Closing Bell - Markets rally after weekend actions in Venezuela, L3Harris CFO on global defense 1/5/25

Episode Date: January 5, 2026

Global risk with Barry Knapp of Ironsides Macroeconomics and Drew Pettit of Citi Research who break down market reaction to developments in Venezuela, followed by a big-picture look at what comes next with Richard Haass, former president of the Council on Foreign Relations. Energy stocks and oil markets take center stage with Andy Lipow of Lipow Oil Associates. Tech outlook with John Belton of Gabelli Funds. L3Harris CFO Ken Bedingfield on geopolitical hotspots and Venezuela.  Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Well, that's the end of regulation. Thrive and asset management doing, ringing the closing belt, the New York Stock Exchange and UPEXE doing the honors at the NASDAQ. Stock soaring today. Following the arrest and capture of Venezuela's Nicholas Maduro, the Dow jumping 600 points, an intraday all-time high, a record closing high. It looks like just shy of 49,000. And it was the first time that it traded above 49,000 in the trading session. The S&P 500 and NASDAQ both up 710. of a percent, a big gain for the Russell 2000, up one and a half percent in this Monday trade. Energy, the best performing sector, as oil gains following the events in Venezuela. We've got much more on oil and the oil stocks coming up. Financial is also with a big gain.

Every name in the group ending the day in the green, big gains for consumer discretionary as well. Utilities to the downside by more than 1%. We're also seeing gains for the metals, gold, silver, copper, platinum, Bitcoin, bouncing back to 94,000 for the first. first time since the middle of November as well. That's the scorecard on Walsh. Welcome to closing bell overtime. I'm Morgan Brennan. John Fort is on assignment at CES in Las Vegas. Coming up this hour, we are breaking down all angles of this Venezuelan story, the geopolitical implications, plus what it means for stocks, oil prices among our guests, Council and Foreign Relations, President Emeritus, Richard Haas, defense stocks among the sectors moving higher today. L3 Harris

hitting an all-time high. Its CFO will join us coming up. as well, a lot to talk about there, including some company-specific deal news. But first, let's dive deeper into today's stock market rally. Christina Parts and Evelace is at the NASDAQ with more. Hi, Christina. Hi, Morgan. We talked about the energy sector. All energy stocks really led the market higher today after President Trump announced

plans to take control of Venezuela's oil industry, saying American companies would help revitalize it following the capture of President Nicola Maduro. Valero, posting its best days since November 2020, while Schlumbergei, Phillips 66, you can see on your screen up over 7% Marathon Petroleum, all posting their best sessions since April. Chevron was the Dow's top performer today contributing to that 49,000 point gain up or closing 5% higher.

In technology, though, the chip sector saw a little bit of mixed action ahead of CES, which kicks off this afternoon. InVD, both closing a lower after Friday's rally, though. Their CEOs are set to speak very soon in the next few hours. But chip equipment names actually cut a bit. SML, applied materials, KLA, you can see on your screen, all 5% or more higher. After Bernstein said ASML's growth from memory demand is, quote, understated, or underestimated, I should say.

The SOX index also hitting an intraday high earlier today. And last but not least, shares of our parent company, Versant Media, falling about 13% in their trading debut here at the NASDAQ following the Comcast spinoff. The stock houses CNBC, other NBC Universal cable network, subsidiaries like MSNow, et cetera, the Golf Channel. And so there could be some selling pressure attributed to index funds divesting post spin-off. We'll see. Morgan?

Yeah, I think there have been some expectations. We could get that. All right, Christina Parts and Evelas, thank you. Now let's turn to the bond market reaction to this weekend's news. Rick Santelli is in Chicago with more. And Rick, we saw a move lower in Treasury yields. Yes, we did. And it would be really hard to point to anything I've seen in foreign exchange or what's going on in the Treasury complex that would point to a Venezuela dynamic.

but we are seeing buying, many may try to point to flight to safety, but just not really seeing it. As a matter of fact, if you look at twos and tens on a two-day chart, what should jump out at you is that the curve is flatten, meaning long-dated treasury yields, have fallen further. But you really can't tell that from the two-day chart because the two-year is not below yesterday or Fridays trading low yields, but the 10-year isn't. But here's where the secret is. Let's open the charts up. Now, if you go to mid-October with a two-year, it's bouncing around at the 345 support. So it's playing around with the bottom of its range. But if you look at a 10-year since late August, it's basically knocking up against the top of the range, which is 419, 420.

So we have two kind of totally different scenarios from a technical perspective here, but the curve did flatten. Right now, two years are down two basis points. Ten years are down four basis points. The curve two to tens is around 70 basis points down from 72. And the dollar index did have some bids early on. One could say that the Venezuelan news didn't hurt the dollar. It was trading well above Friday's highs. But as the day wore on, it really did lose its bid.

One thing that hasn't changed much is the weakness on the dollar side on the Chinese you want. If you look at the dollar versus yuan, it's hovering at the lowest levels since mid-May of 2023, and that dynamic really is accelerated since early November. Morgan, back to you. Yeah, definitely one to watch. Rick Santelli, thank you. Money flowing back into cryptocurrencies, though, following the arrest and capture of Nicholas Maduro, Bitcoin rebounding to its highest level in nearly two months.

Mackenzie Sagalos is here on set. She's got more crypto rally. Is this the new safe haven flight to safety trade here? Or is it something else going on? Morgan, very good to see you. The first five days of January have delivered the perfect storm of tailwinds for crypto, pushing Bitcoin past $94,000 and adding more than $230 billion to the overall crypto market cap. Now, it started on Friday when institutional traders returned in force.

We saw a pickup and net inflows to spot Bitcoin ETFs after a long stretch of redemptions. Then over the weekend, President Trump announced the U.S. would take control of Venezuela's oil reserves. Traders read that is bullish. Venezuela holds more than $17 trillion worth of crude, and if that supply hits global markets, it could drive energy prices lower and ease inflation pressure, which tends to lift risk assets like crypto. And then on top of that, Bitcoin reclaimed its 50-day moving average for the first time since October's crash, triggering a wave of short liquidations as bearish bets were forced to cover. And in derivatives, traders are leaning back into upside exposure.

with open interest building in near-term calls and a lot of that interest clustering around the $100,000 level. We haven't seen that in a while. And perpetual funding rates show leveraged loans are paying a premium to stay in the trade, Morgan. All right, super interesting.

Keep an eye on that for us. Mackenzie Sagalos. Well, market's kicking off the week in rally mode, shrugging off geopolitical shock after the U.S. captured Venezuelan leader Nicholas Maduro. The Dow hitting fresh record highs, energy stock surging,

has investors bet on oil infrastructure to rebuild and limited broader fallout from what's going on in that country. So how durable is this optimism? Well, let's bring in our guests to break down the implications for markets, for investors. Joining me now, City, U.S. equity strategist, Drew Pettett, and Ironside's macroeconomics director of research, Barry Knapp. It's great to have you both here. Drew, I'm going to kick this off with you.

The Dow at a record high. Two days after this highly sophisticated two-and-a-half-hour mission raid into Venezuela. Does it make sense that we see stocks trading here? I think so. Look, when we looked at the data at the beginning of the day, you didn't see a spike in implied volatility across the rates complex. Rick was kind of alluding to that earlier. You didn't see it in oil. You didn't see it in the dollar. When you have all of those kind of cross-asset macro implied volatility reads staying really low, I think it's fine for equities. So to us, look, I think the reaction was fine. This doesn't really change the fundamental premise for the S&P 500. And as long as that's

intact and the macros are stable in the background, that's a really good environment for risk assets. Barry, want to get your thoughts on this very same topic. Oh, you know, I suppose you could have expected some sell-off in crude as a consequence of, you know, a couple hundred thousand barrels coming online in a few months and maybe 6,000 to 800,000 within a year. We obviously didn't get that. And so I think the Venezuelan situation was really a non-event for equities in general. And the theme today is the same theme that's been persistent for the last month or so, which is this whole run-at-hot thesis.

And the idea that growth is going to re-accelerate and broaden out in 2026, we got an isms survey that was weaker than expected. But all that did was translate into a rally in the belly of the Treasury curve and expectations that the Fed is going to wind up providing some more stimulus on the rate policy side. And so that was the theme of the day. We could talk about what happens if we do run it hot,

which is we may very well run into supply problems in the back end of the Treasury market again, this time. at least in part generated by trying to finance the AI infrastructure build out. Remember, we had the second biggest month for the supply of investment grade credit in November we've ever had. So we may get to the end of this month

and find it's something like what happened in 2018 where we start to have a little problem with the back end of the treasury curve again. But for now, I think, you know, investors are willing to give this broadening out theme the benefit of the doubt. Drew, where would you be? putting money to work right now and why?

Look, it's two big themes. It's one, it's inflecting growth. I'm going to play to the run-and-hot thesis here. If you get the Fed cutting and you're in an equity soft landing, you've had so many companies that really haven't had earnings growth for years. It's not just small cap. It's a lot of cyclicals. They should actually go from kind of the negative side of the ledger to the positive side

on growth. So I think you look for inflecting growth. Financial's plays to that really nicely. And then we want to be in companies that are, getting high returns on their growth capbacks. And guess what? That's tech. We are not afraid of software. We are not afraid of semis. I think you can kind of play those two types of separate cyclical and growth beta themes for 2026. Very, I mean, you can make the argument. We're going to dig into this throughout the hour that there has been a major shift in the playbook around foreign policy,

at least as it exists from a U.S. standpoint with this current administration. But the other piece of this, and I think the two actually go together. When you think about how this administration approaches everything from a business-first investment-first standpoint, including internationally, is this idea that, and you talk about this in your notes, that global trade rebalancing is an underappreciated story. So as we talk about a run-at-hot economy, how does that factor in? Yeah, I thought about you on Saturday morning, Morgan, when I got up and my phone was lit up about Venezuela and our conversation we had back in December about this financial news cycle. Yeah, I think there's two really big themes that are underappreciated for 2026. The first is we're calling it the privatization of the Fed's balance sheet, but it's a big deregulatory cycle and this idea that you can shrink the Fed's balance sheet because

less reserves will be required, and that can, in essence, move capital allocation from the Fed to the private sector. So that's one theme. But the other one you bring up is way underappreciated, which is, If the U.S. current account deficit, trade deficit, is truly going to shrink, and like it did in the 70s after Nixon took similar actions, then you are going to have a restructuring of global capital flows. We've seen that in the movement in gold, for example.

We're going to see that in how fixed income is traded and priced globally. And it could be a theme that means another year of a significantly weaker dollar, which certainly good news for a lot of those cyclical companies, Drew, was referring to small caps and the like. Emerging market equities could look pretty good in that environment as well. But there could be, you know, points where we get risk-off scenarios to develop, too, if that dollar sell-off starts to accelerate at any point. I think the dollar was structurally overvalued going into the Trump's second term. So I'm not viewing it as a debasement per se. Okay.

But if the dollar falls two years in a row, it's hard to believe that that would happen without any sort of risk-off scenarios unfolding, you know, along the way. Okay. More will be revealed. Barry Knapp, Drew Pettettit. Thank you for joining me with all the major averages higher today. The Dow closing at a new record high. And the S&P of 610s and 1%, 6902, were less than call it 1%. Less than 1% from a fresh record high there as well. Well, now let's turn to Venezuela, dig a little more deeply here. The country's captured leader, Nicholas Maduro, a pure. during a court in Lower Manhattan earlier today, where he pleaded not guilty to four charges he faces, including drug trafficking charges and narco-terrorism. Now, this comes after the U.S. strike on the country over the weekend, with President Trump now saying that the U.S. would, quote, run Venezuela until a leadership transition is in place.

How does this weekend's move alter the geopolitical landscape? Joining us now, Richard Haas. He is the President Emeritus of the Council in Foreign Relations. He is also Senior Counselor at Centerview Partners. And Richard, it's great to have you back on the program. Welcome. Thank you. Happy New Year.

Happy New Year. All right, so we've heard that commentary from President Trump about running the country. We've also heard Secretary of State Marco Rubio come out and basically say that this is about running policy around Venezuela. This is about continuing to implement this oil embargo and sort of use economic pressure. The term that I keep hearing is coercive diplomacy. What happens next? I think the real question is, to what extent is there a meeting of the minds between the successor leadership in Venezuela and the Trump administration?

Let me let's just take a step back for a second. Whatever else happened over the last few days, it wasn't regime change. It was simply leadership change. Mr. Maduro got shipped out. We now have his former vice president running things. And the question is, is there a meeting of the minds between, say, her and Marco Rubio on such things as American action? to energy reserves, participation of American companies? Is there an understanding on drug trafficking, perhaps on Venezuelan support for Cuba, and so forth? And if there is, my guess is the administration

will simply work out a new relationship with this successor regime. And if there's not, then the administration faces some really difficult choices about what it's prepared to do and whether it's prepared to escalate pressure or escalate its involvement. What is the read-through to the region as well as the rest of the world? Much of the region is not, shall we say, wildly enthusiastic. There's a deep and difficult memories about American interventionism throughout the hemisphere. I think countries like Cuba are obviously particularly worried, as they should be, and not a bad thing that they are, because, again, they've lost the, you know,

potentially the subsidized support from Venezuela. I think other parts of the hemisphere like Mexico, Canada, slightly farther field Greenland, are unnervious, Colombia as well, about this America that seems prepared, shall we say, to act in an unshackled way. And they're wondering what it might mean for them. Yeah, there's a lot of focus now on Iran, too, with protests there and some of the rhetoric that's come out of the U.S. regarding that country and then obviously how that dovetails back into the broader global energy market story potentially, too. Yeah, I think what you had on recently was about right. I think in the short run, there's almost no impact on what happens in Venezuela on the global energy market. You're talking about a country that's producing less than 1%

of global oil output. It's going to take quite a while and a lot of money to move that needle. So I really don't think it's going to make a difference. There's so much surplus in global oil supplies. I think Iran is a more significant player. It produces over 3 million barrels a day, exports around 2 million barrels a day. Some disruption there would have a bigger impact, particularly on China, which takes almost all of Iranian exports. I just think it's a little bit premature, though, to make any confident predictions about how things play out in Iran.

We've seen protests before. The regime there has proven to be pretty resilient. And the real question is, if I'm wrong in the regime were to fall, which, again, in principle, I would welcome. The question is, what takes its place? place. How long is there a period of disarray? And what does the successor look like? The idea that you'd have a bunch of people reading the Federalist papers in Farsi, that's one possibility, but it also could be something rougher and messier. I want to dig a little more deeply into China

here, too. There's been a lot of talk in the last couple of days about whether what we've seen with the capture, the raid on Maduro now sets a precedent for China where Taiwan is concerned. But I think that also misses the point of what's happening in the Western Hemisphere, in the U.S.'s own backyard, which takes us back to the national security strategy, this reinforcement, if you will, the Monroe Doctrine. And this idea that China has used Venezuela and others have two, other adversaries too, but China's used Venezuela as a launch pad. It has now signed on 24 Latin American countries to the Belt and Road Initiative. It has built out an invested in critical infrastructure all over the region. It is now the top trading partner for many of the major countries throughout the Latin American region. And it's been pretty aggressive in saying that its strategy is going to continue to move forward in the U.S.'s backyard.

War games just a couple of days ago, for example, as well. What does this now do to that scenario? It doesn't change it because it was already happening. The drivers there are not the American intervention in Venezuela. The drivers there are American tariff policy. The lack of free trade agreements in the Americas for over. a decade ago now, the destruction of the agency for international development, we've essentially removed ourselves from a lot of what is going on in the Americas, and China's been only too happy

to step into the vacuum. This is an own goal. This is something we have helped China to do, and we ought to be rethinking really hard about the lack of an aid presence and the lack of a diplomatic presence, the lack of a serious trade and investment policy for the Americas. This is on us, and this existed long before we went into Venezuela. Richard Haas, thank you. Great to get your insights today. Appreciate it. Energy, the best performing S&P sector today. It's up more than 2.5%. The biggest moves weren't in the oil giants. Exxon and Chevron, the bigger winners, perhaps unsurprisingly if you track energy, oil field services, Halliburton, SLB, also refiners, including Valero. We've got more on the oil trade

coming up. Plus, the financial sector. Up nearly as much as energy today. Big moves for Goldman Sacks, J.P. Morgan, sending those names to all-time highs. Also, records for Bank of America, Morgan Stanley. What's driving that? We have so much to dig into in this hour. Stick with us. Overtime's back in two. Welcome back. Energy, the top sector today, driven by big moves and equipment and services names like SLB and Alberton, Chevron, the top stock in the Dow. The company is the only authorized U.S. oil major by the U.S. to export Venezuelan oil and has continued to operate there, albeit very small levels. But the move in crude itself, it's more muted, up 1.8 percent, as traders

don't anticipate much disruption to oil markets, at least at this point. In the last few minutes, the White House releasing a statement on oil, saying, quote, all of our oil companies are ready and willing to make big investments in Venezuela that will rebuild their oil infrastructure, which was destroyed by the illegitimate Maduro regime. But many analysts on Wall Street are saying that any material investment or increase in production would take years, billions of dollars to actually execute. So joining me now for more is Andrew Lipau, Lipau Oil Associates President. And Andy, it's good to have you on. And I want to start right there, because there does seem to be this divergence in the public narrative. We just mentioned some of that White House

statement that oil companies are ready to go in. But then we've also been hearing, and We've seen this with some of our own reporting here on CNBC, that companies do seem to be very hesitant to do so, at least right now, perhaps in part because of the governance and stability questions. How does this play out? Well, good afternoon, Morgan, and thanks for having me. I think that the oil companies may be ready and willing under a certain set of circumstances to go back into Venezuela. But in the near term, I think, you know, the industry is looking the Venezuelan oil industry is in such a state of. disrepair. That even to get more oil out of the ground, you've got to go and assess the state of the infrastructure, number one, to get that oil to market, and number two, to significantly

invest in the power grid in order to supply reliable electricity to run those production facilities. So while in the near term, I'm not expecting much change in the amount of oil coming out of Venezuela, we might see some incremental supplies coming out of Chevron, who already has boots on the ground, But as far as having a material impact on world oil supply, you're looking at $10 billion a year for the next 10 years to result in a substantial increase of maybe several million barrels a day, 10 years down the road. Interesting. And, of course, we're talking about heavy sour crude, the most direct competition, perhaps, with Canada's oil sands crude. So if and when that were to come online, and if and when sanctions were to be lifted and those exports were to, to make their way to the U.S., what does that mean for the mix of oil imports, and how does that

factor into the refining capacity, especially when you think about domestic players? Well, certainly, this is good news for Gulf Coast refiners. And if we look all the way back to 1997, the U.S. imported 1.4 million barrels a day of Venezuela in oil. And that would include companies or their successors such as Chevron, Citgo, Exxon Mobil, Marathon, Phillips 66, P.B. energy and Valero. So they're all ready to take increased volumes of Venezuelan oil. And as you point out, that would be competition for Canadian heavy oil. But now that there is new pipeline capacity out of Alberta to the Pacific side, I think China would step in and buy those additional supplies. What you might see on the Gulf Coast is a reduction in supplies

from the Middle East, namely heavy sour crude coming in from Iraq, Kuwait, or even Saudi Arabia. I do want to go back to the China piece of this because Venezuela pumps what sub a million barrels of oil per day. Most of what they export is going to China. You do have this embargo in place. What happens to that supply? And perhaps just as importantly, maybe at least in the near term, if it is diverted away from China, do you start to see the realization of what's going on in Venezuela in real time in spot prices as China goes elsewhere? As China goes elsewhere, into the market to try and make up that crude? Well, it's really difficult to assess where this roughly 350,000 barrels a day is going to go.

Since the U.S. continues to impose sanctions on the shadow fleet of tankers, so that impacts on the Chinese ability to lift oil out of Venezuela. However, if they use non-sanctioned tankers, that would be a workaround that could keep the oil flowing. flowing. Of course, China is losing access to very inexpensive and highly discounted Venezuelan oil production. So they would look for alternative sources, one of them being Canadian oil, but the other could be supplies out of the Middle East. Okay. Angela Bao, thank you for joining me. Thanks for having me. We mentioned big gains for Bitcoin and the financial stocks today. Both of those themes benefiting Coinbase, the best non-energy stock

in the S&P 500 in a trading. It finished up about 7, almost 8%. It's not the only buzzy big gainer, though. Robin Hood, Carvana, Palantir also moving higher. Up next, Mike Santoli. We'll look at whether Risk Appetite is back on the table for 2026. Stay with us. Welcome back to overtime, a bold start to 2026,

with risk back on the menu. some of last year's most speculative stocks catching a bid again. But is it a sign of real conviction or just new year noise? Senior markets commentator Mike Santoli is here. He has a closer look and his take, Mike. Yes, mortgage. So definitely traders entered the first full week of 2026, kind of in a frisky move, grabbing for the higher beta parts of this market,

the more aggressive segments. Here's the high beta, S&P, ETF. You see it's just maintaining this lead over high quality and actually opening up that gap. You see it also trading just about up to a new high. So absolutely, people were racing for the stuff that moves the fastest with the most leverage to underlying market moves related to that. Take a look at Bitcoin compared to the social sentiment ETF, kind of a meme stock basket. You'll see here mostly I'm interested, not so much that the returns are similar over a couple of years,

but that the shape of these charts is the same, right? So in other words, it doesn't look like the S&P 500. They just sort of move together. They peaked within days of each other in October, which was a couple of weeks before the S&P peaked. And by the way, in that buzz ETF, there's obviously the semiconductors like NVIDIA and there's Robin Hood, but also, you know, AST, Space Mobile, and a lot of those more kind of buzzy, long-shot-type futuristic stocks as well. Take a look at margin debt.

So this is investor borrowing. This is the six-month rate of change, how much it's grown over a six-month period of time. And you see here, it is pretty high on the chart. So this goes all the way back to 1990. So there you go. That's the Internet bubble. This is 2020 into 2021. And so we're sort of similar.

And also, we weren't depressed before this. We were coming off a relatively high level. So I don't see this as some kind of big, glaring warning sign of some kind of real market trauma to come. But it does create the circumstances under which you wouldn't be surprised to see kind of a gut check in the first quarter, a build toward an over-optimistic moment in the markets if today's type of activity were to barrel on, Morgan. Yeah, and perhaps just as significant has been the role that retail investors have played

in all of this margin activity, options activity, et cetera. I almost don't think we talk about it enough. But Mike Santoli, thank you. We're going to see it later this hour. Maybe we'll dig a little deeper then. Time for a CNBC News Update with Kate Rooney. Hi, Kate. Hi, Morgan.

The Department of Homeland Security blasted Hilton hotels on social media today, saying DHS officers had reservations in Minneapolis canceled. because of their immigration enforcement work. The department also posted screenshots of emails allegedly from the hotel saying they were not allowing agents to stay at the property. Hilton spokesperson said the location in question is independently owned and operated and that it is investigating the matter. Leaders of the Corporation for Public Broadcasting, meanwhile, or CPB, voted today to dissolve their nearly 60-year-old organization which oversaw government funding for PBS and NPR. CPB has been winding down operations since Congress voted last summer to claw back $1.1 billion in federal funding for public media. And a federal judge today ruled that Amazon

must face a lawsuit accusing the online retailer of failing to prevent price gouging during the COVID-19 pandemic. The Seattle judge called Amazon's claim that Washington state consumer protection laws were vague when it came to pricing unpersuasive. Morgan, back over to you. All right, Kate Rooney. Thank you. you. Shares of NVIDIA falling about 1% today. Not taking part in this rally, but right now, as I speak, NVIDIA CEO Jensen Huang is helping to kick off CES with a keynote address. Up next, we're going to get a live report from Vegas. We're going to discuss whether tech can rally for a fourth straight year of this AI boom. Stay with us.

Welcome back to overtime. A. big markets day. The Dow gaining nearly 600 points, trading above 49,000 for the first time ever. Although it did close just below that level, gains of more than half a percent for the S&P 500 and for the NASDAQ. The Russell 2000 was the biggest gainer of these averages, as small caps continue to catch a bid here, maybe a little January effect action underway. We saw big gains in energy stocks, especially the oil field services names and the refiners, but not just the oil names either. The energy names we associate with the AI buildout also with huge gains today. And shares of microchip moving higher right now in after hours.

Those are up about 4%. The company updating its third quarter guidance now, saying it sees net sales of nearly $1.2 billion. That tops the even the high end of the range of its previous guidance. And it's also higher than the current analyst estimates. So we are starting to see more of this tech news come out, perhaps not surprisingly, amid the kickoff of CES as well. So speaking of that, NVIDIA's CEO, Jensen Huang, giving the keynote speech right now as the consumer electronics show gets underway.

AI expected to be the backbone of the event once again this year. Will it also be the backbone of the market? And if so, which areas will lead this year? Well, joining us now, John Belton, portfolio manager, Akabelli Funds. Great to have you here on set. Welcome. Thank you. Nice to be here.

Let's start right there with this question. 2026, AI, how does this continue to play out? Well, I was just watching the start of Jensen Huang's keynote. in Las Vegas. And first, I'll say, he was wearing an extra shiny leather jacket today. So I think that's a good starting, good starting point for the year. But no, I think fundamentals for these large tech companies, Nvidia included, remain really strong.

I think in terms of the AI infrastructure buildout, it still feels early innings. And I think this year, we're going to see a continuation of AI being adopted across more and more use cases by more and more end users. I find myself in more and more conversations around industrial AI, physical AI, robotics. There's an expectation that that could be a big theme here at CES this year as well. What do you think? Well, that was a big theme last year. And I think Jensen and Vidiya, they're always one, two more steps ahead of the game.

They talked a lot about building a platform for physical AI developers and for robotics last year. I think that's going to continue to be a theme this year, particularly given some of the applications in autonomous drugs. driving and in various applications for robotics. I also think scientific discovery is a topic he started to talk about more and more when I was just listening to that before coming on here. That's what he was starting to talk about. So I think those will probably be two big themes for Nvidia and for the AI market broadly. How do you invest in it, especially given the fact that you managed not one but several growth focused funds? Yeah, I mean, I still continue to like the leaders. I think there's on one head I like investing in the picks and shovels still.

So I like the leaders at the chip layer, all the various companies coming together to create the physical infrastructure and the data center. And then I think the next thing to watch is going to be at the application layer. How does that proliferate? So right now we have agenic software as sort of a new growing theme, see if that picks up momentum this year. And then already mentioned autonomous driving robotics and some of the broader applications as well. So I think having some exposure across each of those layers still feels like a pretty good bet. There's a lot of talk about the broadening out of this market and anticipation that we could see that here in 20206. How do you see it?

And what does that mean from a growth-specific perspective? It was really interesting to feel that in the second half of 2025, particularly in the fourth quarter, the market really broadened out. And, you know, I do still think the large tech companies, the fundamental outlook, is pretty strong. So this is a group, if you take the MAG6, exclude Tesla, because that's a little bit of a different fundamental outlook. This is a group of companies still growing revenues, close to 20%, still growing earnings, north of 30% last year, contributed about 70% of the S&P 500's earnings growth last year. So pretty amazing. There's an expectation or what's being priced in looking forward is still strong fundamentals for the MAG6,

but decelerating, and a nice acceleration outside. the mag six. So I think if that plays out, you are going to continue to see a broadening out in performance. But I do think that's a big if. Okay. John Belton, great to have you on set. Thank you for joining me. Thanks for having me. Well, we'll continue to monitor that Jensen Wong NVIDIA keynote. And we'll bring you some of those headlines a little bit later this hour. Up next, though, the CFO of L3 Harris on what the U.S. military's action in Venezuela could mean for defense stocks as his company's stock hits a record high. They have some deal news as well. two there. Overtime is back in two.

Welcome back to Overtime. The ITA Aerospace and Defense ETF hitting an all-time high today after this weekend's raid in Venezuela, the highly complex Operation Absolute Resolve, utilizing more than 150 aircraft plus ships, space data, cyber warfare. This is global defense budgets

continue to grow amid geopolitical uncertainty, shifting foreign policy and trade dynamics. Well, joining me now in a CNBC exclusive interview, L3 Harris, CFO, Ken Bettingfield, L3 hitting an all-time high today as well, after announcing a deal to sell a majority stake in its space propulsion and power business to private equity firm A.E. Industrial to become standalone company revitalizing the Rocketdyne name. And L3 Harris also announcing a reorganization of its business units today. A lot to get to, Ken. It's great to have you back on the show. So welcome. Thanks for having me on, Morgan. All right. Let's start right there with this deal news because we're talking about enterprise value of what, $845 million, stand-alone company. Transaction expected to happen in the second half of the year. 40% stake. being retained by L3 Harris.

As far as I know, at least in this industry, we haven't seen a deal quite like this done before. So how did it come about and why is it happening now? Well, look, Morgan, I think as we look at our strategy to be the trusted disruptor in defense, creative partnerships have been a part of that strategy, and I think that's what you're seeing here. We have a lot of confidence in this business, and we were looking for a partner that we could work with who could invest to drive the growth in the space propulsion business. while we would be able to continue with our knitting, which is really more so focused on national security, and we can take some of the cash and invest into the missiles business to really drive

the capacity that's needed for the Department of War and its allies to expand missile production. Yeah, and of course, missile production is something that's been talked about and has been a focus of the Department of War for years now, including solid rocket motors, which I know you're in the business of making too. So what does this mean in terms of an ability to reinvest back in that production and ramp it more quickly? Well, we're absolutely focused on ramping missile production, in particular our portion of missiles, largely solid rocket motors, but other electronics as well. We've been working very closely with the other defense primes, as well as the Department of War,

to identify the critical programs that need to get accelerated and ensure that we are doing what we can to drive that acceleration as quickly as possible. So we'll be investing in, you know, new equipment, automation, building factories to drive growth into that, you know, needed expansion. And I think this really will help us to jumpstart and enable that growth. Yeah, I was talking to Kurt Conert from A.E. Industrial, who's on the other side of this deal this morning. And he basically said he thinks deconsolidation is coming to the industry. He sees this as potentially, the first wave of this type of transaction for primes as this disruption happens in the government as we see these policy shifts. How does this speak to the broader industry landscape

and especially as we do see defense budgets growing, but we also see priorities changing? Look, I think it does help to create competition in defense. So if you think about it, A.E. Industrial will be able to invest in growing this business in space propulsive. will be able to take our proceeds and invest more money into the business of capacity expansion on missiles, as I mentioned. So I think it's, you know, a win-win for all customers and certainly does kind of open that door to creating additional competition in aerospace and defense markets. I would assume L3 Harris technology was involved in this highly sophisticated one for the history books, mission that we saw carried out over the weekend.

What should investors understand about the role of L3 Harris in that and in this military complex in general? Well, first of all, I would say, look, L3 Harris supports our customer, our biggest customer, obviously being the U.S. warfighter in whatever their mission might be, whether that's in Eastern Europe, the Middle East, or a potential adversary in China, and certainly any issues here in the Western Hemisphere. It's safe to assume that L3 products and technologies were involved, whether at the platform level or at the soldier level as they executed the mission, and we're certainly proud to support our customers in whatever missions they have, whatever challenges they're dealing with in this continuing, you know, complex geopolitical environment. Yeah, and just your assessment of the geopolitical environment and what it means is we do see defense budgets continue to grow and how that, I guess, comes back to L3 Harris in this demand profile. Yeah, look, if you think about U.S. defense budgets, certainly, you know, there's a 150 plus billion dollars relative to, as we look at the budgets going forward, whether it's to fund Golden Dome or other opportunities, we see that as driving, you know, significant ability for us to grow the business, whether it's at the space level with missile defense or ultimately missile capacity. to drive interceptors that are needed to protect the homeland, and then supporting our allies who are seeing growing defense budgets as well. You know, we've seen a lot of growth, certainly in Europe, as we bring, you know, software to find advanced software to find radios. Yeah.

Since learned out of the Ukraine, you know, war and, you know, how soldiers fight on the battlefield. They want the most advanced technology, and that's what we bring. Ken Bettingfield, great to have you on. CFO of L3 Harris. Appreciate it. Thank you. Overtimes back in two. Welcome back.

InVIDIA making news at the Consumer Electronics Show. John Ford is there, and he joins us with the details. Hi, John. Hey, Morgan. Yeah, Jensen Huang is on stage right now at the Fontainebleau as part of NVIDIA's big presentation here. It's a big CES because, yes, everybody's talking about AI, and NVIDIA is at the center of it.

But now there's a push into more physical manifestations of AI. That's what he was just talking about. physical AI. That's not just robots. It's not just cars. It's physics in AI. And Nvidia has some new innovations talking about there. It's particularly around reasoning, the ability for these systems to make decisions, different kinds of decisions in real time. He also talks a lot about open models and how that's driving the industry forward. I'll have to listen for what more he has to say about the infrastructure piece, that core of Nvidia's business and the next generation of Nvidia's systems. We expect to hear a little bit more

about that but that's coming up and then he'll be sitting down with me here exclusively on CNBC for more of course I have questions about GROC as well that major we won't call it an acquisition it's a it's a licensing deal that got done just inked anyway just a few days all right we're looking forward to that John Ford thank you so tune in to fast money for that conference welcome back to overtime the Dow hitting a new record but is it real strength or just index math. Mike Santoli is here with a closer look at the charts. Mike. Yeah, so it's always both, Morgan. Interesting dynamics driving the Dow to a new record today. You see here against the S&P 500. It has reached a new high. The S&P has not quite. It's about half percent below its own

closing high. But you see it's closing the gap to Dow is. It moves more with value stocks. Value has been gaining on growth. You see how big the gap was back in the fall. We've now narrowed that to a fair degree. However, big moves today in Goldman Sachs and Caterpillar shares, which just so happened to be by far the two highest price stocks in the Dow. It's a price weighted index, really did put the Dow over the edge. And now we have this interesting comparison. The market cap of Goldman, Caterpillar, and Coca-Cola are almost exactly the same. $285 to $290 billion.

You see Goldman and Kat just racing higher. It's a very long-term chart. It goes back to 2001. However, Coca-Cola is a $48 stock. Therefore, Goldman at $9.50 is $14. times the influence as Coke, and Kat has nine times the influence as Coke. So it shows you the idiosyncratic nature of a price-weighted index. I love that you can just rattle those numbers off. I want to go back. I refresh my memory on him, but yeah. I want to go back. Goldman

being a key example. This one, I want to go back to this torrid rally we've seen in financials, including today, what's powering it. Everybody is sure that it's the clearest play on both deregulation, a quickening economy in the U.S., still strong credit condition. and the Fed cutting rate. So those things are basically the bull thesis for 2026 in the nutshell. And financials appear to many people to be just the absolute most transparent and high leverage way to play it. I don't know if it's too crowded this trade or if it's just everybody kind of realizing what the good fundamentals are likely to become. But I tell you, Goldman is pricier than it's been in a very long time to stock. Interesting. All right. Mike Santoli. Thank you.

And of course, financials are one of the best performing sectors in the S&P just behind energy today, with all the major averages, higher, and a focus not only on Venezuela and geopolitics and CES and AMD tonight, but also on macro data, including quite a bit of labor data as the week unfolds. That does it for us here at overtime. Fast money begins now.