Squawk on the Street

SOTS 2nd Hour: Santa Claus Rally: A Boom or Bust? Plus: The Apple Playbook, and 2024’s Rise of the Dupes 12/30/24

David Faber, Leslie Picker and Mike Santoli discussed the latest for stocks as a potential Santa Claus rally stalls out – with a slew of consumer and big tech names under pressure an hour into trade. Strategists from Citi and Invesco broke down their bull and bear cases for 2025, with the team also focusing in on the future for Chinese equities under president-elect Trump. Plus: Apple $4T watch, a look at 2024’s “rise of the dupes”, and one warning sign flashing for financials. Squawk on the Street Disclaimer

Duration:: 46m
Broadcast on:: 30 Dec 2024
Audio Format:: other

Squawk on the Street Disclaimer

(phone ringing) - Xfinity here? How can we help? - Hey, can my wife I handle a big birthday party for my daughter? - Well, we built Xfinity internet to handle hundreds of devices at once. So party away. - Oh, we are gonna need a bigger cake. - Now through March 4th, get Xfinity gig internet for $25 a month for one year when you add an unlimited mobile line and ask how to get an eligible free 5G phone with trade-in. Switch today. Restrictions apply requires people to sign an audiovisement bank account, taxes fees extra. After promo, regular rates apply, Xfinity internet required. Reduce mobile speeds after you see monthly data included with your data option. Data thresholds and actual internet speeds vary. - Some things you wouldn't mind being stuck with, like a huge inheritance. But a phone that has to be plugged in just right so it charges is not one of those things. Switch to Verizon and we'll pay off your old phone up to $800 five prepaid MasterCard for a new one on us. Just trade in any phone from our top brands with select unlimited plans. 82999 perches with new smartphone line on select unlimited plans minimum $90 per month with auto pay plus taxes and fees for 36 months required. Less $830 trading/promo credit applied over 36 months. Trade-in terms apply. Pay-off phone requires smartphone purchase important with new smartphone line on select plan. Less provide most recent bills showing pay-off and not a eligible phone. Additional terms apply. - Good Monday morning. Welcome to another hour of Squawk on the street. I'm David Fable with Mike Santoli and Leslie Picker. We're live from post nine at the New York Stockers. James Karl and Sarah have the morning off. I want to take a look at the equity markets. It's not a pretty picture, at least if you're long as we head into what we're into the second to last trading day of the year. And you can see we are down sharply on all of the major averages. Treasuries, not really the culprit here. Obviously we did have that spike in rates last week, not so much as you see a decline overall in the 10-year to 4.5 or 7%. - Yeah, seems to be more sentiment driven today. We are 30 minutes into the trading session here. Three big movers we are watching. NVIDIA off morning lows and in the green actually. Oh no, down about half a percent or a quarter of a percent at this point in time. The company is turning its attention to robotics. According to the FT saying NVIDIA will launch the next version of compact computers for humanoid robots in the first half of next year. Officials in South Korea are investigating a deadly plane crash involving a Boeing jet after it landed and skidded off the end of a runway at an international airport. They are interrupted into a fireball as it slammed into a wall. Transportation officials, they are now conducting a special inspection of all Boeing 737-800 aircraft operated by airliners in that country. We have more than 4% right now. And more volatility in names like Tesla and Palantir both still up double digits and some of the best performers on the S&P in December. But coming off of those highs into your end, Tesla down about 3% Palantir down about 5%. - We got the PMI's a little while ago. Let's get to pending home sales. They're out just moments ago and Diana Olic has in court. - Diana. - Well David, pending home sales in November rose 2.2% month to month and we're up 6.9% from November last year, that according to the Realtors. And that is slightly better than expectations and the fourth straight month of gains. Remember, this count is based on signed contracts. So that's people out shopping in November. When the average rate on the 30-year fix spent much of the month over 7% before coming down in the last week, an AR's chief economist, Lars Yehud, said in the release, consumers appeared to have recalibrated expectations regarding mortgage rates and are taking advantage of more available inventory. Regionally sales fell in the Northeast month to month but rose everywhere else with gains the strongest in the South now that may have been making up for declines in earlier months due to several hurricanes and flooding. And it looks like we will be starting the new year over 7% as well on mortgage rates. As a result, the home construction ETFITB is down close to 17% month to month on pace for its worst month since March of 2020. And David, we remember March of 2020, not so great. No, that was not a great period at all. Diana, thank you, Diana Olic. Turning back to stocks, we're in the midst of a significant sell-off. Of course, as we end the year here, let me turn to Mike Santoli. I mean, a lot of people are on vacation, a lot of perhaps people who run portfolios, but this is gonna get their attention a bit. It will. Yeah, I mean, illiquidity works in both directions. Usually it means upward drift in the last few days of the year. This is not the case right now. Now, definitely you have heavy pressure coming from the largest stocks, the Nasdaq 100 down about 1.9%, but it is sharply negative across the board. And the big question with this rise in treasury yields over the last few weeks is obviously, as it always is, can the economy handle it? Can the real economy handle it? And we got the data this morning, the PMIs, seemed like a little bit of an extra leg lower in equities because of that. Now, we have yields coming in today. So that sometimes is the next phase where yields and stocks go down together, it becomes a little more of a true safety trade. If volatility index up toward 19, that's not common for what's expected to be this kind of holiday interrupted com trading period. So still feel like it's pulling forward some of the profit taking that you might have expected in January. A lot of times January is characterized by the leaders of the last year being sold, laggards being picked up. Not seeing so much in the way of laggards being picked up today, but I did say the equated S&P down 1.5%. So it's pretty across the board. Look at that. A couple of stocks in the S&P are up on day. And, you know, maybe this leaves a little bit of a cleaner positioning story going into next year because one of the risks a couple of weeks ago looked like it was going to be all the strategists were bolded up. Everybody was maxed long. A lot of the frothy speculative stuff was running hard and maybe we're taking the edge off of those extremes. Yeah, I mean, I think that's something that Tom Lee was talking about on Squawk Box this morning, this idea that kind of doing the opposite of what you'd seasonally expect may set you up for more of a bounce at the beginning of the year remains to be seen. I mean, there's no real catalyst for the selloff, right? I mean, a little bit of data here, maybe some yield pressure last week, but nothing. I wouldn't say you would point to a very specific catalyst except for an economy that seems like it's in deceleration mode, even as yields go up, you know, maybe because of just, you know, a little bit of a minor buyer strike as we had these big auctions. But no, I don't think this is a real, you know, it's not really an outright growth scare like we had in, you know, let's say August of this year. Yeah, maybe more positioning and sentiment-driven than anything. Stux kicking off the final trading week of the year with investors still hoping for Santa Claus rally, maybe hopes fading a little bit today, despite weakness across big tech, names like Nvidia, Microsoft and others joining us now, city private wealth chief investment strategist, Stephen Whiting. Stephen, thank you for being here. What do you make of today's market action and how do you think it positions the market for 2025? Well, I think for a little bit of perspective for everyone, prior to this morning, the S&P 500 was up 25% for the year on what's gonna turn out to be about a 10% earnings game. So everyone just recognizing that around 6,000 for the S&P 500 is a pretty full level. We've had two good years here after a really bad one. The economy is going to grow. We have been through a period of just reconciling that the Federal Reserve is not going through some radical easing and we don't have a growth paradise. We have a good deal of policy on certain date. But if we continue to have an outlook for economic growth through 2025, that there's more to come, I think that that we will, in fact, have a decent year. But it's not gonna be on the path that we've just had, which over the two year period was a 54% gain after losses of 2022. Yeah, it's been a remarkable two year period. So then should investors diversify away from the S&P 500? And if so, where should they diversify? We were talking last hour about the fact that U.S. exceptionalism and particularly some of the big tech names have been the beneficiaries of a lot of flows over the last few years, which has helped drive them higher. Where else should investors diversify if not for the S&P 500? Right, well, look, 30 times earnings, 20% EPS growth, seems to be like we should still have a position in U.S. large cap tech. That is where there's gonna be a great deal of future innovation, but heavily priced. So you really have to zoom out to what you've just addressed. It's been 15 years of U.S. outperformance, about 20% in the latest 12 months, which is big, but the 15 year mark is what I really focus in on. And so the rest of the world has been left in the dust. It's outside the United States. The world share markets are 1/3 of global equity market cap. And there's no real visible catalysts for why that should change. But if you do expect that the world economy is going to strengthen from some of the declines that you just saw in the Chicago PMI, for example, the manufacturing sector across the world is still yet to really get to its feet. You'll probably see broader gains. And if you think about how the premium on U.S. shares has picked up over 15 years time, I think that you're going to see that the S&P 500 is not going to be the best performing asset class for 10 years. I mean, after all, we've got a 13% return for 10 years, through two very different administrations and a new one coming. So I'd also look at alternatives. That if you think about some of the fixed income markets that can offer yields, just give you one in public markets. The loan market is probably going to return close to 8%, over the next 12 months. I wouldn't substitute stocks for them. I don't take that as an alternative to U.S. treasuries. But as a yield enhancer and a diversifier with very low volatility, probably quite solid credit. This is an opportunity that we would add to portfolios because you won't want a portfolio that just looks like the S&P 500 for the coming decade. - Yeah, that pitch has definitely helped spur tremendous growth in that sector over the last few years as well. In VSCO Global Market Strategist, Christina Hooper, also joining us today, do you think the market kind of honing in on technology? Do you think it was discriminating enough when it comes to AI this year? Do you think that anything that was just even AI adjacent went up? And what do you think that tells you about 2025? - Well, I don't think it was discriminating enough, but that's the nature of something that is so groundbreaking and innovative. You tend to see that all AI adjacent, anything related tends to rise. I mean, we saw that with dot com stocks in the 1990s. And it's just a normal part of the process. And then we do see greater discernment as time moves on. And as we realize where the greatest beneficiaries are and what the most compelling plays are. But I think it's just natural. It's human nature to when there is something that is so, so different and just has the potential to be transformative that we would see just this sort of mass move into anything that relates to it. - Christina, what's your snapshot take of the economy we have right now going into next year? I asked because you look at Atlanta Fed GDP tracking, it's like near 3% real growth. And yet some of the numbers that have been coming in the labor market has softened up. Obviously, manufacturing has not really come off the mat and you have housing related activity. Also, you know, kind of retreating a little bit here. So what's your thought in terms of the growth trajectory into next year? - So this is an economy that is slowing and cracks are clearly forming. It's been more resilient than we expected. I think than markets expected. But they're clearly cracks forming. We just saw a credit card issues, greatest number of defaults since 2010. There are a lot of issues in particular areas of the economy. But the overall economy has been chugging along. What I think we're gonna see is a lot of excitement that then becomes something of a reality. We're going to see, you know, the deregulation begin quite quickly. I think that's going to be impactful. And I think that's gonna unleash animal spirit. So I think we're gonna have a relatively strong economy in 2025. I think we could see some slowing in the near term, but I think we'll see a re-acceleration. And it's not gonna be just the U.S. I think there's potential for the Chinese economy to rebound. And I think major economies then bring along other economies with it. So I'm quite positive on the global outlook for 2025. - All right, Christina and Steven, thank you both so much for joining us today. Really appreciate it. - The New York Stock Exchange and the NASDAQ, excuse me, will both be closed on January 9th. It's an observance of a national day of mourning to honor the passing of former president Jimmy Cardo. Again, that'll be January the 9th. As we head to break, here's a roadmap for the rest of our hour, another year of underperformance for China-related stocks. Our last guest was just talking about that. What a Trump presidency could mean for the group. And of course, what is still the world's second largest economy. - Plus big tech under pressure after hitting record highs. We'll discuss what's ahead for the second. And 2024's Rise of the Dukes. Just what they are and how they're impacting retail. This holiday season. A big show ahead, Squawk on the street, is back after this break. Don't go away. - I'm Elliot Kaylin and I cannot wait to tell you all about the new podcast I'm hosting for Smartless Media. It's called Smartless Presents Clueless, a bite-sized twice-weekly game show with a different main game cliffhanger puzzle every single episode and all this season. The contestant will always be Sean Hayes. That's the clueless promise. Since you never know what the game will be, you won't want to miss a single episode. Listen and follow wherever you get your podcast. - Where can you kick off the new year with big savings on gig speed? Only with Xfinity. Now through January 30th. Get gig internet for $25 a month for one year when you add an unlimited mobile line. Plus hurry and get a free 5G phone with trade-in. Go to Xfinity.com/gigsavings to learn more. Requires paperless billing and auto paper store bank account restrictions apply, equipment tax and fees extra. $40 internet discount applied to mobile bill. After promo regular rates apply, Xfinity internet required. Reduce speeds up to 30 gigabits of data usage per line, data thresholds and actual speeds vary. - Where'd you get those shoes? DSW has all the shoes you need for whatever you're into. You know, like running shoes that give new meaning to personal best. Or everyday sneakers that make coffee runs look cool. Basically DSW has all the best styles from the brands that always get it right. Like Nike, Brooks, Timberland and more. Oh yeah, did we mention they also happen to be the perfect price? Find a shoe for every you at your DSW store and DSW.com. - Welcome back to Squawk on the street. Tribute's pouring in from world leaders following the death of former President Jimmy Carter. Emily Wilkins is in Washington DC. She has more on that. And what is going to follow in the days ahead as well. Emily. - Hey, David. Well, yeah, it contributes from world leaders. They are pouring in. And we now know that Thursday, January 9th is going to be Carter's state funeral and a national day of mourning. So the stock exchange NASDAQ, they will both be closed on January 9th. Now, both Biden and Trump have paid their respects to Carter, Biden, who is one of Carter's earliest supporters outside of Georgia during his presidential run. He praised Carter for living a life of purpose. He also said that it's a sad day, but a day that brought back incredible memories. And Biden said that today America in the world, in my view, lost a remarkable leader. You also saw Donald Trump posting to truth social, praising Carter saying that he was truly a good man. And of course, we'll be greatly missed. Trump added that Carter was also very consequential, far more than most presidents, after he left the Oval Office. And again, many world leaders, they are sending their condolences at this time. This includes Pope Francis, Ukrainian president, Vladimir Zelensky, plus a number of Middle East leaders who are also praising Carter for his damn date camp. David Accords, this of course includes Israel president, Isaac Herzog, and Egyptian president, LCC. Guys? - Yeah, that's one not to forget, of course. I can remember Sedot and Begin, Emily. 1977, I believe it was. Unexpected the time. And in a obviously very war torn area, Egypt and Israel still have peace. - They do. And I think when you look at Carter's record, I mean, certainly there were some concerns, like aflation concerns about foreign affairs. But certainly the camp David Accords really hold out as a bright moment. Of course, a lot of what has been said about Carter, Trump actually summed it up quite well. It was a lot of what he did after his time in office, the charity that he did, the election security he did, the traveling around the world, the working with health and diseases that really kind of helped cement his legacy, get him that Nobel Peace Prize and really redefine what it means in the post presidency. - Emily, thank you. - Emily Wilkins in DC. Squawk in the street, we'll be right back. Don't go anywhere. - From success of new diverse podcast hosts to the ever evolving host listener dynamic, podcasters have created a revolution in storytelling that has forever changed media. Obsessed? Us too. That's why we at SiriusXM Media are bringing you the trendcast. Hosted by me, Sophie Anderson. It's the show that identifies dissects and explores opportunities for advertisers around five major trends taking hold of the industry today. Take a deep dive with us and listen wherever you enjoy your podcast. - Where'd you get those shoes? DSW has all the shoes you need for whatever you're into. You know, like running shoes that give new meaning to personal best. Or everyday sneakers that make coffee runs look cool. Basically, DSW has all the best styles from the brands that always get it right. Like Nike, Brooks, Timberland and more. Oh yeah, did we mention they also happen to be the perfect price? Find a shoe for every you at your DSW store and DSW.com. - Stocks in China underperforming the S&P for the year. And if you go back, it has been for many years. In fact, trade policy likely to perhaps bring more pain in the coming year. Our next guest expects a battle between President-elect Trump's pragmatic stance on China and the ideological drive of the various hawks on trade around him. MSA, capital managing partner, Ben Harberg joins us now. Ben, always good to have you. Hope springs eternal when it comes to China, I know. And you've been navigating very difficult markets for some time. Are you hopeful for 2025? - 2024 wasn't too bad for us. Our graded China growth ETF secret was up 20%, which is a decent return, all things considered. And I think, you know, the conditions are laid for an even better trend in 2025. The Chinese government has been come trialing and airing different forms of stimulus. And it looks like the trade in policies are working. General debt relief for the provincial governments is finally coming into full effect and finally they're unlocking a lot of the money that they owe downstream to local businesses. The real estate market seems to have stabilized. This month saw double the real estate transactions in Shanghai that were there a year ago. And I think that Donald Trump has the potential to bring in a kind of brand of ruthless pragmatism into the dynamic that could see it actually find some constructive and concrete evolutions, as opposed to just an ideological back and forth. - Yeah, I wanna talk more about that. But when it comes to China, I mean, you talk about debt relief, but we're also still talking about worries of deflation, a Chinese consumer that, despite attempts to prod them, seems unwilling to really increase their spending in a significant way. You know, on the local property level, is it going to be enough to change those two dynamics? - We don't have to shift them into buyers again at the local property level. We just need to stabilize the current prices in some ways stopping future construction will actually help that because there's been a huge overcapacity issue across every sector in China, but none more acute than I think in real estate. And so if that construction slows down, supply starts to stabilize. And again, we're seeing it in the tier one cities, that stabilization. But when that free fall stops in housing prices, people stop feeling poor. And when that feeling wears off, that's when they start to get their ceilings back under them and come back to the high street. So that is the critical litmus test. It's not even further real estate consumption. It's simply stopping the bleeding. And I think that we're seeing signs of that now. - Then going back to geopolitics and the relationship between the US and China, last week we saw President Trump file a motion with the Supreme Court asking them to pause a ban on TikTok, which was set to take effect next month. That was a different stance than we saw from President Trump a few years ago. And I'm just curious what you think that implies about Trump 2.0 and its relationship with China. - Trump's stance on TikTok was not surprising to us and I've even spoken with other senior officials that are highly influential within the Republican party and within the kind of MAGA base. And many of them are proponents of TikTok and the ability it has given them to address a much wider audience, let alone the kind of inter relation between some of President Trump's largest donors and their investments in the application. So this outcome was not surprising. It's something we've advised to people for the last year or so, but alongside of that, you obviously saw President Trump emerge from that meeting with the CEO of TikTok and say that together China and the United States can solve all major issues. You saw him re-truthing articles about incoming or nominated Ambassador Perdue, that he will bring a pragmatic touch to the relationship because of his experience in doing business in China. And so I think these all lead to a highly pragmatic environment. Ben, you mentioned the performance, I think of your actively managed ETF. I don't know what the asset number is. I think it's fairly small, but I am curious, are you going to continue to own the same names, any change in terms of how you're going to structure your own portfolio based on your expectations for what China will and won't do in 2025? - We came into the year and we came into this strategy. I think you needed an active approach to China just because of the constant back and forth on the trade front, new names being added to the entities list or other export restrictions list from the US side, sanctions lists, and of course, watching the immediate impacts of these stimulus measures, be it trade-ins or otherwise, and their effect on consumers in China. And so we've been trading in and out, not only of nays, but also of markets. So eight shares, eight shares and ADRs. And I think that approach has paid off. We're beating our nearest competitor, the likes of K-Web by five, six percent on the year. And I think that you've got to be active on China. You cannot sit passively because there are too many things going on at once, too many variables. - And it should, I mean, we obviously talk a lot about the failure, so to speak, of the Chinese economy to put up the growth numbers. Perhaps it had been anticipated. But then they are still a leader in solar, a leader in EVs, battery technology, a number of other areas. Are there ways that you see that you can play those separate from the fact that the Chinese economy still continues to have its challenges? - Absolutely, again, we look at a very selective swath of names within China that we see as high growth either because they're exporting globally, the likes of Pinduoduo or Alibaba, who have large global presence, particularly in the United States. We're looking at names in the kind of fully integrated supply chain, the likes of BYD, who are doing tremendously well in building electric vehicles. Both domestically and abroad in China, it just saw a statistic today that in the next couple years will be bigger as an electric vehicle market than the entire American car market. So a small China is still bigger than most of the world. And then, of course, any of these integrated hardware producers in the mobile phone space, our biggest holding today is Xiaomi, a company that's doing tremendously well, not only on mobile handsets and IoT devices for the home, but now electric vehicles producing hundreds of thousands of cars. So you've got to move in and out of those names, but all of those are doing tremendously well in spite of the overall macro plays. - Although they have dozens of EV makers, don't they? I mean, there's got to be some consolidation, doesn't there? - It's possible. I mean, already there was a lot. When we invested in NEO eight years ago as one of the first and largest investors, I think there were 300 electric vehicle companies that were registered at the time, that consolidated to just four or four or so. So I think that that list maybe could add more in our two names, but no. And a lot of global names are actually consolidating into them. European automakers like VW are actually co-producing electric vehicles with the Chinese. So I think you'll see more of that kind of co-branding across combustion and EV names globally. - Yeah, well, if such an important market for so many, the German automakers, and obviously it's gone away in terms of market share to a certain extent. Ben, thank you, Ben Harberg from MSA. - All right, you're ahead to a break. Check out the spike in natural gas as weather forecasts show freezing cold temperatures coming around the first half of January. Knack gas is on pace for its best year. Since 2016, they're coming off a very, very low base, like 25-year lows in prices about 10 months ago. We'll be right back, stay with us. - Hello everybody, I'm Contessa Brewer with your CNBC news update. The U.S. is sending nearly $6 billion in additional military and budget AG Ukraine. President Biden announced $2.5 billion in security assistance. He's making a last minute push here to help Ukraine gain footing against Russia before President-elect Donald Trump takes office. And Treasury Secretary Janet Yellen announced $3.4 billion in budget aid. That goes to keeping Ukraine's government running during the war. Five people have now been charged in the death of former One Direction star Liam Payne, authorities in Argentina say the manager and receptionist of the hotel, where Payne fell to his death in October, now charged with manslaughter, along with one of Payne's friends. Previously, two other hotel workers were charged with supplying him drugs. Tony award-winning Broadway actor Linda Lavon has died. She was best known for her starring role as a waitress on the TV sitcom Alice, which earned her two Golden Globe Awards and an Emmy nomination. Her representative confirmed she died of complications from recently discovered lung cancer. She was 87 years old. That's the news right now, David. Let me send it back to you. - Okay, thank you. Let's get over to Emily Wilkins. She has some news for us. Involving, I believe, the Speaker of the House, Emily. - Hey, David, yes. Of course, Mike Johnson is face going to be facing a battle for his speakership this Friday. His lawmakers will have to re-elect him. You remember how that went last time for Kevin McCarthy. But Mike Johnson now has gotten a lifeline from President-elect Donald Trump, posting the truth social just moments ago, telling Republicans to not blow this great opportunity that we have been given. He said the American people need immediate relief from the Biden administration and calls Speaker Mike Johnson a good hardworking religious man. Trump says he will do the right thing and we will continue to win. Mike has my complete and total endorsement. Now, at this point, we only know of one lawmaker, Thomas Massey, who said that he absolutely will be voting against Johnson when it comes to the vote on Friday. But we know that there are at least a dozen other lawmakers who have spoken out about their frustrations with Johnson, the fact that he's had to go to Democrats so many times to get various things done. They're worried that he's not paying enough attention to his conference and they are looking into potentially other speakers. I mean, we saw Steve Scalise, Jim Jordan throw their hats in the ring last time. Of course, at this point, both of those individuals are behind Johnson. It does seem like Johnson's the one who is most likely to get the 218 that is going to be needed. But we will see exactly what happens on Friday, but at least for Mike Johnson right now, he's got to be feeling good with that endorsement now from Trump. Guys? - And Emily, remind us how many Republicans he can afford to lose, what's the margin? - So it's really only about two to three. And the reason we can't be more specific is that it is a majority of whoever votes for a specific person. Remember, you can also vote present. But Democrats have 215 Republicans, I think, are going to be coming in with 219 or 218, depending on how you want to count a lawmaker who's now not focusing with Republicans, but is still Republican. So the numbers are a bit all over the place. We'll, of course, be able to provide some more clarity as opposed to actually go on. But really, we're talking any more than two or three in Johnson's and Hot Water. - Emily, thank you. We'll keep an eye out on Friday for that. Appreciate it. Stocks in the red just over an hour into trading near session lows. Bob Bassani here at Post 9 with Moron, what he's watching. We're glad you're working today, Bob. - Yeah, well, we're all having to work this week here, but look, this isn't very pleasant. But there is a basic thing that's going on here. First, this morning, we saw a cell program come in. You saw the flight, the bonds that we saw earlier on, but we're still getting seasonally light volume. I know that this is not pleasant to see things go down, whether it's heavy or light volume, but that's what it is. The last time we had it actually really notable up volume day was December 20th, then that was the rebalancing. And since then, it's been seasonally light. Remember, it's still not comfortable, but take a look at the major sectors here. Basically, everything's down about one and a half percent, and she's the one little exception here, but the consumer discretionary tech, industrial's, communication services. Here's where these are not that useful anymore. When you have this tyranny of big cap tech, when you get a big cap tech sell-off, it drops all of these sectors. So just take a look at the major big cap tech. It doesn't matter here. If you can have Apple and you can have Meta in the technology sector and you can have Alphabet and Tesla sitting out there, Alphabet's in communication services, but Tesla and Amazon, they're in consumer discretionary. So these are all tech stocks, essentially, but they're cross platforms here or across sectors, and when they're down, they drag all the sectors down with them. That's what happens when you have this tyranny of big cap tech. Santa Claus rally not looking great. Last time we had it down year, 2015, down 2.3% for the Santa Claus rally. Of course, we're only halfway through folks. People think it's over, it's not. It's actually seven days, and we're only three and a half days through that, but the average gain is 1.3%. Right now, we're doing down 100 points. We're down about 1.3% on the Santa Claus rally. So again, this would be a little unusual if we ended the year to the downside. Think about things this way. Think about 2024, what happened this year? S&P was up 25%, and yet, earnings were up 10%. Well, that's a big difference. And what made the difference is, we had a multiple expansion that was notable. We're at 22 times forward earnings. A little over that, when we started the year a year ago, we were at 19 and a half. There's your difference in the multiple. That's a big, big change here. There's sectors out there. Look at this, this is the estimates for 2025, but that's what we care about. So tech is still leading, but there's plenty of sectors that have very healthy expectations that are much more, shall we say, undervalued. In fact, some of them in the value camp, including some industrials and material stocks, these are perfectly respectable, yet nobody is paying much attention to them. So this, here is your hope for the rotation trade here. The potential, and if you look at some of these, Mike, Apple, the forward estimates for the big caps have flattened out. As you know, Apple, Microsoft, Alphabet, they're in the low 30s, Amazon, mid 30s, Metas of high 20s. They really haven't gone up much at all. Even Nvidia's flattened out. Broadcom's gotten a lot of attention 'cause its estimates have gone up a little bit for 2025. So my point is, I'm making the value call again here. There is a reason what the number is flattening out. Multiple is flattening out for big cap tech to consider other sectors where there's perfectly respectable profit growth expectations. >> Yeah, I mean, really, if you look back, essentially, there was a stealth earnings recession in the majority of stocks, right? Not the big guys that drove the indexes, but they're coming out of that now, right? So you have earnings growth that's broadening out a little bit. Also Bobworth noting, I mean, the max decline this year in the S&P was like 8.8 and 1/2%. >> Yeah, 30 years later. >> But you at least get one full double digit correction. >> Yeah, I'm not terribly, you know, we'll talk more about in the next hour about the warning signs for 2025. But if you think about what motivates the stock market, which is the direction of earnings, are they growing or are they shrinking? And profit margins, 12% profit margins still up there. I mean, the story for years is, oh, they're going to deteriorate. They're not. The profit margins is how much are they keeping from that revenue all the way to the bottom line. 12% is just about a record. It hasn't slipped at all this year. And that's why the stock market is still there. >> By the way, that's before the so-called efficiencies of AI really worked between the enterprise, if that actually happens. And of course, one of the things I mentioned this morning is a threat to 2025 was people stop believing the AI story. I think that's not going to happen. I think you're in the same campus, me. I think AI is going to provide remarkably great efficiencies out there, improvements in product. >> But is that already being backed? >> It's in certain stocks, but it's not priced into, what happens with the entire world just becomes better, it manages their money more efficiently. Look what software is a service did to the bookkeeping industry. There's nobody writing in books anymore that hasn't been for 25 years. And look how much more efficient corporate America is because of software as a service. Well, here's a software that's going to eat all the other software that's out there, essentially. >> Productivity could go up, and that's a key count in the GDP, of course. >> Yeah, it's already actually already started a little bit, anyway, on the charts. >> Bob, thanks a lot, Doug, soon. Let's focus on Apple a little more, stock under pressure this morning, putting a pause at least in its march to a $4 trillion market valuation. Our next guest says Apple is the most user-friendly touchpoint for consumer AI, and the cycle will take longer to materialize in 2025. Martin Yang, Oppenheimer, senior analyst of Emerging Technologies joins us now. Martin has a buy rating on Apple, price target of 250. And Martin, let's start there, because obviously you like the big picture Apple story with a buy rating, but your target's about where it's trading right now, does that just speak to current valuation? >> No, it speaks to a lag between how fruit can be made up to try to start, I guess. But our rating, our conviction in Apple as a stock has not changed. >> It's not changed, so tell us about AI as it is playing into the investment story for Apple right now. It feels as if there was a little bit of a delay in investors embracing the idea. Maybe that's accounted for some of the outperform, it's a lot of part of this year, is folks maybe believing in it a bit more? >> Yeah, when we look at AI and its impact on Apple, it's two aspects. One is to invest in perception, the other is consumer perception. We believe that investor perception is outpacing the consumer perception. Right now we're still very early in the adoption of AI being the hands of consumers on their daily lives, either for business or for entertainment. And that will take some time, I think, throughout 2025 for the consumers to get real benefit of those AI functions coming within new iPhones. >> And what does that mean for the ongoing iPhone cycle right now? I guess there's been sort of a mixed evaluation of exactly how strong the current cycle is. >> Yeah, so I think the sentiment definitely have changed or deteriorated to be exact. You know, going back to June in 2024, when we first got a first glimpse of Apple intelligence, everyone was very excited, but it seems that the adoption will be lost slower and will need to install base to gradually upgrade to the phones that are capable of running Apple intelligence. >> That was, I think, get delayed into later 2025, not early 25. >> If that's the case, and there is this persistent gap between investor perception and consumer adoption, do you expect to see a drawdown in Apple shares? Is it kind of finds its footing relative to the kind of upgrade cycle that a lot of investors are pricing in, essentially? >> We're not expecting any meaningful drawdown. We may see some disappointment on consensus versus Apple's delivery. Apple's reported numbers in the first half 2025, but I think as we go throughout, as we progress towards the second half 2025, Apple's real performance, we'll be able to match expectations better. >> I guess just to circle back to the valuation story, we're 32, 33 times forward earnings at this point, pretty much high for the iPhone era, aside from a brief period in the pandemic. What can we expect out of the PE? >> Yeah, out of PE, I think it's mainly focusing on the E, where Apple historically has been consistently expanding margins through a better mix of service revenues. And then as we go through a better AEI-driven replacement cycle, the hardware outperformance and hardware-driven earnings will also catch up again later in the 2025 cycle. >> And I know you think that the introduction of a lower-cost model might help that? >> Correct, I think a lower-cost model is right now under-appreciated story for hardware shipments in 2025, and that would maybe offset some of the negative impact we are expecting for our device or iPhone shipment, just more than in the March and June quarter. >> All right, Martin, thanks very much. Appreciate you weighing in, this morning. >> Thank you. >> Still to come, what a second Trump presidency might mean for the banks in 2025, with the financial sector outperforming the S&P this year. We are back in three. Welcome back, bank stocks looking to build on a strong 2024 campaign in the new year. The S&P financials up more than 25% year to date on pace four. It's best year since 2021. Six of the universal banks all up at least 30% this year, with Goldman leaving the way up almost 50% in 2024. But one warning sign to note out of the FT this weekend, credit card loan defaults jumping to their highest levels since 2010. Now we have heard this from the consumer facing banks that those at the lower end of the income sphere are struggling. They've drawn down their pandemic savings, and they're struggling to pay off their credit cards and of course rates are higher because of where interest rates have been. But the banks are pretty well reserved for this type of thing and the larger banks in particular have such a diversity of clientele that it hasn't necessarily been seen as something that would be a major headwind for at least the stock prices, although the consumers are an important part of the economy. Yeah, I mean, I would say first of all, that's a dollar value of right offs. So as a percentage of outstanding credit card balances, it's a lot lower than 2010. That would still up a lot from the low. So it's sort of more in the normal range, longer term in terms of charge off rate, but yeah, directionally, not ideal. And you wonder what it means for the case for deregulation, which seems crystal clear that banks are gonna get a lot of relief and whether that's on how much capital they have to hold, reserves, how much stock they can buy back, whether they can merge. All makes sense. Also the fees on late fees for credit cards feels like people will assume that's gone. The limits. Leslie, as strong as the performance has been for the big banks, I always tend to look as well as the alternative asset managers, you cover them. I mean, it is worth pointing out, Blackstone has a $207 billion market value at this point. It's bigger than Goldman Sachs. KKR is now up 77% this year at 130 billion. Obviously we talk a lot about private credit, what that has meant in terms of as a competitive threat or alternative to bank lending to some extent, but it shouldn't be unknown to people. All of them, other than Carlisle Group, have been great performers. That's obviously a lot more focused on just good old private equity. Right, the more pure play or the more private equity exposed you are, Blackstone too. They have real estate exposure, private equity exposure, growth exposure as well. But it's a lot smaller proportion of their overall portfolio. You're going to underperform those like KKR and Apollo that do tend to kind of tilt more toward that. No idea if they can put up those kinds of stock numbers again. 78% for Apollo, 78% for KKR. They all get in the S&P. So all the bull, you know, fat, all the bullish arguments have somewhat been realized. So we'll see. All right, speaking of big winners this year, check out the top gainers on the S&P 500 for 2024 with just two trading days remaining, including today's the Palantir, a 350% topping net list. We'll be right back. The rise in social media shopping and influencers has accelerated the growth of knockoff brands and dupes this holiday season. Courtney Reagan's here. She can explain to me what we're talking about here, Courtney. - Okay, so think about dupe like a duplicate, David. So did you get something close to what was on your list? But maybe it wasn't exactly the same thing. You might have been duped. Fashion and premium brands have a long dealt with lower priced copycats, right? But social media has accelerated dupe culture. Social influencers build businesses around dupes. Consumers use #dupe to find these knockoff items. So Sprinkler AI ran a query for CNBC with more than 2.9 million mentions in 2024 from public posts on social media sites, along with sites like YouTube blogs and other sites, looking for the word dupe specifically. So Chanel was the top brand associated with dupe at more than 19,000 mentions followed by Dior and then Apple. Lulu Lemon also had a high number of mentions associated with users looking for dupe products. Imitation may be the highest form of flattery, but in this case, it also means potentially losing the sale to someone else. And while no one copycat brand dominated for Chanel Dior or Apple, those top three search for dupes, Sprinkler AI found that 20 of the most common Lulu Lemon dupe requests came from the social community suggesting similar options at Walmart on eight of those 20 products. Amazon for five of those 20 and she in for two. So here's an example of the Lulu Lemon everywhere belt bag and the Walmart dupe that was often mentioned. Now for free people dupes that's owned by Urban Outfitters. Amazon was the answer for 14 of the top 20 products requested. Uh, that was another big dupe request. Here's an example of the ultra many boot dupe that ego makes that came up in the data here several times. Now important to note, 94% of the mentions were not from influencers pushing goods for commission or a fee, but rather consumers, more or less crowd sourcing, a look for less saying does anyone know where I can get this item, a dupe for a lower price. And those were some of the answers that were generated. Back over to you, David. - Court, do we see the companies push back on this at all? IP protection, citing anything like that? - You know, it's so funny and such a good question. I think for many, many years, this has been a question, right? I mean, you may remember there was a very famous lawsuit with Christian Lou Baton and those famous red sold shoes sort of trying to copyright that red mark. And eventually it just doesn't always hold muster in the court. So kind of a tough one. I want to use influencers for good to push your own products, I think, as a different way of going about it. - Courtney, thank you. - Thanks, David. - Thank you for explaining to me what you're talking about there. Courtney Reagan, we've got the S&P off its lows for the session, but still down some 1.3% and that's a bit worse at 1.4%. - From success of new diverse podcast hosts to the ever evolving host listener dynamic, podcasters have created a revolution in storytelling that has forever changed media, obsessed, us too. That's why we at SiriusXM Media are bringing you the trendcast, hosted by me, Sophie Anderson. It's the show that identifies, dissects, and explores opportunities for advertisers around five major trends taking hold of the industry today. Take a deep dive with us and listen wherever you enjoy your podcast.