Power Lunch - Stocks slip in last day of 2024 12/31/24

Episode Date: December 31, 2024

Stocks moved lower today, as investors wrapped up another booming year that hoisted the S&P 500 to its second consecutive annual gain exceeding 20%. We’ll tell you all you need to know to start 2025 on the right foot. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Hello everybody and welcome to Power Lunch alongside John Ford. I'm Contessa Brewer. We're coming up. The trading year is coming to an end and it comes not with a bang, but just sort of like a shrug and a meh. This is officially the year without a Santa Claus rally. We're going to take a look at what it could mean for markets in the months ahead. Plus, the volatility won't end with the markets. President-elect Trump's proposed tariffs expected to disrupt trade with both our allies and rivals. We'll speak to the Premier of Alberta, Canada. And the C-suite saw its share of challenges this year, multiple CEO turnovers, companies just dragged into politics, negative public sentiment reaching a new low will lay out what challenges could come in the year ahead. But let's start with the markets, the past week's volatility, not easing. Even with these declines, though, we saw some massive gains this year.

Palantir up 340%. Vistra up 260%. Invidia up 170 plus valuation spiking across the board, especially big tech. So could this continue in the new year? Joining us now for more is Mark Muscini. He is Chief Investment Strategist at Jenny Montgomery Scott. Also here with us is Bill Strasulo, Chief Market Strategist at Bell Curve Trading Guys. Welcome.

Happy New Year. Mark, doesn't a lot here depend on whether the price to earnings multiples stay kind of rich in 2025. I know you think it's a good year ahead, but what influences whether those multiples stay strong? Well, John, happy new year to you as well. Two things. One, certainly earnings that are expected to grow at a mid-teens pace by most aggregator services. And so in order to achieve the kind of gains that I think a lot of strategists, including us, have largely penciled in. It's not going to be, as you

said, due to multiple expansion. Over 50 percent of the returns generated over the last couple of years has been due to PE expansion, not just earnings doing the heavy lifting. I think that's going to be reversed this year. So as a consequence of that, and the other, of course, being an economy that remains relatively stout. Right now, we're seeing the Atlanta Federal Reserve's GDP NowTracker posting up at 3.1 percent annualized. That would be an extension of what we saw in Q3. And if that's the case, certainly a lot of momentum going into 2025, which is a pretty good setup for stock prices overall, even if we don't get further multiple expansion. Okay, well, conversely, Bill, you think the stock rally is pretty much over. So how should investors position themselves heading into 2025?

Raise some cash? Yeah, John, I'm going to take the other side of that all day long. Look, you know, we've been one of the most bullish firms on Wall Street for the last year, year and a half. I've talked about a number of times on this network, S&P going to 6,000, NASDAQ 100 going to 22,000, 225, Dow going to 45,000 to 47,000. And that seemed like a pipe dream six months or a year ago, but we're here. And those are the targets off the critical March 2020 lows, the pandemic lows, which is the key long-term trend

driving the markets. Everybody comes on these shows and says, I'm a long-term investor, but if you wanna stop an interview in its tracks, ask them, what's the long term? Is it three years ago, five years ago? Is it 1929? But the key driver here is really off the pandemic lows, when we had the historic massive monetary and fiscal stimulus.

And when you look across the major U.S. equity indices, it's basically tapped out here. You know, Wall Street is, you know, is looking for the economy to stay strong. Great. I mean, that's in the market. Fed rate cuts in the market. Trump administration would be more pro-business in the market. 90 to 95 percent of this is in the game now in the market. And there's a lot more that can go wrong, they can go right.

So we're advising our clients, which are some of the largest mutual fund complexes, hedge funds, pension funds in the world to pump the brakes and take your equity exposure down. Okay. So are you just putting that into fixed income right now? Are you going into real estate? Like, where are you seeing other opportunities then, Bill, if it's not in the market? Yeah, I mean, Contessa, we advise all sorts of money managers that have all sorts of prospectuses. some of the long only mutual fund complexes that will raise cash.

Other ones have brought a million dates. Well, they may sell calls, buy puts. You know, the defensive sectors will not lose as much as some of the more aggressive sectors, the magnificent seven, et cetera. But the point is that there is not much left here. You know, I could see maybe the S&P getting pushed to, you know, $62, $6,300. maybe NASDAQ 125, but you're in the eighth or ninth inning here. And I think for the people watching the show, the other side of this is take advantage of what's been a great run. Take some chips off the table and take your exposure down.

You're going to be able to put that money to work at much better levels later in the year. Mark, do you think that, I mean, even if you think that the next year is going to go gangbusters, do you also think that there's going to be volatility and that you have to have some investing patience? to get ready for 2025? Well, certainly we've tempered our judgment relative to the expectations in the coming year. We certainly don't expect to see another, what would be a three-peat of 20-plus percent gains. We penciled in 6600 as our central case, which is about 10 percent out of the money. But along the way, we expect far more volatility for some of the reasons Bill mentioned in 2025

versus what we've seen here, other than the gross scare in August, where we had about a 9 percent pullback in equity prices in relatively short order. But a consequence of the fact that we have pulled forward a lot of news on certainly, you know, receding inflation, Fed rate cuts that are underway. Certainly fiscal policy where investors are focusing more on some of the pro-growth aspects of a deregulation and prospects for lower corporate income taxes rather than tariffs and something untoward surfacing geopolitically or otherwise. And so those are all the reasons we would expect more air pockets this year so investors may be able to take advantage if they're nimble enough of opportunities to come in at lower prices. So I think the overall path is for hire. Mark, in a way, what you and Bill are

saying is similar. Like, they're going to be some rough moments. It's just Bill thinks the good news is priced in. And you think that those down drafts will be buying opportunities. So Mark, what is going to be the defining moment or signal that Bill's wrong and you're right? And if these are not the way of the year, but they're buying opportunities. Well, I think as we get into the first quarter and we get a little better crystallization around the policies and the sequencing and magnitude of them under the Trump administration will be able to handicap a little bit better than where we are today. And I think, obviously, news on the jobs front, which is going to be key to the consumer,

which, as we know, drives almost 70% of economic activity, will be how well that remains. stitch together, which will give us an indication as to whether consumption can continue to prime the economy and provide it the positive impulse that it has so soundly over the last couple of years. And so we'll know whether we're going to see something that perhaps precedes what I think would require a major down draft in equity prices, meaning something that would be more bearish or bear-like in terms of a draft down-draft in nature, is prospects of a recession. something that lurks out there that would trigger an upending of this economic momentum we have established right now, given the strength in the labor market. All right. Well, I love a good disagreement. Mark, Bill, thank you.

Really? We could have one right now. Let's do it. No, we can't. We cannot. We're going to agree. Energy and metals had an overall positive year. It was actually the soft commodities that saw the serious gains. Pippa Stevens is tracking those moves. Pippa. Hey, contest, so we saw big gains for cocoa coffee and orange juice. juice this year. And with no quick fix, we could see even higher prices in 2025. Coco is pacing for its best year on record. Coffee's up about 70 percent and hovering right around an all-time high. And orange juice is tracking for the best year since 2009. Now, cocoa and coffee both require very specific growing conditions and crops have been hit hard by bad weather. Steve Wateridge from Expana told me, unless there's a big improvement in cocoa supply from Ghana and Ivory Coast, we've got a

big issue and one that he said the market is just now realizing. When it comes to coffee, key producer Brazil is on the cusp of its fifth consecutive poor crop thanks to climate change. And that's also impacting orange juice output since Brazil is the world's largest producer. Now, Rabobank expects supply there to decline by 15%. Companies have managed the surge through actions like smaller chocolate bars and trading down to robust of coffee. But these structural issues can't really be fixed by adding more supply, meaning that there's going to have have to be a demand side response. Contessa. All right, Pippa, thank you for that. Head on the show. We'll do exactly that. We're going to keep looking ahead. Shares of Apple on

pace to close out 2024 with a 30% gain. Could a new administration in the White House and those expected trade tariffs disrupts disrupts up Apple's plans? Plus, speaking of tariffs, will be joined by the Premier of Alberta, Canada, to discuss President-elect Trump's war of words with our neighbors to the north. Power lunch back in two. Welcome back to Power Lunch. The new year likely beginning with headaches for Apple. The company will have to hit the ground running to deal with tariff threats and global tensions. Steve Kovac has more. Steve. Hey there, John. Yeah, let me give you a couple things here at the top of Tim Cook's agenda going into 2025. First of all, dodging those president-elect Trump's tariffs as he did for Apple in Trump's first term. And next, China, specifically getting Apple intelligence off the ground there. But let's start with tariffs. I think that's the most important one. Trump coming into office in a few weeks promising blanket tariffs up to 60% on goods from China. That had hit Apple the hardest of any mega-cap tech company.

Most products from Apple, including a majority of iPhones, are made in China. How Cook managed to dodge tariffs in the first Trump term, though? Well, he developed a relatively cozy relationship with Trump, as his peers, such as Jeff Bezos took more antagonistic stances. And that all culminated in 2019 when Cook gave Trump a tour of an Apple factory in Texas. already existed, but Cook showed Trump a new model of Mac computers getting made there, and that turned into a win-win scenario for both sides. Trump got to show everyone Apple making things here in the United States, and then the following month, Apple got relief from tariffs on imports from China.

Ahead of Trump taking office again, he said Cook came and dined with him in Mar-a-Lago a few weeks ago. No mention from Apple or Trump himself on what that means as far as tariffs go. So early in the year, here's what to watch for. Keep an eye out for announcing. from Apple related to job creation or manufacturing here in the United States. That could be what Apple offers in terms of getting tariff relief. Next, let's talk about China. Still a lot of competition going on there from homegrown competitor, Huawei. But beyond that, Apple needs to get the government to approve Apple intelligence so it can

launch on iPhones in that country. I asked Tim Cook about this on his last earnings report off one of his recent trips to China. He didn't have a comment, but we do know talks keep going on. And Apple does need Apple intelligence to launch there for Chinese customers who are more obsessed with tech specs. And it will have to partner with another company like Baidu on artificial intelligence since Open AI, which is the partner here in the United States, is blocked in China, guys. All right, Steve Kovac, thank you for bringing us that story. You know, it occurs to me that the tariff threats are not only threatening China. The future of trade with our neighbors to the North seem rather uncertain because President-elect Trump has threatened to impose 25 percent tariffs.

on products coming in from Canada. Several Canadian political leaders have responded with economic threats of their own. Earlier this month on Power Lunch, the Premier of Ontario, Doug Ford said he would go to the extent of cutting off energy exports to the United States if necessary.

Now to discuss her thoughts, Danielle Smith, the Premier of Alberta and the leader of Canada's United Conservative Party. Premier Smith, it's great of you to join us today. First of all, I note that when you talk about cutting off energy exports, Alberta exports more than $127 billion. That would be 56% of all of the oil that the United States imports double that from Mexico, Saudi Arabia, or Iran if you were to combine all of that.

So when you look at that amount, is that even realistic to cut off, say, Alberta's energy exports to the United States? I certainly don't think it is realistic, and nor do I think that that would make us a very good neighbor. quite frankly. I have a little bit of a difference of opinion with my Ontario counterpart. And maybe it's because we are the principal supplier of oil and gas to the United States. We know how vitally important it is for American energy dominance that we're able to be a partner in that. The Americans have, you've seen an increase of your production and export to 13 million barrels a day, but America still uses 20 million barrels a day. And so we're able to provide a lot for the domestic consumption, which keeps the price of gasoline low.

We've been told that if a 25% tariff does indeed come in across the board, it would increase the price of gasoline by a buck a gallon, which I don't think that American consumers want. I don't think that would be in keeping with the second objective of the Trump administration, which is to address inflation and keep prices low. So we're hoping to be able to talk about how Canada is a great friend, great partner. We have a wonderful, quite balanced trade relationship compared to other nations in the world. And we think that if we took a North American strong approach so that we could get into a position of collective dominance, I think that that's actually a great partnership that should continue. And I hope that we can avoid tariffs altogether. You sent a message out in response to Donald Trump's truth post about the trade deficit with Canada.

And you pointed out the jobs and the way that the energy exports support the price of gasoline in the United States. But also, you pointed out that grain and livestock, which, of course go into food costs, which was one of the big factors that we saw in this election, as well as timber, which has to do with building materials. And as you know, housing supply in the United States is rough and hard to come by. And in response to hurricanes and wildfires, those rebuilding materials drive up inflation. All of that, it's a great pragmatic argument. Do you have any sense whether you're being heard from the incoming administration? Well, I hope we are because that has been the relationship that Canada's had with the U.S. for some time.

Amylos face said our economy is only one-tenth the size of the American economy, but it's pretty remarkable that we are the largest buyer of American products. Mexico is second, and we beat Germany, Italy, France, the UK and Vietnam combined in the amount that we buy from America. And part of it is this partnership that we have a lot of products that we produce, whether it's livestock or grain or not. timber or oil and gas or critical minerals. The Americans use that in the value added and creation of products. And then we buy a lot of those products back. And so that is one of probably the most successful trade partnership in the entire world. And I don't see that a trade war benefits. American consumers certainly doesn't benefit Canadian consumers. And I think we'd be much stronger together, especially with this latest move from China to ban some critical minerals, germanium, gallium,

and timid. Guess what? You can get those from Canada. You can get one of those products from BC, another from Ontario and another from Quebec. Uranium as well, vitally important for energy security increasingly as we're looking at small modular reactors, but also defense. You can get that from Saskatchewan and Alberta. And so we really feel like this is a partnership that we should continue to talk about the strengths and the positives where we both benefit and hopefully be able to avoid tariffs. So Premier Smith, I'm curious because a couple years ago, you have the Alberta Sovereignty Act, and it seems like you would argue you're trying to protect your province from federal overreach, right? Protect your economy. At the same time, there seems to be

this sweeping move in a lot of countries and economies to keep from being treated unfairly and to make deals that benefit them. Trump is trying to do something similar. How do you balance the desire for free trade with the desire to protect the interests of the economy over which you're presiding? Well, I think the thing to understand is our country is a little bit different than the U.S. And the U.S., a lot of land and resources is owned by the federal government and private landowners. In our country, the resources and the land are owned by the provinces. So the Alberta government is the owner of 85% of the oil and gas in our province. It's some, you know, we've got a trillion barrels of oil in place, 200 billion that's recoverable

at today's technology. We've got over 200 trillion cubic feet of gas. We've got poor space to be able to bury CO2 so that we can address emissions. And so because we are the owner as a province, it is in our interest to be able to assert our ownership and look for more ways to be able to get our product to our best friend and trading partner, which is the United States. We've had, we have a number of pipelines that go into the U.S. we're able to export alone, 4.3 million barrels per day. We'd love to be able to double that

so that the U.S. economy would then be able to export to their friends and allies internationally. And that's the kind of partnership that I think we should be talking about. Okay. And so do you see openings with the Trump administration to do that, even within this environment of the president-elect, saying that Canada is treating the U.S. unfairly? I think so. I mean, I look back at our trade, a statistic. going back for the past 20 years. There was a decade between about 2010 and 2020 where Canada actually had the deficit

with the United States. The real big difference in the U.S.-Canada trade relationship more recently is commodity prices. And when you look at if we're able to be a secure, safe supplier of commodities to the Americans, that just benefits American consumers. It benefits American businesses, especially when you look at China controlling

80% of the supply chain of some key minerals, all of which are available in Canada. So if we can make that argument that the trade surplus when it comes to the manufactured goods is actually very balanced. The difference is that we're able to provide the key source of materials that go into making all of those great American products.

And that's why I keep on making sure that that message is coming through loud and clear. I don't think that either of our country's benefits from a tariff war. I think we're much stronger together, and we want to be that partner. Okay. See how it plays out in 2025.

Daniel Smith, premier of Alberta, Canada. Thank you. Thank you. Well, January's arrival usually signals a fresh start, whether that's playoffs for your favorite football team or maybe even a reset for your stock portfolio. After the break, our trader will give us his playbook for 2025, some offense, a little defense, and, of course, some special teams.

Market Navigator is next. Welcome back to Power Lunch. If you're watching any football over the next couple days, Here's something to keep in mind. The games could offer a framework on how to manage your portfolio in the new year. My next guest is he will tell us his plans for navigating the market in 2025 NFL style. Joining us now is Eric Clark, portfolio manager of Rational Dynamic Brands Fund. Okay, some offense, Eric?

Yeah, let's talk about offense in the investment thematic, and that's through private markets. The funny thing is 90% of the economy. here and abroad is private companies, and yet all of our investing tends to come from public investing. And so there's this huge opportunity in our industry of migrating some of your money over to the private markets because KKR, Apollo, Blackstone, and others have made it very easy for advisors to do that. And so you're talking about some of the smartest investors in the world, strong returns this year, and you're getting it at a discount. KKR is 9% off the highs. And we

think they'll get over a trillion in assets and that'll help their fee revenue. Just love the businesses. They are super smart investors and you're getting it at a discount. Okay, but sometimes defense wins championships, right? Absolutely, absolutely. It doesn't seem like there's a lot of defense these days in the NFL. But we like Walmart here. You know, Walmart has been a strong candidate, even on the offense side for 2024.

And part of it is that it's not your grandparents Walmart anymore. They are using AI and technology through everything they do, throwing profits faster than revenues. And so you get this defensive quality in a staple, but you have offense because they're just executing really well at a time when inflation is going to stay sticky. And we do think they're going to join the trillion dollar club. I mean, it's not a big stretch at about a 700 billion in revenue. It certainly wouldn't surprise us to have a trillion dollar market cap. They certainly deserve it. Few things more thrilling than good special teams.

Play, how do you do it? Well, with special teams, you know, in our portfolios, we think of that as more active trading. And the goal isn't to over trade, but to be very patient. And sometimes you get a good opportunity to buy a high-quality company that's short-term dislocated. And we actually like Nvidia here. It's 12% off the highs after the earnings report last time. I think a lot of the momentum investors kind of moved away. because there's this supply demand and balance with Blackwell, that will write itself in the

first or second quarter of next year. So with the stock on sale, we know their earnings and growth are still going to be strong. As investors, you take advantage of that while nobody wants to, you know, semiconductors, you know, getting a nice discount. Now, over 141 is a bit of a trigger for the stock and when kind of fast money traders might get back involved. But we like buying it here down at 134, 135, buying in tranches for that ultimate break over 141. Sounds like a solid playbook. Eric Clark from Rational Dynamic Brands. Thank you.

Thanks, John. The view from the C-suite. Earlier in the hour, we discussed what could be in store for the markets and global trade in 2025. After the break, our experts lay out the biggest challenges facing America's executives in this new year. Welcome back to Power Lunch. I'm Steve Kovac with your CBC News Update.

The woman burned to death on a New York City subway earlier this month has been identified as 57-year-old from New Jersey. Police say a 33-year-old man lit her on fire as she slept. He has been indicted on murder and arson charges. Federal immigration authorities say he has entered the U.S. illegally from Guatemala. Israeli Prime Minister Benjamin Natanyahu appeared in Parliament today to push for support for a government tax bill after undergoing a prostate removal surgery on Sunday. Local media reported that he left the hospital again. against his doctor's advice. Hardline rebels have threatened to vote down the wartime bill,

which includes a package of tax hikes and spending cuts. And some good news for drivers as we head into the new year. Gas prices are expected to drop in 2025 for the third year in a row. The national average for a gallon of gas is forecast to dip to $3.22 next year. That's according to Gas Buddy. That would be the lowest national average since 2021 and is about 11 cents less than the average of $3.33 this year. John, I'll send things over to you. Steve, thanks. Well, meantime, companies faced a lot of challenges in 2024.

CEO departures at U.S. companies hit a record high. The most notable included Boeing, Nike, Starbucks, and Intel. Beyond that, we had political fights and rising public hostility toward corporate leaders. Note the United Healthcare CEO assassination. Given all this, what challenges await CEOs in 2025? Well, joining us now to discuss is Lulu Cheng, Missouri, founder at Rostra, and Jeff Sonnenfeld, Senior Associate Dean for Leadership Studies at Yale School of Management and a CNBC contributor. Guys, happy New Year.

Lulu, why is direct communication going to be so important for CEOs in 25? Well, thank you for having me. So CEOs have basically become the human mascots of their company. People make it incredibly personal, as we've seen with the tragedy around the United Healthcare shooting, people treat the CEOs as the human emblems of their company. They attribute traits to the company that they see in the CEO. We see this happening with Elon. We see it happening with Alex Karp.

And so for the CEO to be strategic about displaying that combination of traits that they want to impute to their company is going to be super important. Jeff, what were some of the best CEO moves in 2024? What can CEOs learn from that for 25? Thanks a lot. I agree with what Lulu just said. And thanks for the invitation to join you, John Contessa. You know, I've been doing this particular segment, believe it or not, for over 30 years. And it's just really good to take stock of where the last year was.

Einstein says, you know, learn from yesterday, live for today, hope for tomorrow. This past year, we've seen that Walmart, Motorola, Goldman Sachs, Bookings.com, Citigroup, these are five that really were underappreciated, that their stocks soared. They did very well. Extraordinary transformations. I know we don't have time to get into depth on it today. have a Fortune magazine article that just came out on this for anybody who's interested in it. Jeff, hold on.

These are companies. Hold on. Great transformation. Hold on just a moment, Jeff. Sorry, we got some breaking news on U.S. Steel. Our Pippa Stevens has the latest Pippa. Take a look at shares of U.S. Steel because they are jumping here after Nippon Steel is reportedly sweetening its bid for U.S. Steel as it hopes to get approval for the acquisition.

According to the Washington Post, Nippon has said that it would give the U.S. government a veto over any reduction in U.S. steel's production capacity. That, of course, is meant to alleviate some of the concerns brought by Sipheus that a decline in domestic steel production could pose risks to the national security of the United States. Now, President Biden has until January 7th to decide whether or not to approve or deny the deal based on those Sipheus concerns. You see there, U.S. steel up 9%. Guys? Thank you very much for that, Pippa. Jeff, I know that this is an issue that, I mean, And we were even talking about the importance of some of our big industries on election night. Can you talk a little bit about your reaction to this sweetening of the pot for the U.S. Steel?

Yeah, that is pretty exciting news. What's interesting, Contessa, when we did talk about it, we were surprised then, as we are surprised up to this moment, that this is one area where President Biden and President-elect Trump are in agreement. And that's not where, in fact, the labor unions and many others are. that are eager to see this as they feel go into deeper pocket, stronger hands with the Japanese ownership. But there's a strong sense that this should stay as a Scipius, which is, you know, a protected industry, like the airlines or others that we need to have this to be domestically based. And it is this sweetening of the deal is interesting.

It will make it more complex. This is definitely going to have to go to litigation. But right now, the U.S. government, both parties are against it. they really want us to stay in U.S. hands. Just the way we're looking at trying to bring chips back to the United States, it would be a bit of a paradox if it flipped the other way. But again, it's certainly in the interest of a lot of key stakeholders see it go into stronger hands, which was the Japanese hands that will invest in it.

Jeff, thank you for that. Lulu, I want to go back to the conversation that we were having about the CEO environment next year. I mean, when you're seeing such a difficult environment for leaders where with politics, many feel forced to pick aside. You have this big backlash for DEI this year. And that, as you said, they can personally lift or sink share price of the stocks. How does a leader of a company navigate all these new pressures amid, by the way, a lot of AI concerns or strategies that must develop and develop very quickly? Well, so CEO resentment has already been really high. I think going to get a lot higher. I think part of the reason for the turnover has been that the job of being

a CEO while it's paying really well is unglamorous in the sense that you just get constant hate and vitriol for you and your family 24-7. And that's only going to get worse. A lot of CEOs are going to get paid even better, especially as the stocks of the best performing companies rise. They're going to be under pressure from shareholders and themselves to start replacing a lot of their employees with AI. So AI disrupting the job market is a reality, 2025. is going to really pop off in terms of CEOs. You'll see CEOs making major changes of replacing customer service and sales, and a lot of people with AI is going to make resentment a lot worse.

And the other thing is a lot of the CEOs that are the most interesting, the most washed are CEOs of private companies now. So, sex, massive company, I think it's $350 billion valuation. I know it doesn't exactly translate to market cap. But a lot of these companies would be large-cap companies. They would be in the S&P 500, OpenAI, in the mid-100 billions. Anthropic would be a large-cap company, ramp, and d'endral scale. These would all be large-cap companies, and we don't have the visibility into what the

it's doing. It seems like those CEOs, right. They have more luxury to keep their private life private, to keep their politics private, because they don't have to be on an earnings call four times a year. They're not out there doing investor meetings or public shareholder meetings. They do investor meetings, of course. So, Jeff, who's doing it right? Let's go through your top five list this year.

Well, it's, and I would just, by the way, disagree a little bit with Lulu on that. CEOs are still the most admired leaders of any institution's society, beating out academics, beating out the media, beating out, of course, public officials at all levels, and even the clergy. There are populist extremes on the left and right that have made a lot of noise. But we had 200 CEOs that went to the very spot of the murder the week after. the murder of Brian Thompson of United Health. And they became defiantly just to make a counterstatement that they're here from the largest companies. But, you know, Walmart has been remarkable.

We talk about AI and your last speaker in the last segment, talked about the magnificent changes in Walmart. It has really been a great AI story. And counter to what Lulu was just saying, this has not been at the expensive job loss, but really digital advertising. They're beating everything Amazon in terms of their digital sales, which is shocking. They also, you know, their sales are up just on brick and mortar, 4% on top of all this. So that's a remarkable story.

Motorola, they're up 50%. You talk about these issues that Lulu and you were talking about on security. This is the country's premieres provider. People don't realize how well Motorola is doing. They remember the old cell phone days. Greg Brown has led an incredible transformation there as impressive with Doug Woodman did at Walmart. David Solomon, he's pulled out about a lot of retail finance for good reasons on regulatory fronts. And again, the stock is soaring there.

He's done very well up 50%. And the stock has tripled since he's been there. And Bookings.com, which is another just amazing story. That stock had fallen about, oh, I don't know, 97% at the time the new CEO entered there. And since he's been there himself, which he's. It's been a revolution, is that they have, they have soared the triple the company, and they're up 50% again this year. These are a couple. And then Citigroup, the backroom organization, maybe it's prosaic, but it's brilliant, is that Jane Fraser has done a magnificent job.

She's up 35, 40, almost 40% on her stock and getting out of some complicated international arrangements. So these are some, sorry. Thank you so much. We appreciate you bringing us the top five list. Lulu, great to see you as well. Happy New Year. Thank you, folks. Still ahead. Off to the races, some big changes coming to horse racing in the new year.

We discussed what it means for the industry, for sports betting, and much more power lunch. We'll be right back. Welcome back. The past few years have seen pro sports moving the goalposts, pun intended, changing up key rules or features to try and increase interest in the game, including MLB's pitch clock, a new NFL kickoff rules to name a few. Well, now horse racing is trying a few new tricks of its own. Horse racing could be poised to take off in the new year. Its most famous trainer, Bob Baffert, has returned after a three-year suspension from Churchill Downs. I know what it felt like to win the Kentucky Derby, and I can't wait to get that feeling back. In Kentucky, Churchill Downs is spending $300 million on renovations.

At Belmont Park in New York, nearly half a billion. The kind of improvements, industry insiders say, are needed everywhere to attract new fans. They don't want to go to a racing facility that's been there since the 1960s with old infrastructure. with old bathrooms, they should be able to walk into an updated racetrack. The races themselves could get an overhaul, a gate race, for instance, where investors own the positions or slots, secure a great horse, and the slot value soars. Owners can then buy, sell, and trade in an effort to win multi-million dollar purses. I think it's a good way to increase a handle for the racetrack and get better horses.

Fan duels all in, offering horse racing alongside football and basketball. And Draft Kings sponsored the Travers this year. As gambling increases, so does the size of the purses and the number of eyeballs on the sport. Still, there are challenges, including concerns over the welfare of the horses, though owners and trainers hope enforcement by a new federal horse racing integrity agency will reassure fans and investors. We're seeing a consolidation. We're seeing smaller full crops. And with that, we're seeing fewer horses racing. So in some ways, the market shrinking, but I still think there's potential for growth.

And that potential is attracting Wall Street money. Danny Moses is a trader famous for his short calls, but as an investor, he's long on horses. I can't think of a better experience than being with friends, trying to make money, enjoying yourself, gambling on the horses that you also own. And it's a lot of fun. And what's really interesting is the gambling part of this, as gambling expands, it becomes, comes this flywheel where it funds those bigger purses. It attracts a higher quality of horses, higher quality of horses in the races, attracts new engagement from new audience. Take Churchill Downs,

which is probably the purest play on horse racing for a publicly traded company. Year to date, it's about flat, down about 1%, beating some of its competitors. But I talked to CEO Bill Karsan, and he said, we think that we are poised for a completely new era with new fans, especially with that crown jewel of the Kentucky Derby. Penn says it's proud to be the biggest operator of perimutual wagering across the nation. There are a lot of gambling companies that have horse racing facilities or horse racing businesses, and it will be fun to watch to see what this sport does as there are new opportunities. All right. See if it comes back. Fascinating. Well, remember, you can always hear Power Lunch on our podcast. Be sure to follow and listen to Power Lunch wherever you go. We'll be right back.

Welcome back yesterday. We talked about an old retail trend that social media helped intensify this year. Dupes. What about other trends heading into 2025? Our next guest has a few predictions for the new year, ranging from M&A expectations to what could be the newest styles. Here with us now is Jan Niffin, the CEO of Jay Rogers Niffin Worldwide. It's good to see you. Okay, so dopes. In fact, I just did a story today about Walmart offering this knockoff of a Birken bag that's all the radio. right now. Is that still going to be a thing these look-a-like of expensive products? Hey, that's been a thing forever. I got sued for that in 1993 by Reebok. So it's not like that's new. We've been knocking off product, trying to duplicate something that's a higher-level brand, and then getting away with being enough different that you don't get sued or put out of business over it, but enough like it that the customer thinks it's cool and wants to buy it. So I would be shocked, shocked if that went away. just like I would be shocked if counterfeits went away, even though those actually are illegal.

I had another expert tell me that these sort of real expert, the luxury products, the things that are going to last for a long time are becoming of more value. And fast fashion is not going anywhere. What does that mean for middle of the road products? Well, I think you also have to remember what we're seeing, too, on things like the real, real where you're buying something that's a 20 year old Louis Vuitton bag. It's still really cool. It was really expensive. It's still not that cheap, but it still satisfies your need for that cool thing. Well, there are some people, of course, that are willing to buy that used product,

and there are people that are willing to pay up for the really good stuff like Louis Vuitton and Hermes bags, et cetera. But there are other people who just don't have the capacity to do that, and they still want to own cool, nice stuff. So I actually think we're going to have a really good time for brands in 2023, not just very high-end brand. I think it's good if you're Ralph Lauren. It's good if your tapestry. It's good if you're Lululemon. It's good if you're Nike. Because those are aspirational as well. You want to own that because it is a cool trademark. Jim, one of your predictions is that luxury is going to come back in 2025. There was a column maybe in the New York Times over the past few days arguing that the quality had really gone away

from luxury and that luxury is on the outs. Why do you disagree? Depends on your definition of luxury. Quality is not gone away on the Irmes-Burkinbag. It is not gone away on the Louis Vuitton products. There are things that are getting passed off as luxury that maybe aren't as well made as they could have been in the past. On the other hand, there's a whole group of people that want to own luxury products. And right now, they're being constrained by finances, particularly in Asia. If the Chinese government really starts to reflate their economy, we will see luxury become important again in China. And I believe given what we're going to see in the economy here in the states, you know, we're not going to see higher taxes than 2025.

We all thought we might. We may actually see some lower taxes. But we're definitely going to see probably lower interest rates, better values than home, home equity loans, people refinancing. That's going to drive money into that $100,000 year customer and plus. One more for you. They're going to buy better things. You'll see them buy more luxury. Jen, does Nike's comeback actually start to work in 2025?

Yes. Somewhere in the 18 months when they started it, we were going to see improvement and comeback. I think we'll see that in the second half of 2025. They'll get some pipeline of newer product. They're getting better positioning in the stores and all because they're being nicer to the people that are selling their product than they were. And everybody's thrilled about that if you talk to the people out in the real world

retailing. And so I think you're going to see more support for the brand. You're going to see newer nicer product and you're going to see better distribution across the brands. So I think you'll definitely see a resurgence in Nike. But I know that you can't see good numbers out of On and poker. You still can. Okay. This is yet more more M&A? Yes or no? Yeah, absolutely. More M&A. We're going to see Norckstroms go private. We're going to see Macy's probably go private. We'll probably see coals go private as interest rates fall and you can refinance the thing by canceling the dividend. Yeah. And you're probably also going to see tapestry come back and talk to what's left of Capri and

decide what they want to own. And that's just the beginning of the cycle. There'll be other areas from M&A because interest rates are like to come down. That's the end of the show on the last day of the new year for Power Lunch. Thank you, Jan Niffin. Thank you for watching Power Lunch.