Closing Bell - Closing Bell: What’s Next for Stocks? 12/8/23

Episode Date: December 8, 2023

What lies ahead for stocks as next week’s fed meeting looms large? Cameron Dawson of NewEdge gives her expert forecast as we wrap up the week. Plus, top Apple analyst Erik Woodring says the bull case for the tech giant has been reignited. And, CIC Wealth’s Kevin Simpson reveals the new tech name he is buying. 

Welcome to Closing Bell. I'm Scott Wapner, live from CNBC Global Headquarters. This make-or-break hour begins with the next move for the Fed, the markets, and most importantly, for your money. That after today's jobs report and the recent rally in stocks and bonds. We'll ask our experts over the final stretch what's in store. In the meantime, your scorecard with 60 minutes to go and regulation looks like that. We do have green across the board, kind of been all over the map, but that's the current look. Yields are jumping today after the unemployment rate fell after the jobs report came out. There's your picture. We're green there, too.

Two twenty four. The yield on the 10 year, but a pretty good day for a mega cap tech to Apple is higher, holding above three trillion in market cap yet again. We'll speak to top analyst Eric Woodring of Morgan Stanley in just a few moments on what his expectations are for that stock in 2024. Alphabet, well, it's giving some back today as questions mount about the company's just rolled out AI model. All of it takes us to our talk of the tape. What lies ahead for stocks and next week's Fed meeting, which is looming large? Let's ask Cameron Dawson, chief investment officer for New Edge Wealth, here with me on sets. Good to see you out here. Good to see you.

Anything change for you by virtue of what was delivered today in the job support? I think that nothing really changed. However, what we're not getting is confirmation that data is falling off a cliff, which just means that if we think about the 120 basis points of cuts that's being priced into markets, maybe that's a little bit ahead of itself. But when we think about the Fed going into next week, this data doesn't really change whether or not they'll hike. We don't think that they will hike. But it means that they probably won't endorse the Fed cut path that the bond market has priced in. I mean, March was probably a little aggressive, don't you think? I mean, that was three meetings from now. But even if that is aggressive, the implication is that the Fed is going to cut in 2024, that the hikes are done.

And the report today just underscores for many that a soft landing is in play. Yeah, we're living in this super Goldilocks world where we're continuously threading this needle where we can have it all, where we can see the deceleration in wage growth. They were a little bit hotter today, but deceleration in wage growth and inflation data, and yet it's not coming with the pain. I think the question for markets next year is that we're starting to see little signs of weakness, a little bit of deterioration around the corners of the job market, not enough to say we're falling off a cliff, but does this little bit of easing turn into outright deterioration where we would be more concerned? Are you growing more positive on the outlook for the market than you've been for the, let's say, the balance of 2023? We think that there's still opportunity for earnings to surprise to the upside. That has

been something that we haven't seen earnings revisions move much higher yet. You could still see better revenue growth and margins. That's been you really want to dream the dream on margins. The thing I think that the challenge as we look at markets is that they are expensive. They're trading at 19 times forward. Markets re-rated aggressively this year. The S&P 500's P.E. is up 20 percent. So if there's upside in the market, it really is in those areas where P.E.s are lower,

as well as in those areas where you see the potential for more earnings upside. OK, so I had Tom Lee of Fundstrat on with me yesterday on Closing Bell. Speaking of earnings, he says you can get, I know I was going to tell you to sit down, but you're already sitting down, $270, even $280, $280 on the most aggressive side of what he believes. His target for the S&P is 5,200. That's the highest on the street. And here's why he is so bullish. I want you to listen to what he said. We can react on the other side. Tom Lee. I think you have more groups that could actually have better earnings power into next year. And especially if caution comes off companies, you know, CapEx, there's a lot of pent up demand in CapEx. Five out of ten groups actually sort of cut CapEx as a percentage of revenues last year.

So you have a CapEx opportunity, you have a home recovery opportunity, and you have interest rates falling. It's hard to say stocks should fall next year. What do you think? Is he too optimistic? I think that if we're looking into 2025, which is what that 270 number is, that's actually where consensus is as well. So what we can see is that that's not pricing in any kind of recession. We're not in the camp yet where we think we're going to have an imminent recession in the first half of 2024. But that's a long way away, end of 2025. So I think that's where we'll continuously have to look. Once you get to 19, 20 times that 25 number, that's when you're starting to $280 on his high, high upside prediction for earnings, the economy is going to do quite well.

And thus, the market's going to do a lot better than people are even thinking it might. I think it's how much do we cut? Because not all cuts are created equal. And the threshold by history is about 75 basis points. The Fed has cut rate 75 basis points without a recession. The markets rally. They hit new all-time highs. Once we get to that 75 basis points. The Fed has cut rate 75 basis points without a recession. The markets rally. They hit new all-time highs. Once we get to that 75 basis points, everything's great. The different scenario is that if you go more than 75 basis points, that's when the Fed is seeing something, an issue with the economy.

They're cutting for a really bad reason. And that's when markets are starting to trade less robustly because you're cutting earnings estimates as well. What seems reasonable to you if he's got 5,200? And I don't know if you want to throw out a number or not. And if you don't, that's perfectly fine. But in terms of returns for next year, what seems reasonable to you? High single digits returns would be reasonable because if you assume that we don't have a recession,

that's about where you get on earnings growth next year, which just means that I don't have to make any bold assumptions about multiple expansion. I can get the upside just from the earnings alone. High single digits. So you're not willing to go double digits. High single digits, though, sounds, people would take that. People would take that. And that's about in line with long rent average. Interesting. In terms of areas that you think would lead now as bullish as Tom is, Tom also says, well, mega caps, they'll outperform, but they're not going to do what they did this year. It's going to be these other sectors. Listen to this. He says financials can

be up 30 percent. Industrials can be up 25 percent. Small caps can be up 50 percent. Yeah, I mean, that's a high beta kind of market. But we're seeing those sort of opportunities. We're going through the areas that are left behind. And we see things in health care and financials where the bar is extraordinarily low, just as the bar was very low for a lot of these tech companies at the beginning of the year because people weren't invested in tech as much. They were worried about interest rates going up. So now we're starting to see very selectively things within financials, things within health care, things within small cap, even where there is big upside because the bar is so very low. All right. Let's bring in CNBC contributor Shannon Sakosha now of Newby Private Wealth into the conversation.

So, Shan, what do you think? You heard Cameron suggest you could get high single digits. Let's bring in CNBC contributor Shannon Sekosha now of Newby Private Wealth into the conversation. So, Shan, what do you think? You heard Cameron suggest you could get high single digits. And then Tom Lee is like, oh, you're going to do a lot more than that. You can get all the way up to 5,200 on the S&P. Well, 5,200 is clearly the approach that you get. Probably more rate cuts than Cameron's certainly talking about, probably in the neighborhood of at least 100 basis points of rate cuts. But you also get strong top line growth, Scott. I think the challenge here is that everyone's talking

about 2024 earnings estimates being perhaps too optimistic. But I think if you look at those optimistic earnings, they're being driven by the fact that you look at revenue growth expectations. If you look at the next three quarters, for instance, we're going from about a little under 3% to 4.5% plus in an environment where inflation is well below that. So I think the delivery of top line growth next year in the absence or moderation of inflation, I think is really where you could potentially get that inflection point in terms of delivery of that type of metric on the S&P 500. You know, I think there's still going to be some challenges to that. I think if you look at the economic data that's underlying, notwithstanding what we saw in today's report, we are seeing a slowdown. And,

Scott, don't forget, if you talk about the opportunities in a sector like industrials, you're really looking for that manufacturing reshoring. You're really looking for that manufacturing renaissance. And I don't know if you've looked at PMIs lately, but we're really not seeing it yet. So, I mean, you're not willing to be more optimistic for next year than you were this. I mean, I think, you know, bears or those who've been cautious have been so this year, it turns out to their own detriment, right? Because the market has obviously had a pretty good year and more of late it's balanced out more than it was. So it's kind of hard at this point to nitpick and say, well, I was right to be cautious because from November 1st to today, you weren't.

And I don't mean you specific. I mean, the bearish view. Well, if you think about how we came into the this this period over the second half of the year, Scott, we've actually been neutral in equities. And the caveat there is that the pullback that you discussed that August, September, October timeframe, was really based on rate volatility. And so if you believe that the Fed is kind of out of the equation, and you and I have talked about this, and I think we're standing firm on the Fed being less of a player as we go into the next couple of months, then you're thinking about what's happening in the bond market. And that bond market volatility is really where you're going to see perhaps the foundation. Because if you think about multiple expansion and the need for that, yes, there are, you know, we've talked a lot about that top 10 stocks of

the S&P 500 and the multiple expansion that they've experienced. There are other parts of the market that have had multiple expansion as well. So to Cameron's point, I think looking at some of the sectors that are underloved and perhaps have been sold off because of the rate environment, that's really where we're seeing it. Those happen to be also rather defensive parts of the market. Well, I mean, small caps are not, industrials are not, financials are not. The implication that Tom makes is that, you know, the economy is going to do much better than people think. The Fed is going to cut because inflation is going to cooperate enough. And then you're going to massive catch up trade in those areas.

Well, financials, let's put it this way. There have been parts of the financials sector, you know, areas like insurance that have actually experienced multiple expansion this year, Scott. So, you know, if you want to talk about fine, you get a rotation to smaller regional banks, you know, that's a play. And that actually could boost that small cap trade as well, right? Because they make up a big part of that universe. I think the other thing to think about, if you're looking at that inflection point that Tom is referencing, those three sectors that you just talked about, particularly industrials and small caps, you're looking at early cycle. And I think that that second half of the year, if you do believe that we are past the pain from an economic perspective and the Fed is allowed to cut at least a couple of times

because inflation has come down significantly, he's not wrong to be positioned there. I just think the first half of the year is much more uncertain than I think this particular jobs report or any single piece of data is reflecting. Maybe, Cam, this is no more difficult than just thinking the Fed goes from being your foe to your friend. They don't necessarily have to cut a million times to be super friendly. They just have to stop hiking, acknowledge that at some point, which I feel like they're almost on the verge of doing. We'll get a plot next week to get a better idea.

But we know what happens when you either don't fight the Fed. That cuts both ways. We learned our lesson of what happens when they raise aggressively. Now we're going to maybe learn it next year when they stop. But isn't it interesting that even though the Fed turned out to be far more hawkish and raise rates far more than expected through the course of 2023, that we've also had this big multiple expansion.

And that was something we didn't expect going into the beginning of the year. Our thesis was that, hey, Fed's going to be tighter, economy's going to hold up better, and that would mean that you're not going to be able to expand multiples. That's not at all how it played out. So maybe the Fed was just much less relevant in 23 than we thought. When we look to 24, though, one of the things that's still in the back of my mind is that when I talk to companies, they're saying they're losing pricing power. They're not able to raise prices as much. What does that mean for the top line? What does

that mean for revenue growth? Because the street is expecting it to accelerate. Wasn't the bulk of the multiple expansion, though, in the mega cap stocks a very, you know, a much smaller number? Like the equal weight S&P multiple is still 15 to 16 times, is it not? So there's the biggest swath of the market didn't experience the kind of multiple expansion that a small group did to sort of skew the pie. Exactly. And the number is that multiples for the S&P went up 20%, but multiples for the Equal Weight Index only went up 8% this year. So in theory, there's a lot of room for multiples to move higher, to get back up to the 17 to 18 times on the equal weight index, which was their prior peak. What does that mean

for index level returns, though? Because if you've already re-rated tech stocks and tech stocks have high estimates for earnings and positioning is already there, if tech isn't the leader that it was this year, what does that mean for index level returns, which is why we would skew to the lower end of the range of return possible. And I would also just bring it back to Tom Lee, who says, you know, look, if the S&P shan can do 12 to 15 percent next year, that seems a reasonable number in his mind. And even though he doesn't believe that mega cap is going to lead the way as as it did this year, it's still going to outperform. It's just going to be fourth on his list. So for those who are now in mega cap, let's say they've chased. They didn't want to miss out

on the full thing for the year. What do they do with those stocks into a new one? Well, so there's two things at play here, Scott. I think that the implication for those who think that we're going to see, you know, potentially some pressure on the S&P 500 when you think about the rotation is that people are actually rotating from technology into other sectors. I think that the other alternative, you know, expectation, if you will, is that you actually see, you know, movement from cash, which now is going to have some reinvestment risk in the second half of next year, into equities. And I think that it's unlikely, at least in my view, that you see a lot of people piling into technology given the returns this year. And so I think that's why, if you look across the other sectors, you could potentially see that that's a slight rotation from technology, but also new flows going into that. And that could power in part some of the interest in small cap as well,

because I would say most investors are probably under invested in that just given the emphasis on growth and technology over the last year. Cameron, what about bonds? What I mean, we're just coming off the best month since the 80s, right? Stocks ripped in November, bonds ripped. Now what? Now what? bit more of a hawkish message from the Fed next week. I think at the end of the day, the bar is much lower for them to be construed as hawkish than for them to be construed as dovish, just because you've seen such a repricing. But then as we go into 2024, I think that we probably have this sideways chop in yields. Maybe you don't have the same kind of big upward movement like you had in 2023, but a big movement lower in yields really would be dependent on there being a recession, meaning going back sub 4 percent into the three handle range for the 10 year likely requires much weaker data. Shan, you talk stocks, you talk cash. What about bonds in the new year? What do we expect?

Yeah, I mean, I think, you know, I just referenced cash having some reinvestment risk. You know, I do think that there's a lot of people that are clustered in the short end of the curve, Scott. And that doesn't necessarily mean that you have to go out very far in adding to your duration. But I do think that there will be a rotation into the intermediate part of the curve. I think if you think about, you know, people looking to potentially lock in yields, if you're even anticipating two or three rate cuts in the second half of next year, then you want to make a move potentially to lock in some of that income. And if we're only talking about high single digits in equity returns, wouldn't it be nice to be able to lock in something that you can get on the corporate side and intermediate that's commensurate with that?

So I do think that there won't be a rush, if you will, absent a significant economic contraction or a change in the trend that we see. However, I do think there could just be this natural progression where we see investors adding to their duration as a result of this concern that that front end of the curve is going to move lower. Give you the last word on that. Yeah, I think that that is the prudent thing to do, that as you start to see bonds mature on the front end, to reinvest in the long end. It doesn't mean that we can't ignore the risks of duration

and meaning that. We do know that we have Treasury refunding announcements at the beginning of the year, all these things that spook the bond market. But being able to lock in those yields for the long run for many investors is the prudent thing to do. All right, we'll leave it there. Cameron, thanks for coming out here. Thank you.

Appreciate it. Shan, thanks so much. Enjoy the weekend. We'll see you soon. Shannon Sikosha, let's get a check now on some top stocks to watch as we head into the close on this Friday. Christina Partsenevelos is here with that. Christina. I am. And let's talk about Lululemon. At all-time highs after earnings and revenues topped analysts' estimates. That's actually overshadowing, though, the lighter-than-expected guidance for the ongoing holiday quarter. The shares were actually down yesterday. Executives touted strength on Black Friday, though, but noted there are some uncertainties in the macro environment. Shares are up almost 6%.

And Levi Strauss is lower after announcing that current president and former Kohl's CEO Michelle Gass will step into the chief executive role in January. Gass will replace the Gene Giants' current CEO, Chip Berg, in a succession plan that was first announced last year. And shares are down just shy of 2 percent. Scott. All right, Christina, we'll see in just a bit. Christina Partsenevelos. We're just getting started here. Up next, reigniting the bull case. Apple seeing big gains this year. And Morgan Stanley's Eric Woodring now makes the case for even more upside. He'll tell you why and how far he thinks that stock can rally. We're live today from CNBC's global headquarters, and you're watching Closing Bell on CNBC.

Welcome back, shares of Apple. Well, they're up more than 50 percent this year. My next guest says the bull case has just been reignited as well. Eric Woodring of Morgan Stanley raised his price target this morning, joins me now to explain exactly why he did that. It's good to see you again. Welcome back. Thank you very much, Scott. Good to be back. All right. So your price target now is 220. Look, it dawns on me the last time you were on on October 30th, Apple shares were 168. And we had a very frank conversation then to the point where you were very honest with investors at that point, said, look, I'm bullish. I think things are great, but I wouldn't necessarily step in front of the stock right here. Maybe it's going to pull back more. Maybe it goes down to 160. Well, here we are,

195. Thank you very little. What do I do now? No, the market is a very humbling discounting mechanism. So I think we all need to keep that in mind. But if you remember when I was there with you, I said there were two kind of near-term risks that I was concerned with. One was the risk of negative iPhone production cuts, and one was the risk of the Google DOJ trial coming to a conclusion and some form of adverse reaction. And in my view, both of those risks are now largely off the table. You know, Hanhai's results earlier this week, I think, gave confirmation that there's relative stability in the supply chain. And what we learned earlier this week is that the timeline to conclusion for the Google DOJ case is multiple years away from now. And so, again, discounting that risk multiple years out.

My point this morning was really saying, since October 27th, Apple has outperformed the market by five points. Market's been up 10 points. Apple's been up 15 points. I believe that over the next 12 months, the probability of Apple outperforming by a greater magnitude is higher. I'm not making a directional call on the markets. I'll leave that to Mike Wilson and my colleagues here at Morgan Stanley. But ultimately, with the bear case somewhat eliminated from the near term, I think there are things that we can look to that are very positive.

The directionality of the services business, it's accelerating to mid-teens. That was a key crux of the bear thesis. Gross margins for the fourth consecutive quarter, reaching a new all-time record, mid-40%. And then as I wrote alongside some of my colleagues two weeks ago, a lot of the discussion about AI has been on a lot of the mega-cap cloud giants. It really hasn't been on Apple. I think Apple's time to shine is still on the future when it comes to AI. That gives investors something to get excited about. And yes, I know the stock is $195. On my fiscal 25 earnings, that's about 26 times earnings. Stocks traded between 18 times and 32 times over the last year. Valuation isn't

cheap, but it's not overly taxing. And if you ever make a valuation bet on Apple, historically, you've been proven wrong. And so I just think with the bull case, excuse me, with bear drivers somewhat diminished in the near term, there's things to look forward to in 2024 that get me excited. It's funny because, I mean, if you're right about Apple's trajectory in 2024, I mean, Mike Wilson is going to be, you know, he's going to still be wrong on where the market's going. But that's neither here nor there. I don't want to put you in a difficult spot. You must assume then that smartphone demand has troughed. So that's a good point. You know, in my world, in the world of hardware, which is a very cyclical world, you typically want to buy hardware stocks at two different points. One is when you believe that the absolute kind of demand

generation has bottomed and or when you believe that we're in for kind of a sustained period of acceleration in year over year, year over year growth going forwards. We do believe the PC markets have bottomed. We do believe the PC markets have bottomed. We do believe the smartphone markets have bottomed. Demand is still very uneven in the near term. Don't get me wrong. But as I look at my Apple model, over the next four quarters, I forecast growth accelerating incrementally each quarter. That gives you something to get excited about. And so there is still very much an uneven demand market. But again, there's times that you want to buy hardware stocks. I think for at least Apple, that time is now.

I'm looking at a story that hit a few minutes before we came on the air. And I hope you had a chance to check it out. I know what you're going to ask me. Yeah, here's the headline. Apple's iPhone and watch product design chief to leave in shakeup. That's going to apparently happen according to this particular report in February. So what does this mean to you? It's hard for me to say. We know that Apple has a very deep bench of executives.

We've seen that over time. I'm not personally sure how deeply involved this individual or group of individuals have been in the design and growth of this business, I'd imagine quite involved. What do you mean, it's the chief? But again, quite involved. But in saying, does that mean that all of a sudden the iPhone isn't going to be this product that we love and adore and don't give up and continue to buy a new one? I don't think that that's the case.

And so we can always look to a deep bench. But it's just hard for me to speculate at this point the importance of that news. Again, according to the to Bloomberg. Sure. You referenced earlier is sort of one of the the roadblocks, if you will, to to being maybe more bullish was the timeline of the DOJ Google trial being being pushed out. Can you remind our viewers why there's relevance to that for this? Sure. So, again, the trial is between the U.S. government and Alphabet, Google. But at the end of the day, Google and Alphabet are very close partners. Apple generates, we believe, somewhere between high teens and low 20s, billions of annual revenue

from Google for making Google the default search engine on Safari. That's a very lucrative contract, very high margin contract. In the event, you know, this judge, Judge Mehta, believes that, you know, the way that Google has approached the search market, you know, devolves into something related to antitrust measures, then there's ways that that relationship between Apple and Google might change. So in a way, Apple, actually, while Apple is not involved in the case, they might even stand to lose more theoretically in the event of an adverse ruling. That is why it's so important to Apple. We believe, again, ultimately, an adverse ruling could be somewhere between a 4% to 7% EPS hit. But the reason I think that this

risk has been pushed further out is we've learned in the last week, earlier this week, actually, that the expectation for the timing of the conclusion of this case is the end of 2024. There's then a roughly six to 12-month appeals process. You could then go through another trial to determine what a theoretical or potential remedy could be, followed by another set of appeals. As we know in the United States legal system, you should always bet the over. Maybe that was something, maybe that's a learning statement that I can make from this is it just takes a lot of time for these types of big, high-profile cases to work its way through the legal system. That's the point that I'm making. Still a theoretical risk, absolutely, but the push out of it means that the market is going to discount that risk factor in the near term. It's really amazing that the stock,

if I would have told you, okay, revenue growth is going to decline for a factor in the near term. It's really amazing that the stock, if I would have told you, okay, revenue growth is going to decline for a few quarters in a row, smartphone demand is going to be weak, and China's recovery is going to be weak, but oh yeah, hey, the stock's going to be back at 195 over $3 trillion in market cap, you would have said, you're out of your mind.

Give me a comment, though, on my last point, China. What do you see there? You know, China is a market that is uneven right now. We know the economic challenges the country faces. We also know it's a very competitive market. In our view, it's one of the largest smartphone markets that has a very elevated churn, a lot of switching back and forth from brands. We do believe that the ecosystem, the Apple ecosystem in China is strong. We see that in our smartphone surveys that we do every single year in China, more services adoption, buying new products that aren't the iPhone,

wearables is one of those that has been very, very popular. But it's a challenging market. But again, it's a very important market. It's Apple's second biggest market after the United States. When I think about China in this year and what it means for fiscal 24, you know, I have iPhone units in China right now down 24 percent year over year in 24. No coincidence, total coincidence, of course. To me, that is de-risking the ultimate outlook. So said differently, if we think things are going to be worse than 24 me, that is de-risking the ultimate outlook. So said differently, if we think things are going to be worse than 24%, that is a very severe view. Some reports indicated that, for

example, on the 11-11 singles holiday in China, that iPhone volumes were down 4%. Again, down 4% is much better than down 24%. And so what I've tried to do is really be quite aggressive in my cuts there and say, let's assume the worst, hope for the best. And what it seems like is we're somewhere in between. It's a very uneven demand market, weak macro, a lot of competition. I got you. 24 and 24. I just hooked you up for one of your next notes.

I appreciate it as always. Thank you, Scott. All right. Eric, thanks. Take care. Bye-bye. Thank you. Eric Woodring joining us from Morgan Stanley.

Up next, five-star stock advice, capital wealth planning. Kevin Simpson, he's back. He reveals his newest tech position and the stock he is debating getting back into. That's after the break. Closing bell right back. NASDAQ trading higher today on pace for its sixth straight positive week. My next guest looking outside the Magnificent Seven heading into the new year. He just started a new position in one of those less talked about tech names.

Let's bring in Kevin Simpson of Capital Wealth Planning. It's good to see you. Welcome back. Hey, Scott. So I see your stock. So a couple of days ago, we've got the mentalist O's Perlman, on, and he asked me to think of a name of a company. He guesses what it is. It turns out to be IBM.

You text me. You're like, this guy's unbelievable. How did he know that? And then I see that you bought IBM. And I'm like, what? Why did you buy it? Just because he picked it? Yeah, I thought when you picked Halloween,

and then you picked IBM, and Oz was on the show, why not? The truth is, Scott, we haven't owned IBM in years. And I thought it was hilarious when you said that because we were initiating the position. And the thesis really is, can we get outside the Magnificent Seven? Can we find companies that provide a little bit more value? Granted, way more old school, but can we get some kind of sleeper exposure into AI? And Watson was early to the party, and I don't think it really ever became what they had hoped it would. They're reinvigorating Watson X, which will allow for lots of companies to get exposure to AI. The Red Hat deal that everyone thought was a misfit and something that they overpaid for is now starting to become synergistic within the company.

If you look at a stock that's paying a plus 4% dividend while we wait to see how this matures, I really think that there's an opportunity set here and some value, Scott. And it's not just the Red Hat, which is projected to do double digit returns next year, even old school traditional IBM is still looking at single

digit growth. And even though that's not explosive, growth is still growth. And we're looking at this as something that is not looked at by everyone over the past three or four years. The stock hasn't done anything. It's just starting to break out a little bit here. So we feel like there's some trajectory to the upside for sure. I thought you were like, oh, no, I'm buying it and we'll just see what happens. But I get you. There's more to the story. I figured there probably was. All right. You bought you added to your position in CME Group. Why? You know, this is one that you and I have been talking about for the past few months. It's a company that has tremendous double digit growth. Their revenues over the past nine quarters have

been increasing at a nine percent clip. The growth has been at 10 percent. They've got massive dividend growth. Their commitment to shareholders is incredible. And the other thing that is increasing at a nine percent clip. The growth has been at 10 percent. They've got massive dividend growth. Their commitment to shareholders is incredible. And the other thing that is potentially exciting about the end of December is occasionally they'll pay a special dividend. Last year, they paid four dollars and 50 cents at the end of the year. There's no guarantee that they'll do it, but they've been a lot more profitable this year than they were last year. And if anything is, you know, history repeating itself, it would it would create a dividend yield that's in excess of four percent cumulatively. So we like growth stocks. This is certainly one that's benefiting

from more action, more activity, trading and futures, trading and indexing, trading and interest rates, bonds and equities. So we like CMA Group for the for the growth story there. Let me note for our viewers and for you, for that matter, too, we're at the highs of the day right now. It's been an interesting session. You know, the data came out. Market wasn't really sure what to make of it, whether it had changed the narrative at all that, you know, the Fed's done and it could start cutting. I mean, right now, Dow's good for 162. S&P's up 18. NASDAdaq starting to look pretty good as we head into this very final part of the trading day up 70 points um i bring it up because i think the prevailing thought is that what

happened today just means that that soft landing is still intact you have caterpillar which you added to which would play right into that narrative no yeah we're not expecting a hard landing we're not expecting a massive recession i think history may come back and teach us that there was a rolling recession that kind of happened over two years but i don't think that we need some kind of massive fall off of the cliff and if the infrastructure bill is real there's no better beneficiary than caterpillar you know it's fun because you and i were talking about it last time when they were reporting earnings and we said look let's just hold off until after they

report. It's probably going to go down. Same thing happened with deer. But we've gotten a situation here with the share prices kind of leveled off you definitely have value. And the opportunity set again for really high quality companies.

Twelve forward P. E. you're getting plus two percent dividend yield. Increase that dividend by like eight nine percent every year. A recession would hurt the story. We're not planning for the recession. We're betting on the infrastructure. We're betting on Caterpillar. You have a reaction before I let you go to Broadcom and the earnings because you've been building a position in that name. Yeah, I think the earnings were excellent. Looking forward, it's amazing how strong I think

the potential is for this company. Right after they reported Scott in the post-market, it was down $22. And I was like, why? What the heck's going on? Which is a good lesson not to trade after hours. But still, the 14% dividend hike, there was a little bit of miss on revenue. The report wasn't perfect, but the sales number was excellent. I thought the projections were better than a lot of people are expecting for next year with the acquisition and bringing VMware into the story. It's going to make them 50 percent semiconductor, 50 percent software, takes away some of the cyclicality from

the stock. And now that VMware is in the rearview mirror, they've got seven point one billion dollars allocated for share buybacks. And I think the stock is cheap and I bet they do as well. So if you can get this thing in and around nine 900 bucks, I think you're going to be really happy in two years from now. All right. I appreciate it as always, Kevin. Thanks so much. That's Kevin Simpson, Capital Wealth Planning joining us once again on Closing Bell. Let me note as well, we've hit a new 52 week high on the S&P 500 as we speak. That's the highest level back to March of 2022. So it may have taken a little while today for the bulls to get excited about what was delivered this morning from the Labor Department. But nonetheless, we do have 20 minutes left and we have a little bit of a ramp into the close on this Friday.

Up next, we're tracking the biggest movers as we head into that close. Christina Partsenevalos has that for us. Christina. Well, crypto continues its climb and it's helping one broker and a security deal between an air conditioning company and Honeywell. I'll explain next. We're 15 away from the close. Let's get back to Christina Parts of Nevelos now for a look at the stock she's watching. Christina. I'm smiling because Steve Kovac just tried to jump into the shot. But bullish sentiment around crypto continues with Bitcoin just shy of $44,000, up over about, what, 160% year-to-date. Crypto broker Coinbase is up about 7% right now after falling for two straight days. There was some profit-taking, including a roughly $22 million sale from Cathie Wood's ARK Investment Management Fund.

Coinbase is up, though, 329%, outpacing games in cryptocurrencies. Shares of air conditioner company Carrier Global are moving higher after announcing the sale of its security unit to industrial firm Honeywell for $4.95 billion in cash. Honeywell aims to bulk its safety business where growth has slowed in recent months. Honeywell down about 1.5%. Carrier up 4.5%. All right. Christina, thanks.

Have a good weekend. You too. See you on the other side. This is Christina Partsinevola. Still ahead, retail investors jumping back into the market at levels not seen in more than a year. We'll tell you what names they're buying. We'll do it just ahead. Closing bell right back.

Take a look at that chart. That's RH. It's sinking in today's session. We'll tell you what's behind the move and why it could impact both the retail and the housing trade in a big way. When we come back inside the market zone. We are 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 R.H.''s quarterly miss and how it could impact the retail and housing trades. And Kay Rooney, with a look at what retail flows this week, might be signaling as well. Mike Santola, you first. I just said new 52-week high S&P. We've had a nice little ramp as we've pushed through this final stretch. Yeah, I mean, everybody seemed to be able to see clear toward this path to a soft landing that we've gotten reinforcement for.

But a little more affirmation doesn't hurt. And the market response today to a somewhat moderating labor market strength, but also with this disinflationary forces in everybody's mind, it's just enough. It's enough to keep the seasonal trends intact. We've been going sideways for about three weeks. It's not that aggressive, you know, a buying stampede in the market. It really is just kind of a grind at this point. But yeah, good enough for new highs. The next thing to look for is anything that disturbs this assumption that we have the Goldilocks type numbers out there, of course, inflation next week and all the rest of it. But for now, it does seem as if we broadened enough that it's not just a handful of stocks we're

talking about. You look at the banks and how they've responded and now at multi-month highs as well. And so it makes people feel better about what the underpinnings of this rally took a minute today, didn't it? But as your point, Russell is outperforming right now. I think there was people were a little bit gun shy about this uptick higher in Treasury yields. Is that going to be just something that's going to puncture the good mood and maybe test the rally so far? Didn't seem to really take hold. Yields still at a manageable level below four and a quarter on the 10 year. So I think all that together shows you that nobody really decided they had to make any changes today, except to, you know, maybe do a little bit of buying around the edges. Yeah. Let's talk about restoration hardware to plummeting today after a surprise quarterly loss.

The furniture retailer pointing the finger at a, quote unquote, frozen housing market, forecasting that promotions will continue to pressure the bottom line. So what do we make of this, Mike? Well, I mean, there's no doubt that in some respects we do have a frozen market, and it's just about new home build and renovations and home furnishings in general, not necessarily been all that active in terms of demand. On the other hand, it does seem very idiosyncratic here when it comes to RH. They've had a number of quarters where they've disappointed people revising lower what they expect to earn. There's a lot of a revamp of product lines going out. So the point being, it doesn't seem to be purely macro here. If you look at shares of William Sonoma

or Ethan Allen or other home-related stuff, it's able to perform in here. Sherwin-Williams also is, I think, clicking toward 52-week highs. So it shows you that there's a little more of a specific and almost a pandemic-related boom-bust story in RH. Right now, earnings for next year for the company are not even supposed to be half of what they were earning in the prior two fiscal years, you know, before we really exited pandemic times. Mike, I'll get back to you in a minute. Kate Rooney, market rips and retail gets more interested, huh? Yeah, and a little more confident on the risk side, Scott. In the past week or so, we have seen the strongest retail inflows since March of last year. That's according

to data from J.P. Morgan. Individual traders invested $6.8 billion in the past week. Almost half of that went to individual stocks, those self-directed trades. There's also some evidence that they're ramping up risk as well. One sign of that, that money I talked about, it's flowing out of money market funds. Those funds and ETFs have really seen record inflows this year as rates climbed. But for the first time since May, flows to money market ETFs went into negative territory. That's according to Vanda Research. Vanda says it's seen traders also move out of some of the defensive big tech names into riskier small cap software names, for example, in the Russell 2000, also buying some of those crypto proxy stocks that have been really volatile lately. J.P. Morgan points out an

uptick in GameStop as well in terms of inflows. The original meme stock, of course, that is the poster child for risk taking and then a lot more buying in Tesla, which tends to be sort of a bellwether of retail behavior. It's widely held about 12 percent weighted average in most portfolios, Scott. All right, Kate. Thanks, Kate Rooney. All right, Mike, you want to comment on these flows? Absolutely. I mean, on the one hand, you know, for perfectly to be expected when the market has been ramping for six weeks, you're near the highs of the year. You're starting to get a little more comfortable about the macro. The AI theme is running through a lot of this stuff.

And, you know, there's a point at which it gets overdone. But I don't think, you know, you have to go through the stages of having broader participation. You need bulls to make a bull market. And so I think it's understandable. You're getting some retail response. Although I would say it's not unequivocal. I know that the Ameritrade Investor Movement Index actually showed that their clients were net sellers in November, even as the market went straight up. So I think it's one of those things you monitor. It's good until it's not so

good as a contrary signal. And I think right now we're still in a zone where it's better to have broader participation and some of the single stock themes working as opposed to, you know, really just everybody fixated on the on the macro trade and trying to trade the Fed. And by the way, the Treasury yield story as well. Yeah, we're getting there. Just to reiterate to everybody, too, the S&P 500 during this hour, the final stretch hitting a new 52-week high. And as Mike has suggested, it's been broad-based as well. Don't just look to technology.

Financial's one of the outperforming sectors today as well. Michael, have a good one. Why don't you take us into the close today on this Friday? You got it, Scott. I'll see you Monday. And we are still about 4,600 on the S&P 500, not just a 52-week high. That would be the highest close level, the first time above 4,600 since the end of March 2022. And that was at the peak of a failed bear market rally after the first crack in early 2022.

You do have pretty decent breadth, as Scott was saying, about two-thirds of all volume in the New York Stock Exchange is to the upside. The leaders, the biggest upside contributors for the day, as you might expect, are things like NVIDIA, Microsoft, Apple, Meta. So clearly the big winners continuing to win. You see kind of that straight 45 degree angle up after noon as well. The bond market took the relatively firm jobs report today as an excuse to do some selling in bonds. But, you know, they might the yields might have bounced otherwise as

well. Just on technical factors, you have the 10 year yield up to about 423. So still under four and a quarter, 435 a level people are looking for to see maybe that makes folks a little more uncomfortable. And boy, it's been a calm market for three weeks, really going sideways until today's little ramp above 4,600, at least if we hold it there. We are also up for the week, by the way, around two-tenths of a percent in the S&P 500. and the volatility index really just cracking. Right down around twelve and a half. Showing that our traders as we go into an option expiration week next week. Are not expecting too many fireworks

to see if they're right about that that's going to do it for closing they'll have a good weekend we'll send it into overtime. With John Ford.