Closing Bell - Closing Bell: Tech Surge Back with a Vengeance 12/11/24

Episode Date: December 11, 2024

The mega-cap melt up rolls on … so what is next for stocks? Fundstrat’s Tom Lee breaks down his outlook for 2025. Plus, former Dallas Fed President Richard Fisher tells us what today’s CPI print could mean for the Fed’s next move. And, Deirdre Bosa explains what is behind the big drop in Uber’s stock today.  

All right, guys, thanks so much. 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 has taken the Nasdaq to a place it's never been before, above 20,000. That milestone reached earlier as Apple, Amazon, Alphabet, Meta, Tesla, and Netflix all hit new highs today. In just a second, we'll ask super strategist Tom Lee how high stocks can fly in the new year.

He'll join us momentarily with that outlook. In the meantime here's where we stand with 60 to go in regulation. The market's getting overall a pretty nice lift today after the CPI came in as expected. Big tech no surprise is helping the S&P edge closer to 6100. We're only about 13 points away. We're going to watch that closely over this last hour of trade. It does take us to our talk of the tape back with a

vengeance as mega cap and the melt up their rolls on. Let's welcome in Tom Lee now fun strats head of research and a CNBC contributor with us as you see. At post nine welcome it's good to see you great to see let's hit tech first- should we

be surprised. At this resurgence- this melt-up? And it's maybe caught some people by surprise. I think investors should realize 2024 has been a year of surprising strength. The market has avoided so many opportunities for weakness. And now we're entering the final weeks of the year where we know there's still $7 trillion of cash on the sidelines and quite good visibility next year. So I think stocks should finish very strong. Why do you think money is going to the mega caps now in the manner that it is?

Up one and three quarters percent today, the Nasdaq up almost 4 percent over a month and able to achieve this milestone. One reason is mega caps have been leading. So it's sort of what people reach into the shelf when they risk on. But second, we know that when interest rates fall, the mega caps actually are very sensitive to that. And I think today was a day where the odds of a December cut increased. You know, the probabilities are now solidified and that's actually bullish for tech because the CPI was, you know, some would say sticky, but it was largely in line. Is that how you read it?

Yeah, that's right. And I think it's allowing the CPI print today allows people to imagine a path to 2% because shelter now is cooling to a level that's in line. Auto insurance, which was at 25% earlier this year, year over year, is now down to 13%. So the two biggest contributors to CPI are in a downshift. I don't think the fact that used cars are going up is going to reverse the Fed's view. I don't think the Fed's going to tighten because used car prices are up. All right, so Fed's cutting next week.

That's your base case? Yes. And then what happens after that? All bets are off? Wait and see? What do you think? I think the Fed remains in play because neutral is, let's say, two and a half to three percent. We're at four, five after the December cut.

So we know the Fed's in a cutting cycle. I actually think the best case is for the Fed to do the fewest number of cuts next year. That means the economy is pretty strong. That's right. It's strong. They don't they're not harming the economy by keeping rates here. And the labor market is is holding up. And now we have a lot of firepower for future cuts, which support stocks. OK, you talk about a Fed put. You also talk about another put. And that's a Trump put. Yes. It's going to be here tomorrow, by the way, ringing the opening bell.

People are excited about that down here for sure. But you say that that is a substantial part of your outlook for the new year, the Trump put. Explain. The Trump put is, on the simplest level, it is a White House that is going to measure its success by how the stock market performs. But it's also a president that's coming in into a second term, but with a lot of previous experience.

So this is a cabinet that has good private sector acceptance and I think very markets friendly. Overall, I think investors who might have been cautious for the last few years now want to be risk on next year. All right. So your outlook to me is interesting, the way you sort of game out where the S&P can go. Because you say we're going to 7,000 by mid-year,

which sounds amazing because most targets that I've seen are 7,000 at the top end for the entire year. Your full-year forecast, though, is 6,600. Why? Part of it's cyclical. We're coming off two back-to-back 20% years, and there are five precedents to look at. Five of the five precedents since 1880 had a weaker second half. So I'd say that's the base case. The reason I think markets do better in the first half is that there is going to be a lot of enthusiasm about a new White House, some of the headlines that come, whether it's deregulation, et cetera. And we know there's still a ton of cash and a lot of low leverage on the sidelines. That's why stocks can rally. And by the way, 11% in a few months, we've seen that routinely the last couple of years. But in the second half,

I think markets start to worry about the larger macro risks like the Middle East, the potential risks of tariff and executing that, and potentially the fact that Doge could be so successful that it could slow the economy. You're worried about being too efficient, cutting too much, and what the impact is going to be? Yes. And maybe the probability that it should be more effective than consensus. I think most people think because Doge has no executive powers, it's not going to be effective.

But we have Elon Musk with Twitter, with X, as a huge pulpit to embarrass companies. So if waste is identified, this could create PR problems for companies. And that's why there could be pressure on stocks. So where do you think, you know, we've had a lot of multiple expansion over the last couple of years as we're in year two plus now of this bull market. I hear a lot of calls that we're done with multiple expansion. Now we need earnings growth to carry the market higher. Are we going to get enough earnings growth to do the job? I think when people think of multiple expansions, they should really think of the median stock, not index level. The median PE in the S&P is 17 times forward earnings. When the 10-year is at 4%, you're paying 25 times for a 10-year bond. I think the median PE can actually get towards 20. And earnings growth, I think the dispersion should really pick up next year because we have,

we don't have the headwinds we had the last four years. We don't have a tight Fed. We don't have an inflation surge. We don't have election uncertainty. The ISM is finally turning up and there's a lot of pent up spending. So I think earnings growth should be pretty broad. Your earnings growth numbers are really positive, $275 to $300. Yeah. Put a reasonable multiple on that, even if it's above historical multiple, and you've got a pretty darn good market. That's right.

And I think that as the markets get used to a 20 PE, then the idea of a 25 PE for a battle-tested group of 500 companies isn't out of the question, and that's why there could be upside actually in the second half. All right. Well, let's expand the conversation and bring in Lauren Goodwin of New York Life Investments and Brian Levitt of Invesco. It's great to have you at our table today as well. Lauren, I begin with you because you've been sitting here listening to Tom Lee give his forecast. Does it make sense to you? It makes a lot of sense in the sense that we agree on a lot

of the themes that we're expecting to be grappling with next year. I would say where Tom has a tale of two halves, I expect that many of the themes that you're looking at for the second half of the year may play out sooner. And that's to say that these sort of bricks in the wall of worry around how will positive business sentiment, for example, weigh up against trade. I think those things will be starting to be laid out already in January. I do expect the market to climb the wall of worry, though, because of the positive elements Tom's pointed to. We have a Fed with a little bit of ballast. Earnings growth is likely to be broadening. I see the cycle as being expanded. This is constructive. But as I look over the course of 2025, that's a year for probably moderate equity market and fixed income returns, one where portfolio construction is going to be

really important. How do we judge a cycle that is, you use the word, expanded versus one that is arguably going to be renewed because of the sentiment plus policy plus rate cuts. Yeah, I agree. I think that when I look at 2025, there's very little to be worried about in terms of growth really hitting a snag. I agree that drawdowns in government spending, which has been such a source of support for the economy over the past couple of years, are likely to result in slowing economic activity. But this is an environment that's fairly conducive to risk asset performance. What do you think? Yeah, I agree.

I mean, the realities, we've been saying it for a while, peak inflation, which happened a while ago, peak tightening, which happened a while ago, all supportive for equities. And I think that that persists. I mean, what we're all quibbling about here is the timing of some type of uncertainty around policy. Some kind of upset related to said policy. Right. But that wouldn't be end of cycle. That wouldn't be end of market cycle. That would be some type of drawdown. I mean, we've had a year where we have not had a lot of volatility, maybe for a day or two when the Bank of Japan raised rates. And the reason we haven't had a lot of volatility is because we haven't had a lot of policy uncertainty. Now, if investors, I've been saying that, you know, investors can see the Trump trade in two different ways, tax cuts and deregulation or tariffs and fiscal consolidation.

If you look back at 2018, it was a year in which we had prolonged trade policy uncertainty that drove business investment lower, and the market ended up falling 20 percent in the fourth quarter. Not the end of a cycle, right? Federal Reserve eased in 2019, but that's the type of thing that could emerge. But the backdrop for equities remains good. What kind of returns do you really think are possible for the S&P next year? I think you'd have more modest than what you had over the last couple of years. So, but can you... You mean I'm not going to get 25? I know, it's not upsetting.

What? I know, it's disappointing. But yeah, you'll probably get low double-digit returns in the S&P 500. I don't see any reason why you wouldn't end up with a year like that. And the hope is that it's broader. You know, the idea is if the Federal Reserve can bring down rates, the economy can pick up a bit, you can start to see some convergence between earnings of the biggest names and the rest of the 493. You have broader market participation than we've had.

How do you how do you judge that, Tom? Right. I mean, there's the hope, as Brian said, that you get this broadening. You know, maybe this is just end of year activity in the mega caps. And once you get President Trump back in the White House, we start talking about legit policies, things that we actually know are going to happen rather than speculation about things that we think could. Is that the match that lights the spark of the broadening on a more substantial basis?

Yeah, I think the probabilities are really much higher for a broadening. One of the things to watch is the ISM. It's been below 50 for almost three years. It's finally perking up. So much of S&P earnings are actually highly correlated with the confidence that comes from the ISM turning up on the manufacturing side. So I think earnings visibility is much better next year. And I think when you think about deregulation and the resulting capital markets and M&A activity, that really benefits the financials and industrials more than it would tech. Okay. Well, we will underscore once again for you that

the Nasdaq did top 20,000 for the first time ever. It's holding above that now in part because it's another strong day for stocks like Alphabet amid a big week of gains for that name. It's up more than 10% this week alone. Deirdre Bosa following that. What's behind the big move, Dee? Well, today it announced the next generation of its large language model, Gemini 2.0, what Google is calling the next era of models built for the agentic era. This is key. Google has a major distribution advantage, which it can lean on in the application phase of generative AI. So it's bringing new capabilities to its AI overviews, which now reaches a billion people that are still using traditional search, but they're getting Google's AI answers.

So in a lot of ways, it's an introduction for the mainstream. Now, this is also just the latest in a string of wins for Google this week. We had that quantum computing breakthrough that we discussed yesterday. Also, Cruise yesterday saying that it will get out of the robo-taxi race entirely, and that clears the way for Alphabet subsidiary Waymo to cement its current leadership, maybe forcing investors, Scott, to rethink its valuation, which has been hurt by antitrust battles and its innovators' dilemma. That said, the rest of the month could prove to be more volatile. We're expecting a ruling on the ad tech case and Google will file its own remedy suggestions in the search

monopoly case by December 20th. Scott. All right, Deirdre Bosa, thanks for that. Tom, it just brings me back to you, the idea that how much of what we're seeing, maybe even a little bit today, is there's been such a regulatory overhang on a lot of these names under the current administration. Now you have a new FTC chairperson. Is that playing a role in any respect to this? Because Dan Ives put out a note today, said Christmas comes early with the new head of the FTC for tech. It's probably the best way to sort of measure this is what Bitcoin's doing, because Bitcoin faced enormous regulatory burdens over the last few years. And now we have a White House that's embracing digital assets, a new SEC chairman, FTC chairman, a new commerce secretary.

I think these are actually being viewed as pro-business, reviving animal spirits. But I think a good proxy is watching Bitcoin. All right. Now I'm going to have to pin you to a target again on Bitcoin because, I mean, you've been among the most optimistic and outspoken about it for years, to be quite honest. So here we are above 100,000. What's a legit target for 2025 for Bitcoin? We think it's going to follow a similar halving cycle that we've seen in the past that would

imply something around $250,000 for Bitcoin in 2025. And on top of that, we have a Trump put because Bitcoin is potentially a strategic reserve asset for the U.S. government. How have you been watching crypto, Brian? How are you thinking about what's happened with all of these alleged Trump trades? This may be the most acute place to look, direct Trump trades, because, you know, for the reasons that Tom Lee said. And the way you think about the sentiment that is put forward by what we're witnessing in something like that, in that asset class by itself. Yeah, I always prefer to stick to the knitting around what leading indicators are

doing, what the federal monetary policy authorities are doing. If you think about the first Trump administration, there was a lot of excitement around specific trades, and they all ultimately faded. Now, some could say that was the result of a pandemic, but they were fading in 2018. And what I mean by that, interest rates jumped up pretty significantly initially. Cyclicals outperformed defensives initially. It was all the hope for higher nominal growth, which did not emerge. 2018, Fed's raising rates, and you had the policy uncertainty with the tariffs. And so by the end of the administration, even really before the eve of COVID, rates were lower and defensives were

outperforming cyclicals. So, yeah, we could we could try and size it based on what we think the administration wants to do. But the realities of the real economy will matter. If nothing else, it has people, Lauren, rethinking allocations to different kinds of asset classes, whether it's equities or now because you do have a crypto favorable administration that, well, maybe I need to allocate more towards that and other alternative assets if you want to basket it with that. And then credit, which you have ideas on as well. Absolutely. When starting with alternatives, I see have ideas on as well. Yeah, absolutely. Starting with alternatives, I see two major trends evolving there. One is with respect to digital assets.

And when we think about macroeconomic themes and specifically geopolitical risk, we put Bitcoin and digital assets generally into a satellite bucket along with oil and gold that helps to ballast against event risk. When I think, though, structurally with respect to alternatives, really looking at where does the digital asset of the future go, I think it's broader than Bitcoin. And I'm thinking about the democratization of private assets. With credit, this is an area that I think is getting a little less attention because the equity market has been so strong and because there's been volatility in rates. On a total return basis, spreads are already tight in credit, but on a total return basis, I love the high-yield asset class. We've just talked about cycle extension. Quality of the asset class is good, especially if you pick high-quality borrowers. And the yield opportunity, the income generation opportunity in this asset class,

especially on the short-duration basis, I think is second to none. And we're seeing investors that are concerned about valuations. We're not one of them, but for the clients who are, we're seeing them allocate from equity into the high-yield asset class. Lastly, I just want to ask you, Tom, about your small-cap call. It's not going to likely get to the level that you thought it would return, but it's going to go down as a good year for the Russell, right? It's up 19% year to date.

What should we think about for next year? Are you willing to throw targets out there? Yes. What type of returns you would expect, right? If 50% was what you thought you'd get out of the Russell this year. Like I said, barring something crazy over the last few weeks, you're not going to get that. But that doesn't mean that you're not going to get good gains next year. The Russell, yeah, the Russell's at roughly 2,400 now. I think it can reach 3,000 next year. Now, the context is, this is the first good year for small caps in almost 10 years. The 10-year underperformance of small caps to the S&P is 9100 basis points. It is the second worst

10-year period for, if you use Fama data, in 125 years. Only 398 was worse. If you took the four times small caps underperformed by the four worst periods, they outperformed the next three years and five years by 1500 and almost 2500 basis points. So next year I think is a good catch up year. Deregulation, animal spirits, M&A, better earnings growth, but it's been kind of painful. Small caps haven't been a good timing vehicle.

Yeah, yeah. All right, we'll leave it there. I appreciate you revealing your outlook first and with us. Thank you. That's Tom Lee. Lauren, thanks so much. Brian, we'll talk to you soon. Thanks, everybody. Let's send it to Kate Rooney now for a look at the biggest names moving into the close. Hi, Kate. Hey there, Scott. So health care stocks today sliding after a bipartisan group of lawmakers did introduce a bill to break up health insurers. The law would force companies that own health insurers or pharmacy benefit managers to divest their pharmacy businesses within three years. You got UnitedHealth, CVS and Cigna today all down about 5%. And then Nike shares actually heading in the other direction,

about 2% higher as they renew their partnership with the NFL for another 10 years. Nike will continue to be the exclusive provider of uniforms, sideline practice, and base layer apparel for all 32 NFL teams. Scott, back over to you. All right, Kay, appreciate that. Kay Rooney, we're just getting started here. Up next, the former Dallas Fed President Richard Fisher is back breaking down what today's CPI print might mean for the Fed next week.

He'll join me right here at Post 9 after the break. We are at the New York Stock Exchange. You're watching Closing Bell on CNBC. Welcome back. To cut or not to cut? That is the question for the Fed after today's CPI report came in mostly in line with expectations. Joining me now here at Post 9 to discuss is former Dallas Fed President Richard Fisher. Welcome.

It's great to have you here in person. It's an honor to be here. Thank you, Scott. You say you are baffled at the market's reaction to the CPI. Why? Well, as you know, they're just about 99 percent now of a likely cut of a quarter. The economy is doing well. Powell keeps talking about this. Said it was remarkable. Financial conditions are wonderful. Look at what happened here on the floor today. Spreads are narrow. And I think one of the ironies, by the way, Scott, is they cut 50 basis points in September and then another 25. Rates have gone up, not just from one year out. They went up in the sixth month and they went up on the three months. So financial conditions are very accommodative right now. A lot of private capital out there, private lending and so on.

If I were at the table, I would say, let's pause. But I'm not at the table. But you wouldn't cut. I'm an old guy, so I'm not there anymore. So you wouldn't cut next week? No, I wouldn't. And what would you do after that? Well, I'd wait and see what the data tells me.

They're having trouble getting to the two. We just saw the inflation numbers. They've dipped up just a little bit. The employment numbers are quite strong. I don't see a reason to do it, but there may be a reason. And so I'm saying I was saying 40 percent probability, but obviously the market differs with my views and the market's more powerful than I am. Well, the reason is because it's such a delicate balance of acknowledging that the economy is, in the Fed chair's words, remarkable, while not wanting to upset the labor market. He talks about the risks on two sides. So how do you thread that needle?

He also talks about these are historically strong employment numbers. And the data that just came out wasn't that weak. So we'll just have to see. Remember, it's 19 people. It's their best judgment. That decision, in my view, given the way the memos circulate, has already been decided or will be decided by Friday. And we'll just have to see what they do.

I mean, you think they're at neutral now or close? How would you assess that? I don't know. And they don't know what neutral is. That's why I asked you the question. Obviously, we're thinking about the rate, which doesn't overdo the economy, underdo the economy and contains inflation. So I don't know. I think they're not there yet. And I think they have to be careful. We are seeing some inflationary pressure still in the services sector. And remember, only 17 percent of the U.S. economy is manufacturing. Goods have been depreciating for the longest time. It's the service sector that counts. And those numbers are still fairly robust in the 4 percent range. You said we're not there yet.

Right. Obviously implying that we're still restrictive. You said we're not there yet. Right. Obviously implying that we're still restrictive. So if we're still restrictive. No, I'm not saying that. I'm just saying we're not there yet. We're not at neutral yet. Where are we? Well, I don't think we have to be in neutral if inflation is still a threat. And we still have this volatile inflationary pressure above the 3%, 2.5, 2.6%, 2.7% level. And if you take the real core, it's around 3%. So we haven't gotten there yet. And that would tell me just maintain conditions for now.

But again, Scott, I'm not on the committee anymore. I'm an old guy. No, but you have strong opinions, which is why we like to have you on. You're not afraid to share that. My real concern here is about fiscal policy. And I'm going to give you a number that I think all of our audience will realize, any business person or investor. We took in, in fiscal year 2024, the U.S. government took in $4.62 trillion in revenue. So consider that the sales of the company. And they paid out over $900 billion in interest. Actually, the ratio is

they're taking in revenue. Nineteen point three percent of that revenue goes to paying interest. Nobody on the floor of this exchange, no banker would invest in such a company. That's what I'm worried about. And I don't see under the projected, even with the savings that might be able to be achieved by Elon and others, the problem is the interest rate's going up because 2% debt is rolling over at 4% in the longer part of the yield curve. It's why the chair himself says that we are on an unsustainable path. That we're not there today, but we're on an unsustainable path. That we're not there today, but we're on an unsustainable path. Now, those in the new administration may say,

yeah, Richard, but we've got extraordinarily pro-growth policies that are coming. Correct. And we can grow our way out of the problems that you and others suggest are, you know, if not terminal, certainly detrimental to the health of this country for a long period of time. And I hope they do. By the way, I served, as you know, in the Clinton administration. We grew our way out of it. Newt Gingrich was helpful, by the way. We ended up paying down the nation's debt. Alan Greenspan was so worried he couldn't operate the

Fed. There wouldn't be enough treasuries to do it. We were buying them back in. We balanced the budget. And that was because of economic growth. Okay, so what's wrong with it this time? I hope it works. We're late in the cycle. And we'll just have to see if it works. We came around during that administration. What makes you think we're as late in the cycle as some would suggest? That maybe, as I asked one of our guests earlier, we're about to have a renewal. I agree with that. We could have been at the end of the cycle, but now we've just filled the gas tank again. We don't need to get out the can. We've just filled the whole thing. Well, we're not only filling it ourselves. Foreign investment is helping us fill

it as well. And as you know, I've said, we are the best looking horse in the glue factory, the global economy. Look how miserable things are in Europe and in South Korea and stasis in Japan and weak in China. Money is coming in here. Over a trillion dollars has come in recently, not by central banks. It's coming in by private investors. That fuels our tank. It gives us capital to work with. It maintains the spreads low. It finances our treasury. I would argue, Scott, if it weren't for that, the 10-year would be at 5%, not at 422. When we talk about other risks, how do you think Jay Powell is thinking about tariffs? Because every time he's asked, he says, we just don't know. You don't know until it happens.

Now, remember, I was the deputy U.S. trade representative for four years. And all I can tell you is that everybody wants to have their industry protected, and it's really a tax on the consumer. So that's where we are. The average applied tariff right now is 2.8%. Now, if we go to 10 or we take 25 each to Mexico and Canada, our biggest trading partners, what are companies to do to protect their margins, raise their prices or ramp up productivity? That's a big ramp. So I I'm old

fashioned. I view it as an inflationary and also anti-growth. Do you think concerns, lastly, about Fed independence with President Trump are overblown? Yes. You don't have any issues whatsoever? I mean, he told NBC. I love the way he said, by the way, if I ask him to resign, he won't. But if I tell him, he will. You heard Powell's answer at the press conference. Right. He said he won't. Well, there's no way he can force him to do it. And I do believe that Powell

can outmaneuver him on the Hill on this issue if needed. He did that with Biden when Biden wanted to appoint Lael Brainard rather than him. So, no, I don't worry about it one bit. All right, Richard, we'll leave it there. It's great having you here in person. I always enjoy our conversations. Thank you. Thank you. That's Richard Fisher right here at Post 9. Up next, the NFL approving the sale of a minority stake in the Philadelphia Eagles. We have the details and what it might mean for the league coming up. It's just incredible what's happened with valuations. We'll get into that more on the bell. The NFL approving the sale of a minority stake in the Philadelphia Eagles. CNBC senior sports reporter Mike Ozanian is here to discuss.

Good to see you. Good to see you, Scott. So this was at a valuation of 8.3. It was just in September where you had them at 7. What happened? Your pencil needs to be sharper. What's going on? Shows two things, Scott. One, I don't know what I'm talking about. And number two, the values of NFL teams are rising like crazy. There were three other deals today, buddy. $1.3 billion in a couple of months? Yeah. No, I was too low. I was too low. That's what I'm saying. It's like we've gone up that much in a couple of months. Not just there. The Dolphins alone, they had a sale today. Just the team, $7.7 billion. That's what, like $600 million

more than I had? The Bills, $5.8 billion minority stake. The Raiders, 6.5 billion. Okay, the Raiders went for that typical limited partner discount. But overall, this shows how hot the NFL is. To your point, if you were Jeff Lurie, look how happy you are on this sale. You bought the team in 1994, 185 million, 8.3 billion. How do we judge whether this environment is too frothy or not? I'm not suggesting it is by even asking the question. I'm just curious, when you are growing your valuation and you're the expert, you're like the guru on this. And if it goes for $8.3 today and you had $7 in September, do you think it's frothy? No, I don't. I'll tell you why. The TV ratings are

phenomenal. There are new assets that could possibly monetize like all these international games. I think that's something they can make a lot more money from. And the league has done a great job of taking some of the content and streaming it while at the same time maintaining the growth rate in typical broadcast tv revenue lastly then i gotta run i mean they're a good team that helps they spend they win their valuation goes up that's what steve that's the steve cohen playbook you spend you win hopefully and then your valuation presumably goes up right it's like one ideally follows the other. Is that true? Much more so in baseball, in a big market situation where there's no salary cap. In the NFL,

a lot more money spread evenly and you have a salary cap. All right. It's fascinating. I appreciate you spending some time with us, Mike. Thanks. Thanks, Scott. That's Mike Ozanian here at Post 9. Up next, Ed Yardeni. He tells us why investors may need to brace for some volatility early next year, just after the break. And another day of milestones for stocks, with the Nasdaq crossing above 20,000 for the first time ever, S&P closing in on 6,100. One strategist now wondering if there are too many bulls. Joining me here post-night is Ed Yardeni of Yardeni Research. Good to have you back. Thank you. You are worried about that a little bit, right? Because it seems like now everybody's getting pretty bulled up. Yeah, I try to focus on the long run, but I think in the short run, there are too many bulls. We're

seeing a lot of the sentiment indicators suggesting that almost everybody's bullish that could be bullish. For the right reasons, though, right? For the right reasons, absolutely. So I am kind of wondering whether to be a true contrarian this time around is to bet that the market keeps going up despite all the positive optimism. But look, I think there's a good chance that January will see some selling here. I think a lot of people have accumulated some monster capital gains, and I don't think they want to rebalance their portfolios before the year end because of the capital gains taxes. So I think there could be some rebalancing in January. We'll see how

powerful this bull market is, if it kind of overcomes that, which it might. What do you make of the makeup of this sort of most recent leg that MegaCapTech is awake? Yeah, it's still going. Does it surprise you? A little bit. I thought at this point we were seeing signs of broadening, and particularly I thought we would broaden into the 493, the rest of the S&P 500. I think that's still happening, but clearly the leadership is still the Magnificent Seven.

And look, there's always something exciting that they deliver. I mean, quantum chips is what Google said they're going to be delivering. I think there's a little bit more hype than reality there. I don't know that it's ready for prime time, but the market certainly loves to hear that kind of stuff. Your point's well taken. Apple today, we have news on chat GPT integration. You mentioned the Alphabet news, which we were talking about earlier in the program. This is where the action is.

Go where the money is. Yeah, that's right. That's where the headlines are. And, you know, I guess it's exciting to know that Siri is going to be smarter with artificial intelligence. But it wasn't really a surprise that Apple's moving in that direction. But that's what everybody wants to invest in now is technology and communications. And that continues to go. That's where the money's

going. Did you ever think, I mean, maybe you did, and maybe it's not so outlandish to think about since we're on the doorstep of a $4 trillion company in the United States stock market, like Apple is pushing up against that as we speak. Yeah. Well, you know, the country is extremely rich. I mean, we got like $170 trillion in net worth of the household sector. So they're sitting in a tremendous amount of net worth. And that includes stocks and real estate. I think the country has really never been wealthier. And we're seeing that in the value of stocks. People have money to spend on stocks and the companies are delivering earnings. Yeah, they are. I mean, there it is, $3.73 trillion right now for Apple. Speaking of numbers and big ones, $7,000 is your target for $25,000,

$8,000 for $26,000, $10,000 by decades end. Talk to me about that. Those aren't really crazy numbers. They're consistent with historical math. The S&P 500 tends to go up 7% per year, including dividends. It tends to go up about 11% per year. And so that 11% trajectory would get us to 10,000 by the end of the decade. We'll leave it there. I got to run. Ed, it's great having you here. Thank you. That's Ed Yardeni with some lofty targets for stocks.

Still ahead, we'll tell you why Uber shares are under some pressure. Today, we are back on the bell right after this break. S&P trying for a record close. NASDAQ on track to close at a record and above 20,000 for the first time ever. Coming up next, we'll run you through what to watch for when Adobe reports an OT. That and much more inside the Market Zone. That's next. We're now in the closing bell Market Zone.

CNBC Senior Markets Commentator Mike Santoli here to break down these crucial moments of the trading day. Deirdre Bosa digging in on the dip in Uber shares today. And Seymour Modi joining us with what to watch for in Adobe earnings. They're coming after the bell. Mike, I'll begin with you. We're taking out some more big numbers. We are. And we're hunting for more.

Definitely are. There's just been really no aggressive across-the-board selling pressure. The majority of the market's been able to settle back. And then then as you've been talking about, the big growth stocks just kind of resume their flight. I think part of this is as the rally matures, investors reach for stuff that hasn't moved that much, isn't that extended. Also, it's a really quick and convenient way to just essentially grab for exposure. But it's also happening at a time when the cyclical parts of the market that really did surge after the election have been doing not much. Right. You had no help from industrials today, no help from banks today. And what that

means is it's not as much about conviction rising that the Fed's going to be cutting into an accelerating economy because that was the premise a month ago. Now it's more about, well, the economy's fine right now. Fed's going to do one more. Then it's going to be maybe meeting by meeting and number by number. But until then, there's not a lot in the way of stopping the overall market trend. I do think we're going to finish this year with all the shorts cleaned out, with elevated valuations, with sentiment pretty extended, and then it's about seeing if this market can be pleased by what comes next. I like the way you put that. This really is an economy is good, but Fed doing less move.

That's why you have the money going to the mega caps. You get to play the offense of the moment with AI, and you get to play maybe a little touch of defense with the Fed doing less. Exactly. And the Fed doing less has always been a perfectly acceptable scenario if it's not because they're trapped, because inflation is too high. If it's because growth is good, then we're okay with that. Yeah, like Richard Fisher was talking about.

You're like doing all these things. Why bother with all these cuts we've been talking about? Deirdre Bosa, tell us about Uber today. Okay, well, let's start with the cruise news. That news that it was going to exit the robo-taxi race that essentially consolidates the industry around Alphabet subsidiary Waymo and Tesla. So where does that leave Uber?

Well, exposed to this growing threat that this will be a winner-takes-most platform shift with little or no use for legacy ride-sharing. Elon Musk has already said that his future fleet of robo-taxis would operate on its own network, and Waymo, despite some early partnerships with Uber, is starting to squeeze Uber out with other deals. NetNet's got a lot of uncertainty for the future of Uber and ride-sharing as a whole if we do get mainstream robo-taxi adoption.

That itself, though, is still a big question. All right, Deirdre Bosa, thank you very much for that. To Sima Modi now with how we should think about Adobe after the bell and remind people that the CEO will be speaking in overtime. Shantanu will be, so we'll pay attention to that, but we need to see the numbers first. Yeah, that's exactly right, Scott. Adobe has sort of been left out of this rally that we have seen in software stocks, underperforming the IGV software ETF this year by a wide margin. It's down about 7% in 2024.

Morgan Stanley analysts say there's this perception that it's dealing with increased competition from private vendors and the incorporation of diffusion engines and platforms like Google and Meta. However, if CEO Shantanu Narayan can convince Wall Street that Adobe fits squarely into the generative AI basket, that could certainly help. And Live Sentiment recently partnering with Box on a host of AI tools for enterprise customers. The street is expecting earnings of $4.66 this quarter on revenue of $5.5 billion. Results out soon. As you point out, Narayan out. We'll join us on CNBC in the 4 p.m. Eastern hour, Scott. All right. We'll look forward to that. Seema Modi, thank you very much for that.

So we will have a closing high for the NASDAQ. We're not sure about the S&P. Maybe get to 6090. So about six and a half points away from that as we try and get to 6100. And we've got PPI in the morning, which you'll remind people is an even better read towards what matters most to the Fed. Yes. And that's the PCE. Yeah. It often is a much cleaner kind of inference to what PCE is going to be. I do think that the numbers within the CPI today were somewhat reassuring on that measure. But yeah. And then we clear that hurdle. And, you know, the Nasdaq doubling in four and a half years, you got the 10,000 in June of 2020. I looked up, it's 17% annualized growth rate. That's the annualized return over that four and a half year period.

That's also exactly the annualized return for the last 15 years. So essentially, you're going back to 2009, just after the financial crisis low. It's a remarkable trend of an index that's sort of leveraged to kind of the fastest part to the economy. And there's just enough kind of huge winners that keeps it compounding. Now that it's the size that it is, I mean, who knows if you can expect anything like that.

But it is sort of remarkable that we haven't yet had really any giveback. Despite the 2022 bear market that really hit the NASDAQ harder than anything else, you've more than made up for it. So for all the talk of broadening, and it really was, you had these episodes of broadening, I think it's tough for that to be sustained without macro acceleration and some sense that we are earlier in the extended cycle than we might be. I'm also thinking about what's going to happen in D.C. with the Doge Department of Efficiency and all that. And as we think about these stocks, Mike, I mean, they are representative of the most efficient and productive parts of our economy. Yeah. So you may have even more of a focus on these kinds of businesses that are

going to help usher in what some hope will be a new era of efficiency. Yeah, I do think that's true. The other side of it is you have to be really sure that these toll takers on the digital economy have sustainable moats, that essentially they're not just sort of tax collectors and they're not just using scale to muscle out of the competition, because everything seems to say this is going to be a very forgiving administration on mergers and size, except for big tech in certain respects. So, you know, we'll see. I think right now it all holds up. The fundamentals are moving in the right direction. And again, they rested for a few months here. So I don't think it has to be either or.

It doesn't have to be mega cap growth or the real economy. But for now, they're taking turns. That bell's ringing in. The first ever close to the NASDAQ above 20,000. It won't be a new closing high for the S&P, but it's also not that far away. More is Adobe and its earnings. Zimba OT.