation accelerates that much, you're talking about a 10-year treasury yield above and a half percent you square that with an equity market trading at twenty two point six times forward earnings you look at financial conditions that are at easy levels back to twenty twenty one. A Fed not cutting in

twenty twenty five will drain liquidity and that's a real challenge for equity markets at these valuations so if we do see a re acceleration and inflation we would see that as a key negative driver of markets and likely would lead to a big rotation in leadership as well, away from growth and into value, which would be dominated by energy. How would you respond, Samir?

Yeah, I mean, look, we do see a 10-year north of 4.5%. So our year-end target on the 10-year is 4.75%. We also have kind of a higher growth target than consensus. So I guess from our standpoint, we're very constructive. We also have kind of a higher growth target than consensus. So I guess from our standpoint, we're very constructive. We're very bullish. And again, we think all these things can kind of live together because you finally have an economy that doesn't need Fed interest rate cuts. I think most people have forgotten a time that they used to be like that. That used to be normal. In other words, last point to you, Elise, stronger growth supersedes everything.

That's essentially what I hear. Do you agree with that? I think so. You know, we would characterize this as a high and healthy environment. We need to be prepared for inflation and growth to probably run at a faster rate than they were in that post-global financial crisis decade. But we're putting even sort of odds on the risk of inflation reaccelerating and a growth slowdown coming to fruition. And so we just want to make sure we've got, you know, effective utilization of all the tools in the toolkit to protect portfolios accordingly. All right. We

will we'll leave it there. Elise, thank you. Cameron, good to see you here as always. And Samir, we'll talk to you soon. Thank you. Samir Samad. We're just getting started here. Up next, the Bitcoin breakout, hitting another record intraday high today, well above that critical 100K level. We're above 106. Now we will break down what is powering this latest move, whether the rally, in fact, does have more room to run, as some suggest. We're live at the New York Stock Exchange. You're watching Closing Bell on CNBC. All right, welcome back. Let's send it to Kate Rooney now for a look at some of the day's biggest movers into the close. Hi, Kate. Hey there, Scott. Well, it could be a

rocky road ahead for Ford, at least according to Jeffries, which is downgrading shares to underperform from hold and then cutting their price target to nine bucks. That's down from 12 bucks. Firm citing inventory overhang as the biggest potential drag on that stock. The legacy automaker has struggled this year, down about 18% or so since January. And then some swaps to tell you about in the NASDAQ 100. Moderna and Illumina are going to be leaving while Palantir and Axon are joining. Plus, you got the Bitcoin proxy MicroStrategy also joining the index today, 5% higher on that news. MicroStrategy has also been added to the widely traded Invesco QQQ ETF.

Scott, back to you. All right, Kate, thank you. That's Kate Rooney. Let's send it now to CNBC.com's Taneya McKeel for more on Bitcoin's record-breaking run as we see those MicroStrategies of the world and Robinhoods and just about anything else tied to it rising as well. Yeah, Scott, Bitcoin starting the week on solid footing here, rising above $107,000 a coin today for the first time ever. And there's a nice little flurry of different things that are all coming together here. It's benefiting a lot from the rally in the S&P and the Nasdaq today.

Bitcoin is a risk asset, and especially with more institutional adoption this year, it often trades in tandem with tech stocks now speaking of tech stocks you know kate just mentioned microstrategy today it made yet another uh purchase of bitcoin it's fifth since november and michael saylor its chairman and founder has reiterated again and again including on our air earlier today that he thinks it's always a good time to buy bitcoin even at the top and that the company is going to continue to do so so that stock uh off its highs of the day but up seven percent at one point. And of course, like Kate said, you know, follows the news that starting December 23rd, it's going to be included in the NASDAQ 100 and the popular QQQ ETF, which tracks that index. So

there is really a ton of excitement around that. And then contrast all of those big buys by MicroStrategy and, you know, big buyers and institutions at large with the supply of Bitcoin. I spoke with folks at CryptoQuant this afternoon, and their data is showing that the amount of Bitcoin that OTC desks supply to institutions and large buyers has fallen sharply since December 10th. And then, of course, there is the Fed, which is expected to lower interest rates this week, which would likely benefit Bitcoin because it trades like a risk asset. I mean, you're already getting big targets out there. Tom Lee was here last week and said $250K, maybe next year. What do you think investors are truly expecting to finish the year?

Yeah, I mean, $250K for next year, certainly at the higher end of what we've seen. I think, you know, it's anyone's guess here. A lot of, you know, analysts and investors on Wall Street were looking at 80 to 90 for the end of this year, this year, for the end of the year, this year. So, you know, above 100K would be welcome to anyone. But these rallies that we see in Bitcoin do come with very frequent or regular 30 percent drawdown. So if it did, you know, pull back to the 90K range or to the 80K range, I think that would be around Bitcoin support based on what the chart analysts in Wall Street are telling me.

So it would still be, you know, that would still be considered a success for investors. OK, Taneya, thank you. Taneya McKeel on the Bitcoin case coming up. One of the most powerful bull markets in history. That is what Maryland Bank of America's Chris Heisey is expecting for stocks. He will tell us what's going to drive that big move and how he is positioning now. Closing bells coming right back. NASDAQ hitting a record high to start the week. Apple, Google, Tesla, Broadcom all leading the charge today. Our next guest expects even more upside ahead, saying investors should prepare for one of the more powerful bull markets in history in the years ahead. It's bringing Chris Heisey of Merrill

and Bank of America Private Bank. Good to see you. Do tell more, please. Our whole thesis is not just next year, but next year is a launchpad, Scott, for what we call the asset light era. Simply put, companies are becoming more asset light, less measured, less leveraged to fix costs, less labor intensive, less fixed asset heavy intensive. So higher multiples make sense, less credit sensitive, more cash. And the asset light companies have the cash to buy the asset heavy things like power generation. It's almost the perfect marriage, Scott, when you think about it. And if the supply of assets is going to go down and the demand for assets is going to go up, while we become more asset light, that's where you get rising asset prices over a much longer period than most people expect.

And that's our general thesis for what we call the asset light era. When you say higher multiples make sense, are you suggesting higher multiples from here or that these currently make sense? So no worry about those who suggest, well, valuations are already too stretched. Yeah, right now they are stretched for looking back. But as it relates to where we're going and how innovation is happening much more rapid, a transportation, a trucking company today is really not what it used to be. It's a computer with wheels. So from my perspective and our perspective here in the CIO office anyway, we're looking at these high multiples as not being stretched. They actually make sense for now. Now, should you expect more multiple expansion? That would only come if there's another reversion

to the upside as to what the growth looks like on a go forward basis. I think we're good where we're at. We should not expect more stretched valuations from here. But let's just keep where they're at. Allow the growth in the profits to come forward next year. And I think that's why you see a very good first half of next year. What stocks are going to drive this bull market that lasts for a long time, Chris? It becomes a characteristic driven overall. We've had our movement up where the narrow leadership drove the higher market cap areas of the S&P. And then there was some rebalancing that took place. The best of the rest is what we call it are now starting to see more positive

earnings. They had negative earnings for most of last year collectively. So you get a little bit more rebalancing, but it's still going to be those companies that are going to drive this asset like theme. So we would expect tech to continue to participate, perhaps slow down in how big and enormous their outperformance was, but then bring others into the equation to help lift the S&P for more normal returns. You know, we're going to we're going to put potentially 25 percent or better this year again. And it's hard to see that happening again next year.

We would say, let's look at profit growth of double digits. And that should be your expectations for all of 25. Double digit returns low, I assume you're alluding to for next year and then maybe more robust in the years that follow because of all the reasons that you just suggested? That's right. I think what we have to look at is we're all patterned to look at the negatives that are the known unknowns. How about some of the positives? What we're witnessing in innovation right now is happening on top of a technology stack versus creating the ground floor of a technology stack. So if you can build on something that's already been built, you don't have to spend as much CapEx. And if you do,

that ROI on that CapEx comes quicker. And that's what our whole thesis is, which is rapid, more demonstrative innovation that goes across all sectors. And here's where it gets really interesting, Scott. We think that a good portion of this productivity theme is not just about operating leverage at the top and bottom line. But when you get rapid innovation that can hit at the bottom line where your costs are heavy, that lasts a lot longer. And that's what we believe is we're witnessing right now. And it's just beginning. Are you thinking about possible negatives or at least all the positives

needing so very much to offset whatever negatives there are? Spending cuts, tariffs, higher rates, stickier inflation. What do you think? Yeah, you know, much of the positives outweigh some of the ones that we're worried about. Let's just start with tariffs. I mean, we don't know what ultimately is going to come down and how much and where and all that. But generally speaking, a tariff is a tax. You give it time, it becomes a tax on growth. So I'll have to watch that very closely. But our view is pretty simply nominal GDP growth split between real growth of three

and perhaps inflation of two and a half to three gets you to five and a half, almost six percent nominal GDP. On a real basis, about 2.4, 2.5. Now, that's enough to create some revenue growth. And if you get productivity on the cost line to the downside, that's where your margins actually, frankly, the surprise could be that they could expand on the on the, you know, overall geopolitical front again, splintering unknown, unknown. We're getting used to it.

It's not good, but we're getting used to this world of that area still being very much elevated. Finally, inflation. The 1990s, we averaged two and a half to three percent inflation give or take what year you're talking about and growth was good and that's what we expect this time around and a more normal yield curve still flat uh and a little bit steeper but not the inversion that we just went through yeah um when it comes to the private bank, I mean, what what are you advising your best and wealthiest clients to do as it relates to crypto? How are you thinking about that as not just a, you know, such a young asset class, but one that's going to be much more mature in the years ahead and maturing much faster than maybe some thought because of the stance that this administration is going to take regarding it

whether it's a private bank or merrill we don't provide guidance on on the crypto space uh overall from our cio office perspective but what we look at is the general risk taking that's going on it's an emerging asset class a lot of the asset management industry is trying to figure out new ways to get exposure to it. They're opening up some of their mandates and it appears that demand continues to rise simply on the basis of institutional demand. And as all of this outgrowth continues, it'll be absolutely critical that anyone that looks at a full portfolio is to run risk management metrics as much as they can because you can get overexposed to areas of asset classes that are very highly correlated with each other i.e technology nasdaq and and the areas of this emerging asset class they're all very

highly correlated it's really important to watch your overall exposure to all those risk factors together. I understand. Let me try again in a smarter way on my part. But as the chief investment officer, are you thinking about crypto in different ways today than maybe you were even six months ago in the kinds of asset classes that you think will perform the best in the years ahead, whether you're advising clients or not, is almost irrelevant. I mean, if you're, you know, you're going between stocks and credit and cash. And now here we have an asset class that has sort of captured the imagination of America, even more so now because of the new administration.

How does that factor into the way you're thinking about the markets broadly and asset classes in general? Asset classes in general and the market in general. So let's put off the market off to the side for a second. How do we think about that? That's where you get this feeling of, I wouldn't call it euphoria, but excessive risk-taking across the board. Is it too much? We'll leave that to those who value those areas of the marketplace. But what we do watch is those correlations that I mentioned. If you're going to get a rise in technology and a rise in NASDAQ and a rise in the S&P 500 and a rise in an emerging asset class, you've got to be very conscious of if that's happening all at once. And then what if liquidity goes away? That's number one. So we're watching that very closely and not to get overly exposed. Number two, as it relates to just overall

thinking about portfolio construction, institutional investors, high net worth investors, family office investors have always looked for less correlated, non-correlated assets, non-correlated return streams. They're still doing that. And it's just beginning with newfound asset class, such as the one alternatives. Right. We talk a lot about alternatives. This is part of just the way of thinking about that. Yeah, that's that's that's what we're hearing every day. It's been been this way for a long, long time, whether new asset classes come or go. But that's exactly how they're thinking about it. All right. Good stuff, Chris. I appreciate you. Thank you.

We'll talk to you soon. That's Chris Heisey, as you see Bank of America Merrill. Up next, we're tracking the biggest movers into the close. Kate Rooney is back with that once again. Hi, Kate. Thank you, Scott. So, yeah, a pair of fast food giants moving in opposite directions today. We're going to reveal which ones and why after the break. We're less than 15 from the closing bell. Back to Kate Rooney now for the stock she's watching. Tell us what you see.

Scott, so we're going to start with Starbucks down almost 4% today. The coffee giant on pace for its worst day since May after Reuters reported the company's partner in India, Tata Consumer Products, is recalibrating its Starbucks store openings in that country. Tata Consumers did reiterate its commitment to operate 1,000 Starbucks there by 2028. And another issue over at Starbucks, coffee prices. They're now more than 70 percent higher for the year. And Starbucks said today it was increasing its parental leave policy up to 18 weeks for the birth parent for those working at least 20 hours a week. Meantime, McDonald's edging higher today after being named a top idea over at Jeffries. The firm looking at McDonald's customer loyalty and

then value offerings to boost same-store sales. Despite softer traffic for fast food restaurants, McDonald's shares have recovered from that June low. They're now around 4% higher for the year, Scott. All right, Kate, thank you. Kate Rooney, a few pieces of news on the social media front we want to get to. Julia Borson has that for us. Hi, Julia. Hey, Scott, big news on TikTok. ByteDance is asking the U.S. Supreme Court to temporarily block the law

that would force ByteDance to sell TikTok or shut it down by January 19th. This comes after an appeals court on Friday rejected TikTok's request to halt the ban. TikTok saying, quote, we are asking the court to do what it has traditionally done in free speech cases, apply the most rigorous scrutiny to speech bans and conclude that it violates the First Amendment. TikTok saying that the ban would result in the censorship of over 170 million Americans on January 19th and that small businesses on TikTok would lose more than $1 billion in revenue and creators would suffer almost $300 million in lost earnings in just one month unless the ban is halted. Scott?

Okay, Julia, thank you. That's Julia Boorstin. Still ahead, Broadcom surging to a record high today and up nearly 40% in the past two trading days. We will dive deeper into that move just after this break. We're now in the closing bell market zone. Broadcom and Supermicro swinging in opposite directions today. Seema Modi is here with those details. Plus, Courtney Reagan on what is behind the pop in Capri shares and Phil LeBeau on Honeywell's potential spinoff.

Seema, we'll start with you on two stocks going in opposite directions today. Second day of gains for Broadcom after getting 24% on Friday, another 6% today, Scott. Goldman Sachs, the 25th analyst on Wall Street to lift their price target from 190 a share to 240. Shares are higher today. They're referencing Broadcom as the key enabler of this Gen AI trade. Separately, there's been this growing debate about inference versus training. And Morgan Stanley talks about this in their morning note, about how there could potentially be this investor rotation out of training, which of course is dominated by NVIDIA, and into the companies that are really

focused on inference, which is running these AI applications like a Broadcom or Marvell. Their CEO joining Kramer tonight, but it is reflective in today's price action with Nvidia shares down, Broadcom and Marvell trading higher and also chatter around Masayoshi Son's a hundred billion dollar investment. Laura, that expected to be around AI infrastructure, is that good news or bad news for Nvidia?

CEO Jensen Wang does have a good relationship with Masayoshi Son. He was in Japan just a couple of weeks ago, and they were on stage talking about ways to partner together. And, yes, we are taking a look at shares of Supermicro down yet again, just in the last hour, being dropped from the NASDAQ 100, which is that house of non-financial 100 stocks, concerns around the future,

and, of course, that NASdaq extension coming up next year. All right, thank you for that. That's Seema Modi. All right, Courtney Reagan, to you on Capri. Yeah, so Capri Share is getting a boost after a WWD report cited the sources that the high-end companies exploring the possibility of selling off or spinning out Versace and Michael Chu,

leaving the original Michael Kors as the remaining brand. Now remember, Capri was supposed to be acquired by Tapestry for $57 a share, but the deal was blocked by the government, and then both parties ultimately decided to end discussions as it was going through the court system over the last several weeks. Shares of Capri are trading, actually, they're trading much lower than they were at the deal at $22 a share.

And on its recent earnings call after that deal fell apart, CEO John Idol said in part that it's always open to discussions about its asset. It's a public company, but that the company's, quote, first commitment is rebuilding all three brands. Selling or separating Jimmy Choo and Versace would allow the focus to be entirely on rebuilding Michael Kors, which is the largest of the three and perhaps has the fewest obstacles in a turnaround, but it would undo a strategy of becoming, quote, a global fashion luxury group, as Idol outlined when Michael Kors first bought Jimmy Choo in 2017. Back over to you. All right, Court, thank you.

That's Courtney Reagan. Phil, tell us about Honeywell. Stocks moving higher because they're considering spinning off their aerospace business. That was the announcement this morning. Remember last month when Elliott Group took a stake in Honeywell, they said, look, this company is undervalued as a conglomerate. Spin off aerospace, it might be a different story. And here's the reason why. This is really the profit driver within Honeywell right now. The revenue, the company sales, 40% of the company sales, potential valuation of $90 to $120 billion, including debt.

Bottom line is this. You're looking at Elliott using the playbook that we saw, both for GE, for HOMIT, and that's moving to higher valuations for aerospace assets. All right, Phil, thank you. That's our Phil LeBeau. Bell rings. What a day for the Nasdaq.

It's another biggie. Better than 1%. New highs for Alphabet, Amazon, Apple. I'll see you tomorrow.