Power Lunch - Nasdaq jumps to new record to start December trading, S&P 500 inches higher 12/2/24

Episode Date: December 2, 2024

The S&P 500 ticked higher to a new record to begin December trading, as investors looked for stocks to add to big November gains. We’ll cover all of the angles for you. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Welcome to Power Lunch, everybody, alongside Kelly Evans. I'm Tyler Matheson. Thank you for joining us on this Monday, Cyber Monday, with us for the entire hour. Nancy Tangler, CEO of Laffer Tengler Investments. Nancy, good to have you with us. Let's start with the markets as the Dow and the S&P 500 finished their best month of the year on Friday. Today, it's the NASDAQ leading the way up nearly 1% also hitting a record high today. The hits just keep on coming, Kell. And what do we just say? I mean, the first time since the 90s we've had back. to back gains of 20% for the S&P, and only the fourth time in the past 100 years. Yeah, yeah. Maybe it's looking a little scary up here. I don't know. Well, we'll hear from Nancy on that and more. Yes. The big news in the world of AAI, meanwhile, is Elon Musk asking a federal court to stop

Open AI from becoming a for-profit business leading to a discussion about how to proceed with AI? Our profit motives can make it better or worse. Yeah, we'll see on that. This is one where I need to get educated pretty quickly because I'm not sure I understand the corporate structure of Open AI right now. I'm not sure why it is the way it is and what would what the implications would be. Not to delve into this ahead of time, Nancy.

I don't know. I think what's going on here is it's helpful when you're going to scrape the internet of all of its data, it's helpful to be a research institute. When you're suddenly going to make money off of that, well, you can't really be a research institute anymore. Yes, you have to be a for-profit company. So I wonder if that's how we've gotten into this mess. I think that's right. I do. I think we saw what happened with social media because there's a lot of responsibility that goes with that. So I think it is going to be interesting. I thought Sam Altwin would be the biggest loser if Trump got elected.

And it turns out that he may be. Really? Because it just empowers Elon Musk. Yes. Yeah, the whole thing. Yeah, golden child. And let's talk a little bit about Intel. Those shares are higher as the CEO Pat Gelsinger retires effective immediately.

The stock has lost half its value this year as other chip stocks have soared. Nancy, you've been critical to this company even before Gelsinger took over back in 2021. So I guess you are applauding. this move? Oh, it took too long, Tyler, I think, is what. I mean, I will say I think boards are acting much more quickly than they had been, and that's a positive. But in this particular case, you had a CEO who came in to do a turnaround. Instead, he went to D.C. hat and hand and spent his time doing that, looking for funding, instead of innovating. And I think I was on your show when I said, enough already, and we got out of the stock much higher levels, but it doesn't matter.

It's been dead money for a long time, and I think it's going to continue to be. Yeah, let's actually dwell on this topic for a minute on Pat Gelsinger's departure and what is next for the chipmaker. I'll bring in C.J. Muce. He's with Canter Fitzgerald. He has a hold on the stock, 25 price targets where it is now. CJ, it's great to have you here. I mean, just a couple weeks ago we were talking in stellar terms about Nvidia. So what does one do with Intel now? Yeah, it's a great question. You know, I think at the heart of, you know, the board's decision, which, you know, I guesstimate is where there was, a disagreement with the board and Pat. And, you know, I think there's inherent frustration. But I would go back in time and say that, you know, just in late August when they had the last board meeting and the press release they put out in September, clearly the board was 100% behind Pat then. So something has changed. I would imagine in the last three months. I'm not sure. As far as what to do with shares, you know, I think there's an inherent struggle at Intel. There's clear value on the product side, particularly in the client PC part of the business. which is worth that if you put 15 times, that's worth $100 billion just for that.

On the other hand, the foundry business needs the volume from Intel to survive. And so today, Intel is planning to buy $9 billion of silicon from TSM for the client business in 2025. But at the same time, they want and need to bring that back to keep Intel Foundry alive. So it's really kind of the chicken or the egg problem. And I think what it speaks to is that there's no easy resolution or solution here. So to the comment earlier, you know, I do think it's dead money still. Is this a, this is kind of a two-headed company.

There's the foundry business and then the Intel products business. Is it going to stay that way? Well, you know, they've separated as one company but two divisions. I think one of the questions after this announcement this morning is whether, they might push forward in, you know, a more forceful way of separating the two. But I would highlight that Chips Act money, you know, requires that Intel product maintain majority ownership of Intel Foundry. So I don't think, you know, clear-cut separation is doable, at least under kind of the current

construct of the agreement with the Chips Act. That's super interesting, C.J. So let me just clarify that. A lot of people are saying that this all has to do. with a disagreement, perhaps between Gelsinger's vision to keep the company together. Maybe the board, maybe others wanted to split it up because it's floundering, but you're saying it can't even split it up. As of the agreements with the Chips Act, they need to maintain majority ownership.

So, you know, you could spin and, you know, maintain 80%, something like that, you know, perhaps try to get customers to invest. But, you know, they tried that, or it was a thought process, before and no one would step up. So again, you know, I think there's so many different levers here at play that make it almost impossible to come up with an easy solution. But, you know, what we know is that the foundry business is losing money. Product Co is making money. But the U.S. wants to have leading edge manufacturing. And we don't want the world to just rely on TSM. And so, you know, we as a country want Intel to succeed. And, you know, it might take.

actually more money from Washington, D.C. to make it work. And, you know, I'm not sure that's something that's, you know, in the cards going forward. But it really highlights kind of the tough kind of pickle we're in with Intel today. Maybe we should call it the floundry business. So, Nancy, where would you put in my, if you wanted to be in chips, where would you go? That was one of your best lines. Well, I wouldn't go there, obviously. We own Broadcom. We also own, well, we own lamb. So that has a different set of issues. And then we own some NVIDIA and we own a little bit of Texas instruments. I think you want to stay with the clear winners in this environment. I mean, let's not forget that Xerox actually developed the mouse, but it was Microsoft and Apple that commercialized it.

So you've got a company that has stopped innovating. C.J. points out all the right issues, which is they're kind of between a rock and the hard place. And so I think you want to stay away from that one. It takes a long time to turn the Queen Mary. By the way, the shares just turned negative on the session. So they started with a 4% pop today on this news, couldn't even hang on to it, probably as the depth of these problems is becoming clear. And to his point about how we need to rely on someone other than TSM, I don't know how many billions of dollars you think we can reasonably plump into a company like Intel to make it into something that it's not. I think it's too late personally. I'm not usually, I'm a value investor by trade.

So you always look at these as opportunities. But I think this is one you want to stay away from. It's been misman. It wasn't just Gelsinger. It was Bob Swan before him who was a platoon. placeholder for two or three years, I think. And then just a lack of leadership. You can't catch up in this business. So, C.J., is your vision, that's a pretty dark vision that you just painted there. Floundary would do it. But do you share that view that there is no light at the end of the tunnel here.

There's just more tunnel. Well, I think that there is potential if they can really nail 18A as a smaller kind of manufacturer and then try to grow over time, and that would be kind of a 10-year process. So I think that's one kind of door that the board of directors could consider. I think the other is trying to get TSM to run a factory for them in the United States. And, you know, I'm not, well, I would say categorically today, that is not something that TSM would want to do strategically. They've always maintained that their bleeding edge node has to stay in Taiwan. they can only do kind of n plus one externally. But perhaps, you know, through, you know, the U.S. government calling the president of Taiwan,

perhaps, you know, that could change. So those are kind of the decision tree that I could see. And, you know, everything else, you know, I think is really just noise. And so, you know, we'll see what the board decides. I mean, when it gets to the level of national interest, you almost think there needs to be, We need to convene sort of Jensen Wong and Lisa Suu, you know, these leaders from those parts of the technology and bring them together to try to come up with what would they do? Like, what is to be done here? This feels like it's a problem that's almost too big for Intel if we're deciding that this has to exist in this country at this leading edge, Nancy.

Well, and this is where I think Elon is important to the new administration because, you know, we still have congressional participants that don't understand how to regulate social media. it's been with us for decades. So I think you need insiders to your point that are going to come in and say this solution is the one that we should pursue. But the question is at what cost? And I think the tunnel, if it's a 10-year tunnel, that's a long time. So as an investor, I think there's just plenty of better places to hang out. Indeed. More tunnel at the end of the light. All right, C.J., thank you very much. We appreciate your time today. See you again soon. Now, the big CEO departure to tell you about this morning, Carlos Tavares of Stalantis is leaving at least a year before he's previously announced retirement date. And those shares are falling on this news.

Let's hear more from Phil LeBow. Hi, Phil. Hey, Tyler, this is not a huge surprise. We've known for some time that there has been major friction between Carlos Tavares and the board of Stalantis. Well, yesterday he submitted his resignation effective immediately. And it's easy to see why there's been so much tension. and there are so many problems at Stalantis. These are just a few, a few of the negative financial highlights under Tavares in the last year.

First half profit down 48%. Q3 U.S. sales down 20%, Europe, down 12%. And specifically to the United States, Tavarez admitted, look, I was arrogant in saying, keep the production going, keep the prices elevated. Well, they did that in the first half. And you know what? It's coming back to really kill them. They're U.S. sales in the third quarter for RAM down 19 percent. Jeep down 6 percent.

So what happens now for Stalantis as they try to figure out, first of all, how to get things back on track in terms of sales and stabilizing some of the losses that they're incurring in different regions? First and foremost, John Elkin, who is the chair of Stalantis, will lead a committee and they're essentially going to run the company until they name a CEO, which is expected in the first half of 2025. also point out that the company has announced it is reaffirming its guidance for all of 2024. But remember, they cut that guidance some time ago. So the shares under, what, down, almost 7 percent. Not a huge surprise, guys, because these guys have been a mess for some time. And finally, Carlos Tavares, the only CEO that Stalantis has known has left the company. All right, Phil. Thank you very much. Nancy, let's get some thoughts on Stalantis from you. Or broader the automakers.

Well, I think what we've learned is that Tesla was very clever in pushing margins down to take share. And though it was criticized at the time, they've really secured their place, really impacted Ford negatively. And so you've got a third-tier player in the business, in the car business in general. In Stalantis. In Stalantas, sorry, yes. And so I think you need to think about, I mean, we need to think as investors. Why would you want to own this company when you can own, you know, Ford GM, which has done a good job, or an electric vehicle maker that is dominating the space?

It's a $12 stock that's down 50% this year. Bill, to me, what's also interesting about this is it's a time of massive change for the, oh, he's not there. But it's just a massive change for the global auto industry. Yeah, absolutely. I think we started to see that when all the regular car makers, automakers, were chasing EVs a little bit too late and still are losing a tremendous. amount of money on each vehicle. So I think in this particular case, it's not that the cars are bad. It's just that they can't, I don't think they're going to be able to get the scale and have

the strategic direction they need to move forward. So again, I'd be looking somewhere else. And on Tesla, which I haven't checked in with you lately. I remember we were sort of on the fence about it the last time we spoke, if I recall correctly. That was pre-election. Yes. Well, we still owned it. But I was on the fence about earnings. I didn't think the earnings were that great. Right. And if, you know, if you have an opportunity at these levels, it's not a bad time to be trimming it. But I think what we know, and I talked about a couple of years ago after my factory tours, was that this is much more than an EV company. In fact, I would argue it's an afterthought EV company. It's the AI business. It's the full self-driving. It's the megapack, the electric utility grade batteries that grew at 52% last year.

At some point, it may be necessary to monetize some of those businesses. At the moment, I think the company's getting credit for MindShare and, you know, Star Power. I went to the Wii Robot event. That's right. It was long on... I already forgot about it. Me too. I forgot about it the next day.

It was long on wow and really short on detail, although I think I may have told you I found my home health care plan, which is Optimus, the Robot, because she can shake a martini. I'd like one now. Absolutely. Serve it up to you. Appreciate it. I will take a little break. After this, we'll talk open.

season on Open AI. The firm has caught plenty of flack after announcing a switch from a plan switch, I should say, from nonprofit to for-profit status. But now Elon Musk is joining that fight, asking a federal court to stop Open AI's plans. Could a suit bear more weight given his role in the Trump administration? More questions and answers next. Hi, welcome back, everybody. The battle for AI supremacy just got a little bit more contentious. Elon Musk asking a court to temporarily block Open AI from becoming a four-prone. entity. Calculated move from Musk, who has his own AI company in the works, XAI, and his timing couldn't be better. Open AI has already caught heat. You need a scorecard on this,

folks, with the open AI and the XAI for its potential pivot with some questioning the company's intentions after claiming for years to have no goals beyond operating as a nonprofit, artificial intelligence research firm. But Elon Musk may prove to be one tough opponent, given his role in the upcoming Trump administration is connections there. Here to help us make sense of all that is Malo Santo CEO, XIA, and CNBC's technology correspondent, Steve Kovac, also with us is Nancy Tangler. X, welcome. It's good to see you again.

What is going on here and why is Musk involved in this? What is his stake here? Why does he oppose OpenAI going into a for-profit status? Yeah, well, first, it's good to see you. Thank you for having me again. the core challenge here that we're seeing with this Elon Musk lawsuit is the fight over the ownership of who actually owns the IP that OpenAI created while it was a nonprofit. It's well known that Elon Musk bankrolled a lot of those initial investments in developments that he gave, I believe

it's $44 million in its first five years as a nonprofit. And by lending his name and his expertise, he was able to attract a number of industry partners and leading research scientists to come to the organization. I read through the 86-page lawsuit that was filed. And in there, he gives examples of right before he separated from OpenAI's board of him vehemently denying wanting to turn into a for-profit structure simply because, hey, I bankrolled you guys for the first five years. Why would I now let you go before profit? And then I don't have any ownership stake in what was created. I think his quote was that he said he was giving away startup capital for free. Right. And so now as Open AI has taken all of this intellectual capital that it's built and spread those assets across a number of for-profit

entities, the question comes into play as to who should own it, should Musk have some type of controlling stake in the IP that was developed or not. And so we're seeing this play out in real time where he just filed the injunction the other day to try to force a court to stop it transitioning. Now, the interesting thing is that the nonprofit structure that Open AI has will still exist under their proposed restructuring. But the controlling governing body will turn into what's called a public benefit corporation, which will require them to both consider societal harms and profit needs in balance. And unironically, this is the same structure that Elon Musk has inside of XAI.

This is also the same structure that Anthropic has, which is home to another major open AI competitor, Claude. And so the question becomes, is it really truly about the intellectual property and who should own it? Is this something petty? Is this something that is being played out? And I think we'll have to see what the court decides. Well, Steve, do you see it as X sees it, basically? It is very deep, involved and gnarly. Yes. And let's look at the timing of what's happening here and what happened on Friday. Asking them to stop being a for-profit company, last week the Wall Street Journal reported that X-AI is about to launch its first consumer product. X-AI is way behind all these other AI

companies, Open AI and a. That is Musk's company. This is Musk's company. And right now you can't, unless you subscribe to X, if you're a premium subscriber pay, however much it is a month, you do get access to it. But other than that, there's no real way for just people like you and me to access it. It sounds like that's going to change pretty soon. So it's going to be a direct competitor coming sooner than later to chat cheap E.T. And by the way, XAI is being operated like a for-profit company. So you can look at it at one way, trying to kneecap a competitor saying, hey, you guys had this original mission. By the way, I bankrolled much of your original mission,

and here you are going against that. Microsoft gets involved in here, too, because it's not just about this abandoning the mission. It's also alleging anti-trust anti-competitive processes between these two companies because Microsoft has such a huge stake and gets early access to open-AIC technology. And the final bit here is Musk alleges that Open AI is telling its investors

don't invest in anyone else that includes XAI. So there's a huge fundraising race going on here as well. Right. I mean, again, Nancy, there's a tension here that has not yet been solved with a lot of these AI models, but gets to the business models and the profitability and the potential profitability for sources. So if you're Reddit, if you're a news organization, if you can license to these organizations, that's why the XAI thing with Twitter is so interesting, they have to get their information from somewhere. And it's one thing if you're open AI and you did it at first because you were a research institute

and you scraped it off of the internet. But now that everybody gets the game and now that you're a for-profit, you're going to have to pay to be able to continue to access all of that information. Or Kate Rodgers has reported, or Kate Rudy's reported, you're going to other, or just try to generate it yourself by literally covering the news yourself or what have you. Yeah. Yeah. And I think Steve's right. I think this is a kneecapping event that, you know, because they're so far behind, they, and that's Open AI, to your point earlier. You're so far behind Open AI.

I'm sorry. Yes, XAI is. is so far behind an open. It's just X as an ORA. And we're going to go to XIA here in just a minute and get their point of view. But go ahead. Yeah. So I think it's just a very chaotic time.

You've got articles being written that Google is going to go out of the source business or search business. But they're arguing because of AI searches, but they're arguing, no, no, we're going to we're going to reinvent ourselves. So I think one of the things you have to do is just step back and go, what's the motivation? And I think the motivation is slow down my competitors. get maybe get a little my own back and see what comes out. So X, our panel of cynics here thinks it's a kneecapping. What do you say? I would argue that that is a potential strategy.

However, I more so see it as a fight over ownership of IP that Elon Musk heavily bankrolled in the beginning. And as they're making that conversion to a for-profit structure, him wanting his fair share. In the lawsuit itself, you know, it does allege that they spread out the IP that was originally owned by the nonprofit entity over what they call a web. of companies that are for-profit that both Microsoft and Sam Altman personally own the majority stake in. So I feel like even if this isn't to harm the competitors and maybe kneecap their progress, because it's not going to stop the development of the AI models. It's also to make sure that Elon Musk has his rightful claim in whatever profits are coming in. Something else that's really interesting, given his position that he is accepting inside of the new federal government

is the relationship of some of the president's family with OpenAI, where it's, where he's one of their largest investors is Jared Kushner's brother, Joshua Kushner, and his thrive global, thrive capital, thrive global, something like that, their investment firm, which is one of the leading investors in the last round in OpenAI. So it'll be interesting to see how both the arguments that are being levied in court where they're alleging that OpenAI and Microsoft violated RICO, the federal statute against racketeering, to see how that plays out as a legal argument in court, as well as whether or not, you know, Elon Musk's new position within the government and his proximity to the president plays a role in shaping how this pans out. This could be a reality show, couldn't it? It really is. Seriously.

Kelly, you had a final. No, it's better than a reality. Yeah. I would just, so just be clear, he, Musk is not trying to get money back. It doesn't sound like he wants to stay as a nonprofit company, which, of course, you would slow them down from and undermine them, exactly. All right. All right. XIA, good to see you.

And Steve Coback. Thank you as well. And, Nancy, you get to stick around. I'm so glad. Still to come, death by a thousand splinters. Lumber prices have been spiking in recent months, with production dropping in Canada. And now tariffs under incoming President Trump could push prices even higher. We already had tariffs go up on August as well.

We'll explore the repercussions and market navigator next. Welcome back to Power Lunch. Let's get you a quick check on these markets. It was the S&P and NASDAQ at new highs, right, Dom? It was, record highs, yeah. Dow is a little bit lower, though. So are the Russell 2000s. All right.

So we got the market navigator today. And what we're seeing right now is a sell-off in lumber prices earlier this year. Lumber's gained, though, around 20% over the last few months. So could this be the beginning of a new bull cycle for that building commodity? Let's ask now, Kyle Little, the chief operating officer over at Sherwood Lumber, a guest in our program frequently, Kyle, because you are our experts in lumber. So let's talk about the volatility we've seen in prices. We had you in the heyday, and I say that jokingly, because the price of lumber was

literally a rollercoaster ride over several points over the last few years. What exactly is different or the same about the price action now? Well, thank you for having me first. Great to be back. I really appreciate all that you guys have done and helping expand a little knowledge in our industry. Yeah, prices today are less than, were more than triple what they were a few years ago. So right now, I would say lumber is in a relative phase of stabilization. We talked earlier this year about a bear market rally, which we had just weeks after we last spoke, and that pulminated into the peak that we just are in the midst of selling off of. 2003 was really the supply price correction.

24 is now kind of building the foundation for that next cyclical move. We're not ready to totally confirm that move yet. But I think the question that remains to be seen is, is 2025 the beginning of the next bull cycle? And there's a lot of things that are telling us that we might be very close to that. And this is nostalgic, Kelly, right, for you and I? Because we had quite the storyline for lumber back in the day. I don't know if they can expand that chart out to show, you know,

2020, 2020, 2021. We were upwards. The price action. Oh, yeah, it was crazy. We're in the 500s, Kyle now. there are going to be some people who are always looking, this is the market navigator looking to make a trade. Should they be buyers of lumber here or should they maybe think about fading this upward move? You know, I think there's a lot of confusion in the marketplace today, particularly just looking at the broad fundamentals in regard to tariffs and what they do to volatility in the marketplace.

Many don't know, but in lumber, we've been in a tariff situation. This is not new news to us. We've been either having a tariff quota or an anti-dumping duty or otherwise since 1982. I think the most recent move this past year where we saw tariffs double after the softwood lumber agreement expiration. I think that had a lot of people confused. And then in addition to that, many don't realize that they are likely going to double again as we move into 2025, particularly the second half of 2025. And what does that mean we should do? I mean, I think what we should do from a technical perspective is recognize what the market makeup is today,

particularly who's long, who's short, and then ultimately say, who should I kind of ride the coattails and ride the wave. And for the last 18 months, we saw commodity funds be grossly short over the last year or so, only to reverse that position in its entirety and now moving more to a long position. And conversely, the producer, merchants, commercial side of the trade was the opposite. They were very, very long during the down cycle and now are very short as we just begin this most recent up cycle. So could we see a short squeeze ahead? We are leaning towards that as particularly we see supply-side challenges with the reduced supply over the last. 18 months of roughly 3 billion board fee.

All right. Kyle, little Sherwood Lumber. Thank you very much. Always great to get your thoughts, and we appreciate it. Thank you so much. All right. So it's interesting because when I think about the lumber trade, you know, there's the derivative plays, and I think about Home Depot and lows. Oh, absolutely.

How many earnings calls we've listened to read transcripts for where they talk about the prices of lumber being an influence on earnings and everything else that happens within those companies? Yeah, there's been more positivity on those stocks lately, as people hope we get an inflection point next year. Builders, when we talk about this, if you look at the charts, he was just showing, this looks like more of a move within a range, not necessarily a big breakout, even with the potential tariffs could be coming. Like he said, they've been tariffed for 40 years. A lot of those went up in August as well. So for anyone who thinks maybe now is going to be the moment that it breaks out, maybe some food for thought.

I just remember the highs that we saw back during the post-pandemic world. I used to drive by the piles of lumber at our local younger. Do you want to lock this up? Yes, just like copper back in the day. Don, thanks very much. Tyler, over to you. All right, Kel, thank you as we had to break. Let's get a quick power check on the positive side of the S&P. Super Micro up 30 percent.

A modest gain there. The company says its independent review has found no evidence of misconduct or fraud. On the negative side, Texas Pacific Land Corp after a 25 percent run up over the past month, we will have more on markets when we return. Welcome back to Power Lunch. I'm Pippa Stevens with your CNBC News Update. President-elect Donald Trump promised there would be held to pay if the release of Israeli hostages is not secured by the time he takes office in January. He made the claim this afternoon on his truth social account. There are believed to be more than 100 hostages still being held in Gaza, although up to a third could be dead. The State Department said today wants to see a,

quote, political process to end the civil war in Syria. Rebel fighters launched an assault in the country last week and made gains in the city of Aleppo. Syrian and Russian jets are retaliating against opposition forces, with President Bashar al-Assad pledging to crush the insurgents. And the French government is on track to collapse later this week. Far right and left parties submitted no-confidence motions against Prime Minister Michel Barnier today after he pushed a budget bill through Parliament without a vote. If the vote passes, the Prime Minister's coalition would be the first forced out by a no-confidence vote since 1962. Tyler, back to you.

All right, Pippa, thank you very much. The NASDAQ starting December by jumping to a record high, but the Dow giving back a little after that very strong November. So can the recent rally continue or we do for a pullback? Jim Tierney is CIO of U.S. concentrated growth at AB and Nancy Tengler is still with us. Jim, welcome. Good to have you with us. I mean, my sense is that you think we're due for a pullback, but that doesn't mean we're going to get one. I think everything that you saw post the election sort of made sense in terms of stock rallying, stocks rallying. the expectation of less regulation, business confidence is up substantially. The consumer was

incredibly healthy this past weekend based on overnight numbers. So it feels like everything's moving in the right direction. Yes, stocks look expensive relative to their own history, but that's never been a great reason to sell or a great reason to have too much concern unless there's a catalyst. And I just don't see the catalyst right now. What about interest rates? Excuse me, particularly on bonds. I'm not speaking so much about the Fed Funds rate. forth. But what about interest rates and whether those higher rates and higher stock prices can coexist? As you can see from my gray hair, I've seen a few market environments and I think back to 2000.

And interest rates were 6% then and a 25 multiple on the S&P 500. That was really extended, but it was because of the earnings downturn that you actually saw what happened to the equity markets. At 420 on the 10 year, I just don't see things as that extended today. I see Nancy nodding. Yes. Well, I'm going to tell Jim, never let them see your gray hair. That's my strategy. Yeah, I mean, I've drawn the analogy as Jim just did to the 90s,

where we coexisted with higher interest rates. So 10 year between 5 and 8 percent, Fed funds rate above 5 percent for the entire decade. And so what we saw was stock price performance that was outstanding until it wasn't, but it lasted for a very long time. I think we're in that same productivity. driven growth environment, and I do think it continue for some time. Though I agree with Jim, we need to see a correction every kind of 12 months, 10% on average to let everything recalibrate.

But in general, we still think we're in early days of a 90s bull market equivalent. No, the only thing, Nancy, I wonder about is trying not to quote these off the top of my head, but when the forward PE is basically the highest it's ever been with the exception of, you know, maybe dot com or, you know, when the Buffett indicator is at its highest since 19. Or when, you know, the proportion of Americans piling into stocks is also at the highest it's been since the 90s. All of these kinds of things are taking place. Obviously, you still have to be in the market.

But do you do anything tactically in case there is, in case 2025 isn't this good a year? Yeah, I think this is a stock pickers market. But remember, too, there's almost $7 trillion in cash on the sidelines. We also know that earnings growth came in much better than expected. Average P.E. multiple, sorry, P.E. multiple on the equally weighted S&P is at 18 times, historically, it's been at 17 and a half times. So I think what you want to do, and then there's also been an analysis done of the number of stocks trading at multiple above 50, and we're well below 90s levels. So I think what you want to do is own the right stocks. I think Jim would probably

agree. He probably thinks he has them in his portfolio. I think I have them in mind. But you want to own the reliable growers with the great management teams. What are the right stocks in your portfolio right now, Jim? I see what's happened post the election and a bunch of companies have realized been hurt, and I think there's opportunity there. Look at Constellation brands. Yes, I fully understand that they import beer from Mexico, and that is going to be tariffed potentially. But let's break that apart. Will it actually be tariffed, or is that a threat, number one? Number two, look at what the peso is done. The peso has moved significantly offsetting in advance any impact of the tariffs. Third, the business, the underlying business continues to be on fire.

Takeaway is accelerating nicely into this quarter, and we know that from the scanner data. And finally, their capital spending program, which peaks this year, means it unbelievably increased cash flow over the next two to three years, which lets them be a self-help story where they can buy their own stock back at 16 times earnings. So I think that's a great opportunity. You look at Cooper companies, similar type of situation. Yes, Cooper has a surgical division which has tools for women's reproductive health and some for IBF. That's taking the narrative as opposed to the 80% of the business. That's the contact lens

business. And that's a tremendous business. Great growth. They're the industry leader. They have the best pricing structure. They're winning market share. And they're getting unbelievable manufacturing efficiencies out of their plants now, which means margins are going to go up. So we're looking at double-digit earnings growth. And that's a stock that's virtually done nothing this year. I think there's some really attractive opportunities, particularly with the dislocation. Jim Tierney, thank you very much. We appreciate your time today. Thank you. You got it.

Now you can join the CNBC Financial Advisor Summit. On December 10th, hear more opinions like this. Industry experts will be talking trends, risks, and strategies to help better serve clients to scan that QR code to register or visit cnbc.com slash f a. And we'll be right back. Welcome back to Power Lunch and take a quick look at stocks, where the NASDAQ and the S&P today are once again, hitting all-time highs. Dow's down 80, though. Let's get a check on the action in the bond market, which has been notable as well for the last couple of sessions.

Rick Santelli, we're under 420 on the 10-year. Yes, we are, and it's very notable. If you go back to the Wednesday before Thanksgiving, you could clearly see with twos and tens on the same chart that we lost ground on the Friday afterwards, and many thought that might just be a holiday move. But here we are, and you could see on the charts that the two-year is leading us. back upward, but still, yields are definitely lower than they were pre- Thanksgiving. Now, if we open this chart up on 10, specifically to mid-October, we are hovering near

what they closed at on Friday, which is the lowest level in a month and a half. Now, as we look at the data this morning, it's very clear why the two-year may be leading rates higher and not coming down as quickly as longer-dated treacheries, because the data, especially from a sequential standpoint with the PMI's was higher, except for prices paid, which was lower, and that is a good thing, even though some of those metrics were below 50. But maybe the most important issue is, how do we calibrate with rates around the globe? Well, here's our tenure versus the EU tenure, the boon.

And as you can see, any kind of a close above April's high close of 218, 218 basis points, will be the widest in five years. And today in the range, we had 219, even though we slipped a bit as the euros closed. So you want to pay a lot of attention to that 218, 219 level. Why does it matter? Capital flows, potential buyers in U.S. Treasury, especially the long-dated part of the curve, may, of course, be a clue as to what demand may change as that spread differential gets even wider. Tyler, back to you.

All right, Rick, thank you very much. Rick Santelli on the bottom. Well, the holidays are here, and it's the season of giving. Nancy Tangler will give us the gift of three of her favorite stock picks next. Three-stock lunch time. Well, welcome back, everybody. Time now for three-stock lunch. Nancy Tangler will be our trader. We've got it right in the house here. And she has three of her top stock picks with us right now. Your consumer discretionary pick is Chipotle. Yes. So it stumbled a little bit when Brian Nickel, fled to Starbucks, thank goodness, that he did.

That's the Starbucks share of all. Yeah, because I am, yeah. I think I talked to you about it at the time. But yeah, so it's in our 12 Best Ideas portfolio. This is coming, they're not going to change strategy. They're still trying to drive innovation and productivity. So they've got a new sort of make line product called hyphen that's really streamlining. Then, you know, they've got their target is 7,000 stores with 4 million in average volume. That a lot of that is driven almost half. They're currently at two on their way to four. Almost half of that is mobile orders. So it fits all of our themes. Plus, they think that their sub-10-dollar burrito, I've never had one. Mine are always above 15, yeah, but is cheaper than the competitors by 20. So are they going to be able on mobile orders, which I know they are very good at. But one of

the problems with Starbucks is that they had too much input. They had mobile orders. They had walk-in orders. They had all these different ways, and it got too complicated. Yeah, it is too complicated. So I think you're going to see Brian Nichols streamline and really shore up. I mean, and just by putting the condiments or the cream and things back out for customers is going to save a tremendous amount of time. I love that. I love seeing what he's going to be up to.

Let's talk Uber. That's your next pick. This is so fun because the stock was working so well, and then the last couple of weeks has been kind of, I don't want to say broken, but why do you like it here? Another Tesla casualty. We like it because they've got a first-class CEO. They're starting to print free cash flow, so they're going to buy back shares. We also think that the business has plenty of room for growth, even still with Uber Eats and the rideshare business. It's been hit on a strong dollar and some slowdown in rideshare. But I think this is a company that you just want to continue to add to at these levels. It's also in our campus. I think they're tentacles in a lot of places, which is one of the sort of things about that company. Your last pick is one that was that we don't talk about as much, and that's Oracle. Yeah, we used to. Remember when... You used to all the time. When Larry Allison missed the cloud, and so he started taking out ads in the Wall Street Journal, bottom right hand corner every week. Yeah. So they've got the magic now. They figured it out.

It's a scalable cloud product. They have partnerships with Microsoft, Amazon, among others. And I think they may disappoint on earnings. Sometimes they do, and that's an opportunity. It's our largest holding in our ETF, TGLR. Is that right? Yeah, and it's done really well for us. So I think you can still make a lot of money in this stock. All right, Nancy, we'll be back with you for some final thoughts in just a moment. So stay with us on Pellow.

Welcome back. Let's get some final thoughts from our lovely guest host today, Nancy Tangler. I know you've shared a lot with us already, but again, going back to this sense that things are almost too good to be true going into 2025. What kind of gives you the confidence throughout the new administration and everything going on that you think we'll still have a well to tap to kind of keep the experience. expansion going, keep the stock market going. Well, so I do think productivity, that's what we've been hanging our hat on at Laffer Tanger, productivity really has the potential to not only drive growth, but drive margins.

And I think that's important when you're a stock investor. I also think deregulation is at the margin going to be important, just as it was last time, the last Trump administration. And then I think if we get lower corporate tax rates, I mean, if you just went from 21% to 18, that would add about a little under 4% to S&P earnings growth. Do you think they're going to do that? I mean, I think they're going to try. It's going to be hard, right?

With the constraints around the budget and everything else, you know, it's going to be expensive. Yeah. That goes back to the rates thing and, you know, all of these fights. Yes, except that when you drive incentives. We talked about this last week when I called in that you saw corporate tax receipts after the Tax Cut Jobs Act go from $200 billion to $400 billion last year. So if you provide the right incentives and you provide, I think they'll probably return to expensing. And when we were at 100 percent in the early years of the TCJA, we saw a lot of KappaX spending.

How worried are you about tariffs and trade and we've got about 20 seconds? I'm not. I think a lot of it's rhetoric. And I think, you know, we had it last time. And we've had it in the Biden administration. And we've still seen consumers prosper except for the inflation. Right. So, yeah, but that wasn't the tariffs.

Great to have you with us. Thanks. Thanks for being here. Thanks so much for your time. Thanks, Kelly. And thank you for watching, Colin.