Squawk on the Street

SOTS 2nd Hour: 2024 Market Recap, 2025 Top Picks, & Apple’s China Headwinds 12/31/24

David Faber, Leslie Picker, and Mike Santoli discussed the latest for stocks on the last trading day of 2024. The S&P notching 57 record closes in that time, and on pace for its best 2-year performance since ‘97-98. Within the hour: why one fund manager says to bet on financials and energy here, 2025 picks from the street’s top analysts across retail and restaurants, plus a look at some of the year’s biggest winners (soft commodities) and losers (gaming stocks). Also in focus: Apple headwinds when it comes to China, after the stock’s big run off November lows. Squawk on the Street Disclaimer

Duration:: 46m
Broadcast on:: 31 Dec 2024
Audio Format:: other

Squawk on the Street Disclaimer

Are you still quoting 30-year-old movies? Have you said cool beans in the past 90 days? Do you think discover isn't widely accepted? If this sounds like you, you're stuck in the past. Discover is accepted at 99% of places that take credit cards nationwide, and every time you make a purchase with your card, you automatically earn cash back. Welcome to The Now! It pays to discover. Learn more at discover.com/creditcard based on the February 2024 Nelson Report. At Capella University, learning the right skills could make a difference. That's why our business programs teach you relevant skills you can take from the courseroom to the workplace. A different future is closer than you think with Capella University. Learn more at Capella.edu. Good Tuesday morning. Welcome to another hour. Squawk on the street on David Faber with Mike Santoli and Leslie Picker. We're live from post-line of the New York Stock Exchange. Carl and Sarah have the morning off. Let's give you a quick look at the markets and treasuries. Of course, a half hour into trading. You can see the S&P is up about a quarter of 1%. And the 10-year hanging right around that 4.5% yield. Leslie. Not bad for the final trading day of the year, and we are 30 minutes into that trading session. Here are some big movers we are watching today. More volatility in shares of Bitcoin proxy micro-strategy down more than 10% over the last week despite this morning's gains of about 1.8% currently. And shares of Fannie Mae and Freddie Mac were surging overnight down a little bit now. Investor Bill Ackman writing a lengthy social media post about the names saying he expects President-elect Trump to remove Fannie and Freddie from conservatorship, potentially making them private companies again. Ackman arguing the move should generate more than $300 billion in additional profits for the federal government and remove $8 trillion in liabilities from the government's balance sheets. And keep an eye on Big Tech, all of the Mag-7 in the red over the last week, Tesla, Amazon, and Microsoft, the biggest laggards down 3% or more, although they did comprise about 53% of the total return of the S&P in 2024. Almost all of it built up by mid-July. And since that point, it's been, they've been, you know, indifferent, I think. Some of it met as Amazon's done well since then Apple, of course. But in general, it was really the first half of the year was very concentrated, second half, a little bit less so. And I'll also point out, I mentioned earlier, you know, last day of the year, you got this, people trying to get ahead of this reversal trade, laggards into leaders. Right. And you actually have very strong breath today, even though the S&P is only up about 2/10 to 1%. So the recent leaders, the big gap names in the index, are taking a bit of a rest on a balance. And, you know, it's a little bit of just sort of, you know, gamesmanship and mechanics around the end of the year. Well, Mike, as we sort of end the year and think about next year, which begins on Thursday, and I'll be here. What mechanics do we want to be thinking about early in the year? Same kind of thing in terms of the laggards starting to at least outperform for a brief period of time? For a try for sure. And I do think the fact that we have had a lot of below the surface selling and a lot of, you know, stocks looking like they've already kind of taken their medicine for a little while might give a decent entry point for the new year flows. I do think we have been contending with elevated expectations. You mentioned some of the sentiment indicators. That's probably gotten moderated over the last couple of weeks, tactical sentiments, a little bit more, I wouldn't say troubled, but it's a little bit less over excited. However, strategists for the year ahead, median target for the S&P 6600. That's 11% up from today's level. The lowest target I think is more relevant is 64 lowest published target for year end. That's up 8%. Nobody sees this market doing worse than 8%. That's a big difference from last year when actually strategies didn't see any upside at the media. So should we do the opposite of what they said? And it's interesting. I mean, look, the stock market goes up two thirds of all years, you know what I mean? It's tough to necessarily say that's an outright contrarian fall, but it does say the market might be harder to please in the coming year, just because everyone's already sort of positioned psychologically and financially for good things. And I mean, this time last year, we were talking a lot about the catch up trades, whether it was value stocks or small caps, Russell did very dramatically underperformed. It did. And now it's back this year and the S&P. You know, everything sort of pales in comparison to the market cap weighted index is the Russell's up 10% this year. S&P value is up 10% this year. I think 12 months ago, you would have taken it. If somebody said, buy the smallest stocks, buy the cheapest stocks, you'll have 10% of you, you might have been okay, you just didn't think the S&P was going to give you 25. Also fewer than 30% of all S&P stocks have outperformed the index. Really tough once again to be an act. There were some brief violent moves in the Russell, of course, around when rates first started to come down, which had people offside. So did you get a clear view that we were getting a rate cut? They started to rip and then off the August low, they also did. But now it's been tough again, because it's been a weird point in this cycle where we're not really restarting. Of course, mentioning, of course, people also own bonds. I mean, it hasn't been the greatest year there. It's about flat. Yeah, about flat. Obviously, not a year. We go back to 2022, which was just, it's not just that it was such a bad year equity-wise, but it was a horrible year for bonds as well. And so you've got crushed everywhere. Exactly. Obviously, a different matter this year entirely. The 6040 portfolio did finally club back to a new high. Did it? I was curious. Well, look, a year and a half after the stock market low. Yeah. So yeah, it was rough. But at least stocks did their job. They kind of held their value and gave you the carry on the on the way. Well, the S&P 500 on pace for its worst month since April, but closing out a great year, as we've been saying, with 57 record closes and the index is best two-year performance and a quarter century. Our next guest favors financials. Top picks include Wells Fargo, City and Bank of America, along with energy. Chuck Lieberman, advisor's capital management managing partner joins us now. And Chuck, do those favorites? You know, big financials and energy imply that you're looking to sort of look for contrarian plays or just a value orientation. What's behind that? It's kind of both a happy new year to you, Mike. And I agree with the statement that you made earlier that only about 20% of the S&P actually outperformed. That means roughly 80% matched or underperformed. So that's where the real value is. The economy is doing well. Earnings are rising and rising at a pretty good clip. So if companies have really not participated, that's where you can find value. Would you consider the big banks not to have fully participated? I mean, they actually have been on a pretty good relative performance run. And it feels as if the bull case in terms of regulatory relief and a pretty decent economy is pretty well acknowledged. Yeah, that's right. But keep in mind that last year they got decimated by the Silicon Valley fallout. All the banks got slaughtered. They have come back very nicely in the last several months. They're nowhere near those lows. But they still represent outstanding value. They're all trading it relatively moderate. Or in some cases, modest price to book, priced earnings. And they do have good prospects with the economy doing well. And then on top of that, you have the additional thoughts that the government will be more likely to allow M&A to take place. There'll be more IPOs, more capital markets activities that will help the big banks in particular. And then the regulatory environment will be more favorable. So there are a lot of reasons to think the banks should do well. From a macro standpoint, you think immigration and tariffs will be the most important aspects for early 2025. How are you handicapping those two policies and the potential impact to jumpstart inflation? Yeah, those are critical issues in my mind, Leslie. So there's no doubt that Trump's promises may not all happen. But certainly he's going to push on a number of fronts. So for sure, I would bet that the wall or the border is closed much more effectively. That means the flow of illegal immigrants in the United States is going to be greatly reduced. And they were critical to the growth of the economy. People don't really appreciate that. They would not have been possible for the economy to grow as rapidly as it did over the last couple of years if those people had not come in and been available to work. So firms will not be able to hire at the pace that they did in the last couple of years. That inherently means slower economic growth. But it also means more labor scarcity. And so we'll see more upward pressure on labor costs, which means more pressure on inflation. And then you throw into that mix the question about tariffs. So again, Trump may be posturing. It's not likely he's going to implement all of what he threatened. Some of that may be just to create bargaining chips. But I would certainly bet that tariffs do go up to some degree. We just don't know how much. And if tariffs go up, that means prices go up and inflation goes up. Trump, coming back to sort of value, you know, your focus on it, obviously it can be somebody easy to find stocks that are undervalued or represent value. But it doesn't mean they're going to go up. It's another year where growth is outperforming value. What gives you the confidence that at some point you're going to want to own value at the end of the year because it actually did better? Well, one of the nice things about owning some value stocks is that they provide pretty good yields. So you're paid to wait. I don't need these companies to go up next week, next month, next first quarter. I have a longer term perspective. We're investors, not traders. And so we're looking for good value over the long term. And if we're in good companies and the companies are doing well sooner or later, the stocks will follow suit. Chuck, appreciate your way in this morning. Happy New Year. Appreciate it. Thank you. Same to you. All right, let's talk Nvidia. We haven't talked enough about Nvidia today. It's the third best performing stock on the S&P this year despite underperforming the rest of the MAG7. Really, in December, but even more so over the last six months, as Mike's pointed out, a number of times kind of flat. Christina Parsonovles has been tracking that action while she covers this industry overall for us. I have. I won't start with Nvidia because I know you talked about it. We haven't talked about it enough today. Is that sarcasm? No. Kramer's not here. Usually in the nine to 10, we must mention it at least 27 times. Okay. Well, for our audience that, you know, maybe gets a little bit bored hearing about Nvidia all this time, we'll start with the broader sector because it was definitely all the rage in 2024 as the semi industry ETF saw growth of nearly 40%. And I say this, SMH, stocks, all of those and those outpace the broader US market, but zoom out. And that wasn't as impressive as 2023 when the AI boom first kicked off and everyone was just scrambling to get a piece of the pie outlook for the chip space does hinge on the success. Now I can talk about Nvidia, but one of its bellwethers in video, although shares have remained pretty flat just over the last two months or so. Nvidia shares still skyrocketing over 180% this year. There's no doubt the GPU King will continue his reign, but there's still debate right now. And this is a new narrative for this year revolving around the timeframe of that success. Recent checks show weaker demand for the current GPU. That would be the Hopper iteration as customers are waiting for the latest Blackwell. That's the next iteration. So, you know, they're not maybe holding off on some of their purchases to wait for the next and greatest. They also have been, there's been back and forth headlines about possible delays for said Blackwell. And then additional China chip restrictions, but investors really, of course, aren't phased by these concerns. A key catalyst will be CES next week, where we'll hear from Jensen Wong, as well as the CFO collect press about the future of AI computing and possible financial goals and updates for Blackwell. Nvidia and several other AI winners like Marvell, Arm, Broadcom, chip manufacturer TSMC have all fared well over the year, bringing an average return of over 100% outpacing that basket of chip names that we talked about the SMH as well as the socks. But the rest of the sector hasn't fared as well as those exposed, let's say, to auto and electronics. The PC refresh cycle, we heard from HP not too long ago saying it's just really a slow start. And it's impacting names like AMD, memory maker, Micron. We know their guidance is a lot weaker very recently, just a few weeks ago. Intel went down 60% on the year. One of the worst, I guess 60% of its value lost in 2024, biggest drop in 53 years as a public company. So Intel's got more than its share of issues. Yes. And in fact, I would assume it's going to be on your radar. It is for mine as well in 2025, just mean what's going to happen in terms of leadership there, not to mention in terms of the structure of the company itself, the number. Alterra, what's going to be spun off, how are they going to split it up? Who's the leader? Will it be split up? Precisely. Would you really see the bigger split that certainly people talk and speculate about in terms of manufacturing and design? And I guess some of the debate, I spoke to an executive, another chip executive, who said that the problem with Intel is they tried to do too much all at once. I need to know, then the argument is, well, you had Pat Gelsinger, who came from the chip space, was really well-versed in it and had the drive and the ideas, but unfortunately that didn't pan out, especially when you saw the loss of capital going into the manufacturing side and the fact that they fell behind so many other chip makers. Even with their latest, they do have a GPU that's just really not up to par with what's out in the market right now. You mentioned CES coming up. I mean, Nvidia for several quarters was on this cycle of, please just tell us that the next thing is huge and it's going to happen and we can kind of put it on the horizon. What are we waiting for specifically, if anything, to hear incrementally from Jensen Wong? It would be Blackwell. So it's the one we know we want the timing. Precisely. See, that's what's driving the stock in the near term. I know you have talked about it in many ASICs. The custom-made chips will possibly take away this market or change in videos rain in the coming few years, but in the near term, it really rides on what is that next iteration and not even after Blackwell, it'll be Reuben, right? So will there be any commentary about Reuben? And so it's constantly fueling that fire, right? The next and best thing is coming. Don't worry, because we're doing at least one new chip a year, which makes it so difficult for others to keep up when Nvidia is so far ahead. Blackwell's shipping. Blackwell's shipping in size right now. It is already shipping. Right, right now. But the ramp up is not expected until... The first quarter, right? Yeah, probably. Yeah, end of first quarter. End of first quarter. Thank you, Christina. Thanks, guys. Happy New Year. And to you. As we head to break, let's give you a roadmap for the rest of the hour. I expectations for a different Mac 7M going into the new year, the risks for Apple in 2025. Plus a record-breaking year for commodities, just not the ones you might expect. We'll explain and talk the outlook for 2025. And stocks ending a strong year with some volatility. We've got top picks from restaurants to retail. A big show ahead, squawk on the street is back after this break. Don't go away. The 150-billion-dollar pet industry is booming, as people absolutely love their dogs. If you're looking for a solid investment, Dogtopia is the name to know. With 300 locations across North America, it's the largest leading and fastest-growing pet franchise offering a recurring revenue membership model. Dogtopia offers safe, open-play dog daycare, boarding, and spa services. Want a recession-resistant franchise? Check out Dogtopia because every dog and dog parent deserve it. Go to dogtopia.com to learn more. If your small business has a problem, you could say, "Ugh, just my luck." But you should say, "Like a good neighbor, State Farm is there." And we'll help get you back in business. Like a good neighbor, State Farm is there. Are you still quoting 30-year-old movies? Have you said cool beans in the past 90 days? Do you think Discover isn't widely accepted? If this sounds like you, you're stuck in the past. Discover is accepted at 99% of places that take credit cards nationwide. And every time you make a purchase with your card, you automatically earn cash back. Welcome to The Now. It pays to Discover. Learn more at discover.com/creditcard, based on the February 2024 Nelson report. 2024. Tough year, at least for some to be in certain stocks of restaurant-related companies, fast food-related companies. Bankruptcy filings were up over 50% year over year. There were major C-suite shake-ups, for example, Think Starbucks. In-store traffic declines as well. McDonald's suffering a bit from that. Our next guest, though, does see green shoots, has some top picks for the year as well, joining us ever for ISI's David Palmer. We were talking off-camera a moment ago. I mean, the likes of Kava and Sweet Green certainly had a good run as well this year, David. I don't know if your top picks incorporate more of that business model or what sort of drives it. Tell us. You nailed it. Talking about the fast casual segment, you're certainly seeing those chains that are exposed to the upper to middle-income consumer base, protein at a price, certain casual dining share gainers, company-operated restaurants that are US-centric. Those all those circles really captured some of the winners in '24, so a Texas Roadhouse, Chipotle. Those are some of the best performers, Brinker, with Chili's being an outstanding performer. The fast casual and the casual dining share gainers, particularly those that were giving you better food value, those were the ones that were killing it. To some degree, those still have some of the best outlook situations into '25. Texas Roadhouse and Chipotle are still average in terms of their valuation levels right now, so those would be fine. One that's below average and perhaps the only high-quality name within that zip code of being that US company-operated, within that zone of casual dining that we're seeing is beginning to work is Darden Restaurants. That's a name that we think will continue to work perhaps more powerfully than the others because of the valuation set up there. Olive Garden is the key turnaround. They're going to be doing some stuff with digital and delivery, which should really help them as they go into their fiscal 26. Darden Restaurants among that code word, I think, is the name to look at. And David, where do you stand with the in-progress, I guess, turnaround of Starbucks under new leadership and how investors are now viewing the opportunity? The Starbucks is a key name to watch. Obviously, they've been a mess of a company. They've had some issues with their core consumer on two fronts. First, they had their issue with the Gaza incident and also their union, which kind of created a black cloud over the brand. In addition to that, they've their previous core, which was that worker B, everyday espresso user, has seen issues with their service levels. And basically, those two fronts, they need to really cure the brand. Brian Nickel and team are working on it. And this is going to be the key name to watch in terms of a brand turnaround at 25. It's a US-centred company-operated brand. It exposed to the high-income consumer. If they turn around, that name is going to be a very powerful name. We believe in Brian and the team. They made some steps in the right direction. There's been some signs of stabilization. They're not out of the woods yet. We'd like to see this union issue go away. We think they'll solve that. But the innovation pipeline, the operational cures, these are going to all be part of that. It's not going to be a straight line, but we recommend that one for 25 as well. Yeah, requiring maybe some patience there. In terms of just the fundamentals of the industry, given what you're seeing with traffic, maybe some pricing pressure and consumer tastes, do you expect to see more consolidation in the new year in this industry? M&A is going to be interesting to watch. We saw a lot of those mid-cap names get a bit in the past because they were consolidators within the space. We're seeing a bit of that cooling in the consolidation. A lot of the reason for that has been the industry has been kind of lousy. Like you pointed out that traffic has been lackluster. The shared losers are doing poorly. There's been negative earnings revisions, both within the casual dining share losers to the negative, but also in fast food. To see M&A heat up, we're going to have to see a better industry environment. Some of those animal spirits that people are anticipating are going to have to get going. That's very, very possible. By the time we get to the call of the May/June period, we're going to be lapping those pre-election jitters. Remember all that inflation pushback hurting even the likes of McDonald's, which is a likely turnaround story within 25 as well. That could really help that M&A picture heat up again and the consolidators as well. The likes of restaurant brands, which is near its lows on valuation long-term. The names like that would be the buyers need to get some momentum as well. David, always appreciate it. Happy new year, too. Thank you. Thank you as well. And it's the last trading day of 2024. Let's get a check on the biggest gainers in the S&P this year. Palantier up nearly 350% on the year. NVIDIA 177% to name a few. And as we had to break check out this mystery chart, an underperformer on the year and the month, but over 86% of analysts call this one a buy. We'll tell you what it is and what's driving the action out for this back in three. The $150 billion pet industry is booming as people absolutely love their dogs. If you're looking for a solid investment, Dogtopia is the name to know. With 300 locations across North America, it's the largest leading and fastest growing pet franchise offering a recurring revenue membership model. Dogtopia offers safe, open-play dog daycare, boarding, and spa services. Want a recession-resistant franchise? Check out Dogtopia because every dog and dog parent deserve it. Go to dogtopia.com to learn more. Are you still quoting 30-year-old movies? Have you said cool beans in the past 90 days? Do you think Discover isn't widely accepted? If this sounds like you, you're stuck in the past. Discover is accepted at 99% of places that take credit cards nationwide, and every time you make a purchase with your card, you automatically earn cash back. Welcome to The Now. It pays to Discover. Learn more at discover.com/creditcard, based on the February 2024 Nelson report. Welcome back. That mystery chart before the break? Wind Resorts, one of many casino stocks underperforming on the year, Contessa Brewer, here with the breakdown and outlook for 2025. Contessa. Hi there, Lesley. Yeah, investors this year preferred to gamble on big tack, rather than casinos. Take Las Vegas Sands. Now, it has the most profitable casino resort in the world in Singapore, and yet it shares up this year, only about 5%. Macau still has not reached pandemic levels of visitor spending or gaming. I should say pre-pandemic levels. You see that in wind's charts. Melco MGM shares all reflecting that. Look at Melco's off, 35%. MGM, of course, has tough comps, regionally and in Las Vegas, plus higher labor costs. It shares down 23% this year. Caesars down 30%. It's a big competitor on the strip. Pen entertainment under pressure to show some get-up-and-go with ESPN bet its stock is down 28% this year. But let's talk about the stand-outs. Fandal parent Flutter listed on the New York Stock Exchange in January. It is the nation's leader in sports betting and eye gaming, and its shares are up 44% this year. Draft kings by comparison up a little more than 5%. In regional gaming, Boyd is up 13% ahead of its peers, but of course, lagging the broader indices. And the sphere just on fire in Las Vegas, it shares up 18% this year. Finally, Rush Street Interactive, up an eye-popping 203%. The online gaming company showed strong profit growth this year, especially in notable opportunities in Latin America. It's only a third of a percent today, but ending the year on a strong note. And every time I see the CEO, he's like, when are you going to give me some attention on CNBC? Well, Rich, here it is. Rush Street Interactive. There you go. All right. You got that one done. Let's talk a little win here. You know, I've been talking about Tillman Fertito 9.9%. It was a 13G. And he's going to become ambassador to Italy. So he's not going to take it as my understanding to a D, not going to get active there. But there may be others. What is the frustration with what's happened at win in the management? I mean, I think for one, there's just this constant pressure to want to see a return. They want the shares to reflect the real potential for the money. I think that there's an expectation that the company could be doing more here in the United States with more focus on U.S. operations and sort of trying to break its dependency on Macau and on China. But the last time I sat down with that CEO, David, all they wanted to talk about was this new opportunity in the United Arab Emirates. That resort, Casino, will be the first in the region scheduled to open in 2027. But Tillman Fertita, I think that he and some investors have some skepticism about when they're going to see a return on that particular investment. And they want to see more attention paid to the U.S. opportunities. Got it. Interesting, Contessa. Thanks so much for the roundup. As we head to a break, check out the biggest laggards on the S&P 500 so far this year, which is a few hours left, Walgreens, Intel, Moderna Selenese, Estee Lauder, all of more than 48% on the year. We're on the movers to watch here after a break. And don't forget, you can now catch Squawk on the street anytime, anywhere. Listen to and follow the Squawk on the Street podcast, available now on Spotify, Apple Music, and other platforms for back and forth. Welcome back. I'm Pippa Stevens with your CNBC News Update. A team of U.S. investigators, including representatives from Boeing, were on the site today of the deadly plane crash that killed 179 people in South Korea. The plane was seen as having engine trouble and preliminary reports say the pilot received a bird strike warning and issued a distress signal before the tragic landing. South Korea's transport ministry launched safety inspections on all the 101 Boeing 737-800s in the country in response. A military appeals court ruled against defense secretary Lloyd Austin's effort to toss plea deals reached with three defendants charged for their involvement in the 9/11 terror attacks. The men agreed to plead guilty in exchange for being spared the death penalty. Austin had argued he should decide on any plea agreements, but defense lawyers said he did not have the legal authority. And Puerto Rico is preparing to ring in the new year in the dark. A blackout hit the U.S. territory early today, leaving more than 1.3 million people without power. Officials say it could take more than 24 hours to restore the grid. Leslie, back to you. Pippa, thank you, Pippa Stevens. Just over an hour into trading, stocks in the green today, Bob Bassani here at Post 9 with more on what he's watching for this final trading day of the year. This makes sense. Totally loves to point out the year-to-date chart. Almost the same as the one year. Twenty-four percent. We're the same as the one year. And up two years in a row, when was the last time? 1998, that happened up 20 percent or more, two years in a row. Well, the only thing I care about is whether we can reverse the Santa Claus slide, as we call it now. It's not the Santa Claus rally. It's the Santa Claus slide, but I think we're 50 points away from doing that. We'll keep an eye on that. Let's just look quickly at the big themes in 2024, and then I'll push to 2025. Pretty obvious ones here. We got a great economy with 3 percent GDP and strong earnings growth, 10 percent this year, 15 percent for the S&P in 2025. And relatively low volatility. We were 13 to 16 through most of the first half of the year, got a little choppier in the second half. But overall, below 20 is low volatility. And then the expansion of the AI theme overall, which I think is the single most important thing. So if you just look at mega-cap tech, you think, my heavens, this is the biggest story that we've got out there. What else matters? I mean, when Nvidia's up 177 percent, Broadcom's up 111 percent, Tesla, Meta, and you go on and on, Amazon, Alphabet, Apple, and Microsoft, you think this is all there is. But actually, the AI theme really did broaden out this year. That was the big question in the middle of the year. When are we going to see something else? But look at these companies that moved on AI themes. Power generation companies and utility companies suddenly became mega-stars, because all of a sudden, everybody woke up and realized this is where we need to go for the power management and power generation. Companies like Eaton, nobody ever paid attention to before, suddenly became AI darlings. This was a long time ago. This was an early AI light because they specialize in power management that can benefit from AI management. Even some reeds out there, Jones Lang LaSalle, which is a very well-known commercial property, was talking about companies taking more space to help with data center management overall. So you see what's going on here. There is some rotation going on. Let's look at 2025. The basics theme here is tech earnings are continuing to be strong, but the growth, the rate of change, the delta, as we call it, is decelerating somewhat. So technology is going to have another good year. Look at that, 21%, 20%. Those are great numbers overall. But consumer discretionary, you're looking at Amazon, where you're looking at Tesla, a bit slower, 16% here, and communication services are also a bit slower as well. So what you're looking for here is slight deceleration earnings go to the tech oriented. And if you look at the non-tech areas for the S&P 500, 20% from 5%, for health care, for example, industrials 19, materials 19, these are healthy numbers, double digit gains, putting on the bottom here with energy and real estate, where you see there's not been a lot of excitement about energy in general, precisely because you get that kind of number 5%, but it was down, we're down almost 20% for energy in 2024. So I guess the key point here is we are looking for some earnings deceleration in terms of technology stocks still strong and earnings acceleration in the more value oriented sectors here. Finally, I would be remiss to point out, here's the gold GLD, I just did the 20th anniversary of the gold GLD, the other day started in 2004. Look at this up 26% the year, that's the best performance for gold since 2010 overall here. And friends, happy new year, happy and healthy 2025, it's going to be a good year, you know why? Because the four of us are all going to be here in 2025. That's why, and CNBC is going to be here to guide you into the new year. Thank you for that research Bob, I was wondering if you're going to be here, I just said it, okay? I'm wondering, we're all going to be here, okay, even as we get shipped off somewhere as a as a spun off company, spin offs do by the way, spin co is going to be great, it's going to be fabulous, we're going to be buying things, spin offs do very well, after marketing, who knows what to do, there is a CSD, there you go, if you measure the performance to spin offs, you'll see that they do quite well, particularly media spin offs, there you go, remember, actually not really, I know, we'll talk about that. Okay, we're going to talk about a lot of things, I can't wait till the new year, Bob thanks, Bob's funny, high expectations for Apple in the new year as well, the stock been under pressure a bit into the year end, up double digits low off the November lows, Steve Kovac joins us now, he's sort of talking about what CEO Tim Cook has to manage, plenty to manage at a company like Apple heading into 2025, Steve. Yeah, that's right, David, and Tim Cook will be here in 2025 like the rest of us, and going into next year, here's what's on his agenda, I'm going to give you two main things that he needs to pay attention to, first of all, dodging President-elect Trump's tariffs as he did for Apple during Trump's first term, and second, China specifically getting Apple intelligence off the ground there, but let's start with tariffs first, because that's the most important, Trump coming into office in a few weeks, promising blanket tariffs of up to 60% on goods from China, that would of course hit Apple the hardest of any of the mega tech companies, most products, including the majority of iPhones, are made in China, and look at how Cook managed to dodge tariffs in the first Trump term, he developed a relatively cozy relationship with Trump as his peers, such as Jeff Bezos, took more antagonistic stances that all culminated back in 2019, when Cook gave Trump a tour of an Apple factory down in Texas, now that factory already existed, but Cook showed Trump a new model of Mac computers that were being made there, it became a win-win for both sides, Trump got to show folks that Apple was making things here in the United States, and the following month, Apple got relief from tariffs on imports from China, now ahead of Trump taking office again, he has already said Cook came and dined with him a couple weeks ago in Mar-a-Lago, no mention from Apple or Trump himself on what that means for tariffs, so early in the year, here's what to keep an eye out for, and now it's from Apple related to the job creation or manufacturing here in the United States, that could be seen as something they're giving Trump in return for some tariff relief, but let's turn over to China, still got a lot of competition from homegrown competitor Huawei, but outside of hardware, Apple needs to get the government to approve Apple intelligence, so it can launch on iPhones in that country, I asked Cook about this last earnings, fresh off one of his recent trips to China, he didn't have a comment on how those talks are going, but they do continue, and of course Apple needs Apple intelligence for those Chinese consumers who tend to be more obsessed with tech specs, that could help them drive some sales there, and it would likely have to partner with Baidu or another Chinese company for artificial intelligence, since OpenAI, the current AI partner on the iPhone, that is blocked in China guys. No shortage of challenges you just laid out Steve, I guess on the tariff front, you know, do you have any expectations there in terms of what they might announce to a million rate, any of the incoming Trump administration's concerns, whether when it comes, I guess, to US manufacturing or the more things Apple could do on our soil? There are some things they can point to, they can, and they've done this in the past, including, and especially during the first Trump administration, talking about job creation through things like the app store, Apple has done a number of internal studies and paid economic research that they say shows, you know, they support, you know, billions and billions and billions of dollars in economic activity here in the United States, he could also point to that TSMC facility out in Arizona that's going to be making chips for some Apple devices, and then he can point to just other job related or other investments here in the United States and other suppliers here in the United States, such as Corning for their glass and things like that, but no one really has a serious expectation that Apple will be subject to tariffs this time and will find a way around it just like they did in that first Trump term, David. All right, and just to be clear, the iPhone is still largely made in China. Yeah, exactly. That's what I was saying. The vast majority are made there. They're trying to offload some of that to places like India, but that's nowhere near the capacity to make enough iPhones to cover up any Chinese tariffs, and if that does happen, of course, prices would have to go up, David. Yeah, and up potentially substantially. Steve, thank you. Thanks. So ahead, we're digging through retail's winners and losers. The stocks are going to want to watch in the New Year as well. We're back after this break. Taking an NFL themed approach to the market, one expert gives his lineup for how to play offense, defense, and special teams. One name on his list, Walmart, which is on track to join the trillion dollar club. Tune into our market navigator segment today when I see you for power lunch at 2PM Eastern. Welcome back. Consumers are continuing to shop according to our next guest. He says the sector, the retail sector will see a growing gap between winners and losers across low end and luxury. Joining us now, BMO Capital Markets analyst, Simeon Siegel. Simeon, thank you for being here. So help us break down where you see the winners and losers in those two segments. And the best part of this is that I don't even have to be the one to say there's going to be a divergence. We're seeing it. I don't have to be the one to say where consumers are spending. We're seeing it. And so I think that's what's important. I think what we are seeing is businesses like TJX, which are compounding and they're gaining share. But then there's also businesses on the other side. And that's true across the spectrum. And I think that's what's important. I think it's very easy for us to say high versus low income people are shopping. If they have money, they're not, if they're not, but it's very rightly or wrongly people are scared to not have something under the tree. And I think we're going to find out that people spent across the gamut at holiday. And we're going to find their companies that took advantage of the companies that were left behind. What do you think in this environment is the best way to take advantage of the current environment? Is it discounting, offloading inventories, re-pricing certain products? What do you think is the appropriate strategy that will ultimately become successful next year? So I think it's a great question. I think there's also important to make a distinct, to effectively distinguish between companies and stocks. And from a company perspective, if you have excess product that's not moving, you need to take your losses and move on, you need to take that reactionary discount, because there's a difference between deciding to proactively discount as part of your strategy and to clear. But you need to do it. And then you move on, you have new product. I think what's interesting now, from a stock perspective, I think there's companies that you can say that are quality compounders that are not cheap, they're expensive for a reason. And again, I mentioned TJX. But I also think what's interesting now, because of that pervasive fear, because of the view that the consumer is feeling a lot more pressure, they're actually some companies that, from a stock perspective, that I think are very underappreciated. I think if you look at a company like an Under Armour, which is in turnaround mode, which actually is maybe doing a reverse of that promotional comment to saying we're going to pull back, we're going to actually sell less, but charge more for it, which sounds like inflation, you're actually seeing the earnings growth. And when companies stocks are underappreciated, earnings growth can be really powerful. And so I would say that's my barbell as I look into the next year. I've got my expensive for region TJX, which should be a quality compounder, but then the company with some of the underappreciated torque in the form of an Under Armour. And Simeon, I think just from a macro perspective, you said it, you know, and have wage growth, when consumer debt balances seem like they're relatively manageable, people are going to spend to their ability to do so. But what about the goods versus services breakdown, whether you see any shifts in that dynamic or anything else that might, you know, be relevant in terms of where consumers emphasize their spending dollar. So, hey, Mike, it actually is right behind you, which is fascinating because I didn't even realize that. But it's December 31st and its planet fitness is day to shine. And so you've got it right on the screen behind you there, where here's a service where they have seen, so this is a gym, this is a brick and mortar gym, that is probably the TJX of gyms that has just been compounding its business. And they're watching people not only spend the $10 a month, now they've raised price to 15. And so I think that this is probably true goods versus services, maybe in a different way than saying discretionary versus stable. So me versus want spend is a different conversation. But goods and services, I actually think maybe we get a little bit too broad brushstrophy on this as well, saying, okay, people are just going for experiences or people are just spending on the service, as opposed to these goods under the tree. And I think, again, ironically, that planet fitness, which is going to have their big New Year's countdown soon, and January really matters for them. We'll watch our New Year's resolutions work. I think shows a nice indication of here you have, again, maybe a more entry level priced gym that's been flourishing. So I think it's an interesting question. It's an interesting point. I think I'd probably make more of a distinction in an inflationary environment and macro environment between things that people want to spend versus things that people need to spend on, as opposed to are you buying this goods or services, which becomes a really interesting conversation. But I think you give me a compelling service, or you give me a compelling good, and you're actually seeing me open my wallet for these days. Is there a reason that the stock blasted higher right after Election Day to coincide with an earnings report? Or was there some policy idea that somehow is going to help that? So I feel like you and I talk about this idea that I'm not a technical analyst a lot. And so I go above my pay grade here and I make this comment. So I'm not a technical analyst when I'm mad to say it's not true at all. But it's fascinating when technicals work from a very layman perspective. When even I can see it, November is always a great month for Planet Fitness. It's wild, but it is. So I think that's one thing. But on top of that, for an actual reason, they did raise price for the first time ever. And so Planet Fitness won the $10. So they've been raising price on the black card they call it. So that second tier, but you and I have never seen a marketing commercial saying anything other than $10 for Planet Fitness. And now all of a sudden in August or in the summer, so when they reported, we now saw that move to $15. And so there's a new management team. There's a new price. There's a lot of new interesting opportunities. And I think people are coming back to this story and saying, okay, here's another compounder that may have seen a little bit of tough times and people came back to that story. So it was an interesting dynamic, but November always a good month for Planet Fitness. Fascinating. Who knew? I would have expected January 1st with the whole resolution setting, but I didn't think about November. Smart Money trades January and November. There you go. That's what it is. Simeon, thank you. Happy New Year to you. As we had to break, check out the best performing sectors on the year. No surprise, their communication services, technology and discretionary round out the top three. And still had a look at the top performing commodities this year. No, it's not actually energy or metals, which 2025 could bring for the likes of cocoa and orange juice and our coffee, our sacred coffee after a record year. Stay with us. Welcome back to Squawk in the Street, a record year for softer commodities such as cocoa and coffee. Pippa Stevens has more on whether that run will roll into the next year of Pippa. Hey, David. Well, we saw big gains, as you said, for cocoa, coffee and orange juice this year. And with no quick fix, we could see even higher prices looking forward. Cocoa has more than doubled and is facing for its best year on record. Coffee's up about 70% in 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 Waterridge 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, Waterridge said, "Keep producer Brazil is on the cusp of its fifth consecutive poor crop thanks to climate change." Now, poor harvest in Brazil is also impacting orange juice with Rabobank expecting supply to decline 15% in the world's largest producer. Now, for the time being, companies have managed the surge through actions like smaller chocolate bars trading down to robust coffee or increasing other juices like pear in orange juice blends. But these structural issues can't really be fixed by adding more supply, meaning there has to be a demand-side response. And of course, guys, as it goes in commodities, the cure for high prices is high prices. And would a demand-side response Pippa mainly be used less or is there a way to further switch things out like cocoa? I guess it would be hard to replace. Yeah, so companies have already taken kind of the lowest hanging fruit options if they can. Things like shrink fleasion or trading down to robusta or swapping out cocoa butter for other ingredients. But at a certain point, they're going to start raising prices more aggressively if we continue to see commodity price rise. And so at that point, it really has to be a pullback and consumer demand. We have seen that to a certain extent for orange juice so far when prices did sky rocket earlier this year. But so far in coffee and chocolate, we've seen demand hold up. And so that will be the key question for 2025. Pippa, thank you. Pippa Stevens back at our headquarters. Our live market coverage continues here. We've got the S&P and positive territory though giving up some of the early gains, still up 24% for the year at this very moment with the NASDAQ, not quite at the up 30% mark as well with that 0.04% gains. Stay with us. All opinions expressed by the squawk on the street participants are solely their opinions and do not reflect the opinions of CNBC, NBC, Universal, or their parent company, or affiliates, and may have been previously disseminated by them on television, radio, internet, or another medium. You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of an opinion. 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