Power Lunch - Stocks shake off early losses 1/12/26

Episode Date: January 12, 2026

Interior Secretary Doug Burgum discusses Iran, Venezuela and energy policy. Apple and Google team up to power Siri. And Oppenheimer's Ari Wald joins the show to give his 2026 outlook.  Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

A major escalation in the Trump administration's pressure campaign against the Federal Reserve and a major moment for Google as it hits a major milestone. Happy Monday. Welcome to Power Lunch. I am Brian with Kelly Stocks at record highs, at least for the S&P, shrugging off an investigation for the DOJ into the Fed and Chair Jerome Powell. Powell pushing back. So will this end in criminal indictments or maybe it goes nowhere? We dig in. And a tech collaboration for the history books. Apple using Gemini models from Google for its AI powered Siri.

That's a lot in there. Shares of Alphabet are reaching a new all-time high on the news, powering the stock beyond the $4 trillion market cap. Needham's and Laura Martin will join us shortly to discuss this partnership. Yeah, big day. I mean, who would have thought with all the markets this morning, Kelly, that we would be hitting a new intraday, not closing, but intraday record high on the S&P 500. Exactly right.

A big turnaround from the 500 point. on the Dowell this morning. Certainly was. All right. So as you can tell, folks, there is much to do on today's program. But let's start the hour with another big-time guest right here on Power Lunch, because you are obviously aware of what has been happening in Venezuela. But the world, the last few days, also watching Iran and closely. Because millions of people rising up in the last few days to protest the oppressive Iranian regime, and they seem willing to die for their freedom. Most importantly, Iran is a human story. But it's also a major oil in energy story with the country producing about 3.22 million barrels of oil per day or about 3%

of total global output. Interior Secretary Doug Bergam, joining us now. Secretary Bergam is also the chair of the National Energy Dominance Council and welcome and good to chat with you again. Secretary Bergam, obviously much to discuss American oil, Venezuela, wind power and more. But I want to start with Iran and the events there. How closely are you watching Iran, not just from a human perspective, but also on the various outcomes? and what it might mean for the American oil industry? Well, Brian Kelly, great to be with you. And, of course, we are at the cusp of perhaps a historic change in the world.

And all of this is because of President Trump's leadership. Without President Trump's policy and execution of energy dominance, the U.S. would not have been able to take out the Iranian nuclear capability in terms of their producing nuclear weapons last June and then have essentially no change at the price of the pump here in America. That's because of the policies that President Trump put in place and was executing on around energy abundance and around freeing up our energy industry to produce, gives him the degrees of freedom to do the things that he's doing. And, of course, that's severely weakened the Iranian government. I think that, of course, this is a government

today, the Iranian government, which has been responsible for funding terrorism, as many as 24 different terror groups. They're responsible for taking American lives over the last many, many decades. And I know that many other countries in the Middle East would love to see the current Iranian government fall. And as President Trump has said, he stands with the Iranian people. And President Trump is specifically is upset about the fact that Iranian may be using snipers to kill protesters. And he's said over and over, he's not going to tolerate that. The all Iran's oil output comes from NIAC, the National Iranian Oil Corporation, state-owned entity, the workers there, they're family people. They're just Iranians like everybody else.

Do you have any intel or insight that you can share on what the status of Iranian output may be right now? Because as I tweeted out over the weekend, if we see, like in 1979, the oil company can alter the outcome. If those people rise up against the regime and say, we're on strike, we're with the people, not with the regime. You could take millions of barrels a day off the market and effectively starve Tehran and the Ayatollahs of their money, which would, I hope, end this violent protest. Well, that's absolutely true, Brian, that that would make an impact because this is a government which has run on their oil sales in the same way that Russia is. So part of President Trump, when he's talking about trying to have energy abundance, energy dominance, energy domic,

in lower global oil prices. Part of that is he wants to take away the funding mechanism from Russia to wage war in Eastern Europe and for Iran to fund terrorism around the world. I mean, it's a, you know, when you take the dollars away from Iran, then all of a sudden they can't make payroll for Hamas or Hezbollah. You know, these are things that benefit the world and benefit peace around the world, benefit prosperity. In addition to the effects we're seeing at home, because with these prices right now, we've got the lowest gas prices in America that we've seen in five years. And if you're in a red state that are even lower, policies drive pricing, President Trump's policies, and those red states in general, the data

backs that up, that if a red state that's been pro-energy has got incredibly low gas prices relative to even some of our own states or relative to the policies that we might see in some states in the U.S. or in Europe, which continue to drive pricing up. But it's exciting to see this action. And, of course, the action in Venezuela, with, with, oil reserves in Venezuela larger than even Saudi Arabia between the U.S., Canada, and Venezuela. I think we're seeing a historic shift where the power of OPEC is going to be diminished. And you're going to see the Western Hemisphere, led by President Trump, really exerting dominance around the pricing of oil and the production of oil and gas around the world.

A year ago, under President Biden, we still had a ban on the building of LNG export facilities. And here we sit today, Brian. The U.S. number one LNG export in the world literally saved Europe last year by all the exports coming off the U.S. to Europe on LNG. That is fascinating. It's Kelly here. Mr. Secretary, if I could jump. We just need an acronym, first of all, for whatever we're forming here in the Western Hemisphere. You know, there are some oil analysts in the market who are starting to worry a little bit as they look down the road about tightening oil supplies.

So we've had this two million barrel a day glut in the market right now that's keeping prices low. But they point out a lot of that's on ships. It's in China. And if China got desperate because they can't access Venezuela and crude, maybe they could just take it. And suddenly the market's a lot tighter than we think. Do you think that this will end up being more of a passing phenomenon than a permanent one? Is there a plan, for instance, if supplies were to suddenly tighten globally? Well, I think one thing you encounter on in America is the incredible technology, innovation, and speed at which our shale oil producers can move.

We held on January 6th, Department of Interior held a federal leasing sale as required by law, and it produced a record, record pricing. One lease block went for almost $220,000. per leased mineral acre in the Permian in New Mexico. The total of all those lease sales, $327 million, these are some of the highest prices we've seen since 1987. So there still is optimism. And of course, the shale producers in America, it's not drill and hope you hit oil. It's they know where it is. They know how to get it. Every well they drill essentially produces. And so we've basically got a huge strategic patrolling reserve across them, Marcellus, the Bakken, and the Permian that can be tapped by our companies if needed.

Are you happy with oil? I mean, we're almost at 60 again. Well, I think one thing we want to keep doing is cutting red tape. I mean, one thing that we know that these fantastic American companies are continually innovating in terms of driving their productivity up and the cost down. We saw that a year ago in my last year as governor in North Dakota in the Bakken, 75% of the percent of the permits that we were giving were three-mile underground laterals as opposed to two-mile, same drill pad size, same number of people working on the rig, but 50 percent increase in the productive rock that they were going through out of one well. I mean, name another industry that's seeing productivity leaps like that. So these producers are always finding ways to get their cost

down. We're trying to help them here from the federal government cutting red tape and changing the rules and regulations that were meant to strangle them and push them out of the market in the favor of expensive, highly subsidized, intermittent sources of energy. And so we know that if 60 used to be the break-even point, cutting red tape, I think we can certainly get it down to 50 where we can have a profitable, growing, vibrant, abundant oil and gas industry,

but again, there was a lot of red tape piled on during the Obama and then the Biden years against oil and gas in the US. And we can take that away and still have the cleanest air, cleanest water, best soil health. in the world. Because you know, I talk to all the oil and gas companies, Mr. Secretary, and I'm not going to you know this. I mean, you're from North Dakota. They're a little worried. They're a little worried

that if we go too low, they're going to have to lay people off. They're going to have to cut production because they simply are not profitable. Doesn't sound like you and your team are worried that if we get $50 oil in the United States again, that that's going to have a negative impact on the American oil industry. Well, I think a couple things. One is if we start seeing low prices, we've an opportunity to fill up the Strategic Petroleum Reserve, but I also think there's going to be a big increase in demand. I mean, people act like we're static on demand. I mean, you're leading off talking about AI and Apple and Google, but the amount of natural gas we need to produce electricity to keep ourselves at the forefront of the AI arms race against China, we've got a lot

of work to do in terms of looking at this big surge in demand for energy, particularly on the electrical side in the short term, you know, midterm, you know, it looks five years out. Nuclear is a great option. Geothermal is a great option in the near term. We need to bring more natural gas online producing electricity to help meet that demand. So there's going to be upward pressure on price from demand at the same time. If we can keep the supply going, we can maybe keep these prices down. Because as you know, the price of energy is baked into everything. It's not just the price, the gas of the pump. It's in the clothes where we all wear the. the homes we heat, the food we eat.

There's an energy component, and this administration's committed to winning this war on inflation that was ignited by the Biden administration. President Trump is winning that war, and we want to keep winning that war. And the one way we do that is make sure that we keep, make sure that we've got affordable, reliable, U.S. secure energy. Yeah, and you have a great quote where everybody's heard the term,

knowledge is power, but you kind of inverted that, and you said power is knowledge, meaning if we have electricity, we can power AI, which ostensibly is going to make everybody more well-informed. It's a great point. With that, I want to pivot quickly to offshore wind, because the wind proponents would say we need all that energy to power homes, and then we can use the excess energy to power AI. You and your administration have a 30 or 90-day pause on offshore wind. Can you give us any update right now? Maybe break some news for us, Mr. Secretary, about the status of. of the pause on those five offshore wind programs. And then also, does this in any way have anything to do with Denmark and Greenland? Because Orsted is the developer of two of them, and Orsted is one of

the largest companies in Denmark, which oversees Greenland. Well, you're connecting a lot of dots there, Brian, but I would just go back with the top line, which is the whole offshore wind is not only unreliable, it's actually unaffordable. It's some of the most expensive, ever conceived, none of them would be built without subsidies coming from the taxpayers. And, of course, with the law that was passed last July 4th, the one big beautiful bill, there's an end to those subsidies. And so that's why you're seeing virtually every project that was even being considered is not underway. The only ones that were still being considered were the ones that were substantially under construction. And those five, which are located near population centers

and near airports off the northeast coast. I mean, with a new report that came out in December from the Department of War from the United States is that there is significant radar interference with these. And, of course, we know that modern warfare today, whether it's what was happening between Iran and Israel, or whether it was what's going on every day in the Russia-Ukraine war,

we're not reading stories about pilots getting shot down. These are drones on drone, type wars that are happening or drones versus missiles every single day. And if you want to do launch an attack on our population centers, I'm not giving away a hint, but the way you would do it is you'd come through one of these large, large, and I say large, covering thousands and thousands of acres of offshore, as close as 15 to 20 miles offshore, we could have an enemy swarm drone attack, you know, into a place like the Northeast before we even knew it. So we're taking a hard look at this thing and we're going to meet, we're meeting with the developers. Does that mean they're done,

though? It sounds like you're saying they're done because now what the fear is, Mr. Secretary, is that you've got these half-finished wind turbines that are going to sit in the ocean, and if they're abandoned, they're just going to kind of sit there and rot and look bad and be environmentally unsound. What's going to happen now? Are you saying it's not going to be, they're all five or over? Well, all five are under review because they all fall under this new national security review, but we're holding meetings with each of those developers and trying to find if there's a way where we can mitigate, share some of the findings that some of those are still confidential reports,

you know, in terms of having security clearances to share that, but we'll get through that. We'll share the information. And if we can find ways to mitigate it, we can. But when you talk about these relics sitting out there in the ocean, understand that under the Biden administration, there was no financial assurances that were put against these projects, They weren't thinking ahead to 12 years from now when the blades are falling off or these things need to remove.

If you're in the oil and gas industry and you've built an offshore platform, you've got to take full financial accountability for what happens at end of life. The offshore folks were given a pass. That was a free pass on that side of it. That was all going to land back on the taxpayers. So the sooner that we stop building stuff that are going to end up providing unaffordable, unreliable electricity. If you want an alternative, one gas pipeline from Pennsylvania into New York and New England would provide the equivalent amount of power of all five of those things combined, Brian, only those five offshore projects.

It would equal that. One pipeline would equal all of that, only it would work seven by 24 regardless of the weather. And those are the kind of pipeline projects that have been blocked by the state of New York and by others. So again, this is not about AI data centers driving up. This is about policies in states raising the cost. Billion, it's essentially every year billions of billions of dollars are being paid by the citizens of New England in higher energy prices because of the policies of places like New York State. And it's, again, that's why you've got the price in Maine of electricity is triple what it is in a place like North Dakota.

And North Dakota's had the highest amount of energy demand, new energy demand of any state. It just came out on a report. And so you can have increased. demand for electricity, you just have to also increase your supply. Interior Secretary Doug Bergam there kicking off the show, wide-ranging interview. Secretary Bergam, do appreciate it very much. Thank you. Folks, I'll be headed back to D.C. tonight. And by the way, talking about some of these issues at the State of the Energy event in D.C. tomorrow morning. Nice. Looking forward to that. What are the potential obstacles

for major oil companies as they ponder entering Venezuela and those comments from the Interior Secretary just now? And should investors in Chevron, Exxon, and Conoco be on high alert after what we've heard from the president over the weekend. Let's ask Wells Fargo senior research analyst Sam Margolin. Sam, it's good to see you. And what should Exxon do to begin with? Well, you know, they've been there before. I think the main thing to keep in mind is that there's a lot of oil there.

And, you know, everybody's well aware of the $300 billion or $300 billion barrel reserve number that's been published for some time. There's third party sources that say there could be significantly more than that. There was a report from the U.S. Geological Survey that came out almost 15 years ago. So based on technology that's even out of date that said there could be twice as much recoverable oil than that in Venezuela. So it is a massive opportunity, and that's why there's a lot of interest from the industry. But when you have a resource of that size, you have to think in decades, right? It's not even about the next four years or what anybody says.

You have to plan for 20, 30, 40 years out. Understood. And so I think when you hear companies talk about some of the challenges, of moving into a resource that big, as big of an opportunity as it is, the assurances that you need that are durable through any kind of political environment over time just maybe aren't here yet. And so, you know, as those come through, as those filter in, that's when I think you'll start to see activity pick up.

Let's play the comment from Exxon CEO, Daryl Woods, so that to some extent has caught the president's ire. Take a listen. In Venezuela, today it's uninvestable. And so significant changes have to be made to those commercial frameworks, the legal system. There has to be durable investment protections, and there has to be changed to the hydrocarbon laws in the country. So, and I take that in conjunction with what the Interior Secretary said about they want oil prices lower. They want the Permian Basin to function like a new OPEC

in the Western Hemisphere, along with, you know, Venezuela and Mexico and Canada. So, you know, if you were a big oil CEO right now, I mean, to me, I would be worried that, the price of my commodity is going lower, I'm going to be under political pressure to make more of it, and therefore my company is going to be worth less. My stock price is going to underperform. Yeah, I mean, I think the efficiency aspect is an important part of it. I mean, costs have been coming down, just in the Permian alone on a per foot basis. The Interior Secretary referenced sort of per foot metrics that are going on the Bakken. In the Permian, per foot costs have come down 30% in the past, you know, five years. basically since before COVID. So there is a huge tailwind from efficiency gains that are coming from

costs. That will help offset maybe a stabbler, lower oil price environment. But at the same time, when I'm picking stocks as an analyst, I'm mostly focused on durable portfolios through a lot of different oil prices scenarios, including lower ones. And really, that comes through in dividends. Right? These companies are positioning themselves to maintain and grow dividends, to grow shareholder returns through a lot of different oil prices scenarios, whether lower oil prices are driven by more supply from Venezuela in the future or just a normal cycle from the underlying economy. I think what matters is that portfolios need to be durable through that. And so that's our stock selection criteria more so than trying to figure out what the oil

price is going to be tomorrow or a year from that. supportive of a lot of these names, even with the pressure on. But if that changes, let us know. Sam, thanks for now. We appreciate it. Leave it there. Sam Margulet from Wells Fargo. After the break, two tech titans, Google and Apple are teaming up for a historic partnership. We'll discuss the collaboration what it could mean for the stocks with Needham's Laura Martin after the break. All right, a flurry of tech and media headlines to begin the week. But one of the most notable that is grabbing some of the attention of the mega-cap investors is that two tech titans are teaming up. Apple announcing it is joining forces with Google to power artificial intelligence starting later on this year.

That means Apple will lean on Google's Gemini model and cloud technology for AI-powered Siri, along with future models in years to come. Elon Musk, for one, minutes ago, slamming the collaboration. He wrote, quote, this seems like an unreasonable concentration of power for Google, given they already have Android and Chrome. Joining us not to break it down from an investment perspective, Laura Martin, senior intranet and media analyst at Needham. Laura, we wanted John to talk about Consumer Electronics Show in Vegas and your top 10 list. But we've got so much news.

I've got to ask you about this. This is, it seems like a really big deal for Apple and for Alphabet. What's your take? I think right now Wall Street is funding too many LLMs. And what's becoming clear is that Google is going to be one of the winners, where this Gemini, both because it's, model is now raised ahead of Open AIs model, but also because they've got this chip that's really efficient of their own, they're running a closed ecosystem. And remember, Brian, that Apple already gets

$20 billion a year for exclusive search rights on the iOS devices. So essentially, this billion dollars in theory that Apple's going to give Google is just a reduction in the price that Google has to pay them for the 20 billion year of search exclusivity. But it does, I, I, I, don't disagree with what Elon must quote you just put up. It really does concentrate power. But as you know, we ran Google's monopoly. The courts found that Google was monopoly, and then they did nothing, didn't even really slap their hand. So, and they didn't, the courts did not stop Google paying and iOS 20 billion year for the exclusive search default rights. So I think it's a concentration of power, but the courts are saying it's fine. So they should keep going forward because these

companies are worth more together than they are separately. So in going forward, I mean, also here the big news is on the chat GPT front, do you think they've really, you know, lost a lot of a, look, they have 900 million weekly users still, I understand, but Gemini seems to have really gained some ground quickly. Yeah, and I would make this distinction between consumer and enterprise. You know, Google is doing, the alphabet is doing a lot of work for the defense department. This is, Apple is sort of like an enterprise relationship, not a consumer. facing. My gut feel is that the security requirements for enterprise will be much more difficult,

and therefore, my guess is Gemini sort of focuses more on enterprise first, and maybe it happens to winning consumer, but I think Open AI's primary focus is consumer, but I think the money's bigger in enterprise. I want to ask you about Meta, because there's a huge piece of news, I think, that kind of fell a little bit under the radar. Meta Today, Facebook announcing, it is hired Dina Powell McCormick as president. Okay, so you think, well, very powerful ex-Goldman Sachs banker. That's great.

Well, let me add a little layer to this lore, which I'm sure you have thought about. Dina Powell McCormick is not only a super powerful and intelligent individual on her own. Her husband is also one of two U.S. senators from the state of Pennsylvania. Pennsylvania is probably the most important energy state outside of Texas in the United States.

Her husband has great sway there. Oh, and Mark Zuckerberg announcing earlier today that they want to produce tens or hundreds of gigawatts. of power over the next number of years. I think this Dina Powell McCormick hire is a massive, massive foray into energy that's not getting a lot of attention. We thought about that at all.

You know, I think it's an okay theory. My guess is she feels like she's a big enough piece of talent that if she actually felt like they were hiring her, they are. They are. No, 100 percent, 100 percent. Goldman Sachs, super successful. on her own right. I don't think it hurts that your spouse is a senator from one of the two states

that arguably mean the most in energy in the United States with an energy-friendly governor in Josh Shapiro. I think great point. And the other point I add is that this is the second Trump administration hire. His general counsel I just hired was also ex-Trump administration from Trump's first term. So I do think there's a little political pivot going on here with Mark Zuckerberg where he's hire people that he knows Trump likes already. And maybe that can finally get that way. Laura, your quick, who's who, you were not hot on meta, right? Am I remembering correctly?

Correct. We have a hold on meta. Would this change your view at all now that they're beefing up in this way? No, it definitely wouldn't because, you know, the problem with, if you're trying to hire somebody to get at somebody else, like, you know, the power thing's a problem. I mean, it's a serious problem. Amazon's doing the best job because they have a lot of corporations. competencies and physical logistics. But this power thing is really a gatekeeping factor. And this is

a race. This is a land grab. So Amazon might win, not because it has a better anything, but it is better infrastructure. Well, I wonder, because Zuckerberg today said they're going to try to build out, not buy, build tens of gigawatts and hundreds of gigawatts. That's going to take an immense amount of policy OK, is my point. Like, you can't build anything without 700 bureaus. signing some red tape form. And I think Dina Powell McCormick, with her power on her own right, coming from Goldman, her relationships as a Pennsylvania resident matter a ton. I think it's a sneaky good hire by Zuckerberg, is my point, particularly because two years ago they hired John Arnold, the non-tech natural gas billionaire. They're getting bigger into energy on the board and C-suite side.

Maybe I would say that this race going on right now is measured in weeks and months. And if you're working on relationships, that feels much longer term to me. This game, this land grab will be over in two years. So, you know, I think that people who are, you should throw money at the problem for sure. But I also think investing in relationships that are long term is, I don't know if that matters. Because I think the race has run too fast to worry about things, to be building power three years from now. I'm not sure. It's a sprint and it's a marathon, no.

Yeah, sort of. That's fair. It's both a sprint to the marathon. But if you get too far, those do fall behind and get left behind, as the Pirates of the Caribbean say. And that's true at AI also. I think you're right. They seem to sense that, you know, it's all hands on deck. Look at us at the ship. Just quote Pirates of the Caribbean? Which one? Which like six? The squid-faced guy. I don't. Laura Martin, Nidom, Internet, senior media analyst, always the good.

We'll get you back on at some point talk about the hot takes from CES and the very weak robots. Laura Morton. Martin, thank you very much. All right, coming up, President Trump, escalating his attack on the Fed and Chair Jerome Powell with a criminal pro, a former Fed and Treasury Chiefs, as well as some key members of his own Republican Party speaking out against the investigation. We'll get the very latest on that big story when Power Lunch returns. All right, welcome back. One of your big stories today, an investigation into the Federal Reserve and Chairman Jerome Powell, the probe, which we have to note could end up going nowhere. It's possible. Centers on the $2.5 billion renovation of the Federal Reserve's headquarters building, as well as statements Powell made during congressional testimony months ago. Amen Javers, joining us now with more details and reaction on the story which has not only brought people together across aisles, Republicans speaking out as well, but brought a lot of.

of former Fed officials kind of out of the woodwork signing a singular document as well, Aymie. Yeah, it really did, Brian. And we just got the first reaction from White House press secretary, Caroline Levitt, speaking to reporters here at the White House, giving her take on this. She was asked by a reporter if the president ever directed the Department of Justice to open an investigation. Here's what she said. The president has every right to criticize the Fed chair. He is a First Amendment right, just like all of you do. And one thing for sure, the president's made it quite clear is Jerome Powell is bad at his job. As for whether or not Jerome Powell is a criminal, that's an answer. The Department

of Justice is going to have to find out, and it looks like they intend to find that out. And in that same press gaggle, I asked Caroline Levitt if the president wants Jay Powell to go to jail if it's found out that he did in fact lie to Congress. And she said she'd give me the same answer to that question she just gave in that soundbite there, which is that we'll let the Department justice determine that, Brian. Yeah, even as Axios is reporting, Amon, that, you know, Treasury Secretary had called the president and said he was, I think, perturbed was the word they used and warned it could be bad for markets.

Yeah, the reporting in Axios is that Besson said to the president that this could be a mess. Now, we can't match that. I've called around and I don't have anybody who I can source who will confirm that that's the case. There may have been a call between Besson and Trump last night, but we don't know what was said on it. Axio says they know what was said during that call. But, you know, who knows? I don't know. As with everything, this whole administration, a grain of salt. You know what they say? If your mother says she loves you, get a second source. Amen, thanks very much. Amyne Jabbers. Let's get a quick check

on the bond markets, which had somewhat of a reaction last night, but have calmed down today. And we had a big auction last hour that was better than expected in terms of demand for 10-year bonds. That pushed the 10-year briefly to 4-17. Now we're around 4-18. Still, we hit about 4-20. 420 when some of this was first surfacing last night. So that sale of $39 billion and 10-year treasury notes suggesting solid demand still for long-dated government paper and were right around those levels a little bit higher since that happened. You can advance it along.

The 10-year yield in Japan also continues to climb higher to its lowest level since 1999. We've been saying that day after day after day as it continues to follow this parabolic move you can see over the past couple of years. All right, stocks. We hit a new intraday record high on the S&P 500. That said, we are still a hair away from two big major milestones. Number one, Dow 50,000. We're at 485 and change.

And S&P 7,000. We're at 6981. So what do the technical say about when we might hit these? If we might hit these, that is next. Welcome back to Power Lunch. It looked like we were going to take a breather. on the march to S&P 7,000, but we are once again heading in that direction as we've clawed back the losses from earlier on. And the SMP is positive for the day and about 20 points from

that huge milestone, believe it or not. Here on set with us in his first interview of the year on his 2026 outlook is Oppenheimer's head of technical analysis, Ari Wald. First of all, great to see you. Second of all, forget the fundamentals and earnings. We didn't forget it, Eric. You look at that chart. What does it tell you? When are we hitting S&P 7K, Dow 50K, and all the rest of it? Well, we put out our big numbers for 2026. Our top number was S&P 7,700. We think the market continues to push higher. And it's really just a case of there's very few market top warnings as it stands today. We think the cycle is intact. If you look back historically, eight out of 32, 23 cycles since 1932, excuse me, Bulls have made it this long.

But when you say there's no signs of us topping out, talk about that because that's what everyone's on the lookout for. Yeah, and the cycle has matured with the fourth year now. We should be getting close to this topping point. But when we think about internal breadth, we have the Russell 2000 now actually pushing through resistance that has capped gains for the last five years. I think that supports a healthier, more inclusive advance. Look at market leadership. High beta cyclicals outperforming defenses. We got credit spreads hitting new tights for the cycles. So the typical warnings that you would see into a top just aren't present as we currently see it.

You know, because a lot of people would say this is just, not that it's gone too far, it feels top heavy, you know, all the gains are at the top and so on and so forth. So along with seeing the S&P being able to keep going to 7,700, what else do you see based on, you know, everything you're watching? Like, is it broadening? Is it different kinds of sectors that you see taking the leadership? It is, it's the broadening trade. And granted, there is no middle ground here. I mean, as it stands, if you look back historically, either it's another double-digit gain or you top out in your negative. So we're just going by what we see right here right now, which is the rebroadening trade.

This is not a sell big tech trade. It's the fact that now industrial stocks, financial, small caps, probably most importantly, are starting to break out to the upside world stocks. Probably most – the biggest chart I had with Global PMs last year is the MSCI-all-C-all-country world breaking through 18-year reasons. resisting, dating back to the great financial crisis. But if you look at that subset versus the S&P, I still think this is a tech-led secular bull over the long term. What could break it? Anything that you're seeing in the charts, that's like a little bit of a warning flare? And that's the key. The specific cycle-ending catalyst always changes. Tider monetary policy, economic recession, runaway inflation, bursting of an asset bubble.

Criminal investigation. Criminal investigation. The chairman of the Federal Reserve. But you're looking for the market's reaction. And the market warnings historically have remained the same. Narrowing breadth, defensive leadership, widening credit spreads. Even as we think about interest rates, in our view, it's neither high or low rates, but stable rates that support a healthy market, a healthy economy. We've had a range-bound tenure for much of the last three years.

If that starts a nosedive lower, we start to see leadership turn more defensive. that would worry me. We're not seeing it. Yeah. Well, like it sounds good. See you later. Have a nice year. And, you know, because I think we're all trying to figure out, like you said, there is no middle ground. So if the options are, and again, we can always buck historical trends, but that we tend to either keep going or face these kind of negative returns. And then to Brian's point, trying to watch the market behavior. Because we've seen so off on headlines. I mean, look what happened last April. That looked like it was a break from the rally. And yet it wasn't. You know, we dropped significantly.

and then, I'm talking about the rally since 22, right? We dropped 20 percent, and then we've marched back and kept going. Yeah, volatility is the cost of admission for long-term price returns. You have to expect it. Even in positive years, we look back midterm years that are typically strong, especially in the second half, so the average max drawdown is 10%. So expect volatility. Actually, if you look at those midterm years, May to September in particular,

the weakest stretch of that. So it could be setting up for another sell in May. that does set up for the sweet spot of that presidential. That's not a bad thing, though, right? Every year, almost every year, we get a 10% or more drawdown. And people freak out about it. I get it. But it's normal.

It's even healthy. Is it not? I hate to use the G word. Nothing is guaranteed in the stock market. But is it more than likely at some point this year, we will get a 10% or more drawdown. Oh, that is for sure reasonable. And if that is not in your mindset as being reasonable, you're in the wrong. business. This is the cost of admission, is the volatility that comes along with the S&Ps and the

markets that it typically appreciates over the long term. Expect the volatility along the way. Last April, a great case in point. As it stands, we're not really seeing any breakdowns that would suggest that type of volatility is imminent from a trading basis. So I think, again, Russell 2000 breaking out, equal-ated S&P, MECI-EFA, emerging markets, NASDAQQAQ, COILD and ready to spring higher, S&P 500 likely goes higher in the near term. All right, Ari, thanks so much. Appreciate it today. Ari Wald of Oppenheimer.

Now, let's get out of the markets for a minute and go over to Sima Modi with a CNBC News Update. Brian here, the stories are watching Democratic Senator Mark Kelly suing Defense Secretary Pete Hegseh and the Pentagon today saying he was unfairly punished for disfavored political speech. Now, Hegsaith recently issued a formal censure to Kelly, a retired Navy captain for his participation in a video urging troops to disobey a leader. legal orders. The censure could reduce his rank and affect his retirement benefits. In the lawsuit

today, Kelly argues Hegset's actions should not be able to proceed. In other news, the State Department said today it has revoked more than 100,000 visas since President Trump took office. The department says it targeted foreign nationals who have been charged or convicted with crimes, ranging from assault and theft to driving under the influence. And the White House says President Trump will meet with Venezuelan opposition leader and Nobel Prize winner Maria Karina Machado on Thursday, Machado dedicated the prize to the president and even suggested she might give the award to him or share it with him. The Nobel Committee has since said the price cannot be revoked, transferred, or shared with others. Kelly?

All right, Sima, thank you very much. So what to buy with the markets in your all-time highs? As Ari just said, just buy everything. But Stephanie Link will join us with her best value ideas, and you're looking at one of them right now. Message, Brian, or I, if you can guess, our mystery chart up 35% over the past year. the reveal when Power Lynch returns. Welcome back. It's Power Check time, and our next guest has three value pick. Value picks with stocks in your all-time highs.

I'm just teasing. We don't mean value, like, the value stocks that don't do well. So anyway, we'll get into it. We're going to start with Wells Fargo, which was our mystery chart. They report earnings on Wednesday. Here to talk about that. And more is Stephanie Link, the chief investment strategist and portfolio manager at High Tower and a CNBC contributor. It's great to be here. Welcome. Happy New Year. I can still say that, right?

Absolutely. That's exactly what Ari Wald, somebody said. It's not too late to say happy New Year. I'm going to do it. The whole month. I'm going to just do it. Happy New Year. Merry Christmas, Mother.

Thank you. I think it only just ended yesterday. How about Wells Fargo stuff? I mean, it's done so well. It has. Maybe not as well as Goldman Sachs, but it's up a lot. You think it can keep going. When do we hear from it?

Wednesday. Okay. So I like the banks. I am 10% overweight the banks relative to my benchmark because of the macro. And then Wells Fargo also has kind of a micro story to it. So the macro really is, the economy is hitting on all cylinders.

We know the Atlanta Fed trackers at 5.1%. Net interest income. We have not had a cycle for net interest income in over a decade. I think you're going to start to see improvement there. We're also seeing better fee growth, low double digit, fee growth. M&A grew 27% last year, and I think that's poised to move higher. And, of course, you have deregulation, deregulation really more on the capital levels and the returns that we're going to see.

I think you're going to see an increase, especially after Basel. 3 endgame gets released. Now, Wells Fargo, it's all about the asset cap lift. As soon as the asset cap lift was released, they are now able to increase investments to grow. They're also able to increase their market share. And then, of course, you also have the net interest income story. I think you are going to see 4 to 6% growth in net interest income. We haven't seen 4 to 6% in anything in terms of net interest income. That's why that's important. It's over 50% of their revenues. But this company is doing such a good job investing. Even with credit card caps and whatever else might be coming.

I mean, I don't think, I think it's noise, to be honest with you. I would be buying Capital One. I own Capital One. I would be buying capital one. I would be buying capital. Absolutely. Because if you put caps in place, Cal, you're going to restrict loan growth. That's the last thing that this president and the administration wants to do.

So you don't think they're going to do it. I do not. I do not. But Capital One, certainly, their average yield is about 17.9%. Compare that to Wells and Bank of America. it's like 5, 6, 7%. Capital One's done well. It's up 32% in the past 12 months,

but it's not done nearly as well as Estee Lauder. Estee Lauder, E.L, 53% gain in 12 months, up 7% this year. So it's kept the momentum going. Apparently beauty is not dead. Beauty is not dead. And while the stock is up 50% in the past year, it's still down 70% from the highs in 2020.

Okay, because I was like, where's the value for Stephanie Link? it's had this run. Yeah, it's had a run, but it's still down quite a bit. The CEO joined last year at this time, and he has a program in place called Beauty Reimagined. It's just trying to figure out how they're going to provide value to the customer, product innovation, supply chain fixing that, sourcing, fixing that. And so this is a company that has, they're in 150 countries, and they have the best products, the well-known products. We all know one or two of their brands, maybe more. And so I think the CEO is really going to do a better job going forward. We're not out of

the woods, but 48% of their revenues is China and the U.S. Last quarter, China grew 9%. Wow, did it? So we're starting to see a little bit of improvement there. All right. I don't know if that brings us to Gap, but Gap is also on the list. And we do know the retail stocks. Look at what's going in with Abercrombie today, American Eagle, to some extent as well. I think Gap is down on that, but what was the significance of the news? Yeah, I mean, I think, well, there's a big conference out there. And I think Ambercrombie had had a nice jump last, last quarter, so they pre-announced today. It's a very volatile stock. Gap is to less so, though, and I just think that Richard Dixon, who is the CEO of this company, it's been there for a couple

years now. The Playbook is working in terms of the talent he's gotten into the company, the product relevance, the same store sales that have actually seen much better than expected. You're looking at Gap and Old Navy, which is 70% of their business. They're growing comps for, four and a half percent. Who's growing comps in specialty retail at four, four and a half percent, not them. I mean, not anyone else, but them. So the one problem is Athleta, and I think they can fix that. They can turn that around. I mean, athleisure in itself. It's so fascinating. Athleta used to be the grocer. I mean, you know, it was like, you know, Gap, at least they have athletic. Now the trends have reversed,

and now it's all denim and not athletic. It's totally true, but I think it's fixable. They just hired somebody that came out from Nike, and I think we're going to see better product. The problem is you haven't had really good product, and how many leggings do you need? How many vests? I have about 20. Do they divest? They could. I don't think they will. Sounds like you need to divest if you have 20. I probably need to divest. Yes, absolutely. They're also focusing on beauty and accessories.

So they're doing things. And it's working and the comps are there and traffic is good. So by the way, it's still down 20% from 2021. So I think there's opportunity at 13 times earnings. There you go. If you heard Ari Wald, who says it's all going higher and you don't want to buy whatever, the high flyers. Here are your names, Stephanie Banks. Thank you. Appreciate it, as always.

Stephanie Link with High. High Tower. Coming up, your neighborhood's superstore is getting set to join some tech giants. We'll show you the name next. All right, quick programming notes. Stay tuned for CBC's interview with Black Rock's Rick Reeder. He's going to be weighing in on the bond market. It's also on a report that he is meeting with President Trump this week. It's possible, Kelly, that Rick Reeder of Black Rock is the next chair of the Federal Reserve. It is. We'll see what comes of that interview. And in the meantime, the name getting added to the NASDAQ 100 is Walmart. The index,

be updated on January 20th and WMT shares are up 3.5% on this news, Brian. It will replace AstraZeneca. Yeah, pretty amazing. Walmart, I think the biggest ever shift of a company from one exchange to the other and adding that. By the way, I will be hosting closing bell overtime in just over one hour. So, tune in. Yes, we look forward to that. Another day where the indexes are shaking off the Fed News for now and getting back on this march towards some of these round numbers that we've been talking about. So it's kind of exciting to see. They just keep moving. They're going to shake it off.

Shake it off. Thanks for watching, everybody. Closing bell starts right now.