Closing Bell - Closing Bell: What’s Not to Like? 11/08/24

Episode Date: November 8, 2024

With an already-strong bull market getting an extra kick from anticipated policy help and loosening Fed policy into a sturdy economy … what’s not to like? NewEdge’s Cameron Dawson, Truist’s Keith Lerner and Pointwealth Capital weigh in on where they see the markets – and your money – headed from here. Plus, Former Fed Governor Mishkin maps out what he is expecting from next week’s CPI print. And, RBC’s Lori Calvasina reveals her post-election playbook. 

Welcome to Closing Bell. I'm Mike Santoli, in for Scott Wapner, live from Post 9 at the New York Stock Exchange. This make-or-break hour begins with the Bulls stampeding through landmark levels to polish off the index's best week of the year. Here's a look at the scorecard with 60 minutes to go in regulation. Further follow-through to Wednesday's huge post-election balance has taken the Dow Industrials. As you see there, past the 44,000 mark, the S&P 500 above 6,000 for the first time. You see the S&P up about half a percent on the day. A decisive election result and expected growth-friendly policy mix under a second Trump administration has investors discarding caution, reaching for risk. The volatility index has now melted to 15 or so from about 22 a week ago,

although it is a little bit steady today, even as the indexes make a new high. Tesla shares are the biggest upside contributor to the S&P today, given Elon Musk's closeness to President-elect Trump. The stock up 30% or so on the week, 8%, 9% today. And treasuries are steady. A day after the Federal Reserve delivered

a quarter point rate cut with more possibly to come the 10-year treasury yield is actually tracking to be down a bit on the week after it had that brief pop to a four-month high around 445 on wednesday it's now 4 30 or so it takes us to our talk of the tape with an already strong bull market getting an extra kick from anticipated policy help and the Fed loosening policy into a sturdy economy. What's not to like? Let's ask Cameron Dawson, New Edge Wealth Chief Investment Officer. It's great to see you. Good to see you. You know, it's sort of you line it all up like that. It looks like green lights as far as you can see. Is there anything to bring into the conversation to complicate the story? I do think we have to respect the uptrend, which has been just so very powerful this

year. And clearly through the election, we removed the tail risk of potentially higher corporate taxes and maybe higher regulation, which is certainly something that the market is celebrating. We cannot ignore that valuations are very stretched. We're at 22 and a half times earnings. We also cannot ignore that earnings estimates themselves have actually been getting trimmed over the last couple of months. And so you're seeing this divergence brew where the upside in the market really driven

by sentiment, driven by valuation, not necessarily because of a fundamental change in the earnings picture. So we think we have to watch that the most closely over the course of the next couple of months. Yeah, I mean, valuation has been certainly a little bit of a shadow on the market for a while, more so now. Twenty two and a half times, as you mentioned, it's pretty much as high as it's been since the post-pandemic boom when earnings were probably a little more depressed. And you mentioned, yeah, 275 is where S&P earnings for next year have been cut back to a little bit. So whatever you say, it's still 21 times next year's number. I guess you would counter that by saying in a bull market,

if the stories line up and right now you have this ability to believe that either the cycle can sustain itself for longer than we expected or it can accelerate to a degree in a private sector friendly way. I mean, I think that seems to be the chatter. And I do think that valuations at the end of the day need a catalyst in order to be able to be a true weight on the market. And what you typically see is that valuations start to fall when you're cutting growth estimates, when you're cutting EPS estimates, when people are getting more concerned about the outlook. So even though we're now pushing up against those 2020 highs, and to your point,

those were 2020 highs based on depressed earnings and the Fed that was growing money supply at 30%, you were flooding markets with liquidity, very different story. But until you start getting a question about growth, then we do think that valuations keep potentially drifting higher. It's why valuations are a poor timing tool.

Really helpful for the five year, not at all helpful for one year. In terms of timing or at least tactical considerations right now, you know, you can't really stand in the way of that kind of momentum move we saw a couple of days ago. Usually that tells you, again, as you say, the trend is pretty sturdy. But what about, you know, expectations for whether we need to cool off a little bit? Well, we are overbought if we look at things simply simple as the RSI. So it is expected or would not be too much of a surprise to see a little bit of a digestion. But to your point, you did see that breadth surge.

You saw the number of 20-day highs surge to 55 percent. You had folks like Jeff DeGraff saying that you've effectively gotten escape velocity. These are things that you typically do not see at market tops. It does not mean that you can't digest the power of the move, mostly if we have something like a CPI that comes in a little bit hot next week, which could jostle markets, for example. So, of course, we have to keep those things in mind, but usually the track record of breadth surges is positive. It is. It's certainly eventually positive. Almost

everything, when you dial it ahead 12 months or so, it usually resolves to the upside. Let's bring in Keith Lerner of Truist Wealth and Sandra Cho of Point Worth Capital Management into the conversation. Keith, love your take here on where the market has brought us at this point. You know, the 6,000 level, it's above most strategist targets for the end of the year, well above the median, I think. Where do you think we should expect to go from here? Yeah, well, hey, Mike, great to be with you and Cameron and crew. It's been a strong market and we've been trying to keep things pretty simple in our work, right? I mean, you've talked about it, sticking with the primary trend, which is still positive. We do have the Fed still on our side.

Even if they skip a meeting, they're more likely to ease than raise at this point. We have global central banks easing. And we tend to look more at forward earning estimates or the blended estimates. Those are still moving higher, albeit at a slower pace than they have before. Valuations, which the discussion has rounded around, are discussed, is high, as Cameron's mentioned. It's tough to make a short-term trade on valuations. I think that tells us more about the long-term returns are likely to be somewhat lower. We also know that credit spreads today are at the lowest level in decades. So that's also showing some confidence as a whole. And then finally, you know, seasonality, when we are up big through October, more than 15 percent for the S&P 500. The final two months have been up 19 out of 20 times. So I think that's all positive, Mike,

like you said, like when everything seems like it's all working well, it's like what's going to hit us? I mean, there's probably something from left field sentiments getting maybe a little bit stretched, maybe some choppiness after this round number. But all in all, we still think that you want to stick with that primary uptrend. Fair enough. And Sandra, if you talk to clients here after the election, you had this focal point of anxiety and expectation around it. Now we have resolution. The market has relaxed a lot. We're up 25 percent in the S&P 500 year to date. What would you be telling them in terms of whether, you know, the world has changed in a favorable way or it's more the same or should we expect some give back? Yes, I mean, you know, this is post-election and we knew

that half the population was not going to be happy with the outcome. And so I am dealing with clients that, you know, are unhappy. But what I focus on is that the elections are over and the markets like certainty. And I agree with Cameron as far as, you know, there is momentum and Keith, that there is momentum in the markets right now. A few weeks ago, I called S&P 500 at 6,000 by year end. And, you know, we hit it today. So now we're looking um our base case is 61 20 for year end we do think that you know the market is going to continue this trend and it's going to be strong we look at consumer sentiment it's up and um you know we do think that the year is going to end um you know well yeah that would be another just couple percent from here uh 61 20 here cameron i

guess the question too is whether the character of this bull market has changed at all. You know, there is this sort of pretty clear message on Wednesday's market action where it was like, OK, let's just execute the textbook Trump trade, which is small caps and financials and cyclicals value to some degree. And then actually a lot of stocks were down, like defensive stuff and yield sensitive. To what degree are we making any kind of a short pivot? Or is it, again, not necessarily that much of a shift? It seems like we played that 2016 playbook for one day versus what happened in 2016 is that lasted about two months. And then it started to give it back up. So one of the things

we're watching really closely is growth versus value. Very simple ratio, but you continue to see growth still outperform even post-election, which just suggests that maybe some of that leadership in the Mag7 that everybody is expecting to start to fade, at least for now, is hanging in there. And maybe that is because of Tesla's strength. So clearly, there is a difference today versus what we had in 2016. And so it's a question of do we see a continuation of things like the small cap trade, even though you are seeing small cap earnings continue to get cut, valuations aren't that cheap. So clearly, there's a lot of questions as to how far we can extend the Trump trades. Yeah, Keith, weigh in on that, just in terms of whether it's time to step away from the sort of growth quality leadership we've

seen in this market for a while, the market cap weighted S&P, and decide to get either more cyclical or look for laggards. Yeah, you know, it's interesting, our work, you know, our overweights right now are from three different aspects. We have technology, which we've been, you know, overweight most of this year. We think the AI story is intact and earnings are intact. We're overweight financials even before this. We think if the economy stays resilient, credits tight, M&A picks up, that's all good for the financials. Technicals are good. And there are also overweight utilities, which, you know, historically have been defensive, obviously a little bit of a derivative play on AI.

Yes, AI didn't feel great about utilities. Today I feel better. So it's almost as if it's not just tech. I mean, this week, too, you have financials, industrials, energy all up over 5%. So I just don't think it's an all or none. I think there's opportunities within. And, again, we're playing it from those three sectors specifically and still tilted to the U.S. I will say globally, Mike, I mean, it is a big week of U.S. outperformance.

We've been Team USA for some time. And, you know, that's something that happened during the Trump trade of 2016 and we think continues into the end of the year. Yeah, I mean, it does get tricky at some point if the argument is value is going to take over from growth and the U.S. is still going to outperform the rest of the world. But, you know, stranger things have happened. But it seems like those things push against one another a little bit. No, Keith? Yeah, and that's why we're not, I mean, we're pretty much neutral on value and growth. And I will say, I mean, I think it's good for us to be thinking about what can go wrong. I mean, Cameron alluded to this, like in 2016, that was arguably a bigger surprise.

Yields were sub 2 percent as opposed to above 4 percent. The deficit's a lot bigger. And so far, the market is really focused on all the positive aspects, you know, lower taxes, deregulation and really kind of putting off the OK, what happens with tariffs? And arguably the policy outcomes is wider. So at some point, I think there will be a counterbalance for that market and sentiment. But maybe that's going to be a little bit delayed. Maybe it's later this year or really more likely in the first quarter that we have to deal with some of that policy uncertainty. Yeah, I mean, what stand as basically reflationary policies into an economy that's been kind of barreling ahead for a while and we've tried to get inflation under control is sort of a funny mix. Sandra, I wonder what your thoughts are about the bond market here. It's been, I guess, commonly said that it seems like treasury yields could be the arbiter of whether

this policy mix has runway, whether equities can hold their valuation. We got a little bit of a scare from among some people that the 10-year yield was going to get maybe unanchored here. It's not yet done that. After the Fed cut by 25 basis points, we've kind of calmed down. How do you think about bonds as an investor at these levels? I think bonds right now for year end, I think they're going to be steady as far as that goes, because, I mean, the only thing that we see is that yields are pretty good right now. And we think that that's going to finish the year. But for 2025, the concern is, as you mentioned, that if inflation starts to tick up, the Fed might pause

and then that might, you know, kind of upend things just a little bit. So we're really keeping a close eye on that, especially if tariffs are implemented in the way that the Trump administration has mentioned. If they're imposing like a 60% tariff on Chinese goods, you know, that really could throw things around. But we really think that that's just posturing in order to come to the negotiating table and implement better trade agreements. So, you know, that shouldn't manifest because it would hurt U.S. companies. And I do think that the administration knows that. Yeah, well, we'll see. I mean, that shouldn't manifest because it would hurt U.S. companies. And I do think that the administration knows that. Yeah, well, we'll see.

I mean, that also mimics 2016-17, actually, right, where the market quickly seized upon the positive aspects of policy. And then 2017 was full of, you know, trade war headlines that would hit the market at least short term. And maybe we get the reverse this time because we don't get the negotiations around taxes until the end of 2025. So the prospect of actually lowering that corporate tax is something that we would get

towards into 25, into 26. But we could get tariffs right away and have to contemplate what that means for things like the dollar, what that means for cyclical companies. So maybe instead of getting the good news first, like we got last time in 2016, we get the bad news first. That could be, although I've often thought that the best kind of tax cut is one that's on the way. I mean, because if you think about it, it was a year before the law was passed and the market was willing to just pay for the prospect of it over and over again. I guess the other piece of it tactically,

and Keith, I'll ask you this. You mentioned seasonal effects. You mentioned this tendency of strong years to finish very strong and this compulsion of people to make sure that they're participating toward the end of a year. Is positioning right now among investors, is exposure to the market, do you feel it's low? Is it middle? Is there still room for it to expand safely? I think probably middle high. I think, you know, if we remember right before the election, we saw the put the call ratios spike. The VIX was above average. So very quickly, we've seen, you know, that that fear go out the window. And we saw the VIX plummet, as you mentioned earlier, put the call ratios kind of plummet as well. So I don't think, you know, the one thing I always have to write down in November, December of doing this is like seasonality and sentiment tends to be trumped by the trend,

no pun intended. So I do think that's probably something more weary for the first quarter. But I do think we have a bit more to expand before year end. I don't think sentiment is extreme at this point because there was so much nervousness and anxiety heading into the election. Yeah, I do guess that's the question, Cameron, is kind of just how much has already been burned off. And does it matter? Because you hear people say, well, there's no reason to sell at the end of a year. And so therefore, the market can kind of just continue to ratchet higher. And the question is, does that create a pull forward potentially of returns from 25 into the end of 24? Because we do know that if you're sitting on big gains because you've had a strong year, why would you recognize those gains in trim positions today versus waiting a couple

of months and delaying tax payments for 16 months? So we do think that it's likely that we do get a chase into year end, but then that creates a scenario for 2025 where you have even higher valuations even more stretch positioning which is why our base case for 2025 is more high single digits to mid single digits types of returns very different than the 20 plus that we've gotten this year sure although maybe on top of i guess it's like 37 over the last 12 months many people would would take that. We'll see. Cameron, good to see you. Keith and Sandra, thank you very much. Appreciate the discussion today.

Let's send it over to Seema Modi for a look at the biggest names moving into the close. Hi, Seema. 44 minutes left in trade, Mike. Shares of Sony are on pace for their best day in more than two years after reporting second quarter results. Earnings grew almost 70% year overover-year, beating estimates while revenue fell short. The results were boosted by strong growth in its gaming and network services division, with Citi analysts crediting cost improvements from the latest PlayStation 5. Meantime, shares of Pinterest are plunging after 15%, about 15%, after it reported weak revenue guidance for the fourth quarter. The company's CFO telling

analysts on the earnings call yesterday that a slump in advertising revenue is likely to continue. Pinterest still beat on the top and bottom line for the third quarter and improved a share repurchase plan of $2 billion, but it hasn't been enough to boost the stock today, Mike. All right, Seema, thank you. Talk to you again soon. We are just getting started. Up next, former Fed Governor Frederick Mishkin tells us what he's expecting from next week's CPI print. That is after this break. We have the S&P still holding above 6,000, the Dow above 44,000 for the first time and the S&P 500 crossing above the 6,000 mark. Investors bracing for a big week of economic data next week, including the October CPI print on Wednesday.

Joining me now to discuss what it could mean for the Fed's December meeting and beyond is Frederick Mishkin. He is a former Federal Reserve Board governor and a CNBC contributor. And Rick, it's great to have you here. I mean, you know, yesterday's Fed decision and Chair Powell's press conference really conveyed a sense of comfort by the central bank in terms of where they seem to be situated in the way of policy, not wanting to really stoke too much drama or suspense about the next move. Does that does that fit for you? Does that make sense given the conditions? Yes, it does. The inflation numbers have been looking good. And actually, the economy has been very strong. But that's good news. As long as inflation numbers are good and coming down on this glide path down to 2 percent, which seems to be what's happening,

having a strong economy is just a terrific thing. I mean, the Fed should never be seen as being hostile to an economy that's doing well. It only wants to limit the economy when it's growing so fast that, in fact, inflation is heating up. And that doesn't seem to be happening so so far so good. This is looking- nobody would. Expect it to be as good as it is now that the. That is really looks like it's getting in soft landing there that it wants. It's big issues

are going to be coming down the road by the way. Which are those issues I mean do they include the coming inflation numbers because there has been a little bit of a sense that. Yes massive improvement going in the right direction but perhaps a little bit of a pause in the disinflation

process. So I'm actually looking longer term than that. But also remember that monetary policy takes a long time to have an effect. We've just had an extraordinary election and the election of Donald Trump as president. That's going to create some very interesting challenges for the Federal Reserve. So one of them is the issue of Federal Reserve independence. As many people know, Trump was extremely critical of the Federal Reserve when it wasn't lowering interest rates to his liking. Trump tends to be a low interest man, just as he says he's a tariff man, he's a low interest

man. And when Jay Powell comes up for renewal, it's extremely unlikely that he'll get re-dominated. And then who knows who Trump will put in. And interestingly, you know, so far the Trump appointees worked out not because they were all great, but because Jay Powell was brilliant in dealing with Congress so that, in fact, only the good appointees got through. I think that that's less likely to happen in the future Jay is Not going to be there So in fact that presents huge challenges for the feds particularly that will be coming up towards the next election

So that's going to be a huge challenge for the Fed a lot of pressure on the Fed to to keep rates low to boost the Republicans. That could lead to a lot of inflation, particularly if Trump chooses somebody who is willing to be, quote, a low interest rate person. Yeah, I mean, of course, Powell yesterday pretty unequivocally says, obviously, he does not believe the president has the authority to fire or demote him. So he's going to serve out his term. And that being said, too, even though there is the potential, as you suggest, for a lot of friction, the Fed's already easing. The economy is already strong. It's almost as if there'd be nothing really to blame the central bank for at this point. So, you know, why would would that come to a head? Well, because it's two years from

now. So that's going to be a very, very, very different environment. We just don't know. And it might be that the Fed is faced with some inflationary pressures and has to raise rates. And Trump would be very upset about that. And that could mean that he'll pick somebody. They've talked about that he wants to choose somebody who will agree to talk to him and consult him about interest rate decisions. That's completely something that should not happen. It should not be something that is a good thing.

The independence of the Fed has actually served us extremely well in terms of actually keeping inflation under control. And it's been a linchpin of both academic research saying that that's good and actually the Congress and the president in the past have done that. Trump has been an exception in recent years, and it could get even more difficult given that this time around, I think he's not going to make the mistake of appointing somebody like Jay Powell. Instead, he'll want somebody who he can pressure much more easily. What would you look for in the way of market behavior to suggest that there was anxiety building about the implications of a Fed that was less independent? Well, you even see a little bit of it now.

The long bond rates are up. So you know, the bond vigilantes watch this very, very carefully. And by the way, it's not just this issue of independent. It's also the tariffs. So you know, again, there's two things that Trump has said about macroeconomics. One is a low interest man and second is a tariff man. And in those cases, the tariffs actually will create, again, very, very difficult problems for the Fed because they would, if they get implemented, we don't know, that would actually

raise prices. And in fact, it's like what we call a supply shock, a negative supply shock, something that raises prices, which creates more inflation. And then the question is, what should the Fed do about it? So I don't see a problem for the next couple of years right now. But boy, two years from now, it's going to be a very, very difficult environment for the Fed. And we just don't know how it's going to play out.

Again, we really don't know how this presidency is going to play out either. But particularly, I think that there will be super big challenges for the Federal Reserve at that time. And, you know, who the president is does matter on that, particularly in some policies. Yeah. I mean, I guess there's some research suggesting that the Fed ought to look through one-time price adjustments due to tariffs. Absolutely. But who knows what that means and what else is going to be going on at the time. So as you suggest, maybe some room for plenty of drama as we go along.

Rick, great to talk to you. It'll be interesting times, which is great from my perspective as a scholar, but not necessarily great for the country. Yeah. Some would say great for, you know, for the news business, too. We'll see if that plays out. Rick, thank you very much. Appreciate it. You're very welcome. All right. Up next, RBC's Laurie Calvacina is breaking out her post-election playbook. She'll tell us where she's forecasting opportunity in the market under a Trump administration. She joins me at Post 9 after this break. And don't forget, you can catch us on the go by following the Closing

Bell podcast on your favorite podcast app. We'll be right back. Small caps surging since the election, with the Russell 2000 having its best week in more than four years. But is that trade getting ahead of itself, or is there more room for it to run? Let's ask RBC's Lori Kalvasina here at Post 9. Lori, good to see you. Good to see you, too. This is part of a general set of questions of what, if anything, has changed given what happened with the election and just general economic conditions and exactly how it should play out from here. So, look, I think with small caps in particular, we got another reason why they could continue

to do well fundamentally, and that's inherently a by the USA trade. And so if you and I would also add corporate taxes onto that. So if you look back to the history of the first Trump term, we had three distinct trades into small cap. None of them lasted. It was a very fickle market. But in 2016, we got a big surge up on economic optimism around Trump.

2017, another one on the corporate tax cuts, which small caps benefited more from. And then if you remember, this one's a little more complicated, but in 2018 when there was all that optimism on the China trade war that China's going to have a recession, rest of the world's going to catch a cold, but the U.S. is going to be OK, people surged into small caps then. That all unraveled at the end of the year. But we did see precedent for that. And I think there's, you know, a combination of trade. There's a combination of tax cuts and just general excitement. You know, you have to remember half the country or more elects the president. We do usually see risk assets take off after

because the winner does usually get that endorsement. Yeah. You could also even add just an anticipation of more M&A activity and just a general maybe higher metabolism capital markets. But what about the other adjacent aside from small caps? I mean, essentially, you know, it's sort of interesting how the template for 2016 was, well, you got to buy cyclicals and banks. Yeah. Well, that's the stuff that actually been working for months, at least on a relevant basis. So, you know, what's interesting after the day after the election, I went back and looked at elections and leadership shifts in the market. It started out as a small, large project. It shifted into a growth value project and looking at a bunch of other stuff. Back in 2016, we had already started to see a shift into growth and that that lasted for quite

some time. When Biden got elected, you saw a shift into value and that lasted a number of months. But I came away from the study thinking, you know, when we get these political leadership shifts, even if some of these style shifts in markets have already gotten started, there just does seem to be something about changing the political dynamics that results in a leadership shift within the equity market as well. So I think we have to take seriously the idea that some of these things, even though they got started already, may have at least a little bit more room to run. Does the at least expectation of some of the policy movements give cover to where valuations are right now? Does it really change the equation in terms of what you can expect the market can deliver given how far we've run?

Yeah, so I think let's just look at corporate taxes in isolation. That's an easy one. We all lived through that one. And what I remember about that 2017 period and even kind of 2016 was we didn't know exactly what the new rate was going to be. It was kind of all over the place. By the time we really got to what it was announced as and the legislation was passed, a lot of the trading had already happened. And so this vague idea that earnings can be higher because taxes are going to come down, maybe it's just a paper E, right, that's increasing, but that can boost animal spirits. And I think some of that is feeding into the market right now. Now, I will tell you, I have cautioned people when I heard Trump speak in New York at his speech at the Economic Club. He did talk about a tax cut with conditions for domestic producers.

I'm not sure the street fully understands that. I don't think we really understand exactly what a tax cut with conditions for domestic producers. I'm not sure the street fully understands that. I don't think we really understand exactly what a tax cut might look like. But I think the market is giving Trump the benefit of the doubt on that one right now. Yeah, I mean, that has been the pattern too, right? You sort of front load the anticipated benefits and then see if the details conform to that or not. I also, I mean, we can think back to 2017 where it was like company by company was pressured to come out and suggest how they were going to spend the tax cut.

I mean, it's a crazy thing to recall. You know, I was telling my team that's the first time I started reading earnings call transcripts. Oh, yeah. Because we wanted to get that color from companies on, one, how it was going to benefit them, and, two, what exactly they were going to do. Now, we already also, interestingly, have, you know, a CapEx boom, mostly seemingly happening because of AI and then some of the, you know, the fiscal measures out there. So is that going to be accelerated from here? I mean, it just seems as if, again, it's a lot of the policy stuff is an accelerant to what's already been happening. So I would say if we're thinking about tech and AI specifically, I spent a lot of time during this, on this during the campaign season. Both candidates seem to come out in the same place to me as friendly to AI. You know,

at Trump's speech again, he was talking about how we needed all this additional electricity, you know, a generation, I think it was maybe Bitcoin, not AI, but he generally has seemed to be supportive of that. And that was something I was very focused on to see if we were getting any negative comments on AI or tech, because that would be negative for the market. And frankly, I just didn't see it. Now, I do think there's, you know, sort of a separate issue. When we look back over the last few months or few quarters, a lot of companies have been talking about how their orders are slowing down, their customers are hesitant because of the uncertainty associated with the election. We've kind of moved into a situation where the election's not uncertain, but policy is somewhat uncertain.

I'm going to be curious as we're reading the off-cycle reporters, listening to conference presentations, is that uncertainty alleviated enough? I think that's another thing markets have been cheering. I'd like to see what companies are saying about that. It's interesting because you could always find an excuse to not do something or to worry. And we'll see if companies do. You talk about some companies talking about front-loading orders to get ahead of tariffs and all the rest. So it could be noisy. Yeah, no, it's true. And, you know, what's interesting about the market action today, you mentioned tariffs.

I mean, it's an up day in the market. Not, you know, as off to the races as we were, you know, the first day after. But I was looking at the performance. The defensives are leading. Materials is lagging. There's been this whole debate in my meetings, at least. Do you play attention to the 2016 Trump playbook or the 2018 playbook if you're worried about the tariffs? The market's not down today. It's managing to take it in stride. But I'm seeing that old tariff playbook from 2018 showing up,

because back then, if you look from March to December at the height of the China trade war, it was the defensives outperforming. Materials and industrials were lagging. And industrials isn't quite conforming to that today, but the rest of them are. Interesting. Yeah, no, it's worth a reminder. A lot of stocks are down today. Breadth isn't so great, but it is selective.

So, Lori, great to talk to you. Thank you. Great to talk to you, too. All right. Up next, we are tracking the biggest movers as we head into the close. Seema is back with us. Hey, Seema. Mike, it's been a tough day for two restaurant stocks.

Those names coming up after this short break. About 19 minutes till the closing bell. Let's get back to SEMA for a look at the key stocks to watch. Mike, shares of Blumenbrands are on track for their worst day since June of 2022 after reported a weak outlook and declining same-store sales. Traffic at Outback Steakhouse fell about 4%. Bonefish Grill fell about 8.5%. The company also refranchised part of its Brazil operation, but that did not boost results. You'll see shares down nearly 10%. Let's talk about Sweetgreen, also moving lower after the salad chain missed on the top and bottom line. Same-store sales grew 6%. The company raised its sales outlook. Despite today's drop,

we are looking at the stock up about 240% this year, Mike. Wow. Yes, not too bad. All right, Seema, thank you. Tesla shares touching their highest level since April of 2022 as optimism around the Trump administration's impact on the company boosts the stock. That market cap crossing a trillion dollars again today. Joining us now is Jed Dorsheimer of William Blair, who has an outperformed rating on the stock. So, Jed, if you had to explain with some level of specificity why the stock is up so dramatically over the past couple of weeks around the election. Could you bring it back to what it means for the company? Yeah, I think so. I mean, Mike, you kind of have two things going on and you have a little bit of a yin and yang, mostly on the yin on the positive side, I guess, which is, you know, less regulatory

burden on Tesla. So if you look at the big opportunities for Tesla, it's probably going to be, you know, and this takes away or if you take a step back and you say, hey, Tesla is not just an auto company, but it's, you know, is it a bigger, whether it's an energy, how we look at it or an AI. And one of the big risks for RoboTaxi, which they just rolled out a month ago, is the regulatory burden on that. And so I think what you're seeing here is a reduction of the risk that Elon's involvement in the Trump presidency is going to be able to probably ease Tesla in getting over that automated vehicle AV hurdle. On the negative side, you clearly have the IRA and risk around that, that's hitting all of the solar names, some of the solar names that we cover right now.

But if you also dig under the covers and a bit deeper of what Trump has been saying, you know, it's unlikely that he's going to be targeting domestic content. And Tesla has more domestic content for batteries, for energy storage, and for autos, including EV, than any other company. So I think that's what's justifying the move here. And it's clearly a momentum move. Well, exactly, yeah.

I mean, I guess, you know, we have been at these prices before and even higher. The stock was around 400 at the peak. But there has been a huge deceleration in terms of, you know, obviously growth rates and earnings estimates being cut for this year and next. You think the market is going to continue to kind of look past that? I think it's probably in this the opposite of shoot first, ask questions later. You're getting all the benefit right now because, you know, you've got a couple of months before any policies can be enacted. And so I think I think you're getting the bet. You're getting the best case scenario. And I think that's going to continue to play out here. You know, if you looked at the, you know, if you cut the tax credits for EVs, that would have a pretty meaningful hit to gross margins for Tesla. So

obviously you're not getting that to play out. And I think this lasts for a while. Yeah, there has been a lot of talk that, you know, other automakers would be more disadvantaged if those EV credits perhaps went away. But obviously that's a kind of 100 percent profit margin revenue for Tesla when they get bought. So, Jed, we'll have to leave it there. Of course, we agree with that. From a long perspective, you take the, you know, duration of the long term, you know, that would be a real positive for Tesla. All right. We'll see. Jed, appreciate it. Have a good weekend. Thank you. Thank you. You too. Thanks for having me. All right. You got it. Still ahead, shares of Expedia and Airbnb moving in opposite directions. We'll drill down on those moves coming up. Check out shares of Cloudflare sinking in today's session.

The stock down about 4% after issuing weaker than expected guidance. And don't miss an exclusive interview with the CEO of Cloudflare. That's coming up in overtime at 4 p.m. Eastern. All right, up next, it's been a big week for the banks. We'll break down what's behind that sector's bounce and what it might mean for the space in the new year that and much more when we take you inside the market. We are now in the closing bell market zone. Seema Modi is watching two travel stocks moving in opposite directions after earnings. Leslie Picker is here to break down the big moves in the banking sector this week.

And Mackenzie Segalos on whether the sharp rise in fintech stocks may be overdone. Seema, a couple of travel names moving on results. Yeah, we have Expedia higher, Airbnb lower. Let's start with Expedia though, Mike, because shares are rebounding after the online travel operator raised its outlook. And CEO Arianne Gorin reiterated her focus on efficiency while also finding new markets to grow in. RBC Capital's Brad Erickson touting Expedia's home rental site Vrbo, which returned to growth for the first time in over a year.

It's a sign to Wall Street that Expedia's marketing initiatives are starting to pay off, shares up about 4%. Meanwhile, Airbnb missed on earnings and lowered its 2025 outlook due to rising costs associated with expanding overseas, where executives say it's underpenetrated. Bank of America writes that from a valuation perspective, it's trading at a premium and that there are other ways to get exposure to the leisure travel trade, especially now that more people are returning to work. You'll still see Airbnb up on the year. Back to you, Mike.

All right, Seema, thank you very much. Leslie, the banks haven't really quit yet. No, they sure haven't, Mike. That Spider Bank ETF up more than 10% this week alone on pace for its best weekly jump in a year. Most of those gains, of course, coming from the day after the election, where investors bit up the sector on fervor around potential deregulation. When asked by our Sarah Eisen earlier today whether the election changes

her outlook, Citigroup CEO Gene Fraser said, quote, we are expecting broadly this to be pro-growth and beneficial. Fraser said the election results unquestionably helps the prospects of dealmaking and financing. We see a good, positive outlook. The pipeline is strong. And I think now it's game on in areas that have been more restricted. So we're expecting to see the return of the sponsors in a much more meaningful way now. We've been waiting for that. That whole ecosystem has been rather gummed up. And now with the valuations that we're seeing and with the markets very much open for business, I think we can declare the sponsors will be back. Now, among the big six, Morgan Stanley and Goldman Sachs,

two firms perceived to have the most upside in a revival of capital markets were the biggest weekly gainers this week. Mike. All right, Leslie. Thanks. Yeah, that Goldman move is pretty stunning. All right. Take a quick look at shares of Spirit Aero Systems. Seeing a pop in just the last few minutes after a Reuters report said Boeing was close to a funding agreement with Spirit, which is one of Boeing's key suppliers.

The report says the agreement could be announced in the next few days. That pop did dissipate a little bit there, but you can see on that intraday chart where it did respond to the headlines. Mackenzie, a pretty active couple of days in fintech. Yes, you've got Upstart, which uses AI to inform loan decisions, up more than 46% today, by far its best day in over three years. And that move really represents how fintech is now becoming part of this Trump trade. Toast is 14% higher. And then there's the crypto proxy stocks that have been surging along with Bitcoin. Week to date, Robinhood is up 28% and Coinbase is 50% higher on the back of the election.

Analysts are trying to figure out whether that move is warranted, though. Coin stock is showing signs it's very close to being overbought. The question now is how sustainable this rally is with potentially less regulation and a pro-crypto president. Mizzou host Dan Dolev says that names like Shifor, SoFi and Marketa are poised to rise. And even though you've got Block and Affirm trading lower after reporting results yesterday, a more friendly business environment under the new administration could boost shares long term, given that both these payment firms focus on SMBs, Mike. For sure. Although, Mackenzie, you mentioned the expectation of perhaps lighter regulation

on crypto and Bitcoin and other coins have obviously responded to that, anticipated and then responded to the election results. What specifically do you think folks in that market are anticipating here? So the big regulatory shift that the industry is expecting is a change of leadership at the top of the SEC. Donald Trump explicitly promised to fire Chair Gensler on the campaign trail, who, remember, has brought more than 100 enforcement actions against crypto companies. Trump can't do that altogether, but he can install a new head of the commission, one who might go softer on the sector. And analysts say that that is a big part of what's driving Coinbase and Robinhood higher since both are facing legal fights with the regulator. And it certainly helps that more than 280 pro-crypto lawmakers won House and Senate

seats this week, which bodes well for finally getting a crypto bill passed into law, which is what a lot of banks have been holding out for, Mike. So aside from a lighter touch on enforcement or going after these companies for alleged fraud, what might be in that bill? I just keep trying to get my head around why the value of the asset is going to go up if, in fact, the government is now sort of endorsing it as an asset class. Well, I mean, there are a couple of things here. So, one, Donald Trump has talked about establishing this national crypto stockpile. So he'd take $15 billion worth of Bitcoin that the government already holds. And instead of auctioning it off, he would permanently keep that out of circulation. So that's just great for price dynamics.

But in terms of the legislation that might be passed through, if they repeal something called SAV-121, it's a niche accounting bulletin from the SEC that would really open the door for banks to custody cryptocurrencies like Bitcoin. That is a real game changer and what I hear a lot of players on Wall Street are waiting for. Yeah, it does make sense, especially because, you know, me and others thought that once the Bitcoin ETFs came out, it was already priced in. And clearly it wasn't. They responded after the fact, too. So anything that broadening the base of owners seems to seems to help it. Mackenzie, thank you very much. Appreciate that.

As we head into the close, the markets, the indexes have lost a little bit of altitude here. You see the S&P 500 has slipped just barely back below that 6,000 mark, still up four-tenths of 1% for the day. Market breadth has actually been a little bit mixed below the surface. You have essentially only about 50% of all volume in the New York Stock Exchange is to the upside. The Dow trying to hold on to that 44,000 level. We still are on pace for an extraordinarily strong week across the board, 4.6% upside in the S&P 500 on the week. The Nasdaq has not really been

the center of things, but the Russell 2000 had that huge one-day repricing on Wednesday up 6%. It is now tracking to be up 8.5% on the week, and in fact, 18% on a year-to-date basis. So after a half a year when nobody wanted any small caps, people have migrated back in that direction. And the volatility index looks like it's going to go out just below 15. One week ago, it was at 22. So a lot of tension released on Wall Street this week. That's going to do it for Closing Bell.

We'll send it into overtime with Morgan Brennan.