Closing Bell - Trading the Final Stretch 12/4/23

Episode Date: December 4, 2023

Where is your money going to work best during this final stretch for stocks? Blackrock’s Rick Rieder gives his forecast. Plus, Dan Greenhaus of Solus Alternative Asset Management and Nicole Webb of Wealth Enhancement group give their reaction to Rieder’s big market predictions. And EMJ’s Eric Jackson explains how he is trading the rally in the crypto space. 

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 future of the rally and whether a new bull market is just getting going. Can bonds continue their own remarkable rally of late? We will ask BlackRock's Rick Reeder. He will join us momentarily. In the meantime, your scorecard with 60 minutes to go and regulation looks like that. Well, tech names, they're the biggest drag on the Dow today, though. The Dow, well, it's coming back a little bit. But Apple, Microsoft, Salesforce all slipping today. How about Meta? That's driving the Nasdaq lower. On Word, that founder and CEO Mark Zuckerberg

filing to sell stock for the first time in a couple of years. Bitcoin and gold continuing their own respective runs. And the 10-year note yield, it is up a bit today. But check it out. Right now, 428. It takes us to our talk of the tape, the final stretch of the year and beyond, and where your money is going to work best. Let's ask Rick Reeder. He is BlackRock's CIO of Global Fixed Income, also the head of the Global Allocation Team. In other words, he covers it all. And he's here with me at Post 9. Welcome back. It's good to see you. Thanks for having me. All right. So we're coming off an incredible month. I mean, bonds had their best month since the 80s. Stocks have been ripping. What's your

current view of the markets? So listen, I mean, there are a couple of things that make sense. A couple of things I think are a little bit askew. The first one is inflation is coming down. I mean, the data is clear on inflation. I mean, we're running, I was looking at core CPIX shelter, which shelter comes down with a lag, but it's running, I was looking at core CPIX shelter, which shelter comes down with a lag, but it's running at one and a half percent. You look at, you know, six month moving average of inflation, core CPI is running, you know, is running in low twos. So listen, I think core PCE quarter over quarter is 2.4. So I think it's real in terms of inflation coming down. The narrative of the economy falling off a cliff that we're moving in a recession and the Fed's got to start cutting. In fact, we were pricing in a cut in

January, which was in the markets, which is absurd. Listen, I think that's maybe a bit presumptuous. And I don't think the economy's falling off a cliff. I don't think I don't believe in we're going to significant recession. So I think the pullback you saw today, particularly in the front end of the yield curve, I think makes some sense. Wait, wait. So you're a believer. You're a believer in the soft landing scenario that inflation is going to continue to come down. Yes. And the economy is going to hang in there enough. So I don't even know. I know I've said it. I said it on your show before. I don't even know about this whole landing concept anymore. I mean, I think you have an economy that's much more stable than people think. I think we're moderating from a period of extraordinary growth. You think about nominal GDP, a couple of years ago was 11, last year was 7.

I think we are normalizing from, you know, what is extraordinary monetary, extraordinary fiscal policy, and we're just normalizing. Listen, we've got next year, we've got real GDP running about one and a half with inflation running about two and a half. That's a normal economy. So I'm not, you know, I think the world focuses way too much on surveys and surveys get nervous much more. So if you look at, I know you talk about it all the time, a number of companies are talking about actually a bottoming, which I think is a bit over the top. But you look at inventory levels, we're looking today, inventory levels for a number of companies have come down quite a bit. So anyway, I'm pretty sanguine about slowing, but not excessive slowdown. Is the Fed done hiking?

I think, yes. I mean, they are done. The question is, when do they start evolving the narrative? Real rates, if you think about a funds rate, five and a quarter, five and a half, with inflation moving into the twos, the real rate is too high. And so I think the Fed's got to start cutting. I think probably, I think the market's ahead of itself in March. We were pricing on Friday, we were pricing two-thirds chance you'd cut in March. I think that's over the top. But I think in May, June, listen, I think they'll start cutting. I think they'll start doing something like 25 basis point cuts to get the real rate down to what is the level that, by the way, that would be restrictive.

And it's just too restrictive today. So you said the narrative is evolving. Waller, did he play a role in evolving it by suggesting that you could, in fact, have those rate cuts? Steve Leisman suggested he said the quiet part out loud. Now, he's not the chairman, but nonetheless, his view was provocative and it did move the market. So he's very influential. He's very thoughtful. And, you know, he's very model oriented. And so he was he's what he's been a hawk because he was right to be a hawk because inflation was high and employment was

operating at a breakneck pace. All of a sudden, you know, he cited some things that quits rate coming down the unemployment, the quits, the you know, some of the slack in the labor force is starting to build. So I think he's been sincere. He's being sincere relative to an economy that's moderating and inflation that is really coming down. So I think, and I didn't hear Steve say that, but I think it's right. I think he was exactly as you would think he would be, but he just said it. And the markets reacted to that. I mean, the implication is that they cut because they can, not because they have to. Yeah. And by the way, now the balance is much more two-way. And I think it's a really big deal for markets. If you now have a Fed that can respond in the way of cuts,

now you've got, when you think about what interest rates are, can they be a hedge, can they be ballast in your portfolio, as opposed to we've lived in this environment where rates are going up, you're going to have negative return on fixed income, very different paradigm, not just for the rates market, but for all markets. So if I believe what you're saying, does that mean that I should increase my exposure to risk assets? So listen, if you said, what's the paradigm, if you're building a portfolio today, there's a couple of things I think make sense. One is you can still put a ton of income in a portfolio. We run these portfolios over on the CTF now. It's 7% yield. We're buying a lot of

quality assets, two and a half years of duration. Gosh, if I can clip six and a half to seven and then hold my equities, and I think next year, can equities get you 7% to 12% return? Listen, I don't think you're going to have the spectacular risk performance like you saw in beta this year. But I think you could still have a pretty good year. I mean, if you look at the level of GDP and the ability for companies to throw off real cash flow, listen, I'm pretty relaxed about it. So I think you'll have good returns. But I would build in your portfolio a lot of income. And you could do it by not taking a lot of risk today. So, I mean, what is the traditional 60-40 mix then look like?

Is it not 60-40 anymore? I don't think so. I mean, you know, listen, there are, it depends if you're a pension fund, endowment, life insurance company. You need long-dated fixed income assets against your liability. Today, you can build a portfolio that uses what we like today, the belly of the yield curve, the three- to seven-year point, clip an awful lot of yield. By the way, I think that is the linchpin of where, if the Fed starts cutting, where you'll see some real performance. And you can build in quality assets, investment-grade credit, agency mortgages,

parts of the securitization market. You can clip six out of seven. So what I would do is I would take 60, keep it in equities. I take 30 and I'd say, gosh, I'm going to build a bunch of income without a lot of beta in my fixed income portfolio. I don't need a ton of EM. I don't, you know, less so in high yield than I've had historically. I take 10 things like, I know you have a lot of people talk about private credit, structured

finance where you get a lot of yield. Private credit is like on fire, right? It makes sense. I'm filling the void for what the banks have slowed. Scott, we do a lot of bilateral financing, a lot of individual credit financing. This is as good as it gets in terms of the ability to actually create structure, collateral, covenants in some of that private credit. You talk about the three to five year and you say the convexity of returns is the best that you've seen in decades. That's precisely because you do think that rates are going to come down within the next, I don't know, six months.

So if you run the numbers, if you build a high quality portfolio using this middle part of the yield curve, if rates go up, which I don't anticipate, 100 basis points, your carry, your income, even if rates go higher, you still generate a very significantly positive return. So we'd run the numbers. If rates go up 200 basis points, not going to happen. You still end up breaking even if you build a quality portfolio at the belly of the curve. Let's say the Fed starts cutting rates in quality assets with extending out a little bit out the yield curve. You can create double-digit return and high-quality fixed income. That's as good a convexity as I've seen in literally, Mike,

certainly a couple of decades. Wow. What else? I heard you, you know, at least I read recently, you said the technicals in high yield are, you use the word, incredible. They are. So you think about what happened. 72% of the high yield issuance, they refinanced when the funds rate was under 1%. They pushed their maturity wall out. Technicals, they don't need to do a lot of issuance. The buyer base, people are looking for this yield is terrific. By the way, I don't think the spreads are attractive at all, but you're getting a lot of yield because the risk-free rate is so high. And then you've got a great technical. So my sense is, well, do you have to use a lot of yield because the risk-free rate is so high, and then you've got a great technical.

So my sense is, well, do you have to use a lot of high yield today? You don't. I'd rather use my beta in the equity market, but it's going to be fine. The high market's going to be fine. What do you make of the breadth of the equity market and the way things seem to change a bit in November? Now the big question is, is there staying power behind all these lagging sectors, small caps and things like that, which obviously have woken up. Are you still a dance with who brung you a big mega cap tech, or do you think we're going to have a broader move?

So the first thing I'd say, I think the breadth of the market is terrible. I mean, liquidity, we trade a lot of equities. We trade a lot of options on equities. Boy, the markets are thin. And the jumpy, the less convicted nature of these markets, the ability to be right one day and really wrong the next, is pretty extraordinary. The thematic seems to evolve pretty quickly. That being said, you know, what would I do today? Listen, I think big tech's going to continue to, I'm in the camp of cash flow, your ability to invest in R&D, the ability to grow,

to create real cash flow, I think makes a ton of sense. So I still like having heavy exposure there. The thing, though, that I think makes sense in terms of building some balance in the portfolio is, gosh, I think there are some areas of the economy that make, or the market, that make a lot of sense. Healthcare, which I think is technology in a different form. Which hasn't done well this year. Which hasn't done well this year. Which hasn't done well. But I think some of these tech stocks in managed care, some of the pharma space, I think is pretty attractive.

And then if you go and look at defense, and you know, there's some, by the way, energy, you look at energy, you look at some of the autos, the multiples are pretty attractive. So I still like the heavyweight to tech and moving some of that tech into tech-oriented health care. But anyway, I also think taking some cyclical exposure makes sense as well. What do you think, if we're nearing the end of this remarkable cycle that we've been on for 18 months, what do you think is going to be written about the performance of the Fed over this period of time to get inflation down, to keep the economy from becoming a complete disaster, and somehow managing to do all of that with all of these other risks, some existential, like geopolitical wars and the like, and somehow we are where we are,

where somebody like you in the seat in which you sit suggests they're going to pull it off. How long is the segment? So, I mean, I'd say, so there are a couple of things I would say. Listen, I think the Fed stayed too easy too long. Were they the instigant for the inflation to be excessive? I don't know. I think it's hard to prove that. I think there were other reasons, a war, a pandemic that created excessive inflation. But I think they stayed too easy too long. And I think that's been well chronicled. They were very adept at moving quickly around getting the rate up and including post-COVID the things they do that I think were innovative. Listen, I'm not a believer that you got to keep rates well above four-ish percent because I don't actually think it does

that much. I don't think the economy is as interest rate sensitive, and it bludgeons capital. Places like commercial real estate, resi real estate, people, low-income people. So listen, I don't think you have to keep rate this high, and I think they should move it down. But so anyway, if you're asking me a broad assessment, I think they did a lot of good things. But I think excessive interest rate policy, not just for the Fed, the ECB, the Bank of England, negative interest rates makes no sense. I don't think excessive rate policy makes sense because I don't think the economies are as interest rate sensitive as they used to be. What worries you, if anything? What's the one thing that you're like, OK, if that happens, maybe my view is a little too sanguine? So, I mean, listen, away from geopolitics, away from things like U.S.-China relationship,

China slowing, although my sense is that's bottoming and coming a bit back today. Fed over-tightening, I think we're past that. And so I think that's a big deal in terms of part of why volatilities come down, the Fed over-tightening, hurting the residential mortgage market. Listen, I think that is something to be careful about, but I think we're past that. The thing that I got my eye on for the next two years, three years, there's too much debt on the U.S. government. The debt-to-GDP numbers, unless we start bringing the debt down, unless the Fed brings the cost of the debt service down, unless nominal GDP stays high enough to offset what are burgeoning deficits and growth of the debt service, it's not going to be a problem for the market or for anything in January. But boy, I think that is something. I always say policymakers don't react to the

shark is right next to the boat. The shark is going to get next to the boat. And you've had people on talk about it. We have to address the debt in this country. It's too big. And the debt service, we used to fund treasury bills at close to zero. For 10 years, the average rate on treasury bills was under, was 0.83%. We're funding $400, $500 billion a week at 5.5%. It's too much. It's too much. And we're going to have next year, you know, all of a sudden, can we place this much? And there's going to be risks around that. That to me is the one that over the intermediate term, that makes me nervous. But that's why people like Ken Griffin and others who've come on the network suggest,

if you look at the charts of the servicing, the deficit that we have, they've used the word scary. Yeah. You know, others have said the Stan Druckenmiller. I was trying to think of his name. Stan Druckenmiller. The same sort of thing. But they also predict that that's going to help keep real rates higher because of that service. So how do we take one point to the next? So I think that's right. I think it'll keep rates higher because of that service. So how do we take one point to the next?

So I think that's right. I think it'll keep rates higher. But you think about the Fed can control the front end of the yield curve. We are issuing. So you think about all the issuance we're getting. We're getting mostly Treasury bills, long discussion about the weighted average maturity of the Treasury's debt. We issue a tremendous amount on the front end of the curve. If the Fed brings the rate down, you start to bring that cost of the debt service down. They can control the front end. Listen, the longer end of the curve can move around. That being said, we don't issue, the Treasury doesn't issue nearly as much in the back end of the curve. I think the Fed's got to get the rate down, bring that debt service down.

And then, by the way, we got to keep nominal GDP up in this country. And as long as nominal GDP exceeds the cost of the debt, you de-lever the economy. And I think that's a really big deal. And I think that's the key, whether that plays out over the next couple of years. I think you explained it well. We went 15 minutes. That was the length of the segment. Is that good? That was great. I appreciate it. Very much. That's Rick Reeder, BlackRock. Thanks so much. Look forward to spending time with you in the new year as well. Let's bring in now Dan Greenhouse of Solus Alternative Asset Management and Nicole Webb of Wealth Enhancement Group. It's great to have you here to react to Mr. Reeder, who the headline is going to say, Rick Reeder, pretty sanguine on where we are and what these markets can continue to do. Nicole, do you agree?

I actually do. I think there's a couple of points that Rick made that, and look, who am I to compliment him? But at the same time, we are so aligned in terms of really if we kick things off at the start of the conversation around kind of where real rates are and the unnecessary level seeing as disinflation has really come in. And so in these cooling offs that we're seeing, it does propel the idea that the Fed can pull rates back sooner than anticipated, even two months ago. And I think that does a lot in terms of interest rate stability and how the market prices, kind of this resurgence of the breadth of the market. And while we haven't seen it play out all the way, I think it gives a better read through into being opportunistic in 2024.

Dan, what's your reaction to Rick? Yeah, listen, I unfortunately agreed with just about everything you said. I would just sort of take issue with a point that Nicole just put forth, as did Rick, that I don't know that there's an immediacy in terms of the need to cut rates. I don't see why. I mean, Rick did say by the middle of the year they could be cutting, and I think that's a reasonable position that the economy will have evolved and the path of inflation will have evolved to a degree such that they could probably begin actually or at least contemplating cutting rates by the middle of the year. But before that seems unnecessary to me. I'm not particularly concerned. The economy is doing just fine right now, and I don't know that there's any immediate need to reduce the level of interest rates. But do you agree broadly with him that the Fed is actually going to pull this off? That, I mean, he made it clear that, you know, I don't know about landings and things like that,

implying that we may have no landing. I mean, maybe we just keep this economy keeps humming along good enough and inflation comes down enough that we're like, holy smokes, they actually did it. Yeah, listen, that's always been a possibility. And certainly the odds of it today are higher than they were, call it six or nine months ago. I would just remind viewers a point that a lot of people have been making, myself as well, that it always looks like a soft landing before a hard landing. And so on the one hand, yes, inflation has come down tremendously. No, we have not had any meaningfully adverse effects in terms of the labor market,

which is ultimately how you would define a soft, hard or no landing. But at the same time, history is quite clear that the Fed usually doesn't get this right. And while it does appear that they are getting it right for now, the odds still do exist that perhaps those lagged effects are going to start showing up somewhere around the first or second quarter of next year. So what do I want to do, Nicole, if you agree with Reeder that there's reason to be reasonably positive on the market next year? He said high single, low double digit returns in equities. How's that sound to you? Yeah, I mean, the setup in 2023 has made 2024 look more advantageous. And so while we've harped on the Magnificent Seven, it's really left runway to say there is opportunity for share price to catch

up to the likeliness that we saw troughs and earnings, and we haven't really seen performance of companies catch up to that share price. And so when we think about sectors, we can think about the fact that supply will likely continue to be cut in energy. So there's kind of this window of opportunity there. We can look at health care and the performance year to date. We can think about the infrastructure spending and bills around that and then look towards mid-cap. And we don't necessarily have to make a determination about whether we're late cycle or early cycle. Instead, we can say, where's the money flowing? And I know that industrials make up 20% of the mid-cap space.

And so there might be more stickiness there, regardless of knowing perfectly where we are in the cycle, which isn't textbook definition of when you deploy money into small or mid-cap. So I think there's just a lot of opportunity for investors. And while Rick spoke specifically to pensions, endowments, sovereign wealth funds, I think from our side of the business, working with individuals and family wealth, there's never been a better time to actually create portfolio construction based on

whatever the timeline is for next year. And to quote Rick again, you can clip a lot of income in a lot of different pockets across the market spectrum. So on that note, then, Dan, working for Solus Alternative Asset Management, what does 60-30-10 look like to you if it's 60 equities, 30 high-quality yielding assets, and then 10 private credit and things like that? Yeah, we've talked about this in the past. You're entering the year with high yield, yielding, call it eight and a half percent IG, somewhere in the five to six percent range. Loans will get you a little bit more than that. And then Rick mentioned MBS. If you're going to

start cutting interest rates and then the level of spreads, the basis in the MBS market could be attractive as well. A lot of this may be basis in the MBS market could be attractive as well. A lot of this may be out of the reach for a lot of individual investors, but you can certainly put together a attractive portfolio along the efficient frontier to borrow a phrase no one's going to know. That's going to give you pretty attractive risk-adjusted returns next year. And to the extent that you don't have a recession, and I don't think that it looks like you're going to, at least for the next few months, let's say through the middle of the year, you layer on top your equity exposure on top of that, and you're going to have a pretty decent year. Again, for the stock market, we're going

out here in the 4,600 or something range. I don't know why 5,000, 5,100, if you don't have a recession, isn't your base case scenario. The other thing, I mean, let's be honest, like, you know, the individual investors who may have felt the very way that you said, being on the outside with their faces pressed up against the glass when it comes to alternatives, now actually have platforms by which registered investment advisors, and we've highlighted some of those throughout this year, have given them access, the likes of which they've never had before. That's point one. Point two, Nicole, if I turn to you and we react to another thing that Rick Reeder said, and

as it relates to equities, let's spin back there. Healthcare, energy. What about underperforming spaces moving into 2024? Yeah. And I think Rick brought forward at the end of your conversation the fact that the Fed does have some control over the short end of the curve that makes the debt service cheaper and where we often leave out the part of the conversation around growth being an offset to deficit. And so when we talk about those pockets, all of which you just mentioned, Scott, a lot of them are going to be affected by the next leg

of the digitization of technology and infrastructure within business. And so we go a lot back to this productivity boom, the space for it and where that drives the market. And then suddenly this 2024, 2025 outlook of 10% earnings growth looks like a possibility. And that is where I don't think investors should give up on buying the 493, expanding into the small and mid cap,

which we've still seen outflows out of. And then, you know, technology is still a meaningful component. These mega tech names. But again, to your point, there is so much available to the investor now. And I think this is a time to just really position yourself going into the end of the year. All right. So, Dan, last point to you about the non-493 being the Magnificent Seven, in which Rick Reader said he would continue to lean heavily into. What do you think? I can't. This point has been made before, and it bears repeating, that we keep mentioning the Magnificent Seven as if it's really seven companies, but it's infinitely more than that.

Obviously, Tesla's multiple companies. Google isn't just search. It's got YouTube. It's an AI derivative play, Microsoft, et cetera, et cetera. So there's more than seven companies within those seven companies, if that makes any sense. And certainly they trade at a premium multiple to the market in a lot of respects across the space that's warranted. My gut, I think Nicole touched on this, but my gut next year is you would want to be exposed to sort of an equal weight. There's an ETF, the RSP, Ricky Sanpeter, which is an equal weight ETF. You probably want to be more exposed to that than the market cap weighted ETF. But either way, again, if you're not going to have

a recession and you're going to have earnings growth, then probably the market's going higher. Guys, that was really fun. I loved having you here to listen to Rick and then react in real time. We'll do it again. Dan and Nicole, thanks so much. We're just getting started here. Up next, shares of Spotify popping today, hitting the highest level since February of 2022. We'll tell you what's behind that move higher coming up. Plus, crypto stocks. Well, they're rallying.

Now, EMJ's Eric Jackson, he's back with us, breaking down how he is playing the pop in that space and beyond. We're live from the New York Stock Exchange. You're watching Closing Bell on CNBC. All right, we're about 30 away from the close. Let's get a check on some top stocks to watch now. As we head there, Christina Partsenevelos joins us with that. Hi, Christina. Hi, Scott.

Well, let's start with Spotify higher after the music streamer announced its third round of layoffs just this year alone. The cut amounts about 17% of its workforce, or that equates to about 1,500 jobs, this according to a source familiar. CEO Daniel Ek said in a memo that workers, two workers, that the company took on too many employees back in 2020 as well as 2021 and that it needs to, quote, right size in order to drive profitability. Shares have gained almost 150 percent this year and hit their highest level since February 2022. That would be today, and you can see shares are up almost 8%. PVH is also at its highest level since February 2022, after the Calvin Klein parent was named a top 2024 idea at UBS. Analysts there

credit the brand's strength of PVH and think its CEO is actually doing a good job of improving profitability. They also raised their earnings estimates for the company and are hiking its price target to $158 a share. Shares are only at $104.55 now, but they're up about 5% on this upgrade. Scott? All right. We'll see you in just a bit. Christina, thank you. Christina Partsenevalos up next. Who needs the Magnificent Seven? That's Eric Jackson's take. He'll tell us where he's seeing opportunity outside of the mega caps. Just after the break. Closing bell right back.

We're back. NASDAQ down 1% today. However, names like Uber, Coinbase and several others are continuing to move higher today. My next guest owns all three of them. Joins us now to discuss. Let's bring in Eric Jackson, EMJ Capital founder and president. Good to see you again. So I don't want to start there on these stocks that have been rallying. And it's look, we've talked about how the ARK Innovation Fund, for example, has just coming off its best month ever. I see a headline here that

you sold out of Meta completely. So that's where I want to begin on a day where we're trying to figure out if this, you know, Zuckerberg selling any shares means anything. It's always speculation when you when you see that. Why did you sell out of Meta completely, though? Still like it a lot, Scott. It's one of my favorites amongst the MAG7. But it goes back to something we talked about a couple of weeks ago, which is that I felt that the US CPI data that came out a couple of weeks ago was a seminal moment for the stock market. It's going to have reverberations for the coming weeks and perhaps months. It was the sign that the Fed is really on the sidelines.

And now it's just basically time to wait for the cuts. And that signals the end of a two and a half year bear market for the Russell relative to the Nasdaq and the Nasdaq 100. And I believe that we were going to see a broadening out of the rally. And that's exactly what we've seen over the last three weeks. I just want to put my capital to best use now. And even though I love meta still, and I'm sure I'll be back into it at some point, I wanted to put that money to work in some of the other mid-cap and smaller tech names. Why do you believe, though, that those kinds of stocks have more staying power?

If I use ARK Innovation as an example, the pop over the month was so tremendous, obviously correlated to the tremendous drop that we saw in yields as well. But maybe we've seen the best of that for a while. Or I would argue, Scott, that ARK has been in a two and a half year bear market. Basically, they peaked out in February of 2021. And at that point, when they started to dip and go down, that was really the first inklings that rates were going to go up significantly. Now I think we're sort of on the other side of the coin where the anticipation is how much are rates going to drop over the next year or two. So we don't know if this is going to be a five day rally, five week rally or five month rally. I think I want to be positioned for these smaller mid cap names like Uber, like Spotify, to continue to do well because there's so much ground to make up in terms of how far they've

pulled back over the last two and a half years. So your three top names you tell us, Coinbase, we can. That's number one. Let's start there. Given what Bitcoin is doing right now and now the predictions again, the predictors are coming out of the woodwork, suggesting how much higher it can actually climb over the next 12 months. Tell me about that stock. Well, so far in 2023, Coinbase has far exceeded the returns for Nvidia. I'm not sure how many people realize that. Obviously, they've been on a tear just in the last three, four weeks, too, as Bitcoin has really jumped from the mid 20,000s to 42. But I think, you know, there's still a lot more room to run in a Coinbase. Some people looked at Coinbase as, you know, when the FTX collapsed and everything that,

you know, crypto is a scam and why everything that, you know, it's crypto is a scam. And why would you want to be exposed to that name? They're best of breed within crypto. They've hoovered up market share over these last few years as FTX has gone out of business. Binance has gotten, you know, had to deal with the SEC. They've lost share to Coinbase. Other smaller exchanges have gone out of business. And the other big thing is that people forget, you know, basically Coinbase was a massively profitable company even before 2021 when their EBITDA margins were 58 percent. And I think we're seeing something interesting in the crypto market that's sort of parallel to the to the broader tech market, which is that up till now, Bitcoin's had a great year. But it's kind of the way that the Mag7 has a great has had a great year.

And we haven't seen that extend to some of the smaller altcoins. In the last three, four weeks, those coins have massively rallied, some up 50% to 75%. And when that happens, the ARPU for Coinbase goes up massively. So if we get a little bit of increase in retail participation trading these coins at Coinbase, they will be massively profitable again. I think Bitcoin is the best performing asset class of the entire year. Maybe I'm wrong, but I think I think that is the case. Affirm. Interesting, considering we're trying to assess what the real state of the consumer is. I love Affirm as well. It's actually my favorite long holding. It's been on a tear recently. And the thing that really catapulted it was the news after Black Friday's Cyber Monday by Adobe Analytics that buy now, pay later, which they're the pure play form of, was up like 20% for shopping.

So that's a signal that the consumers are stressed, but they still want to spend. They don't want to spend it on credit cards. But buy now, pay later for equal installments, no interest attached to it, is appealing. And so I don't think anyone had a massive increase in share for buy now, pay later at the expense of credit cards factored into their models. That's the reason why the shares have gone up so much, but still down tremendously relative to where they were trading back in 2021, when the expectations for market share were probably not even as high. How about Shopify, lastly, which is up near 70 percent in 12 months? Shop's also a favorite of mine. I love these three the most. I call them the sack of gold,

S-A-N-C. Shopify, what's interesting about Shopify, Affirm, and Coinbase, they all work together. Shopify has a partnership with Affirm to bring buy now, pay later to their merchants. The founder of Shopify, Toby Luckey, sits on the board of Coinbase. They're all founder-led companies. They're all experts in their domain of the next build out of the digital economy. There are going to be important cogs in that build out. And they've also shown, you know, insider buying. They believe in their mission and what they're doing. Shopify is obviously the leader in e-commerce. If you think that e-commerce is going to continue to take share

from retail and even from the Amazons of the world. Shopify, I think, is the best way to play it. I love all three of these names. I'd like to ask you about one more before we go, because it's in the news today. It's Uber, which has been on a great run. Now it goes into the S&P, figured probably a lot of that was already in the stock. Maybe not. What do you think? No, no, it's been it's been phenomenal. If you look at their chart since, I think, October 26th, it's been it's been phenomenal. If you look at their chart since I think October 26th, it's basically bottomed at 40 bucks and change. And it's been straight up to 60 ever since. I'm not even sure that they've had a down day since October 26th. I think what's

going on is a massive re-rating in this stock that it is a verb now. It is playing a major role, not just in transportation, but of people, but goods, of obviously food as well. They've been a big winner. They're just on the cusp of becoming massively free cash flow positive for the whole year next year. And I think people want to participate. So this is a good example that, you know, there are going to be some profitless tech arc names that are going to rally over these next few weeks because they're beaten down and the short interest is so high. And there's going to be names like Uber, which are profitable, solid mid-cap companies that just haven't gotten the due so far. And they will continue to do as well as they've strengthened their business over these last two years.

Eric, look forward to talking to you soon. Thanks so much for coming back on today. It's Eric Jackson, EMJ Capital. Up next, we track the biggest movers as we head into the close. Back to Christina Partsenevelos now for that. Christina. Well, Zoom video could be in the running to buy an unprofitable cloud company, and investors are definitely reacting. I'll have that story and much more after this short break. We're about 15 away from the closing bell. Christina Partsenevelos watching stocks for us as we head there. Christina? Well, let's talk about 5.9 because it's soaring right now.

Just in the last few minutes or so as the cloud-based call center giant is evaluating itself or should be evaluating selling itself, this is according to Bloomberg, the company is gauging interest right now in potential buyers, and that would include Zoom Video, which tried unsuccessfully to buy the company back in 2021. The report also says conversations are still in the early stages and may not necessarily result in a sale. Nonetheless, shares of Five9 are up, oh, look at that, over 9%. And Palantir is under pressure today, as William Blair reiterates its underperformance rating on the data analytics giant. Analysts there say that there's some tension over who owns the data

in a lucrative contract with the U.S. Army, and it could result in the contract being renewed for far less than the original amount of nearly half a billion dollars. This has shares on pace for their worst day since late August, but still up over 180% year-to-date. Shares down almost 9%. Scott? All right, Christina, appreciate it as always.

Christina Partsenevelos. Up next, your retail rundown. Shares of Lululemon and Nike. Well, they're moving in opposite directions today. We're going to tell you why. One analyst having something to do with that. We'll break it down when the closing bell comes right back. I want to give you a quick share of Alaska Airlines.

That stock's falling 15% today after agreeing to acquire Hawaiian Airlines, a deal valued at about $1.9 billion. The company's saying Alaska would pay $18 a share for Hawaiian, would take $900 million of its debt on its balance sheet. Two, Hawaiian Airlines has a market cap of about $250 million. So look at that jump right there. It's only up 190%. Quite a move. Up next, Ford million. So look at that jump right there. It's only up 190%. Quite a move.

Up next, Ford shares. Well, they're higher, too. We're going to break down what's behind that stock's pop and how it could impact the rest of the auto space. That and much more when we take you inside the Market Zone. 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. Plus, Phil LeBeau on Ford's latest sales numbers.

That stock's on the move. Courtney Reagan joining us on the retail name. Wells Fargo just called a top pick. And I guess the one they just didn't. Mike Santoli, I turn to you first. Trying to make a move here towards the end of the day in the Dow. Yeah, it wasn't much of an across-the-board pullback at all. The market's really continuing to try to address a lot of the major complaints about it.

The breadth problem is essentially fixed in the sense that the advanced decline line has made a new high. You're seeing it again today. I mean, even there are more NASDAQ stocks up than down today, even though the NASDAQ itself has kind of been taking it on the chin, down close to 2% all day. It's probably what Eric Jackson was talking about, right? The big guys are down today, and that's the weight on the Dow in large respects with Microsoft and Apple.

You throw Salesforce in there, too. So it's running from mega cap to smaller, from crowded to neglected, from arguably expensive or bulletproof growth to more cyclical and less expensive. We'll see how long it lasts. This is the absolutely perfect way for the market to digest this move if that's what we're going to be doing down the road. Obviously, I think there's also a history of early December being a little bit choppy or sleepy. And then you see the jobs number and the Fed meeting in the next six trading

sessions. So there's probably all the reason in the world for us to hesitate a little bit right here and figure out if this rally made sense. What do you make of what Rick Reeder had to say, who came across, I think the word sanguine, I said it earlier, that's the word he used. Absolutely. I mean, normalization is very benign in the way that he frames it. And I think the word sanguine, I said it earlier. That's the word he used. Absolutely. I mean, normalization is very benign in the way that he frames it. And I think that if things do play out that way, and that's what the market has been kind of warming toward here, where good news is good news. The economy is going to slow but not fall apart. Yields can moderate from here. And policy is in a more comfortable place when it comes to the Fed.

I think that it makes a lot of sense. The question is, is the stock market, you know, kind of not taking the pain along the way or has it done so in such a subtle, nuanced way that there isn't tremendous amount of upside from here based on that? Maybe that's the case. But I think it's, you know, it's a scenario we should probably wish for and it has a shot of happening. All right. So, Phil LeBeau, I'm looking at Ford today, which is higher. Investors will take it because it's been a pretty tough year for those shares. Yeah. Yeah. And they've been beaten down over the last three or four weeks, especially coming off the UAW contract deal as those details came out. But take a look at the stock today.

It's moving higher largely because when you look at November sales, the strategy shift that Jim Farley talked about a few months ago when he said we are going to go hard on hybrids, it is paying off. Overall sales down fractionally. There you see the ICE models. ICE models are tougher to sell for everybody right now. But the hybrids, they are hot. And it's not just hybrids that are working at Ford. They increased their production on the F-150 Lightning, the Mustang Mach-E. They started that a few months ago. That's the reason why those sales of those EVs up 43% in the month of November. Look, for a company that has had not a whole lot to celebrate over the last month, aside from the UAW contract, they'll take this. This is proof that that strategy shift from Jim Farley is working. But take a look at Ford and GM versus

Honda and Toyota. Actually, yeah, we're going to take a look at all these. There's been a definite split in terms of performance this year, and it's easy to see why when you look at what's happening with Toyota and Honda and the emphasis on hybrids relative to the investments in EVs. That's what's been weighing down Ford and GM. It's the EV investments. Sure. Phil, good stuff. Thank you. Phil LeBeau, now to Courtney Reagan. So Nike gets a yay, Lulu gets a nay from Wells Fargo. Yeah, this is kind of an interesting one, Scott, because it's really a bit of a victory lap for Wells Fargo with Lulu Lemon. Analyst Ike Borchow upgraded Lulu in January because he thought inventory would normalize, margins would

be fueled by improving freight costs, international growth, especially China, would be robust, and its valuation would then return to historical trends and all that happened. Well, all of that did pretty much play out. And so that drove Lulu's outperformance this year. He was right. So then when he looks to 2024, Wells Fargo downgrading Lulu to equal weight and replacing it with Nike as both its top pick and its new top defensive pick. So Nike is right now overweight with Wells Fargo $125 price target. Borja Chow says that Nike is still a quote, show me story, but believes its recovery characteristics and self-help story makes it a compelling long idea for next year.

And a note to clients, he says there is ongoing opportunities for revenue growth, margin expansion and free cash flow generation to justify its target multiples. But he acknowledges current demand for footwear in China is still a major concern and certainly a risk factor. Scott. All right, Court, thank you very much. Two-minute warning, just about there. Mike Santoli, we turn our attention back to the market. The Russell is the outperformer, as we said. Dow's come back from where it was. NASDAQ's having a rough day. You want to opine on this news that Zuckerberg's selling some stock. And a week or so ago, we were like, well, Bezos is selling a lot. Now we get word of some NVIDIA insiders as well, right as these stocks have just

crushed it without having to speculate as to the reasons why they're selling it, because you truly don't know. You can't know. I mean, and it probably varies, to be honest. The NVIDIA insider selling, I mean, that comes after the earnings report. You open up the window when people are allowed to sell and the stock's up. You know, it's tripled this year. So, I mean, that you can take as a bit of a price signal, I think. Mark Zuckerberg, founder, peeling off stock. The stock's down less than Alphabet is today. So it's not as if I think people have seized on that to say, aha. Now, if Zuckerberg were to say, I'm going to pass along the company to my successor CEO,

as Bezos did at the absolute perfect top in 2021, then that's a different story. But at this point, to me, lightening up doesn't make a lot of sense. The overall market insider selling trends are not nearly alarming at this point. In fact, it's one of the many measures of kind of sentiment and how far people are out on the risk curve that I don't think are really flashing a red signal even if you know The market looks a little bit stretched on a 12-month five-week run been an interesting week though for you know Alphabet's down 5% over one week Meta's down about four and a half and videos down near six Yeah, and you you know, there was an argument as to whether the overall tape could handle something like that again right now

We're rotating because people's overall equity exposures are not that crazy at this point. I don't know that we're seeing a real leadership shift that's going to last for a long time. I'm not ready to make the, you know, Russell's go in a 2,500 call or anything like that. But it's worth keeping an eye on that the market can handle this kind of backflow

off of the mega cap. You let us know when you're ready to make your call. That's Mike Santoli. We'll see him tomorrow. I'll see all of you tomorrow.