Closing Bell - Closing Bell: The AI Battleground 12/4/25

Episode Date: December 4, 2025

We discuss the big battle of the AI devices and the big tech players in that fight with our own Steve Kovach and Big Technology’s Alex Kantrotwitz. Plus, Solus’ Dan Greenhaus, iCapital’s Sonali Basak and Invesco’s Brian Levitt debate the state of the market as we near the end of the year. And, Mohamed El-Erian from Allianz tells us which potential Fed chair would be best for the equity market.  Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Welcome to Closing Bell. I'm Scott Wapner live from Post 9 here at the New York Stock Exchange. This maker breakout begins with a new front in the battle for AI dominance. Devices as meta makes a stunning Apple advancement, all while Open AI lurks with its own ambitions. We will discuss all of that with our experts today. CNBC tech reporter Steve Kovac and big technologies, Alex Kanchowitz, Kovac and Kanchowitz, they are back. We'll do that in just a moment. We'll show you the score card here with 60 to go in regulation. been really a mixed day for stocks and not doing too much on either side of the plate today. You can see the NASDAQ barely green while the Dow and the S&P are barely red meta, though, is having one of its best days in months on a report. It's ready to scale back its Metaverse plans even further. Invidia, it is higher today. And a nice day for the banks, too. It's several

hit new highs. We'll follow all of those. There's Wells Bank of America and JPMorgan just to name three. How about Salesforce today? It's up after its earnings. Snowflake, though, not That good. Down 11%. And several of the AI power names are getting a bit of a jolt today, too. So we'll watch those like GE-Vernova of better than 5%. It does take us to our talk of the tape, the AI Battleground. Let's welcome in Kovac and Kanchowitz for more on that.

Steve, I begin with you. Let's not start on the dialing back the Metaverse even further by Meta, but on this poaching of Allen Die, and why that is so significant here for meta and for Apple losing. their head of design for all these years. Yeah, sure. So Alan Dye, Scott, he was the user interface designer. So basically everything you see on your iPhone, that liquid glass design that came out in September. That's all him. But more importantly, Scott, he was the designer behind the software of the Apple Vision Pro. I don't have to tell you how that turned out for Apple, but the idea here

is he's going to bring some of his other colleagues and acolytes over from Apple. It's not just Alan Dye. He's bringing some team members over as well. and to really step on the gas, so to speak, on these AI gadgets over there at Meta and work on the design front of that. I will also say that Apple is going to do is basically following Meta's playbook here because we're expecting them about a year from now to have their own version of these AI glasses very similar to the Meta Rayban glasses that we talk about so much. But this time, it's going to hinge on Apple intelligence.

So before they can even think about AI hardware, though, Scott, Apple has to get Apple intelligence right and that leads us to that other big AI shake up earlier this week from Apple. John G. Andrea, head of AI out and being replaced effectively by Craig Federigi, the head of software, to really get that AI version of Siri off the ground. So Apple has to do that before we can even start talking about what AI hardware looks like over at that company, Scott. Okay, so from AI to AK, you're sitting right next to me. So as I turn to you, is this a bigger get for meta or a bigger loss for Apple? There was a mean comment. on the internet that I think is really reflects what the consensus is among people that have watched

these companies, which is that the departures increased the IQ in both companies. And what I mean by that is Alan Dye, you know, despite the fact that he led design at Apple, the chatter among the design community was he could have done better. I just picked up the iPhone 17 Pro. I think liquid glass is terrible. And there have been a lot of people who have said that they even had to do some changes within the operating system that you pick your tint. It's not a good design situation. So I do think that Apple will be better now that he's left. The other side of this is meta. Meta will now get Apple design know-how.

Even if he might not have been the best person at Apple, people have said he was better at politics than design. He had to be doing something right. He was there for like 20 years at least, right? Apple is a big bureaucratic company. So I do think there's credence to the fact that the people leading some of these divisions might be great at politics and maybe less so at the specific discipline that they're running. That being said, I would say even a B player at Apple, Apple is going to look like an A player at Meta.

So I think it brings in fresh blood to lead design at Apple, while also bringing Apple design sensibilities into meta that should improve what's becoming a very important product line for them, which is their wearables and AI glasses in particular. Are we, is it overstating it, Steve Kovac, to suggest that we are at the cusp of Device Wars now as AI morphs from an arms race about chips and data centers,

that ultimately we're gonna have a lot of these companies coming out with devices that they think are going to change people's lives. And opening eye is doing it as well, by the way. And meta's already laid out their vision for that, right? They said it's all about the glasses. They're pulling back on this metaverse idea. So, yeah, that is kind of where we're heading. The phone is still going to be the center of it.

If you ask Tim Cook right now, he even said this in recent months. We think the phone is going to be around for a very long time. But they are clearly thinking about what kind of what an AI device actually looks like. it seems like they landed on these glasses. It's not, we've got to keep in mind. These two companies, it's interesting we're talking about them right now because these are the two laggards, so to speak, in user-facing artificial intelligence.

Meta's mostly using it to improve its ad service, and we all know where Apple intelligence is. We're going to have to wait and see another few months to see if Apple can actually pull it off. It's only then can we start really talking about whether or not we're going to have some AI device wars. It didn't really play out with the headset wars, clearly meta is ahead there, and the Apple Vision Pro, they're also taking a step back from that

and focusing more in these glasses. So that seems to be the direction where they're going. I'd also point out, we've got to talk about AirPods, too, Scott. That is a huge part of their AI. If you want to call that an AI device, it definitely could be that live translation feature that just launched this fall. That's all artificial intelligence happening. This idea that, you know, I can talk to you in a different language and your AirPods would automatically translate it. That's an AI device. Yes, we think about AirPods as a music device, but there's a lot more going on there and a lot more artificial intelligence that Apple still has room to inject in its current product lineup, Scott. I see, I, Kay, this is interesting in and of the fact that in football terms, we talk about somebody's coaching tree, right? A great coach, and then he spawns all these other guys who go off and do great things in other places.

The Steve Jobs coaching tree, at least when it comes to design, now you have Johnny Ive doing something with Open AI, and now Dye's going to go do something. with meta? Yeah, well, you think about it if you're Apple, right? You have all these people who have been trained by Apple who are now going and beating, building these competing devices. For Apple, people have talked about what's AI, what's the AI disruption for Apple? I don't think it is a replacement of the iPhone. The disruption looks like a new device. Maybe it's watches, maybe it's headphones, maybe it's something else that you carry with you. That is AI first. And that might potentially be a category that Apple won't be able to compete in as well or dominate the way they have with the iPhone.

And so if you think about this race, and I do think it's going to be a big race, it is consequential. We know that smart glasses sales are tripling this year, albeit from a low base. This is going to matter a lot. And if you're Apple, you don't have a product on the market. Meta does.

And Open AI, again, with Johnny Ive, is trying to build the successor product to the iPhone. But even if it's not the successor product, it does have a chance to dent what your company's future growth looks like. Kovac, let's end it there. I mean, Altman and Ive, like, what, what are they doing? What, what's coming down the bike from these guys? Do we have any idea? Boy, I wish I know. I actually talked to one source about this, and he, who actually worked on this, and he told me, it's just an Alexa. It's just a little box thing. It's really interesting,

though, kind of tracking what, how Sam Altman and Johnny Ive has been talking about this in the last several months since that acquisition happened. They've gone from saying, we cracked the code, we figured it out, we're going to kill the iPhone to dialing it back, saying, eh, we have like 10 or 12 ideas, you know, maybe one of these will play out. And then more recently, they're saying, okay, we landed on one idea. We just don't know if we're going to be able to execute it, you know, in the very near term. So there's enormous pressure. I think there's more pressure, to be honest, on what Johnny Ive is doing at OpenEyeye than

anything Apple and meta are working on because that $6 billion acquisition of Johnny AI company and really putting a stake in the ground and, you know, really poking Apple the bear over there in Cooper Tino and saying, you know, we figured out a way to kind of get away from the iPhone and all this sort of stuff like that. That puts enormous pressure on them for it to truly be an iPhone-like moment for Open AI. And I just see no evidence of that happening anytime soon. Especially for somebody considered to be such an icon as it relates to technology designs. Guys, it's fun. It always is. Kovac and Kentiewicz, we thank you both. We'll talk to you soon.

Away from the AI names, the banks are leading a solid session today. For more on that, we bring in Dan Greenhouse, Icapitals, Shanali Basick, and Invesco's Brian Levitts. Great to have everybody here. Sinali, I turn to you. I mean, you get another reminder today why everybody's captivated by the AI trade. You have news from meta. You have news from Apple. You have news from others.

And here we go again. Yeah, we really understand why you want to be invested in AI and say invested. We do think they're heading into next year. You want to be selective. not everyone is going to win in this space. There are many ways to play it, right? We have a lot of clients that are now looking more seriously at venture capital that was not an area

that was in favor for a couple of years. There are a lot of people looking at structured investments because they want to protect against the downside. They just don't know who's going to be the ultimate winner when it comes to the AI space. And I don't know about all of you. Every time I see one of these headlines, my stomach hurts with how much is being spent.

And so that return on investments here is something we believe is going to have to be played out next year. And right now, you are not seeing that take complete hold of the trade, but we believe that going to next year, it'll be a bigger and bigger part of the story. It makes a good point in the dispersion that we've seen from some of these names.

It's become more pronounced in recent weeks, a handful of weeks or so. Does that persist? Well, listen, they aren't all doing the same thing, so there should be some dispersion. But you look at what Google's done, there have been fundamental reasons for it. Obviously, the headlines, Benny Off, et cetera, et cetera.

You look at the turnaround that META perhaps is embarking on right now by cutting costs. There's these idiosyncratic stories at play for each one of them. And I guess for a while, maybe we lump them in together by calling them the Mag 7. But that really hasn't been the case for a while. You know, I looked recently at sort of the monthly performance. It's been a year or two since there's been anything resembling a consistent trend here, in the sense that, let's forget Tesla, if six of them are going up, five of the six are going up by the same amount or something like that, we really should be including Broadcom in the conversation.

Oh, for sure. Of course. That's fair. So there's a lot of idiosyncratic stories at work here. So yes, I think this probably continues and deservedly so. You know, it's crazy. I mean, the Walmart and things like that that you've been talking about for many, many, many months. Let's just call that an AI story too.

Because they have leaned into that more so than many of their retailers, and they're getting rewarded. The stock close above $900 billion in market. for the first time ever. It's going to join the trillion dollar club. Yeah, and it's, well, in some respects it should, because fundamentally it's operating quite well. A lot of the reasons I've mentioned Walmart in the past is just the strength of the consumer. But they have an AI product called Sparky, which is like a shopping assistant. Amazon has something similar, I believe, called Rufus. But they've leaned into it way, way, way more than that. You know, supply chain to help their associates be better at what they do, to help efficiency all over the place. And I feel

like they've gotten rewarded for that. And again, the only point I would make with respect to them is that's an example of a company that's using AI for more than just increasing social trends on Instagram. That's fair. But then that wants me to ask the question, then, is that the next phase of AI investing? Look for the others. Look for the derivatives of this whole story that are going to be using it and proving it to be a winner for their business, like Walmart.

Yeah, I think that is the next phase. look for the operational efficiencies that are going to emerge from this. And you already see in the U.S. corporate profitability compared to, you know, the workers required to generate it is significantly elevated. I think there's two things investors need to think about next year. One, the concern about is there too much hype around the largest names and two, our investors position for an easing cycle. And if the economy picks up some momentum, I think you could take advantage of both with the same thing, whereas you build a better value portfolio, look outside the U.S., go down in capitalization, a bid, other names within the S&P 500,

you can withstand some pressure should it emerge on the biggest names. But also, if you're in an easing environment, leading indicators picking up, that should help broaden the markets, and quite frankly, it already has as we moved through this year. What do you guys make of this comment from Arvin Krishna, he's the IBM CEO, as earlier this week, said, quote, no way spending trillions on AI data centers will pay off at today's infrastructure costs. In my view, there's no way you're going to get a return on that. I'm quoting because $8 trillion in CAPEX means you need roughly $800 billion in profit

just to pay for the interest. Is he going to be talking about, is he talking about something that we're going to be talking a lot more about in the early parts of 2026? I've said repeatedly, I have no idea. My assumption is that this is a bubble and we're in the process of inflating it. There's much more of this conversation, but to oversimplify it. And there's going to be a lot of misspent capital, so to speak, and there's going to be a lot of unused resources,

and it's going to lay the groundwork, not dissimilar to what happened in the late 90s and early 2000s, to the next leg in five and seven and ten years. But as a general rule, I mean, forget his numbers. Yeah, we're spending a lot of money, and it's really hard to imagine that all of this is going to pay off. Yeah. Does that mess the trade up at some point?

It complicates the trade. It creates volatility within it, not just because of the MAG7. We ask this of private equity managers, but I would ask this for every company in the index right now. If you're asking how you're going to benefit from AI, shouldn't you also be asking about companies that will be disrupted or be significantly hurt because of the gains you're seeing elsewhere in AI? We're not looking at the two ends of the barbell here, and I think people really need to be paying attention to that. What else do you like in the market? If we get away from this trade, should you get away? from it? Can we talk about something else? I think you could diversify away from it to some extent.

And yeah, we should be thinking about other things. What? Financials? Many of those hitting your eyes today? I mentioned those in the top of the program. Yeah, sure. I mean, steepening of the yield curve certainly benefits financially. I think what you had over the last, really since mid-October was this idea that the trade around Fed easing and improving economic activity was off. And you had things that were deemed more speculative small-caps sell-off, crypto sell-off, non-profitable tech sell-off. And that's all back shifting again with expectations of lower rates.

And so I would be looking elsewhere. I'd be looking outside the United States. You're an environment where valuations are more attractive. We have not had a weak dollar cycle in a very long time. And we're set up for that. And so, yeah, I would be looking elsewhere. Do you think the bond market is anything in the bond market? So the yield complex again, guys,

if you would, please. Is that a we don't want Kevin Hassett? Well, because there was a story in the FT, which you probably saw, that said some prominent bond investors had told Treasury that they don't want Kevin Hassett because they're afraid of what it's going to do to the inflation picture. Well, there's enough prominent bond investors that some don't want him and some wouldn't mind. I mean, Kevin Hassett's a real economist. It's not like he's nominating.

No, but I mean, the premise being obviously that you don't want somebody who's just going to do the president's bidding and cut rates whenever. Not that he has the power to unilaterally do that, but nonetheless, that was the story in the FT. The bond market isn't necessarily acting like one in which it expects a whole flurry of rate cuts to be coming, does it? Well, but also remember that the bond market might be telling you something else that perhaps he's going to bring consensus around to more rate cuts than is, quote, necessary, and that's

going to drive inflation higher, and so bond yields would be backing up. But listen, I tweeted this out the other day, and I think this is just a very day. really super important. We're treating Kevin Hassett as if somehow picking someone out of the administration is something that's never happened before. Ben Bernanke, chair of the CEA. Janet Yellen, chair of the CEA, Greenspan, Domestic Policy Advisor to Nixon, Volker worked for Nixon, Arthur Burr. Like every chair and Lale Brainerd, widely discussed to be the Treasury Secretary had Hillary Clinton won in 2016. We really need to stop pretending as if people on the Federal Reserve Board and the Fed Chairman are these apolitical, holier than now

people that we summon once in a while to lead us on our monetary policy journey. They're politicians, for lack of a better word, just like everyone else in Washington. Kevin Hassett is getting a lot more attention. Obviously, Trump brings a lot more attention onto everything and everyone in his orbit. So I think in a lot of respects, Hassett gets a lot more attention for that. However, he's a real economist. He's got credentials. He's the chair of the CEA. He's doing a real job. We don't have any idea how he's going to act in the in the in the in the in the uh in the uh as head of the federal reserve just like we don't have the any idea how anyone else is going to act when they get nominated to head of the federal reserve i think in all fairness to what you're saying

that that this president would expect that has it would argue for lower rates because that's what the president wants lots of other presidents linden johnson threw a guy up against the wall you you you seem to be uh throwing that out the window completely and you maybe you just don't want to deal with it. I don't know. I instinctively take the other side of most arguments, so that's part of this. But at the same time, there had been Fed Chairman that had been replaced because they wouldn't cut interest rates more quickly enough. George W. Bush 41, George H. W. Bush, 41, went to his grave, blaming Greenspan for his loss for not cutting rates more quickly. So presidents and Fed Chairman, there's an expectation there always. Obviously, how much the Fed Chairman follows through on those

expectations is a different story. But we've got a couple of things going on. So, so, so we've We have inflation expectations that have actually been ticking. I could have kept going. No, thank you, Ryan. Inflation expectations have actually been ticking lower over the last days. We're well below 2.5% on the 3-year break-even. So, no, the bond market's not particularly worried about it. The other thing that's potentially in the favor is that pay, well, not helpful to the economy,

but payrolls have slowed significantly. And you saw ADP produce a negative print. So we should be lowering interest rates. And, you know, if this Fed lowers or the asset Fed lowers, interest rates 100 basis points, that would be very much in line with what the market is already expecting. Well, I mean, if the, I just wonder if this current Fed does a lot of the job before next May and then subsequent meetings when a new Fed chair would even take the position.

Like we think we're going to get a cut next week? Right. But with a cut next week, that would be consistent of what you saw with risk management cuts, right? That would be three this year into a labor market. That's frankly at a precipice, right? All the data is mixed that we're getting and you're seeing different signals. Inflation is still sticky where it is. Now, the Fed had expected that going into next year, but it's a wild card. Let's be clear. 2026 is a wild card as it pertains to inflation.

No one has that crystal ball. And you have that with the labor market that has generally held up, low higher, low fire. If that tips over, then you're in a pretty sticky spot next year. Maybe the spot to look anyway on what the market wants and who it might want. want, maybe the best quote unquote HACIT trade right now is in the Russell. The Russell 2000 week to date's up 1.3. In a month, it's up 4.3. It's dramatically outplaced, outpaced, excuse me, the others. And albeit quietly, here it is, up 13.5% year to date. Yeah. Listen, it's probably too premature. We obviously don't know that it's Kevin Hacid, although obviously we assume. And to some

degree any incoming Fed chair to the discussion we just had that Brian, thankfully, for the viewer interrupted. And there's your final five, what is at least said to be the final five, with Kevin Morris and Waller and Reader and Bowman, and there, of course, has to. No matter who it is, right? We know that there's dispersion on the Fed in terms of views. And so realistically, you're talking about the Russell. That's a tactical trade based on rate cut expectations. You get one more this year. How many more do you get next year? Especially on the front half of the year. No matter who the Fed chair is, you still have a problem where the rate cut trade only has so much longer to go.

That's the problem. And just to repeat, and Brian said this earlier, he thinks we should lower rates. I've been arguing, I'm not a Trump stooge that I know of, although I would happily be considered for a Fed chair, now that we've pulled Zaviservos, my friend, out of the conversation. But I've been arguing for a while about we should get rates into the mid-3s because of the slowdown in the labor market. You and a lot of other people. I don't need to suggest that I'm alone. I mean, there are a lot of people who are not doing President Trump's bidding who've been arguing for lower interest rates for some time now.

And so in that sense, Kevin Huss is not really doing anything out of the ordinary, to Shannali's point. He's making a case that a lot of people have made. And I would just add, this is not happening until next year. Now, I would say that's fair. This is not that far, this is not that happening sometime soon where the markets, I think what I'm getting at is the market in the short term is concerned with, okay, we're getting a rate cut next week. The AI trade remains unimpeded.

The economy is doing okay. Thank you very much. We go higher. All right. Well, thank you. Because we go out of here. That's San Greenhouse. And Ali, thank you.

Bye. We'll see you soon. We're just getting started here at post nine on the closing bell. Ali Anz, Mohamed El-Ary, and he will weigh in on the possible next Fed chair pick. We're live at the New York Stock. James, as I said, you're watching closing bell on CNBC. All right. Welcome back. Let's send it now to Leslie Picker for a look at the biggest names. Moving into the close today. Hey, Les. Hey, Scott. Yeah, shares of Kroger dropping about 4% after the supermarket chain lagged estimates for third quarter revenue.

Despite a slight earnings beat, the company posted over a billion dollar loss driven by higher operating expenses. it also narrowed its full-year comp sales outlook. The stock on pace for its worst day since 2022. Dollar General shares, though, those are up more than 13% after reporting strong third-quarter earnings and raising its full-year earnings and comp sales forecast. Dollar General, the best-performing stock in the S&P today hitting its highest level since August 2024.

And shares of Intel falling about 7%, 7.7% on new insights out of the UBS Global Times. technology and AI conference. The company said gross margin remains volatile and capbacks for 2026 may likely be flat or slightly down until the worst performing stock on the S&P and NASDAQ today, Scott. All right, Leslie, thank you for that. Leslie Picker. Still ahead. What to watch for when HPE reports its results at the top of the hour. The bell's coming right back. All right, welcome back to the bell. President Trump says he could name a new Fed chair early next year with a recent report saying, as we were just talking about, Kevin Hassett is the frontrunner. The story in the FT, though, says some prominent bond investors are balking at that choice.

Steve Leesman joins us now with more. Steve, what are we to make of this? Well, there is concern, Scott, about whether the prospective nominee Kevin Hassett, I guess perspective is the right word. whether he's an asset as an asset or a liability when it comes to the bond market. The outlook for inflation, financial times reporting some big players in the bond market have expressed their concern to the Treasury with a candidate who seems very likely to be working on or concerned about fulfilling the wishes of the president for very low rates, perhaps at the expense of higher inflation. I've heard this from some major players in the bond market. The problem with this, it's hard to see much worry when looking at the actual trade in bonds. Take a look, for example, since the unconfirmed speculation about asset has picked up steam here, the spread between the two-year and the tenure has grown somewhat wider.

Traders would bid the short end anticipation, perhaps of lower rates, sell the long end because of perhaps you want more inflation compensation. But the move has been pretty modest there. That could reflect the market's understanding. One, rates are determined by a committee, and this committee is going to be more hawkish next year. Two, the U.S. has $38 trillion of debt it has to sell, so there's limits. And inflation is above target, and HACET probably understands the limits of the policy flexibility that he has because the bond market's going to have a say here. Fed funds futures markets currently price for an expected 25 basis point cut next week, then drop to just 340 by June and 306 a year from now.

So 80, 90 basis points of cuts, that is, the market may believe the next Fed head will be HACET and beholden to the president, but it's not pricing in a Fed. head fulfilling the president's every rate cut wish, Scott. All right, Steve, thanks for that setup for us. Now let's bring in Alian's chief economic advisor, former Pimcoe CEO, Mohamed El-Aaron. It's good to have you take part in our conversation. And I want to be clear, just because there's a story written that says there are some bond investors who are concerned about Kevin Hassett being the next Fed chair, let's not make it seem like bond investors have lined up down the block to say, we don't want this guy to be in

in this role. I get that there are some, according to the sources cited in this article, but should the bond market be concerned at all? So first of all, I don't know who these bond investors are, but they haven't expressed that view in the marketplace. I think Steve was absolutely right. You don't see it in the steepening of the curve. You don't see it in the break-evens. You don't see it in how the market has priced cuts after April next year. You simply don't. see it. You need a magnifying glass to find it. Where there has been a move, it has been in yields, but I suspect that has more to do with Japan than with who's going to replace the

Fed. So I think it's important that they may talk to talk, but they haven't traded anything resembling a worry expressed in the FD. The second issue is... I'm sorry, go ahead. I apologize. No, no. The second issue is Steve is absolutely right. Whoever is chair will inherit a faction Fed, they will need time to impose their authority. Scott, I think we are way to focus on the short term and not enough on the long term. What's really important for markets is that every single one on the short list has said that the Fed is an urgent need for reform. And lots of people agree with that, including me.

So we really should be focusing on the long-term implications for the Fed and not whether we get more cuts in the second half of next year. Dan Greenhouse, who was on earlier, and you may have heard the comment. that he had made, essentially said, people are making way too much of this idea that HACET will simply do President Trump's bidding, that every president has a political relationship of some sort with the chairman of the Federal Reserve. Some have come out of other administrations, too. So all of you are making a way too big a deal about essentially what is one vote?

And I think that's correct. A, it is a political appointment, and I'm glad he went through the prior chairs. all of whom had had some job in the administration. The second issue is that he's got to bring the committee along with him. It is not that easy. Whether it's Kevin Hassett, Kevin Walsh, Rick Reeder, whoever it is, they're going to need time to impose their authority. What they desperately need to do is give a forward-looking, unifying vision

of where this economy is going, which is what this Fed lacks. Otherwise, these divisions that are quite deep are going to last, a long time. What do you think happens next week? I think they cut. I mean, the market expectation is 91%. I think they should cut. So hopefully they will do what the market expects them to do, and they should do what the market expects them to do. You think they'll continue to cut, or you think it'll be more of a hawkish cut? I think it will be more of a hawkish cut. I think they're going to frame it or package it in the context of this data is so confusing. It's not even complete, we have to wait and see. And that comes from a Fed that's successively data dependent.

If they were to look forward and they see what's going on on the supply side, I think they would signal a less hawkish cut. But I think this Fed, which is very backward looking, will signal a hawkish cut. I mean, I hear you say that. And then I'm like, well, what do you mean on the supply side. We just had Black Friday. I mean, consumers continue to shock us in their resiliency. And it's not, I get that it's in some respects a case-shaped recovery, but what's been happening in the retail space would suggest that consumers continue to be far better off than anybody expected that they would. So you would look at that and you would say, well, maybe we don't need to rush through the door, break it down, and cut all these times that some suggest we do.

So first, the earnings absolutely point to a consumer that's impressively resilient, absolutely, but also look at the labor market data we got. Look at the Challenger data. Look at the ADP. Claims was an exception, but that's noisy Thanksgiving week. But if you look at ADP, if you look at a Challenger, this labor market is weakening, and that's going to impact income and how people feel about their future purchasing power. So that's the first issue. But that's all demand side. On the supply side, do you yes or no believe, as I do,

that there is a productivity surge ahead of us, which will increase the speed for non-inflationary growth? Two, do you believe that we have to accept, as the Fed has done for five years now, to run inflation slightly above its target, and the Fed expects to do so for two more years, So I'm not saying anything new here because of the change in the supply chains and everything else globally. So it's the supply side that pushes you to cut rates.

The demand side will paralyze you at this point. You worry it all about the future of Fed independence. I know some would say the notion that the president doesn't have any input in the interest rate complex is wrong. And you always cite things that you find to be a problem with the current Fed. the way they view things. They're too data dependent. You've said that. You've made the case that they are political.

Does the institution itself need a Band-Aid rip? What the institution needs is reforms. They've made mistakes on analysis, on forecasts, that have had governance issues. Five Fed shares accused of fiscal problems, of financial misbehavior, not all proven. They've had issues with policy actions. this has been a Fed that has made lots of mistakes.

Most people agree you need reforms. I'm absolutely for Fed independence. It's critical. But to maintain Fed independence, you need to strengthen the Fed and you need internally driven reform. If the Fed just sits there like it has in the last few years and does nothing, these reforms will be imposed on it from outside. And in that case, Scott, they will lose political independence.

So the hope is you get an internally driven reform effort that strengthens this institution. and maintains not just its effectiveness, but its political independence. Who would be the best, then, of the final five to achieve the goal that you said is needed to be reached? Look, all five have said that reforms are needed. Every single one of them has gone through this issue of unique reform the Fed. It's an urgent need of reforms.

So all five are committed. You know, I think Kevin Hassett will do it, Kevin Walsh will do it, Rick Reader will do it. So I'm not worried that whoever of the frontrunners who get it, we will have reforms. They just have to impose their authority. And the marketplace will welcome the return of a trained economist to the head of the Fed. Who's the best for the equity market? That's really hard to say as who is the best for the equity market. I think what you'll find will happen in the Fed is what Secretary Besant has said.

get off center stage, stop the play-by-play commentary that has caused more volatility than needed. Remember, Scott, in the last five weeks, market expectations of a rate cut went from over 90% to below 30% to above 90%. That shouldn't happen. It happened because we got all this play-by-play commentary. So I think what you're going to see is that the Fed will move off center stage and what will drive the equity market will be fundamentals and technicals. not guessing and second-guessing, do we get a cut? Do we not get a cut? So we should get rid of forward guidance? We should get rid of Fed speakers speaking as much as they do.

Is that what you're suggesting? We should reform forward guidance. I think it has gone too far. And second, yes, well, they can speak, but please go forward looking more than the next meeting. Tell us where you see the economy going. Take us back to the days of Greenspan, of Volker, of Bernanke.

Wow, but Greenspan said like 8 million words, and we couldn't understand three of them. I mean, what difference does that make? How can anybody sit here, you or anybody else, for that matter, and tell me where the U.S. economy is going to be in nine months? We know the themes. You've been talking about them all day, Scott. You talk them out every week.

There are very clear themes going on, and they have macroeconomic implications. Do you or not, Scott, believe that we are on the verge of a productivity surge because of AI, robotics, and life sciences. But we also could be on the cusp of an employment disruption, the likes of which we've never seen in our lifetimes. And we don't really know how to get our arms around that yet. And I'm not talking from a productivity standpoint.

I'm talking from an unemployment standpoint where you could have numbers that we haven't become familiar with in an awfully long time, if ever. I totally agree. And which Fed official has talked. about the risk that GDP growth made the couple from employment growth, okay? Not a single one. What are that talking about?

Will I support a rate cut next week or not? That, I completely agree with you. We should have these discussions. And the Fed, with all its PhD economists, should be involved in these critical discussions about where the economy is going, and what does that mean for its dual mandate? Well, whoever thought talking about the Fed

for as long as we did would be fun, but it was. And I look forward to doing it again. Muhammad, thanks. Appreciate you. Thank you, Scott. Mohamed Al-Alarian. Up next, we're tracking the biggest movers as we head into the close now. Christina Partsenavalo is standing by with that. Hi, Christina. Hi, Scott. Well, we got a mixed bag and tech earnings. One stop tanking despite beating the street, another soaring on AI momentum. Plus space stocks jump on a SpaceX competitor report. Details ahead. All right with less than 15 from the closing bell. Let's get back now to Christina Parts of Nubelos for the stocks that she is watching.

Tell us. I got to start with Aklo, because that's the newsiest. The stock is up 17, 16% right now after the Department of Energy just announced plans to purchase up to 10 nuclear reactors. The move is really just a boost for the, nuclear energy sector's demand for carbon-free power to support AI data centers just continues to grow. Euro-E-F, that's one I often follow. That is up about almost 6% on the news as well. Switching gears, UiPath or just path shares soaring right now, 25% driven by a third quarter beat, and of course, confidence in its AI integration. The business software platform's annual

reoccurring revenue, ARR, beating estimates up about 11% on the year. The stock right now is having its best day in two years. And then we also have multiple space-related stocks that are seeing a bump. I was going to say over 10%, but look at AST Space Mobile, up 18% on a Wall Street Journal report that Sam Altman has explored a deal to build a competitor to Elon Musk's SpaceX. It would involve acquiring or partnering with a rocket company, according to the journal, citing people familiar. And so that's why you're seeing all these shares up. Oh, no. Are they going to get into it again now? It's going to happen again.

Whose rocket is going to be bigger? I'm sure they will. Bye. Coming up, we'll run you through what to watch for from HBE and O.T. That's all I got. We are now with the closing bell market zone. CNBC senior markets commentator, Mike Santoli, and empowers Martin Norton. here to break down these crucial final moments of the trading day.

Plus Christina Parts of Nevelos is tracking HBE, those earnings coming at OT, which is why we begin with you, Christina. Scott, investors are going to be really focusing on the server business, particularly any color on AI order momentum. Key Bank expects server growth to be down due to AI order lumpiness, a word we're hearing quite often from last quarter with revenue growth coming in line with consensus. The bigger concern though is margins. Memory pricing is becoming a real headache.

Samsung reportedly hiked chip prices as much as 60% since September, and so when prices rise, margins get squeezed. On networking, Cisco's strong results suggest Juniper should deliver, but Keybanks channel check show an uptick for Juniper, but a downtick for HPE's core networking segment, which could be a problem. HPE also just landed a nearly billion-dollar Department of Defense contract. Morgan Stanley says we're in a, quote, unprecedented pricing super cycle for computer makers. But margin pressures from memory costs and potential softness and core networking are definitely risks for this company heading into the print. Scott. All right. And we shall see. Christina, thank you. As always, Christina Parsons-Evelas. Martin Orton, to you on the trend of this

market, still looks pretty good or what? Well, I mean, if we're talking towards the end of the year through December 31st, we're certainly treading water today. And I think you can expect more of the same because when we look for catalyst, whether that's the priced in Fed cut, we could potentially get some weakness in the data following that. It's hard to imagine any additional catalyst beyond that. But I think if we're looking forward to 2026, when you're thinking about the AI super cycle, it's hard not to argue that we're in an upward trending market, but potentially with some volatility. Mike, how about that, treading water for a little bit here, no real catalyst to take us anywhere.

We are hesitating. Seems like in no particular hurry to jump to the old highs, which is half a percent away. Obviously, it could change tomorrow morning. But I do think that it's almost like the calendars, the catalyst everybody's agreed upon, which is general upward bias, a little bit of a drift higher. It does seem as if the market's just trying to hold in place with nice rotations. You get that pop and meta. It enables alphabet and Apple to take a little bit of a rest, no real net harm to the indexes. And I mentioned earlier, a lot of the more aggressive stuff is starting to fly again. The gremlins are playing. You know, Christina was mentioning the space stocks got kind of a stray catalyst to get them moving, as did the alt-nuclear names.

Well, quantum went up with them. So maybe we're in for that word. You don't really have a fundamental catalyst. What you have is risk appetites rebuilding after a little bit of stable action in the market. Any worries about that at all, Marta, low quality, whether that persists and what that means? Well, I think one of the benefits of what we saw with the November volatility is it took a bit of edge and froth out of the market. So there's no question that there's still a lot of stuff that's expensive, that's frothy. But some of the higher quality names around the Mag 7 have come off.

And so folks who are looking into the AI trade have a little bit of opportunity to move in. But I think there's no question that we're in an environment where people want to take on risk. they want to have a piece of these big movements that we're seeing. So I think that's something that we're going to need to contend with as we move forward. Well, I mean, we still could get a bit of a chase into year end from some underperforming PMs around the way. I do think there's room for it. Definitely people are not at the max in terms of their exposures.

That's what happened with the pullback in the first part of this month, or actually last month. Although, you know, I look at things like the sort of tactical asset management, equity exposure that comes out on a Thursday. It's pretty much back to the recent highs. So people have tried to get in place for that. I don't think it necessarily invalidates the idea that we probably tilt a little bit higher. Keep in mind, you know, 6910 or something like that

is the all-time high. That's October 29th. So you have a pretty decent kind of two months of sideways and arguably maybe get set you up and refresh the uptrak. All right. Mike, thank you. Martar. Thank you as well.

They're going to do the honors down here. down here. They're going to light the tree down here today, too. That's why it's a little extra festivities down here on the floor of the New York Stock Exchange as the bell rings. I'll see you tomorrow into overtime with John Ford.