Closing Bell - Closing Bell: The AI Arms Race 12/8/25

Episode Date: December 8, 2025

The commerce department is set to allow exports of Nvidia H200 chips to China. We break down that developing story with our Kristina Partsinevelos and super analyst Dan Ives from Wedbush. Plus, Blackrock’s Rick Rieder weighs in on the market, rates and the Fed’s next move. And, top technician Jeff DeGraaf tells us how he is playing the recent break out in the banks. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

All right, guys, thanks so much. Welcome to closing bell. I'm Scott Wobner live from Post 9 here at the New York Stock Exchange. This maker breakout begins with a major development in the AI story. A government report that the government will soon let Nvidia sell its more powerful GPUs to China, a change of heart that has Nvidia shares jumping off the best levels, but nonetheless in the green today. We'll have the very latest coming up along with super analyst Dan Ives right here at Post 9 to tell us about the significance of that development. And let's show you the scorecard here with 60 to go and regulation, still a down day as a very pivotal week kicks off.

The Fed decision on Wednesday, BlackRock's Rick Reader joining me in just a little bit on that big story as well. We'll also get earnings from Oracle and Broadcom in the days ahead. We're looking forward to that. Chips in general, by the way, have been surging lately. The socks hitting a new all-time high and elsewhere, Paramount, going hostile for Warner Brothers Discovery. Netflix shares falling on that news. We'll continue to follow that. We expect more developments, of course.

It takes us to our talk of the tape, the AI arms race in this developing story around NVIDIA. Christina Portsenevolos, joining us now with the very latest. Christina. Scott, I can confirm the U.S. Commerce Department has given NVIDIA the green light to sell its H-200 chips to China, although NVIDIA right now is not commenting. Shares are up about 2.5% like you pointed to, but only up 1% now. And that's because investors are cautious about just celebrating too early.

This is seen as a compromise. And I say compromise because now the U.S. government is offering chips from 2023 rather than newer Blackwell technology. Both NVIDIA, keep in mind, and AMD also agreed to pay a 15% fee on China sales back in August, though it's still very unclear if that's actually been implemented. But Washington's approval is only half a battle. Chinese media is calling this desperation, arguing the U.S. is easing restrictions because NVIDIA is losing its foothold as domestic alternative surge. They're labeling the H-200, a, quote, sugar-coated bullet with the same backdoor security concerns that led China to shun the H-20 chip. China has been pouring billions of dollars into their domestic market. Bernstein, just in a note on December 4th, expects China's local AI chip supply to grow five times larger by 2028.

So Washington may have said yes, but China could still say no. And that's the real test for whether this actually translates into revenue, Scott. well laid out for us. Christina, thank you. Christina Parts of Nevelos. For more, we are joined now by Wed Bush star analyst Dan Ives. It's good to have you here. How significant is this? It's a watershed moment if it plays out, and I believe it will. Look, I mean, our whole view is you don't want to give Huawei and China Tech more power. By taking Nvidia out of that market, that's what they've done. And with that, you're talking about what could be $15, $20 billion a year? And I think this shows, and we've seen it being in D.C. a bunch of the last few months,

I mean, you're seeing changing wins there. I mean, there's a recognition that you have to give in NVIDIA that market. You have to let that open because otherwise, China tech gets an advantage. And for the first time in 30 years, U.S. tech is ahead of China. Well, first of all, you call it a watershed moment. The stock's up 1%. I mean, really? Watershed?

Stock's up 1%. If it was such a watershed moment, wouldn't the stock be up more than No, I mean, look, I view it as we go into the coming weeks, we're going to look at this as more and more China opens up. Even as Trump's going to do the visit there in April, I think this is more the tea leaves. Because I view it, this is just the start of what's going to be opening of that relationship. And I think I expect more and more. And he's going to be able to sell into that market. And that's not baked in. I mean, if you start to think about from a street perspective. The view is China very, very cautious, I'd say negative in terms of what that's

going to ultimately be. I'd say the street's underreacting to what I believe is really going to be an opening up of what's going to be a golden opportunity for invidio. Christina laid it out, though. China could very well be like, thanks, but no thanks. I mean, the market seems like it's not willing to take a big leap forward because there are many things that are still at play. Not to mention the fact that these are, What? Already, like, 18-month-old outdated chips from the highest quality ones that NVIDIA produces anyway. And still, I think, one to two years ahead where Huawei is.

So, in my view, just being in Asia for three weeks, you go to any China big tech company, wherever they say publicly, at the end of the day, they want Nvidia chips. There's only one chip fuel in the AI revolution. I think this just signifies cool relations. and I think obviously a lot more positive between U.S. and China, that's bullish for big tech. It's bullish for you. It's bullish for AMD and others. Okay, so let me ask you this.

Would you admit that we have started to see some dispersion among the hypers and among the mega-caps on how the stocks are trading and how each one individually is now being viewed rather than a monolith? Would you admit that? Yeah, and I definitely. Okay, so you would.

So I'm wondering, at some point, can you have an outperform on an Apple, on an Amazon, on a meta, on a Microsoft, and on an alphabet? You're judging all of them equal when telling me that this dispersion that we've witnessed is legit, it's real, and it may continue to be the case. How would you come back with that? Sure. What I'd say is that when it's the sixth, seventh inning of this AI revolution, then you're going to have to separate out and there's going to be clear winners and losers. where we are today, I said, it's top of the third one out relative to this AI game. And when I look at the consumer AI revolution and speaks to our Apple and increased price start hasn't even started.

So when I look at where meta and what we see with Alphabet, what we see with Apple, I think that's just starting. Now, I think you will see the market ultimately just like Microsoft right now in Oracle, almost putting in the penalty box. But I think that's the wrong way to view that. And I think you could pound the table or be much more bullish on certain mega caps versus others, and that's how we've tried to sort of characterize, you know, where the sort of A, the B, the C group. When was the last time you raised your price target on Alphabet? When was the last

time you did that? I mean, that was 30 days ago? Okay, so you got it at 320. The stocks had this incredible run. Do you think you're giving enough credit to the TPUs versus the GPUs of NVIDIA and the apparent advancements that Alphabet has made in this arms race battle, whatever you want to call it with NVIDIA. Yeah, I think, I mean, we've said 400s bold case because, not just because of TPUs, but we send some major change that's happened at Google. I mean, you see, they're on the offensive side versus defensive. Ever since the DOJ win, I think now they're going to be in a situation where Apple is going

to be a big deal that they're going to get done in terms of on the AI front. And I think what you're starting to see now is invidia demand the supply is 12 to 1. So when it comes to meta and some of the TPU that we saw, there's not enough chips to go around for yet. So when I look at... When does the yet become a problem for Nvidia? I think that's not till late next year,

maybe early 2007 in terms of the yet being a problem. And that's right to me. When I look at Alphabet, I mean, me and you have talked about that for a long time. You go to the beginning of this year. I mean, New York City cab driver was bar. from that name. They've had, it's had a huge prove me. And I'd say a similar thing, maybe even where I say Apple is, right? I mean, Apple all-time high, but I think investors are not giving it the credit to now the AI revolution is that comes on the consumer side.

And they inked that deal with Alphabet. And that's going to be a game change. What's up with Apple? What is going on in Cupertino? Within the last week, announced departures, at least four executives. And now you had like one of them, another one, refuting the fact that he was thinking about leaving today, too. What's going on in Cupertino? Look, me and you were in Cupertino, WWDC, and I felt like Michael J. Fox back to the future, right? Like, the point is, like, they didn't announce anything. AI was invisible. And I think Cook, and I expect him to be CEO through least 2027, he's recognizing his legacy. The ending of his legacy, which has been Hall of Fame moment, will be AI. So these are representative of you haven't produced,

you're out, you haven't produced, you're out, you haven't produced, you're out, and you haven't produced your out from an AI perspective because Dan Ives keeps talking about the fact that we keep dropping the ball and we're behind everybody else. Yeah, I would say it's just within Apple Park. There's been a lot of promises. And at the end of the day, you haven't seen the results come through in terms of technology. Now that the DRJ, that win with Google, that's going to open up the key for a partnership here.

But look, this AI party, Cook and Cupertino, they're looking at it from the outside through the windows. Every other big tech company is in the inside, right? And we've seen it. So I think this is also recognition everything Microsoft's done, what Oracle, what other big tech companies. I think Cook finally clock struck midnight. And he recognized culturally. You're not going to do an acquisition.

You need new blood to come in there. All right. I'll see. I always like the conversation, Dan. Thanks for being here. It's Dan Ives right here at post-9. Stocks, as you know, mostly lower today. Not that far away, though, from a new high. Seems a little wait-and-see, perhaps, for the Fed midweek.

We're joined now on that note by. I, Rick Reeder. He's BlackRock CIA of Global Fixed Income. He is head of the firm's allocation team as well. I'm glad we could catch up with you, Rick. Welcome back. Thanks a lot. Thanks for having me, Scott. I assume you expect a cut on Wednesday. Yeah, I don't think it's definitive, but I mean, you're going to have a cut. And I think the markets almost universally think it'll be a hawkish cut and that he will have to give some time to you have a number of members on the committee that are hawkish and so i think i think he's going to cut i think it's going to be a hawkish cut but it's definitely not definitive that they go i if they weren't going you'd

probably probably transmit something in advance so i think you got to put down that uh that they're going to cut 25 but you think it should be definitive i mean i i think it should be definitive they go this month they go next month listen i still think we have room to go i think once you get to a 3% funds rate, then you stop and interpret where is the data. But I think now, given the deceleration you're seeing in labor and a bit elevated inflation, but it's not really impacted by this interest rate, that I think you can get to 3% without any question whatsoever. I think this committee will go in a more deliberate fashion, but yes, I would go to get to 3%.

You know, Steve Leesman has wondered aloud, I guess is fair to say, whether there should even be a meeting, whether they should. just push it off a little bit because they're going to give an outlook, which historically is based on data, which there's been a dearth of because of the government shutdown. Do you think you can get an accurate representation of where we are? Can you even take the outlook at face value, given the lack of data that's going to go into it? I do. I mean, so, by the way, I've heard the argument, could you put it off for a week because you get a bunch of data between now and then? That, you know, it could have been a reasonable idea to do that.

That being said, for what I just said, I think the idea that you're going to go 25, there's enough data that we've gotten in terms of what's happening to the job market that suggests that you can go without any real question that you're going to be wrong in that interpretation. Listen, I think when you look at what companies are telling you what you see from surveys, what you get from, Joltz reports, claim data, et cetera, you've got plenty of data on the job market to suggest that you're not going to make a grievous error in still doing that meeting. You know, I've been looking at rates back up like you have, especially on the long end. You know, here we are at 4.17, 418. If you're right and we do get a hawkish cut, or if the market's right or whoever you're suggesting thinks that that's going to happen, rates could continue to back up, wouldn't I? So I think you still could get some elevation of interest rates. There is a lot of ourselves included of people saying, listen, it's been a good year across a series of products, debt, equity, et cetera, and do I step back a little bit before I take more significant risk? So I can see you back up a little bit more.

That being said, I don't think rates are going very far. I think ultimately you're going to see rates come down. And so, you know, we've been thinking about do you start buying some here at the cheaper levels? But I think for the time being, you be a little bit patient, see if you get that. By the way, you also get a lot of supply this week, not just treasury supply. You get a lot of credit supply coming out of the market. So to let the market digest a little bit before you jump in, I think it could be prudent for a little bit. What are you thinking about in terms of the impact that what's happening in Japan is having an impact globally on yields?

And they're being pushed higher here and other places as well as we watch what's taking place in that bond market. You know, Scott, I think it's a really big deal when you think about. I would say today, Japan, the influence from Japan on U.S. interest rates is not nearly as profound as he used to be for a very long series of technical reasons because it's expensive for Japanese to buy U.S. rates because the cost to hedge, the currency, et cetera. But I do think when you think about the backup in rates in Japan, U.K., there is no question there is a greater demand for financing at the government level. You're also obviously seeing credit financing, hyper-scaler financing, et cetera. So I think you have to be, when you see those sort of rate movements in place like Japan, UK, today, Europe, then it definitely influences U.S. interest rates. So, you know, listen, whenever we're investing around the world, we're thinking about what is relative value, where do you take advantage of it? I think today, quite frankly, when you get backups in Europe, that for us is actually a more attractive opportunity because we get the currency swap effect into it.

So, you know, I like buying European fixing, and particularly when you get rate backups like this. Still, still, because that has been a favored play of yours for the last at least two times that we've had conversations like this. Yeah, I know it's, I mean, it continues to be a durable, but by the end credit in governments, it continues to be a durable expression. I mean, that, you know, you think about from 2014 to 22, we had negative interest rates in Europe. Think about it. We had negative interest rates today. As a U.S. investor buying European credit, buying European rates, you're getting five, five and a half six. in a high yield, seven and a half, eight. It's a pretty attractive yields for an economy that persistently grows at a slow pace, and as a credit investor is actually ideal. So I still like Europe, and I'd be surprised if I'd say at the beginning of the year as well. I think you

kind of alluded to this already, but do you think we've had a surprising of sorts buying opportunity in certain parts of the curve here, because rates have backed up? I mean, I, you know, I do, I will say the markets of the very front end of the curve got very rich. And now I would say as you're starting to back up again, I really, you know, I could see buying the front end to the belly of the yield curve again. Again, you know, I would like to see this Fed what happens in terms of the action out of the Fed. But you're starting to get yields. By the way, we build portfolios, and you've talked about this ETF, we have called Bink. You know, now you get yields again that it's easier to hit six in a quarter, even six 30, six 35.

for a high quality what is virtually civil not virtually average single a rating for fixing going into next year if you believe you're going to have a more doveish fed if you believe that um you know equities i still think equities will do their job but if you think about you can create six and a six and a quarter six and a half you get a little bit of tailwind from interest rate you can create returns of eight eight and a half percent for fixed income for quality fixed income it's a pretty attractive environment for uh for yield man i mean talk you talk about durability of a trade. I mean, we were having conversations about your liking the belly of the curve for at least the last 14, 15 months. Yeah, no, I admit that's expression I continue to

continue to think it's okay. I mean, I think about, I mean, you look back and people say, we need to go back a few months ago and people say fiscal sustainability, the bond markets are unanchored. And then, you know, I look at a bunch of portfolios, including a bunch of the ones we run, you're going to get 7, 8, 9 percent returns in quality fixed income. And if you stay, in that part of the yield curve where the, you know, to get two technically where the forwards are attractive or can be very attractive, depending on where the rate ultimately goes, I don't know. I mean, why not just stay in it? Your interest rate exposure, you don't have to go to the back end of the yield curve. Why not just stay in it, clip yield? And, you know, at the end,

like you said, this ends up being a pretty good year. And my sense is you'll start off the beginning of the year. That'll be pretty good momentum for you. What about high yield? Just given where, I mean, I feel like the Fed, if anything, is cutting into what might be a a strengthening economy? So listen, I think the high, I mean, we've had a good deal of high yield in a bunch of our funds. I go back to I like European high yield a bit more than U.S. We have reduced a bit of our high yield exposure because spreads have gotten tight. That being side, when you step back and say, like you say, you've got a good economy, free cash flow generation is good,

companies have termed their debt out, you're going to have a more normalized default cycle into next year. High yield still gives you, when you think about if we're going to run in full, inflation, two and a half to three, if I can still get six and a half, seven, seven and a half in high yield, depending on type of risk, you take, it's still pretty good, still pretty good yield, even default adjusted. So I think it's, you know, if you said to me, where is it today on scale of one to ten, it's sort of a six, seven. It's pretty good. It'll do its job, but it's certainly not as exciting as it was a few months ago. That's funny, you said six, seven. There are the kids out there are now having fun with this interview, Rick. I don't know if you know what I'm alluding to,

but nonetheless you will after this interview, that's for sure. Let me ask you this. There was a story floated a couple of weeks ago that said Kevin Hassett was the frontrunner to be the next Fed Chair. You have been in, as we know by now, the so-called Final Five. Have you been told directly that you're out? I can't talk about that. Scott, I mean, like, can we talk about markets again? I can't. That I can't really talk about.

I have to ask, I mean, I have to ask you. I know you have to answer it however you, you feel comfortable answering it, but I mean, I have to ask you those questions for obvious reasons. Let me ask you this. There was another story the other day that some prominent bond investors had told Treasury that they would be uncomfortable with Kevin Hassett as the choice. These interviews between us are difficult, Rick, because you are a prominent bond investor, one of the most prominent in the world. Why do you think the market would perhaps have issue with somebody like that being the next Fed share? Let me ask you that.

So, listen, I mean, I think, listen, I think those who have been put up there as potential fed chairs i think quite frankly are all qualified do you know certain people believe that uh you know some candidates have more better qualifications than others i you know that it's a tricky one to comment on listen i i will say this i mean it's a massive honor to be considered one of those final five and uh i would have i personally i don't i think markets will be fine with any of any of those people and i think the other thing you've got to consider this is a committee and is a committee that has 19 people out. I mean, I think you'll have a lot of respect for whoever ends up being the Fed Chair. I think the markets will also have quite a deal, quite a bit of respect for it.

You know, the Treasury Secretary himself said as much out on it was like eight days ago or so that at the end of the day, we can have these conversations endlessly. The Fed Chair, while carrying the obvious weight of the office and the position, is still only one vote. It's still only one vote. Maybe that's the greater point that you're referring to. I mean, at the end of the day, that's right. That being said, whoever the Fed share is the influence that person can have over the committee is a big deal. I mean, it is a committee. Listen, you want to have respect for who is leading it.

The person who chairs, it certainly can have a good deal of influence. But it's right. It is a committee. And they say, it's a committee that I think has been very well respected and will continue to be as such. Let me turn the attention to the markets and make you a little bit, make you a little bit easier. I appreciate that. Yeah. You've been, I appreciate you entertaining the questions. It is what it is. You have been exceptionally bullish on the AI trade. At every moment you have said, stay long these stocks. This is where the action is. This is where the story is. This is where the proverbial puck is going to continue to go.

Have you wavered off that at all by virtue of some of the questions that have been asked about this trade, the durability of it, some of the debt issues around it? How are you thinking about that today? Yeah, it's a great question. So, an easier question. So I would say a couple of things. One, we could debate the IRA. We could debate the revenue that's going to come off of IRA relative to the CAPEX that's going to go in. And are you getting an appropriate IRA off of that or net IRA off of that? But the thing I don't think you can debate for the next year or two is the amount of money that's going to be spent that you just talked about in terms of semis that's going to be spent in terms of infrastructure, power, cooling. And my sense is that cash flow, particularly for the hypers, will still be robust. So I still like the big tech companies. I still think the cash flow generation is tremendous.

You know, when you look at software and you think about, gosh, you know, what is their entrenched in client base and parts of software, that becomes a bit more questionable. And so, boy, it's differentiates why you're seeing so much volatility in software names. We've brought down some of our exposure in software. You know, I still like semis, but do you run the same level of exposure to semis that you had six months ago a year ago? I think he could probably bring that down a little bit. But in terms of, do I still like tech? Yes.

Do I like the companies that are going to utilize data and utilize air? AI and utilized technology, which by the way, put into health care technology, some incredible companies there. Financials are one of the industries that is going to use AI effectively. And I think, you know, we've increased some exposure, some of the financials throughout the year, but also recently. So I still think AI, there's no question about it. The theme is durable and will play out, you know, is there some, you know, do you have to question a little bit, given the massive amount of spend?

and can companies, how much financing will go into it, and what return they'll get off of it? If you're pure AI, yeah, I think you have to question that a bit more. All right. We'll leave it there. Until next time, I really do appreciate how open and honest you're able to be in the face of what I know is a bit of awkwardness for you in dealing with those topics. Rick, thank you. Thanks for having me on. I appreciate it. That's Rick Reader. Let's send it now to Christina Parts of Nevelos for a look at the biggest names moving into this close. Christina. Well, let's start with shares of Netflix because they're following while paramount. Jumping roughly 7% after launching a hostile bid for Warner Brothers Discovery.

Following its loss to Netflix just last week, Paramount is going straight to Warner Brothers Discovery. Shareholders with an all-cash $30 per share offer, CEO David Ellison telling CNBC they're looking to finish what they started. Shares of Confluent soaring right now after IBM announced it will buy the data infrastructure company for $11 billion, Confluent up 29%. Finally, shares of Tesla falling after Morgan Stanley downgraded the stock to, equal weight. They cited valuation concerns, and that's why shares are down about almost 4%. Scott. All right, Christina, thank you. We're just getting started here. Up next, critical AI earnings

taking center stage this week. We're breaking down what's its take for Broadcom and Oracle. And you, if you hold those stocks after the break, we're live at the New York Stock Exchange. You're watching closing bell on CNBC. Earnings from Broadcom and Oracle loom large this week as investors assess the current state of the AI trade. Let's bring in CNBC contributor, Hightower, Stephanie Link, and Vios Advisors, Michael Bappas. They are, as you see both here at Post 9. Welcome. Good to see you both.

Good to see you. Hi. You get this first. Do you have Broadcom? It's been one of your favorite stocks for as long as we've been talking about AI. And it always trades crummy around the quarter. All right. So what now?

So AI. Is it going to be $100 billion opportunity by 2027? Because that's what they hinted at last quarter. Did they sign a new custom ESIC customer? Rumors today, Microsoft. Don't know about that. Do they talk about it? They'll never give a name, by the way.

They'll just say another customer. But we do know that two are probably coming. Two new ones are probably coming next year. But what does it do to gross margins? Because as they get more of these customers, it reduces gross margins. And so I'm not expecting massive upside here. It's going to be all about the commentary. But as you know, I do like the story for the long term because of the diversification.

Let me say this. Because it's not just AI. It's software. And that's 40% of the revenues. It's very good for margins, right? And then it's the other cyclical stuff that we haven't even seen a recovery. So there's a lot going on here. This thing has traded really well lately.

Not bad. I know. I mean, I'm literally looking on my fact set right now. And if I look over the last month and I've got all the names on my screen, I've got the AMDs, I've got the Alphabets, I've got the Amazon, the META, the Microsofts, the NVIDIAs, and the Apples. And this one's beaten all of them. It's a pretty chart. It's had a nice run. And that's why I get a little nervous around the quarter because maybe it's a little ahead of itself.

But it is really all about the custom-asic customers and how many they can actually announce. And we know last quarter they announced a new one. We don't know who it is. We think it's open AI. This one, this coming up upcoming quarter, is it going to be Microsoft? Is it going to be, are they even going to talk about another customer? If they don't, I'll bet you the stock does sell off. Now, this quarter, they usually increase the dividend and increase the buyback.

So I do expect that as well. Stock has re-rated from when I bought it many years ago at 14 times to 40 times. But rightfully so because the growth has expected. expanded substantially. This company can do something like $12 to $15 in earnings power by 2027. So if you look at that valuation, it's not nearly as expensive. That's a good looking chart, like you were saying, right? Up 72% year to date. Mike, I mean, this week with not only this, but Oracle, feels pretty important for the AI trade. We're not talking about the hypers, but we're talking about ones that have really been in the center.

In some cases like Oracle, the eye of this storm of questions about what's going on. Yeah, look, this is an interesting week because of that, because of the Fed. We don't have all the data. But, you know, over the long term in the next three, four, five years, like we've spoken before, I just think AI is one of the most powerful trades that's probably going to be in our lifetime. I mean, this is the evolution of what started in the mid-90s with the computers and with everything that happened with technology, handheld devices. This is the next trade for the next, you know, five to ten years. Okay. Now, that being said, Ed Yardinney, who's as bullish as anybody about,

The market is out with a note today saying go underweight the Mag 7 versus the S&P 500. We see more competitors coming for the juicy profit margins, he says, of the Mag 7. We also expect that the productivity and the profit margins of the impressive 493 will be boosted by the technologies available to do so. What about that call? Yeah, look, it's interesting because a lot of those stocks haven't moved yet. I mean, take J.P. Morgan, for example, it's had a decent year, but it's still trading at 14, 15 times earnings. Yeah. You have a lot of the companies in the 493.

Decent year. It's up 31%. Yeah. Decent? That's pretty decent. But there's still room to go because they're still trading at a real valuation. I think a lot of the non-AI or those non-7 companies will drive the markets higher next year. And I think that's going to be the most important place to look, especially with the Fed coming out this week, assuming no surprises.

I mean, look, it's priced in probably a 25 basis point cut, and everyone's expecting it. If there is a surprise there, you know, that's going to really tweak the market and send it into a different spin. But it's also going to be interesting to see what they say for future. You know, what is the outlook for the future? What does it look like? You're going to get a, you know, you were speaking earlier about a new chairman. You're going to have a lot of different changes coming. And that's going to affect what the market does over the near term, especially going into the end of the year and beginning of the year next year.

If we get a hawkish cut, what happens to the market? Anything? No. I mean, I actually think the balance sheet is more important and how much they expand the balance sheet, because that will offset some of the hawkish cut. I think everybody in this planet is expecting a hawkish cut. We just heard Rick Reader. But if rates back up, though, as a result of that, is that a problem?

You see, I kind of think rates are backing up because growth is better than expected. I agree. And I'll take that. You know I'll take that. I'll take a little higher inflation because of that. Where I don't agree with Rick on 3% Fed funds, I don't think we need to get there with a 3.5% GDP growth rate. And, you know, two and a half, three percent inflation. That's good enough for earnings.

That's what I care about in terms of that. But in terms of Wednesday, you know, the market always trades all over the place. Scott, you know that. I really look at that balance sheet because if it's $45 billion, that's a big number. That's a very big number. Are we okay with rates backing up further or no? Yeah, I think it's fine. I mean, inflation's in check.

The jobs numbers are good. You're going to see some of the tariffs, you know, chaos around the terrorists start shaking out. So I agree with Stephanie. I don't think it's a big game changer unless something really. comes out that was that's really surprising okay good stuff we'll see both you soon thanks michael thank you very much still ahead top technician jeff de graphe he tells us how he's playing the recent breakout in the banks the bell's coming right back welcome back is this market's recent rebound durable let's ask jeff de graff he is chairman of renaissance macro welcome back's good

to see you man you too scott thank you you you you say the fact that's short you you you say the fact that short-term short rates are trending lower is good news for stock. So as long as the yield curve continues to steepen, we're good? Yes. Now, there is a caveat to that, because sometimes that can mean, obviously, weakness in the underlying economy and, you know, all the negative things that are associated with that. But I think it's important to note that credit spreads continue to hover near their lows, if not actually have contracted here in the last couple weeks. And so that starts to take the, oh my gosh, we're going into recession call really off the table in terms of what the credit markets message is. And I think that's an important

distinction because there is a lot of kind of chatter out there that this decline in the short end of the curve means that there's something more nefarious. And I just don't buy it because of what we're seeing in other parts of the structure of the credit markets. You told our producers there's opportunity on both sides of the ball. In the purest sense, offense and defense, is that what you mean? Well, both long and short, right? So, yes, in a way, I think, you know, you look at things like transports. Transports are breaking out, and that's everything from air freight and logistics to, I think Southwest is breaking out today, some of the airlines, Lyft has looked good for a while.

So that looks good to us. Actually, home builders look good to us, but building products don't. You look at office reeds. Office reits look weaker. So there's, I think, you know, and you're seeing it in some of the new high data, new low data, where it's really balanced. And I think there's opportunities both on the long side and short side. So I think you can run, you know, a pretty neutral book and actually have a lot of decent exposure here, which is as a portfolio manager, which is very good news. You're calling out meta to some degree. I mean, the stock obviously had a nice move after not really doing anything, if nothing else disappointing. But you say the outlook has deteriorated as it's now rallying back to resistance at the 200-day moving average nearing a dark cross.

And an optimal exit. Tell me more. What does that mean? Well, there's a lot of stuff in there, isn't there? So it looks like a trend deterioration to us, which is a transition from an upturn to potentially a downtrend at best, a neutral trend. And if you're in a neutral trend or downtrend, when we're overbought, when the stock's overbought in the near term in our Red Mac oscillator, that's an opportunity to be a seller

into that strength as we expect the longer term trend to deteriorate and be the more dominant force there. So for us, optimal exits are ideas that are overbought in downtrends and therefore more vulnerable and susceptible to that long term, that long term deterioration. Keeping my meta gap down, it got oversawed, it bounced, but it's right back into that resistance zone right here with that trend deterioration. And that's what makes it more susceptible than, say, your average oversold condition. I appreciate the time. As always, Jeff, we'll see you soon. Good to see you. Jeff, Graff.

We've got some breaking news out of D.C. Amy Javvers in Washington for us. What do we know? Scott, President Trump, was just asked about the new Paramount effort to buy Warner Brothers discovery. He was in the cabinet room at an unrelated event, taking questions from reporters. Here's what he said. I have to see what percentage of market there. We have to see the Netflix percentage of market, Paramount, the percentage of market. I mean, none of them are particularly great friends in mind. So interesting comment there from the president, not really weighing in on.

on one side or the other here, these rival bids now to buy Warner Brothers Scott, but the president's saying neither of them are particularly good friends of mind. That sort of cuts against conventional wisdom that sort of the Ellisons are more politically aligned with the president than the Netflix bidders would be. But the president here at pains to suggest he hasn't made up his mind yet. He wants to see more information. Well, I mean, you can call into question, I suppose, that the comment, if the reports are correct that his son-in-law, Jared Kushner, might be part of the Paramount deal as well. I mean, it's sort of undeniable that, it's sort of undeniable that, at least from Larry Ellison's perspective, I don't know anything about a relationship or I haven't heard anything about whatever David Ellison's relationship is,

but, I mean, there is some sort of friendly nature of the relationship and the son-in-law being involved in the, the deal appears at odds with that comment. I don't know what else to say. Yeah. I mean, you heard what the president said, right? And, you know, he may be concerned about creating a public record of favorable comments toward the Ellison's that could be used against him in any kind of Department of Justice proceeding, antitrust proceeding going forward. You know, the attorneys for Netflix might be stockpiling comments from the president about how great he thinks the Ellisons are. So the president, you know, you might have. You know, you might be getting to sort of the second level here. The president might be wary of that and wanting

to at least make sure his public rhetoric is, you know, fair and balanced, to coin a phrase. Okay. Amen, thank you. It's Amon Jaffers. Up next, we track the biggest movers into the close today. We'll be right back. We're about 10 from the bell. Let's get back now to Christina for a look at the key stocks that she's watching. Tell us what you see. Let's start with Singapore-based biotech company, Wave Life Sciences shares are up 151% after reporting positive data from a phase one trial, specifically of an RNA obesity shot that cut fat but retained muscle. The results address pretty much the biggest disadvantage of DLP1 weight loss, which is muscle loss.

Shares of Carvana hitting a record high after S&P Global announced on Friday, it's going to add the company to the S&P 500 on December 22nd. Bank of America also raising its price target for the stock as well, shares up 12 and a half percent. Shares of Berkshire Hathaway moving lower after announcing a number of structural changes, including the departure of investment manager and GEICO CEO, Todd Combs. This is just weeks before Warren Buffett will be stepping aside as CEO. Shares down one and a half percent, Scott. All right, Christina, thank you. Christina, question now. Coming up next, we'll run you through what to watch for when Toll Brothers reports in overtime. The market zone is next.

For now, the closing bell market zone. CNBC, senior markets commentator, Mike's in Toli and JPMorgan Asset Management's Jordan Jackson here to break down these crucial moments of the trading day. Plus, Diana Oleg is watching Toll Brothers ahead of its results in overtime. Dye, we start with you. Okay, well, so Toll Brothers, as you know, is the luxury home builder. So it's been outperforming its peers recently because it's not as heavily reliant on small moves in mortgage rates. That said, the average on the 30-year fix has really barely moved at all since early September. And concern over the broader economy has increased.

So we'll see how that hits the higher-end buyers. Demand has also softened in the south and west, which is where Toll does have a lot of product. Now, Toll did guide to lower deliveries from a year ago. It has increased its use of spec homes, that is, homes without a buyer yet. Helps to meet the demand, but it can hit margins because of increased incentives. So we'll be watching both price and incentives. And just to note that we still have not gotten any homebuilder data from the government since before the shutdown. So listening to what these big homebuilders have to say is increasingly important.

Scott. Yes, a very good point you make. Diane Oleg, thank you very much. Jordan Jackson, nice to have you here at Post 9 as well. It's a pretty big week. Got the Fed, the Oracle, Broadcom. What are you thinking about? Well, we're keeping an eye on the Fed, obviously.

We think the Fed's going to cut rates. I think you are going to see a number of dissensions. Obviously, Mirren's likely going to favor of more aggressive easing. We could see a couple of dissents for no easing at all. It's funny, when we were pending our outlook, AI, lift, and economic drift, we titled the Fed section, difficult decisions facing a divided Fed. And so I think it's not a foregone conclusion that we're going to see continued cuts into January into next year. You may actually not get further cuts into the second half.

If we get a so-called hawkish cut on Wednesday, does that do anything to the prospects of an end-of-year rally? Two-week, two-and-a-half-week move? I don't think so. I think there's just a lot of supportive dynamics in the market right now. It's hard to be bearish. You know, the only flashing red light is valuations, and we know valuations don't tell you much of anything for returns in the short term. Yeah. I feel about that. I mean, it's true. There's a lot of bullishness out there. There's no doubt. So that, to me, is where you assume if forced to say up or down, you'd say we have pressure to the upside more than not.

What is interesting coming into the Fed decision, though, is the all-time high on the S&P was set the first day of the last Fed meeting. That's October 28th. Next day, Powell feels compelled to kind of pull everybody away from the idea that you're definitely going to get another cut this year. and the market did back off. Now we've actually rebuilt to the same exact level, basically, that we had before that prior Fed decision. And I think that therefore people are just kind of tensed up a little bit ahead of it, even though I don't think that there's as much room for Powell and even the dot plot to kind of disabuse the market of some kind of dovish assumption, because I think everyone

is on board, but they're going to be noncommittal, they're going to basically be data-dependent. They're going to say that they're somewhat closer to neutral, and maybe even within in sight of neutral rates. So to the degree that that comes to surprises anybody, I don't know why it would. We'll see if the market takes it as an excuse, though, to react. If there's a story that needs to take the edge off, so to speak, it's Oracle, both from an equity standpoint and the CDS standpoint. Sure. That hangs in the balance this week. I mean, that could do a lot to portend where this trade goes, not just this particular stock name trade, but the group right now. AI in general.

Yes, and so Oracle shares have come up off the lows. I mean, obviously not nearly what they lost, but the degree to which they can sort of project out and say, we are very confident that we're going to have massive demand and revenue that's going to more than pay for the leverage we're taking on. That's the whole game. Because if you look at the stocks that are working in AI and those that have struggled, it's all about do we have deep-pocketed financing, do you have the backing of, you know, cloud platforms and all the rest as opposed to having to raise money for. Now, I'm not too alarmed

about the absolute level of the CDS because it's still implying a very, very low chance. Oh, yes. It's not the absolute level, but it's from point A to point B. It's like, wow. But people feel the need to stay hedged or to use it to express a longer term concern about this area. Let's finish with you, Jordan, the AI trade, the durability of it. You feel as good about it today as you have? I do. If you look at 2026 earnings revisions, they've been moving higher for the cohort. For the rest of the market, they've actually been moving lower. Right? So look, these companies have fortress balance sheets, many of them still sitting on more cash than debt. So I think we are a little bit antsy around the debt issuance that we're seeing. I don't think it's a company issue. I think it's a broader bond market issue. A lot of supply coming online. That could pressure spreads a little bit wider. If you're a good manager, you actually want to take down some of these credits. 20 seconds that we have left, Edjard Denny's saying go underweight Mag 7 versus the 493 next year. What do you think about that?

I wouldn't necessarily go underweight. I'd be neutral, Max 7. The next dollar is going to go to other parts of the market, though. Yeah. It's 35% of the S&P. It's a really tricky thing if you think the market can go up 10% and somehow Mag 7's not going to help out. Russell, 493 has got to be up like 15, 18% to get you there.

All right. Jordan, thanks. Good to have you here. Mike, of course, to you as well. That does it for us. We will go out with a red market today. Tomorrow's a new one. I'll see you then.

Into O.T. Thank you.