Power Lunch - Nasdaq crosses 20,000 for first time ever 12/11/24

Episode Date: December 11, 2024

The Nasdaq surged after November’s inflation report met economists’ projections, clearing the way for the Fed to cut interest rates again at its December meeting next week.November’s CPI was in line with expectations. We’ll cover all of the angles with our guest host for the hour, Stifel Chairman & CEO Ronald Kruszewski.  Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Good afternoon, everybody, and welcome to Power Lunch alongside Kelly Evans. I'm Tyler Matheson. Joining us for the hour is Steeful CEO, Ron Krashefsky. Ron, welcome an Indiana guy. I'm happy to say, as my son is. So welcome. A big Indiana guy going to South Bend and taking a big. Yeah, we're going to. I'm telling you. We're going to whip those golden domers. All right. Last read on inflation.

Before next week's Fed meeting comes in right along, it came in basically with in expectation range, up 3 tenths of a percent, month up of over month, up 2.7% from last year. Now, markets seem to think this clears the way for another Fed rate cut. We'll see. Guys, do you have me to go to run now or in a second? Go now. Keep, all right, let's just talk about the NASDAQ for a second. Topping 20,000 for the first time ever.

Six of the seven mag-7 stocks are at an all-time high today. All of them except for Nvidia, interestingly enough. For Apple, also worth noting, it is the ninth straight day of a record high. Plus, President Trump has threatened Canada now with tariffs. He's mocked Prime Minister Trudeau as the governor of the 51st state. Today we will hear from the Premier of Ontario about trade relations between the U.S. and Canada. And Pippa Stevens is at a uranium mine in northern Saskatchewan. So we'll dig into the trade, Canada, one of the two, really three main trading partners that we have between Mexico, Canada, and I guess, China.

So we will see that. We start, though, with the markets and the latest reading on consumer prices. Inflation met expectations. Does that clear the way for another rate cut next week? Let's discuss that with Michael Clarfeld. He's managing director and portfolio manager at Clearbridge Investments, and Ron Grushchevsky is here. I would name me the coach there. I told you the coach.

I'm sure it's not the first time, Ron. So Michael, what do you see here? I mean, the inflation numbers were pretty much as expected. Any impediments to the Fed cutting rates next week? And then what do you expect for 2025 in terms of interest rates? Yeah, I think the markets are saying today that obviously this sets the stage for the Fed to cut next week. And I think the markets are cheering that. I think longer term, though, it's clear that while inflation is nowhere near as bad as it was a couple of years ago,

it is stickier than we would have liked and that we would have hoped a few months ago. So I think as we head into 2025, you could still see some more rate cuts. But the outlook for rate cuts is not as strong as it was a few months ago. And I think we think that inflation and rates are likely to be a little higher for a little longer than we were all previously thinking. Well, we came into, Ron, this year with lots of people predicting six, seven rate cuts for this year. And what have we had? Two. We may get a third here in next week.

But that's a far cry from six or seven. Next year, what do you think? Do you think that the pace of rate cutting will slow? Yeah, well, first of all, Steve, but we said two to three, the beginning of last year. Well, you were right there. And today, the market thinks that you're going to, we're setting up for significant rate cuts. What do I think? I really think the Fed's going to do two more.

environment. I mean, inflation at 3.3 percent, pretty sticky. You're not going to get much below four in the Fed fund rate, in my opinion, unless inflation starts to come down. So watch the data. But this 80 percent that we're going to have five or six more cuts, I don't believe. Michael, you are a little more, I guess I would say, cautious about the market given where valuations are. And you're recommending stocks that have pleasantly plump dividends or are growing their dividends. Explain the thinking. Yeah, I think, you know, as we sit here and look at the economy, obviously the economy is in pretty good shape, and that's terrific, right? We've kind of stuck the soft landing, and I think the outlook for 2025 at the macro level is pretty good.

Did we really ever land, or do we just buzz the tower? I guess that's probably right. That's probably right. So, but, you know, the stock market's up cumulatively over 60% over the last two years. Valuations are near all-time highs, and as we've just been talking about, inflation and interest rates are likely to probably be a little stickier for a little longer than people would have hoped. So while we expect robust economic activity or healthy economic activity, I think after a year of nearly 30 percent gains in the stock market, we're a little more restrained in her outlook for capital gains in 2025. Ron, a lot of people think we can do the three peep, 20 percent plus third straight year. We did in the 90s, did end in the dot-com crash. It did. But maybe we can do it

again, without the crash part. Look, I think if you look at S&P operating earnings, we think about $250. The S&P's at $6,000. That's 24 times. And, you know, to now say the market's going to be up another 20%. I mean, sometimes you've got to get out your calculator and just look at it. So I'll take the under on three years a row of 20%. Because in other words, you don't think we're going to expand valuation.

So we'd have to see earnings growth of that magnitude roughly in order to kind of deliver that kind of return. It seems in this rate environment 24 times earnings is a healthy valuation. It's in any rate environment. but I think 24 times. I think it's basically at almost the all-time highs we've seen in valuation, with the exception of a couple of bubbly peaks. Like 2000. Right, right, exactly.

Let's get, Michael, to a couple of the names you like, including the parent of this network Comcast, Nestle, yielding 3.8%, and Enbridge, with a very large yield of 6.1%. Why those three? Yeah, well, I think all for slightly different reasons. So we'll start with Enbridge. Enbridge yields 6% here.

Embridge is one of the largest and best energy infrastructure companies in North America. We think the outlook for energy infrastructure is excellent. We've had energy growth in the United States for several years, and I think under the coming administration, you're probably likely to see more of that. So you have a 6% yield with solid growth and a good outlook for natural gas growth, giving everything we're seeing with AI and data centers, and we think it's a very attractive outlook for Embridge. And then Nestle?

Nestle's stock has gotten pummeled this year. a whole host of different issues. But we think a lot of bad news is currently priced in. The stock's down almost 30%. They fired the CEO. They cut guidance. And today you can buy Nestle, which is a high-quality, diversified staple, with a 4% yield trading at 16 times earnings, much cheaper than the market, much cheaper than staples.

It's not likely to be the next NVIDIA, but going back to our earlier conversation about outlook for next year and sort of where we sit from risk perspective on a risk-adjusted basis, buying a high-quality staple at a 4% yield at a discounted market. So tenderly, gently, tell us about Comcast. Well, you know, it's got the best talent in the business. You get the gold star, brother. Listen, I mean, Comcast, obviously the stock has been a laggard for the last couple years.

That's because I work here. Wherever I go, the shop becomes a laggards. Despite you work. It'll be time. It can be AOL. It can be ABC, whatever. That's actually let us know where you're going next. I will.

I was short. Short it. Stocks are trading in 10 times earnings. Subscriber growth has been challenged on the broadband side, given what's going on with people not moving much because high mortgages and also because of fixed wireless access, the wireless guys now offering internet service. But we're kind of maturing or aging into those. We think those are less headwinds going forward.

And then I also think from a regulatory perspective, there's the chance for more consolidation in the media industry under the incoming administration. Charter. That's the rumor. That's what John Malone is pitching. Try to go national. That's what I'm, and, you know, the competitive dynamic in cable is much different than it used to be. 20 years ago.

Oh? Yeah, dude. No kidding. Even on the broadband connection side, right? So 20 years ago, cable was the only game in town. But today you have fiber in many places. You have, again, fixed wireless access. You can get internet service from Verizon, T-Mobile, or AT&T. You have satellite services. It's a much more competitive business than it used to be. Even if they go nationally, there's going to be a lot. You know whose stock is up 63% this year? Well, thank you very much. Ron also, not only have you had a good year, you've had a good tenure at this point.

Should I run people through just how well the stock has done since you've been, since what, 1999? Seven. 1999. Yeah, and you're up, okay, I have it here. All right. The Seafel shares since you showed up in 1997 are up 6,9007%, is that right? That's correct. Compare that with Microsoft, tie, up a mere 4,000%.

Morgan Stanley up 816% to name the financial services competitor and the S&P up 7%. 109%. So if you have the Matheson curse. We can't own individual securities as most people know, but I have never owned anything that was up 6,000%. Well, you know what? It's a tribute to the people. You know, we didn't create a chip or an iPhone. We just got a lot of people. We went from 600 people to 10,000 people. And, you know, there's growth stocks and financials, too. That's what I would say. So thank you for saying that. I do have a skip in myself. It's an innovative point. But because you're actually cautious on the market into next year. You've had this great run. You've built this big business.

You're going into a year where what do you do now? Is it kind of a hunker down kind of situation now? But don't we have an M&A wave coming? We do have an M&A wave coming. And the economy is going to be good. Capital markets are going to be good. I think deregulation is going to help in a lot of ways. But look, you've got to be cautious.

We're 24 times earnings coming off two years in a row up 20%. We're telling investors. We're not telling you to get out of the market. We're just telling you to understand your risk. Even investors in Steeful? Even investors in stateful. All right. Gentlemen, thank you very much. Michael Carfeld and Ron Khrushchevsky is, you'll stick around.

You are excused, particularly for talking about the talent, as flatteringly as you did. That was very nice. I have to second that. We've got some news out of Washington now. The government's monthly report on how much it spends. Megan Kishella is here with the details. Megan. Kelly, that's right.

We always like to start with one category here. The U.S. spent $87 billion on interest on the public debt last month. That's 8% higher. the same month a year ago, mostly, of course, due to the increase in the size of the debt since this time last year. In total, Treasury took in about $302 billion last month, roughly 10% more than last November, and spent about $669 billion, 14% more than last year. So if you're doing the math here, that's about a $367 billion deficit just last month. And all of those figures set records for the month of November highest ever revenue spending and deficit last month. And

spending was really up across agencies, up 11% on Social Security in November due to the cost of living adjustments since last year, up 47% at the Department of Homeland Security. Most of that went towards FEMA and disaster relief efforts. And then at the Department of Agriculture, spending up 23% for the month, most of that going toward crop insurance payments for farmers. So top line here for the fiscal year so far, we're two months in, and the deficit is running about 19% larger compared to this time last year. So higher spending, higher debt, Kelly, all of this is ripe terrain right here for Elon Musk, the Vake Ramoswamy, as they launched this effort to try to vastly slim down the federal government.

Guys. Megan, thanks. I think our guest host might want to say something about this. I mean, these are big numbers. Absolutely. Again, I think that what I want to see when we talk about moving this economy forward is really a deregulatory, you know, slimming back. I could take the financial services rulebook, which is probably this big.

cut it in half and not change any of the real protections for investors or the market. People are going to go, oh, the financial crisis. You know, we just, we increase capital so that doesn't happen again and so on and so forth. And those are valid points, but you have to look at when you do too much regulation, and mostly in capital raising, we can't do IPOs today. It is too expensive. There are too many rules. And for the American economy and investors to be able to thrive, they need to be able to invest in new startup companies.

But deregulation is a different question, isn't it, Ron, from the spending and tax side, from the fiscal side of the budget? I mean... Well, there's no question, but part of the balancing the budget is growing GDP and growing revenues and growing tax revenues. Fair point. So, you know, we need to do that. And to do that, we're going to have to look at deregulation as one of the pillars, okay? That's only one.

That's fair point. And when you look at $87 billion in interest, spent in just a month. It was half of what we spent. The deficit was $1.8 trillion last year, $900 billion was on interest. I mean, that's just sort of, to me, that's kind of dead money. I mean, that's money that you can't use for some productive purpose. It's like running up your credit card.

Yeah. I mean, with those interest payments, when interest gets to this level, it's more than defense, we're going to have to figure this out. But again, the way is not to cut our way out of it, the way is to allow the entrepreneurial, the capitalistic instincts of America, which are much different than in Europe to take hold and let some of the spirits go. And that will drive a lot of these efficiencies and allow us to pay some of our bills. Ron, thank you. You'll be back with us throughout the program.

Still to come. I thank you, Megan Casella, as well. Still to come, uranium fever as nuclear power takes off a lot more resources are needed. After the break, Pippa Stevens will take us inside the West's largest uranium miner. demand for uranium is rising amid the nuclear renaissance, and Camaco is the Western world's largest producer. We got an exclusive look at their Cigar Lake Mine in northern Saskatchewan and take you inside. Coming up next on Power Lunch. Welcome back to Power Lunch, everybody. Nuclear energy is about 20% of the U.S. electric grid, and now with AI and the promise of small modular reactors, it could play an even larger role.

Our Pippa Stevens is in balmy northern Saskatchewan, with a look. at the West's largest uranium miner. Hi, Pippa. Hey, Tyler. So we're here at Chemico's Cigar Lake Mine. They are the second largest uranium miner in the world. And the ore here is 100 times richer than at your average uranium mine. Now, there is a lot of activity down here in the mine with the specialized jet boring system. But the company is also constantly exploring new areas in order to extend the life of this very valuable asset. This is one of Cigar Lake's active development regions. This will give them the ability to access or further away from the site. So this big drill blast about two to four meters every single day.

And after that happens, all of that rock has to be brought back up to the surface in the same elevator that we took down here earlier today. Now, in order to make sure that the structural integrity of the mine is sound, they reinforce the walls with all of these rock bolts. Despite the fact that the U.S. has the largest nuclear fleet in the world, we are heavily dependent on other countries for every portion of the nuclear fuel supply chain. And reliable supply, including from places like right here at Cigar Lake, is becoming increasingly important after Russia cut off exports to the U.S. That only is good news for a company like Camaco, Western supplier of uranium conversion working on enrichment. We're getting a lot of customers that don't want to play that game. They don't want to play those geopolitical games. And they're coming and saying, where is a safe, reliable producer?

Where can we be assured that our fuel is coming from for years to come? So you can see above me that parts of this tunnel have already been mined. The telltale sign is those concrete filled backholes. The ore body is that away. But they are not done drilling here. Cigar Lake has three jet boring systems. And they vary where they drill in order to maintain the structural integrity of the mine. And you know Kelly and Tyler, when you think of a mine,

you think of underground and dingy, but it's actually really comfortable here. It's a lot warmer than outside, really bright. The Wi-Fi is great, and the road is even paved. The Wi-Fi is great. Two quick questions. How far underground are you right now, number one, and number two, when you're going into a uranium mine, do you have to wear any protective garments or gear, or is the radiation level monitored in any way as you're underground there?

So right now we're 1,600 feet underground and the radiation is very, very carefully monitored. I'm even wearing a decimeter right here and I can see my reading right now. It's 2.64 microceiverts. That is basically what you'd get if you were walking around in your daily life. That's background radiation levels and I am really close to the ore. And so the reason why they developed this jet boring system is because the grade is so high that you can't have workers close to it. So it's all done remotely and it all drops down into the ore.

these pipes that have reinforced steel so you're protected from it everywhere. And then for the workers who are here underground every day, they wear monitoring devices at all times. Their data is tracked monthly by the regulatory body and they also do urine analysis. And so they are very careful and make sure all their workers are well below the CDC's recommended limits. So Pippa, a few years back when Germany was closing its producers and so forth, it might have seemed as if this mine didn't have that bright of a future.

Now I have to imagine they're seeing a bananzi. potentially in front of them. Can they meet the demand that may be coming down the pike or are they going to expand or should we look for other uranium mines in this region to come online? So that is the million dollar question because of course all of the current supply is already contracted many years in advance. Here at Cigar Lake, they're permitted through 2031 and that could be extended through 2036. In the interim, there are some options. MacArthur River, which is close by. That currently stands at 18 million pounds per year. They can extend that to 25 million pounds. They also have some operations idled in the U.S. The total there is about

2 million pounds that could bring back online. But longer term, when you're looking into the 2050s, there's certainly going to have to be more exploration because not only is demand there from nuclear reactors coming back online and having their life expanded, but then we have all the SMRs potentially coming in the 2030 and beyond range. And so we will probably see more exploration. But, you know, this one took almost a decade to come online from first, you know, construction down here to their first production. So it is certainly not an easy feat to build one of these. All right, Pippa Stevens, thanks very much. We appreciate your reporting. Ron, any thoughts here? There's obviously going to be a heightened power demand as AI begins to sop up so much of our

I mean, stop up. I think the numbers are, it's 4% of the electric grid going to 14 if you want. And you'll say, well, what does that mean? That means that I'd be long energy type stocks. I just would be because energy is going to be needed. But I will also say this, I do not believe in my lifetime, and I'm going to live a long time, that there'll be another nuclear plant built in the United States. A new one from the ground. Even a small one? I do not believe that.

You don't think that we're going to bring online any of the smaller nuclear nuclear? Well, no, we'll bring three mile island back on, consolation. No, I mean, the new idea is the smaller, Pippin knows the term. You don't think we're going to, that that iteration of nuclear energy is going to put it next to your house? I'm going to say there's a lot of space in this country. There's a lot of space. Well, you've got to be near a grid. So I

Actually, it'll be interesting to see it. And the nuclear projects that have been brought online have bankrupted, the two utilities have tried to do it. Southern Company? That's exactly right. So I wonder, however, we need power to power AI. So that's going to be an interesting couple of years as it relates to power and AI. Interesting.

Well, you put a stake in the ground there on the- I don't think we'll have a nuclear plant, but we'll see. There you go. I like people who come here and say something. You know, take a stand. My lawyers are upset, I'm sure. They work for you, don't forget. Just tell me you're up 6,000 percent in the past 20 years.

Beyond uranium resources and minerals, things could be harder to come by if Trump's tariffs become a reality. Not just from China, even from our neighbors like Canada. We'll speak to the premiere of Ontario about the coming geopolitical twists here after the break. Welcome back to Power Lunch, with President-elect Trump threatening to impose 25 percent tariffs on products coming in from Canada, when he takes office. Some investors and economists are concerned about the impact that could have on our trade. Joining us now to discuss is Doug Ford, the Premier of Ontario, and the leader of, I did not know

Premier Ford, this was a thing, the Progressive Conservative Party. Welcome. What does that mean? Well, we're PCs, progressive conservatives. I'm a staunch fiscal conservative, I believe, in putting money back into people's pockets, giving tax breaks. In the last six and a half years, we've never raised a tax, put a tax on. We've reduced taxes by $8 billion each and every year off the backs of companies to make ourselves more competitive. And we've reduced taxes for people, too. A very simple theory.

You put money into people's pockets, and they're going to go out and stir the economy. And I believe what President Trump's going to do by reducing taxes, that's what stimulates economy. me. And when you reduce taxes on businesses, they reinvest it into their technology, into their people, into infrastructure. And that's exactly what we're doing here in Ontario. So he's a tax. Prime Minister Trudeau took a trip to Mara Lago to try to explain to President-elect Trump the damage that would be done to Americans if we put tariffs on Canada. And Trump did not

appear persuaded by that. Is there a better case to be made? Or should the kind of tongue-in-cheek comment that Canada should become the 51st state if it doesn't want tariffs have some truth to it? Well, you know, when it comes to trade, we do $1.3 trillion of two-way trade with the United States. That's more than China, Japan, UK, and France combined. We're the closest allies and friends over many generations, over centuries, actually. And we're just so much stronger together. I listened to Duran earlier on on your show here. He's bang on.

You're going to need the energy. Who has the energy? Ontario has the energy. We're nuclear energy leaders in the world. We're building small modular reactors leading the world. And who would we love to give our energy to? Which we do now, by the way, is the U.S. We ship energy down to Michigan over to New York, so does Quebec.

But Alberta ships 4.3 million barrels a day. You start terrifying that, and the American public's going to see an increase in gas by a dollar a gallon. And all I'm saying to the president is we aren't the problem. China's the problem. Mexico is the problem. China is shipping parts and cars over to Mexico. Mexico slapping on, made in Mexico stickers on, shipping them up through the U.S. and into Canada, costing American and Canadian jobs.

So we're there to strengthen our relationship, not hurt our relationship. I always say that 9 million Americans wake up every morning to produce products that are shipped up to Ontario. We're the number one trading partner, number one export destination to 17 states, number two to 11 other states. Interesting. It seems, it seems that, you know, again, everyone says, you know, tariffs are a negotiating point. You know, how would you react?

The border seems like fixing the border should be relatively easy. You know, Canada probably needs to pay more to the defense. And that's certainly a negotiating point. And then I hear things I ask friends and they say you're very far north, the seas, you have to secure those. And do you think you're willing to do that in a tradeoff for not having tariffs? Well, I've called for a meeting with the prime minister and all the premiers. And we're going to hold his feet to the fire. I'm sure he's going to come back.

We're meeting him at 4 o'clock today. I'm the chair of the Federation this year. and we're going to make sure we're going to secure the border. We have mentioned this well before President Trump or President Elect Trump got elected. We were telling them about the border, and we need to meet our 2% NATO commitment. We're approximately 1.4%. Put that aside because Ron, I agree, we can fix it. But, you know, there's no closer trading partner than Ontario and Canada as a whole.

We are not a threat. You take our energy off the list there. And our trade, $500 billion a two-way trade every year with the U.S. Ontario alone, split equally right down the middle. We're a big auto province here. And 50% of the parts that are produced either at assembly plant here in Ontario or even in Michigan, they're coming from the U.S. and, you know, it's just going to hurt the supply chain. It's been around the auto PACs since 1960s, and it can go back and cross the border eight times

before it gets assembled in a plant in the U.S. or in Ontario. We're just so much stronger together. I just can't stress it enough. It's going to hurt Canadian jobs, but I can assure you it's going to hurt American jobs when they don't have their number one destination to export to without being terrified. You think of Ontario and its proximity to the manufacturing bases in Michigan, Ohio, Illinois, and so forth.

And a lot of those parts, as you just said, move back and forth across the border multiple times during the production process. And if you're putting tariffs on at each of those iterations, you end up with a much more expensive end product. Yeah, but I always say if someone in Texas is buying a pickup truck that's produced outside of Toronto, at the GM plant, they're typically paying $60,000. You put tariffs on that. That's going to be $75,000. It's hurting the American people. It's hurting the Canadian people. Why the president is doing this is beyond me. Again, let's focus on Mexico.

Mexico has to make a decision here. They either with Beijing or they're with Washington. I can tell you where Canada is with. Canada's with Washington. So you're saying, Premier Ford, that there's no way that if we put tariffs on on Chinese goods, that they're going to backdoor them through Canada? Absolutely. We're the ones who put 100% tariffs on Chinese vehicles, and I think 25% on parts, and we'll continue tariffing anything coming from China. That's where the problem lies. Again, shipping Chinese cars and parts into Mexico, Mexico slapping a sticker on and shipping them up

through the U.S. and Canada, they do not deserve a... seat at the table. I'd much rather prefer to do a bilateral trade deal directly with the U.S. If Mexico wants to do one separately with us, so be it. Well, Premier, we need your oil and gas, okay? So get the NATO thing fixed, get the border thing fixed, and make a deal. Well, Ron, I agree with you. Maybe I should have you sitting at the table with me because they're critical minerals to build your military. We have the largest mining sector in the entire world. You know, when you need your lithium, when you, You have your nickel and you only have two mines in all of the U.S.

We have them in our backyard. We have the coal ball. We have 42 of the most critical minerals. I don't want to sell them to anyone, but I'll tell you one thing. I'm going to sell them to the U.S. And support our closest ally and friend. And there's no better country, two countries in the world than Canada and the U.S. I spent 20 years in our Chicago facility in the U.S.

and our New Jersey facility. I love the U.S. I love the American people. I talk to Congress women and men every day, senators, governors. You know, you like this so much. You're welcome to join us. Come on down. You know, something, as I said before, I think President Trump's still ticked off about the war of 1812 when we went and burnt down your way to go to us.

He has a long memory. Premier Ford, thank you so much for making the time. And it was very interesting and illuminating to speak with you. We really appreciate it. Doug Ford is the Premier of Ontario. All right. Let's get to Julia Borson now for a CNBC News Update. Julia. Hi, Tyler. FBI director Christopher Ray is resigning as President Elect Trump prepares to take

office. Trump tapped Republican operative Cash Patel to become the next head of the FBI, even though Ray's term was not set to wrap up until 2027. Ray told FBI employees at a town hall meeting that he will step down at the end of the current administration. The commissioner of NYPD says the gun found on the suspect in the killing of United Health Care CEO Brian Thompson, matches shell casings found at the scene. Luigi Mangione faces a murder charge for allegedly killing Thompson as he walked to his company's Investor Day in New York City. Sources tell NBC News the 26-year-old had a notebook that mentioned wanting to target a CEO at a conference.

And ABC announced today the Oscars will stream live for the first time ever on Hulu. The telecasts the award show will still air live on the network. And in addition to the live offering on Hulu, the show will also be a live. available to stream on the platform the next day. Conan O'Brien will host the 97th Academy Awards on March 2nd. Tyler, back over to you. Julia, thank you very much, Julia Borsten. Up next, exploring the financial space.

Our trader will lay out their top financial picks in today's market navigator. More power lunch when we return. All right, welcome back to Power Lunch. Let's give you a quick check on the markets, as you see, their very slight gains, except for the NASDAQ, which has gone above 20,000 for the first time, up nearly 2%. 1.82% the others basically sort of flattish, though the S&P 500 close to 1% higher. Dom Choo joins us now for today's market navigator. What you got, my friend?

So we're not looking at the big tech, which is powering that NASDAG trade, but we're checking out the financial sector, which is outperform broadly over the S&P 500 year to date. But like everything else, technological, political disruption could come quickly next year and beyond. So which names are the best position to continue higher in 2025? Joining us now, fresh out of that two-day big Goldman Sachs Financials conference is McCrae Sikes portfolio manager over at the Gabli funds. McCrae, thank you very much for being here with us. I can see the buzz around you right now.

So as a portfolio manager who is listening to all of these chief executives telling their stories, what stood out to you at the GS Financials Conference this week? Well, we heard from a number of industries within financial services. I would just highlight a couple. First, Bill Dumpcheck, who's been in the business for a long time at PNC, basically presented a plan to his board and said it was the most robust plan he's seen in many years. And that includes many tailwinds in terms of NIA over the next couple years as they roll off old securities and put on new securities to hire coupon.

So that was a very bullish report from him. Secondly, in the insurance business, I listened to a conversation with W.R. Berkeley, CEO, Bill Berkeley, Rob Berkeley, rather. And, you know, continued progress in the insurance business. You know, they're doing ROEs at 18 to 20 percent. It's trading at 13 times. So we still see very good value in there. And then America Express, one of my favorite CEOs, Steve Squarry,

entrepreneurial management team, great brand, good update on consumer spending, going to restaurants. And there is a firm that's trading at below market multiple and growing EPS at 15 percent with pretty good visibility. All right, McCray. So you're going to tell your traders to do some stuff. What is the trade in financial? for 2025. Well, I think, you know, we're jumping off a pretty good point in terms of our asset

levels, the stock market. The shares are up, or the industry is up about 35 percent. In our ETF, we're up about 50 percent, but we're still finding, you know, values here and opportunities, as I mentioned before. But I also think that there's going to be tailwinds in terms of capital markets next year. IPO is coming, engagement, et cetera. So that will power the markets and lift rates even or leif returns even further. So I think everybody's going to be pretty excited to get back to work right after January, especially in capital markets. All right. There you go. The capital markets trade. Thank you very much for Craig Sykes up and Gabelli. Happy holidays. We'll see you soon, sir. And thank you, Dom. Newt as well. Kelly, back to you. Treasury yields are on the rise

following this morning's CPI report. We'll get a read on the bond markets from Rick Santelli when power lunch returns. Welcome back the NASDAQ soaring to a record high today, trading above 20,000 for the first time, and it only crossed above 10,000 four years ago. This morning's inflation report contributing. Many think the Fed now has a path to cut rates next week. Let's get to Rick Santelli in Chicago for more. Rick, it's interesting to watch rates backing up throughout the day, even as those market odds of a cut remain high.

Yeah, you know, today has been a strange day. The market seems to be doing exactly the opposite like a Seinfeld episode. If we look at an intraday of tens, at 8.30 Eastern, we get warm CPI. No doubt about it. 3.3% year-over-year-core. Doesn't sound like it's even in the zip code of the Fed's 2% target. So look what happens at 830 on the left side.

Rates move down. And then as the day progresses, right on the right side, you see rates popping. That was after a really solid 10-year auction. Exactly the opposite effect you would think. Matter of fact, if you go back to Friday, the left side of the next chart, rates went down on a good jobs report.

But they've gone and stacked every day. since, meaning we had a higher high on Monday than Friday, a higher high on Tuesday than Monday, and today, a much higher high than we had yesterday. And if you look at the other big dynamic, Tuesday 10s spread steepen rather dramatically right at 8.30 Eastern, so it did what one would expect on warm CPI. And what's more, if you go to a week to date on Tuesdays, it also popped on the left side there when we had the jobs report. The moral of the story is when you spend $87 billion in one month to service the debt to size of the entire economy of Panama, long rates are going to be stubborn.

Tyler, back to you. All right. Rick Santelli, thank you very much. In the meantime, Macy's forced to trim its profit outlook after wrapping up an investigation into an employee plot to cover up millions of in expenses. We will trade Macy's in three-stock lunch next. Time now for three-stock lunch, and we're trading some key names making headlines today. Maley joins us with our trades. He's the chief market strategist at Miller Taeback. It's great to see you, Matt.

And let's start with Macy's. They reported this morning, trimmed the profit outlook, also revealed the results of that internal investigation into accounting errors from a former employee who hit about $150 million in expenses. Shares are down 2%. Today, Matt, down 18% year today. Are you a buyer here? Well, you know, I maybe want to take a flyer on this stock here, but because it is still, it's a very cheap stock. It's six times earnings and pays a nice tip. and yield. And I do think that some of the things that we're worried about, I mean, this was a rogue employee. How in the world could you let this happen? Well, we have a new CEO. He came in just in the first quarter. So, you know, they've caught it. They seem like they're going to be able to turn this thing around in terms of the accounting issue. But and also on the retail issue is that they're the new 50 stores development. The, sorry, the revenues from those are starting

to pick up. So if they can expand that out to more stores, it's going to be a nice play. It's just, it's been such a long time to turn this ship around. I'm a little bit cautious on it, so it would be a small flyer, not something I want to jump in with both feet. Ron, where do you, where does a rogue employee fit in your sort of risk profile or the things you think about in terms of managing a company? Well, it's what we think about. We have 10,000 people, and, you know, every town of 10,000 people usually have three things, a church, a bar, and a jail, okay? And the problem is, is that you don't necessarily know who's going to go to jail, but you want to do this.

I think in Macy's case, I think it was rogue, but what the market worries about is this is a one-time event. If one person could do it, then are your controls, you know, weak in other areas. And it'll take a little while to get back that market confidence. So this is something you watch for, obviously. Well, have to. You have to. Absolutely have to.

Unfortunately, there are people in the world that don't have good intent in any business anywhere. All right. Next up, we got Mondalese, Board of Directors approving a new share buyback. of up to $9 billion in its common as it is a reported takeover interest in Hershey now seems to be a bit of a long shot. What do you think here, Matt? Well, you know, I just think that, you know, the stocks is bouncing back nicely off of this news. It just didn't seem like a great fit for them to begin with. I mean, some of the ones that they've, these add-ons that they've had recently, they refer to them as bolt-ons,

kind of smaller companies that could enhance their businesses that already exist. This was a whole new thing. So the fact that they're, you know, I don't think they're going to chase Hershey now with this big buyback they announced. So I do think on a short-term basis, the stock was very, very oversold. And it's bouncing back quite nicely. If it can break above the 66 level, which is its 200-week moving average, it could really fly here. On a longer-term basis, I'm still worried about processed foods and the pricing there. So I don't know that's a good long-term holding, but I think for a nice year-end rally, this one's going to continue to bounce.

Just real quickly, right? I mean, do you see if there were a lot more deals to come next year? Is your pipeline telling you that this could be the first of many or kind of an isolated case? I think I don't know the industry very well. From what I read, they probably had a conversation that both stocks have been hammered. It probably makes sense. But it doesn't seem like this is going to happen as an outset. I don't know anything here. Right, right. No, indeed. Let's move along to Broadcom, the information reporting they're working with Apple to develop a chip for AI processing. The shares are up 6.5 percent, Matt, 64 percent. year to date. You hang on to this one?

Yes, I do. I mean, it's funny because it's been, and more recently it's been outperforming the two big heavyweights in the area, Nvidia and Taiwan semiconductor TSM. And it's pumping up, I'm sorry, bumping up against his all-time highs, which is also an

ascending triangle pattern. So for breaks above, above this, at the same time, on the technical side, at the same time, it gets really good fundamental news with the joint venture with Apple, This is a stock that could really surprise people to the upside over the next couple of weeks and into 2025. All right.

You know, you've got to say Broadcom, if people want to have the next Nvidia, I mean, Nvidia makes a chip that does everything, all right? What Broadcoms are going to make specialized chips, and that's what we're going to use as a business. We're going to want specialized large language models. And Broadcom also connects all these things together. So when you're looking for the next trillion-dollar company, this company is a- It's a better investment for you. It's a better, that kind of chip that does a specific function as opposed to one that does all functions.

We don't need to search the Internet for everything. We need to take our data and be specific to it. And that's what they're doing. And that's what I think they're trying to build with Apple. So this is a good play. I don't think a lot of people know about it. Interesting, interesting. Matt Maley, thank you very much.

I understand. Remember this. I want you to remember. Remember one thing from this program? You can always hear us on our podcast. Be sure to follow and listen to Power Lunch. I mean wherever you go. Grocery store, hardware, anywhere.

We'll be right back with some final thoughts from Ron Khrushchevsky. Welcome back, everybody. Let's get some final thoughts from our guest host today. Stiefel chairman and CEO Ron Khrushchev. Ron, let's go back to the terrible shooting last week on a street in Midtown. You were in that hotel that very morning. My question is, as a CEO, have you changed in any way your security protocols? Do you travel with security?

Do you have bodyguards who accompany you on the street? What? Well, I came out here by myself, as you know, so I don't. We have security, but I don't travel with security. Does this change your mind, though? Well, you know what it does? Or your board's mind? Well, my board is talking about it.

You know, you can't live behind bulletproof glass. That's how I feel. You've got to conduct yourself appropriately. This was a random event, but it is very concerning. And what I think all business leaders have to be aware of is that besides this senseless shooting, which it was senseless, there is a level of anger in the populace. There is. There is. That it was Occupy Wall Street in the financial crisis, and now it's health care.

So I just think we need to be aware of it. Personally, I'm more aware of my surroundings. But, you know, I'm just going to. So when you walk out on the street in Manhattan, you are maybe your head's a little more on a swing. than it would have been 10 days ago? How can it not be? Okay, but I don't think anyone knows who I am, but no one really knew who he was either.

So that was very random. And any business of scale, whether financial services business, a health care business, an energy business, can have an angry disgruntled customer or employee. Yep, right? And there are a lot of angry people in America.

Yep, and I just, I think you have to do right by people and just try to do the right thing and live your life. But that was, I feel for the family, and I really do. I can't believe you were there that morning. Well, neither can I. I actually walked out into a crime scene. I didn't really realize it, but, and didn't know what happened, walked right through it. So, yep.

Erie. Ron, great to see you. Hey, thanks for having me. Have a great honor. Yeah, we really enjoy having you here. Come back soon. Thank you. Ron Kushchevsky.

Thanks for a great hour. And thank you for watching Power Lunch. Closing bells starts right now.