Closing Bell - Closing Bell: “Tis the Seasonality 11/24/23

Episode Date: November 24, 2023

Does the risk-on sentiment of November bode well for the duration of the holidays, given seasonal forces? Or is there too much optimism at play that leaves the market vulnerable to even the tiniest bit of disappointment? Dan Greenhaus of Solus gives his forecast. Plus, top retail analyst Simeon Siegel breaks down which stocks he thinks will be winners this holiday season. And, Fundstrat’s Tom Lee is still betting on a year end rally. He explains why. 

Better than school indeed. Welcome to Closing Bell. I'm Leslie Picker in for Scott Wapner. The final hour of trading comes early today with a shortened day due to the Thanksgiving holiday. The major indexes are mixed today but poised to eke out a fourth straight week of gains. Yields in the green across the curve with two more hours to go in bond market trading. We're focused on retail with Black Friday shopping underway and a slowdown in sales growth expected. Nvidia also on the move after a reported delay in special AI chip for Chinese customers. And a new B of A report showing equities capturing $40 billion in the last two weeks, the biggest haul in about 10 months. Which brings us to our talk of the tape today. Does the risk on sentiment

of November bode well for the duration of the holidays given seasonal forces, or is there too much optimism at play that leaves the market vulnerable to even the tiniest bit of disappointment? For that, let's ask Dan Greenhouse of Solus Alternative Asset Management. Dan, thanks for being here. No, thank you for having me. Happy Thanksgiving. Same to you. So does this risk on sentiment have staying power? Are you expecting to see the seasonal forces, the traditional seasonal forces play out? Yeah, listen, I think so. It's been a really strong rally off the October 27th low, call it 10-plus percent, in just a couple of weeks.

Before we came on, I took a look back over the last couple of decades. This has only happened a couple of times. And you might think after such a strong rally over a short period of time, the market might be in for some period of digestion or a pullback. And historically, that's not the case. When you look at one, three, six months, by the time you get out six months after this type of a move, the market's usually up 330 basis points more than your average occurrence. And so usually this is followed up by stronger performance. And I think going into the end of the year, that's probably going to be the case this time. So the driver of that is momentum. What happens if yields start to go the other direction?

Yeah, listen, certainly if things go bad, then the market will go down. And if things are good, then the market will go up. But when you look at the breadth of the participation off the low, virtually the entire market is up. When you look through the list of 52-week highs in tech, we know that obviously Amazon and Microsoft are at highs, but so is ServiceNow, so is Adobe, so is Avago. When you leave tech, you can go to industrials. You've got GE. You've got train technologies in the consumer space, Chipotle, some of the hotels like Hilton and Marriott.

There's really broad participation. And as I think about all these stocks at highs and sectors at highs, I'm reminded of the famed investment guru Taylor Swift, who once remarked, I have no problem staring in the sun, but I won't look in the mirror. I'm old. I screwed it up. But as I say that, I mean, it's easy to lament the strong performance of the Magnificent Seven, so to speak, in terms of one's underperformance or inability to outperform. But when you broaden out from that space, there are investable themes and stocks that are doing very well. And that theme and that

trend is unlikely to change simply because the calendar does. So basically no bad blood for the Magnificent Seven. Are we going to go back and forth? I have every album since like the third, so I can do this. I definitely pegged you as a Swifty. For good reason. You sat down next to me. Speaking of having every album and purchasing and consumerism, today, of course, is Black Friday.

Sure. How important do you think that is in this holiday shopping season is for the remainder of the year in terms of this breadth in equities and overall sentiment? Because there is expected to be somewhat of a slowdown in growth relative to the last few years where we saw so much stimulus overhang from the pandemic. Do you think that impacts just overall investor sentiment at all? Or as long as things aren't too bad, then it won't have as much of a... Yeah, no, at the end of the day, I think as long as it's not too bad, because I think the narrative is correctly, the job market's holding up, real wages are positive a little bit-ish, and ultimately

that's going to support consumer spending. But listen, we know, we just heard from a whole bunch of retailers that to varying degrees told us something of the same story, which is that the consumer unbalance is still strong, although there is evidence of a slowdown as the quarter progressed. And that was true from the beginning of the retail reporting season to the end. And again, to your question, I don't see any reason to think there's going to be some meaningful miss in terms of expectations for the quarter. Again, the labor market remains strong.

The stock market is bouncing. This is all good for confidence and for spending. And again, as the calendar turns, just because you switch from December to January doesn't mean any of those themes are going to change. Well, the labor market remains strong, but there are some cracks out there. Without a doubt. For example, this morning, the S&P global data showed payrolls shrinking in both services and manufacturers and in factories for the first time in three years. You have the news that Barclays, the reported news that Barclays plans about 2,000 layoffs.

And then, of course, there are Citi and other banks that are reducing headcount as well. Does this late-in-the-year job shedding, you know, have any impact on just that overall bullish case that you're seeing? First of all, the weekly jobless claims number, which is trending upwards and bears watching. Last week retraced a lot of its recent gains, and so that's incredibly positive. You follow the financials, obviously, quite well. You know better than most the troubles that's in the space. I mean, if you look at the regional names, like in the KRE, all those stocks haven't gone anywhere for a reason. In the larger cap space outside of JP Morgan, a lot of those stocks and companies haven't gone anywhere for a reason. In the larger cap space outside of JP Morgan, a lot of those stocks and companies haven't gone anywhere for a reason. So I'm not

surprised that there are layoffs. But I don't think that necessarily, you know, 2,000 layoffs, terrible for everybody involved, obviously. But broadly speaking, you're talking about a labor force of 150 million some odd people. I think that the strength for now remains the order of the day. So more idiosyncratic issues, margin shrinking, additional regulation. I will add, though, they're not traditionally financials, but in the consumer finance companies, they are talking about a normalization of losses and delinquencies. Nothing is particularly high or egregious, but obviously when we're looking at cracks that are emerging, that's one particular area to which you could point. Granted, again, coming off an extremely low base for Capital

One, Discover Financial, et cetera, coming off a very low base, but starting to move upwards. For now, normalization. But if it continues, it might be worrisome. And a reversal of a trend that we've seen over the last few years. That's right. I want to bring in Victoria Fernandez of Crossmark Global Investments and Ryan Dietrich of Carson Group. Victoria, you originally thought we would see a recession this year in 2024, and you pushed that timeline to 2024. What were some of the bearish factors that you were expecting this year that ultimately didn't come to pass? And how likely do you think it is that they will ultimately show up next year in the new year? Yeah, so, Leslie, obviously we look at everything that typically goes along with the rate hike cycle. We've had 525 basis points of hikes, and we felt that looking

at the timeline, it would probably be somewhere around the end of this year that all of that would start to feed through the economy. We would start to see the weakness in the labor market. We would start to see margin pressure for corporations and see earnings take a little bit of a hit. And some of these things have not gone as quickly as we thought. And we know that the U.S. economy is less subjective to some of these items than they have been in the past, less rate sensitive. But we still thought we would see it this year when you look at leading economic indicators down so many months in a row, M2 money growth, all of that kind of fed through to our belief we would see it. But the consumer has really held in there. Pricing power for companies has stayed in there.

And so it's lifted this market, and I think it's continuing to do so right now. But at some point, we have to pay the piper. I don't think we're just going to be able to skate through all of the free money and everything associated with it in the stimulus that we had in this economy and not have to pay that back at some point. So we do think we're going to probably see a mild recession next year. I'm not saying it's going to be a huge pullback in the markets but I think we'll start to see these elements hit the consumer, hit corporations. I think a 12 percent growth in earnings for the fourth quarter seems a little hefty.

So we'll start to see some of these things work their way through in the beginning of the year. Ryan, do you expect that piper to ever be paid? I know that you are overweight equities. You remain that way and you expect no recession at all next year. Well, that's right, Leslie. A year ago, we were saying that. We said this is probably a new bull market and there's no recession coming. People didn't like that call, but fortunately, it's worked out. I know I did send you guys a chart that shows kind of when you have a good start to the year, right? We had one of the best starts of the year ever this year. You tend to see third

quarter weakness. That played out. What you also tend to see is the late October lows. And what sparked it? Well, the realization that the Fed is done hiking. We've been saying that for a while. Shelters coming back. Used cars are coming back. Those are positives. So then you layer on the fact that, listen, December is right around the corner. That's the big question every listener has is, will this rally continue? Believe me, we could have a little pullback here. But just think about this. You're going to hear a ton about this. December is one of the best months of the year, up 1.4% on average. In a pre-election year, it's double that, up almost 3% on average.

Now, here's what's really interesting. If you're up at least 10% for the year going into the normally strong December, do you see a chase? You do. 17 of the past 20 times, December was stronger. And the last five times in a pre-election year, December was higher, up over 5% on average. We're not saying we're going to gain 5% this December. What I am saying, a lot of people miss this rally. The economy is better than people think. We think this chase is still on and higher prices are coming. Dan, we've talked a lot about seasonal factors and what it means for the remainder of this year. And you mentioned that nothing necessarily changes

just because the calendar turns over and it becomes 2024. But the seasonal benefits that Ryan was just talking about, I mean, you know, what do you expect to see in January when people start to once again really dig in and look at the fundamentals? So it's not that people aren't digging into the fundamentals now. I think they are. To Ryan's point, just there is a truth. The sell and main go away axiom is, for lack of a better word, repeatedly accurate. And take it to its extreme, to Ryan's point, November and December isn't just the seasonally strong period of the market. It's November, December, January into February. You're up a percent plus for each of those months as well. So just because the calendar turns,

traditionally what is strength in the winter continues into the new year. And again, I don't think anybody's not focusing on the fundamentals now. To the earlier point about the economy holding up better than expected, I mean, I think things are probably going to slow down. And that's not really saying very much since we just had an incredibly strong third quarter. But I think things are going to slow down. But to the point about earnings being up 12% being a bit too much, even if they're up 8%, there's no reason that the stock market can't rally. Again, at this stage of the game, to the 525 basis point observation, if you're not going to have a deleterious effect on the economy,

and when that happens, we can talk about it. But right now, it doesn't look like you are going to have a deleterious effect on the economy, in which case then the bias for equity should continue being higher. Victoria, you expect more volatility ahead. You've got earnings, which Dan was just alluding to. You've got the, you know, what's going on in labor, what's going on with rates and inflation and so forth. What do you think are going to be the key drivers of that volatility and what is the best way for investors to navigate it? Yeah, so Leslie, I think one of the things we're going to see is I do feel the market has gotten a little bit ahead of its skis when it comes to the Fed and the timing of their rate

cuts. I would agree with Dan that the Fed is probably done. I don't think we can say 100% they're done because we still have core CPI double the Fed's target. So I wouldn't say that's 100 percent. But six times over this market cycle so far, this rate hike cycle, we have seen a head fake with the market thinking, oh, the Fed's going to be more dovish than what they are. And the Fed comes back and says, listen to what we're saying, higher for longer. So I think some of the volatility is going to be around the market coming to terms with the fact that perhaps we're not going to see rate cuts in the first half of 2024, that the Fed is going to be higher for longer. And some of that, I think, is going to happen. You know, right now, the market looks at bad news is good news. When is that going to shift to bad news is bad news? When are we

going to start to see things start to normalize a little bit? That, in my opinion, is going to cause the volatility that we're seeing. So for our clients, we're not out of the market. And if the equity market continues to do well to the end of the year, great. That gives us an opportunity to trim some of the names in the portfolio and have some cash ready to dive in when the market does pull back, in our opinion the beginning of next year so you have to be done i've heard some we have some staples and some uh... consumer discretionary names in the portfolio we have fixed income in our portfolio

we're using options in order to generate incoming cash flow for our clients and i think you can also look at some alternative types of things like total returner absolute return strategies and equity market neutral type of strategy. This gives you an opportunity in this market to really kind of do some different things than maybe people have thought of so far this year. Ryan, I know you are looking ahead to next year and already expecting no recession. Without a recession, does the Fed cut rates? We think they do, and it's all about productivity.

Our country has not had very good productivity for a while. We know that. The last two quarters, productivity ran at over a 4% annualized return. The mid-90s, everyone, was the last time we saw strong productivity. What happened, right? The Fed hiked a lot in 94. They hiked a little too much, and they started to cut in 95. But we had strong productivity, so wage growth that Dan talked about earlier remained strong, but inflation was not a problem. So listen, not every time is

exactly the same, we're aware, but strong productivity is important. One final comment, we're talking about all these things going on in the world and macro views. What's the market telling us, right? I mean, just today, the market's flat, if someone just looked at it. Yet, small caps are up a lot. We've seen a ton of participation from small and mid caps. That's the market, in my opinion. The market's way of saying the Fed is likely done hiking. Yields are probably going to work their way lower. Again, as productivity is high, a real positive for the economy going next year. So we're still overweight, small, mid caps, and industrials into next year. Recently, although small cap, Russell 2000 is still down, one of the few indexes in the red

over the last three months. Dan, Victoria, and Ryan, thank you very much for joining us today on this Black Friday. Shares of NVIDIA slipping on reports that it's delaying the launch of its new China-focused AI chip. Christina Partsenevelis is here with more. Hey, Christina. Oh, hi. Well, NVIDIA has been working on an AI-compliant chip destined for China, like you mentioned, and trade publication SemiAnalalyst first reported those chips would be ready to launch on November 16th. Fast forward to today, and Reuters says those chips are delayed until Q1 of next year.

Shares, like you mentioned, down over 1%, but it shouldn't come as a surprise to investors. Why do I say that? Because on Wednesday, I reported that NVIDIA management had warned that these U.S.-compliant chips would be coming in the next few months. NVIDIA CFO Colette Kress saying, quote,

These products, they may become available in the next coming months. However, we don't expect their contribution to be material or meaningful as a percentage of the revenue in Q4. That was said on Tuesday evening. Investors sold off shares earlier this week on concerns that NVIDIA wouldn't be able to keep up with this pace of growth without a huge customer like China in the coming months. Wedbush's Matt Bryson writing today that it's not impactful, you know, the delay of chips in the near term, but over the intermediate term, the China delays

could be meaningful when figuring out when and if revenues peak for Nvidia. Christine, I'm just curious, kind of the competitive picture, the longer this delay lasts, assuming it does last, you know, for some period of time, what does that mean for rivals to be able to develop their chips that would compete in this market against NVIDIA? Well, we're already seeing it with Huawei. There was a report coming out from a Chinese media outlet saying that Baidu was buying Huawei chips in replacement for NVIDIA. It may have just only been a small portion, but there's no doubt that the Chinese market is definitely growing. They're still buying old U.S. equipment, and it's being proven that even on that old U.S. semiconductor equipment,

they're still able to advance their AI chips going forward. So there's still a lot of questions on whether those pieces of equipment should even be chipped or shipped to China. Chipped to China, shipped to China. It's all, you know, we appreciate your reporting. Tongue twister, yeah. Yes, exactly. Thank you. Friday after the holiday. Christina, thank you. We are just getting started. Up next, banking on Black Friday. Top retail analyst Simeon Siegel is back,

where he's finding opportunity in the space and what's at stake for some of the retail's biggest names this holiday season. We're live from the New York Stock Exchange. You're watching Closing Bell on CNBC. Welcome back. Retail stocks are higher today as Black Friday kicks off retail's biggest day of the year. Joining me now to discuss his outlook on the sector is Simeon Siegel, senior analyst of BMO Capital Markets. Simeon, thank you for being here. So help us distill exactly what you're expecting this year with regard to the various pockets of retail, be it discretionary, some of the electronic sales are expected to be higher. How are you looking at the various nuances of spending this year versus previous years? Hey, Liza, good to be here. Happy Black Friday. So I think that like every year,

it's all going to be about the nuance. And I'll use your word. It's perfect. I think we're going to see winners win, losers lose. And at the end of the day, that sounds silly, but it's true. And the interesting thing about it is it hasn't been true for the last few years. The last few years has been all about rising and receding tides. There was no inventory, then there was too much. Now you actually have businesses where we're seeing this big divergence. We're watching within categories. I know there's a lot of talk about the macro, and I'm sure we'll talk about it, but you're watching certain companies see revenues grow, and you're watching direct competitors see them shrink. So as we look at that, I think that's going to be a cross-sector. I think it's finally a time

where you could look and pick the winners of the business. Okay, well, where do you see the winners of the business? So I think the way we're looking at it is within the off-price world. I particularly like TJX. It's been a relative underperformer lately, which gets us very interested in moving forward. But clearly, off-price businesses are going to take advantage from a shopper interest and from a brand interest. And then, listen, it wouldn't be holiday if I wasn't buying scented candles. And so if I look at a Bath & Body Works here, which is a great replenishment business, that's the type of business that just reported earnings, saw its operating profit dollars grow for the first time in a long time, and its stock lagged. I love those dichotomies.

What about the laggards or different pockets that investors should be avoiding? So what's interesting is when I think about these businesses, there's a lot of, we've now watched a bunch of the teen retail. We've watched mall-based companies. We watched a few companies that you and I normally would talk about of being effectively shunned from investors. Now people are chasing them. And so I think there's a question about figuring out intrinsic value versus focusing on the opportunity focused on momentum. And so that'll be something that we'll look through. But I do think it's interesting. I mean, like if you think about, I just brought up TJX on the one hand, you're watching TJX, Ross Stores, Burlington Stores,

all off-pricers, all see revenues grow. On the other hand, you're seeing Nordstrom Rack. You're seeing Old Navy actually see revenues decline. On the other side of the spectrum, from a luxury perspective or accessible luxury, you're watching coach revenues grow, Michael Kors decline. And so that's where I think you start seeing divergences, and that's what we want to look for. And that's why you get paid the big bucks. In terms of— It's holiday.

There's one thing to have off-price. There's another thing to discount. There was a Reuters piece this morning about how retailers are offering deeper discounts this year to really lure back consumers that continue to be squeezed by high inflation and higher interest rates. Do you expect this to have a meaningful impact on margins? Or do you think volume will be able to make up any hit they take on the overall pricing strategy here?

So I think what's fascinating, and we look at these stories, but if you actually look at the numbers, the companies that saw revenues grow versus shrink was kind of split 50-50. But the vast majority of my business actually saw gross margins grow. And so I think whether it's because supply chain and there's other pieces that are offsetting as we still normalize post-pandemic that are helping, or whether it's commodity relief that's helping, at the end of the day, a lot of these companies are actually seeing these businesses come at healthier sales, which is great. And so it doesn't mean that we're not going to see those promotions out there. You and I are saying, I'm still waking up early to go to the mall. Ask me why? I don't really know, but it's fun. But at the end of the day, the promos

are there, but so is the margin. And so that's why when I brought up that Bath & Body Works, what's so interesting is you're getting gross margins improved. But not only that, you're actually seeing them translate to dollars. So you're getting the profit dollars grow. And that's what you want to see. And what about the picture in terms of online versus in-store, especially as these promotions are coming into my inbox and various social media and other online advertising platforms. How does that play a role and what does that mean for the

bottom line for retailers in terms of just the likelihood of seeing returns from certain items or bulk purchases or just the overall, you know, scented candle, as you mentioned, that you might pick up when you step into a store that you may not have purchased or may not have sought out to purchase if you were just kind of doing your quick shopping online? So I'm going to commit the cardinal sin of an analyst or a journalist or investor, and I'm going to anecdotalize here, which I don't think is a word, but we'll go with it. When I got to the mall today, I was able to park really easily. Now I got to the mall fairly early. When I left the mall to come join you over here, people were swarming to get my parking spot. So it's getting pushed later. But I think at the end

of the day, listen, you're clearly right. The e-com penetration has grown. People will continue to shop digitally, but it has not overtaken stores. You and I have talked about this in the past. Stores are going to be the best way to shop both for a consumer and for the retailer, for the business. And so I think that this beautiful fusion of Omni, we have to remember Omni means many, means all, not single. It doesn't just mean e-com. And so I think we'll continue to see that growing. That'll obviously have an impact on returns, although now lately there's a renewed push or a push to charge for returns, and we'll see what that does.

But I think these businesses are figuring out, yeah, you need to have both channels. You need to be there for the consumer, but we no longer have to give everything away for free. And I think that's where we were. That's kind of the biggest delta over the last 10 years. When people realized D2C wasn't all it's cracked up to be, they also realized the consumer didn't have to get every single thing they wanted. And if there's a product that's compelling, the consumer will pay up for it. And being there for the consumer certainly means making sure there are enough parking spots for Simeon to do his holiday shopping. Much appreciated. Happy Thanksgiving to you. Great to see you. Happy holidays.

Up next, a rally to round out the year fund stress. Tom Lee is betting on it. He'll tell us why he sees serious upside as we head into 2024. After this break, Closing Bell will be right back. Welcome back to Closing Bell. We're watching shares of Barclays today moving higher on reports. The company is working on a cost-cutting plan to save more than a billion dollars over the next several years. According to Reuters, the plan could include cutting between 1,500 and 2,000 jobs, largely focused on the bank's back office roles. This comes as Barclays stock has been underperforming its European banking peers, falling roughly 6%

over the past year, while Deutsche Bank and UBS both up double digits over that period. Meanwhile, stocks are muted on this shortened trading session, but the S&P 500 is still on track for its fourth straight positive week. And our next guest sees more upside from here. Let's bring in CNBC contributor Tom Lee, managing partner and head of research at Fundstrat. Tom, thank you for being here. So clearly, November seasonal is delivering. What's your expectation for December? I think there are some positive catalysts in December. We've got two important inflation reports, the October PCE next week and then November CPI. I think our early read is both are going to be positive surprises for markets. And then we've got the FOMC decision. And we've written about how the Fed

has some now room to maneuver and be less higher for longer. And then we've got the seasonals into year end. So I think the fact that we're closing or close to positive today, I think affirms that the positive seasonals are working and that's a risk on environment. And, you know, I think the move in Bitcoin today, which made a new high for the year, is another sign of risk on. So I think for now, it's it's all good signs for December. Room to maneuver less higher for longer. Does that mean you're expecting rate cuts in 2024? You know, if inflation continues on the glide path and it's it's decrementing at 20 basis points a month, that means by middle of next year, you know, core PCE and core CPI might be something like a 2.7, 2.8 with Fed funds at 5.5. I mean, that's so tight.

That's actually what you see when the Fed wants to almost stop an overheated economy. So if inflation tracks at this rate, the Fed is no longer thinking about higher for longer. It's more like, are we oversteering on the upside? Does the Fed need a recession to actually cut, though? No, I don't think so. I think the Fed just needs to make sure that the underlying drivers of inflation are cooling. There's a lot of debate about that. I think the Fed is increasingly viewing it as a supply chain that's ung-gumming, that wages haven't been a

source of wage pressures to drive inflation. If that's still the case next year, they can cut because they don't need to sort of break anything in the economy. Is there anything that would change your mind about a rally into year end? Any key risks that you're focused on? Well, I think the market to watch is interest rates. You know, I mean, the 10 year, you don't want to see revisit those highs, you know, the 5 percent, because it just tells us there's inflationary pressures building. You don't really want to see oil surge or geopolitical risks erupt. So I think as long as those three sort of remain in line, I think it's going to be a good December. What are your favored sectors right now?

You know, looking at just today's market, for example, we've got energy as the leader, materials and health care, while information technology and communication services are the laggards, not necessarily the norm for this year. But where are you kind of focused on, you know, the specific sectors that you believe are poised to prosper? We think institutional investors are going to move it, migrate towards liquid sectors. So I think FANG and tech still make sense to own it to your end. But I agree with many of those commenting today that breadth has improved. So I think small caps are part of this. You know, if it's IWM, the ITF or the Russell 2000. And then financials, I think, are pretty interesting here, too.

Yeah. Some would say they're oversold by several metrics. In terms of, you know, sectors that are oversold, do you think any tax loss selling that we may be expecting by the end of the year is over and done with, and that could partially explain some of the breadth we're seeing in the market in kind of the November period, the last four weeks or so? Well, into October 27th, a lot of that was tax loss selling because the majority of mutual funds do use it in October year end. Individuals and family offices and traditional asset managers are going to be,

you know, taking tax losses because the S&P is up, you know, almost 20 percent. So it would make sense to do tax loss selling this year because there are, you know, potential unrealized gains elsewhere. We just had a board up of the broader indexes of the day. Russell 2000, the leader among those today, but they've been in the red the last three months and in the last 12 months as well. A lot of those are more domestically focused. So when you talk about the risk potential for geopolitical concerns and that being something that could derail your rally projection, what do you make of the potential for investing in small caps? Do you think that's a good idea in the current environment?

Yeah, there's a lot of arguments for why small caps are good three-year investments. You know, their valuations are multi-decade lows. I think the best is to look at price to book. They're back to where they were in 99. Small caps got really hit hard with the rising rates because these companies are more levered and have a higher cost of money. So if rates are falling, that's a bull case for them. And then as you point out, it's ironic, but IWM is highly correlated to emerging market stocks. They're essentially the same risk category.

And so if emerging markets are bottoming or China's bottoming or Europe's bottoming, that's an argument to be overweight IWM or small caps as well. So I think there's things coming together that in the next year could be very helpful for small cap stocks. Yeah. We saw some news coming out of Europe that support that thesis yesterday when our markets were closed. Lastly, Tom, I just want to ask you about earnings season, because we're mostly through it, although it does restart again next week with some enterprise tech names, some retail names. Even though the unofficial end is beyond us, what's your broad takeaway? Beyond the fact that corporate America is really just holding up OK, are there pockets of concern from the Q3 reports that you have?

Well, my overwhelming takeaway from earnings season and also our team using machine learning to look through conference call transcripts is that the realized situation, like the delivered results, are better than not only investors realize, than many management teams have expressed. I mean, that's why recession conversations have dropped. Talk about slowing demand actually is less this quarter than prior quarters. Yet you hear a lot of investors thinking that this was a pretty weak earning season. And it turns out stocks have done great on the heels of that earning season. I think it's far better than people realize. Yeah, it's definitely been a key driver of the recent performance over the last few weeks, along with the interplay with yields.

Tom, thank you so much for being here. Tom Lee, really appreciate it. Up next, getting into the holiday spirits. Big name retailers are cashing in on boozy treats, and it looks like it's set to impact their bottom lines in a big way. We'll tell you just how much customers are willing to pay and the companies that stand to benefit. Closing bell.

We'll be right back. Wine-themed advent calendars. All the rage again this holiday season. And some key retailers are betting booze will boost their bottom lines this year. Brandon Gomez here with the details. Learn something new every day. Yeah, absolutely. Retailers,

but also spirit names as well. Constellation Brands said this quarter wine has been a mixed segment compared to beer and spirits, but that's not the case around the holidays. A projected $1 billion will be spent on wine alone in the U.S. for the two-week period around Christmas and New Year, and that includes this buzzy new trend of boozy advent calendars. Now, ranging in price from the higher end at about $200 for the 24 nights of wine, from Vinebox to a 24-day beer calendar costing $89. And shoppers are spending the money. Costco and discount supermarket chain Aldi is annually selling out of their calendars. Aldi told me it's already sold over 90% of its advent calendar stock this year alone.

Look, it's fun for shoppers. It's smart for retailers, too. It's a year-end cash grab and booze, clearly somewhere where Americans are willing to spend money. Is this usually on top of spending that they would do for the holidays and so forth? It is. And it's also a lot of times a personal purchase, right? It's something exciting for you to do around the holidays on a nightly basis, right? You open up the bottle, it's 24

nights, they're typically those sample size bottles. Maybe it leads you to spending more money on full-size bottles further down the line. And it's probably helpful in discovery too. I'm guessing a lot of these smaller bottles are, you know, taste tests for different vineyards and wineries that people may then go on to purchase. Yeah, absolutely. If you look at the vodkas, it is typically brand names like Tito's, like Smirnoff. But if you look at the wines, they tend to be more in-house brands as well, which gives companies like Costco, like Aldi's, an opportunity to get their market in households and then possibly convert those to more sales down the line. Well, perhaps in December, you can come with samples. Yes.

Yeah, absolutely. We'll be toasting to the new year. Yeah, because, you know, if we're going to report on it, we might as well try it ourselves, right? It's just research. That's just research. Exactly. Investigative journalism. Appreciate it. Yeah, thanks.

Brandon, happy holidays. Up next, we are tracking the biggest movers as we head into the close. Christina Parts Nevelis standing by with those. Hey, Christina. Well, Brandon just brought a booze and chocolates, and many of us are probably still feeling full after yesterday's holiday meal. So perfect timing to talk about the soaring shares of one weight loss drug maker. That and much more after this short break. 14 minutes until the closing bell.

Let's get back to Christina for a look at the key stocks to watch. Christina. Novo Nordisk. That's what I'm watching. The maker of hit weight loss drug, Wagovia Nozempic, gaining steam today, up almost 2% and also hitting a 52-week high. The company announced yesterday it would spend over $2 billion to expand a production facility in France. This comes after announcing another $6 billion to expand a production facility in France. This comes after announcing another $6 billion to expand in Denmark. The company also predicting that a shortage of the weight loss drugs would

continue throughout 2024 and forcing the firm actually to ration, I should say, Ozempic starter kits in Europe. Shares of Zumba, I should say, Roomba maker iRobot, are soaring today on a Reuters report that EU regulators are preparing to approve a takeover by Amazon. That would be the Roomba. That means one hurdle is cleared, but the U.S. FTC is still reviewing the merger. That hasn't stopped iRobot's market cap from surpassing over a billion dollars. Shares are up 37 percent. Leslie, do you have one?

Quite the move. No, I've always thought about getting it, but never actually took that step. Do you have one? Quite the move. No, I've always thought about getting it, but never actually took that step. Do you have one? No, I just have seen videos of children and pets just move around the floor on them. Yeah, I would definitely have a cleaner home had I actually taken that step. But maybe someday. It's not too late. Not too late.

The holidays are around the corner. Hanukkah is around the corner. Perhaps a gift for you. That's right. Not for me, but maybe your husband. Exactly. Thank you. Up next, we are headed to the mall. Speaking of holiday purchases, Black Friday shopping in full swing, a live report from the mall and a breakdown of all the key names every investor should be watching this holiday season.

Not much more when we take you inside the Market Zone. Welcome back. We are now in the closing bell Market Zone. Courtney Reagan is out at the mall braving the Black Friday crowds to deliver the outlook for retailers. Plus, Dan Ives of Wedbush on how Apple may fare this holiday season. And Julia Borsten on how social media is influencing consumer spending. Court, let's start with you. You are spending this Black Friday at the Palisade Center in New York, braving those crowds. What are your big takeaways so far?

Yeah, you know, Leslie, this day is expected to be the busiest day for foot traffic for retail all year, though maybe not as big as it once was. It's not typically a day that we see retail stocks move a bunch, of course, busiest day for foot traffic for retail all year, though maybe not as big as it once was. It's not typically a day that we see retail stocks move a bunch, of course, because this is really just the beginning of the big action for retailers. The XRT is up slightly here today, and Nordstrom shares are up about 5%, sort of gaining back what they lost on Wednesday following those results that were disappointing. Signet Jewelers, though, that's the owner of Jared Zales and a number of others. And American Eagle Outfitters, those are both down about 2% today. It looks like American Eagle has clung some of that back here. Now, the top retailers that consumers at least are searching for today online before perhaps they go out to

the stores, Amazon at number one, Walmart second, followed by Best Buy and Target. And Leslie, we're hearing from cashback at Rakuten. They're seeing a 5% increase in overall trips. Folks that are using that service to potentially look for coupons or get cash back. The health and wellness retailers, those are seeing the biggest trip boost, up 14%, followed by department stores and travel retailers at 11%. Shoe retailers seeing a 10% boost in those shopper trips. Now, this, of course, is retail's biggest stretch. $130 billion is expected to be spent

online and in-store here over the five days from Thanksgiving to Cyber Monday. So we're just getting started. As I've been here, though, the mall traffic definitely picking up as sort of the cadence of shopping has changed over the years, of course, with doorbuster deals no longer being offered at many retailers on Thursday night, and also many of these deals being offered online that are identical to in-store both before and after the big day. Back over to you. And, Cord, this, of course, comes in the middle of your earnings season as well, which you've been covering so diligently. We spoke with Simeon Siegel, an analyst at BMO

earlier in the hour, who spoke about how in previous years, it's really been kind of the tide coming in, the tide coming out, as you look at different pockets of retail, where this year is much more nuanced. Did you get that same sense in listening to the various guidance and management commentary on the calls over the last week and a half or so? Absolutely. Even when you're looking within subsectors. So I'll give you an example. I just spoke with the Home Depot CEO on Monday. And while they're in this year of moderation, I would say the comments from the CEO directly in response to some of our questions about how demand and sales are going and what the expectations are, were actually fairly positive. And then the very next day, we heard from Lowe's, and they were not so positive, sort of saying, look, our do-it-yourself

consumer is spending in different areas, not necessarily things that we sell, like travel and leisure. So a lot of differences and nuances within the subsectors. It's also been the case that we've seen retailers report relatively strong third quarters, but then issue pretty conservative or cautious guidance for the holiday forecast, because there is a lot of uncertainty and somewhat choppy spending. Walmart CFO, John David Rainey, told me,

we are seeing shoppers spend when you give them a big discount or a big deal, but we see noticeable drop-offs before and after that. And so this traditionally promotional period of time, this five days, is going to be really critical when we know consumers are very pressured in a lot of other ways. Yeah, certainly idiosyncratic stories here. It's helpful to have experts like you, Cord. Thanks so much. Dan Ives, the holiday season is typically the most important for Apple in particular. What are you watching this year? I think it's going to be a strong holiday season

in terms of iPhone 15. You know, this is one of you go back over the last few weeks. I think sentiment's way, you know, I think different than what's happening from a demand perspective. I think right now ahead of street expectations, I think from an iPhone 15. Also in China, that continues to be a strength and really flex the muscles moment for Apple, despite bare sentiment. In my opinion, this is really setting up for what is going to be a monster holiday season, especially when you compare it to the last few years for Cupertino. Dan, stay with us. It looks like more consumers are turning to social media to do their holiday shopping this year as well. Julia Borsten here with the latest on that, Julia. Leslie, that's absolutely right. Americans are increasingly looking to shop on social media.

This year, nearly half of Gen Z say they plan to shop on platforms like TikTok or Instagram. That's according to a Shopify Gallup poll. Now, this holiday season will be a key test of the power of AI to create and target ads. It'll also be a test of Amazon. Amazon is now partnered with Pinterest, Meta, and Snap, so shoppers can buy directly from Amazon ads within those social apps. Now, Meta is also offering other advertisers its new AI tools to optimize ad buying as well as ad targeting, and it's currently testing some generative AI ad tools to roll out next year. Now, meanwhile, TikTok is taking a totally

different approach. It launched a TikTok shop in September with 200,000 merchants to build its own e-commerce business. Now, across these platforms, social media ads are projected to drive 10 times more online shopping visits this holiday season than traditional marketing. That's according to Insider Intelligence. Back over to you. Julia, how lucrative are these technologies for the actual social media companies themselves? Do they get any sort of kickback for number of clicks and so forth? Well, look, the more effective an ad is, the more you're going to have those advertisers come back and buy more. So return on investment is key.

Platforms such as Meta want to make sure that their ads have incredibly high return on investment. That's why they're rolling out these ad tools. So those ads can be incredibly targeted and incredibly effective. But I think what's so interesting about these Amazon partnerships is that it's really designed to be a win-win. Amazon wants to make sure they take out any friction that might prevent you from stopping between that time when you see an ad and when you make that purchase. Before, you'd have to go to a different app or maybe open up your computer. But this is really designed to remove that friction. But if it works, then Amazon's going to be spending a lot more in advertising. And that is a win for the likes of Meta and Snap and Pinterest as well. Dan, are there any companies that you believe should be

taking notice of this that are missing opportunities based on lagging technology in the advertising space? Look, I mean, I think Julie talked about for Amazon, this is just going to be more monetization, I think more monetization i think more monetization for meta and especially as you go into the next year and something i think investors are under appreciating if there's one that's probably left on the table in terms of where they haven't monetized as much it's snap right i mean i think snap continues to be the one where you look at the overall advertising what's's happened on social media. It feels like they're left behind. But ultimately, this is just another trophy case moment for Zuckerberg. And I think Jassy really leads are focused on this in the 2024 for Amazon.

What about the potential for regulation thwarting some of the insights they glean from from these programs? Oh, yeah. I mean, the Beltway is well aware of what's going on here. And that's definitely going to be a regulatory spider web as it plays out. But look, regulatory right now, they're 20 miles an hour in the right lane. Technology is going 90 to 100 in the left lane, especially with AI. So it's outside of self-regulation. This is just going to be the strong getting stronger in big tech. All right, Dan, thank you so much for joining us. We have Santa ringing the closing bell today. Hopefully, for those bulls out there,

an insight into the potential Santa Claus rally to come. Either way, we are seeing some mixed activity today in the three broad indexes. That does it for Closing Bell. Now let's turn it over to Overtime with Morgan Brennan.