2025 Bank M&A Outlook, Earnings Leaders: Tech & Health 12/27/24

Summary

Squawk on the Street – Episode Summary

Episode Title: 2025 Bank M&A Outlook, Earnings Leaders: Tech & Health
Date: December 27, 2024
Hosts: Sarah Eisen, Brian Sullivan (Carl Quintanilla, Jim Cramer, and David Faber off)
Special Guest: Ed Yardeni (President of Yardeni Research)
Notable Contributor: Leslie Picker, Kate Rooney, Bob Pisani

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Episode Overview

On this bustling pre-New Year episode, the Squawk on the Street team dives deep into the end-of-year market dynamics, highlighting major themes such as global political risk, the dominance of US markets—especially large-cap tech—the shifting landscape of bank M&A, and the prospects for earnings growth into 2025. Interwoven through the hour are data-rich perspectives on Europe vs. US markets, the nuances of bank consolidation, and a candid account of OpenAI’s transition to a public benefit company, set against the backdrop of ongoing AI rivalry.

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Key Discussion Points & Insights

1. Market Snapshot and Geopolitical Risk

(00:53–07:46)

• Weak European and Asian Markets Fueling US Outperformance:
  • The episode opens with Sarah observing a softer market open, but week-over-week US indices remain robust.
  • Focus on South Korean and German political turmoil: South Korea deals with another leadership shakeup while Germany faces a snap election after Olaf Scholz loses a confidence vote.
• Sullivan’s Take:
  • “I think it’s good for the United States… all this turmoil… sends money here 100% and benefits the United States.” (03:00 – Brian Sullivan)
• The Magnificent Seven vs. Europe:
  • US tech giants (the “Magnificent 7”) now have a combined market cap exceeding that of the entire European stock market.
  • Sarah: “$16.4 trillion… the euro Stoxx 600, the entire European stock market, $13.7 trillion.” (05:36)

Memorable Exchange:

• Brian: “If you don’t get your energy costs down… how can you compete? Why would BMW…ever start or open up a factory again [in Germany]?” (06:08)
• Sarah: “The US has outperformed Europe this year by the most ever in dollar terms.” (05:00)

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2. Diverging Monetary Policy & Currencies

(07:00–10:15)

• US vs. Europe Interest Rates: The Fed remains cautious on cuts; Europe’s rates are already low, yet capital continues to flow into the US due to growth differentials.
• Currency Discussion:
  • Weaker euro vs. dollar may eventually support European exports.
• Investing in Europe: While some suggest European stocks provide relative value, migration of money to the US persists due to stronger fundamentals.

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3. Expert Interview: Ed Yardeni – US Markets and Global Contrasts

(10:15–16:43)

• Yardeni’s Bullish Case for the US:
  • “I’m probably going to overstay my welcome in the United States… The US has a lot going for it. Earnings are probably going to be up quite dramatically this coming year. We’re looking for $285 a share for the S&P 500…an 18% increase.” (10:25 – Ed Yardeni)
  • Bullish on US because of resilient consumer spending, boomers spending nest eggs, and robust, tech-driven capital spending: “50% of nominal capital spending in the US is technology.” (13:15)
• Why US Outperformance Keeps Going:
  • The widely anticipated recession never materialized; ongoing productivity and “roaring 2020s.”
• Interest Rates & “Bond Vigilantes”:
  • The term “bond vigilantes” is back as Treasury yields rise despite Fed cuts, reflecting concerns over loose fiscal policy.
  • “I think the bond vigilantes have pushed bond yields up 100 basis points since the Fed lowered rates…” (14:10)
• Risks Ahead: Outlines tariffs as a concern, but not enough to derail overall economic momentum.

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4. Bank M&A Outlook – Consolidation and Regulation

(19:51–21:42, led by Leslie Picker)

• Bank M&A Rebounds: $14 billion in US bank mergers this year—bank sector up >30% since January.
• Key Drivers for 2025:
  • Deregulation on the horizon with a possible Trump administration and support from legislators like French Hill.
  • Banks with large retail deposit bases in attractive markets seen as acquirers (PNC, Cadence, Citizens First, Prosperity, Tompkins).
• Risks:
  • The NY Community Bank cautionary tale—rapid expansion led to stricter capital rules and poor loan performance.
• Impact of Deregulation:
  • “It may actually bring down the cost of compliance, which could make scale less of a necessity” (20:53 – Leslie Picker)
• Notable Quote:
  • “The flip side to deregulation is…they may opt to use that capital for digitizing operations, expanding capabilities…” (21:08 – Leslie Picker)

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5. Rotation in Leadership: Tech, Small Caps, Earnings Growth

(23:13–40:20, including Bob Pisani segment)

• Concentration in Mega-Cap Tech:
  • S&P 500 “diversification” challenged by dominance of a handful of stocks; 37% of index in a few names (Nvidia, Apple, Microsoft, etc.).
  • “Guess what folks, you’re not that diversified… 37% of the S&P 500 is a couple of stocks.” (27:57 – Brian Sullivan)
• Earnings Acceleration and Rotation Potential:
  • Bob Pisani breaks down how “Magnificent Seven” growth will decelerate in 2025, while broader S&P 493 sees accelerating earnings.
  • “Fourth quarter overall… [Magnificent Seven] expected to be up 24%. But next fourth quarter, up 18%. Still really great numbers but decelerating growth.” (35:30 – Bob Pisani)
  • Health care, industrials, and materials poised for stronger earnings, but tech valuations remain sky-high, limiting rotation so far.
• Efficiencies & Productivity:
  • Companies delivering record net profit margins (12%)—a key factor in stock market highs.
  • “They’re getting more efficient. They’re using AI, they’re just doing more with less.” (39:38 – Sarah Eisen)

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6. OpenAI’s Profit Pivot and Ongoing AI Competition

(41:17–44:15, Kate Rooney report)

• OpenAI to Become Public Benefit Corporation:
  • Transition from nonprofit roots; necessity to raise “more capital than we’d imagined.”
  • “Investors want to back us but at the scale of capital need conventional equity and less what they call ‘structural bespokeness.’” (Kate Rooney, 41:17)
• Elon Musk Dispute:
  • Musk sues to block the move, calling it a “total scam.” OpenAI reveals Musk earlier lobbied for the change.
  • “This is turning into a war of words.” (43:14 – Brian Sullivan)
  • Meta (Mark Zuckerberg) also voices concerns about OpenAI’s new structure.
• Industry Context:
  • Competition across big tech (Microsoft, Meta, X.ai, Anthropic).

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7. Streaming Records: Netflix and the NFL, Big Tech in Focus

(29:52–33:08)

• Netflix’s NFL Christmas Broadcast:
  • “65 million combined viewers watched… Most streamed NFL games.” (29:52 – Sarah Eisen)
  • Netflix’s massive reach distinguishes it from other platforms.
• Big Tech’s Outsized Role:
  • SAP is Europe’s largest software company (~$300 billion market cap) dwarfed by US counterparts like Apple.
  • “The biggest software company in Europe has a market cap of 300 billion, which is…tiny.” (29:40 – Brian Sullivan)

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Notable Quotes & Timestamps

• Brian Sullivan (on global capital flows):
  “I wonder if all this turmoil…sends money here 100% and benefits the United States.” (03:08)
• Sarah Eisen (on market cap):
  “Magnificent 7…$16.4 trillion…the entire European stock market, $13.7 trillion.” (05:36)
• Ed Yardeni (on US earnings):
  “Earnings are probably going to be up quite dramatically this coming year…an 18% increase.” (10:25)
• Ed Yardeni (on global outlook):
  “I just can’t…get there [bullish on foreign markets] based on what I see in terms of the economic and political fundamentals.” (10:24)
• Leslie Picker (on M&A):
  "Deregulation may make scale less of a necessity...they may opt to use that capital for digitizing operations." (21:08)
• Bob Pisani (on earnings and rotation):
  “Earnings acceleration for next year…for the other 493 [S&P stocks], next fourth quarter, one year from now, up 14%. Okay, that’s accelerating earnings growth.” (35:30)
• Sarah Eisen (on AI-driven productivity):
  “They’re getting more efficient. They’re using AI, they’re just doing more with less…” (39:38)
• Kate Rooney (on OpenAI):
  “We once again need to raise more capital than we'd imagine…Investors want to back us but at the scale of capital need conventional equity.” (41:17)

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Timestamps for Important Segments

• Global Political Risk & US Market Impact: 00:53 – 07:46
• Monetary Policy Divergence/European Investment Case: 07:46 – 10:15
• Ed Yardeni Interview: 10:15 – 16:43
• Bank M&A Outlook (Leslie Picker): 19:51 – 21:42
• Concentration, Rotation, Earnings Growth (Pisani): 23:13 – 40:20
• OpenAI’s Structure Shift & AI Rivalry (Kate Rooney): 41:17 – 44:15
• Netflix Streaming, Big Tech Cap Tables: 29:52 – 33:08

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Tone & Flow

Throughout, the tone is lively, slightly irreverent, and filled with quick-witted banter (especially from Brian Sullivan), as well as deep-dive analysis from Sarah Eisen and guest experts. The conversation organically weaves between macroeconomic insights, market trivia, big-picture themes, and stock-centric specifics, anchored in facts, charts, and real-time market observations.

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Conclusion

This episode spotlights the overwhelming dominance of the US equity market, especially among mega-cap tech stocks, and considers whether earnings optimism and global economic uncertainty will maintain that lead into 2025. The resurgence of bank M&A and fresh regulatory winds are also dissected. Meanwhile, the AI sector continues to disrupt financial and corporate landscapes, with OpenAI’s for-profit pivot and high-profile tech rivalries setting the stage for the new year.

Listeners are left with a sense that, for now, the US remains the preeminent place for capital and innovation—but that momentum, rotation, and global rebalancing are stories to watch closely in 2025.

Transcript

[Sarah Eisen]

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[Brian Sullivan]

It's Jim Cramer here. You're listening to the opening bell of cnbc, Squawk on the Street. Don't miss a minute of the action.

[Sarah Eisen]

Good Friday morning. Welcome to Squawk on the Street. I am Sarah Eisen with Brian Sullivan here at post 9 of the New York Stock Exchange. Carl, Jim and David all have the morning off. Take a look at futures this morning. As Andrew just noted, headed for a lower start on this final trading day of the week. Dow futures down almost 200, Nasdaq futures down 110. But we're still looking at really nice gains for the week. Talking about more than 1% gains, actually 1.8 for the S&P 500 going into today. Nasdaq up more than 2% for the week. Treasuries kind of mixed we saw buying earlier. It looks like that's reversing. Our roadmap begins with renewed geopolitical risks for stocks, South Korea and German political turmoil, plus rising tariff and trade concerns. We're going to break down what investors need to know ahead of these final trading days of 2024.

[Brian Sullivan]

All that ahead. Plus Netflix setting some new streaming records for its NFL Christmas double header. Beyonce, to your point, Sarah? Yes, I think driving a lot of the viewership. We're going to give you those numbers ahead. Shares of Netflix down a little bit ahead of the open open AI laying out profit plan, saying it, quote, needs more capital than imagined, which is interesting because I can imagine a lot of capital.

[Sarah Eisen]

Turns out it's expensive to make. AI Turning to the markets though, the 10 year yield holding just above 4.6% this morning with the S and P and the Nasdaq on pace for another week in the green. As mentioned, we are barely positive for the month of December at least if you look at the S and P. But for the Nasdaq we're up more than 4%, which speaks to the divergence and the continued leadership by megacap tech. Brian, what I think is interesting this morning Is the turmoil overseas. I mean there's, there's news there on the political side.

[Brian Sullivan]

No, I know, but. And it says anchors chat, so let's chat. I think it's good for America.

[Sarah Eisen]

That's what you do.

[Brian Sullivan]

I think. No, I think it's good for the United States. And something we've talked about before, listen. Germany was the fourth biggest economy in the world. It was, it was the heart and soul of the industrial European. It's had its struggles. I've talked about that for three plus years. South Korea, okay, A lot of semiconductors, a lot of big ships, LNG ships. But I wonder if all this turmoil in the sophisticated capital markets of the world sends money here 100% and benefits the United States.

[Sarah Eisen]

That's been one of the stories of the year, in fact. So here's some of the headlines just to run you through what's happening. South Korean lawmakers impeach the acting president.

[Brian Sullivan]

Why would anybody want to be president of South Korea, by the way? They all end up in jail, missing or worse.

[Sarah Eisen]

I'm not sure about that.

[Brian Sullivan]

Well, what happened last seven or eight?

[Sarah Eisen]

The last president, remember, had that short lived martial law order plunged the country into political turmoil. There was an acting president here, not able to fulfill parliament. And so now he's out. And now the deputy prime minister and finance minister is going to be acting. It's a, it's a mess. You can see it in the South Korean stock market. You can see it in the South Korean yuan, the currency. And then in Germany too, some similar sort of unfamiliar chaos when, when it comes to Germany on the political front. So the president has dissolved parliament there called for a snap election on February 23rd after Olaf Scholz, the prime minister, lost a confidence vote because he destroyed.

[Brian Sullivan]

Not he. Okay, you want to go all the way back? Let's go to Gerhard Schroeder. You remember that name? Gerhard Schroeder. Were to walk down the street in Munich, I can tell you this much, he would get yelled at because he sold their industrial soul to Russia. Cheap natural gas and imported labor from Eastern Europe. That was the German economic model. Both those things are over. The Nord Stream pipeline. Maybe Sarah knows somebody blew it up. We'll probably never know. The point is us. By the way, LNG on its way. The first shipment from Venture Global on its way to Germany right now. Olaf Scholes miscalculated. They're shutting down the three last nuclear reactors. They probably don't have the people to turn them back on. Their electricity costs just hit a record high Last week, last week hit a record high. And they're going to have to choose between industrialization and lower energy prices. That's my rant for the day. It's 904. Go home now.

[Sarah Eisen]

Look, I mean they also have very little economic growth, if any. Why would you got some deficit problems as well. But to your point, Brian, all of this continues to draw capital into the United States. The U.S. has outperformed Europe this year by the most ever in dollar terms. Mark Newton, who's the technical strategist for Tom Lee at Fundstrat, has a great chart. It's a pie chart and it shows how big the Magnificent Seven are the big tech stocks here in the US Relative to the entire stock market of Europe. I think we have that chart. Take a look.

[Brian Sullivan]

Mark is a hokey, by the way, Virginia Tech.

[Sarah Eisen]

So that's obviously magnificent 7. $16.4 trillion, right? The euro, Stoxx 600, the entire European stock market, 13.7 trillion. So it so is bigger than that. There's the s and P500, which is $51.6 trillion. And then the granola is. Which are some of the growth names like a Novo Nordisk, for instance, a Louis Vuitton. And you're up at that.

[Kate Rooney]

They.

[Sarah Eisen]

That funds track has liked before don't even come close to the big growth stocks here in the US at 16.4 trillion. That's the story.

[Brian Sullivan]

Well, Novo Nordisk is Danish. So they're about, they're. What are they? About a fourth of the Denmark economy. You've got basically Lego Novo Nordisk, right. And what's the beard? Carlsberg beer, pretty much. That's it. That's for the economy. Germany is in big trouble. I've got a lot of German friends. I love the nation. I'm going to say this right now, looking at the camera. If you don't get your energy costs down, and it's probably too late, if you don't get your energy costs down, how can you compete? Why would BMW, vw, Bosch, any of the chemical or carmaking companies, why would they ever start or open up a factory again? You've got Shell, which opened up a 4. I know they're not German. $4 billion chemical factory outside of Pittsburgh, Pennsylvania. You do wonder what the industrial future of Germany looks like given their political upheaval and energy.

[Sarah Eisen]

Well, that's what. That's one issue. The other thing that's interesting to note is divergent monetary policy paths. Perhaps because everyone, you know, the Fed is pausing now, right. They've said that they're going to be much more cautious on the rate cut story. Europe not so much. They don't have the growth that we have. Europe's interest rates are already down to 3%. Where are ours? Four and a quarter to four and a half.

[Brian Sullivan]

Going up. Yeah. Four, six on the 10 year.

[Sarah Eisen]

No, no, no. I'm saying just fed the fed funds, you know so the interest rate. And so we're already a. And yet the money has gone into the US Instead of Europe even though Europe has lower rates and are expected to lower rates much further next year as they find their neutral which is their rate where they don't think, you know, shrinks the economy or expands the economy too much. It's a lot lower than where it is.

[Brian Sullivan]

You're the energy Fed. I think you're the Fed expert. You're the. Is that fair to say the, the currency.

[Sarah Eisen]

I like, I like to pay attention to the macro paid.

[Brian Sullivan]

I don't. The macro for me is just sort of a jumbled mess. So let me ask you this. Is there an investing and we can ask Ed Yard any of this in a few minutes. Is there an investing point of view in. In Germany because you could be negative on the German economy but positive on the stock market, which sounds weird but hear me out. If interest rates in Germany continue to go down and diverge from here we go to 5% of the 10 year. There are 2 and a half percent. Do you make the case that on a relative an absolute basis Europe is a better bargain than the United.

[Sarah Eisen]

Definitely make that case. And here's one additional plus in that side of the story which is because of the divergence in monetary policy that they're lowering interest rates, they have lower growth. The euro's gotten very cheap. It's weakened a lot. We're almost near parity against the US Dollar one to one as the euros weaken. That makes their exports more competitive. So that should help them ultimately when it comes to reviving.

[Brian Sullivan]

Assuming they're exporting anything that and your.

[Sarah Eisen]

And European easier Monet monetary policy. It's why the euro stocks have actually done pretty well this year. They haven't performed as Germany's 20.

[Brian Sullivan]

I think 20 on a dollar basis. US dollar basis. The German market is up. Don't quote me. I'm not looking about 20. You're going to.

[Sarah Eisen]

You're going to.

[Brian Sullivan]

I'm going to look at a look.

[Sarah Eisen]

Yeah.

[Brian Sullivan]

You know that's what we put me on the spot.

[Sarah Eisen]

What do you think?

[Brian Sullivan]

Let's say if you're right, 92. I would say 20.4%.

[Sarah Eisen]

Not bad. 19.

[Brian Sullivan]

I was going to say 19.

[Sarah Eisen]

19%. Dax here to date, I was going to say 19. They have had easy policy.

[Brian Sullivan]

Okay. That's why now does that include dividends? I don't see I'm right with dividends either way. Point is the German economy has stunk up the joint but the investment perspective has been okay, I think because of low rates.

[Sarah Eisen]

The other really strong case for Europe right now is that everyone hates it. Everyone. The action is in the U.S. right? Everyone. That's one of the most popular trades out of international markets into the U.S. that's why the outperformance of the U.S. economy, of the U.S. stock market, of the U.S. dollar, it's all come in. It's all coming in.

[Brian Sullivan]

So have we topped out then in favor of some of. At what point is there. And again, great question for Ed. Ed, if you're listening, get ready. Is there a case where you say we've just made all the money we can make here and our money is better served over there and by their.

[Sarah Eisen]

Ed Yardeni Yardeni research president has liked the US market has been right with his optimistic call. Is it time to turn the tables and go abroad Ed, now?

[Fidelity Announcer]

Not really.

[Ed Yardeni]

I'm probably going to overstay my welcome in the United States. I've been recommending staying home rather than going global since 2010. And it's worth I'm shocked at how well it's worked. At some point I guess it's going to stop working. But the US has a lot going for it. For example, earnings are probably going to be up quite dramatically this coming year. We're looking for $285 a share for the S&P 500. I think we're above all the strategists on the street and that's an 18% increase. And I see the market going up on earnings, not on valuation, just on earnings alone. I think there's a lot of upside in the US Market. Foreign markets, not so much. As you said, it's kind of a messed up world. I'd love to be a contrarian and I agree with your thinking along contrarian lines, but I just can't, can't get there. Based on what I see in terms of the economic and political fundamentals, what.

[Sarah Eisen]

Is what is causing earnings expectations in the US in your mind to go up?

[Ed Yardeni]

Well, my expectations have gone up for sure. And I think it's that after three years of the most widely anticipated recession of all times, it never happened. You Know, for three years there have been fears of a recession. If monetary policy tightening couldn't cause a recession, if geopolitical crises couldn't cause the price of oil to spike up and cause a recession, what's really left? Well, you know, I think you can come back and I would come back with I am concerned about tariffs, but I don't think that's going to lead to a recession. I think it's going to lead to some serious negotiations about freer trade. But at the end of the day, the outlook for earnings is totally dependent on the outlook for the economy, which looks great to me. And we've been talking about the roaring 2020 since 2019 and it's been roaring Stock market record high earnings have actually done very well up to now. And we think they're going to be driven by productivity.

[Brian Sullivan]

So I just posted to my, my Twitter or X as they call it. What's your best investment? Not you, but what do the viewers think is the better investment bet for next year? Us, Germany, China or somewhere else. So I'd like you to answer that question. But I think you've got Sarah and I's macro point. We're just observers up here. You're the expert. But our macro point was that with with Germany so weak and Brazil's a disaster and China stimulating, but that's probably not going to work. Is this meaning the US And I'm going to put an eagle on my shoulder and eat apple pie and a hot dog. Is this the most investable market in the world because the rest of the world is still so screwed up?

[Ed Yardeni]

Yeah, I think that's really the bottom line and it's, it summarizes exactly what's going on overseas. Things are a mess. And the outlook for the US Remains strong. The dollar has been strong and of course we've got a tremendous amount of consumer spending. A lot of baby boomers are retiring and spending their, their nest eggs. So consumers have been remarkably resilient. They actually like high interest rates. And then capital spending is also hasn't been interest rate sensitive. Quite, quite the contrary. It's remained very strong because a lot of it's technology. 50% of nominal capital spending in the United States is technology. And technology is something that companies really have no choice but to spend on. If you either make technology or you use technology. If you don't use technology, I think you'll be at a tremendous competitive disadvantage.

[Sarah Eisen]

You know, Ed, you're the guy who coined the term bond vigilantes and people are using that term again. When they're looking at these higher treasury yields, I don't buy that it's like deficit and debt related. I feel like it's changing outlook for inflation and growth. What do you think?

[Ed Yardeni]

I think it's some combination of all those things. Look, I think, you know, I'm thinking of writing a piece for next week with a headline. The Doge Boys versus the Bond vigilantes or the bond Vigilantes versus the Doge Boys. You might recall that back in the early days of Clinton, he was warned by Robert Rubin and James Carville that he, he had to placate the bond vigilantes. He couldn't annoy them. He had to have fiscal discipline. And I think the bond vigilantes have pushed bond yields up 100 basis points since the Fed lowered interest rates by 100 basis points on September 18th. So the Fed funds rates down 100 basis points in the 10 years, up 100 basis points. I think that's a pretty strong message from the bond vigilantes.

[Sarah Eisen]

But when you say bond vigilantes, aren't you referring to the investors that are pushing fiscal discipline?

[Ed Yardeni]

Yes.

[Sarah Eisen]

That's what you think is happening here?

[Ed Yardeni]

I think a lot of it since.

[Sarah Eisen]

The Fed raised, since the Fed cut rates, hasn't it been just that, that the economy has done really well, better than expected, that inflation outlook has, has gone up in light of the election and in light of the easy monetary policy.

[Ed Yardeni]

But it's all related. I mean inflation and fiscal policy and monetary policy are all clearly related. And as I think what the bond vigilantes are saying, look, we just went through a couple of years here where monetary policy was, was tight and yet fiscal policy was so loose that it does, it triggered inflation and it took a couple of years of tight monetary policy to bring inflation down. And now that inflation is down, does it really make sense to have easy monetary policy and easy fiscal policy? Clearly the Trump administration is going to push for a continuation of tax cuts. And you know how the Doji boys are going to come up with $2 trillion in spending cuts. And by the way, they haven't made it clear. Are they talking about a one year cut or are they talking about over the next 10 years? Usually the CBO, the Congressional Budget Office, when they look at things, they look over a 10 year period, I could see them doing it over, over 10 years, but two years, but, but one year, I don't think that's very likely. So I think the bond vigilantes are concerned about inflation. They're concerned that the Fed is easing, stimulating an economy that doesn't need to be stimulated. And they're not convinced that the Trump administration is going to do much about the fiscal outlook.

[Sarah Eisen]

All right, Ed, thank you very much. It's great to thank you. Happy New Year.

[Ed Yardeni]

Thank you.

[Sarah Eisen]

And your Denny. And by the way, last point on just the demand for US Assets, including US Debt. Yesterday there was a big auction, last major auction of the year, the seven year auction, very strong demand, $44 billion worth sold of seven year notes and there was a lot of demand. In fact it could be why you're seeing some buying in the last 24 hours of bonds.

[Brian Sullivan]

I think your point was well taken and you can record that that I said that that I'll take it. The US Market is the best market in the world to invest in until it's not. And Ed makes a good point in his late he didn't bring it up in this interview but in his latest note he notes so been six bear markets in the last 50 years. They hurt more. Sure they tend to be violent and sharp and painful. But six bear markets in 50 years. That's why stocks tend to go up.

[Kate Rooney]

Yeah.

[Sarah Eisen]

Long term bull the end financials among the best performing sectors so far this year. But will 2025 see even more opportunity for this group with a Trump 2.0 presidency expected to bring with it new deregulation we're going to break down whether it could also lead to a boom in M and A and what it means for banks. Taking a look at futures. We've got a lower open coming. Looks like Dow futures down to 30. They've just taken another mini leg lower NASDAQ futures down 125. Still looking at gains though for the week. More squawk on the street when we come right back.

[Brian Sullivan]

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[Sarah Eisen]

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[Sarah Eisen]

That's music to my ears. I can only talk.

[Brian Sullivan]

Investing involves risk, including your loss. 0 account fees apply to retail brokerage accounts only. Sell order assessment fee not included. A limited number of ETFs are subject to a transaction based service fee of $100. See full list of Fidelity.com commissions Fidelity Broker Services LLC Member NYSE SIPC all right, welcome back. Here the banks set to close out a banner year after a rocky 2023. In fact, if you've not been paying attention at home, don't worry. We are the financial sector up more than 30% since January. But again, the question is always what happens next and for the year ahead. One we're dominating the conversation is consolidation. Two words also dominating the conversation are Leslie Picker and she has those details on the banks and financials. Good morning, Leslie.

[Leslie Picker]

Good morning, Brian. You're right, the banking bulls see the prospect of consolidation giving a boost to the sector in 2025. Over the past few quarters, we've actually seen a rebound in activity, with US banks notching $14 billion worth of mergers this year, very much surpassing 2022 and 2023 levels. But the question is whether that momentum continues and even accelerates in into the new year. Banks may be emboldened by the recent performance of their peers that have made acquisitions, as KBW pointed out in a recent note. Examples they cite include Old National Bank, South State and umb. KBW also recommends buying shares of potential acquirers such as Cadence Bank, Citizens First Bank, Prosperity and Tompkins. PNC CEO William Denchak has been outspoken about M and A plans for banks with strong core retail deposits in desirable markets. Washington seems to be amenable as well, the House Financial Services Committee recently proposing measures that would reduce obstacles for community bank mergers and revisit the way regulators evaluate bank deals. This is the vision of Representative French Hill, a former bank CEO who was recently named the next chair of the committee. But the flip side to deregulation is it may actually bring down the cost of compliance, which could make scale less of a necessity. And they may opt to use that capital for digitizing operations, expanding capabilities and things of that nature. Additionally, 2024 saw a cautionary tale of Bank M and a New York community bank had been bulking up through acquisitions of Flagstar and Signature, to name a few, and these pushed the firm above a $100 billion in asset threshold, which meant stricter capital rules that it was unprepared for as its commercial real estate book soured. And that led of course, to losses of 71% year to date, guys.

[Sarah Eisen]

Yeah, good point. Remember that, Leslie. Thank you very much, Leslie Picker. As we had to break Apple, inching higher toward that $4 trillion market cap mark, on pace for another week of gains. We're going to check in at the open more squawk on the street when we come right back.

[Brian Sullivan]

Hey, Fidelity, how can I remember to invest every month?

[Sarah Eisen]

With the Fidelity app, you can choose a schedule and set up recurring investments in stocks and ETFs. Huh.

[Brian Sullivan]

That sounds easier than I thought.

[Sarah Eisen]

You got this?

[Brian Sullivan]

Yeah, I do. Now, where did I put my keys?

[Sarah Eisen]

You will find them where you left them.

[Brian Sullivan]

Investing involves risk, including risk of loss. Fidelity Brokerage Services, llc Member nyse, sipc Comcast business helps retailers become seamlessly restocking.

[Sarah Eisen]

Frictionless paying favorite shopping destinations.

[Brian Sullivan]

It's how nationwide restaurants become touchscreen ordering.

[Fidelity Announcer]

Quick serving eateries and how hospitals become the patient scanning data, managing health care.

[Sarah Eisen]

Facilities that we all depend on.

[Fidelity Announcer]

With leading networking and connectivity, advanced cybersecurity and expert partnership, Comcast business is powering the engine of modern business, powering possibilities.

[Brian Sullivan]

Restrictions apply. All right, welcome back here. Look at that. CFO Chief Financial Officer Sarah optimism is on the rise. It is. A new survey comes from Apollo Investments and CFO Optimism. They're applauding the graphics.

[Sarah Eisen]

It's a good graphic.

[Brian Sullivan]

The opening bell.

[Sarah Eisen]

I'm looking at it. So it's divergence from about their own company and about the economy. But they're getting more optimistic about the economy in particular, I think.

[Brian Sullivan]

Let's just call it toward the end of the year. They're just more optimistic. There's people clapping. There's a bell ringing.

[Sarah Eisen]

Yes, this is the opening bell. And the CNBC real time exchange here at the big board. We do have a crowd. It's bad boy mowers, pinstripe bull, the coaches of the University of Nebras and Boston College football teams doing the honors over at the nasdaq. Nine million reasons. It's a food pantry in Long Island City.

[Brian Sullivan]

What is your favorite bad boy mower? Which we were discussing lawnmowers in the commercial break. People. She lives in an apartment. She went to Northwestern. Okay.

[Sarah Eisen]

So she's so I don't know what mowers are.

[Ed Yardeni]

So there.

[Brian Sullivan]

It's a zero turn lawn mower. We're not promoting bad boy mowers, but we have pins. We have a college football bowl game, Nebraska Cornhuskers vs. The Boston College Eagles.

[Sarah Eisen]

There you go. Big day here at the end. They do have a nice crowd here for the last day of the week on a Christmas week holiday. Just looking at the market open here, every sector is opening lower on the day. I go first to Tech and the Nasdaq which is down 6.10of a percent here in the early action. Again it's having a very strong week and a very strong month. Up more than 4% for the month of December as big Cap Tech really remains the star of the show despite all those calls for broadening out yesterday. You know the Russell we'll see if we have some catch up here. Sometimes some of the cheaper stocks or the stocks that have lagged behind all year catch a bid and we did see that in yesterday's action. Walgreens Target, some of the losers on the year were higher today, but were higher yesterday.

[Brian Sullivan]

I want to be positive.

[Sarah Eisen]

It's like a lower.

[Brian Sullivan]

I want to be positive. But as we showed yesterday, Carson Group, Brian Dietrich, if the market, if the Santa Claus rally does not happen, if the stock market goes down between basically now and January 4, that history says January will go down. So again, just history doesn't mean it will happen. But we want the market, not we want but the market, if it rallies now, it bodes well for January. If it doesn't rally, it doesn't bode well. And I think if we were going to blame something, got to blame two things. Sarah.

[Sarah Eisen]

Yes.

[Brian Sullivan]

The fact that we're working and interest rates, those are the second one is probably bigger at the 10 year yield is ticket. What if the 10 year yield hits 5%? Can stocks keep going up with a 10, 5% 10 year?

[Sarah Eisen]

I think it depends on the speed and why that's happening. But clearly higher.

[Brian Sullivan]

Yes.

[Sarah Eisen]

Yardeni mentioned investors. No, no doubt about it. We're looking at a 10 year hovering around 4.6. So we were a little bit higher yesterday. But again it wasn't supposed to happen this way. Right. The Fed was supposed to cut rates and we saw that for most of the year yields going lower in anticipation. And then they did that and rates kind of went higher. I just, I don't know if you were looking at the latest mortgage rate numbers on this front. This is of course how it affects everybody. Average 30 year fixed loan 6.0, 6.85%. That is up from 6.72% last week according to Freddie Mac. And it's hovering, you know, not too far away from 7%.

[Brian Sullivan]

Those are high mortgage rates and I think and there's an I have some. I got to be very careful what I say because I love everybody. I got a lot of friends out there that you know you are that when mortgage rates and interest rates collapsed into September they thought you know what, I'm going to wait to borrow money because I think rates are going to go. Going to go lower.

[Sarah Eisen]

Yeah.

[Brian Sullivan]

And not only they knock on lower, they've spiked higher. And to Sarah's point it's been very violent. Is not the right word. But quick.

[Sarah Eisen]

Sudden.

[Brian Sullivan]

Sudden.

[Sarah Eisen]

Is that the right word?

[Brian Sullivan]

Vociferous? No, it's pronounced. Pronounced. Pronounced. That's a Boston. You know what that is? That's a Boston College word.

[Sarah Eisen]

Still, there have been periods where the rates have gone higher lately and stocks have managed to do okay. And maybe that's because of the rotation back into mega cap tech which are sort of more safe haven. They're better earning stocks and they typically do well in, in these kinds large.

[Brian Sullivan]

Caps but not small caps. The S and p small cap 600 is down.

[Sarah Eisen]

So maybe they need lower rates.

[Brian Sullivan]

6.7% this month. So it's gotten, it's gotten absolutely whacked. And I think one of the dare we call the RBIs of the day random and interesting while I'm here. Why not? Is that the S&P 500? If you bought the Spy ETF and you think don't worry, I'm diversified. I bought the spy. Guess what folks, you're not that diverse of it. Yeah, what she said. You're not diversified. 37% of the S&P 500 is a couple of stocks you're basically buying Nvidia, Apple, Microsoft. What else? Tesla and a few others. And that's it.

[Sarah Eisen]

Right. And that's what's responsible for what? Half of the gains of the S&P 500.

[Brian Sullivan]

I guess it doesn't matter until it does bring that chart back up again. That was a fascinating chart because you do wonder and go to our entire sort of macro theme here. What point in our conversation do we say valuations matter? They haven't because the rest of the world stinks. And I think that's kind of was Yardeni's point as well.

[Sarah Eisen]

Look at that weighting of the top 10 holdings in the S&P 500 all time high.

[Brian Sullivan]

If we had a chart of the day. Are you also doing the 3 to 5pm like you did yesterday?

[Sarah Eisen]

3 to 4?

[Brian Sullivan]

3 to 4.

[Sarah Eisen]

I am so.

[Brian Sullivan]

Long day.

[Sarah Eisen]

It's a long day.

[Brian Sullivan]

This should be our. We're going to be on TV half Half of CNBC today. That should be our chart.

[Sarah Eisen]

I actually like my, my, my chart earlier better, which was how the Mag 7 has now outgrown the entire European stock market.

[Brian Sullivan]

That was the Mark Newton.

[Sarah Eisen]

Yes.

[Brian Sullivan]

Virginia Tech pie charts.

[Ed Yardeni]

Sure.

[Brian Sullivan]

He's a hokey. Let's bring that. There it is.

[Sarah Eisen]

I love how you know where everyone goes to college.

[Kate Rooney]

Yeah.

[Sarah Eisen]

7.16.4 trillion. The entire European stock market. It dwarfs it. I mean, it's because they don't have AI companies in part and they don't have a lot of growth and it's been a big divergence.

[Brian Sullivan]

The biggest software company. And again, you're going to check me on this. You got your little computer ready. Because I'm just going off memory here. But the biggest software company in Europe, I believe is SAP, the German company. And I think their market cap is like $250 billion, which used to be big.

[Sarah Eisen]

Sure.

[Brian Sullivan]

But you think about that in the framework of Apple, which If it hits what, 26463 becomes $4 trillion.

[Sarah Eisen]

Almost 300 billion now.

[Brian Sullivan]

Almost 300 billion. I'm always understating. That's what I do. I understate stuff. That's my, that's my.

[Sarah Eisen]

No, but it definitely follows your point. But they don't have a trillion dollar.

[Brian Sullivan]

The biggest software company in Europe has a market cap of 300 billion, which is. Seems quaint. Would that be the word pronounced tiny, minuscule, minus diminutive.

[Sarah Eisen]

Let's hit Netflix. Speaking of big cap tech, because we did get those numbers from NFL Christmas Day. That was, remember, the big experiment, highly formulated. I mean, 65 million combined viewers watched the pair of NFL games on. On Netflix. 24 million for Kansas City, Pittsburgh Steelers. Right. Houston Mowers, Ravens. 24 million as well. 31 to 2 NFL games in U.S. history. Most streamed M NFL games. That's according to Nielsen. And yes, Beyonce. Bull. Much hype. Beyonce. It did peak during that halftime conference.

[Brian Sullivan]

Okay. We have a streaming product called Peacock. It's excellent. So let's not criticize. They say the most streamed. Let's be honest, okay? The reality is it's the most streamed because more people have Netflix than any other streaming service. So you can't stream it if you don't have it.

[Sarah Eisen]

Okay.

[Brian Sullivan]

That's right. If you just have cable. And I know people say, who has cable? Guess what? A lot of tens of millions of people still have. I think it's 65 million people still have cable television. This guy's nodding over here. So thank you, by the way. So the reality is, yeah, 24 million watched. The peak, I think was 27 for the Ravens crushing defeat of the Texans of Houston, 31 2. So Netflix is going to have the highest numbers because they're the biggest.

[Sarah Eisen]

Netflix in their statement, thrilled with the numbers, the dazzling performance by Beyonce on the historic day for the NFL, they say, I mean just to put it in comparison, the biggest day of the year is the, is the super bowl. Right. Kansas City versus 49ers. 123.4 million viewers.

[Brian Sullivan]

Wow.

[Sarah Eisen]

So that's, you know, and it's on.

[Brian Sullivan]

And so you. And I also think to, you know, maybe you had it on at the Eisen household, the Sullivan household had it on. But were we sitting and watching? No, we were talking. We were embracing the holiday, but it was on. So you also wonder how much is that number reflective of like really watching engagement?

[Sarah Eisen]

I mean we were watching. My 7 year old was, was coming in and giving us updates because he's a big NFL fan.

[Brian Sullivan]

And who does he like though?

[Sarah Eisen]

The. He likes the Philadelphia Eagles.

[Brian Sullivan]

Well, he's got great taste by the way.

[Sarah Eisen]

But he also was cheering for the Ravens in that game.

[Brian Sullivan]

Fantastic.

[Sarah Eisen]

He was happy by the way.

[Brian Sullivan]

On a totally separate note, Merry Christmas to our friend Rick Santelli who just sent us a note that the Japanese 10 year government bond has the highest yield back to July 2011. So a 13 and a half year high for the 10 year. And I bring that up not to going as we care about Japanese government borrowing costs. 1.1% is the highest. How much would we that would put. That would put a mortgage at what, three and a half percent?

[Sarah Eisen]

Pretty low.

[Brian Sullivan]

We'd love to have that.

[Sarah Eisen]

Well there and for them it's high because they're getting out of decades of deflationary spiral. They're finally seeing some inflation and the market is trying to push them to raise interest.

[Brian Sullivan]

Remember yesterday when I spoke some Japanese and you were shocked?

[Sarah Eisen]

I was. You always surprised me with your knowledge. Random knowledge.

[Brian Sullivan]

Random but interesting. I can't say that in Japanese.

[Sarah Eisen]

I'm impressed. Look, Nvidia must thank you very much in that. That one I know from going to sushi restaurants. The Nvidia is the biggest weight in the NASDAQ. 100 lower right now. Again, one of the biggest outperformers of the year. Just trying to every day, you know.

[Brian Sullivan]

Are you looking at. Okay, so I'm bringing up my facts. Year to date, quarter to date.

[Sarah Eisen]

What is your looking right now? Let's have some fun.

[Brian Sullivan]

Month to date.

[Sarah Eisen]

Sure.

[Brian Sullivan]

Best performing NASDAQ 100 stock, Broadcom.

[Sarah Eisen]

Yes.

[Brian Sullivan]

So 48%.

[Sarah Eisen]

Number two, game changing quarter, your buddy.

[Brian Sullivan]

Elon Musk and Tesla, but 20 points less. The number one performing stock, Broadcom, 48% this month. Number two, Tesla, 28%. So AVgo, Broadcom destroying everybody this month.

[Sarah Eisen]

Yeah. So this month, the best performing sector in the square S and P is consumer discretionary. And that's because Tesla is a big weight in that. And we're talking about big numbers. These sectors are up more than 5% apiece. Communication services, up 5. More than 5%. You know, Alphabet's also had a good month. And some people were worried about Alphabet and the rise of AI and whether that would threaten the dominance of their.

[Brian Sullivan]

Is it Gemini? Good. If you believe AI Is everything okay, then you've got Microsoft's copilot, you've got Gemini, you've got Sora, you've got Grok from X, you've got Open Air, which chat GPT is kind of the quote winner. Perplexity. Can they all win or. Or again, do some die? Do we start to see mergers or do people test things out and say, which one of these right now is the best? I don't know.

[Sarah Eisen]

No, and I think they also cater to different ones. I mean, there are some that are catering specifically for the enterprise. Thinking of Salesforce, for instance, Oracle. Can we just mention Oracle for a second? Larry Ellison having a great year. The stock rallied the most since the dot com boom. I think he added another few hundred billion to his amazing small fortune. Richest man behind. You know, I think I'm the last.

[Brian Sullivan]

I think I'm the last interview he's ever given.

[Sarah Eisen]

He never talked.

[Brian Sullivan]

No, I think I'm the. I'm not joking. So out at Redwood City years ago, he and I sat down. It didn't go well. I don't think. Larry, I love you. I saw him at the BNP Parry Bob Tennis Court tournament last year. I'm gonna go back this year. So, Larry, if you're there, we'd love to chat with you because what you've done at Oracle has been amazing. I think what they have done to turn a, dare I say, sort of boring, deep database company into this, darling, has been nothing short of amazing.

[Sarah Eisen]

So Oracle shares have shot up 63% this year. And the net worth now for Larry ellison, more than $217 billion, according to Forbes.

[Brian Sullivan]

That's Eisen, that's Sarah Eisen Money.

[Kate Rooney]

Right?

[Sarah Eisen]

Big. Let's get to bobasani with more on today's market action. Hi, Bob.

[Fidelity Announcer]

Hello, Sara. Good to see you. The important thing about today is a poor opening here, 3 to 1 declining to advancing stocks. All 11 sectors were down at the open. Although I see energy turned around, looks mildly positive right now. But it doesn't matter. If you look here, everything's down roughly one one and a half percent. Even big cap tech, all the magnificent seven started to the downside here. The big story I think is what we're going to see next year here. And the important thing is what we're going to see in terms of earnings growth. So mega cap tech is still going to see significant earnings growth next year, but it's decelerating. It's not as strong as 2023 or 2024, you might think, look at Nvidia is expected to be up 50% earnings growth next year. You might think, my heavens. But it was 127% this year. Broadcom is one of the few big mega cap techs that's going to see an increase. It was roughly 20% this year is going to go up to 25%. And that's one of the reasons Broadcom has been so strong recently. Earnings acceleration for next year. Amazon is going to be down from the mid-50s. Metta also these numbers are great here. I mean, Alphabet, Microsoft, Apple, still double digit earnings gain, just not quite as strong as it was in 2024. So one way to show this is just look at the Magnificent Seven for this fourth quarter overall as a group expected to be up 24%. But for the fourth quarter of next year, up 18, you see still really great numbers, but decelerating growth. And that's got some people very hopeful that maybe we might get some rotation. What about the other 493 stocks? So here's the estimate. The current one for the other 493 for this quarter, up 4% next fourth quarter, one year from now 14. Okay, that's accelerating earnings growth. That's what you want to see. So some of the rotation crowds getting all excited, saying, oh, maybe we can finally entice people to do this. So what would it take to get investors excited about this? If you look at 2025 numbers now, which is all anybody cares about, tech is the leader for earnings growth, but there's very good earnings growth in other sectors that nobody's cared about this year. Like health care has got very strong expected numbers, but the valuations are fair, far, far lower than technology. So has industrials. So have some of the other ones. Materials, which nobody's cared about for a long time, almost equals Technology and on the bottom if you look at some of the bottom ones like consumer staples and energy, you can see why nobody's particularly caring about them because they haven't had significant earnings growth in a number of years. But the point is there are a lot of sectors out there that have tremendous growth potential on the earnings front. The question is whether you can get the people who have grown up in the last decade with growth stocks interested in the valuation call which means these stocks may still see some earnings growth but it's very modest and it's a valuation call. And the bottom line guys is we haven't been able the value people have been pulling their hair out for a decade because in theory people should be enticed by some of these valuations now. But it hasn't worked so far. Now whether this decelerating earnings growth story with big cap tech works or not still rem my position is going to take an awful lot. I don't know if it'll take a collapse of the AI story I don't think it'll be that great. But it's going to take an awful lot to entice people away from Nvidia at 50% earnings growth to talk about health care stocks that might still have earnings growth but nothing near that. It's a very interesting question here. I certainly would like to see a year when value stocks, the rest of the 493 start doing a little something for the markets here. By the way, we talked with Eduardani about why the profits are up. Listen, when you've got a 3% GDP economy and you've got higher prices from corporate America and you've got better cost controls and Sarah, I think you've talked about this, the net profit margins, 12% on the S and P that's a record they're retain not only they're making more money, they're retaining more on the bottom line from relative to the top line. This is why the stock market's at a new high. If that changes you've got problems. But right now, my heavens, this is a tremendous handoff from 2024 into 2025.

[Sarah Eisen]

Guys things efficiency. They're getting more efficient. They're using AI they're just doing more with less and and productivity. We've seen some decent productivity growth in the US and that helps corporations as well.

[Ed Yardeni]

Bob.

[Sarah Eisen]

Thank you Bob Pisani. By the way Brian, energy is catching a bit today along with materials and health care. So this is end of the year bargain hunting type stuff because they lost.

[Brian Sullivan]

All energy so little Bargain hunting. I think Bob's point as usual is correct. Until the trade stops making money. Why would you put your money anywhere else?

[Sarah Eisen]

It's just valuations.

[Brian Sullivan]

Nobody cares. It's just momentum.

[Sarah Eisen]

Well, at a time where you're searching for earnings growth and you're worried about yields, I think the equation changes a.

[Brian Sullivan]

Little bit the day that Nvidia, if it ever comes out or not, I want to say video, any AI company says we don't have the electricity to run all the data centers when if that happens, you're going to see a large correction.

[Sarah Eisen]

All right, as we had a break, it is time for the bond report. Bonds have been front and center. Let's show you what Treasuries are doing this morning. We have seen this big sell off in bonds with yields marching higher really throughout the through the end of the year here. We're headed that way again today below 46 though because we had some buying overnight rate just under that 46 on the ten year. The two year is catching a little bit of a bid with yields at 4.3%. Got wholesale inventories this morning. Perhaps that is having effect. Also strong 7 year auction yesterday. We'll be right back. Well, one of AI's biggest names, OpenAI, the company behind Chachi Beat, finally lays out plans to become a for profit company. Kate Rooney here with the details. So how will this work? Kate?

[Kate Rooney]

Hi Sarah. Yes. OpenAI confirming that they're going to become a public benefit Corporation. The now $157 billion AI company was founded at first as a nonprofit research lab about a decade ago. OpenAI now says the existing for profit arm is going to transform into a PBC as they're also known with ordinary shares of stock. We did report that this pivot was in the works. They're now acknowledging some cash realities here in a blog post too saying we once again need to raise more capital than we'd imagine. Investors want to back us but at the scale of capital need conventional equity and less what they call structural bespokeness. That bespoke structure wasn't something investors loved. Those I'm talking to are relieved at this pivot. And right now the company does involve multiple entities. You have a capped profit company controlled by the nonprofit which will still exist. It's still going to pursue charitable initiatives with a significant interest in the new public public benefit corporation. PBC is do operate with a traditional governance and share structure but they have a dual mandate. That's the big difference. Both a fiduciary duty and then a publicly stated mission as well. Names like Ben and Jerry's Patagonia are well known examples. Plus some AI companies, X AI and Anthropic. No word guys on when this is actually going to happen. And there of course is the Elon Musk factor here. The OpenAI co founder and Tesla CEO suing to block the company from making this for profit. Pivot described it as a total scam on social media. OpenAI has fired back saying Musk is trying to slow the company down as he builds his competitor xi and that Elon pushed for this not for profit transition rather before he left the company. Guys.

[Brian Sullivan]

Yeah. Isn't that the sort of the brouhaha here, Kate, which is that open air firing back at Elon Musk saying wait a minute, like you were for profit before you were against profit?

[Kate Rooney]

Yes.

[Brian Sullivan]

That this is turning into a war of words.

[Kate Rooney]

Absolutely. And they came out with some receipts. They showed emails saying that despite Elon Musk filing multiple lawsuits here, they said you accusing Musk of wanting to change the structure and saying you were for this all along. And also highlighting the fact that he now has a major competitor, which is xi and a name to watch next year, obviously. Ellen Lawmar, influence in Washington at this point, it is really seen as a headwind for OpenAI. As much as they might want to change this corporate structure, there's no saying that this won't happen. But in addition to Elon Musk, you also had and actually you also had Metta and Mark Zuckerberg's side of this piling on and writing a letter to the Attorney General saying they also supported blocking OpenAI's transition here. So interesting that it's actually not just Musk. You also had Metta coming in and saying this might not be the best thing for the industry. So as much as they want this transition to happen, I think there's still some questions of if and when this could actually go down.

[Sarah Eisen]

It's really confusing. Just because it has taken so much outside money from venture capital from Microsoft, it already seems like it's profit. Okay, thank you very much, Kate. Kate Rooney, sir. When we come back, 2024 charts stocks of the year. We'll tell you what they are and what they could spell for 2025. More squawk on the street after a quick break. Just checking on the broader markets after the open here, we're lower S and P is down about three quarters of 1%. But there are some bright spots. Energy, materials, health care, those are the lagging sectors of the year. Catching a bit financials and real estate just turned positive as well. Tech's under a little pressure, led lower by Nvidia, Microsoft, Broadcom, Tesla and Amazon. We'll be right back.

[Brian Sullivan]

You've been listening to the opening bell on CNBC's Squawk on the Street.

[Sarah Eisen]

All opinions expressed by the Squawk on the street participants are solely their opinions and do not reflect the opinions of CNBC, NBCUniversal or their parent company or affiliates and may have been previously disseminated by them on television, radio, Internet or another medium. You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of an opinion. Such opinions are based upon information Squawk on the participants consider reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy and it should not be relied upon as such. To view the full Squawk on the street disclaimer, please visit cnbc.com squawkonthestreetdisclaimer Martha.

[Brian Sullivan]

Listens to her favorite band all the time. In the car, gym, even sleeping. So when they finally went on tour, Martha bundled her flight and hotel on on Expedia to see them live. She saved so much she got her seat close enough to actually see and hear them. Sort of. You were made to scream from the front row. We were made to quietly save you. More Expedia made to travel savings vary and subject to availability. Flight inclusive packages are atoll protected.