Closing Bell - Closing Bell: The Risk-Reward for Investors 01/09/24

Episode Date: January 9, 2024

What is the outlook for stocks in this new year? Trivariate’s Adam Parker and Nicole Webb of Wealth Enhancement Group reveal what they’re expecting. Plus, Skybridge’s Anthony Scaramucci breaks down the looming bitcoin ETF deadline, his Fed forecast and more. And, there were some big moves in the consumer space. We drill down on the moves in the restaurants and retail today. 

All right, Kelly, thanks so much. Welcome to Closing Bell. I'm Scott Wapner, live from Post 9 here at the New York Stock Exchange. And this make or break hour begins with the road ahead for big tech. NASDAQ's outperforming for a second straight day. However, conviction does seem a little bit thin. Big question remains, are these stocks still the best bet in this market or not? We're going to ask our experts over the final stretch. In the meantime, take a look at your scorecard here with 60 minutes to go in regulation. Tech's been mostly green. You see the Nasdaq still hanging on. It's not that strong, though. I mean, Nvidia is. Microsoft's OK. Alphabet, Amazon, they're higher. Not as much as earlier, though. We're going to watch those closely over the final hour here. There has been

weakness again in Apple. Tesla's in the red, too, by about two and a half percent. ComServices is barely green and not much going elsewhere. Not for the other S&P sectors. Energy, well, it's a drag today, along with materials and financials. You see them there sliding across the board. Boeing, well, it's in the red again as well. The company facing more fallout from that door incident over the weekend. The CEO is hosting an all-employee safety meeting.

That's happening right about now. The stock is down about 1% as we speak. And we're going to watch for any headlines that come out of that meeting today as well. Quick check on interest rates. 10-year, well, it's hovering right around 4%. You see across the board here, we're green there. It takes us to our talk of the tape, the outlook for stocks in this new year. And why one closing bell headliner says the risk reward for investors is now skewed positive.

Let's welcome him in. He's Adam Parker. He's the founder and CEO of Trivariant Research and a CNBC contributor with me, as you can see, at Post 9. You're the headliner. Yeah, baby, let's do it. So I know you've gotten more positive, but risk reward is now much better than it was,

even with that big rally towards the end of the year. Well, as you know, last year we were positive, too. I mean, it went up more than I thought. Not this much. It went up more than I thought. But I think the skew positive to me comes down to three things. One, I think the average company has a good chance their margins expand. And stocks work when gross margins expand.

So that's one. Two, I don't think the Fed's going to cut six, seven times between now and January 25. If they do, it won't be skewed to the positive. It won't. I don't think that'll be necessary. I think- But you think if they do cut that many times,

it's because they have to. Because things got way worse. Because they got bad. Yeah. So I'm in the, I don't like the view of good news is bad for stocks. That makes no sense beyond like one day. I think good news will be good for stocks. And I think the third point would be, I think there's a reasonable chance that earnings

grow for several years in a row, like they did from 2010 to 2019. We're a few years in that process now. And what looks a little expensive at, you know, 20 times forward or, you know, 19 times forward to get 10% upside, maybe we'll look a little more attractive as we start believing 25 earnings are above 24 and 26 are above 25. That's my base case. And I think that probably means a skew 6, 12, 18 months out is higher.

Basically, margins have troughed in your point of view. And ultimately, that ends up being the key to everything. Yeah. Stocks work when margins expand. And I think that's the key. Obviously, you know, it depends on pricing and mix in certain industries. It depends on input costs. But I think a lot of businesses are going to see pretty good productivity, lower input costs from commodities and materials, less, you know, wage inflation.

It's wage inflating at a lower rate and can be offset by productivity. Currency could help a little during earnings. So, you know, dollar kind of weakened across the board last few months. I add it all up, and I think probably margins expand. Does it matter how many times the Fed really cuts or when? I mean, I know you said if they have to cut six or seven times, it means things get bad. But, you know, given where inflation expectations are, we got that read yesterday. That was good.

Yeah. It's trending in the right direction. Here's the challenge I have. When I look back at, I wanted to take a step back, come into the year at outlook we just did and say, okay, if the ECB and the Fed are going to be accommodative, I don't want to be a jerk and fight that. We've learned the lesson, don't fight the Fed. But when you go back and you look at the last few times that's happened, it was TMT bubble, it was a financial crisis, and it was COVID. Are you sure that this is the exact same period? It doesn't feel, this feels more like a mid-cycle adjustment, or we had some sort of, it doesn't feel to me like it's an acute problem that's going to need

massive accommodation. So I don't think we're going to get six, seven, you know, cuts unless things get way worse. And my base case from looking at economic activity, leading economic indicators, you know, the strength of the consumer while eroding is still OK. Financial conditions. When I add all that up, it doesn't seem like we're headed into a COVID or GFC era. But Fed funds are probably higher than right now than where they really need to be relative to where inflation is going. You think so? Yeah, I think on a normalized basis, a 4 percent 10 year could be OK. The front end is trickier. We'll see. I think most people believe the curve's got to uninvert, right, at some point. When you go back again, there's insignificant sample size to evaluate the uninversion playbook,

but generally it's bullish for equities too, right? So I think what you need to believe is the 2-year yield becomes below the 10-year yield. The economy is slowing but not tanking, and the average company's margins can still grind higher. If that's the case, equities will be, of course, they'll be 10%. But I mean, isn't the risk, though, that the Fed waits too long to cut? How much risk do you think there is in that? Right? They say snatch defeat from the jaws of victory because they wait too long. Like they waited too long at the front end, they wait too long in the back. You know so i i would answer that differently which is i'm not sure how wrong they were on the front end the part that i would be more critical

of was i think still in early 20 22 they were bought the balance sheet they were buying tons of mortgage-backed securities when housing was on fire in every market so what do you mean that they weren't too wrong in the front and you've been criticizing them for that since we've had these conversations well i guess i don't know i don't know what they what they weren't too wrong in the front? And you've been criticizing them for that since we've had these conversations. Well, I guess I don't know. I don't know what they what they do. But I guess the reason I paused is because I actually don't want them to start cutting crazy. What I want them to do is what I know is the probability they are accommodative is a lot higher than the probability they hike. And I like that dream right now.

I like the dream of eventual accommodation. I'm not sure the reality of it is going to be awesome if it's because the economy is eroding. No, but it's because inflation is coming down. Do me a favor. Hold your thought real quick. Yeah, I got Phil LeBeau on the phone because we do have some new news regarding Boeing that we were watching and looking at how the shares were doing. And, Phil, this seems to be all around how long it is going to take these airplanes to get back in the air. It's indefinite, Scott. I remember yesterday when the FAA initially approved the inspection process for the grounded MAX 9. The thought was, well, maybe later this week we start to see some of the grounded planes back in service. Well, within the last hour, the FAA has come back, and we've heard that this was going on for some time,

a discussion between the FAA and Boeing. And the FAA has come out and said, look, we're going to continue talking with Boeing, looking at their inspection protocols, revising it, telling them what we think should be changed, what should be amended, and we're not there yet in terms of feeling satisfied with the inspection process. So the bottom line is this, Scott. If you thought those grounded MAX 9s were going to be in service tomorrow or Thursday or Friday, that's not likely to happen. I think we probably have a few days here at least where the FAA is going to say, let's take this and make sure that we have everything exactly as we want it

before we tell the airlines, this is the exact process. You do this. You can put the planes back in service. Yeah, we're going to watch these shares. Phil, thank you for that. The shares hit a low of $223 today, but you see a little bit of a move lower on the news that Phil was elaborating on that maybe it's going to take a little bit longer until the FAA has enough confidence to let these airplanes back in the sky. But we'll continue to follow that over the final stretch. Boeing shares down 1.35 percent. I look at your, Adam, back to you, I look at your sector picks and they don't scream, let's play offense, do they? I mean, energy, health care, utilities? The way you make money and you beat the S&P 500 is you have to own high-quality growth stocks and then value that isn't quality now but is improving.

And that's sort of how we're positioned. The S&P is such a big percentage of it is tech. And so even if you're market-weight tech, you probably have 27% of your fund in tech. So it's not like we don't have offense in there. I really like software over semis. You know, we have a tech strategy product at Trivariant, and our main call there has been to like software over semis for the first half of the year. NVIDIA is a little bit of an exception. Why software over semis? Why? Because you want to buy growth companies where growth is a little bit below average and improving. That's a lot

of software. You want to avoid semis where gross margins are contracting and because the inventory across the board for semis, 80th, 50th, 20th percentile is all very high versus history, that impedes gross margin progress for a lot of them. So you own semis where you have low and accelerating, sorry, you own software with low and accelerating revenue and you avoid semis where margins are contracting. But you think some of this move in semis last year, which was the best year for the SMH in 20 years, was punk?

A lot of these stocks just went up and they didn't deserve to. Yes. Do you think so? Yeah, I mean, there's some great businesses there. Obviously, NVIDIA having the biggest two upward sales revisions of any mega cap company ever. And some of the semi indices are price weighted, so it drove a lot of the performance in Soxel and some of the other ETFs.

But there aren't that many pure beneficiaries. The inventory levels are very high for a lot of these businesses, particularly the industrial-focused analog companies, Texan, ADI, et cetera, very high inventory levels. So I think there was a bit of stuff went up that it didn't deserve. Like Rising Tide just lifted every single boat.

Every paper. Row boats, motor boats, yachts, everything. Everything. All kinds of boats. And at the end of the day, those companies, you saw Microchip. That's a kind of broad-based microcontroller industrial company. I think you're going to see those that have a lot of industrial and automotive exposure act poorly until the inventory gets a little bit under control. So their earnings don't collapse because the inventory isn't that perishable.

It's just hard for gross margins to expand. I'm looking at one of these so-called AI yachts, all right? Okay. Microsoft. Yeah. Is this correct? You say you have a short screen on Microsoft? What?

Well, there what we're saying is software companies, and obviously they're more than a software company, but they have high revenue that's decelerating. And so what we show in our outlook is if you take a basket of software companies with low average growth that's accelerating and compare their subsequent performance to those that have above average that's decelerating, you make tremendous excess return in software. So that's a quantitatively derived screen that shows that maybe this isn't the best time to buy Microsoft. On the contrary, or at least try to consistent with that, we don't want to own big differences

in the aggregate Magnificent 7 versus the bench weight. So if you want to be a little underweight Microsoft and a little overweight Nvidia, to get your combo up there, that's kind of how we play. We tell people you got to own close to the market weight of the Mag 7, and Microsoft doesn't screen as one of the better ones right now. Really?

Yeah. Valuation in part? Yeah, it's less the valuation, more the decelerating revenue. Was Apple on that list? Talking about decelerating revenue. Apple was also not one of our favorite of the Mag 7. So, you know, but again, like, you know, if you add up... I sound nervous admitting that.

No, it's on a short screen on a different page. You just didn't see it yet. Okay. I just, you know, I sent you 80 pages like 20 minutes before we came on air. So it would be impossible to process it all. Yeah, I'm looking at it. I don't see Apple anywhere. Well, yeah, you know, so...

Conveniently left that one out. No, you're... We have to yell at somebody else. No. It's in there. No, we don't. I probably missed it myself. No, no.

But our view is that, again, you're close to market weight, the Magnificent 7. Some look better than others. Software is generally, companies are investing in productivity. They're trying to fire people. They're trying to replace them with AI. They're going to be investing in security and other areas. Generally, software revenue growth and expectations is a lot more achievable, and I think semis have a problem.

So I like that pair trade, admitting that they're going to be somewhat correlated if you get a big risk on trade. Well, we've left Nicole Webb sitting here listening to this whole thing. Thank you for your patience. All right, will you fix me? I'm going to fix everything you just said. Good to see you. Good to see you.

Risk-reward better for equities in 2024. Do you agree with that? Yeah, yes. You could say no. No, you know. You sounded a little apprehensive, though. Right, she did. Yeah, I know.

Why? The setup going into this year is getting... My concern overall is even if we... So go back to 2023. We had above-expectation growth doesn't translate into EPS growth. We look at the setup for 2024. There's so much consensus now around this idea that, well, even if the worst thing happens, which is we do go into this mild recession, then the Fed cuts and everything's fixed.

And from our expectation, it's just a little bit of a fallacy. And when we look back at the meeting minutes from last month, there is still quite a few members who believe that, you know, CPI comes in this week, we're 4% on inflation, we still have a 2% target, and rates hold longer than expected at these rates. And then you can make the case for, yeah, but we need to make sure there's ample liquidity come March. And to us, we don't want our clients to hear that we're so consensus that this is going to be a great year, that we're going to hit that 11% earnings growth estimate. That 2025 looks fantastic, too. And that everything's just, it's so inevitable that it's soft and wonderful.

I'll tell you where she disagrees with me. You just put it on the screen. She doesn't think gross margins are going to go up for the average company. And I think that, we talked off air for a bit, that's probably one of the biggest investment controversies. Okay, I think the average company can see margin expansion. You've seen margins come and trough for the last few months. And the analysts are not very good at estimating accurately. They're pretty good about knowing whether gross margins are up or down.

They have about a 75% hit rate on it. More analysts have gross margin expectation expansion for 24 than most prior years. So I think that's where the rub is. I don't also totally agree with her that the consensus is universally bullish. I think that depends who you talk to. Well, I feel like a lot, to Nicole's point, though, a lot more people have gotten bullish. I mean, even bears. I'm not going to mention any names on the air, but strategists who have been bearish for a lot and missed a lot are now bullish or seemingly so.

Yeah. Look, again, you and I have talked about it. I don't think those people just suddenly got dumb. You do that job long enough, you're bullish and right, bearish and right, bullish and wrong, bearish. You're going to be in all four quadrants. That's the life you live when you have to do that for a living. I think in terms of allocating for private wealth or longer-term investors,

I think it comes down to a belief margins are going to expand and earnings can grow for a while. If you believe that, I think the risk award is positive for equities. If you think margins are going way lower or that they're at risk, then you're probably six months early buying them. I think that's the debate. But the other thing, Nicole, is what Adam said earlier is that you take almost everything out of it. It's don't fight central banks. We are at the end of the cycle. We are. Even if I mean, in the unforeseen thing happens and they hike one more time, which seems completely unlikely, by the way, that the next move is going to be a cut. It's just a matter of when, not if. Why isn't that enough

at a time where inflation is obviously coming down? Expectations are that it's going to continue to come down and the economy's hanging in there. So there's just a few data points that we hang on to as curiosity about what the setup really is for 2024. And so I'm just going to go back to the last jobs report. You have this propping up of the headline number by, you know, health care and government jobs where you see some of this destruction and cyclical jobs. And so, you know, healthcare and government jobs, where you see some of this destruction in cyclical jobs. And so, you know, we start to go, well, what does that really shake out? And when we look at pricing and the company's ability to hold prices where they are, does that start to pull back? Does that affect margin? Where do you start to cut then to hold margin and hold it flat? Well, maybe that is

your labor force. And so when we think about names, and I'm just going to go back to technology because they took a lot of their medicine over the last year, that was the first place they went. So to free up cash flow, to see that free cash flow acceleration, we saw job loss. And does that trickle through to some of these laggards of last year? And while their numbers have looked good, again, it's curiosity that maybe it's just not this acceleration into a bull market through the year. I do think something that Adam said multiple times is really important, and it's what we'll be listening to as we look at Q1 2024 earnings, which is productivity. And can we see an acceleration in productivity? Well, we have.

Well, we have. And does it continue? Are you throwing cold water on the idea in general that we're in a new bull market? Do I hear you kind of say that? I don't. I think we ran up so fast at the end of last year that to us, we look at the setup today and we are cautious that the Fed doesn't cut as soon as about 50% believe that they will come March. Again, we can make a strong argument for the liquidity metric of cutting

in March, but if we don't get it, if it isn't until summer, what kind of deterioration do we see? And then is it a Fed pivot that is necessitated by data, to Adam's point, which is actually destructive. So do they actually come in and start to cut and do it sooner rather than later, which is not often the way that they handle these situations. Well, what do you like in the equity market right now, if anything? Yeah. And so, you know, I think there's a lot of curiosity around small cap and a lot of the acceleration we saw at the end of the year. When we look at the mid cap sector, we like it more than small cap.

We like the industrial makeup of mid cap. And then a lot of small cap is a lot of these regional banks where we think actually the large banks are trading at a relative value similar to the small cap regional banks. And so why not pick up the bigger names? Well, because you get the restapening of the the yield curve too, like Adam was talking about. Right. And we believe that you'll actually see a pickup in IPO business and M&A transaction. And so if investment banking can pick back up and you don't see the consumer side of banking deteriorate, then, you know, I think you can make a really strong case for financials. The way I see it, and obviously the devil's in the details, but I think if you own large cap banks and you own mid caps ex-banks and that's your way to beat the index, I don't think you're going to do well if the stock market doesn't do well.

I think you need, I'm trying to square that with your economic view, because to me, mid caps, you need to believe the margin expansion story to be there, particularly with the industrials and the like. You sound positioned more bullish than your upfront rhetoric to me. And let me make this one item very, very, very clear. Do you agree? Not to play the Wapner role, but... Well, I don't need to agree with it or not. No, I actually agree with what you're saying. And what we want right in the private wealth space, It is so important to not have the messaging of risk

on versus risk off. People who went into January of last year stood on a pedestal and said we are risk off. They were wrong. And there is still the opportunity for there to be multiple possible outcomes in 2024. The bull case, the story behind it, it is there. And that's where we talk about, okay, well, look at all the opportunities set. Look at the laggards. Look at the equal weight S&P. Look at the opportunity in mid-cap. That is true.

And you also need to look at what if the rest of this doesn't play out the way that it is priced into the market today. And that is, I think, more of what my messaging is in an attempt to say is you have to be mindful about your positioning that it isn't necessarily guaranteed to go one direction. I'm more bullish. I'm more bullish than that. I think we look back 12 months from now, the market's higher, and you're believing that 25 and 26 are going to be better. And I don't want to fight the Fed and the ECB and the BOE, who are all going to be accommodated at the same time. I'm worried that there could be a month of a harsh sell-off because if they really start cutting a lot, it's because things got worse. But once they start the accommodation, punch me in the face if I am bearish against all that accommodation. So I'm more bossed. All right. We're making that note. You got that?

Gently. Punch me in the face gently. All right. It's not a great, it's a radio face. Our senior, Lawrence, he just wrote that down. You got that? Gently. Punch me in the face gently. All right. It's not a great, it's a radio face. Our senior, Lawrence, he just wrote that down. You got that down? You can punch me in the face, not him. All right. All right. We're going to leave it there. No punching anybody in the face yet.

All right. Guys, thank you. Nicole, thanks. Adam, thanks. As always, let's send it to Pippa Stevens now for a look at the biggest names moving as we head towards the close. Hi, Pippa. Hey, Scott. Well, Juniper Network's surging more than 20 percent following reports that Hewlett Packard Enterprise could buy the company as soon as this week. The deal is valued at about 13 billion dollars, according to the Journal of Citing Sources.

Shares of HPE, though, sliding about 8 percent. And Unity Software dropping 8 percent after the company said it will cut roughly 25% of its workforce or about 1,800 employees. Executives didn't provide estimates around the cost, but expect the charges to be incurred during Q1. Piper Sandler noting it could help Unity hit its financial targets. But on the flip side, growth trajectory is now less certain with product shutdowns. Scott? All right, Pippa, we'll see you shutdowns. Scott? All right, Pippa. We'll see you in just a bit.

Thank you, Pippa Stevens. We're just getting started here. Up next, SkyBridge's Anthony Scaramucci is back with us. We're going to get his take on that looming Bitcoin ETF deadline. SEC is supposed to make a decision by tomorrow. We'll see what happens there just after the break. We're live from the New York Stock Exchange. You're watching Closing Bill on CNBC.

We are back. The price of Bitcoin surging nearly 70 percent over the past three months alone, as expectations rise for potential approval of the first spot Bitcoin ETF, with an SEC decision expected this week. Soon as tomorrow. Joining us now, Anthony Scaramucci, the founder and managing partner of Skybridge. Good to see you. Welcome back. Thanks, Scott. Good to be here. Is this going to happen? Well, we have every indication to believe it would happen. I think you have to remember something about the SEC. If this wasn't going to happen, I think that would have been telegraphed into the market. I'm not saying they're as good as telegraphic things as the Federal Reserve, but they're pretty good at it. And so some of the big issuers that I've been in touch with believe it gets announced tomorrow,

Wednesday after the close with potential trading Thursday or later in the week. Yeah. You obviously have a dog in the fight because you were an early investor in BlackRock's product. Why did you pick that one? Well, you know, at that time they were having, you know, Bitcoin was in the doldrums. It was a bear market. The team over there, they were looking for an outside investor. And so my partner, Brett Messing, I'm going to butcher Robbie's last name, but I think it's Medichek or Medichek. If he's listening, I'm sorry for the butchering of your name. But my partner, Brett Messing,

met with him. Sounds like a close partnership. Yeah, no, sorry about that. Because I, you know, I'm drawing a blank by the high altitude, Scott. But in any event, we put some money in there to help them get it started. And the good news is I think they caught the momentum. Listen, they've been almost perfect on their ETF application. So I do think that this goes through. When you look at the players, I mean, we're showing the list right now, Anthony, on our wall back at our headquarters, and I obviously have them in front of me. It looks to me to be at least a dozen on this list.

Is that too many? Are there going to be more? I mean, how should we judge the number of players who are trying to get a piece of this action? It's a good question. So we stood down. We had an application in in 2021. It got rejected alongside a Fidelity's application. And I think that the 12 of them will probably garner the market share. And those 12 will likely, once due diligence goes through at the wirehouses, Scott, they'll end up on the platforms.

I think this is a seminal moment for Bitcoin because most investors didn't want to open up an account or store it on their own personal wallet. They would prefer to store it in a brokerage account. And the ETF allows them to do that. And so this is sort of a SEC approved wrapper of Bitcoin. And I think it opens up a window of opportunity for the Wall Street, those 12 that you're referencing, to go out and market the idea to their best investors. How much of the run up in Bitcoin towards the end of the year? We mentioned the gains are incredible over the last three months alone. And it was, of course, the best performing asset class of of last year. But more recently, let's just pick over the last three

months, per se. How much of the gain there do you think was due to the expectation of these ETFs? And then some now suggest that you could get a sell on the news. What do you think about that? Well, it's very hard to predict this stuff. I've been humbled by price predictions of Bitcoin. So if there's a sell on the news, though, I'll be surprised because there feels like there's several billion dollars of market demand. And remember, those 12 issuers want this to get off to a strong start. And I do think they have bent up demand. But you're asking a good question about recent appreciation. Remember, Bitcoin peaked at 68 or 69,000 in November of 2021, Scott, when the Bitcoin futures was approved. And I would have thought Bitcoin would have gone way higher. But we had a horrific year in 2022 where I think it landed around 16 or

16,500. So it's been a humbling process, Bitcoin. We entered the space in 2020. We like it long term. We think Bitcoin could eventually be the same or up there with the market capitalization of gold. That may take a decade, but it's very, very promising. And the fact that the SEC is going to allow this in brokerage accounts, I think this is meaningful. And you and I both know Wall Street. Now that Wall Street's involved, they will sell this product to their best investors. Yeah. Yeah. There's no doubt about that. What about the relationship with interest rates and Fed policy? If if the Fed is is done hiking and now rates are going to start coming down, you know, obviously Bitcoin appreciated a lot last year as rates were elevated. How does that relationship go forward from here, do you

think? Well, listen, I think more liquidity in the markets is better for Bitcoin. The people that are studying Bitcoin and doing the work on Bitcoin recognize it as a digital store of assets. They see it as a digital form of gold. And so if there's laxity in the interest rate cycle, that means there'll be more liquidity. And I think that will be better for Bitcoin. It'll find its way into more model portfolios. But I was interested in the debate you guys were having prior to the debate. I don't want to punch anybody in the face, but I do believe that you guys are going to be right on rates.

If rates go lower, it's very hard to fight the stock market. I guess I'm just worried about the top heaviness of it. Anytime we've seen this level of concentration at the top, there's been sloppy forward markets. But I mean, it has broadened out. I mean, that's that was one of the principal stories to end the year. Right. The fact that it was an incredibly top heavy market suddenly became everything goes up, so to speak, except for energy. But but you know what I mean? Like the Russell started working and all these areas of the market that lagged started working again. The question is, does that continue into this year? You know, listen, I think I read this morning that Microsoft has a larger market capitalization than the entire Canadian stock market.

So, yes, you're right. It's moved a little. But there really has to be, I think, a more even market if we're going to have a successful bull run over the next two years. I, you know, listen, tech got demolished in 2022, the same as Bitcoin. So there was no surprise to me that there was this residual reversal. But I think you have to worry as a long term experienced investor about these these concentrations. And I like those names. I think they're great long term names. But I think that that that's got to be an issue for people. But listen, if the Fed cuts rates, you know, there'll be a heavy wind in the sale of the market and you don't want to fight that.

And then Adam Parker will be right. Anthony, I appreciate it. Good catching up. Take care. We'll see you soon. Good to be here. Thank you. All right. That's Anthony Scaramucci, Skybridge, joining us as we expect the SEC to make that decision in the next 24 hours or so. Up next, big money advice. More of it. Rockefeller Capital's Angela Mwanza is with us. She advises ultra high net worth clients. She'll tell us how she's helping them navigate the year ahead. Closing bell coming right back. We're back. NASDAQ, the only major average, is fighting to stay above the flatline today. NVIDIA reaching an all-time high. And my next guest is advising our ultra-high net worth clients to stay invested in mega cap tech this year. Let's bring in Angela Mwanza of Rockefeller Family Office with her 2024 market playbook, ranked on Forbes' 2023

Best in State Wealth Advisor list. Welcome to our program. It's nice to have you. Great to see you, Scott. Thank you for having me. So first off, just give me your general view of the markets as we embark on this new year. Well, the general view, I mean, if I think about where we were last year, we were standing before the mountain. The Fed was about to start raising rates and we weren't quite sure how the markets would absorb that. Look at where we are today. We're talking about a soft landing. I'm not sure if we're 100 percent doing a victory lap on that yet. But we feel that we're in a very good position for our clients in terms of being able to invest for the global economic growth that we anticipate,

to be prepared for that volatility that's coming, to be able to invest for the global economic growth that we anticipate, to be prepared for that volatility that's coming, to be able to invest on an absolute return basis. And I think we'll be able to put some good protection in place for clients' portfolios. And overall, I think this is going to be a very big week for determining which direction we're going to go. We've got financials on their earnings reports. And also we have the CPI print coming up on Thursday. So that's a biggie. Is it right to be overweight at U.S. equities right now?

I would say we're more neutral on U.S. equities. But if you ask me U.S. equities versus international, I would say I would prefer the U.S. I think international is a little bit more sensitive towards some of the geopolitical risks. And I think economically, they're a little bit behind the U.S. in terms of their recovery. So I have a preference for U.S. You did mention mega cap tech. It's funny coming out of a year

of 2023, the S&P 500 did great, up 24.7 percent. The Magnificent Seven ranged from about 48 percent, I think it was, to 249 percent. What we're hearing from clients a lot is, should we just cut bait now? Should we be done with it? I mean, this must be so frothy. However, if you think about what was driving this wave of growth, this AI movement, I think we still have some upside and we like to barbell. We like the mega cap tech stocks, but we also like to barbell with the small mid cap growth names in the public sector. And also we like playing it on the private markets to look for that innovation. And a strong founder pedigree is really important when it comes to that. Why only neutral on the U.S., given all that's gone on? We've come so far. The Fed's just about done, we think. Next move's probably a cut. At least that's what the market

view is, and maybe several of them. Economy's been hanging in there. Earnings are likely to be OK. Isn't that a case to be better than neutral on U.S. equities? Well, it's a question of opportunity cost, Scott. I mean, back in 2022, where interest rates were barely giving you anything, I basically had to eke out all of my returns through my equity exposure. Right now, we're in a world where my fixed income is giving me great mid to high single digit growth and not at a lot of risk. And so it's really more a question of where do I want to be? I can have the same kind of return with lower risk and maybe less return. I'm not saying I don't want to be in equities. I want to have exposure. But I can get in a well diversified

portfolio. I'm getting a decent amount of return and I'm able to lower the overall risk of the portfolio. And so whether I'm looking at fixed income and actually extending duration within our fixed income portfolio is understanding that the Fed's probably going to cut rates. And so whether it's intermediate or longer term on the Treasury and on the corporate bond side. So it really isn't a question of disliking. It really is a question of what do I like more? Oh, sure. No, I think I was even posing it, I guess, in my own mind of saying, why not even like it more? Because your sector picks sound a little more offensive. Now, I'll say you like utilities, not obviously, generally speaking, an offensive way to play things, but small caps, industrials, tech, right?

Well, let me talk a little bit about utilities. And utilities for me has more of a play around the energy transition economy. I don't know if you saw, Scott, today there was a headline that showed that 2023 was the hottest year on record. And that's beating 2016. And the pace of warming was pretty alarming for us as investors and working with our clients. We're looking at ways. How can we invest in these themes? So that goes to the utilities that goes to the industrials technology as well, because we want to be investing in renewable energy and smart gridsids, in electrification. And so really, that was more that play. Yes, a lot of the positioning that we're talking about with

inequities are looking at an opening up around small cap, those cyclical names, those cyclical sectors. But that's a realization that as the Fed settles into, hopefully, a soft landing. And just the other day, I heard someone talking about potentially having a rate hike. Not that I think that's the case. But, you know, in the back of your mind, when you hear that, you always know things are not quite hunky-dory yet. So it's a soft-ish landing, if you will. And so let's watch earnings to see if there's really growth behind this, if there's really solid balance sheets, if the consumer remains resilient, to see if this really has some legs.

All right. We'll see. Yes, we will. Angela, I appreciate it very much. And we'll talk to you soon. All right. Take care. Yep. Angela Mwanza joining us from Rockefeller. Up next, BlackRock CEO Larry Fink. He's just out with a new memo announcing some big changes at his company. We're going to tell you what they are just after the break. Closing Bell's coming right back. Big news in the last hour, BlackRock announcing it's cutting about 3% of its global workforce. Leslie Picker here following that money for us and all of those details. Leslie? Hey, Scott. Yeah, according to a memo obtained by CNBC, the firm has, quote, developed plans to reallocate resources.

As a result, about 3% of BlackRock employees will leave the firm. Based on the latest 10K showing just shy of 20,000 employees, the reduction amounts to about 600 seats. It's a slightly higher proportion than last year's reduction of 2.5% or 500 people. The annual culling is common on Wall Street with large firms taking the new calendar year to rethink priorities and adapt to differing market conditions. I'm told this year's cuts are not focused on any particular group and they're broad-based in nature. In the memo, CEO Larry Fink and President Rob Capito wrote that, quote, even with these changes by the end of 2024, they expect to have a larger workforce as they continue adding people and building capabilities to support key areas of growth. And of course, these comments come amid the potential spot Bitcoin ETF approval as BlackRock has filed to be one of the key issuers there.

BlackRock is also slated to report its fourth quarter earnings on Friday. So a lot of moving pieces in the BlackRock world, Scott. Yeah, yeah, no doubt. I'm sure we'll hear Larry Fink explain these moves in more detail then as well. Leslie, thank you. Leslie Picker, still ahead. Shares of Urban Outfitters are popping. The stock's up more than 7% in today's session. We'll find out what's sending that retailer higher and why it could mean a bigger boost for the broader sector as well. Closing Bell's coming right back. All right, coming up next, a fast food double play. Jack in the Box and Papa John's moving in opposite directions this hour. We're going to break down what's behind both of those moves when we take you inside the Market Zone next.

All right, we're now in the closing bell Market Zone. CNBC Senior Markets Commentator Mike Santoli here to break down the crucial moments of the trading day. Plus, the consumer in big-time focus as Courtney Reagan has the latest retailer reporting a positive holiday season. Kate Rogers joining us with two big movers in the restaurant space. Mike, begin with you. We're going to start looking really ahead to CPI.

Interesting today that we had this nice buying going on in the NASDAQ, and some of the names are still higher, but, you know, Meta's a drag, Tesla's a bigger drag, down 2.5%, and now we're negative. It's pretty localized. NVIDIA, Amazon really have the bids, and then even if you look at the rest of semis, it's just kind of not doing a whole lot of anything. So I think we're still in this mode of figuring out whether the little minor pullback we got last week was enough to kind of refresh the market. Be surprising if that's all we needed.

And maybe we can go sideways, chop around. But it's all preliminaries because we're waiting. We got through a couple of Treasury auctions. So some of the stuff that we were anticipating for the week is already in the books. But mostly it's let's be sure that our conviction about inflation remains well placed and that it remains firmly on the downswing. I think the soft landing scenario kind of has the floor and the burden of proof is on people who say it's not going to happen. But you still kind of forever need that reinforcement. And I think mostly it has to come from the growth side, people seizing on company-specific stuff.

It's merger-type activity. It's activism. It's the consumer conferences. It's health care. Courtney Reagan, who's the latest retailer reporting a positive holiday season? Yeah, you know, it's interesting, Scott. There's been a lot of retail moves this week, but it's Urban Outfitters here today, Really, shares surging about 7% because it's giving a strong holiday update. Speaking at the ICR conference today, it noted November and December revenue grew 10%. That's double what was expected. The namesake brand, it still continues to lag free people and anthropology banners under that company. But it does follow positive holiday updates from the likes of American Eagle and Crocs.

Yesterday, we saw those shares surge. Now, Barclays, though, is a little less optimistic about total gift spending in the holiday season, saying that gift spend was 5 percent below 2022, with consumers spending less on goods but more on services. The firm does say that beauty was the top gift category. That was largely predicted. Luxury spenders did cut back back and Amazon looks to be the winner online at least a week before Christmas. It's hard to beat that prime shipping for all the last minute shoppers. Back over to you guys. Yeah. All right. So it depends on which retailer we're talking about. Good, bad. I mean, hard to make a big case, I guess, in any direction at this point. Courtney Reagan, thank you very much. Kate Rogers, two big movers in the restaurant space.

What do you want to tell us? Hey there, Scott. Yeah, restaurant companies are also presenting, of course, at the ICR conference in Orlando today. Jack in the box down over 4%. The parent company of Del Taco said it will spend more this year as it moves to re-franchise its locations, making them non-company owned and overall making it more asset light. And then moving to Papa John's is hired today by more than 3%. That company updated its guidance, saying it's decreasing its marketing spend, moving away from local ads for franchisees, making that more optional. CEO Rob Lynch also responded to its rival Domino's expanding its Uber Eats partnership in the new year,

saying it has a more than four-year head start on using this tech in its restaurants. BTIG's Peter Slay wrote in a note on ICR, quote, major themes included a broader sense that normalcy is finally returning. We will see if that holds true. Back over to you. All right. Make sure, by the way, Kate, thanks so much for that. Make sure to catch the CEO of Jack in the Box, Darren Harris. That's coming up in overtime. I'll turn back to Mike Santoli. About two and a half to go. Ten-year anchoring about four percent, too, like bouncing a little bit above and below. Maybe we overshot it a little bit to the downside there.

Probably, under 3.8% especially. I think a lot of folks are fixated on 4.25%, 4.28%. If you want to get really cute about it as being a little bit of a barrier. So in that zone, it seems like the market is reasonably okay with it. You definitely repriced Fed expectations and then the inflation trend pretty quickly right there. It's interesting to hear the restaurant CEOs talking about a return to normalcy.

It seems to me that's the entire market figuring out how much of what we're seeing in terms of a step down in growth rates and maybe an uptick in things like credit losses is just a return to normalcy. I was looking at Morgan Stanley, had a big piece on the consumer finance companies today. The stocks have all ripped.

Capital One, Discover, American Express in the last few months. And they're kind of saying that's great because the worst is not going to be reckoned with in terms of a huge default cycle. On the other hand, you know, we just we still see some fraying around the edges of consumers ability to shoulder what leverage they have. So I think that's the fix we're sort of in. Is it still late cycle? We're still waiting for the shoes to drop? Or, you know, is the Fed going to really be able to essentially proactively ease up on the rate side before we have to suffer that?

Yeah, so banks, you know, obviously you're going to kick off earnings season on Friday. Are we about to be in a better place for bank stocks, you think, just given where we are with the macro, the idea of a re-steepening curve? Everything you can observe. All the inputs say yes. Obviously, the bond market rally really takes the pressure off the balance sheets. I think the question is, you know, the regional bank ETF went from trading below book value to trading again at a premium to book value.

So the stocks have moved. They've anticipated the fact that, you know, the scene is set for them to have better numbers. I guess capital markets, the deal side, that completely remains to be seen. It's an article of faith as to whether that activity is going to come back in a big way. But, yeah, I think there's no reason we should be bracing for nasty surprises out of the banks this week. Well, the health care companies feel like making deals because it feels like they're doing it every day. Mike, thank you. So we'll go out next.

NASDAQ's going to fight for the last moments here to see if they can go positive. We had many of the mega caps in the green today, a few reds, so that's why it's almost at the flat line. We will see what tomorrow holds, and I will see you then in overtime right now.