The fate of the rally 12/20/24
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Carl, thanks so much. Welcome to the Halftime Report. I'm Scott Wapner, front and center this hour. The fate of the rally and what, if anything, really changed this week. We'll debate that with the Investment Committee. Joining me for the hour today, Stephanie Link, Kevin Simpson, Jenny Harrington, Surat Sethi, and our CNBC senior economics reporter, Steve Leisman.

As well. There he is. He's getting all set. It's been a rough week. We know by now those stocks are bouncing. And in large part, they are bouncing because of a conversation that Steve Leisman had with Austin Goolsbee, the Chicago Fed president. And I really want to get to you first, Steve, because it's a market-changing commentary that Goolsbee had today. He said the policy rate is still far from neutral.

implying more cuts. In fact, he said, I think rates still come down a fair bit more. We're still on a path to 2%. Was this cleanup of sorts from Wednesday? I don't think so, Scott. I think that this is what Goolsbee believes and believed and probably wrote down for the...

for the summary of economic projections. I think it's important that it was preceded by New York Fed President John Williams, who's the one regional bank president that has the permanent vote, and he's the vice chair of the committee. So it's important that there's, you've heard, I think, from a lot of the hawks on the committee leading up to the meeting, and there was a lot of hawkish talk in the market. And I think there's two guys here, by the way, Buttress,

by the data that came out earlier that showed a weaker than expected rise in the PCE. And so what I think the market learned today is there's two sides to this trade. I think they thought it was one sided for a very long time and they did get a hawkish pause as expected and they didn't hear the other side of anything.

All right, guys, I'll open it to the table. Steph, it was I mean, it's if nothing else, it just reminds people that the Fed is still cutting. OK, we don't know how many cuts we're really going to get. The economic projections that they put out the other day are I get it. They're a baseline, but they're almost meaningless because we don't really know, nor do they exactly what's going to happen. What really changed this week in your mind, if anything?

Well, I mean, it was really confusing commentary from Powell, for sure. Right. I was expecting the guidance to come down in terms of cuts for next year. But it sounded like maybe two cuts would be the best case scenario. So that's why the market kind of freaked out. And it was inconsistent because they raised the growth rate, but they also raised the inflation rate. So it was a mess. But what we did learn is we learned that they're focused on inflation.

First and foremost, I know they are also watching the labor market, but inflation is really it. And when we got the core PCE numbers this morning at 2.8% year over year, that was a breath of fresh air.

relief, if you will, right? And so also at the same time, we got personal income that was up 5%. We got wages up 5.8%. We got spending up 6%. That is very positive for the consumer overall. So if we do make progress on inflation or it doesn't escalate from here and the consumer hangs in, you're still looking at a very healthy economy of about 3% GDP. Here's my question to you.

Where is my list of Stephanie Link buys today?

I don't see anything on my sheets that say you're buying anything. And you've been super positive on this market. You have taken advantage of opportunities that have knocked on this door. And you are just telling our viewers how positive you are. And I was expecting somebody to come in here today and say, you know what? I bought that because that was down a lot. And I bought that because that was down a lot. But I will tell you that I have 2% cash. So it's like I'm pretty bulled up.

I would have to sell something. I'm not selling something when the market's down 1,000. But I'll tell you, Morgan Stanley was down 4.5%. So the S&P down 3.5% before today. Morgan Stanley was down 4.5%. Truist down 4.5%. D.R. Horton down 6%. And then CrowdStrike Zscaler down 8%. Those are all on my list, but

I don't want to sell something today because everything was down this week. So I've got a laundry list. You know we've been talking about I'm buying some of the laggards too. That's what I'm, no, but that's where I was alluding to. I was expecting laggard buying. Well, I'll tell you, my biggest, the biggest bet that I was looking to buy was Boeing, and actually that stock was up on the week. So no, it didn't come down more than I wanted it to come down to. So I have a

laundry list doesn't mean just because I'm not buying that I'm not bulled up because I just said I have 2% cash. That's pretty bullish. Tony Pasquarello of Goldman, you know, in terms of

You know, did anything really change this week? I mean, in his mind, maybe you had an incremental change, at least in the way we need to think about a so-called Fed put. He says, quote, the expectation of easier money was incremental fuel for equities, particularly in the higher velocity corners of the market. While the put is still alive and well, the Fed variable will now serve as more of a floor to the S&P rather than a catalyst.

for the upside. What do you think about that comment? I think that's exactly right. And so when we've been talking about this and thinking about the rally in Tatters, you know, where it goes, is it in Tatters, is it pulled up? Like, where should you be? I think what Tony's saying, which is how I feel too, is why can't it just sit tight?

Right? Why can't we grow into this multiple? The economy is good. Corporate earnings are good. We expect 15% growth next year. Why can't we just sit here and grow into this? And that's really at the root of it. Now, we know there's going to be massive distortion within that. But I want to answer your other question, too. Like, I was buying yesterday. And when Steve said before there's two sides to this trade, I've been on the wrong side of this trade for the month of December.

It's been an insane month, right? You see things like materials, real estate, energy all down 10 and 12% for the month. You see equal weight S&P down 7%, Russell down 9%. Meanwhile, the S&P itself is only down 2.5%. So there's been a lot of messiness out there, even though at the superficial level, it's kind of flat. S&P down 2.5%. So to me yesterday, I had...

I had huge opportunity. I already had opportunity. And then it became even more compelling yesterday. So I added to names like Columbia Bank shares, Organon, Hercules, Sabra, Dominion, and stuff. This is where the way we manage money is just a little bit different because

of our accounts are separately managed, right, some of them have cash. Some of them only have 2% cash, the ones that have been with us for a long time. Some that are newer still have cash that's been sitting on the sidelines. So it was those accounts where they hadn't been fully invested where I was like, great, let's go. Let's go today and take advantage of this. Surat, how did you see what happened this week? What transpired? Does it change anything about how we should view this market and opportunities that may exist and how

Look, sentiment was really, really positive post-election. It got really seemingly negative after Powell. Now we're having a bit of what feels like a reset because Goolsbee told Steve, wait a minute, we're not right up against neutral as some are trying to make it appear. We're not at the very end of the cutting road as some would like to suggest we are.

Absolutely. And I think the market, we got up so fast, so quickly, and then we kind of had this elevator down really fast. And I think through all this, you know, Jenny made some really good points there. Like, you look at the commodities sector and you look at, like, a Freeport that's down to, you know, 38, 39, or the Schlumberger's at 37. So...

If I have additional cash and accounts and I'm like Jenny with separate accounts, I will be buying more of these as we go into year-end. I'm also doing tax lot selling, so that gets a little confusing where you're doing it. But there are opportunities out there that these things are on sale over 10%, 15% down in a month when the S&P is only down two or three. That's what I was saying. Like, where's my lists? Like, where are you guys coming in? I was expecting...

I mean, there was a dislocation on Wednesday afternoon. I was like, all right, well, by the time we get to Friday, if things look pretty ugly, I'm going to have a lot of names that are going to be thrown out on this desk. And I just felt like it was a little light. I wanted to know why. I'm not forcing you to do anything, but my expectation was that we were going to have some activity. Leesman, you want back in?

I just want to make one point that I wouldn't take everything being said today to the bank. I think I'm going to be back here, I don't know, next week when something goes the other way. Scott, it's worth pointing out.

Powell used the word uncertainty or uncertain 13 times in his press conference compared to five in the prior press conference. Goolsbee was all over the word uncertain. So was Williams. There's a lot not to be known here. Some of it's good. Some of it's bad. There's issues of timing. Yes, the

The data was better today. Yes, Goolsbee and Williams are both talking about additional cuts next year that reoriented the market. But there's a lot coming down the pike that's uncertain. I don't know how Stephanie trades uncertainty, but I just want everybody to be aware that if you look at the sum of economic projections, the level of uncertainty is elevated in each particular category that they forecast. Of course, and we're trying to figure out the shutdown mess policy.

play out and the whole thing. Steve, thanks for being with us and for the interview. Sure, pleasure. It's so important that you brought us to the network today, which really did move the market. That's Steve Leisman. Let's turn it back here. So, Kev, I mean, if anything, the so-called hawkish cut, which is unequivocally what it felt like we got, exposed some parts of the market that were pretty ripe for a pullback and looking frothy anyway. That's what BlackRock's Rick Reeder told me yesterday. I want you to listen.

I think equities can still have a pretty good go. I just think, you know, we got, I mean, the last couple of weeks, it felt a little bubblish in terms of some of these sectors. And I mean, you look at, you know, all of them, including crypto, that it felt a little bit frothy.

Right. He's right. And he felt a little bit frothy in some places. I mean, you know, Bitcoin obviously had had this incredible run post-election. It's off the burner a little bit. MicroStrategy down 13 percent this week. It's still at 463 percent this year, to Rick's point. Robinhood down 5 percent this week. I mean, you have things like MicroStrategy. You have areas that were in the right in the center of the froth conversation.

You said it was ugly. I don't know if it was ugly enough. These are the weeks that really make us humble. We kind of knew exactly what was going to happen. There was going to be a cut, a hawkish pause, the dot plot. But we don't always know or we're not always able to anticipate how the market's going to react to it. And the truth is it's probably good and healthy that we had a little bit of a pullback here before the year end because all of us remember 2008.

It was a great year when it was all said and done, but the first six months of the administration, tons of volatility. We're going to have a president who once again is going to be criticizing individual companies on a daily basis. He looks at the stock market religiously. So this is something for newer investors that might seem unusual.

But this is not something that's terribly bizarre, but it is nine years ago. There's a bunch of people trading currencies, cryptos, option stocks who were probably in elementary school, junior high nine years ago. That's not a dig or criticism. I wasn't reading the Wall Street Journal every day when I was in grade school. But when we saw this news on Wednesday, after just a year of Goldilocks, seemingly Goldilocks data, it was the fly in the ointment and things certainly changed.

You did trim Tesla. Speaking of high flyers and speaking of things that some would probably add to the list of, you know, frothy question mark. And you'd look at some of the crypto names and you'd look at Tesla for no other reason than it was up so tremendously from the election on Tuesday.

not really fundamentals, some fundamentals I think, 'cause you know, we're talking about incentives going away and things that will benefit Tesla in the long run over some of the other EV makers. But why'd you trim this?

Pure risk management. We had a 6% position because this thing lit like a rocket ship since the election, like you said. We sold it Tuesday at the open at $470. That same day, Scott, we wrote a covered call for $440, expiring next Friday. We sold it for $46. And by the afternoon, we were able to buy it back at $20. So we netted a $26 profit.

Essentially, we just rolled down the call. Then we rolled into a 435, also expiring next Friday, brought in $20. So it'd be fun to see when we're sitting here next week if we let that expire, if we bought it back. That's pure risk management and a little bit of luck. Did we wash out, you think, Surat, enough of what was frothy or feeling a little bit too out of control? No, I think at 3% to 4%, really not. I mean, if you're going to get

a real correction like we had in august about 10 percent um so i think come january will be very interesting as the new administration comes in and i think what we got was a little prelude to what could happen especially as our new administration start talking tariffs and general economic data and you know thankfully we did get some positive economic data today but if that number went the other way i think you could see a two three percent down again today so i think at least from speaking for myself

I'm not really stepping in until a couple of these stocks because I think when the market does pull, I'll get a better opportunity. But I think that could be the next four to six weeks. What are we doing about the mega caps since we were talking about Tesla? There's been a lot of defense stuff of them this week. Dan Ives saying you've got to buy the dip. I mean, this is where the game is. Week to date, Apple's still up one and a half percent, but you have had declines that are much less severe now because of the rally that we're undergoing, you know, as we speak.

Yeah, I was hoping that Amazon would be down more than 4% on the week, to be honest with you, because that's the one that I own. That's the one that I want to be adding to. And I've said for a while now that the winners into the end of the year are going to continue to win because PMs are chasing because they're underperforming. And the losers will continue to lose because of what Sirat just said. He's, you know, tax loss harvesting. And so it's always funky the last couple of weeks of the year. So I try not to get too caught up in it. But I have...

a shopping list and we talked about all the names on my list but amazon in particular i thought it would hold up a little bit better than down four percent but it wasn't down enough for me to go and buy and add more almost you know a lot of these names were down four percent yeah until uh austin goolsby decided to change the dynamic today because the nasdaq's now up 350 points i know you're looking at the dow uh but nasdaq's up almost two percent

as a lot of the names that got crushed this week from the largest places in the market have now had a nice rebound. We've been discussing, too, that. I mean, it's a nice number and it's important for the headlines on the newspapers of the Dow. But in the reality of the way the markets are, the Dow doesn't really tell you all that much about what's going on. The S&P does. The Russell, which got absolutely hammered this week, Jenny, excuse me.

But you know what? It certainly does, because that's some of the more rate-sensitive areas of the market, like the Russell got absolutely pounded on Fed Day. I'd argue, actually, that the Dow does tell you a bit more. You know, it's old, it's antiquated. But the conversation Sarat and I were having just before the show started was how

almost like all of our normal clients, anyone who has any asset allocation in their portfolio has a Dow-like return this year. You know, they're up 10%, 12%. And so the Dow, in a weird way... Yeah, that's bad relative to everything else. It's normal, Scott.

Well, maybe it doesn't matter. People don't look at that return and think it's normal. They look at it and say, where's our other 20% for the everything else? Let me tell our viewers, if you're up 10%, 12%, 13% this year, you're normal. And you know what else is up 10%, 12%, 13% today, this year? Like all the Ivy endowments. Like any money that's out there. I know, but it feels like an L. Correct.

And there's a difference between what it feels like and what reality is. But the reality is when people open their statements and they're like, why are we only up 10% this year when the S&P is up 30? Because no one who works with an advisor has a portfolio just in the S&P 500. Because everyone's been trained in this business that you asset allocate to some degree. That you give your client like some value, some international, some growth. That they get some bonds, some cash, right?

Everyone, every normal person has an allocated portfolio. Even people who don't work with advisors by and large and are doing it on their own, they've been taught what's the smart thing to do? You allocate your portfolio. And across the board, if you look at what real returns are out there, they're not the S&P. And I think this is where there's a problem. Because if you're comparing yourself to the S&P and you think like, oh, I'm

I'm a loser to your big L, you're going to start to make really stupid decisions. And your stupid decisions right now are going to say, oh, I missed MicroStrategy. I'm going to sell my whole portfolio and put into that at the top. My only point was if you're looking at the Dow as representative of really everything. It's not representative of everything, but it's a normal.

The Dow was down, what did it have, like 10 straight days that it was down? Right. Well, half of the loss over those 10 days was UnitedHealth. Okay, but you know what? Which points to why it's not the greatest place to look as your overall market health picture. But I'm still saying it's a representative total return number. If you take...

If you take Broadcom, Tesla, Google, like out of the S&P 500, you have a completely different return in the S&P 500. Broadly out there, like we all know this from our portfolios. I understand, but if you take the Chiefs and the Bills out of the NFL, you have a much different playoff picture too. Fine, but you know, sports analogies are lost. I don't know. I haven't been looking at the Dow. They're good. I haven't been measured against the Dow or look at it. We all, as PMs, we all look at it.

I'll look at the S&P 500 as the market. That is what it is. It's a much broader representation. Right, but you know what my point is, Steph. No one's portfolios are the S&P 500. I 100% agree with you, but I will say this, that the S&P 500 is not perfect either because you've got 35% of the weighting is tech and services. So nothing is really perfect, but I think as portfolio managers, if you're kind of a core manager, the S&P 500 is your benchmark. So that's what we pay attention to and that's why it's so important. And historically, that worked, but

this year I don't think it works because it's got 35% in a few small companies that have been extraordinary. We look across the board. But that's been the case, Jenny, for a couple of years. Fair enough. But this year it seems a little bit more extreme. And all I'm saying is like most normal people with any kind of...

with any kind of allocation in their portfolio have a more Dow-like return. 60-40, 70-30, whatever the allocation is, it's about 14%. Some international, some value, and you get this 13%, 14%. I'm not saying look to the Dow. I'm just saying it's not a distorted return when you look outside of just the S&P or the QQQs.

You do have a pretty good battle of companies that want to get into the S&P or be included in the NASDAQ 100. Palantir is going to join Effective Monday as the best performing stock year to date, up better than 300%. Kev's position in that got called away. But Bob Pizzani joins us now because that's what it is, Bob. It's a pretty fierce fight and a whole big hullabaloo to get into these things. That's right.

And there's a lot of lobbying going on to get into these indexes, Scott. So today, as you heard from Scott, the S&P 500 and the Nasdaq will add and delete new members and rebalance the indexes. At the close today, Apollo Global Management and Workday is going to join the S&P 500. Corvo and Amentum will go out of the S&P 500. In the Nasdaq 100, MicroStrategy, Palantir,

Axon Technologies will join the NASDAQ 100. Illumina, Supermicrocomputer and Moderna will come out of the NASDAQ 100. Now years ago, these index reconstitutions had very little impact on trading. It was more intellectual. Not anymore. The explosion of index-based ETFs has changed all that today.

roughly $16 trillion is indexed to the S&P 500, and over $400 billion is indexed to the NASDAQ 100. That is really big money. Now, if you doubt it being included in a large index matter,

Just ask Palantir. Scott mentioned this. On November 14th, the company announced it was transferring its listing from the NYSE to the NASDAQ with the specific goal of being included in the NASDAQ 100 index. They said it. They got their wish. They're going in at the close today. Not everybody got their wish. There were a lot of Bitcoin advocates hoping...

hoping that Coinbase would be added to the S&P 500 instead of Workday or Apollo today. That would help validate crypto as an asset class. Big lobbying, Coinbase has a similar market cap to Workday, but Coinbase did not make the cut.

Today, maybe because it's too volatile. We don't know. MicroStrategy is going into the NASDAQ 100, but given that its biggest asset is Bitcoin, half of the value is Bitcoin, and the CEO, Michael Saylor, has said he wants MicroStrategy to be a Bitcoin bank, there's some question about whether MicroStrategy should be a tech stock

or a financial stock. For the moment, NASDAQ says it is a technology stock. However, Scott, if they reclassify this sometime in the future as a financial, it's not eligible to be in the NASDAQ 100. You see all this lobbying going on and furious moving around. The point is people care now about being in these indexes, and we've seen a lot of lobbying to get into them.

I think we're going to see a lot more in 2020. Yeah, as you said, I mean, the minute the announcement comes out, the stock goes up and to the right. Workday, Surat, you own. Yeah. It's another one that's going to join, as Bob said, effective on Monday. And it's interesting. I mean, I don't know about you guys, but when we put a stock on our prove list and buy it, we don't really see what index it's in.

But then when it does come in or out, it affects the stock. And look, this is positive, but you never know. You own one that gets the other way, too. And, you know, Apollo being more representative, I think these are companies that are more true representative of where business and commerce are going. All right. Up next, Jenny. She alluded to the fact that she's been buying and she has a new name as well to tell you about next. Is the committee along for the ride? We're going to find out the name and we're going to debate it coming up.

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All right, we are back. Been a good year for stocks. Everybody knows that. Not for every stock. Not for everyone. Your stock that you're buying is down 38% year to date. It is 53% off its 52-week high. It trades at only 10 times earnings.

And it is TripAdvisor. Right. Why? So we added this to the discipline growth strategy yesterday. First, I'll give you the numbers and then I'll tell you the story. So like you said, 10 times earnings, 14% free cash flow yield, double digit earnings growth ahead. Here's one of the best parts, $232 million a year of free cash flow generation on a $1.9 billion company. So here's what happened. We started looking at this last November when it was at $28 a share.

There was a Liberty Media overhang, and that really concerned people for a whole pile of reasons like what was going to happen with that controlling stake, what was going to happen with debt, blah, blah, blah. Drives the share price down 50% from then. It was $28. We bought it yesterday at just shy of $14.

Since last November, you've had two things happen. And the big thing was yesterday. Yesterday, TripAdvisor announced that they're buying in Liberty Media's shares, right? So that whole overhang is gone. Separately, over the past year, there is a part of their business called Viator, which is a huge growth business. It's really cool. They've grown really nicely. Oh, geez, I forgot to mention one thing on the fundamentals, too. 33% EBITDA margins. That's huge. Oh, yeah. So, yeah, huge.

So Viator generates-- Oh, that. Right. Viator generates $800 million a year of revenues. They do 55,000 tours from global providers. What's super interesting here is that global tours, only 30%-- or sorry, tours of all sorts, tours and experiences, only 30% are booked online. But meanwhile, airfare and travel

hotels are all booked at like 65% online. So there's an enormous opportunity to expand this Viator business and drive growth further. So that's kind of what you've got going. You've got the overhang of Liberty Media gone. You've got Viator driving growth. You've got 300 million monthly users. Like it's just a great business and it kind of goes to your initial question. Why aren't you buying right now? Well, we are.

All right. There you go. Let's do this. So let's do what I think most investment committees would do. You come within a name. You're like, I want to buy it. Right. And the committee debates it.

What do you think? I think you have to have patience on this one. I understand what the appeal is for everything that you just said. It's very contrarian. It trades at eight times EBITDA. It's down so much. There are only five buys on the street on the stock. There are 14 holds and sells. So it's definitely contrarian. But their core travel business is in bad shape.

and it's in transition and the revenues are going to drag down, in my opinion, the good from Viator or the fork for that matter. So I think if you're comfortable with a year timeframe for them to turn this travel, the core travel business around, I have no problem buying it and owning it. But I think you have to just say it's not going to happen

overnight, I mean down 12% for their core business. And it's the biggest part of their business. And a transition into kind of the planning and guidance that's what they're doing, I just think that's gonna take a bit of time. - I think you're right, and I think on the patient's front, two things there. One, we've literally worked on it for 13 months, so that's like step one of the patients.

to, you know, in our strategies and it drives people bananas, right? That we're so patient. But generally when we buy something, I'm like, look, I want to own this for three years. Right. You buy low and sell high. Totally. And I'm completely comfortable waiting it out. Is there a catalyst in your mind though? I think the catalyst is really the Liberty overhang disappearing because that was huge. Like there was a chance that they were going to get laden with a billion plus of debt and that's just gone. So you saw it pop 8% yesterday on it. Kev?

I mean, occasionally good things happen to cheap stocks. And I tend to think that you've made a good... That's very funny. No, I like it. I think for a speculative trade, now's the time to take a swing at it, especially considering you've lost almost 50% of the value on all the points that Stephanie brought up. And I know you're not a trader. You're looking 12, 18, 24 months out. And I like that. I think that the AI, the personalization, the mobile aspect of it can really be something. But if you're looking for a trade, you know, tread lightly. But for an investment...

I'm in it with Jenny. - What do you think, Surat? Have you owned any of the stocks that are in the surrounding orbit? - We've owned Expedia in the past and TripAdvisor. I think I understand your thesis and where value people to.

I'm digging the other side and I'll go to Delta because I want, if I got a cheap stock, I also want some of the catalyst. And just this week, the CEO talked about Delta's bookings in January are the highest they've ever been. So you got a stock during the eight times earnings that's got forward momentum, cheap stock here too. But I'd like to kind of wait because I've been in these stories before where I'm waiting for two years and the market's up 20% and I'm like, now what am I going to do? So I do want cheap with a little catalyst, but I totally get what you're doing. I'll give you the last word then, Jenny.

$2 billion market cap. I mean, there still is pretty good demand for travel. Consumer confidence is in a pretty good place. I think, like, if you want just one nugget on it, you can land at 14% free cash flow yield. That's incredible. You can do a lot of good things for a business when you're minting cash like that. All right. Good stuff. I appreciate that. Pippa Stevens has the headlines for us today. Hi, Pippa. Hey.

Hey Scott, an Indiana man received today a maximum sentence of 130 years in prison for the so-called Delphi murders. That's the 2017 killings of two teenage girls. Richard Allen was convicted last month of murder for killing best friends Abigail Williams and Liberty German, who vanished during a winter hike outside the town of Delphi.

The Consumer Financial Protection Bureau is suing three major banks, Bank of America, Wells Fargo and JPMorgan Chase, over alleged fraudulent payments on the Zelle payment app. The agency claims customers lost more than $870 million on the app because the banks failed to protect them. Zelle's operators said it will fight the meritless suit.

And Unababy Essentials is recalling more than 600,000 child car seats due to a harness issue. The National Highway Traffic Safety Administration said debris could get stuck in the front harness, which could keep it from properly restraining a child, increasing the risk of possible injury in a crash. The recall affects the Raba models from 2016-2014.

to 2023. Scott, back to you. All right, Pippa, thank you. That's Pippa Stevens. Coming up, we are trading more committee stocks on the move. We have several today. A pharma double-double, a price target hike for one of Stephanie Link's newest buys. Document them all next.

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Let's get some committee stocks on the move today. Uber, favorite idea for 2025 at RBC. They say they're drawn, Surratt.

to controversy with their favorite ideas. Not afraid to go there on this name. What do you think? Look, the stock's down 10% in six months. It's flat year to date. We sold a bunch of it in the 70s, but I'm not selling it here. I think the opportunity the next year is really good for Uber, especially as travel and people are moving and the economy is doing well. It's just been one of those that people have used for source of funds. And I think the overhang of EVs and who's going to be in their space too short term is going to take a long time for them to have any competition.

CarMax price target goes to 88 from 72 at Truist. They do reiterate their hold, right? They don't love it here, but they try and get closer to where the stock is currently trading. Right. So this isn't that interesting, but it's still really compelling. They just announced earnings. They were really good. Unit sales were up 5.5%. And here's the cool thing. Earning

actually beat consensus by 31%. People really weren't looking at this fairly and had become overly negative on it. So when we're talking about valuations and growth rates and what's fair to pay right now, you've got a stock trading at 23 times and the earnings growth expectations, and these are for the consensus estimates that, by the way, were just beat wildly, are 22% next year and 31% the year after that. That's a combination that I want to own. The other nice thing about CarMax is

They basically sell cars in the three to five year old vintage. And that works really well in the kind of economy that we're in. And also coming out of the huge distortions on auto sales from the pandemic, we're past that. So they're in a nice spot to grow, achieve some really nice high margins. Watching Novo today, you guys have probably heard me take a look at the stock on an intraday. It's a brutal day.

for Novo down more than 16%. It's even come off the worst levels of the day on their weight loss drug, missing a target. But the flip side of that, of course, is Lilly, which is getting, at least it was popping, in part on that development. We can take a look at Lilly going the opposite direction today, up 4%. Kev, you have that in the QDevo.

Yeah, we missed that in our dividend strategy, but we own it in the growth strategy. Real nice pop upwards. Novo Nordisk's problems are Lilly's gains. This is something that, again, will play out over time for these weight loss drugs. But it's not their only product. So I think there's a lot of things that can help elevate Lilly beyond just a headline. Sir, what about Merck? They got downgraded today.

And it's, was it outperform? Now it's at perform. The target goes to 105 from 136. So again, closer to where the stock is right now. What do we think? I mean, it's got all my farmer stocks, whether it's Bristol, Merck, J&J. They're all in the dumps. It's been one of the worst performing sectors of the year. Well, especially since we got the new administration coming.

The overhang there is huge. I think this is the stock I think somebody mentioned. These are the earnings have to grow into these. The valuations are so cheap for these guys. Good dividends. You're going to hold it? Are you making the case for a Surratt holding? It's a Surratt hold. Okay. For Bristol and J&J and Merck. Okay. Crown Castle. TPG said it'd be an advanced talk to buy the company's fiber unit, $8 billion. We do have a 52-week low.

52-week low today. Is that right? 52-week low? That's right. It's right. Okay, go ahead. Of course. It's a dividend stock. They're all terrible right now. Anyway, on a serious note, they're not all terrible today. But Crown Castle is interesting. This rumor of these fiber assets being for sale started a few months ago, and the valuation on them, which right now is $8 billion, came in lower than people anticipated maybe six months ago. So the share price came in. What happens when they sell these fiber assets?

are two things that are interesting. On the one hand, FFL, funds from operations, will be reduced. On the other hand, once this kind of like low, no, kind of capex-sucking business is gone, they might be able to get an expanded valuation. So right now, Crown Castle trades at 13 times.

And that's weighed down by their fiber assets. Their peers, AMT and SBAC, trade at 17 and 15 times. So they could get some multiple expansion. So you have like an on the one hand, on the other hand right here. It's not super clear, but you're getting a 7% dividend. All right, Accenture target to 430 from 420. So it's a modest bump.

We take a look at that stock a little upside from here by Goldman Sachs. They said they see significant secular tailwinds. Yeah, I mean, it was up 6% yesterday on a good quarter. They beat earnings. They beat revenues. Operating margins grew 90 basis points year over year. Free cash flow grew 102%.

year over year. Their Gen AI bookings grew 166% year over year. AI and cyber both grew double digits as well. And that's what they're talking about. AI and cyber is a play with Accenture and the stock has lagged materially year to date. So I think it's a catch up trade for 2025. Okay, we'll take a quick break. We'll come back.

Santoli is on the other side with his midday word, which is probably a little bit different. Well, not probably, perhaps a little bit different now than it would have been some 40 minutes ago because the Dow right now is up 827 and the Nasdaq's up nearly 370. That's almost 2% with the S&P good for about 108. Knocking on the door, at least try and get back to 6K. We are back in two.

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Okay, we're back. Senior markets commentator Mike Santoli joins us now with his midday word. I'll just leave it to you to make sense of what we came into today thinking and then what Goolsbee may have us now adjusting to. Sure. I mean, look, coming into the day, I think when you talk about just what the conditions were, and we've talked about it for a couple of days, things were getting a little bit washed out. You saw all the extreme oversold readings. The question was whether the market could make any use of that.

if the PCE numbers were pretty much benign, and they were. And I think it allowed the market to exhale. You had yields coming off the highs. Absolutely. I think, look, Goolsbee kind of refocused people on the idea that maybe we're still on the trend back to 2% inflation without having to really radically change the rate path. But I think the more...

actual encouraging thing to me is that the market just seized on that. Let's be honest. That's something you probably would have expected Austin to say a couple of days ago. He said it. The market was in a spot where it was ready to make a run for it because it had been cleaned out a little bit coming into this. We have a 90% upside volume down the New York Stock Exchange right now, plus 90% actually.

That's generally a positive thing, too. Keep in mind where we came from, though. The S&P right before the Fed decision a couple of days ago was at 60-60. All right. So we're 59-70 right now. So at this point, we're still relieving the oversold. We're trying to say, OK, maybe things didn't change radically a couple of days ago. We got through a lot of the political noise. So we'll see where that leaves us. Maybe we can make use of the

the positive seasonals into next week. Does it feel like, though, maybe, I mean, I don't know, you look at today, which suggested the market overdid it a little bit post-foul, post-Powell. I mean, yeah, look, the market always is going to overshoot it in the short term. I don't think you necessarily had the...

the basis for a 28 VIX when you're a couple percent off the highs. It showed you really how weak things were below the surface. And now you have a really nice spike peak on that VIX chart. That's usually one of those things that says market clenched up too much. Now we're releasing the tension. I guess the question is how far it carries us, because we do now have a sense out there that whenever we thought

the preferred policy priorities and efficacy was going to be next year. Maybe we have to rethink that. If that was a core of your bull case for 2025, maybe you have to adjust. If it's just about, hey, the trend is friendly, then stick with it. Not much has changed. I'll see you in a couple hours, Mike. Thank you. That's Mike Santoli. Coming up next, our year-end report card reveals continue. We will look at the best stocks and some of the worst as well from the committee next.

Report card time. Surat, please come to the front of the class. It's your time. All right. NVIDIA up a lot. We know. United Airlines up 134 percent. That's been a huge winner. GoDaddy. Yeah. Almost a double up 92 percent. You've owned it all year. What's with this stock? Why does it work so well?

So GoDaddy is in a perfect space. Basically, when you go online, you get a domain name. They're selling you additional services like security, things like that, cash payments.

Great growth, recurring revenue. It was out of favor for a while. And then you can just look at the chart picked up in the last year, year and a half. You like United along with Delta? I like Delta a lot better than United. United is on my trim. If not, I'll probably be out pretty soon. But I think Delta is the key stock in the airline business. We were trying to find you the other day. You were hiding from us. I always hide. Lamb Weston.

Debacle, disaster. We're like, "Sarat, pick up the phone." Sarat's like, "I'm not answering that." Huge debacle. Executive producer calling, boom. Huge debacle. What do you do now? They fire the CEO.

Janna's in there, Activist are in there. They messed up the ERP a couple of quarters. Europe was much worse, a lot more supply than they have for demand. You're selling it? No. Let's cut to the chase. No, actually, it was a tax law double up for me, so I'm in even more pain. But at $60, I'm not selling it. OK. Because I think in two years, it gets about $5. You get a 15 multiple, it's going to go back to $75, $80. It's too cheap to sell at this point, unless I'm doing the tax law and selling, which I've already doubled.

Don't ghost us next time, all right? It never goes to you, Scott. Kinetic. Jenny, KNTK is the ticker symbol for wherever you are playing. Up 68%. You bought it in August, didn't own it all year, but nonetheless, it's a big winner. What now?

So on Kinetic, I think there's still more earnings growth ahead and more upside there. I think if, can we go to my bigger list? Because I want to talk about it comprehensively. You can do whatever you'd like. Thank you. Jenny. So, so. You call the shots. This is all a facade over here. You're

You're such a mensch. You're such a mensch. Okay, so my three winners that you had for me are Meta, XPO, and Kinetic. What's interesting is the losers are Aptiv, Devin, and StarBulk. And I think it's really interesting in this because if you say what went right and what went wrong, when I sat here last year, they looked similar, right? They looked like compelling valuations, decent earnings growth. And for each one, there's an opposite. So you've got in the tech space, Meta and Aptiv. In the energy space, you've got Kinetic and Devin. And then in industrials, you've got XPO and StarBulk.

And they're wildly divergent returns. But what really separated it was the earnings growth that either came through or didn't. But like I started last year with Aptiv, for example, saying this thing's trading at 13 times earnings and has 21% earnings growth. By the way, Meta didn't look that different. It was 21 times earnings and had 20 plus percent earnings growth. One of them executed on earnings, the other didn't. If you ask me what I want to buy and sell right now, we want to trim XPO, we want to trim Meta, totally comfortable holding Kinetic,

all three of the losers totally comfortable buying or adding to. Devin, I might wait until after the first of the year because I'm probably going to use it as a tax law service. One other thing. Sorry. Okay, hurry up. Let's go. You know how they say a parent's only as happy as their most unhappy kid? I really appreciate the report card because a PM is only as happy as their worst position. So thank you for reminding me that I actually have some winners. Okay. It's my pleasure. Thank you.

Kevin, Meta's up a lot. We got it. Amex, one of the better performers this year. Goldman's had a great year, we know about. Marathon Petroleum down 11%. We talked about Merck Pharma, but what about Marathon Petroleum down 11%? Yeah, I mean, we would still add to it here, Scott. It's an energy play. Energy, we've been underweight most of the year. We had higher expectations for them.

It's a strong dividend. They increased the dividend by 10% already this month. They reduced the float by 15% just this year. So we know what's happening with energy. It's return of cash to shareholders, dividends, dividend growth, share buybacks. We think it's still a good story for 2025. Freeport's down 8%. There was a note today that says materials, I think it was from Krinsky at BTIG, suggesting materials are way, way oversold.

100%. But it seems like every time we say that, they go down further. But this is a copper play long term, not a China play. Good dividend. You can write calls against it. We will add to the position here. We're not sellers. All right. Good stuff. We'll take another break, and we will come back, and we will do final trades. 3 o'clock Eastern, the final closing bell of this week. We'll take you through the final stretch, see what we're going to do. 800 points right now on the Dow. So we have a reversal on our hands. Pretty powerful one, too. Chris Toomey and Matt Boss will be with me. Let's do final trades.

Surratt, I gave you the business earlier. I'm going to let you go first. All right. Thank you. Freeport. I'm not ghosting you, Surratt. I know you're not ghosting me. I'm going with Freeport. One of Kevin's plays. I like it. It's so cheap at 38. All right. Jenny. Columbia Bank shares, 5.3% dividend yield. Thank you. Kevin Simpson. Procter & Gamble just pulled back from 182.5% dividend, of which they've raised it 66 years. Stephanie Link. Target, 20 of 25 turnaround story. All right. Great weekend, everybody. Good holidays if we don't see you. The Exchange is next.

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