Power Lunch - Stocks wobble into year end 12/31/25

Episode Date: December 31, 2025

Stocks sell off slightly but the major averages are still tracking for double-digit gains for the year.  Citi Research’s Drew Pettit joins with his market outlook for 2026. And what are the technical charts showing for next year? Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Live from the NASDAQ market site right here in New York City's Times Square. Welcome to Power Lunch, everybody. I am Brian Sullivan. Kelly is off this week, and we are here for the last trading day of this year and the first trading day of next year. That's on Friday because Big Tech, it's been all the rage, and hopefully it's made you a lot of money. And though bonds are closing literally right now, stocks, they're doing a full day just like us. And they are closing out the year on a high note, also just like us. And we have got a full show for you coming up because it was the year artificial intelligence, data centers, and energy, literally powered markets and the news flow.

We'll dig into how it all may play out next year. Plus, the Oracle of Omaha retires. As the end of an era for Berkshire Hathaway's Warren Buffett, he is stepping down from running the company. We'll take a look back and ahead. And is it time to fade the gold rush? Gold has been soaring on pace for its best year since. 1979, but one smart money veteran says, it is now time to take a little bit of that money off the table. We'll get to all that. Welcome, everybody. Hope you have for a great New Year's Eve.

Let's begin this hour with the technical side of the markets. In a year that has been dominated by big tech, which part of the AI trade can keep working and which part might be ready to break down. Your next guest is a market veteran technician whose insights help traders separate noise for meaningful signals. He's also just a great guy. And he joins us now on New Year's Eve, live from Minnesota. Craig Johnson of Piper, Jaffrey. Craig, we're really happy to have you on the program.

We know, listen, it's an interesting day. Thanks for joining us. You've made so many great calls in your time. Great to have you on the program. What is the technical setup for the macro market as you see it next year? Hey, Brian, it feels like we're making the last call on the last day of the year here today. And it's kind of a fun way to end the year.

What our viewpoint is for 2026 coming up is we're not looking for a lot of upside, Brian. As we look at 2026, we only see about 5% upside. We're looking for 7150 on the S&P 500. And as we think about the progression of what 20206 is going to look like, it's probably going to be strong. We're probably going to have a week, second, and maybe third quarter, and then sort of finish on a high note. And from my perspective, I'd call that a jump, a slump, and probably a pump after you get through the midterm elections. And from my perspective, it's going to be an okay year, but I'm only looking for about 5% upside for next year, Brian. Okay, let's get to a jump, a pump, and a slump.

It's one of the reasons we love you, Craig, among many, because you're just going to lay it out there. It's something to remember a little bit catchy. So what would be then the pump if you're only seeing a 5% gain? for all of next year. It sounds like the first half, kind of to your point, may be a dump. That's good, Brian. But, you know, what I think is ultimately going to be for the first part of the year is a continuation of this AI trade we've been talking about, but a little bit of a shift in focus, perhaps not quite as much about the invidias of the world, some of the chips, but more about the interconnects that are going to take place. We're going to need more optical

companies, Brian, to actually connect these data centers together. make AI, all these agents and everything else that people are going to use to really have faster connectivity to make it work. So I've been sort of turning my focus to a lot of these optical companies, companies like Sienna, companies like coherent, and companies like Corning. I look at a company like Corning in here, Brian, and it's like if we go back, we're probably going to go retest the 2,000 highs on that stock. And if we do, we've got a nice 20 plus percent upside. And if we look at Sienna, Bright, I could see another 20, 30 percent upside, even though it was up a lot here in 2025. Wow.

Because these are not beaten up stocks that have had rough years and you see a turn. To your point, these stocks have been noticed by investors. Corning has done well. They're glass, their fiber optics that go into all those cables you talk about. Sienna, kind of the same thing. Coherent, a little bit on that side. These are names that have already been hot. It sounds like you just like the charts, I guess, on these names.

Well, we like the charts, but there's also that connection theme that's going to play out with this. As we think about the data centers, we think about AI to really make that next level of AI work. And that's where the first part of what we're talking about, where you get this sort of kind of quick jump up in the market is what we're ultimately thinking here in the first quarter, playing some of these names. And then the slump side of this comes into play as people start focusing on politics in Washington and you start thinking about midterm election and those kind of items going to be a lot of noise in 2026. And you probably don't see that noise quiet down until that midterm election is done. And that's where at the end of the year, Brian, clearing some of that noise, things got reset. You get that sort of pump at the end of the year is what you ultimately get.

I know you're not a political analyst. You got a great team there, though, at Piper. but is that kind of the norm, Craig, where, you know, you get to these elections, it's very close, the Democrats may retake the House, you never know, both sides are going to be crowing, maybe a lot of finger-pointing, a lot of promises made, but is kind of that slump or maybe the dump or whatever you want to call it ahead of that, is that kind of a normal phenomenon for the stock market? Brian, that is the normal seasonality that you see in midterm election years is, again, that's strong jump at the beginning of the beginning of the market.

year and then that sort of slump through those quarters. That is normal seasonality. And then again, getting through the elections, clearing some of that negativity out of the way. As you said, the crowing that takes place. That is all normal seasonality. Looking back all the way to the 1920s is what you typically see. And I don't see any reason for that to be different. And the other part of this, too, Brian, is we've also gone and had three years in a row of double-digit gains. And when you look back through history, it's not very often you go four years. years in a row with double-digit gains. So again, bull market is not finished by any means. It's just going to be a bull market with a lowercase B, Brian. And the trend is still higher.

Fair enough. But we have shown viewers some of the other data that suggest that when we get a fourth year of a bull market, we've had three big years. When we get a fourth year, historically, it has done well. You're not calling for a market downturn. You said you saw about 5% gains. that's not that far, by the way, above the dividend yield. So it doesn't sound like you're totally buying into the history as a guide story. Oh, I think history is a bit of a guide, but when you go back and you pull together a couple of these pieces between the seasonality in midterm election years, you go back and you also look at from an earnings perspective, when you get double-digit earnings growth, and you also look at three years in a row,

go into that fourth year. Some of the returns, Brian, get a little bit more muted. And one of the other points that I would make, too, is if you look back to 1986, there's been about 17 times that we have seen double-digit earnings growth. And what you ended up seeing happening in nine out of those 17 times is the actual multiple of the market contracted. So while the economy did well, earnings did well, the multiple contracted. And your average return in those years, Brian, was about 6%. So I think sort of setting the base case expectation, and again, using history as a bit of a guide, suggests that, again, bull market isn't over. It's just a lowercase B with kind of a single digit type return for the full year. But a lot of volatility and a lot of great trading

opportunities for the rainmaker here on our desk, Brian. Oh, I knew you're going to get the rainmaker references. I love that. So it's, what is it again? It's the, it's the something, the slump, and then the pump? You've got the jump, the slump. the pump, Brian. Jump, slump, pump. We love it. Maybe it's the no crow grow. Craig Johnson, happy new year, my friend, to you and the rainmaker.

See you soon. Thank you. Thank you, Brian. All right, you're very welcome. Well, the bond markets, folks, they just closed for the New Year's Eve holiday. The big bond story this year has been the spike higher in borrowing costs, not really here in the states, but certainly around the world. In fact, some markets seeing some of their biggest moves ever.

Rick Santelli, he's been. been talking about it almost all year long and he joins us now from chicago rick happy new year happy new year brian and the country that you're talking about with historic moves and interest rates well we'll keep that for a few minutes to the end but let's look at our two year our two year right now is hovering and closed at 347 you know where it was at the beginning of the year 424. It's down a little more than three quarters of percent, down 77 basis points. Our 10 year, currently at 416 where it closed, well, it closed last year at 457. It's down 41 basis points. Now, let's have some fun. Let's add in German boons and Japanese government bonds.

You see the boon there? 237 to 285, it's up nearly at 50 basis points or half a percent. And if we look at JGBs, and there's where our historic moves are, they're in Japan. Interest rates that were kept squashed down, negative territory, yield curve control. They threw everything at manipulating markets. The JGBs were purchased by the government like here in quantitative easing, but they also purchased ETF. They owned. The Bank of Japan was a huge owner in all the markets.

It's now coming back to haunt them. As I said, up nearly 100 basis points. Finally, let's look at the dollar index. It's down a little less than 10%. And the euro currency, which is 57.6% of that dollar index. So there's an automatic inverse correlation, but it's up 14%. And you can see how they're moving in different directions. You and I are going to make T-shirts and make a fortune.

They're going to say bond moves big in Japan. Rick Santelli, happy New Year, my friend. Thank you very much. To you, too. Thanks, Brian. Thank you. Folks, we are just getting started on this New Year's Eve power lunch here at the NASDAQ and ahead. The man, the myth, and certainly the legend, retires today. It is Warren Buffett's final day as CEO of Berkshire Hathaway.

And up next, we'll take a look back and also a look ahead at his legacy and Berkshire Hathaway. There is a live look of Times Square, the literal calm before the storm. And we are right up there in that office and that studio. And we're back right after this. All right, welcome back. It is the bittersweet end of a truly, truly remarkable run. After 60 years, CEO of Berkshire Hathaway, Warren Buffett, is officially retiring. I mean, he's 95.

He deserves it. Now, he still will remain chair of the company, but he's officially handing over the CEO reigns to Greg Abel beginning tomorrow. Here not to talk about the Oracle of Omaha's legacy, his impact, and also where the company goes from here is Bill Stone, longtime Berkshire Hathaway shareholder and chief investment officer of the Glenview Trust Company. Bill, good to have you on. Happy new year it is. Bitter sweet, certainly, but hey, at 95, can't blame Warren Buffett for stepping down. Does it change your investing view of both shares or either share of Berkshire Hathaway stock? No, I mean, it doesn't

change my view. Obviously, you lose, I shouldn't say lose, as you mentioned, he's going to remain chairman. He's going to still go into work five days a week for as long as he can. Again, he even talked in his Thanksgiving letter. He's just physically not as able, not as sharp as he used to be. But again, as you mentioned, he's 95 years old. I guess what I look at it is, I got to say, I started going to the meetings in Omaha in the early 2000s. And I started back then because I said, I don't know how much longer this guy's going to be around. I want to keep going. And so I've kept going ever since. So I just consider it a blessing that it's going on this long. And I think they've done a great job in getting the company as well prepared as you can be for

any transition. You know, I mean, it's it's even seemingly an even bigger transition because, as you mentioned, with him running it for 60 years, you don't see many companies that somebody runs it for 60 years before they hand it off. And the thing about Buffett, and correct me again if I'm wrong, I have interviewed Warren Buffett. It was a long time ago, went out to his office, in Omaha. It was a very special day. It wasn't just that he was a great stock picker or investor. The last 20 years, particularly we saw in the subprime crisis, he was also sage. He actually rescued in some ways big banks. They came to him to borrow money. Talk about that sort of implied power he had, not just as an investor, but as somebody who almost represented

the capital markets. Yeah, I think you would kind of make him, wouldn't you say akin to what J.P. Morgan was at his peak, right? That he could stop. Yes, as a human, not the bank, the man, J.P. Morgan. Right, the man, yeah, sorry. Yeah, I think that's the way I equated to. He had such, you know, people had such reverence for his opinion

that he could change, you know, really markets. He not only that, Bill, as you know, he had special SEC dispensation. You know, everybody has to file their 13Fs, the quarterly holdings of what they own. Warren Buffett got like a special rule, the Buffett rule, or whatever you want to call it, where he could like reveal them later. I mean, I don't know if there's going to be another Warren Buffett. Do you think the markets, the way they're structured, right? Supercomputers, high-speed algorithms. Is there a place for somebody, even close to him in this market?

I think there's a place. It's just hard to imagine, you know, especially because he really paved the way, you know, he turned, essentially, you know, was the first one I know of that started and turned an insurance company into a vehicle for a long-term holding of investments. He was really ahead of his time in coming up with that, you know, further back even, think about just the expertise in capital allocation. He turned a failing textile mill. that made suit lining. So most people maybe know the textile side. They made suit lining. So think

about how great that business would be not very good. You know, it eventually was gone. But he took the money that he got from cash flows out of that and bought insurance and bought other other companies along the way, seize candies, et cetera. And the rest is history. But, you know, that's the one thing is he did it. And I would do always tell people, if it was that easy to do again, somebody would be doing it. And there are some people trying to do it. But, but, He certainly, and you think about the duo that having Charlie Munger as your partner, it's just hard to imagine that coming together again anytime soon. Yeah, Dan O'Hur on a smaller level is trying it in the private market.

I think Todd Bolley and his team at Eldridge Industries are kind of trying to replicate that just a little bit. Yeah, Markell. Yeah, Markell. Let's move forward. They do nice things. What about Greg, Greg Abel? Like, what is, how does he, he's his own person. He's going to listen to his chair, obviously.

but how does he differ from an investing perspective from Warren Buffett? Yeah, and I think we don't know a lot, well, about his investments, et cetera, or, you know, specifically. But I do think the good news is we don't need, I mean, we'd love to have Warren Buffett forever. Don't get me wrong. But, you know, Buffett's taken it from this textile mill to, you know, the 10th largest company in the SB 500. I actually think, you know, a transition to a manager that seems to be what Greg Abel's specialty is good at managing very large businesses and very good businesses. And, you know, frankly, some businesses that are struggling a little bit within the conglomerate. I think that actually is what he may bring to the table more because, again, are you going to be as good of a capital allocator as Warren Buffett?

I would bet against that. But we don't need that anymore. We have $381 billion in cash in that company. and it's really about taking advantage of opportunities when they come and obviously, you know, keeping the capital safe, et cetera. Yeah, I don't know if anybody's going to be as good of a capital allocator as Warren Buffett or if they even, by the way, could be, but I do know this, the best chocolate is seize candies of California. I agree.

Bill Stone of Glenview Trust Company, we appreciate your inside. Bill, have a happy New Year. Thank you very much. Thank you. Happy New Year. All right, thank you. Well, some companies, folks, they pay well. But Open AI reportedly may be blowing them all out of the water. Up next, we're going to reveal some of the eye-popping stock-based compensations that are happening right now to many people at OpenAI.

All right, welcome back. We hope you had a big, big year this year. But you know who also reportedly had a big year? Many employees at OpenAI. The Wall Street Journal got its hands on some company data, and it found that OpenAI is paying some workers very, very well. In fact, the report says the average stock-based compensation at OpenAI is a cool $1.5 million per employee.

Of course, just one report. And remember, averages can be skewed because, you know, math. But if it's close to accurate, it is a big number. And in fact, it would be some of the highest pay of any tech startups in history, maybe the most. McKenzie Sagalos, joining us now from San Francisco. Mac, these are big numbers. They really are. When you compare it to other companies out here in Silicon Valley, it really just puts it into perspective. So let's start with Google, right? Before it filed to go public in 2004, it disclosed stock-based comp and adjusted for inflation. It was roughly one-seventh of what OpenAI is paying now.

And if you zoom it out to a broader peer set, the gap gets even wider. Open AIs per employee stock comp is about 34 times the average at 18 other large tech companies in the year before they went public, according to a Wall Street Journal analysis. And those same investor decks, Brian, they show that Open AI expects stock-based comp to rise by roughly $3 billion a year through 2030. All right. So because, as I referenced on the intro, you know, math, averages the most, like, misused word out there because if you got one guy or one woman making $100 million,

it can skew the average. Do we know, and maybe we don't, is everybody just making a bundle or there are a couple of just superstars just printing gigantic sums of money? You can certainly assume that there are a handful of MVPs that are garnering nine-figure salaries that are helping to skew that number higher.

But what I will say is that OpenAI has been in the midst of this code-red period where it's been all hands-on-deck looking to shore up their models because Google Gemini has made such strides. That's long hours during the holiday. It is a finite period that this code red that's supposed to end in January.

And so people across the board, not just the people who are building the LLMs, but some of your mid-tier talent want to be compensated. And it's such a competitive market that OpenAI realizes it needs to pay up. And another data point for you here, Open AI's equity spend is projected

to hit 46% of revenue this year. For context, Pallenteer was at 33% before its IPO. A little history. I was actually on the train. There is a train, believe it or not, from Mountain View, California to San Francisco the day Google, I would say IPO, but it was a Dutch auction. Anyway, a lot of the people on the train were employees that got really rich. There were people literally weeping and throwing champagne. I've got to imagine that these employees, when and if they go public at Open AI, they're not only going to be hugely rich themselves, but the entire region and the city of San Francisco where you currently sit, that is a real shot behind you, McKenzie, that they're going to have a huge tax windfall. The mayor has got to be happy about that. Yeah, not a green screen. Bay Bridge behind me. Yeah, I mean, when you look at these numbers, and we were talking about who stands to gain

the most of opening eye goes public in 2026. We know that, at least internally, they are working through the mechanics of how to do that. We were talking about in the context of SoftBank yesterday, their 10% stake. Microsoft has a 27% stake. They've already 10xed their investment to $135 billion, but certainly a lot of of a very newly minted billionaires out here in San Francisco, and yes, they will have to pay taxes. Maybe they actually may be paying more if some of these proposals go forward. But that's a different segment for maybe a different show.

And by the way, let's not forget, Open AI actually started as a non-profit 10 years ago. McKenzie Sagalos, happy New Year, Mac. Might see you later on on fast money. Who knows? Mack, thank you very much. All right, coming up, maybe the only question that all of you really really. care about right now. Where are stocks heading next year? One Wall Street strategist says rally on, Garth. He's here. Well, we certainly hope that you are resting up and getting ready for next year,

but we are here and we are working. And since we are here at the NASDAQ, we got to dig in with some stock data, right? First up, of course, big cap tech. Because if you owned Alphabet this year, congratulations. Take your family to dinner tonight. Don't skimp. You're having a great investing year. Alphabet is the best-performing supercap tech stock this year of 60%. To be fair, all of the so-called magnificent 7 plus net fix did rise. Alphabet, though, the best of the best. But the money-making wasn't just big cap tech.

Check this out. HVAC company comfort systems more than doubling. Amphanol. It makes antennas and fiber optic systems more than doubling this year. and big ships also in vogue. Huntington Ingalls make ships for the U.S. Navy and Coast Guard. It also apparently makes a lot of money for investors. That stock surging as well. Now, obviously, these are not the only companies that outperform some big cap tech. But they did catch our collective eye, but that was this year.

Let's turn now to next year and see what might be on the radar. And welcome back in Citigroup, Director of Research for U.S. Equity Strategy. Drew Peta, Drew, welcome. Happy New Year. I was just a tiny slice of what was a third year of another good run. Do you see a record rally continuing into its fourth year? We do. And Brian, it's all fundamentals.

Like, look, I heard the technical setup at the beginning of the show. I hear people talk about sentiment. But when you get down to the nitty gritty, earnings are still moving higher. We're above consensus. We're probably at the high end of the street. As long as the fundamental story is still intact, we're happy to stay invested in this market and buy some risk and hold some risk into 2026. I want to be optimistic. It's New Year's Eve.

Everybody wants to feel good when that ball behind me here at the NASDAQ drops at a few hours. But I wouldn't be doing my job if I didn't ask, what would be the risk to the fundamental strength story? Look, it's the multiple. And I hate to come back to something that sounds very basic and down the middle. but we're paying a lot for a really good fundamental story. When we really break this down, we think the market is discounting about 10% earnings growth for the next five years. That is extremely good.

What we have in our projections implicitly is about 12% growth. The problem is if you get good growth, not great growth, that's a reason for people to take profits. So the risk to us, everyone says valuation, but to us it's really growth living up to those valuation expectations. All right. Inside the market, you know, there's 11 different sectors. One of them is called industrials. The industrial sector, currently the third best performing S&P 500 sector this year. Now, normally I wouldn't reference a third best of anything, Drew, but that was the

first time it is finished in the top three in 12 years. I mean, 12 years for these industrial companies. We've talked a lot about this potential shift in the market. What's your internal thesis for sectors and stocks next year? Yeah, it's funny. There's a couple stories here. One, it's inflecting growth. So we've heard people talk about earnings are broadening, growth is broadening, market performance is going to broaden. But to us, there's companies that have had negative growth for three plus years coming out of that post-pandemic high that we're finally going to see some inflections. That plays really well to some cyclicals. Industrials falls in there.

We like financials a little bit better. Another thesis, growth, that game's not over. Look, there's still a lot of AI stocks that when you discount the earnings are actually reasonably priced. So to us, there's still AI at a reasonable price out there. And then the last piece, look, there's a lot of companies that have really changed and improved operations. There's tons of these big cap names that survived a pandemic. They've survived tariffs. They've survived a lot of business challenges.

There's a ton that are improving ROE from an operational perspective. Those three stories, those three stock stories are the biggest ones we think that will really define the internals of the market in 2026. Any sectors out there that you don't like that you're just sort of negative or at the minimum neutral on Drew? It's consumer, to be honest with you. Again, another segment I heard right before, you know, power lunch, there's winners and losers in consumers. when you're kind of in that world, it's hard to have a really good fundamental view. You know, we're ahead of earnings on pretty much every sector except consumer discretionary and consumer staples. I don't think there's a really great catalyst there for L-performance of those

two sectors. Yeah, and then you've got an international view. I know you're the U.S. guy. We'll talk international in the next segment, actually, Drew. But listen, the world has done better than us this year is next year we're going to go back to sort of eagle on the shoulder, Apple Pie, USA, or what? It's idiosyncratic. I really think, like, AI, for example, yeah, it's much more dominant in the U.S. market. I would say it's at least 50% of U.S. market cap, at least upcap anyways.

But when you think internationally, it's not as big of a piece of that pie, but the AI to reasonable price names are much easier to find internationally, and those off of the tariff lows have actually outperformed the U.S. AI at a reasonable price names. So there's some opportunities there. I think you want to kind of piece these themes together. together, not just domestically, but globally as well. Well, I love it. And by the way, I love the background. I don't know where you got that speed limit sign. Don't answer that as your attorney. I would just say plausible deniability.

But I like the whole sort of cabinish look. Drew Pettit, Citigroup Research. Have a great new year. We'll see you in 26. We'll do. Thanks, Brian. All right, maybe the speed limit will be over 50 here in the United States. All right, step out of the markets for a second. Get over to Kate Rogers with a CNBC news update. Ryan Deputy Attorney General Todd Blanche says government lawyers are working around the clock, including through the holidays to review documents in the Epstein files. He said this afternoon the department is taking an all-hands-on-deck approach to make required redactions to protect victims. His comments came after the New York Times reported the DOJ still has 5.2 million pages of files left to review.

Meanwhile, President Trump told Politico today the construction of his triumphal arch in D.C. is expected to begin in the next two months. It comes as the U.S. prepares to celebrate its 250th anniversary in July. The president said earlier this month the arch should or would rather be built near the Arlington Memorial Bridge opposite the Lincoln Memorial and said it would be similar to European victory monuments. And Zootopia 2 is now Walt Disney Animation Studios' top grossing movie of all time. The sequel has now raked in $1.46 billion at the box office surpassing the studio's previous record holder, Frozen 2, which brought in $1.45 billion in 2019. I've seen Frozen and Frozen Too many times, Brian.

Yeah, but you have young kids, too. Zootopia 2 is the top grocery. I would not have guessed that. Same surprises, huh? I'll have to check it out. I guess we all love animals, talking elephants, yaks. Let's hear it for the years. Who knows?

Kate Rogers, thank you. Happy New Year. Happy New Year. All right, as we talked about folks, folks, we love the USA. But the money making wasn't just us this year. So next up, we'll look ahead to what countries may make you money in 26. All right, welcome back. Let's turn now to your market navigator because we got just over an hour left in the entire trading year.

And all the major U.S. equity indexes, they're set to close out 2025 with double-digit gains. Still, your next guest says he is looking to add some global assets to his portfolio in 2026. Joining us now, Todd Gordon, founder of Inside Edge Capital. And a man, I know, I know, Todd, you love America, you love this country, but maybe there's better investing opportunities around the world, particularly south of here, really far south of here. Quite south and much warmer, Brian. Happy New Year's too. Yeah, love this country. I am a patriot, but we must, as a capitalist, follow the capital.

So, yeah, there is a rotation happening overseas, particularly in South America. So the main drivers, we're seeing valuation and rotation away from, again, expensive tech growth stocks. The commodity move is very big. They're major exporters. They're not as impacted also by tariffs, so there's a little bit of insulation there. I think the move under Venezuela, perhaps is the view that we're stabilizing the area a little bit. And the political change in Argentina with the new president, Javier Milley, I hope I'm pronouncing that right. He's a populist, right-wing libertarian, gave that market a lot of boost. So there's factors that are driving the rotation there. There's some FX at work, as I mentioned, the commodities. So, yeah, I think, you know, is it a full-on rotation out?

No. I think we're still in a secular-driven AI bull market. But let's increase the exposures we already have overseas, and particularly in the South, in the portfolios. Yeah, Mercado Libre M-E-L-I, technically headquartered in Montevideo Uruguay, I hope I pronounce that right, but a lot of its business, of course, in the more populous nations, the Brazils, the Argentinos of the world. Again, this is an incredible story. Some people call it sort of the Amazon of Latin America, but again, I think, I'm guessing, Todd, that you have to watch currency moves, right?

Because the currency moves that you talked about, those could change everything, I think. They certainly can. And it's interesting. There's a lot of nuanced stories going on within Latin America, but particularly, let's just focus on the dollar. The dollar index, which is a basket against six or seven international currencies, has been into decline. And if we've, really, if we break a little bit lower in a new year, that's a break of a trend line that goes back to 2011. So that could be additional dollar weakness, despite the Fed, you know, done with the rates move. that would boost international holdings. You know, Argentina currency is getting destroyed. I know Colombia is up, and I know Peru is actually off significantly. But, yeah, I mean, MELI is, like you said, it's Amazon, it's PayPal rolled into one. It's a, you know, they have a big first mover advantage in the area. It's a digital online platform.

It's Amazon. It's marketplace. They're doing it. Amazon did in 2010, right? They're doing logistics. They have credit financial services. they're expanding margins. The growth, if you look at the gap EPS, when you convert it into dollars, Brian,

like they're going 35, 40 percent every year, expected over the next three years. So the growth is there. Stocks pulled back to 1900. We increased our allocation. And if we can get a little bit of a push-up, I might go to three or four percent in our portfolio. Three to four percent still. We're looking down south. And I have to say that I can't speak for other shows, Todd.

I know for me, that's probably the first Montevideo reference of the year. and it's on the last day of the year. Todd Gordon, appreciate that. Thank you very much. Apparently amazing, like, barbecue and beef in Uruguay. I need to go. All right, coming up, could using AI actually hurt a brand why one viral ad is raising that multi-billion dollar question?

Well, over the past month, you have probably seen countless holiday ads, but one is standing out for what it did not do. This is Porsche's animated ad. Look at that. It was created with hand-drawn sketches and a little bit of CGI. But no AI was reportedly used. The video is racking up millions of views online, and many viewers are praising the brand, Porsche, for ditching AI. This reaction comes just weeks after Coca-Cola faced the typical online backlash over its AI-generated Christmas ad. critics called it soulless or devoid of creativity. The point of all this is not to bash one or the other or whatnot. It's to ask a question if consumers are starting to reward what feels real

and could maybe leaning into AI backfire for some brands. Let's ask Professor and Marketing Expert, Ameriress, Reid. He is a prof at the Wharton School of Business, also a CNBC contributor. Happy New Year, Americas. I mean, it's, it's, is, can we read anything from this other than it's one ad versus another? Do you think there's a, a story to this no AI thing? Happy New Year to you. Well, Brian, I think there is a story here.

And I think if we look at what's going on here, I mean, you're a car guy. So you understand that the community is built around those loyalists who are really into the product, really into the car. And I think what Porsche has really tapped into here is a kind of community that says, hey, you know what? We're a powerful brand. We're about craftsmanship. We're about authenticity. We're about all these wonderful things. And let's communicate that to our audience by intentionally saying, hey, we're going to actually produce some creative around this, give you some Easter eggs, give you some things that if you're really in the know, if you really know what's going on here, you can pick out the little gyms that are going on

in this commercial. Oh, and by the way, it's real because it's made by real humans and it's made for real humans who love the Porsche brand. Yeah, it is a, listen, it's a beautiful ad in part because they have beautiful cars, at least in this person's humble opinion. I'm not sure I could fit in one, but I like to look. Either way, America's, you know, my son was watching TV and the COLA ad came on. He's 11. He said, Dad, you know, that was all AI. And he didn't say it like a positive way.

Are companies and brands going to look at this and go, huh? Maybe AI is not the answer. It's a great question, Brian. I think that the AI train is here. So companies and brands, product services, organizations will be using these tools. And so I think the big question is what's going to really happen is for brands, it's going to be very important for them to figure out how to untap the true authentic creativity in these tools. And so many companies are going to use these tools, but the question is my prediction is this, the creatives who are never creative are going to go away. It's going to be an extinction level of info those guys.

But the people who are true, careful, authentic narrative storytellers, they're going to figure out ways to be even more creative with these tools. And you're going to see a lot of that happening in the space of marketing and creating ads like this. Again, the Porsche brand ad is a little bit different because it's playing into that authenticity that makes it work so really well. Yeah, because you are the professor of this at one of the most prestigious universities, dare I say, in the world.

So what is then the professor reads advice? to all the corporate and marketing executives who are no doubt sitting at home in their PJs more comfortable than us watching right now. Well, here's my advice, Brian. I would say, listen, AI is not going to take your job. A person who's gifted and skilled and well-proficient in AI is going to take your job. So you know, Simon. So I'm myself included as a professor, everyone is going to have to figure out how do I get better at what I do using these tools. And you can't avoid it. You can't. You have to improve. brace it. You have to dive in head first and figure out what are the different ways that I can make

my own work, productive, more elevated, more creative, and all of these different things. That's my prediction. I think it's a very good prediction and probably made a lot of people happy and some people a little scared. America's Reed, have a happy new year. Thank you very much. We'll see it in 26. Thanks, Brian. Happy New Year to you as well. All right. Thank you. All right. Before we hit the break, let's just do it. We've got to take a quick look at Nike. Nike's on pace for its best in nearly three months, CEO Elliot Hill disclosing that he bought one million dollars worth of stock. It's not a lot, but hey, it's still something. And it follows Apple CEO Tim Cook, who bought around 50,000 shares a couple million bucks worth of Nike a couple of weeks ago,

maybe both picking up the stock to the end of another rough year because Nike on track for the fourth straight annual decline, but maybe a boost of confidence for the current CEO, Tim Cook, and others. All right, coming up, it is a sprint. To the finish, two cities, neck and neck, top spot. This year's Power City Index on the line. Exclusive content you only see here, and you only see it. Next. All right, let's wrap up this hour for the NASDAQ with a big tease to Friday

because on Friday, we're going to have our big reveal. Which city or metro area won the stock market this year? We were going to do it today, but honestly, it's kind of too close to call. We need to see how things shake out in the final. hour of trading. As a refresher, we made 36 different city and metro area stock indexes composed of the 12 largest market cap companies in each area. They are equal weighted. We track them through the year, and then we track the median return of each city or metro area. And right now, it's really doggone close between Charlotte, North Carolina, and Silicon Valley.

That's right. The Queen City, Charlotte, it's popping because of the hot returns of some of these companies. Albemarle of more than 60%. Curtis Wright up 56%. New Corps up nearly 40%. And SPS technology of about 38%. In fact, only three of the components in our Charlotte Stock Index declined this year. A really close behind? A bit less of a surprise, no doubt. That is Silicon Valley. Now, to be clear, this is not San Francisco. That's its own Power City Index. But in Silicon Valley, you've got these booming stocks. App Lovin. I just like saying it. It's up 110%. Alphabet, the aforementioned, up 66%. Apply materials of 58% Broadcom, up 50% as well. The two indexes as of one hour to go in the year of trading, just under 1% away from each other. So let's see

how things finish out the rest of the year, and we will formally reveal our 2025 top Power City Index for the stock market right here from the NASDAQ on Power Lunch on Friday. Are you excited? I am. You know where else they're excited? Dubai. Because that's a live look at the Burj Khali for the tallest building in the world. They are literally 25 seconds away from ringing in the new year.

And in just about nine hours right behind us here in Times Square, that New Year's Eve ball will drop. We'll ring in the new year here as well. Happy New Year to those in Dubai and Abu Dhabi. I will see you on Fast Money in two hours time.