Closing Bell - Closing Bell: The Road Ahead for Your Money 12/5/23

Episode Date: December 5, 2023

The great debate in the market right now over where your money is likely to go takes center stage as NFJ’s John Mowrey and Cantor Fitzgerald’s Eirc Johnston argue their forecasts. Plus, Oz Pearlman – the so-called “Wall Street Mentalist” – explains his career path from Merrill Lynch to reading minds. He also showcases his talents by doing a trick live on set with Scott Wapner. And, Michelle Ross from StemPoint Capital makes the bull case for biotech. 

Welcome to Closing Bell. I'm Scott Wobner, live from Post 9 here at the New York Stock Exchange. This make or break hour begins with a debate over where stocks are heading next after the sharpest rally in nearly 18 months. Is there steam left or will things simply fall apart as the calendar turns to a new year with many new challenges? Let's first take a look at the scorecard with 60 minutes to go in regulation. There's a bounce for the Nasdaq today. It's been down for the past five days. Apple, how about that stock? Getting back above $3 trillion in market cap for the first time since August 3rd. Nice gain there. Nearly $4. Alphabet, Amazon, Nvidia also, as you can see, their winners on the session today. Well, tech's gain to Russell's pain. Small caps, but they're sinking

after a really nice run lately. And bond yields talk about sinking. They're taking another turn lower. The 10-year below 4.2 hit as low as 4.16 earlier today, which takes us to our talk of the tape. The great debate in the market right now over where your money is likely to go. Our bull, NFJ's John Mowry, argues the broadening of the rally is legit and can go even further. Our bear canters Eric Johnston, who's made the case repeatedly right here that stocks cannot sustain the momentum and are sure to fall and fall a lot. Both here at Post 9, as you can see, to make their respective cases.

Gentlemen, welcome back. Eric, I turn to you. This market has done incredibly well over the last month. Why aren't you finally bullish? Well, the economy is slowing. One of the backbones of this economy has been the labor market. Certainly the labor market and the fiscal spending have really been the two things that have allowed it to stay so resilient. Fiscal spending is going to turn negative year over year very shortly. And of course, the labor market, as we know, every data point is coming out. It is slowing.

And if you look at labor costs for companies relative to sales growth, it has now gone wrong way, which means that when we look at our data, we think that corporates are now really going to start to cut those costs, and they're going to cut labor costs. So the economy is just starting to slow. If you look, a lot of people think that we are out of the woods because the Fed is done hiking. The last three Fed hike cycles, the recession has started 10 to 17 months after the last rate hike. The last rate hike was four months ago. So this is not unusual for the fact that we have not gone into recession yet. It is unusual, though, how we came into the Fed hiking cycle,

is it not? I mean, the economy was at a strong point. There was so much stimulus in the system. This wasn't your just run of the mill. Fed starts hiking. So batten down the hatches cycle. And I think we've learned that over the last 18 months, despite batten down the hatches cycle. And I think we've learned that over the last 18 months, despite many calls that the economy was already going to be in a recession because of the aggressive campaign that the Fed launched. Yes. And I think that's why it's taken so much longer than many people, including myself, thought. But it doesn't change the fact that the trajectory of the economy is for it to slow. Now, there's questions around how much will it slow.

But I think, you know, the data clearly shows that it's going to slow. And when you have slowing growth and lower inflation, earnings don't do well in that situation. Well, I mean, slowing growth from you know five percent i mean there are obviously the history is littered with periods of time where growth is is good and inflation is not nearly what it is now or what it was and stocks do just fine because earnings do just fine what if we're just in a period of normalizing what economic growth is i mean what's long-term trend two two percent yes the issue is is that you're paying one of the highest multiples you've paid in the last 65 years. So the starting point around multiple is far too high. And then where we are in the

economic cycle, right? We are not at the beginning of the economic cycle. The unemployment rate right now is 3.9%. It's been below 4% for 22 months. That's about the second longest ever. The longest was about 35 months, which should only be another year. And then if you look at nominal GDP growth since the last recession, it's already grown by 40%. And so the average growth coming out of a recession is about 55%. So we are late cycle. The multiple is one of the highest we've seen in 65 years, and you have an economy that's slowing, and you have earnings estimates that are too high. That's a bad, bad combination. Mr. Mowry, you say what? Well, I do agree that you are seeing stretched multiples, particularly in the larger cap tech

space. So I would not argue with that. What I would pivot to is if you look down the cap scale, and we've seen this broadening out. I know you've been talking about it today on your show, Scott, we are seeing a lot of those areas that have been just blasted. And I think the recession has been priced in. For example, I'll give this statistic. We just pulled this up today. If you look at the number of stocks in the Russell 2000 value or the Russell mid cap value that are on pace to be down back to back calendar years, it's the highest since the GFC. And the second period thatcap value that are on pace to be down back-to-back calendar years, it's the highest since the GFC. And the second period that it was that high was in the 2000 bubble,

okay, coming out of the dot-com bubble. So there are stocks in the small-cap arena that have absolutely been trashed. People have avoided these because they have higher debt balances typically. You also have a lot of financials. Those have been punished because of what happened back in March. But that's created the opportunity. The Fed is actually paying people to not take risk. They really are.

You're being paid to sit in a money market. You're being paid to sit in cash. You need to be looking at the areas that have been dislocated because of those opportunities. So we see value there. And then you also know that I think EM is cheap. We can talk about that later. Well, what happens if, you know, Eric, your rates continue to come down? That's where the trend seems to be, despite a lot of calls that we're going to have five and a lot

higher than five percent. I said we're below four point two today on the 10 year. What happens if you get to a point where and I don't maybe it's soon where money starts to come out of money markets and into risk assets like stocks? So does that far-fetched? It does a little bit. Since pre-pandemic, money market assets have grown by about $2 trillion. Money market plus deposits have grown by about $2 trillion, which sounds like a lot. Well, for good reason. Yes. And the capitalization of stocks have gone up by $12 trillion.

Stocks have gotten more expensive, and money market yields have gone from zero to the highest in 20 years. So one question could be, why haven't money market assets gone up more than that? Why haven't more assets gone into that belly of the curve trade of whether it be MBS, high yield, high grade, that are now yields that we haven't seen in a very long time.

And so the risk-reward owning those assets is far more attractive than paying a peak multiple on peak-ish earnings in late cycle for equities. Okay, I'm glad you bring that up, because Rick Reeder of BlackRock was here on this very set where you're sitting a day ago and agrees with you that the belly of the curve, five, seven years, is a great place to be. But he also makes the argument that equities are going to do just fine because rates are going to come down and the economy is going to hang in there. I want you to listen to what he told me yesterday. We can kick it on the other side. Can equities get you 7 to 12 percent return? Listen, I don't think you're going to have the spectacular risk performance like you saw in beta this year, but I think you

could still have a pretty good year. I mean, if you look at the level of GDP and the ability for companies to throw off real cash flow, listen, I'm pretty relaxed about it. So I think you'll have good returns, but I would build in your portfolio a lot of income and you could do it by not taking a lot of risk today. Right. So he agrees with you in some respects, but not in others. We can still do pretty well. He was pretty sanguine and he used that word. So I think if you have a I think it's trying to, you know, the bull case right now of slowing growth, lower inflation, but yet equities, earnings grow by 12 percent and the Fed cuts 125 bps. There's a lot of things going on that are sort of at odds. And I think he actually said they're going to cut less than the market or they're going to start later.

Well, because the market's pricing in March, which is only three meetings away. Exactly. Exactly right. So I think that for what the market is pricing in right now, that is quite threading the needle of having 11 percent earnings growth while inflation comes down, because inflation coming down is a negative for earnings, right? Inflation helped earnings growth. It's now going to be a headwind. Growth slowing and saying we're going to pay 19 or 20 times multiple when I have the choice to get 7 or 8 percent returns, as he rightly said, in the belly of the curve. So if I can get 7 or 8 percent returns there, why would I take all this risk owning something that is quite expensive with a lot of risk and really no margin for error? Do you think the bulls are over their skis a little bit,

John, on this idea that everything's going to be just fine, that for many, the base case, the base case is now soft landing, economy hangs in, inflation comes down, the Fed cuts because they can, not because they have to, and all in the world is good. I think everyone's been offsides all year, to be quite candid. I think people were underweight the NASDAQ. They were underweight the S&P. They thought we were going into a recession. So they were completely offsides there. And now they've been offsides again with what you've seen with positioning into some of the small caps. I mean, for example, Scott, if I told you that the S&P sub-industry of regional banks was tied with the triple Qs over the last six months, would you believe me? And it is.

So we're seeing a tremendous move, and I think investors have been off sides for over a year now. Well, that's because the Fed came to the rescue on the regional banks when the crisis hit. So you went from a point of panic to a point of no panic because the Fed had your back. Well, the banks suffered tremendously after that period, too. The reason they've been rallying recently is because there's been more consensus that the Fed is going to reduce rates. And if you look at the two-year bond, it's signaling that. Over the last one year, Scott, the two-year bond yield is up just 20 basis points.

But the Fed has raised 225 basis points. When you see a spread that large, the bond market's signaling to the Fed, you need to cut. And if you look at the duration of when they cut, it's usually 6 to 12 months. So we're on pace for that. So the market's pricing that. That's why you're seeing small caps move. That's why you're seeing banks move. And they're trading at the steepest discounts we've seen since 2000. So there's lots of opportunities. And I completely agree with Eric that you're seeing stretched multiples in some of the large cap areas, but that is not the case in the small cap areas. Edward Leibstein. He's making the case that you're seeing stretched multiples in some of the large cap areas, but that is not the case in the small cap areas. Edward Lysine.

He's making the case that you're seeing stretched multiples across the areas, not just pointing to mega cap. I mean, you make the argument that the market is just too expensive. What are we at, 19 times for the S&P? We're only at like 15 times for the equal weight S&P. Mega cap performance has skewed everything, and it's been easy to pick on and say, see, the market's so overvalued. Well, it's overvalued by the magnitude that bears like you suggest, because those stocks have a much higher valuation than the rest of the market. They do. But I think they are. I think they're linked. I think one of the reasons why there's

been this sharp decrease in multiples in the group that John's talking about, is because the money has gone into the mega caps. And so I think that they are very, very linked. You know, you saw it yesterday, the market was down while small cap was surging and equal weight was up, but that was because the mega caps were down. So, you know, yesterday, mega caps got cheaper, those names got more, you know, expensive, but the net net and net they are tied because as money goes into the smaller names it's got to come out of the larger names but it doesn't change the ultimate fact that the group as a as an aggregate right is is not growing and has the multiples that work that we're talking what point

do you look at performance in the market and say, you know, this is getting away from me now, and then you're forced to change your view? Like bears are a bit on the defensive now where they had all the chips in there, you know, towards them early on. Well, now the table has turned and the bulls are the ones who are flexing their muscles, suggesting like the narratives change in our direction.

So what pushes you towards their direction further? So I think stocks can, they can overshoot and they can, they can undershoot. You know, one, five weeks ago, market was at 4,100, right? And the narrative was very different than it is now at 45, 50. And so I, you know, and I said, as I did a show three weeks ago, I thought the current, based on the sentiment, positioning, this could ride for another couple weeks. But I think if you take a step back and you put price aside, ultimately stocks go to their fundamental levels. We've seen overshoots in the internet bubble in 2007, in individual stocks during the meme crisis, or meme situation. In all of those cases, ultimately, it's a matter of when, but ultimately stocks go to their fundamental value.

And if it doesn't make sense, if you've never said, oh yeah, I think stocks should trade at 20 or 21 times earnings, then don't say it now just because stock prices have gone to the level they are. Ultimately, stocks go to their fundamental right price. It's a matter of when, and I think it's going to happen again. That's why I'm bullish. There are so many stocks that are trading

at the steepest discount in 7 and 10 years. Edward Life Science, the cheapest multiple since 2014. Rexford International, trading at the lowest discounts in 2017. We are seeing opportunities across the space, Scott. And if you move down the cap scale just outside of those MAG7, it gets very, very interesting. So if you move off those top ones, we're seeing a lot of opportunity. And I think that investors need to be buying straw hats in the winter. They really do.

They need to be putting these in their portfolios. They need to lock them away. And they're going to be big returns. I'll go back to the stat I just said because I want to make sure that the audience heard this. Forty percent of the stocks in the Russell 2000 value are down consecutively, back-to-back years. This does not happen, Scott. This does not happen statistically. When you get these dislocations, you need to be allocating capital there.

So we see lots of opportunities in those areas. Stock by stock, not every stock is cheap or inactive. I'm a portfolio manager, so we're looking for opportunities. But I will say that when you look at the landscape, investors, I think, have been too defensive. They've been offsides. They're avoiding these areas and they're afraid to take risk. Why would you take risk when you can get paid in a money market? And I would argue that's exactly when you should take risk. What are you going to do if Eric's right, that still earnings expectations are too high and enthusiasm about the economy is

misplaced because, yes, it was pushed. We haven't had a recession yet, but we may get darn close, if not go into one as we get into 2024. And don't count on that rate cut that you're hoping for in March at the very least. Well, to be very clear, we're not making any thesis based on a rate cut. We would never put a stock in the portfolio based on that. No, but if you're making an argument to me that I need to be in those dramatically underperforming, more cyclically sensitive value areas of the market, you better hope that we don't have a recession because that's not going to work. So I would push back a little bit because I think a lot of it's already priced.

Again, going back to that stat I just shared. So I think a lot of this has already been priced in with a lot of the multiple contraction and we are seeing fundamentals hold. So I would argue that you're seeing a lot of that already priced. And just to be clear, you do have to reevaluate your positions from time to time. You've got to know when to hold them. You've got to know when to fold them. So sometimes you need to kick a name out that does miss, has structural issues with their earnings, and we'll do that. But in aggregate, I think investors are under invested to these areas just like they were under invested in big cap a year ago when we sat

on this very set and talked about semis home builders and all these typical areas that nobody wanted on the idea though what if people aren't um over invested in in big cap because as rick reader says i'm in the camp of cash flow right Which is why he thinks that those stocks are going to continue to do well. That's why they have had that defensive nature to them. And why would that change anytime soon? So you're getting a little bit of everything. Yes. So I think those names are going to continue to work. And when I say work, outperform the rest of the market until we go into that zero recession-like growth. And I think at that point, all these cheap names that John's talking about are going to be buys at that point because the recession then or this sort of bottom in growth is going to then be, okay, it's behind us,

we're in it as opposed to it being forward. I think as long as the bottom in economic growth is in front of us, I think you want to, on a relative basis, own the mega caps versus everything else. And then I think you want to turn the tables as soon as you feel like we're getting towards the bottom in the economy. Eric got the first. You're getting the last. One more point that I would make. I am very optimistic on small and mid cap, as you can tell. But I will tell you that our positioning is shifting. We are getting more defensive in our positioning. What do I mean by that?

Utilities are getting cheaper. Staples are getting cheaper. REITs are getting cheaper. Typically, REITs, staples, and utilities are more defensive because they're yield plays. So what's interesting about our portfolio as I look at it today, we are moving into more defensive areas. That doesn't mean they can't have big positive returns. In 2019, utilities were up 20%. So you can see these names have very good returns.

But because of the interest rate environment, that has created a big dislocation in defensives because nobody wants to own utilities, REITs, staples, and all these names when you can get risk-free at 4.9%. But as soon as that starts to shift, Scott, the reinvestment risk is going to become real. People are going to panic. And that's going to push people. People are going to panic. And that's going to push people back into these yield stocks that are trading at the lowest multiples in many years. Johnston and Mowry, you're a good team. I enjoy the conversation very much.

Come back. Thank you, guys. Thank you very much for being here at Post 9 with me. All right, let's get a check on some top stocks to watch now. As we head into the close, Christina Partsenevalos is here with that. Christina. Thanks, Scott. Well, Charter is on pace for its worst day in over a month after CFO Jessica Fisher warned that the communications giant could post a decline in Internet customers this quarter. The commentary has shares deep in the red right now, down about 9 percent, and also put shares of CNBC parent Comcast under pressure.

Alba Mall is lower on some downbeat analyst commentary. Piper Sandler cutting the lithium producer to underweight and slashing its price target, citing, quote, substantial deterioration in the global lithium market. UBS also cutting its price target due to lower lithium prices. And that's why you can see shares down almost 5 percent. Scott. All right. Christina, we'll be back with you soon. Christina Partsenevelos, we are just getting started here.

Up next, Wall Street mentalist Oz Perlman is here. He'll tell us how he made his way from Merrill Lynch to reading the minds of big-name celebrities and athletes. He'll join us just after the break right here at Post 9. We're live at the New York Stock Exchange, and you're watching Closing Bell on CNBC. All right, from Wall Street to mentalist. For years, Oze Perlman has been capturing and reading the minds of everyone, from TV hosts to A-list celebrities and professional athletes. Today, he's bringing his talents right here to Post 9, and he joins me now.

Thank you so much for being here. Thanks for having me on, Scott. It's great to see you. I really want to know, because I've seen you perform, and I think a lot of other people have as well. How do you become the mentalist from Michigan to Merrill to the mentalist? Honestly, this was always what I did as kind of a side hustle slash hobby slash passion, where it started with magic. You think of magic as sleight of hand tricks, where you fool the eye, and then you kind of graduate from that level to fooling the mind, knowing how people think.

You don't need to do fast hands anymore because I know what people will do and how to influence them in certain ways. Did you always want a career on Wall Street? Is that what the original dream was? Honestly, I love Wall Street to this day. That's why CNBC has me. It's a passion of mine, finance, the markets, but I don't think it was my calling. That's what I realized. I worked at Merrill

Lynch. Shout out to Merrill. It just wasn't. I knew that I was destined for something else and that that's where my true talents lied. But I always, to this day, I still love it. When you left Merrill, did people think you're crazy? Did you say, I'm leaving Merrill to become a mentalist? People thought, are you mental? Like, what are you doing? And so I think my parents had a real talk with me, like, are you sure this is a good idea? But I think sometimes in life,

you got to take a leap of faith and kind of go after your passion and sometimes you can't really jump in the pool with your toes dipped in the water I was doing shows on the side but until I quit and you know sat on my couch and had that moment of oh my god I got to go make this a reality not just a dream NBC's America's Got Talent was like a big deal for you right was that that was your rocket ship that took me from being a local act in the New York City area to kind of national and international. People got to see what I do. How many gigs do you have a year, would you say, now? Got to talk to my manager, but if I was to guess, around 120 to 130.

And you have some double headers. I told you this morning, I had a Zoom show, a virtual show this morning. There's a lot of companies that are shockingly still remote. And tonight I have another show live here in New York City. I'm sure as much as people love to hear us chat and they love your story, they want you to perform some sort of act, magic act. Are you a magician? When people say, are you a magician, what do you say?

If you get me at a party and I'm off the clock, you want to see some card tricks, I will blow your mind. But think of a magician as like a doctor, a general physician. I'm more of the plastic surgeon where there's very, very few. I got the extra training where I don't need the cards to get inside people's heads anymore. Higher fees, probably. That's it. Yeah, that's it. You're right. You're a plastic surgeon. You're like, is this aesthetic or is it a cosmetic? Do you have something that you would like to do? I would love to. You know what? How about this? Because we're talking about what is it that I do? And people ask me that all the

time. Is this psychic? Is this magic? I'm not a psychic. I have no supernatural ability, Scott. You don't try this yourself. You eat, breathe and sleep stocks. Imagine that right now you look into the future and random. They need to know you have no idea. Think of a day in 2024. Give us a random date and swear on your life. There's no way I can know what date you're about to say. Do you agree? Yeah, I have the date. You want the date? Say it. What date? Halloween. Halloween, October 31st, 2024. And that you, I know this is real. Don't hold us to this, folks. This is not insider info. You have a crystal ball and you have somehow seen that on that day, 4 p.m., closing bell ends, one stock is either up or down the most out of anyone. You and you

alone know this company. Now, I know this isn't real life. This isn't a real prediction. But I want you to focus on that company that you have determined in your mind on this random date. And think in your mind, is it going up or down? Don't say think up or down. You're bullish. You're optimistic.

It went up. Am I right? I could see it. I could see it. And then I know all the different sectors. I know what you would have avoided. Close your eyes, please. Be honest.

I did not tell you what to do. You literally could have thought of any company. Are we? Be honest. I need them to know at home. True? Yeah. Scott.

No, that's true. I said I wanted to go big on this. Open your eyes. Which company are you, bam, predicting in your mind somehow you know this? October 31st, 2024. There's no way that you would possibly know this. How could I say it? IBM. See, I thought we'd go big, and we'll go big with Big Blue, with IBM, my friends.

Stop it. See, I don't know how you do this. Can we bring one more person on? Yes. Contessa Brewer. Contessa Brewer, get in here. I am psychic. Stop it. I thought you mightessa Brewer, get in here. I am psychic. Stop it.

I thought you might need me. You might need me. So you know what, Scott, I have read your book. Let's do some shameless promotion. This is a good stocking stuffer for Christmas. Even if, you know, your viewer loves it, but man, you're an Ackman icon. This is a good one. I'm being honest.

I finished this thing in two days. I want you to take your book. And I want you to flip open to any random page. He's still shook up by IBM. Honestly, I have no idea how you knew that. Flip it open. If you did, my job security wouldn't be as intact. Apparently.

And I want you to, any page you want, rip it out. Rip it out. This is going to be a valuable book, folks. All right. And I want you to do the same thing in your mind but different because the best stories are told not just in books, but books that get made into movies, the visual medium. I want you right now, Contessa, randomly to think of any movie star in this moment. This is, think of a movie star right now, male or female. You got someone in mind.

I do. Take that page. And what I'd like you to do, Scott, rip it down the middle. And I want you to hold both ends in your hands and get rid of the pen for a second. I want you to have full focus here and let either piece drop. And when he drops, you change your mind and pick a new movie star. Drop one. Turn it sideways, Scott. Rip it in half again. Now freeze right there. When we tell a good story, especially about stocks, I have three stocks that I want to show you right here. And I want you to see if you can tell what connects them. Bring these up, please, one at a time or all of them at once. Can we please bring up on the screen three companies?

MasterCard. What's the next one? Thomson Reuters. And one more company, United States Steel. If we could bring those three up. Do you know what connects those three? No. You don't realize about what you do. It's in there. Hear me out. This is going to be so impressive. My thoughts. Drop one. Change your mind. New movie star. New movie star.

Is that this won't just blow your mind. It's going to make you question reality. Rip it down the middle again. Rip it down the middle again, Scott. Take, and I want you to take, and either one of those, hold out, drop. Change your mind. New movie star. Okay.

Rip that one down, and then I want you to take and rip each one into about the size of a half dollar quarter. Finagle those. And he's going to take and last but certainly not least I want you to drop

one of those pieces or you have more than one piece you have three or four. I'm good. You know what? Drop two of them out of one of the hands. Last chance.

Here we go. Now we go to the fun part. Take those last two. And what I want to do here is change your mind one last time. Drop one last piece. And at this point, not just the new movie star, this is where we get to the ending. A movie star and the movie that person was in, I think it's a guy, am I right? The movie star?

No. The one with the movie in it. Yes. It is a guy or it's a girl? The I right? The movie star? No. The one with the movie in it. Yes. It is a guy or is a girl? The movie. The movie at the end. A movie star and the movie. The one you've picked. Yes.

Is it a guy? Yes. She was confused. It's a brave new world. Who knows anymore? Okay, here we go. Listen to me. I want you to take that pad of paper and I want you to write down the movie that you

picked that he was in. Write down that movie right there. Scott, let me ask you a question. Hold your hand flat. Put that in the middle. I want you to rip that down. Rip off the edge where there's all the stuff that's not paper. And what I want you to do right now, you wrote the movie.

Okay, is it the movie? Oh, don't show me, don't show me. Let me ask you a question. Is this the movie you picked before? Yes. The same one? No. Oh, so what's, I'm so confused. How many movies have you thought of? So Contessa, go to the first movie. Go to that one. This is the movie. No, take that one away. The first movie you thought of. Oh, the first

movie. Yes. See, she changed her mind. Hear me out. If we were to look down, I'm going to guesstimate. If you look at this, we have one side with nothing on it. How many words? Scott, getting closer. How many words would you say you see on here roughly? About 20. Hold this. Tell us. Look down at it. You have how many words written down right now? Nothing. I'm trying to go back to the original. You made me change like 10 times. It's harder for you. How can I know what she's thinking if she doesn't even know? You opened it up. You looked at the movie star. You looked at the movie they were in. That's the ending.

Write that down. Oh, the ending. Yes. Yes. Is it a good ending? I hope so. I'm waiting for the ending of this. Okay.

All right. The ending. I've got it. I've got it. From your whole book, page after page after page, you're looking at this. Tell us what word out of there, out of all this ripping, jumps out at you the most. What are you looking at? Say it.

Matrix. Turn it around. Show them. Contessa, we can't see you on camera. Matrix. I don't know how you... But wait, everything connects, folks. Everything connects. Look, look. We have a lot of equities traders. Look behind you, Contessa. She thought of four different movies. Look at the tickers. Bring it up.

What is the ticker symbol for MasterCard? MA.A. M.A., if we could. Can we bring that one up? What is the ticker symbol for Thomson Reuters? T.R. No, I think it's bring it up for us, please. T.R. in United States Steel. What is the ticker symbol? Oh, my gosh. Letter X. The letter X. Dude, you are ridiculous. OK, that was like serious. I'm like, what is he saying? He's telling me to change 90 times. I don't understand. I don't even think we're here. We are in the Matrix, folks. We are in the Matrix. Thank you.

Thank you, Scott. He's like, not that one. Not that one. That is Oz Perlman, folks. You've seen him all over television. That was unbelievable. Alright, I'm sold. A round of applause for everybody on the floor. Amazing. You've seen them all over television. That was unbelievable. You've seen them somewhere, so you're not sure of that. All right. I'm sold. A round of applause for everybody on the floor.

Amazing. Thank you again. All right. Up next, we're betting on biotech. That sector's slipping. This year, it's down nearly 5%, but one hedge fund manager is betting on that space in a big way. She'll make the case just after the break. Closing bell comes right back.

We're back. The biotech sector down nearly 5 percent this year. However, my next guest says there are still many reasons to be optimistic. Here to share where she is finding opportunity. Michelle Ross, StemPoint Capital CIO and managing partner. Welcome. Very nice to be here today. It's great to have. It's great to have you on our show. What about the space? Why is the space not done well this year and why is it going to turn? Absolutely. So one of the things that has happened over the course of the year is that biotech as a long duration asset, something that typically requires more capital to be sustained, has become a proxy to an inverse proxy to the rates market and what's been going on. And as rates have been going up, we have seen these assets, in particular biotech, really take the opposite trade here and be. Okay. So as rates

continue to come down, which you must think they are. Absolutely. Then that will be good for these much longer duration assets than say, you know, not the way we talk about mega cap stocks, but stocks like these. Exactly. And we've started to see that through November. So as you have seen somewhat of a move down in the rates market, biotech has been lifting. And I don't want to make it seem as though that is the only thing that is driving this sector at this point. we have really seen a fair amount of really solid fundamentals and different themes that have developed below the surface that are in part also being attributed to the success we're seeing over the last couple of weeks. I mean, probably the biggest theme that's not under the surface anymore is this weight loss phenomenon, the GLP-1 effect, as you call it. How are you investing into that?

Yeah. So we have actually been following this theme and investing in this theme for years now. This is an incredible opportunity that was developed in part through a diabetes drug. Lillian Novo took a diabetes franchise, developed it into what could have been only an aesthetic market in the obesity market as it stood. And then ultimately with the outcomes data that they provided, have been able to transform that into what could be a transformational outcome in the industry to obviously prevent death and cardiovascular outcomes and ultimately long-term savings to the healthcare system as well. So today was J&J's Enterprise Day, right? And you have stocks that you've focused on around that, that you are invested in? Yes. Names like

Protagonist? Yes. A lot of these names we don't talk about very often, but PTGX. Yes. Why? Why? So one of the things I do want to say about a company like J&J today is when we look at their innovative medicines that they've really showcased, they have transformed themselves. They are, in effect, a biotech company. And when you look at the large cap companies and you see what they're doing, they're not only developing well, they're partnering well. And Protagonist is one of those partners. And what they've been able to do with Protagonist is develop a next generation in the autoimmune indication world, J&J 2113. We just heard today from J&J that this has the potential to be over $5 billion in peak sales. They had previously said about a billion dollars in peak sales. So just the augmentation of that guidance is something that we were looking to

and very excited about. Okay. Watching that stock on the move today. Legend Pharmaceuticals. Yes. Legend is another great example of true innovation and J&J finding the right partners early and really being able to take these companies at that right time and catalyze it into something very dramatic from a market potential standpoint. We like Legend because of the approach to the science in cell therapy. They're using a CAR-T technology. They're supercharging the T cells in the body, the immune system, and allowing it to fight cancer. Now, Legend is a phenomenal example of someone growing the market, but we do have a company as well that we really like and are investing in called Arcelix. And Arcelix is another company that has moved their

way into the cell therapy CAR T market that we believe is going to participate in what is going to be a multi-billion dollar opportunity for multiple myeloma patients to see a much different type of outcome it could be the standard of care in the future. Great having you on look forward to doing that that again. Michelle, thank you. Of course. Thank you. Michelle Ross joining us here post-night. Up next, we're tracking the biggest movers as we head into the close. Christina Partsinello standing by with that. Christina. Well, customers are still willing to dish out the dough for more expensive smucker's jam. And AT&T cutting a deal with Ericsson. Where does that leave Nokia? I'll explain all of that

after this short break. All right, we're 15 from the closing bell. Let's get back to Christina Partsenevalos for a look at the key stocks that she is watching. If Oz was still here, he would tell us, of course, before you even did it. But go ahead. Maybe he's on the sidelines listening and guessing, or not guessing. Sorry, he's a mentalist, he knows. But even though sales fell 12% in the quarter,

Smuckers posted higher than expected profit driven by higher prices and consumers' willingness to buy more expensive products. Smuckers, which makes Folgers coffee and Jip peanut butter, also completed the acquisition of Hostess and expects profits to actually fall for the year due to those acquisition costs. And that's why shares overall, though, are up 4%. Say goodbye to Nokia and hello Ericsson. Shares of AT&T moving higher after securing a $14 billion partnership with Ericsson to revamp AT&T's wireless networks.

That's actually pushing up the stock of both AT&T up above 3%, Ericsson up above 4%. But that means replacing existing Nokia cell towers with Ericsson machinery and software. That means also it's hitting Nokia's stock price down 5%, hitting a three-year low on the news. Scott. All right, Christina, thank you. Christina Partsinello. Up next, shares of Apple are popping today. We break down that new report that has the big tech name moving higher today, topping $3 trillion in market cap yet again. We'll talk about how it might impact the stock heading into twenty twenty four. We're right back. We're back. I want to give you a quick look at the names reporting earnings in overtime this evening.

We've got Box, MongoDB, Air Environment and Toll Brothers all set to hit the tape in just a few moments. So do not miss a breakdown of those at the top of the hour. Up next, American Express taking a hit today. That stock falling by nearly 2%. We'll find out what's sending that name lower, what could be in store for that stock this holiday season. That and much more when we take you inside the Market Zone. We're now in the closing bell market zone.

CNBC Senior Markets Commentator Mike Santoli here to break down the crucial moments of this trading day. Plus, Steve Kovac on what's behind that rally. And Apple shares today. Kate Rooney as well on the comments from Amex CEO putting pressure on that stock. Mike, I begin with you. So the Nasdaq's getting a little bit of a bounce today. Yields below 4.2. What stands out

the most? You know, we have some negative breath. So you can either have a broad rally or at least broad participation to the upside and the Nasdaq stocks sell off or vice versa. So now we have the vice versa. To me, it's the quiet sort of low amplitude churn that we're in for the last couple of weeks, really. The last 11 trading sessions, you haven't even had a 0.6% daily move in the S&P 500. Yet within it, there's been a lot of sloshing around. And I think on net, you're up a little bit on the S&P over that period, but the average stock's done even better.

So that's what we wanted to see. I do think now you're at a point where you could look at the chart and say, well, we stopped right at resistance. We have everybody kind of forced in to participate in the rally. Lots of short coverings already happened. What next? And what next is probably comfort that first quarter and fourth quarter earnings look plausible.

Soft landing seems OK, but not too soft and not too hard, you know, too fast a landing, let's say. And that's the debate we're going to be having for a while. But the rate relief is real and under 4.2 on the 10 year is meaningful. So what do you say to people like Eric Johnston, who you probably listen to and you know the story well? How do you what's the pushback? So the current line is it's completely implausible to imagine 11 percent earnings growth next year and the Fed's going to get easier and inflation's going down. You're describing the year 1995. OK, we literally had 10.5% earnings growth, 5% nominal GDP growth. You had the Fed cut two or three times, not 100 and something basis points, but you basically had a similar, you know, mission accomplished type year. The other piece of the earnings growth story,

look, it's quirky stuff. It's the top six stocks are contributing other piece of the earnings growth story, look, it's quirky stuff. It's the top six stocks are contributing a third of the net earnings growth. Merck had a massive $10 billion decline in net income. It's coming back next year. It's not some kind of heroic revenue growth story that's penciled in. It's 4.4% revenue growth. That's what the S&P is projected at next year. Well, that's about what nominal GDP ought to be. Yeah. One of the heavyweights today, Steve Kovac, is Apple. Clearly, it's above 193. It's about a 2% gain. What's going on? Yeah, and you don't need to be the mentalist to figure this one out. It's Foxconn raising their guidance for this holiday quarter, saying, you know, gadget demand is better than they expected after looking at the first couple months of the quarter. And that's great news for Apple. Foxconn,

of course, makes almost all of Apple's gadgets, including the iPhone, the most profitable product they have. And this is coming as we just finished a full fiscal year of declining sales for Apple. And for this current holiday quarter that we're in now, Scott, Apple saying that sales were expected to be flat year over year. So investors have been looking for Apple to return to that top line revenue growth and seem to be hanging on those comments from Foxconn today

as signs that maybe they can squeak out a little bit of a win here, Scott. Yeah, I appreciate that, Steve, very much. Mike, above $3 trillion in market cap for the first time in a few months. You know, it's just, it's one of these things. First of all, every year people seem to rediscover that it's a holiday shopping beneficiary. And whether it's true or not, you get a huge push in sales or not. People feel like it is. It makes a lot of sense that it is. And it also is sort of splits the difference between the sort of hyper growth.

It's an NVIDIA. It's a Microsoft story. And it's just kind of a boring defensive type thing. So I run out of sort of edgy, smart things to say about Apple because it just does its own thing. It's not really a reflection of a lot else that's going on except for its own heft and dominance. I mean, I remember it was like 169 below 170 not that long ago. And to your point, it just battles back in the face of what would seem to be negativity from a fundamental standpoint. But it is, boy, it's a beast. Yeah. And then, you know, the whole kind of being insulator agnostic about what yields do because you do have a lot of cash and also the lowest cost debt in corporate America. So all of

it, I think it makes sense here. It doesn't necessarily imply that we're on some kind of new accelerated uptrend in the stock, but it is always impressive when it gets there. Kay Rooney, it was right around noon when Amex started falling because the CEO started talking at a conference. Yeah, Scott. So Amex's CEO gave investors a little bit of a cause for concern. That was earlier today at the Goldman Sachs conference in New York. Stephen Squeary saying that billings in October were, quote, not as strong as they were in the third quarter. That spooked investors. He said at the time, we didn't see growth in October like it was in the third quarter.

And he pointed out some weakness there in travel and entertainment, T&E there. Goods and services, he said, remained relatively strong. And for context, Amex's growth in the third quarter was about 7%. He did say November billings were in line with Q3 and that U.S. consumer retail was very strong. He said from Thanksgiving all the way to Cyber Monday, he was, quote, encouraged by that. Squirey pointed to their more affluent client base.

He says he's not seeing a slowdown in demand for those premium fee-paying cardholders. Did say they're seeing double-digit growth still in international billings, which is one of the higher margin sides of the business, more profitable for Amex and the card companies. Scott. All right. Kate, appreciate that.

We'll keep our eyes on that stock, too. We've got one more real AI play to report earnings, and that's Broadcom this week. This is the stock that the bulls make the argument is the cheaper version of NVIDIA. And that's kept this thing, although it's not talked about as much as NBDA, it's up a lot over the last 12 months, better than 70 percent. Yeah. And I think you've gotten probably the repricing in terms of accounting for that exposure, because beforehand it was really purely steady free cash flow story, buyback, capital return, all that stuff. So it's definitely in the stock at this point.

Historically, markets don't always like to have to hunt for the magic exposure to the secular trend within a company that has a lot of other stuff going on, which, of course, is why NVIDIA has been the preferred choice. But it would be an interesting tell about the current pacing of demand on things like that. So, you know, we'll see how it goes. I do think, you know, with the Amex comments, have to at least pay attention to a relatively muted commentary in general about current quarter activity. That's something that you can see in some of the guidance. And we have to be aware, even though I just said next year's numbers don't seem implausible,

we have to see if we're in a bit of a soft patch right here, though. Amex was up 32 bucks since late October. It's down two and a half. All right. Good stuff. We're going to go out in the red, though. We said the Nasdaq is getting a little bit of a bounce. Thank you very much, Apple.