Power Lunch - Dow reverses course in volatile start to 2025 1/2/25

Episode Date: January 2, 2025

Stocks slid in a choppy first trading session of the new year, as the slump to end 2024 extended into January. We’ll tell you all you need to know. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

And welcome to Power Lunch with Kelly Evans. I'm Brian Sullivan. Great to be back with you on this fine show going forward. Lots to do in the days, weeks and months ahead. First up, stocks, they're taking another turn lower. But this after two very good years, so the only question we're going to answer now is, where do we go from here? And how much do we make of the one day decline today, the lack of the Santa Claus rally?

I guess there's still time. Energy and utilities are the only two S&P sectors in the green today. Nat gas has been moving around a lot. amid this cold snap in the U.S. and Ukraine blocking nat gas shipments in Europe. I don't have to tell you, Brian, but like these prices are up, but they are nowhere near where they were a couple of years ago. I have a feeling we're going to do more on that story coming up. Speaking of blocks, some Knicks and Rangers fans hoping to watch their teams here in the New York

area blocked out. Is this kind of blockade coming to your town and team next? And how is it not? As this, you know, I mean, as everyone has to figure out not only who is their distribution and who's the package and where are they trying to go? The streaming world makes all of this uber complicated. Yeah, and there's a lot of fights. And we're not being local.

It's a national, international television show. The question is, does this then this fight go to L.A. and Chicago and Houston, others. We'll talk about it. We've had how many of these blackouts already, big ones that have been happening. And they fight over money, and then our bill goes up a little bit, and we move on. Well, or, yeah, we move on to something. Let's start with the markets, which are lower on this first trading day of the new year. The big question is whether we can see a repeat performance for 2025, like,

we've just come off of for 24 and 23. Our next guest says, any disappointment, any slow, what? You don't like that intro? Any disappointment or demand slowdown in NVIDIA and AI is the single biggest risk-facing investors. Is it not Dan Greenhouse? I did say that. Yeah, okay.

And what's your beef? I just giggled at, I'm happy to be here. Welcome. With you, with you, what a wonderful. It's too late now. Okay, I'm sorry. No, I did say. And NVIDIA is in the green today, so we can take that.

It is, and it's in the midst of a little bit of a sell-off here, down 10%, 8, 10% from the high. But listen, I'm not breaking any news by saying a demand flowdown in AI is the single biggest risk. So much of those of those mega-cap stocks are derivative, a derivative of that story. And if something were to happen there, obviously, it's the biggest risk facing markets. I know we like to talk about tariffs, but that's really it. Wouldn't you say that, I mean, I could say the biggest risk would just be economic slowdown or Barry Knapp last hour. No, biggest risk is rates backing up because of more term premium deficits, that kind of thing. think they're wrong, especially Barry Knapp, who I have nothing but great respect for.

Listen, yields are a rally. The man's not even here to defend himself, and you're talking on him. I'll call him later. Listen, yields are certainly a risk to market. Obviously, the last time we got up to 475, 5 at the end of 22 was a bit of a problem for markets. And any time yields go up too quickly, it's a problem for equity markets. And certainly, an economic slowdown, given the relationship between broader growth and SB 500 revenues, yada, yada, also a bit of a risk.

But from my standpoint, again, so much of the work. And it's not just Nvidia and Broadcom. It's eaten. And it's a number of companies. It's Vistra. It's all those AI derivative plays that have done so exceedingly well, helping the so-called other 493, which I think is a stupid name, but whatever. All of those are derivatives of the same story.

If something were to happen there, I just, I don't see how that is not the biggest risk. But is the risk that the rate is X or is the risk that the rate has gone up so fast? and the reason why the rate has gone up. Of course. I mean, listen, the reason it goes up is the biggest issue. If yields are going from, let's just say, four and a half to five or five and a half or six, because the U.S. economy explodes through some productivity miracle and everything's going wonderfully, then fine, that's not a problem. If it goes from four and a half to five or six because suddenly the U.S. government has to issue

$8 trillion in gross that next year instead of $4 trillion or whatever the number is, that's obviously a different risk. Now, that said, the inflation story, from my standpoint, I know it's a big risk, and obviously tariffs are complicating the issue somewhat. The inflation story seems contained to me. Contained at a level above the 2% target that the Fed is going for, but contained nonetheless. And so if I'm an economist, I'm worried. Two and a half is not acceptable. Three is not acceptable.

But if I'm an investor, I don't really care. Two and a half is fine as long as it's stable there. Even three is fine if it's stable there. And in fact, that's what you've seen over the last couple of quarters. I'm just checking on the tips yield because we did see a lot of. of movement there the past couple weeks. And to your point about the other 493, and this was actually a point Barry made, so I'll give them some credit. When we see the tips yield rising, that's when we tend to see the mega caps outperform, right? No one wants to own anything else in a

world of sticky inflation. No one wants to own the rustles, for instance. So we've seen a little bit of relief there's the chart. It hasn't come down a lot yet. So there is something in the market that is getting, it doesn't like your 3% as much as you do. Listen, the one caveat I'll offer to this conversation is I think when we lumped and I just did it, so I'm partially to blame. But when we lump everything in as the other $4.93, it misses that there are a ton of non-AI stories that have been

playing out in markets, irrespective of what the Fed is doing, irrespective of what the government is doing, the insurance stocks are doing super well, a number of industrials are doing well. G.E. Vernova and some of those new energy stocks are still doing well. I know we lump them at consumer related names. Look at Expedia and booking,

for instance. The cruise lines? The hotels. They have. They've been doing incredible. Miami's done very well, by the way. We're going to do that tomorrow. What cities have done best for the stock market? Miami's on that list because the cruise lines. Wow.

But I think to Kelly's point, okay, and what are we going to dunk on Barry Nap? He's not even here. The poor guy, I mean, Barry, call in. You made his point, by the way. We're at a point now. Here's all I worry about. We're at a point now where it doesn't matter that the $493 are doing well, and I agree, stupid name. It's just that everybody just wants to talk about NVIDIA.

Kelly Evans goes out and I at a restaurant. She can't even have dinner with her 17 kids because guess what happens? Everyone just wants to call her side. I said, Kelly. I wish I went to dinner at restaurants. Where's Nvidia going? It's the taxi driver thesis. And that's what worries me.

Everybody's talking about the same five stocks over and over and over. It's almost like the only way I would push back down on what you're saying is I'm not sure Nvidia is the stock anymore. I'm not sure it's the one. And maybe your interactions are different than mine are non-existent. But I'm not sure it's the one that people care the most. I think Broadcom was an interesting turning point in that. The new Nvidia, Broadcom?

You know, the idea that it doesn't have to be those chips that are powering the AI build-out. It doesn't de-risk that story. That's totally fair, but I think that's too nuanced for the conversation. If we're talking about the taxi driver, the taxi driver, the catch-all, the taxi driver, doesn't really care whether it's Nvidia or Broadcom. It's AI, it's chips, it's GPUs, etc. It's the story. And again, whether you play that through Nvidia or Broadcom is largely irrelevant,

that narrative is what's driving some of those other names I mentioned, like Eden, like Vistra. Do you care? I know we have to move on. Do you care the Apple's down 3% today? And what do you make of the fact that this company, which no one is saying is at the forefront of this, the other, was like the best, had some of the most superlative stats in the market to close out the year? Listen, Apple is a powerhouse. It's obviously, not obviously, within the context of those names has some of the least impressive growth rates. Although forward earnings growth rates, although they are looking a little better now, call it low double digits. But does it worry me that it's down 3%. I mean, you know, a friend of mine likes to say, sometimes stocks go up, sometimes stocks go down. You can't hold me.

That friend's a genius. You shouldn't hang out with that friend more often. Sometimes they go up. We're leading the show with that. Listen, everyone. It's not wrong. No, it's not wrong. It's not wrong.

Sometimes that's wrong. And by the way, you've had a great year. All right, sit tight, come up with some more ways to dunk on poor old Barry nap. Let's right now blast it out to Rick Santelli in Chicago. He's got the latest read on the bond market. And why I think you might agree, Rick, that the Federal Reserve cut in September just looks weirder and weirder and weirder, at least to me. You know, I don't disagree. It looks weird, but I don't know that it's making a huge difference.

The long end has a mind of its own. And I think that really is going to be the story for 2025. Everybody's debating if rates go up, it's going to be bad for stocks. There's been plenty of years where the long end has gone up, where the curve is steeping, and stocks loved it because it was underpinned by a strong and growing and expanding economy. Now, if it's about debt and deficits, that's a whole different story. And listen, you know the way the press treated Trump in the first administration? Believe me, they're going to be all over debt and deficits that they've ignored.

for the last administration, it's going to be an ongoing probing story, and the markets are going to pay attention. Claims today? Yeah, they were at the lowest level initial claim since April, but there's a huge asterisk there. The seasonal adjustment process doesn't work well during the holiday season. I would take $211,000 and maybe take it with a grain of salt. In terms of what the markets did, they definitely reversed higher after that, as you see on twos and tens. But I think one of the big stories today that's being overlooked, is this double topping 30-year bonds, right around a closing yield of 4.81%, which, by the way, was the intraday high today in 30-year bonds.

Now, granted, if you're a technician, you're looking primarily at closing yields, but it definitely had an effect today. And finally, you know, the Eurodollar is roughly what? 57.6% of the dollar index. So this is kind of a funny chart, of course, through the mirror image, but it really drives the point home. The euro currency and the dollar index are both at extremes going back for 26 months. If there's a big story today, it's that the dollar jumps into 2025.

Kelly, Brian, and by the way, it's great to see you on this show, Brian. Welcome back. Back to you. Thank you, Rick. Really appreciate that. Double top potentially in the 30 year. Again, do people trade bonds? Probably not.

Let's hope it's a double top and not whatever you'd call something that's about to break. out? Double bottom? Double bottom? Listen, again, the pressure on yields in 2025 is probably roughly the same as the pressure on yields in 2024 with the added uncertainty surrounding tariffs. I will add, I've made the case on the network numerous times. I don't think tariffs are as detrimental as many other people. I think there are offsetting factors that can be applied that are not considered.

That includes strength in the currency. That includes any additional pressure that might occur on oil prices, particularly if the incoming administration, put some pressure on the Middle East, particularly the Saudis, to increase output. So there are complicating factors here that make it more difficult to simply say tariffs are coming and, oh, by the way, inflation is going to spike. Congress might have something to say about all of this. Congress has something to say that's way too much, but presidential candidates can say what they'd like. And they do. They say a lot of things. What actually occurs is often up to the 535 women,

or minus a couple, in D.C., women and men. Except Congress has spent the better part of the last 30 years ceding their authority on tariffs to the executive branch. Such that you have a moment. Or presidents have taken the last 20 years and taken that power. With little opposition. Using executive orders and executive actions. Fair.

That necessarily were not written into what we, well, not you, because you're much younger. But what we learned. Much younger. And Barry Nat, by the way, his happy birthday, Barry. He's emailing me already about this. You're coming on soon. about constitutional power, but I think that's a different issue.

Listen, we're morphing into the political show, but like that's Congress's issue that for 30 years they have ceded that power or allow the executive to take that power. They can take it back anytime they want. But that said, there's little to stop through AIPA or Section 301 or whatever the type of tariff the incoming administration wants to apply. There is little at this moment that Congress seems willing to do to stop that.

So we have to assume that much of that, if not all of that, is going to come to bear on the market. Did you have an AIPA reference in this show? I have no idea. I'm going to leave it to the viewer to Google IEPA and find out for themselves. Or Bing it. Don't judge. We don't promote any companies here.

Bing it? Most search is being done now on Amazon, so you never know. Well said, Lycos. I think the Amazon thing is clear. Web crawler it. I'm all, I'm a Gemini now. Okay. They told me that I said, what was the performance of some stock in 2024?

They said, sorry, we don't have access to stock prices yet. They got to make a deal with CNBC. It's going to cost them. That's right. All right, on, thank you very much. All right, on deck, here on the new Power Lunch, why Ukraine is saying yet to Putin's natural gas, at least for now. All right, welcome back to Power Lunch. Hope I have it a great start to your trading 2025.

Let's talk energy. Natural gas prices. They spiked to a 52-week higher earlier this week following reports of a colder-than-usual temperature forecast for January. That is what we call an understatement. We're supposed to get what's called the polar vortex. All I know, it's going to get really cold. Please know.

Could have two feet of snow in parts of Virginia and maybe North Carolina. Because they do great with snow down there. They can't handle it. In the meantime, Ukraine, halting the flow of natural gas from Russia to several European nations on Wednesday. That brings an end to Moscow's 60-year run of natural gas, 60 years through the same pipeline through Ukraine. The question is, what does it go from here? and what does it mean for us? Joining us out to talk about all of this,

including his outlook for global energy prices this year, Jonathan Maxwell, he is the founder and CEO of Sustainable Development Capital. Jonathan, good to have you back on. Natural gas here in the United States. I mean, God, Europe would love to have our spike. They're paying $50 or paying $3.5. That said, do you think this spike that we're having here is short-term based on this weather forecast?

So very probably not. So one of the things that I find amazing about this story of Ukraine's five-year transit deal not being renewed. So as of yesterday, there's no gas flowing through that pipeline through Ukraine into Europe. One thing I find amazing, actually, is that we've now got more dependence on the United States in Europe than ever before. in fact, about 40% of Europe's LNG comes from the US. There's a huge pressure growing on gas prices here in Europe. They're up about 70% in 24 versus over 20% in America. And I think that there is a very substantial risk that that's going to continue.

I think we're even looking potentially at futures trading higher for the summer this year. We've got substantial gas reserves, but surely there's a risk here that the, sheer weight of demand coming from Europe against supply constraints is going to drive prices globally. Jonathan, I look, U.S. prices are still incredibly low, sort of relatively. Like 360, we were up at $9, you know, during the peaks of 2022. We're nowhere near that. And yes, even though there's going to be, look, we became, first U.S. exports of LNG 2016. By 2023, we were the biggest exporter on the planet. And our gas prices in 2023 and 2024 went nowhere. They basically were around $3 about where they are now. You'd think if we were sending all of this gas and there's this huge,

and so even if we ramp up, you know, to meet that demand that's coming, this big demand spike, we're supposed to bring online 70% more capacity in the next couple of years to the US. Isn't that likely to keep a lid on prices from spiking much more from here? I think European prices that have always been much, much higher than in America. And the point that you're making is really since 2019, in particular, America's become the largest oil and gas producer in the world. Europe isn't, I mean, Europe is an importer. It's energy dependency has gone up, not down. The UK, where I'm sitting, energy dependence has gone up, not down. The government here talks about energy independence, but we import 76% of our energy. I think America's in an

incredibly powerful position. Having said that, there are risks on the price side, and you know, you are going to see very substantial demand coming from Europe, in particular into the United States for imports of LNG. And that's going to have an impact. Now, there is a very positive side to this from a financial perspective, you know, the incoming Trump administration looking to relax export permits on USLNG projects. There was, by the way, a perhaps last ditch piece of news. It's unconfirmed today that the Biden administration is looking to permanently ban drilling for oil and gas in targeted areas of U.S. waters before the end of the administration.

Yeah, it's not good. I don't think it's going to happen. I mean, the judge halted the last attempt that they had. It's the White House's attempt at the end to send up a signal flare. Jonathan, this should not be new news to any CNBC audience. I mean, we've been covering this European energy story now for going on four years. Is there a way to look back and say, what was the main? mistake or mistakes that Europe and its leaders made because Europe and the UK is in really bad shape?

Well, look, for sure. I mean, we have had relatively little investment in base load generation in the UK and Europe. There has been relatively little investment in storage in the UK and Europe. There are enormous investments happening, which I'm delighted about running a sustainability company in renewables, but at the same time, you know, the energy system needs to sort itself out. The biggest piece of it, though, the biggest piece that I would refer to is as follows. Europe extraordinarily wastes enormous amounts of its energy.

And I'm afraid the US does too, but it matters even more in Europe. Roughly two-thirds of the European energy system when it comes to making electricity, for example, roughly two-thirds of the energy used to make electricity lost through, you know, basically through generation, through natural gas systems, through transmission and distribution, let alone at the point of end use. The biggest mistake that Europe has made is not being efficient as importer with the application of the energy that it has to buy from overseas. America has...

Jonathan, that's fair enough, but I would say the biggest mistake that they've made, Germany made a decision to rely its manufacturing economy on piped in gas from Russia. So the waste be what it may, the prices that they've had to pay the past couple of years, subsequent to that, I mean, it's been a complete disaster. Same in the UK for their power prices. So, yeah, they have to figure out a way to, you know, take care of the emissions or what have you, but they also have to get the fuel in the first place. Yeah, but we can't fantasize about how we can produce fuel.

So Europe is an importer, so is the UK. these are the brutal facts. Now, the question is what you do about it. Now, one of the other disasters that Europe has faced is that it started to make massive investments in areas which are so we celebrate it, but make relatively little difference compared, for example, with Boeing more efficient.

We poured billions, hundreds of billions into renewable power, which I'm delighted about, but it hasn't been balanced with an improvement in efficiency. The US has a much large, supply case. By the way, if America made itself more efficient, it would also save hundreds of billions, indeed trillions, which I hope the Elon Musk Department of Government efficiency is going to focus on. But Europe needs this desperately. If Europe becomes more efficient, and this has been the war cry of the European Commission since 2014, literally, since the last time Russia invaded

Ukraine through Crimea, the European Commissioner for Energy said, for every unit of gas we don't use is two and a half we don't buy from Russia. The reason it's such a big difference is because of the level of waste. It's the wake-up call. It's the massive handbrake turn that Europe has now got to because we can't do what America does. We cannot generate energy to this degree. You could if it was nuclear, but Germany decided to shut that, unfortunately, decided to shut that off. Correct.

Yeah. And at this point, it will take a decade, maybe more. And that's just electricity. Electricity, remember, is only 20% of the energy system. Well, said. Jonathan, we'll get you back on because this is a bigger conversation. It's not one that is going away. Jonathan Maxwell is the founder of Sustainable Development Capital and CEO as well.

And Jonathan, thank you very quickly. I just want to add this, that this negotiation, it is possible that Ukraine comes around and says, you know what, okay, we'll allow more Russian gas to flow for more money. Oh, sure, fine, and be that as it may. But you can't tell me it's a bad thing that Europe now has built all of these important. LNG terminals, Germany and all the rest of it, to get U.S., to get gas from the U.S., maybe Australia, I mean, that's a much better partner in the long run, I have to think, than Russia at this point. I've stood on some of them, and I hope so.

And by the way, the first load of U.S. LNG from Venture Global, it went to Greece. So you can't go right from here to Ukraine because it kind of looks bad. But go to Greece first, then sell that to Ukraine. The first load of U.S. LNG to Ukraine just came. So there's a lot of interesting stuff happening. There absolutely is. And after the break, it's been two great years for the markets. The question is whether 2025 continues the winning streak.

Our next guest has a very specific reason to be bullish this year. We'll explore that in-market Navigator next. All right, welcome back to Power Lunch. I wish the first trading day of the year was in the green and we were moving higher and everything was great, but it's not. A lot of the weakness that we saw to start or end 2024 is rolling over to begin this year. The Dow is out about 200 points, not a huge decline, but all three major averages are down about four-tenths of one percent.

Tom Chu, good to see you. Good to see you. Happy New Year. What is our market navigator? We're going to talk a little bit about maybe the fact that there is no Santa Claus Pally this time around. But also, it's been two banner years, right, for the stock market in a row. So that's good. But will it be a three-peat?

Our next guest is bullish on equities in the coming year, but says that it's time to get back to basics, the fundamentals when it comes to actual stock pick. So joining us now is David Miller, the co-founder and chief investment officer over at Catalyst Funds. David, when we say back to basics and we say fundamentals, we are talking about many different metrics, but which basics and fundamentals are you talking about with regard to stock picking in 2025? Yeah, the basics I'm really focused on are the things that drive the quality of the business. What does their revenue growth look like? What does their earnings growth look like?

What's their return on equity, their return on capital? what type of current and forward P are you paying? And that's really what I'm looking at. Okay, so if that's the case, they always say that the bottom line is the most important. The profits are the most important for the company. Ultimately, it's about a company trying to make money for its shareholders and everybody else in the ecosystem. Where exactly is the profit story in 2025 and what types of companies get you there?

Yeah, well, the thing about the stock market or the S&P in general is that, you know, his Historically, if you go back 20 years, P's were around 20. Now, today they're in the mid-27-ish type range, maybe 25 on a forward basis. But ironically, I think they're actually a lot cheaper than they used to be, not meaning that P is lower than the other P.E., but when you compare the types of companies and what they're really worth, if you look at the economy 20 years ago and you look at 2005, the largest companies in the S&P 500 were large, very capital-intensive,

relatively cyclical businesses. They were, you know, banks like Bank of America, City, J.P. Morgan. They were General Electric, General Motors, Ford, firms of that type of nature, that both required a lot of capital, had relatively tight margins, would also be relatively cyclical. Whereas you look at the companies that are dominating the S&P today, and it's completely different. They're powerful monopolies that are growing rapidly with very high free cash flow, very high margins. You had net margins back in 2005 around 7% versus 12% today. And when you think about a company like a Google or an Nvidia or a meta, these companies' margins are much more like almost printing money compared to what it used to be

a couple decades ago, which is why I think we're still in store for a pretty powerful year ahead because those companies' businesses are still firing on all cylinders. And I think their valuations are very reasonable. You know, Brian and I were talking in the break alongside Kelly about the minting money. the aspect of who can kind of make it, how they can do it. What's the top pick then you have for 2025? Yeah, so, you know, amongst, like, you look at the Magnificent Seven, and I think there's a good reason they call them the Magnificent Seven, these really are wonderful businesses, but you look at Google in particular. They're the cheapest of the bunch. They're probably 22 times forward earnings.

They're likely to grow top line and bottom line revenue about 12% over the upcoming year. You've got about 4% earnings yield on the company. I think they're very well positioned and very reasonably priced relative to the growth that you see that they've been able to put up in the cloud. And even their core search business is still growing at a pretty healthy rate. But, you know, close to 30% on the cloud. All right, David, the top pick is Google. Thank you very much. And wishing you a happy and prosperous 2025. Thank you. Appreciate it. You know, Brian, you know, it's interesting about Yes, I do know. And I know you.

The alphabet story is interesting. Remember today earlier, we had a downgrade, right? An analyst downgrade on the shares, but the stock was still up. It remains to be seen what the sentiment is like for many of these mega-cap stocks in 2020. We got to go to Kelly. Here's my question, though. Everybody loves Google, but here's what I'll say. Number one is Kelly said earlier, I use Gemini.

Fair enough. That's Google product. But you do wonder, will AI damage or help? Alphabet's Google's business model. I don't know. I'm a co-pilot user, so I'm in the minority, I guess, right now, but I'm just trying to diversify our usage of AI. How did you get co-pilot? I don't have co-pilot. If you go to our outlook. If you go to Bing right now, if you go to Bing right now, you'll see a co-pilot button right on the top there. Microsoft is going to jam. I mean, it's going to help us.

We can't wait. I'm going to send it over to you guys. I'm going to send it back to you. Thank you very much, guys. After the break, the latest on the recent attacks here in the U.S., both physical, the digital front. as well. We'll lay out all the details when power lunch returns. Welcome back. The U.S. dealing with the aftermaths of attacks on both the digital and physical fronts lately. The first is Chinese hacker stealing treasury documents in what's been called a major incident. Then, of course, the terrorist attack in New Orleans, claiming the lives of 15. There are also growing suspicions around that cyber truck explosion outside of Trump

hotel in Las Vegas. We do have full-team coverage of these stories this afternoon. Let's begin with Megan Kassella with the latest on the Treasury hack. Megan. Kelly, still more questions than answers, I would say, on this security breach at Treasury, congressional Republicans now weighing in asking Treasury Secretary Yellen for a briefing on the details before the end of next week. So the top Republicans on the Senate banking and House Financial Services Committees saying in a letter today that it was unacceptable that a China state-sponsored advanced persistent threat actor, that's an APT actor, was able to access Treasury's systems, saying it raised serious questions

about protocols for safeguarding sensitive federal information. That request coming after the Washington Post reported overnight that it was the sanctions office within Treasury that was breached during the hack. This, of course, is the office that chooses which companies or which entities should be targeted for financial sanctions. That's according to unnamed U.S. officials to the Post. Treasury did not respond to our request for comment on that. But on the topic of sanctions, China's Ministry of Commerce moving today

to hit 28 U.S. companies with new trade controls, partly over U.S. arms sales to Taiwan. You can see some of them listed here, mostly in the defense space, Boeing, Lockheed Martin, Raytheon, a few others. China is now stopping all exports to these companies effective immediately of all products that have dual civilian and military uses. Now, all of these developments, guys, underscoring really rising tensions between the U.S. and China, all of that taking place before any tariffs have yet to take effect, guys. All right, Megan, we appreciate it for now. Thanks, Megan Kassella in Washington.

Let's get the latest now on the terror attacks, and they are terror attacks down in New Orleans. NBC news is Jay Gray, joining us now. Jay. Hey, Brian Kelly, and yeah, the FBI saying this morning that they are 100% inspired by ISIS, that these were, in fact, terror attacks carried out by a lone wolf suspect. A lot unfolding into this investigation. The latest is the reopening of Bourbon Street. The city has reopened the street to pedestrians after that terror attack that killed 14. wounded at least 35. The gunmen are the driver of the truck and gunman at one point

also died in a shootout with police. Let's let's tell you what we've learned from investigators as they've updated the information they're providing for us. First of all, the suspect in this case, Shamsuddin Jabbar, 42 years old, an army veteran apparently posted videos as he was driving his rented pickup from Houston here to New Orleans. He initially in these videos said that he planned to harm family and friends, but that he didn't think that would make a big enough splash, according to the FBI in the media. And so he and these are their words quoting from his video, wanted to make sure that everyone knew about the war between believers and non-believers.

He proclaimed his allegiance to ISIS in another video, and in one of the five also provided what they call a last will and testament. Now, they've opened Bourbon Street, but before that happened, they moved in heavy-duty barricades to line this street, something that wasn't there the night of the attack, as that truck just darted around police cruisers that were in place and sped up and into the large crowd on Bourbon Street. We also know that later today there will be the kickoff of the Sugar Bowl, part of the college football playoffs. That game was supposed to be last night postponed until this afternoon. the governor today telling us that he feels very confident about the safety and security of not only the French quarter, but the Superdome where that game will be played this afternoon, saying that they wouldn't have opened this area if they weren't sure that it was safe.

He says that they have a new security perimeter around the Superdome, the field where that game's going to take place, that they've added personnel, federal, local, and state police. They have more bomb sniffing dogs. They continue to search and comb the super. Superdome and will continue to do that until this game is over. So they feel confident about what's going forward right now, Kelly. But again, everyone cautious and watching and waiting to learn more about what's happened in this tragedy.

Jay, we appreciate you joining us with that report. Jay Gray, NBC. NBC. NBC. NBC. NBC. Hi, Kelly. Authorities say they believe in active duty Army Green Bray was inside the cyber truck that exploded yesterday outside of the Trump Hotel in Las Vegas. They have identified the man as Matthew Livelsberger, but say they are still waiting for DNA confirmation to say without a doubt he was in the truck when it went up in flames. The coroner's office confirmed the man suffered a gunshot wound to the head before the explosion. Authorities say Littlesberger was on leave in Colorado Springs when he rented the cyber truck in Denver and drove it to Las Vegas. Terraform Labs co-founder Doquan pleaded not guilty today to fraud charges in U.S. federal court.

He has denied wrongdoing in the $40 billion collapse of two of his company's cryptocurrencies in 2022. Kwan was extradited to the U.S. earlier this week from Montenegro to face the charges. And an appeals court ruled today, the Federal Communications Commission did not have the legal authority to reinstate net neutrality rules. Last April, the agency reversed its own 2017 repeal of the rules, which took place when Donald Trump was in the White House. The FCC did not immediately comment on today's decision. Kelly? All right, Pippa, thank you very much, Pippa Stevens. Shares of the drug maker, Numora, are plunging after its depression drug failed a key trial. They're down 81%. It's less than a $2 stock right now.

We'll get the full story on this one next. Welcome back. Check out today's biotech blowup, Numora therapeutics, losing nearly all of its value after its drug has failed a trial of depression drug. Angelica Peoples joins us now with those details. Angelica? Hey, Kelly, that's right. Numerra's experimental depression drug failed to show it was any better than placebo in a phase-through trial. Now, this is one of three late-stage studies that Numerra is running,

but RBC is calling this the worst-case scenario. And that's because Numer's drug showed the exact same effect on depression symptoms as placebo, not even a little bit better. And depression is a really tough space for drug developers. The placebo effect can make a treatment look less effective than it is, But RBC analyst Brian Abraham's in a note today saying that there's no obvious explanation here for this failure other than an insufficient drug effect. I spoke to him a few weeks ago ahead of this readout, and he was estimating this to be at least a $2 billion drug. And so this is obviously a huge disappointment for investors.

Like you said, that stock down about 82 percent today. And it's also another setback for the field. Numer was going after a new way to treat depression. And again, there are more studies underway, so this could always change. And we're also expecting some data from Johnson and Johnson. They have a similar drug in phase three with those results expected later this year. So it's not over, but it's certainly not a great sign, Kelly. Are there any other knock-on effects for the rest of the biotech space, Angelica?

You know, this is definitely one that we're watching, and I don't see any overall effects to the XBI, but it's been a pretty miserable few years for biotech. And any time you see a setback like this, it can give people pause. You know, we were talking about it this morning that we've seen, you know, you know, billions of dollars of outflows in the sector last year. And so now if you're deciding whether you want to invest in biotech or go somewhere else, maybe this does give you a little bit of pause about how much risk you want to take. True.

Angelica, thank you very much. All right. So it may be a new year. It's the first trading day of the year, but, you know, that doesn't stop us from wanting to take a look back. So did the top picks, Wall Street's most favorite stocks, did they actually do well last year? We're going to show you numbers and data you will not get anywhere else. It's a very special restock lunch. All right.

Welcome back time for more exclusive content right here on Power Lunch. Every year, me and one of my colleagues out of Michael Bloom. Michael, thank you. Spend weeks collecting Wall Street analyst topic stocks for the year. It takes a lot of time, but we do it for you, loyal viewer and listener, with the idea that then we can not only show you which stocks Wall Street really, really likes for the year, but also what stocks, maybe. just did not perform to the way that they thought they would perform.

These are all names on three or more top picks list. Let us jump right in with the stock number one, Kelly, and I'm going to blow your mind. This is a huge secret. Big surprise. Invidia. Wow. Yeah, I know. I know.

You're shocked. Nvidia was one of the names on a top list, top picks list more than three times. Let's go through three names here to help us trade all of them. Erie Wald. He is managing director. and head of technical analysis at Oppenheimer. Ari, thanks for joining us. Invidia, no shocker, but what's it going to do in 2025?

Hey, good to see on the show, Brian. Happy New Year. I think for Nvidia, it comes down the trend following 101. It's a stock that's been traded above its 200-day moving average, not only since the start of last year, but the start of 2023 as well. And nothing has really changed in our work through that. We are advocates for letting,

winners run. So I think as much as Nvidia has been established as leadership, there's really no cracks in the trend either. Race stops to 118. That's the 200-day average. I think it's positive above there. As the stock more recently has been consolidating around its June high at 141, I think you ultimately get the breakout. With a break. All right. Ariel, let's move then from one extreme to the other

because one of the worst performers was Boeing, but it also appeared on several top three lists, despite that it posted its worst year since 2020. It was down 32%. What do you do with it now? Kelly, happy new year to you as well. Well, we like relative strength. We don't like relative weakness. You stay away from this one. Here's a stock that's getting above its 200 average for the first time in a year. But consider, this is the third year of a bull cycle. What does this stock look like when the cycle tops out? I think that there's relative risk and relative weakness is coming off a multi-decade low versus the S&P 500.

So if you like it fundamentally, use that 200-day moving average as a stop at 171. For us, if it starts to fall back below that 200-day 171, we'd be looking to start shortening it again. Wow, below 171, which is, you know, right around where we are right now. There were 36 stocks that were on three or more top picks list. 36 stocks. We can't, we don't have time to go through all 36. But the name that maybe was the most surprising, Kelly and Erie to me, was a company called Halmet Aerospace, who's on four top picks list.

It's a company not a lot of people, Ari, ever talk about. Guess what? It basically doubled this year. Wall Street got this one, right? What do you see? Yeah, we spoke about it in a couple of our reports in May and October highlighted as a top idea within the aerospace and defense industry. Now, the industry didn't really take off, but the stock has continued to work and we still

like it. So it's got a bullish trend. It ranks high in our momentum work. And so for these reasons, we recommend buying this minor pullback in the stock. See good support at $105. That marks the November 6th gap. And the 100-day moving average also converges around there. Uptrend's intact. Are they the ones who make the big missile, the, you know, the sophisticated anti-aircraft systems and all that? I don't know. The stock has been a hero no matter what, Erie. So we appreciate your time joining us and to close out this very special edition of three stock lunch. Thank you.

Got to go. Take care. We'll be right back. All right. If you're a fan of the New York Knicks or the New York Rangers and you have optimum cable, guess what? You're screwed. I don't know what else to say.

Michael Ozania is here to talk about another cable fight, which is literally leaving fans in the dark. Yeah, you've seen a lot of these over the last few years. Have TV viewers are shifting from watching cable TV to streaming. And so this is just the latest. episode in cord cutting. And if you're a New York Knicks fan right now, you're really ticked off. But you have options. How is the parent company pushing them to, yeah, are they pushing them to some of the streaming options to kind of gain leverage? Yeah, which sphere, which owns MSG networks,

does have Gotham sports, which is the network. They have the Yes network on there as well, partnership of New York sports. The problem is they kind of had to make it prohibitive almost to sign up for it if you don't have cable. Yeah, it's $30 a month. If you have cable and you're already subscribe to that. You get it for free. But the problem is the profitability with these streaming apps like Gotham, as standalone entities aren't nearly as profitable as cable is. What does all of this mean for the teams? Because they've made so much money in the past from these regional sports networks. Well, the Knicks and the Rangers have long-term rights agreements going back to like 2016 when the networks were spun off. So at that time, the NICS started at a

rights fee of $100 million a year. The Rangers 30 million, which goes back to our earlier point. If you're Knicks fan while you're mad. The Knicks are the most valuable viewership. And they're good this year. Finally. And the Rangers are not good. So their rights fees aren't going to go anywhere. And last catastrophe came and it went into bankruptcy, in which case we saw what happened with Diamond and the rights fees could be renegotiated lower. Not a good sign. We're talking about the bankruptcy work. Big change in the media landscape. Thank you. Good to be here. Brian, thank you. Happy new year. See them on. You too. And thanks for for watching Power Lunch.

Closing bell starts down.