Closing Bell - Time for a Portfolio Pivot? 12/14/23

Episode Date: December 14, 2023

Is it time to do your own pivot out of large cap growth stocks and into areas of the market that have dramatically lagged? Anastasia Amoroso from iCapital gives her take. Plus, Mark Okada from Sycamore Tree Capital Partners sees higher rates in the new year. He explains why. And, star analyst Stacy Rasgon tells us what today’s Intel AI event might mean for the stock. 

you you you Welcome back. A minute 45 left in the show. Several more headlines to get to, and we're going to squeeze it in. Starting with the drama at Disney, Tryon announcing it's nominating its own CEO, Nelson Peltz, and former Disney CFO, Jay Rizzolo, to Disney's board. The latest salvo in its proxy fight against the company, Tryon had sought up to three or four board seats. In a statement, Disney defended its current board, saying it's experienced, diverse, and highly qualified. The company went on to say its governance and nominating committee will review the nominations and provide their own recommendations to the board. Okay, a new study from the Pew Research Center found a third of U.S. teenagers say

they almost constantly use at least one of the top five social media sites, including YouTube, TikTok, and Instagram. I think you could probably go up the age scale on that. Yeah. Something like Twitter and Facebook, and people are doing that too. I think this whole decade is going to be about pushback among kids' usage of social media. Maybe it's just because I'm entering that life. Are you pushing back? What's the rule?

They're still too young, but we're already stopping with it. Don't stop touching mommy's foot. I can't even check my email. We had a rule in our neighborhood, no cell phones for the kids until they were 11. Yeah, I think at this point, if you make it to 8, it's like people pat you on the back. It shows how old I am. This year's corporate holiday parties are more likely to be in a break room than a ballroom.

Did someone here pick this because of our party? As companies battle inflation rates and the state of events, they're responding by taking a more low-key approach to holiday and other celebrations at the office, and some people have party fatigue. 55% say they'll skip their company holiday party. So what's the difference?

Did you go to the one? Was there a party? Yeah, that's right. I never get invited. It's here. It's now. It's happening. All right. Steve, thanks for joining us. See you tomorrow. It's been fun. Thanks for watching. We'll see you and you tomorrow. Closing bell starts right now. All right, guys, thanks so much. Welcome to Closing Bell. I'm Scott Wapner, live from Post 9 here at the New York Stock Exchange. This make or break hour begins with the Dow's record high and whether the S&P will be next to make history

following the Fed's pivot. We'll ask our experts over this final stretch how far stocks can run now. In the meantime, your scorecard with 60 minutes to go in regulation looks like this. Stocks picking up right where they left off following Chair Powell's presser. Energy and financials among today's best sectors.

Investors taking a look outside of mega cap tech for opportunities today. Take a look at the Russell 2000. It is surging yet again. And that's even after yesterday's big jump rates. Of course, they're a big story today. The 10 year dipping below 4% on the idea that a flurry of rate cuts are coming next year. And all of that takes us to our talk of the tape. Whether it is time to do your own pivot out of large cap growth stocks and into areas of the market that

have dramatically lagged. Let's ask Anastasia Amoroso, chief investment strategist for iCapital with me here at Post 9. It's nice to see you again. Good to see you. Did the gold posts move yesterday for this market? What do you think? Yes, I think yesterday was an absolute game changer. And what we heard from Fed Chair Powell was that it's not about the economy. It's not about financial conditions. It's not about the jobs market. It's about inflation. And inflation have been coming down pretty far and fast. And if we're at a point where inflation is 2.7 percent by March, the consensus is expecting and interest interest rates are still at 5.5%, that's a big gap that the Fed can do something about, meaning cutting rates.

And Scott, what we've been doing for the last two years has been thinking, rates are high, who's going to get hurt by this, and what companies are disadvantaged? But we're going to have to do the opposite of that and say, who's actually going to be in a good position now the rates may be coming down. Okay so this game changer from the Fed that you you obviously cite what about game changer for investors now put that put put your words into action right yeah what do we need to do now as a result of this game-changing move? Right so this year has been about keeping it simple you go big tech big tech you go maybe some private credit, go bigger, go home,

right? Exactly. And it was pretty big. But I think what you do in 2024, you broaden that out and you look at pockets that have underperformed. So there's a few things on my radar in particular. One of the top performing sectors, at least when I left to go on the show, was real estate. If you look at REITs, REITs and home builders that Joe and I actually talked about last week, they're the top performing sectors because they've been most disadvantaged. They now have a relief rally. You look at bonds, actually of all sorts of bonds, and what we know is yields fall leading

into the first rate cut and also rates fall out after that as well. So if yields continue to fall, bonds can actually rally. And then, Scott, the other thing you and I talked about as well is unprofitable tech. And by the way, when I say unprofitable tech, I don't just mean tech. It could be biotech. It could be all sorts of young, unprofitable companies that have been left behind, and they're rallying hard now. Okay, so there's this idea of whether, which, by the way, mega caps are mostly down today. NVIDIA is a modest winner.

But everything else, whether it's Apple, Microsoft, Alphabet, Meta, Amazon are all down. Whether mega caps are going to be in ATM and some of that cash is going to go into these areas you're talking about. Whether cash itself from money markets is going to just come in by itself into those other areas. I'm wondering what you think about that, because Goldman's Tony Pasquarello, who's pretty influential and he runs their hedge fund client strategy over there, suggests that money doesn't necessarily have to come out of the mega caps to go into these other areas. It can, in fact, come out of money markets as yields come down. What do you think? I think great note from Tony today. And I think he's spot on because mega tech cap does not have to fall apart because, first of all, if you look at valuations

adjusted for growth in earnings, they're actually not that stretched when you look at that forward PE to growth multiple. And, you know, if you have a solid economic environment and the Fed is pivoting, that is still a fine environment for big tech stocks. So I think money comes out of money markets, which pay 5.5% roughly today. But chances are they're not going to be able to pay that, let's say, six months down the road. So I think investors are starting to think about that. They're also looking back at this year. If you've parked a lot of your net worth in cash, you're probably regretting some of that right now.

And so what are you going to go and do? You're going to go and see where the market has underperformed. And you're going to go into the areas of weakness that we saw in 2023 using that money market cash. I mean, people would agree with you, but not everybody agrees where the money is going to go. Like Jeffrey Gundlach was on with us yesterday right after Powell. He's not on board with that. Listen to what he said. I think the logic that people have that money market bloat is going to go into the stock market is wrong. I think it's unlikely for investors to go from risk-free six month T-bills to the magnificent seven at massive PEs and all-time highs on the Dow Jones Industrials.

I think they're much more likely to go from their mountain of cash in T-bills into bonds. All right, that's provocative. What do you think? Well, first of all, I think that's right, that cash is not going to go into some of the largest tech companies that outperform because the ownership of those is something like 29% of the market cap right now. It's just really pretty stretched. But I do think that investors have a unique opportunity, which is they have optionality to look at a number of different things. They don't have to only go into stocks,

and they don't have to only go into tech. You can actually look across, and the opportunities are so much broader now, across sectors and also across asset classes. Now, to Jeff's point, I think bonds are obviously worth a look, whether it's municipal bonds, whether it's investment-grade corporates, whether it's high yield. And I think you may be able to earn an equity-like return by taking some of that duration risk and some of that credit risk. So that's very compelling for investors. But do you

put all of that eggs in that one bond basket? No, probably not. I think you do go shopping for areas of underperformance. And look, we're exiting this year on a pretty high optimism note. And I think that is going to carry over into January. And I think people are going to be kind of looking how to allocate those portfolios and its stocks, its bonds, its real estate debt, its private credit. I mean, it's private equity. By the way, valuations have reset a lot in private equity and venture capital as well. So that's a unique opportunity set like we haven't had in two years. All right. Let's bring in CNBC contributor Joe Terranova now of Virtus Investment Partners into the conversation. Good to have you back. Thank you. Do you agree with Anastasia that this was a game changer yesterday? Oh, this was a clear pivot. This is something that only happens every

several years. And what it clearly did was it accelerated and intensified this massive mean reversion trade that's been in place for the better part of December. And I think that mean reversion trade remains in place as you move through January into February. But I'm a little suspicious that that mean reversion trade is not going to find itself running up into some resistance in the first quarter. So you think you think there's too much optimism about what happened yesterday? It's not like and Powell said it himself. Like I'm not I'm not going to declare victory today. And there's still a lot of unknown. We still don't really know what the ultimate lag effects are going to be. Maybe they're more dramatic than some bulls want to expect. Maybe the economy slows further.

You think there's a little too much optimism with a VIX that is still at 12 and a half? So I know when your birthday is, but I would never say it on air. But if I said to you, Scott, in 2024, when your birthday comes around, guess what I got you today? When your birthday comes around, you're probably a little bit disappointed. And I think the Federal Reserve, to that extent, basically told markets what the present they may give them in 2024 is today. Are you insinuating like we're pulling forward too much? Oh, without question, we are. We're pulling forward a lot of good news, aren't we? We're pulling forward a tremendous amount of good news.

You tell me. Oh, we are. There are those who think that we're not necessarily because, Anastasia, there's still a big bet on a soft landing. And if you can achieve a soft landing and you actually can get really close to the Fed's 2% target on inflation next year, then maybe you're not pulling anything forward. Well, I think near term, I mean, every indicator that you look at of positioning, we are at overbought levels and we're at those stretch levels. But can we still sort of continue

given this euphoria that's now in the market? Probably. But I think Joe is right. In the first quarter, something is going to happen that's going to knock us off balance a little bit. The reason why I still go back to the game changer comment is because if we're in the environment where the Fed is not hiking rates but cutting rates that allows for multiple expansion that allows potentially for upward earnings revisions. So that really just resets the whole investment landscape. So from my perspective, I mean, I hate chasing this market at this point. You know, it's very uncomfortable to buy unprofitable tech after it had something like a 19 percent month. You know, but at the same time, if we do get a pullback, there is a shopping list of things that I'm going to want to buy for that game changer of 2024 of rate cuts. The game changer, Joe, really boils down to whether the don't fight the Fed moniker is back in a positive way, because it does work both ways. We learned our lesson

about trying to fight that in 2022. Correct. And in some respects, in the early part of 23, ex-MegaCap, are we back to a don't fight the Fed, i.e. a lot is going to go up? I mean, bonds can go up. Stocks can go up. Many different parts of the equity market can go up. Maybe just like, I don't know, the dollar goes down. Maybe that gives a bid to commodities.

I don't know. You tell me. Well, I love commodities here. In particular, I like gold and I certainly like silver. Silver's this week is actually finally seeing some significant perform a positive performance. But but gold in an environment where we're seeing yields fall and the economy beginning to decelerate, gold is actually in the commodity space. The one area that I believe you want to own. I don't know. When I think about all this, I wouldn't say fight the Fed because you really have to think about not just the Fed, but global central banks in totality. And the Bank of England, the ECB, they're certainly not giving markets what the Federal Reserve gave the market yesterday in such a dovish tone. I'm positive on 2024, but I'm not overly excited about the early part of 2024 because you mentioned before soft landing. I don't know, to me, the soft landing, we've kind of priced that

in right now. And the expectation is pretty high, isn't it? I mean, we're setting ourselves up only to disappoint. We really have a high bar that we have to achieve in the coming months. There's no doubt about that. Let me just break away for one minute. We do have a market flash. Shares of Shift4 Payments are spiking. On a report, the company could be an acquisition target for global payments. Shares of global payments dropping on that. We're going to bring you the details ahead as we have them. We just wanted to let you know what's happening. Actually, we're going to go to Christina Partsenevel. Are we going to do that now? No, I'm sorry. All right, we'll do that in a second. Back to what you guys were saying.

Yes, well, now, you know, given all this good feeling, of course there's a lot of risk. You don't want anything now that's negative is a risk. Yeah, and I think that's one of the reasons why you don't walk away from the mega caps at this point. Now, look, I run an equally weighted strategy. OK, I'm up 5 percent this week. I'm ecstatic about it. It's great. We're in the right places. Thirty eight percent of the fund has made 52 week highs.

Twenty five percent of the fund made a 52 week high today alone. So I'm going to maintain that strategy. But it's not a light switch. Why are we continuing to talk about the mega caps like you either own them or you don't own them? It's the degree to which you own them. And I think there's going to be a moment where you're going to be glad that they are in your portfolio in the first half of twenty twenty four. If in fact we see economic disappointment if, in fact, we see economic disappointment and if, in fact, we see earnings disappointment. Let's also remember how offsides people were coming into this year in Mega Cab. I'm looking at you, but I'm not looking at you,

because you represent a lot of people who were. Yes. And then played catch-up a bit and now are very happy. Yes. Where you're positioned. The interesting thing is going to be if we have this assumption now that, oh, now money is going to come out

and it's going to go in these other areas and that's going to leave money on a table in an area that is still driven by AI. They still have the best balance sheets, Anastasia. Piles of cash. Right. They don't need to hit the debt markets. They're buying back stock. I'm thinking of Apple buys back more than anybody else, etc. So how do you sell that? Right. Even if we go in an economic environment where other things catch

up, you know, how do you walk away with an earnings growth rate that is, you know, in some cases, double the S&P? How do you walk away, you know, from, as you mentioned, companies, they don't have to rely on leverage. They have plenty of cash in the balance sheets. And do you walk away from, as you mentioned, companies, they don't have to rely on leverage. They have plenty of cash in the balance sheets. And as we're getting some M&A news, I think maybe that's another story of 2024 as well. Maybe it's some of those big tech companies that are deploying cash. And that, by the way, is yet another way to help some of those unprofitable tech positions. But I want to go back to just kind of one stat. I know we're talking about pre-trading a lot of this first rate cut.

Clearly, that's what the markets are doing. But historically, if you look at the last six rate hiking cycles, during the time period when the Fed is on hold, stocks typically rise by 8%. And if you look at the six months leading up to the first rate cut, stocks rise by 9%. So I think that's pretty powerful history, you know, for me to justify an equity market that's worth staying in. So, Joe, I'm looking at energy, which is up 3% today. It is the best performing sector by a lot. You have described that sector as, you know, this is like

the moment of truth this month. Yes. If you don't get something going soon, this trade is going nowhere. So now you get the Fed doing what it did, the dollar dropping, energy's ripping. Is this the moment? Is this finally it? So as someone who is overweight energy, I would guide the viewers to step extremely cautiously into the energy trade. Not only has oil declined significantly in the last several weeks, natural gas is down 14 percent, 14 percent in the month of December alone. Energy right now is an oversupplied sector. It needs to work off the oversupplied conditions. I'm not sure if the market is as long as it was coming into December, but the market was overweight energy coming into December. And for those who

can't do anything about it just yet, like myself, okay, you're sitting with that overweight positioning and you know the fundamentals are actually against you. Just to remind people, because I don't want to assume everybody knows, the reason why you say I can't do anything is because you run the ETF. We have specific periods where you rebalance. Correct. Right. We have a quarterly rebalance. The next one would be the last business day of January. OK, I just wanted to make sure everybody's clear on that. Energy. What about it? I mean, earlier in the year, I would have thought that this is a sector worth owning for geopolitical risk hedge, for inflation risk. But I think we're in a pretty different state now, especially with inflation decelerating. It's hard to make that case.

Look, demand is as good as it gets, and supply is abundant. So I don't think it's a top call into 2024. I think it's market weight at best, because as Joe mentioned, we need to work down some of that oversupply. I want to put you on the spot, both of you, real quick before I go. Most surprising sector of 2024, given what just happened with this alleged pivot, if it truly is going to be that, and you're going to have the rate cuts that the market expects. Joe, you first. The most surprising sector of next year that not enough people are talking about is what? I know I'm putting you on

the spot, but there's enough. There are not that many. I would look at the list in materials, you know, in an odd way. I think it's communication services because I actually think the performance is going to be there. And I don't think people expect the performance to be there. I don't see the mega caps. I don't see technology. I don't see communication services falling apart. I don't see the catch down. I see the catch up in the market,

but that doesn't mean you move away from those sectors. Communication services can come right back next year and have a really strong year. Okay. Anastasia, same question. You've had a little more time to think about it than Joe did. I guess I'm not on the spot anymore. Thanks for that minute. But I think commercial real estate. A lot of people have given up on commercial real estate. They worry about the wall of maturities that everybody's talked about. But if you look at the commercial real estate, that IYR ETF, it is rallied very strongly off the bottom,

but it's certainly not back to its prior highs. So I think rotation back into real estate, where most people don't want to go, I think that's the most surprising trade for 2014. All right, guys, good stuff. I appreciate it so very much. Thank you, Anastasia Amoroso. And Joe Terranova, let's send it over now to Christina Partsenevelos for a look at Intel on the back of its AI event today. Christina?

Well, the race is on to be the first to market with AI PCs. But the big question is, does the market really care about AI PCs right now? You saw Intel stock initially jump about 5% when the embargo was lifted around 10 a.m. Eastern, revealing Intel was already shipping an AI PC. Secondly, launching a next generation central processing unit, which is a product they hope they will, they hope will help them stop losing market share to AMD. And then lastly, they tease their hotly anticipated custom AI chip used for training large language models. That would be the Gaudi 3 you're seeing on your screen now. It competes with AMD and Nvidia. But on stage, Gelsinger only showed that chip. He didn't really have any financial updates, no news about next year, what's going to happen. And so investors took that as a lack of news

and sold off the stock, which is why it's only at, what, a little bit over 1% when it actually hit over 5% earlier today. I did catch up with Intel CEO Pat Gelsinger, who said the AI PC chip would help revitalize the PC market, especially as companies are going to be refreshing their PCs starting next year. But even Gelsinger admitted to me it will, quote, take a couple of years to drive that shift.

Scott? Getting to the bottom of it. Christina, we appreciate that. That's right. We'll talk to you in a little bit, Christina Partsenevelos. We're going to talk more, by the way, about Intel's event with top chip analyst Stacey Raskin. That's coming up a little bit later on in the show show so you don't want to miss that we're just getting started right here up next navigating the fed pivot sycamore tree capital partners

marco cotta is back laying out his 2024 forecast for the fed where he sees yields heading from here that is after the break we're live for the new york stock exchange you're watching closing bell on cnbc New York Stock Exchange. You're watching Closing Bell on CNBC. All right. Welcome back to Closing Bell. Treasury yields under pressure today with the 10-year hitting its lowest level since the summer. But our next guest says that rates will be higher across the curve in 2024. Joining us now is Mark Okada of Sycamore Tree Capital Partners. Welcome back. It's nice to see you. Hey, Scott. Good to see you, too. Let me first just get your reaction to what happened yesterday, because, look, it's been a surprising year.

I think you've probably been as surprised as anybody that, you know, the economy is where it is and the stock market's done what it's done. And here we are just coming off an incredible move in yields too that's got that the uh the business of managing money this year has been hard uh it's been humbling i you know i guess um being wrong about the recession being wrong about the stock market um we're still up you know mid-teens which is nice but but it's not 20, it's not 40. So it's humbling. And wow, yesterday was amazing. Amazing. Was it truly the pivot that some are suggesting it was? I just had a conversation with a strategist who described it as a game changer. You know, I kind of have a different view on yesterday as far as, you know, what Powell did. I would I for one, given what we're seeing in the economy and the slowdown, it's it's not necessarily the recession call that that would cause rates to drop enormously.

I kind of think he's talking his book a little bit. I mean, we've got a lot of bonds that need to get issued next year across the curve, 23, 24 percent more than we have now. So bond issuance is going to be up big. And given the massive moves down hard in rates, I mean, that's great for the Fed. They can issue those bonds at better prices. But I got to believe that he's talking his book a little bit as I look through and think through what happened yesterday. Well, I mean, you could forgive him if he was feeling pretty confident about himself and what they've done. Right. Even starting as late as he would admit and has admitted, I think, himself.

They've done a pretty darn good job getting us to where we are now, don't you think? Oh, absolutely. I mean, it's a little bit like, you know, you've won the in-season tournament. Now you're parting in Vegas. But it's still a long season. Core's still not close to where they need to be. There's going to be some work to go from here. And given the strength of the consumer and given the massive, like, reduction or easing of financial

conditions that happened because of what he said yesterday, I think it makes his job a little bit harder to get to where he needs to be for inflation and the target. So again, our contrarian view is that we think rates actually stay a bit higher and we're fading a little bit of the pivot party. See, I don't think he he cares really the way that people suggest that he might about, you know, well, rates have come down a lot over the last month. So that's eased financial conditions. The stock markets rallied a lot. That's eased financial conditions. I don't think he cares about that as much as we might think. And maybe he told us a little bit about that as much as we might think and maybe he told us a little bit about that yesterday where you know he suggested that the inflation was not caused by you know sort of historical standards not not from over raging demand or or anything like that it was caused from a lot of supply chain

disruption he only cares about inflation if the economy's normalizing which is the word that he used, then they'll be able to cut rates for the right reasons. And they're thinking about cutting rates already. Well, that's 100 percent the message that he said yesterday. And whether markets follow that that route for the next year is is really going to be the question. I, for one, think that the the mixture of how we got here with massive inflation was both. I think we had a pretty stimulated demand side based on fiscal stimulus that didn't need to happen. And then we had a supply shock that was historic in a lot of ways. And to his point yesterday about the supply side, a lot of that has been taken care of.

I mean, you really don't see that in the numbers as far as the supply of goods and services. You know, labor has pretty strongly rebounded. And we're on showing a lot of manufacturing. I mean, if you're going to build a battery plant or a chip plant, those are long lived assets and that supply is going to be around for a long time. So I guess from that standpoint, it makes sense that he can be a little less worried about a big jump in inflation from here. But on the other side, on this this stimulus side, I think he's underplaying the potential fiscal stimulus that we're going to see in 24. Remember, it's an election year and Biden's approval ratings are horrible. And I think that what they do on that stimulus side could affect inflation and make his job harder.

So, again, it's going to be an interesting year to see if this pivot that's priced in everywhere we look across risk assets happens. Now, that being said, am I feeling a little more bullish about taking some risks? Sure. I mean, do we see this economy tanking anytime soon in the credit markets? Spreads are certainly not telling you that's the case. Liquidity is not telling you that's the case. So I think it is a time to be a little bit more aggressive with risk. But again, we're not talking about buying triple Cs or anything like that. We still want to be in the higher quality part of the markets. I was going to ask you before I let you go, what is the most attractive thing right now that you see that maybe wasn't as attractive but two days ago?

That's a tough question. I think the digestion of what happened yesterday is going to take some time. But one of the things that I keep thinking about is there's a lot of cash that's in money markets, $6 trillion at $5.25, $5.38. And where does that go? I mean, it's a setup, right? It's how relative is that $5.38 versus the other pricing. And after yesterday, across the credit curve, we've had a compression of rates. And so it doesn't look great from a value proposition. And maybe a lot of that cash just sits there for a while until we get some sort of widening in credit spreads, we get some sort of, and I'm right about the rate curve. And then at that point,

I think it does kind of move out into higher quality credit, I think. And maybe over the near part, the shorter term parts of the curve, which are still at 9%, 10%. I mean, I think that's still cheap. So I think that's the rotation that we see. We've had that debate over the last, you know, 24 hours or less, actually, at this point of where does that money go? Some suggest money from money markets goes into equities. Gundlach with me yesterday post Powell was like, why would it go into equities when, you know, a lot of multiples are already stretched? It's going to go into bonds. So you asked the question, where is it going to go? What do you think?

Well, I agree with that. I think just on our if you're an institutional investor and you're solving for seven, you care about vol. And if your outlook for equities from here is three or four percent with a 15 vol, why do you do that? I mean, that doesn't make any sense unless you're an Uber bull and none of them are so so i think i think somewhere in the credit spectrum is where that money eventually ends up the question is really kind of how much risk that the market wants to take now um high yields at 400 off um loans are at 500 off that that's probably still cheap in here as far as a rotation from that cash. And I think that will start to happen in Gundlach's case where he's talking on a hard landing. I don't think it goes there and is happy there, per se, as far as a lot of risk. Yeah, but it's a $6 trillion question because that's how much money is sitting in money markets. Mark, I appreciate it so very much. We'll talk to you soon. You be well and have a good and happy New Year. Thank you.

That's Marco Cotta joining us there, as you can see. Up next, we're looking ahead. Art Cashin, the legend, breaking out his own crystal ball, revealing how he thinks some of the best names in business will use AI and the boom there to their benefit. Those comments after this break. Closing bell right back. Welcome back. The legend Art Cashin weighing in on the year that was and what he thinks lies ahead for 2024. Bob Pizzani here with those details. It's become an annual thing between you and Arthur.

I can't tell you how happy I am to see him. It's one of my favorite days of the year. It's my annual holiday get-together with Art. Art was surprisingly bullish on the year ahead, noting that this year's presidential elections with the incumbent in office are often up years because of the spending that's involved. He was also surprisingly bullish on the effects of AI on the economy next year. I think AI will ultimately prove to be as strong as the invention of the wheel. Everybody concentrates on the chips, but people like Walmart and Amazon, they will use artificial intelligence to find a way of marketing

and marketing more directly to their customers. They will anticipate the needs in a more correct manner. And therefore, the economy as a whole can grow dramatically. If we get past all these other liquidity problems and we let artificial intelligence begin to run full out, we're moving to a different world Bob we're moving to a very different one this from a man who still uses a flip phone and he writes his letters in longhand every day and dictates them to his secretary now art did have some worries about next year especially about the effects of

commercial real estate on bank balance sheets. He talked a lot about that. He talked about the high cost of financing the Treasury debt. And he talked about how this massive December rally could drag in more investors from the sidelines in January and lead to a bubble that could cause a first quarter pullback. It just made my whole the whole year this hard again. I have been doing this for almost 20 years. By the way, he's going to be here the last day of the year, January 29th, excuse me, December 29th. He'll lead everybody singing Wait Till the Sun Shines, Nelly, a hundred year tradition down here. And he doesn't come down on the floor very often. You get the feeling from talking to him and some of the sound that we didn't have a chance to see that he's surprised that the market had the kind of year it did

relative to a tightening cycle, the likes of which, you know, it's historic. And he's surprised that the market had the kind of year it did relative to a tightening cycle, the likes of which, you know, it's historic. And he's seen he's seen many of these cycles before. I got to believe he's surprised to some degree where I think he was as surprised as everybody else. Last year was the first year in 20 years we didn't do a full interview for various reasons. But I know how he's felt through most of the year, that the probability of avoiding the recession was extremely small. And he studies market history. I learned market history by hanging out with him. Yeah, he's a walking stock all the time.

And he, the probability, last year he said, of avoiding a recession is very, very small. And so he was in that cautious camp, and he felt that they had threaded an amazing needle. All right. That's awesome. We love him. A pleasure. You send him our best, would you? I know you will. That's Bob Pizzani him. You send him our best. I will. I know you will.

That's Bob Pizzani, of course, with the legend, Art Cashin. Up next, Intel holding its AI event today. Start chip analyst, Casey Raskin, breaks down his first reaction to all of those announcements, how he thinks it could impact the stock as well, right after this break. Closing bell, back after this. Thank you. Shares of Intel giving up some of its earlier gains after the company announced new AI chips in the works to compete with the likes of NVIDIA and AMD. Let's bring in Bernstein Stacey Raskin now to discuss.

So the stock was up and it's given a lot back. I'm not sure if you saw our own Christina Partsenevelos, you know, characterize this as kind of a non-event event. And there was like a meh. And even you in your notes, the first words I have from you on my page, like, OK, expand on that. Yeah, look, I think in the wake of AMD's event a week or so ago, people had a little high hopes for it because Intel really was positioning it as an AI event. This was a marketing event to launch their new chips for PCs and servers, is primarily what it was, CPUs. They launched their, I think they call it Intel Core Ultra, but it's their new Meteor-like parts for ultra-thin notebooks.

And they launched their Generation 5 Xeon chips, which is codenamed Emerald Rapids, which is a follow-up to the prior-gen Sapphire Rapids. It's basically like a bug-fixed Sapphire Rapids that's socket-compatible. You can drop it right into the existing infrastructure. We knew this was coming. They already said they were launching these parts in December 14. So there wasn't a lot new beyond that. And then in terms of the real thing in AI that people care about on the accelerator front, they talked a little bit about

Gaudi 2, but they didn't give us anything new. It's already there. And he sort of said, look, we have Gaudi 3 now. It's out of the fab. We've got a chip that I can hold up in my hand, but it doesn't tell you anything. And we know that part's coming next year anyway. So nobody's really going to get excited about PC chips and server chips, not in this environment. And that's why the stock gave up the games.

It was, yeah, was the word I used F? It was fine. Like, there's nothing wrong with it, but it was not as spectacular. But here's the problem. Here's the problem. Given what NVIDIA has done and now what AMD itself is doing and fine aren't good enough, right? Well, I mean, it depends on what the story is. NVIDIA clearly is in the driver's seat here. If

you're ever going to shift to like real data center, like AI and accelerators and everything else. NVIDIA is clearly in the driver's seat. AMD, at least they've got a roadmap with some products on it, and they were actually able to show us show them working. Intel's got something called Gaudi. This is a product. They bought a startup a few years ago called Habana Labs. That's where it came from. They've talked about having a $2 billion pipeline, quote quote unquote for this i don't exactly know what that means they won't say how long is that type one four how much of that type of the expect actually turned actual orders

we we don't know and they all be honest outside of the the a few years ago i think the general like person on the street like they don't have to go to use any place right but what about this because i'm what about this christ? Christina emailed me just a second ago pointing out that AMD popped over 15 percent the day after, after emphasized its AI announcement, even though there was really no major news there either. Maybe this is just one of those days where tech is underperforming the broader market. So we're reading too much into how a stock is performing in the moments after an event was held. Well, two things. Number one, I was a little surprised at the degree to which AMD itself popped like in the day or two

after after that announcement as well. It was a bit of a delayed reaction and the magnitude I found surprising. I mean, today, like semis are actually outperforming a bit. Right. So semis are decent. Intel's up a little bit. It's underperforming the space. And I mean, I guess like, semis are actually outperforming a bit, right? So semis are decent. Intel's up a little bit. It's underperforming the space. And I guess we'll see what it does over the next, like, you know, a few days and weeks. But again, I just don't think that there was anything here that was perceived as surprising or remarkable relative maybe to what we've seen, at least like with AMD on the Hope trade the hope trade or or play with with invidia just get more than a month ago there was a

this was this was a cpu about this was a about pc and and and server cpu that that's what this was that's all i was supposed to be they never said anything else that that that about it if you look at the right press releases laying this out it was it was to launch these two products that's what they did well we appreciate you being with us. You bet. Anytime.

I get you. We'll talk to you soon. Stacey Raskin. All right. Up next, we're tracking the biggest movers as we head into the close. The aforementioned Christina Partsenevelos is standing by with that. By the way, thanks for the email during the conversation. Thank you for reading it, Scott, and the shout out.

Let's talk about Moderna and Merck's vaccine for skin cancer showing positive results and premium travel, a driving force behind two possible airlines. I'll explain next. All right, we're 10 out from the bell. Let's get back to Christina Partsenevelos now for this talk. She's watching. Christina. Well, let's talk about Moderna shares rallying today after positive results from its new mRNA vaccine that reduces the chance of relapse or death by skin cancer, and they're reducing it by roughly half. So those results occurring when the experimental cancer drug is used with Merck's immunotherapy drug, Keytruda, I should say. And so that's why the stock is up nine and a half percent right now. And a few airlines on the rise today after an analyst called Goldman Sachs naming United and Delta as its top airline picks for 2024.

Goldman saying that Delta and United's exposure to the quote, less recovered Pacific market gives them opportunities for growth, as well a stronger premium market. And you can see shares up over 1%, United up higher almost two. Scott. All right, Christina, thanks so much.

Christina Partsenevelis. Up next, countdown to Costco. The big box retailer reporting numbers in OT. We'll give you a rundown of all the key themes and metrics that every investor needs to know. Ahead of that, when we take you inside the Market Zone next. We're now in the closing bell Market Zone. CNBC Senior Markets Commentator Mike Santoli here to break down the crucial moments of this trading day. Julia Boorstin today on possible shakeup at Disney.

And Pippa Stevens here for a Costco earnings preview. Michael, you first. This is a pretty good follow through, I think you have to say, after a pretty strong close yesterday. Yeah, it is. Eighty percent of volume in upside stocks today on the New York Stock Exchange. You have everything essentially but the Magnificent Seven and other big winners from the year up, including oil, including gold. So it's a kind of broadening rally that you would want to see the economically sensitive stuff, the rate beneficiaries. If there's a little bit of a maybe a skeptical point to make, it's the mechanics of this kind of whipsaw could get a little strained. We have a quarterly expiration tomorrow. It could be a kind of a culmination type move where people kind of

rush for the stuff that hasn't participated. But so far, so good. Julia Borsten looking at Disney shares today, which have been interesting. They're up about one percent on some new news regarding Nelson Peltz and what his aspirations are for board seats. Yeah, that's right. Shares up 1% after the latest in the proxy battle with Tryon's Nelson Peltz. This morning, Tryon announcing two board nominees himself, Nelson Peltz and former Disney exec Jay Radulo, who was CFO of the company between 2010 and 2015. Before that, he ran Disney's parks division. Tryon saying, quote,

the root cause of Disney's underperformance, in our view, is a board that is too closely connected to a long-tenured CEO and too disconnected from shareholders' interests. Disney responding, saying it will review the proposed nominees and make a recommendation to the board, saying it has, quote, an experienced, diverse, and highly qualified board that is focused on the long term performance of the company. So now we're waiting for Disney to file its slate of director's nominees and to set a date for its shareholder meeting. That's coming up this spring. Scott. All right, Julia, thank you for that. Julia Borsten to Pippa Stevens now looking at Costco down a little bit before its earnings report in OT. Yes, Scott. Well, it's all about the company's earnings call

for Costco. So they're one of the few that still release monthly sales reports. And so we already know that their adjusted same store sales were up three point nine percent in the quarter, excluding gas prices. And so the conference call is a front and center specifically around trends Costco sees in the sales environment next year as slowing inflation becomes more of a headwind for revenues. Also, how the retailer views the promotional environment, especially if consumers cut spending. But perhaps most top of mind is the membership fee, which Costco hasn't raised since 2017. When asked about raising the fee during the Q4 call, management said it was a question of when, not if, but wouldn't give details. Shares of Costco hitting an all-time high yesterday, outperforming this year, Scott, with a 39% gain.

Back to you. All right. Good stuff. Pippa, thank you. We'll see you in OT with those numbers when they hit. Michael, back to you. About two and a half minutes before the close. So, 273.

Actually, I was looking at energy, which is up 2.73%. That's what I meant to say. Forgive me. I didn't think bond yields went down that low just yet, but go ahead. I wrote down 273, and I said it, and I was like, wait a minute. You're not talking about bond yields. I was like, no. I looked back. I was like, energy, yeah. Getting that nice boost, is it lasting? That's going to be fun to watch. Yes. And I think that you can ask the question about a series of moves, whether it be the laggard sectors like real estate, whether it be, you know, banks up another 4 percent or something today, small caps up two and a half. It's obviously winning back chunks of underperformance in a, you know, kind of a twitchy, jumpy market. So you don't want to extrapolate what's happening from here. So it's spreading the wealth away from the huge traditional growth type winners in the index.

It does make sense from this point on. They're kind of free of macro influences for at least about another week until you get PCE. And everyone now thinks they know what PCE inflation is going to look like. And maybe it doesn't matter because the Fed's already tipped its hand. So all that being said, it is really about the year end flows and rotations and trying to grab for things that haven't participated. But as I said before, you just have to be cognizant of the idea that sometimes this creates a little bit of instability in the market. You've run a long way and it would make sense perhaps at some point to take a little more of a step back and assess what's been done over the last month or so. Yeah. Powell kind of front point to take a little more of a step back and assess what's been done over

the last month or so. Yeah, Powell kind of front ran PCE a little bit yesterday, to your point. And, you know, I'm looking at mega caps, for example, where Apple has just gone barely positive. So there's still that dip buying mentality in those tried and true mega cap names. Most are doing all right. I mean, Microsoft's down two and a quarter percent, but maybe that's a little bit of sympathy to Adobe having a rough day out of the software space. Yeah. Combined with the fact that it was kind of the most beloved, overbelieved stock in the Magnificent Seven and pretty much universally held. So all that stuff, it's a source of funds. I think there's a way out for the for the rest of the market to do fine

and not necessarily at the pure expense of the big index names. It's all about where the incremental dollar goes. That's the ideal scenario. Maybe a lot to ask for, but so far in the last couple of weeks, we've been getting a lot of ideal stuff happening in this market. When the 10-year hits 273, you remember we had this conversation, right? There's the close. We're green across the board.

Into OT with Morgan and John.