Power Lunch - Crypto prices bounce 12/2/25

Episode Date: December 2, 2025

Stocks headed for gains as crypto prices rebounded from the slide. Can equities carry momentum into 2026? And Costco sues the Trump Administration.  Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Barry jib. Barry jib. Stocks rebounding from the sour start to the month. Welcome to Power Lunch, everybody. I am Brian with Kelly. We're on our sixth day of gains in seven sessions. You can say the market is staying alive. Some of yesterday's losers, the winners today,

that is technology in crypto. And crypto, it needs a win. Bitcoin is wiped out all of its gains, Kelly, for the year. Wow. The question is whether the bull market for stocks has more room to run for 2026. And the forecasts are rolling in. The trillion dollar question remains about AI. Is it a sustainable revolution?

Is it a bubble? Osang Juan of Wells Fargo. Anastasia Amoroso, a partners group. They'll join us to give their outlooks in a little bit. And for those who are you shopping around for a little value this holiday season? I mean, who isn't? Don't worry. We have you covered because Stephanie Link is here bringing the holiday spirit and a big, brand-new

stock pick just for you. We get all that ahead, but let's start today with the news of the day in the ongoing and everlasting sort of jockeying for first place in the trillion-dollar AI race. Sam Altman, he of OpenAI, reportedly sending a memo to employees calling the chatbot situation a quote, code red. This after Alphabet, Google's parent company, released its newest version of Gemini its AI bought a couple of weeks ago that many in the technology, community you're saying is now ahead of chat GPT. Joining us now is McKenzie Sagalooks, who's actually in Las Vegas. We get to that in a second, McKenzie.

This is fascinating because Sam Altman and OpenAI had been considered the leaders for about three years. They were the big dogs. They had all the money. They still maybe do. Alphabet was left for dead. Now all they, here they come, the sort of leapfrogging Altman and Open AI. How red is this code?

read. CEO Sam Altman is on, like it's on, he's on unfamiliar ground here. He's on the back foot to Google. It's the three year anniversary this week of Chat ChbT's launch when he very much had Google on the back foot with their chat bot. And what this really says is that he's doing something that's familiar from the OpenAI playbook. He is centralizing resources under this project.

He did this in the context of that video generation software app, SORA that came out a few months ago. That was in response to V-O-3 from Google. He is now doing it in the context of the LLM wars because that's really been the product that is driven so much of the optimism, why they're able to get investors on board these valuations, even though they're not profitable, even though they skewed the retail customer, which is a lot more or a lot less lucrative than that enterprise base. And he's done it because they were the clear leader in chatchee. You know what's changed in the last six months? You've got Gemini, Google's chatbot, launching these advanced models that have now become super sticky with the retail customer.

They've gone from 450 million to 650 million monthly active users in the course of a few months, and you've got some data showing that engagement is actually higher on Gemini now than it's on ChatGBT. I'm going to use a boxing metaphor or analogy, one of the two. I always get them mixed up, which is you've got this boxer, open AI, who's just been punching alphabet and everybody else kind of in the face round after round. seen as the clear leader. Alphabet, suddenly the old boxer comes out of the corner in the eighth round, starts landing haymakers. Is there something that Alphabet did that got them to where they are now, or did the market maybe, maybe Silicon Valley just completely underestimate

Alphabet and Sundar Pichai? The big thing that Google has that Open AI doesn't is a full AI stack. For 10 years, they have building, they've been building in-house, AI chips, that TPU, they've got their own cloud business. And then they came up with the actually invented the transformer tech that's behind all of these LLMs. So they really were poised to be the leader from the beginning, which is why it was so impressive that Open AI came out ahead of them in the way that they did. And so Open AI has been trying to replicate that playbook. They signed that $10 billion deal with Broadcom to make their own AI chips. They've committed $1.4 trillion to build out all these hyperscaler campuses to compete with Google

ostensibly on the cloud side of their business, but that's the big question, whether they can compete on the model front. And really, what I will say is that every few weeks, you've got a new model out. It was just this week, Deep Sea came out with two new models that they say actually either match or outperform, both chat CBT5 and Gemini Free. And that's what this model race has become. Like every few weeks, whoever has the latest model out suddenly is ahead of the game. And another thing that Altman put in that memo was the fact that next week they're putting out a reasoning model that's actually going to outperform Gemini 3 according to their benchmarking tests. That, Bri, was an analogy that you gave, because according to Gemini, an analogy is a more

detailed comparison used for explanation, but a metaphor is a shorter, more direct comparison that says one thing is another. What about a simile? And so that's how we know that these tools have become so, like, useful for everyday life. But you quoted Gemini. You didn't quote chat GPT. Because I put it in. You just did exactly why I think this code red. Yeah. was launched. Also because I wasn't logged in on this computer and I have to, but nevertheless, I think that your question about how red is the code red is the right one, right? There's sort of the code red of our business is losing, you know, we've got a, someone else has a tenth of a foot of a lead on us. And then there's the code red of no one's using our product. And I'm not sure

this is a code read of no one's using chat GPT so much as more of a, you know, inside baseball, look, their models, it's a little, maybe it's a little bit better than all. And I guess McKenzie the shift is the urgency is because when people get used to a product, like Kelly just referenced, Gemini, when they get used to using a product, it's hard to shift. They've made their choice, and that choice may be very, very sticky. So the trillion dollar race is now. This is it. That's exactly. And you've got data showing that engagement is higher on Gemini than it is for Chatjee. And that's what's so concerning because, yes, Open AI is still in the lead in the context of weekly active users, 800 million there. But it's just in the space of a few months that Gemini was able to add another 200 million users to their base.

And so that's a concern here. How long will they hold onto that lead? And at this point, their investors are contributing to their cap table in the context of them being the leader in the chatbot wars. Because they're trying to build up their enterprise business, but it's still 70, 30 in favor of the retail consumer, which doesn't bring as much money. in the door. And what's also notable here is that Altman is going all in on making this revenue stream work. He is putting to the side monetization tactics that they had been testing out as this, you know, different merchant integrations, these shopping agents. He's saying we're going to sideline all of those projects in favor of making chat CBT work for the consumer because this is how, this is the premise in which we are instilling confidence in our investors to keep

contributing at a half a trillion dollar valuation. Yeah. And you're right. Like what one, Marginal customer for life is worth it at this. But, Mac, why are you in Vegas, by the way? Is it related to Code Red or no? What kind of Code Red? I'm here for Amazon ReInvent, which is their big annual conference for their cloud business.

And we have these slew of announcements, but the most notable among them is the fact that they are coming out with not just the Traneum 3 chip, but their Traynium 4 chip. And that's what, I mean, the Cloud Wars, Kelly, they're now commenced, like, they're completely in keeping with the Cloud Wars.

So the same thing, because those who win the in-house silicon battle are going to do better on margins. They're going to bring more customers in the door. And that's part of why the underdog here, Google, has been able to land some new contracts from the likes of Anthropic, from META, because their TPUs, their in-house chips are really popular. But Matt Garman, AWS CEO on stage today, and I'm not sure if we have enough time with the control room to play a soundbite. But he was pushing ahead to these new chips because their point is we were only three years

behind Google and putting our silicon program together. But we are coming for them. And I will also say that there's something about this not being a zero-sum game and that having competitive silicon actually puts pressure on Nvidia to undercut them on price. Andy Jassy, Amazon CEO has said that their tranium chips are 40% cheaper than the industry standard. That is huge when you have that kind of cost control, both in terms of its cloud business, which is still Amazon's profit engine and in the context of getting more AI enterprise customers on their cloud. Yeah, it's fascinating.

It's amazing. It's amazing on the same day. We'll let you go, McKenzie. We've got an Amazon semiconductor chip announcement and an Amazon announcement that you just didn't, the one o'clock, about super fast delivery. Trying to get groceries quicker to your door. It's Amazon's world and we're just kind of living in it. McKenzie, thank you. Let's move over to crypto now, which is actually bouncing back after a rough month and, of course, a rough session yesterday. Strategy and Bitmine, as of yesterday's market close, we're getting crushed. Robin Hood, Coinbase, popular for crypto trading. They are, of course, are under pressure as well. Today, the crypto's on a rebound, and so goes the halo effect. The crypto exchanges and other exchanges that trade significant

volumes of crypto are up as well. And so are the crypto treasury names like strategy, Bitmine, and Sharp Lake Gaming. Join us to break down exactly what's going on here as Neo-classic co-founder and managing partner, Michael Buccella. Mike, it's great to see you again. Why the sudden, it collapses too strong of a word, especially in the crypto world? Why the sudden reset and value? What do you think is going on here? Yeah, I'm here. I'm here. Can you hear us now?

Yep, I can hear you. It's like a Verizon commercial. We got you. You're good. You're good. It's good. We're good. We plugged in the DSL line.

Yes. Why the sudden reset in crypto value to Kelly's question? So we still are recovering from October. 10th. And I think the market really, we have a very sensitive market. They go heavy into doomsday scenarios, narratives. We had a liquidity situation. It created some de-leveraging events, and we haven't recovered from that. Open interest is still well below where it was. I would say general speculation has kind of moved away from the tail end of our industry into things like the prediction markets and zero-day options in Robin Hood. So I think the speculative part of the market

is sourced elsewhere at the moment. The institutional bid came out for a moment because that's what they do. You come into an event where you need to de-risk your overall portfolio. And then today, thankfully, we're in a day where the Bitcoin's in the black. I'm typically next to a red screen, which I think I currently am. You know, we saw the announcement from Vanguard, saying that they're going to allow their clients to trade and invest in crypto ETFs and mutual funds that control or hold crypto. And then Bank of America saying they're going to allow their advisors to allocate one to four percent of their clients' investments into crypto assets. So those two things along with, I mean, Atkins' announcement is incredible. incredibly bullish for the part of my industry, which is private markets, developing, building,

financial innovation. But he indicated in January of this year, we're going to have an innovation exemption, which allows all the builders in the U.S. to build without being beholden to the existing securities laws, which are really restrictive in terms of innovating a financial market. So I would say all that to say, institutions are edging back in. Retail can change on a dime. So retail can come right back into the market, but at the moment they're still pretty absent. We're talking about Circle. How do you, what's What's your point of view on the whole stable coin industry? Stable coins are critical.

I mean, the stable coin bill was one of the most important bills for our industry. And I think my face might be freezing in process, so bear with me. But stable coins are incredibly important for us to get into financial markets and financial markets to get into the crypto industry. I think the ability to transact at the speed with a bare asset is incredibly important for risk reduction. And I think you're starting to see a lot of innovation in the world of private credit. right the consumer lending market is going to be under under certain types of review but yeah go ahead

i suppose where i'm going with this is is it a great business model we were talking about this last hour if circle is fundamentally a spread play on high interest rates in the era of of higher interest rates is ending if they lose 100 million dollars in revenue every time the fed cuts rates by 25 basis points that's not a great name to i mean that would explain why they're back down towards their IPO price would it not it's it's it's you know if the business model is sensitive to rates it's sensitive to rates. I mean, you have to think maybe a little bit further out into how can they grow into a multiple they were once at. But generally speaking, if you're a net interest margin model, then you are beholden to the rate curve. And so, you know, will I say it's a good

or a bad business? It's a great business. It's made a lot of people a lot of money. I think they're still operating, you know, at a pretty decent margin. But if, you know, that rates curve continues to move in that direction, it's going to be more difficult to generate capital. Tether, on the other hand, you know, is an interesting model. It's obviously up for debate. They retain a lot of that. margin, and then they sort of reinvested on their own balance sheet. So there's many different models out there. You have things like Athena, which you're actually in a stable coin that has a basis trade that generates yield. So it's almost like utility in the back end. But stables are a good business. And they're very useful for the financial aspect of crypto.

They're useful. I guess we'll find out if they're good business. A quick last word, like I know you've got to go. But do you think that this shakeout is behind us now? Or has it left kind of has it left people with a bad taste in their mouth about the industry that has you think affected where the price can go from here? Yeah, I've, I have no tasteless. I'm numb to these types of movement, so I'm probably not a good barometer. I would say generally any time we have a run to all-time highs

and a retracement, you're going to have people that acquire it have bought at the top. And they didn't sort of dollar cost average, which I feel like I always say dollar cost average. But they sort of, you know, place their full one, two, three, four, 20% of their assets into Bitcoin at the peak. And so, yeah, listen, people are going to be scorn by it. But I do think, generally speaking, we're in a good position.

There was a lot of de-leveraging. The vol in Bitcoin continues to be higher elevated than it was previously because the markets are still fairly thin. And so that's the big risk. The big risk is we don't get the market depth that we had three, four, five months ago to support those sell-offs. But if we keep getting bullish indicators like we did in this morning, we should be in a good position.

All right, I like it. Thanks for your take. Mike, appreciate your time. Thank you. Mike, you sell-off. All right, outside of crypto, let's get a quick check on that stock. The Intel on Intel, Intel up 7.7%. It's leading the NASDAQ, really kind of amid a data center full of bullish option calls.

Intel, it has really turned it around with the new CEO and now trading at its highest level since April of last year. And after the break, the great Stephanie Link will join us with her best ideas, one of which you see on your screen. That is the mystery chart. You think you know it? Let us know. We'll reveal the name and more. Next. All right, Dow is up 170, and as you can see for the graphic, it is time for a power check.

And today, we're looking at a couple of names that your next guest thinks you should be buying. And that guest is our good friend Stephanie Link, chief investment strategist at High Tower Advisor. Steph, great to have you on set. Right to be here first time. Really? First time on this set. On this set? Yes. Well, I'm sorry. Well, no, we hope there's a second time. Thanks for coming, schlepping out to new. We know it's so beautiful outside the weather, 5035 and raining. All right, the first name on your list is home builder D.R. Horton. Now, this stock has done really well on hopes of maybe lower interest rates down the line. Stocks up 35% of the past six months.

What is your bullish case on DHA? But it's still down 7% in the past year. And it trades at 13.8 times earnings. And they are one of the best operators in the industry. Look, we know about interest rates are too high and demand is too weak. But I think you have a lot of pent-up demand that is out there. So when rates do come down, and I think you need mid-fives in terms of mortgage rates. But I think we're going to get there.

And once we get there, you have five million homes. that were short in this country. You have five million millennials that wanna buy a first time home. And if you talk to any of the home builders, they will tell you they would much rather buy back their stock than actually build. In fact, the big five builders out there, home builders,

they all have buyback programs. D.R. Horton has the largest. It's $3 billion and it's 6% of the float. And 50% of their business is first time buyers. So I think when you do get those first time buyers coming into the market, these guys should do pretty well. Isn't a home builder's job to build homes? Five million homes short in this country.

That's a big number. We should build. We should build, and eventually they will. But guess what? In D.R. Horton's last quarter starts, we're down 31% year over year. So it's not changing anytime soon. Is that just because it's not in good business sense right now, or is there something standing in their way? Well, I think it's both.

The demand is not there. They have to give out incentives. So gross margins have been under pressure, which is why this thing trades at 13.8 times earnings. But I do think once you get the demand, then you're going to have the pricing power, and then you have gross margins. Well, millennials may not be able to buy a home, but they are having children. Birth rates are – I don't know if your birth rates are up. As we talk about Dick's sporting goods, I'm about to drop how many dollars over the next 10 years. Because once your kids are old enough to start playing Little League, you're going to spend a lot of money on sporting goods, soccer balls, lacrosse balls, little league stuff.

This woman knows that. She knows that. Are you kidding me with her family? I don't even think we're going to have the capacity to do organizing. She almost has a baseball team. Yes, that's right. But Dick's sporting goods is winning, and they bought Footlock. They're going to kind of shut down some of their operations.

They're roll some others. They've got these huge places where you can now, like, play baseball inside. What's your thesis on Dix? Pretty cool. Their core business is humming. They just reported comps of 5.7% this past quarter versus 6.4% a year ago. So they're comping the comp. Wow.

That's a big, big number, in my opinion. They raised numbers. They're increasing market share. And Foot Locker is the problem right now. But you guys know, I like turnaround stories. And this has a little bit of a mini turnaround story within it. Core business good, footlocker bad. They fix Foot Locker, and then you get even better sales.

That was our mystery chart as well, by the way. So 10x trades and Oyster Capital, they guessed it right off the bat. Where do we go from here on that? Do we do Palo Alto potentially? We can do that. No, Natera. Oh. Is that fine?

Yeah. This is... Could I call an audible on the Audible very quickly? Because you just threw in the towel on Target. Talking about retail turnaround stories, before we get to Netara, this seems to fit more with the Dick's story. If I thought there was a turnaround story at Target, you've clearly given up on that. Well, I still own a little bit, a very small position, but that's because I didn't have any cash, and I wanted to buy Dix. And by the way, I wanted to buy Starbucks, which is another name that's fairly new.

Target just has a lot of problems. It's going to take a long time to fix. If I thought it was a six-month fix, I would buy it here, because it's trading an 11 times earnings, and it yields 5%. Wow. But I just think it's going to be a real challenge for them to get traffic in the door. Are they going to have to cut the dividend if it yields 5%? They might. They might.

I would not be surprised. I think it's pricing in kind of really all that's bad. But I just feel like this is going to take time. And I just think these other names that I bought in the consumer world will do better. So I'm keeping a little position because it's so cheap and because you do have a turnaround and you do have new management. but the traffic is declining sequentially. They're losing share every single quarter. They're going to spend 25% more in CAPX just to turn it around.

Let's wait to see if we get any return on our investment on those investments. It's going to be tough. I was shocked to hear that Natera is Drucken Miller's biggest possession right now. We have to talk about that. I talked about this with a company a year or two ago, and I don't need to get into it. But why do you think this is such an attractive opportunity? Women's Health. It's a $50 billion total addressable market.

This company has ASP pricing power. They have a whole bunch of new products. They're seeing volumes accelerate in their existing products. They have 100 clinical trials right now. So they're not going to make it all, but they've got a lot in the pipeline. And the company is growing revenues about 15%. I think you can get that to 30% over the next three to five years. And more importantly, margins, gross margins, 64% today, I think they can get to 70%.

So that, talk about operating leverage. Now, look, the stock has had a nice run. I certainly wouldn't want people to, you know, run in and put all their money in this, right? Wait for any dips, but it's a really great story for the long term. Netara, Dick's Sporting Goods, D.R. Horton, we didn't get to Palo Alto, but that's like a bonus. That's okay. But we'll reserve that for the next time you come because there will be a next time, because don't, we want, we'd like you here in New Jersey. I like to be here in New Jersey.

Well, do you? This is our home. I do. Well, that makes it easy. I'm a little bit further away than you. All right, well, we'll talk about it offline. She makes your commute look. Stephanie, thank you very much.

Thanks for having, guys. Stephanie Link. Our market navigator will bring us more names to put on your holiday wish list. Some stocks that were once hot are ready to run again in the new year after the break. Welcome back. You know what time it is? It's time for the market navigator. I'm Dominic Chu. Our next guest is looking at a couple of high flyers. One stock that even soared more than 800% over the past five years and then cooled off considerably in 2025. But the story doesn't end there. He thinks some of these names are poised for big comebacks in 2026. So joining us with the story is Rich Mullen. He's the founding partner and CEO at Palace Capital Advisors. Rich, we have high flyers across the board. all over the place in the markets right now. Which ones actually go on your holiday shopping list based upon the pullbacks? We're focused on Vistra Energy. We've seen this, to your point, stock fly over the last five years, up about 14% this year, but pulled back a good 45 points off

its high. Vistra is a beneficiary of the energy super cycle, the demand and electricity attributed to industrial reshoring AI data centers and the electrification of the U.S. We think that this is a long-term secular story and really excited about the pullback here as a great entry point and have positive prospects for 2026. Rich, there's no concern in your mind

about some of these valuations relative to historical norms for these utility-type companies based upon these AI valuations. Well, it's a good point. I mean, historically, utilities, because there was really not, growth attributed to them, have traded 8 to 9 percent times EBDA.

We're seeing utilities now trading at 20 times EBDA, and it really is this secular energy demand. These have turned into growth stories. You know, we've heard today, you know, from Sam Altman, a code red in open AI, and we know that there's going to be winners and losers in this, you know, AI race, but one of the things that's going to be constant is energy, and the demand for it is just insatiable right now. So we think there's a prolific amount of opportunity here and a long-term secular trend that can be investable for many years to come. And Rich, one more on your shopping list has to do with the boom that we've seen in private assets, specifically credit.

What's going on with Aries? Well, Aries is a little bit of a different story. It fell back in the rolling private credit concerns. It's down about 14 percent here. I mean, I think the story here is a secular one as well. People don't realize that there are half as many publicly traded companies today than there were just in 20, or 25 years ago. The market and the opportunity set is going into the private sector. We think with the private credit concerns that have kind of caused this pullback right here, that they exist, but they're not a pervasive trend overall.

We think there's bad credit underwriting in public markets, just as there are in the private markets. And these are pretty idiosyncratic events at this particular time. Private credit is also really tied to the overall health of the economy. We don't see a recession in the offing right now. We think that the economy is set up very nicely for 2026 and private credit and the Ares Infrastructure Fund as well as some of the other pro sports and media verticals that they have really position them nicely for a continuation and the growth of the economy in 2026. All right.

Rich Mullen at Palace Capital Advisors. Thank you very much. What's on this holiday shopping list. Brian Kelly, I'll send things back over to you. All right, Dom, I'll pick it up. Dom, thank you very much. All right, before we go, we got to look at two earnings-related movers. You got MongoDB and Credo. Those stocks are skyrocketing. They posted blowout quarter, both companies raising their guidance thanks to, you guessed it, AI. Coming up here on Power Lunch, is Santa Claus coming to Wall Street this year?

And can this bull run continue? Next year. Street heavy hitters' predictions on both of those next. All right. Welcome back stocks. They are higher across the board right now, six up day in the last seven on the NASDAQ S&P and Dow. Traders now betting the Federal Reserve will cut rates when it meets next week, December 10th. The odds of a Federal Reserve rate cut now at 87%. according to the CME's Fed Watch tool. And while many on Wall Street are expecting a bit of a Santa Claus rally into the year end, there's already optimism for next year.

It's the most bullish forecast coming from Deutsche Bank, with a year-in-priced target of 8,000 by the end of next year. Let's bring in our panel to talk about that and more. Joining us, Anastasia Amoroso, managing director, chief investment strategist of Partners Group, and Osang-Qan chief equity strategist at Wells Fargo, who's never heard of Deutsche Bank. I don't, you're like, who's, who's Deutsche Bank?

What is your target for next year, Osang? 7,800. Okay. Nice. That's pretty bullish. Let's do it. What's the main thesis behind that bullish view? Yeah, I think the macro cycle is still very favorable.

It's going to be led by the profit cycle. We're forecasting 14% EPS growth for next year and another 13% in 2027. Liquidity is a little tight, so that's a little concerning. And I think that was the main corporate for the volatility or the past couple weeks. Well, I think that's turning. We expect the Fed to start increasing their balance sheet starting in April. And we're really calling for the first half is going to be about reflation. So we're long cyclicals, reflationary sectors such as energy, materials, and even like financials and retail.

I think the second half of the year is going to be really about AI. And I think there's a big potential that AI could become an actual bubble led by liquided injection by the Fed. But it's fascinating what you just said, and we'll talk more about this. this kind of, but there are a lot of people right now who go, I'm hearing about the consumer and I'm feeling this shaky. There's no way this economy is that strong. But everything that you're describing as kind of, you know, points of strength sound like they have nothing to do with the consumer space. So do you think the consumer space ultimately catches up to that or just explain this dynamic where we can have strong profits? I mean, that's big profit growth you're talking

about and all of these factors going on, but still a consumer that feels a little bit under pressure. Yeah, I think that's turning. As we look into the first quarter next year, I mean, for 2026, we're forecasting about 80 basis points of GDP contribution from physical policy. And that's really front-loaded in the first half the year, and really in Q1 through tax return. So I think that's going to be a major tailwind to the consumer overall. And for tax return season, we're forecasting about $850 more per person versus last year. So that's going to be a pretty significant tailwind to the consumer overall. Anastasia, your target for next year?

Look, I think the fair value for the market is somewhere around $7,500. And the way I get there is a multiple. Assuming it holds steady and maybe lifts up a little bit because of the rate cuts that we were talking about. And also, you know, we're not going to be applying that multiple to next year's earnings. But really by the end of next year, it's the next year's earnings after that. So that's how I think we can get to $7,500. I think bigger picture, just qualitatively speaking, it's all going to be about the policy tailwinds. And it is what was talked about just now, the tax refunds, the tax cuts that are going to be.

a tailwind for the consumer, certainly, especially for the middle income consumer, I would say, is going to be also about the rate cuts. You know, fine, they're priced into the curve. They're priced into the Fed Fund's rate and the probabilities. But the impact of those rate cuts is still to be felt into 2020. So do you know, and you may know, do you know who the next Federal Reserve chairman? I don't know that. Well, I'm willing to bet, though, you do know that whoever it is is going to push for lower rate cuts,

Correct? I mean, wild assumption on my part. That's right. And look, you know, it's certainly, there's certainly policy, politics reasons potentially to suggest that. But I do think there's also the labor market weakness that should promote further rate cuts. And look, whether you look at the number of job openings, whether you look at, you know, kind of mixed signals we're getting from ADP and payrolls, the labor market does need support. So I think the rate cuts will come in. And Brian, the other thing I will bring into this equation is it is a midterms election year. And I do think as the calendar turns, as the focus turns on the November elections, it's going to be about affordability and what can we do for the consumer? And for all the talk about the cave-shaped

economy, I think next year a lot of the focus is going to be not on how to make the higher income consumer feel good, but how to make the lower income consumer feel good and how to turn that sentiment around. So I think policy is going to go a long ways to try to do that and therefore support the markets. It's fascinating because it seems like there's dry powder Osung, because we had NRF say there was all this foot traffic. And the spending is a little bit more mixed, but it's almost like there's this pent-up demand. The consumer wants to spend, and maybe to the point that you guys have made, they get a little bit of that, called it stimulus, almost that's kind of coming down the pipeline. And now I could actually, I see how you're

arriving at some pretty bullish outlooks for next year. Yeah, and I think AI earnings are going to continue to be strong. I think this is a prolonged cap-back cycle that AI companies are going to have to invest more because I think this is almost like mandatory cap-ex that this is on AI arms race. So that's going to continue. We're going to see more contribution from more beaten down sectors. And we're starting to see some of the more short-cycle industrials and more beaten-down sectors starting to see better, you know, pricing power and things like that. You said something at the beginning, though, Osang, sorry to cut you off. That really caught my ear. You said the second half of next year may turn into a

an actual AI bubble. What did you mean by that? I don't think it's a bubble yet. But you think it could become one? Yes. Through cheap low rates, cheaper money, causing bad behavior? More liquidity, more speculation.

I mean, so far, basically since the end of the tech bubble, the entire outperformance in the NASDAQ versus the S&P has been driven by better fundamentals, better earnings growth. And I think that's likely to continue going forward. So I don't think it's a bubble. I think it's fundamentally driven our performance in the NASDAQ.

I think there's a big chance that as the Fed starts to expand this balance sheet, meaning there's going to be more liquidity in the system, more liquidity means speculation. So as speculation starts to pick up, that could potentially create a bubble in AI. Yeah, I mean, these are definitely the right kind of points to call out, and I think the right risk to monitor, but I think what it really ultimately depends on whether adoption keeps on rising or not,

whether AI innovation keeps happening or not, And one of the things I'm actually quite encouraged right now is that the innovation does seem to be happening. It's not just Chad GBT. It's the new models of Gemini that are, you know, showing, you know, really successful outcomes. So you have the innovation. You have those big tech players that are drivers of AI CAPX. They are also the beneficiaries of AI revenues. And they're really the enablers of the adoption.

And I think as long as that formula holds, you know, it's not a bubble. You know, sure, do we have some extended valuations in public markets? And private markets and AI stocks, yes, of course. But I think if you can parse through that and focus on what is actually driving value in AI, it's not a bubble. All right. We need like a feeling good music to start playing here. It's like all happy. No, but I like the way you're explaining where this could come from.

Thank you both. Appreciate it. Anastasia Amoroso and Osang Kwan. On the fixed income side, the 10-year yield is pulling back after touching its highest level since mid-November. We're around 4.085. market's looking ahead to the Fed's final meeting of the year next week. Rick Santelli has more from Chicago. Rick, what are you watching?

You know, I'm watching all the yields around the globe as we kind of head into year end and do recognize that even though we have priced in a cut and I don't think the Fed ever will disappoint the market when it's over 60 percent probability. It certainly doesn't mean the longer maturities are going to play ball with the Fed's easing mentality. And around the globe, rates are snugging up a bit. Let's look at one-week charts and realize today we have a bull steepener, very slight, meaning to 10 years virtually unchanged, but short rates are a bit lower. Let's look at one-week charts and travel around the world.

If we look at our 10-year, over the last several days, you can see yields moved up. But we have the highest yield on most of the economic partnerships we have around the world. At 408, but we're down 49 basis points for the year. Now, let's look at a German boon. Right now, at 275, it's up 40 basis points on the year. Add in the French tenure. It's up 30 basis points on the year. Let's add in the Japanese tenure.

It's up 78 basis points on the year. All of them are well below 4%. But the trend is clear, and the rate of change may make it painful, especially in Japan. Brian, back to you. It's like the World Cup of Fixed Income. I love it. We're going to have like a World Cup, but for bonds. Rick Sancelli, thank you.

You like that? I love Honduras versus Ecuador versus Germany versus Brazil. All right. Coming up, call it the Costco counterpunch. The retailer taking on President Trump's tariffs in court. Welcome back. Costco is taking on the White House, becoming one of the largest U.S. corporations to challenge the president's sweeping tariffs in court. Their lawsuit argues for a refund of the tariffs they have paid on imported goods thus far.

Amon Javers has more from the White House. Amen? Hey there, Kelly. Well, yeah, Costco is saying here that they're facing a December 15th deadline to settle up their bar tab in effect with customs and border protection. That's why they had to file this lawsuit, which they dropped on Friday. And what they're saying is they want these tariffs to be ruled as illegal, and they want a full refund. We'll see what the court says about all this. Obviously, it's going to be up to the Supreme Court, which has said that it's going to take up the case overall on the president's tariffs on an expedited basis.

And also that the president will also see what the president has to say here. The president has said this is one of the most important cases that the Supreme Court will ever decide because of the bearing that has on his foreign policy and the conduct of his foreign policy. That being the case, Amin, how notable is it for a name, you know, everyday name like Costco, huge loyal following? In other words, they have something to lose. They're not going to do this unless they think it's really important and they really want to, I guess, recoup the revenue that they are the dollars that they've had to pay on tariffs. Yeah, I mean, you know, this is just my interpretation, Kelly,

but you read the language in the lawsuit. It does seem, you know, a little tentative. It's almost as if they're saying, look, we didn't want to do this, but this is the situation we're in. We have to because we're facing this deadline and because we're not sure that if the retail, winners win the case in the Supreme Court against the administration, we're not sure that we necessarily will get a full refund unless we have filed our own independent legal action. So that's why we're doing this. And they raise, you know, the prospect of going toe to toe with this administration, which a lot of companies have not wanted to do because the president is so loud on social media when he sees a company doing something that he doesn't agree with. In this case, the statement from the White House was fairly tepid, simply saying that the fact that this case, was filed indicates the importance of the Supreme Court deciding on the president's side in this case.

So in other words, if they think they have to specifically file this lawsuit in order to claim any rebates that might be coming on the tariff front, we might expect then a lot of other companies you're going to follow suit. Yeah, and a lot of companies have already done that, Revlon being one of the big ones, but yeah, I think you might see a lot more of this, especially if Costco does this, kind of sticks their head above the trench here, and nothing negative happens to them. You might see a bunch more companies decide to weigh in here. And the big question, Kelly, here, is how much has Costco paid in tariffs so far this year? That number is not in the 17-page filing. So we just don't know at this point exactly how much is at stake for this

company, but it's got to be a pretty large number for them to take this action. You'd have to imagine. Yeah, absolutely. Maybe we'll get more granularity on that front. For now, Amen, thanks. Appreciate it. You bet. All right, let's get out of Sima Modi for a CNBC news. Brian, the man accused of shooting two National Guard members last week in Washington, D.C., entered a not-guilty plea this afternoon. Ramuna Laquanwa is charged with first-degree murder and assault in the ambush, which killed one soldier and left another fighting for his life. The Afghan National, who investigators say once worked with the CIA, appeared in court virtually from his hospital bed. Agriculture Secretary Brooke Rollins threatened to cut off federal funding to 22 Democratic states next week, over their alleged refusal to share SNAP program data with the Trump administration.

She says the states include California, New York, and Minnesota, that administrative funds will be on pause until they comply with the order. And the Pope urging the U.S. today to avoid a military ouster of Venezuela's president, Nicholas Maduro. He said dialogue and economic pressure on Venezuela would be a more appropriate course of action. The Trump administration has been reportedly weighing military options in the country in response to Venezuela's alleged drug trafficking to the U.S. Kelly? All right.

Thank you very much. We appreciate it, Zima. Coming up, the Warner Brothers Bidding War, a media giant sweetening its offer as many circle the popular name. We'll be right back. Got some breaking developments in the Warner Brothers Discovery Bidding War. Julia Borsden, what's going on? Well, Brian, the latest bids for Warner Brothers Discovery came in on the deadline yesterday.

Ahead of Warner Brothers Discoveries proclaimed target of a deal by Christmas. Sources familiar with the situations say Paramount Skydance's latest bid for all of Warner Brothers Discovery include some sovereign wealth fund cash. Now, it's unclear what the exact amount is, but sources say the amount of sovereign representation would not trigger a Sipheus review. Comcast bid, which is a combination of cash and stock, according to a source, familiar, say that the offer would combine Warner Brothers' discoveries streaming and studio assets with NBC Universal's studio and streaming and all of its remaining assets after spinning off

Versant, which will be CNBC's parent company after the spin. Now, Netflix's bid for the streaming in studios division is reportedly majority cash. Sources tell me Netflix would remain committed to theatrical releases for Warner Brothers films if an acquisition were to go through. Now, no comment from any of these players. I'm told that Warner Brothers Discovery is keeping a tight lid on the process and that the role that Warner Brothers Discovery CEO David Zazlov will play is part of these discussions.

Bloomberg reporting today that Zazlov is expected to have a management role at the new entity under the Comcast offer. Surely, this has been the source of a lot of speculation, Brian. Former CNBC producer and executive David Zaslov. It all comes full circle. Julia, thank you very much. And this has been the one to watch, obviously, for what kind of exact combination. Many chapters yet still to find out.

We want to get in this little fact of the day, though, right? The stud and the dud? It is, thank you. What is the stud? No, you go ahead. It's Boeing, I think. The stud is Boeing. It is Boeing.

Flying high. By the way, we're going to talk about Boeing tonight in the 5 p.m. show, Fast Money. I shall be hosting. Mel is out tonight and tomorrow, so tune in. We'll talk with the traders about B.A. Now, B. A. Barracus from the A team, Boeing. Up 9% this year. It's shocking. The Dudd Packaging Corp packing it in on track for its worst day since April. I still wanted to talk about the anniversary of Enron.

That's right. Today was today. And the company that replaced it after its bankruptcy and the, was it in the S&P 500 was, ding, ding, ding. Invidia. Envita. Closing bell. Start right now.