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Final Trading Hours, Biotech's Boom & Buffett's Last Day 12/31/25
00:43:14
As 2025 wraps, we break down the year's top market drivers. Biotech deals dominated the sector, will the M&A momentum continue in 2026? Plus, it's the end of an era for Berkshire Hathaway as Warren Buffett steps down.
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Contessa Brewer
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Is it time to reimagine your future? The right business skills may make a difference in your career. At Capella University, we offer a relevant education that's designed to focus on what you need to know in the business world. We'll teach professional skills to help you pursue your goals like business management, strategic planning, and effective communication, and you can apply these skills right away. A different future is closer than you think with Capella University. Learn more@capella.edu. you're listening to the Exchange. Here's today's show. Thank you for joining us today. Here we are, the last trading day of the year, the last day for government health insurance subsidies and Warren Buffett's last day as Berkshire CEO. Welcome to the Exchange. I'm Contessa Brewer and for Kelly Evans today, stocks really haven't changed much for the day. On track now for the third consecutive down session, but still we're ending the year with double digit gains. Big tech mostly lower. We're keeping an eye on Nvidia. TikTok parent ByteDance reportedly is planning to spend more than $14 billion on Nvidia chips if the company is allowed to sell its H200 chips from China next year. And the metals trade is looking a bit tarnished. Silver and platinum declining than 8%. Gold down 1%. Let's begin though with the big year for the markets. The S and P is set to close 2025, up about 17%. This is the third straight year of double digit gains and really we're looking at that AI frenzy that has fueled the NASDAQ. It's up 21%, the Dow up 13%. And look, don't count out those smaller guys. The Russell 2000 up 12% this year. And this rally was broad based as well. All 11s and P sectors on pace to end. Higher. You've got communication services, tech and industrials as the leaders. Comm services here led higher by a huge gain in Warner Brothers and Alphabet. Real estate and consumer staples are at the bottom of this list with real estate barely hanging on to gains. So will the enthusiasm continue with us? Jamie Cox, managing partner at Harris Financial Group. Jamie, I got a real kick out of the notes I got from you because it's been a long time since I've seen someone so plain spoken about the AI bubble. And whether it's there or not, can we start with that?
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Jamie Cox
Happy New Year. You know, people have been talking about AI bubble for the last couple of months. I mean, it's even been on 60 Minutes. What people are paying attention to, they're trying to relate it to the 1990s when there was no earnings growth, there was no underlying fundamentals that supported the stocks that were being run up. What you have now is a completely different situation. You have a situation where the companies that are investing in the infrastructure, they actually have the earnings growth and the capital to support that investment. And also the largest tech companies right now are doing the investment to try to crowd out and make sure that the smaller players actually get a foothold and actually take over and gain market share from them. So it's a completely different situation. And so we're not yet in a bubble. That doesn't mean that there's not going to be one in some, in some future state. But what we don't see are some of the markers that typically define bubbles. Like, we haven't seen any of the typical or the privately held companies come to IPO yet. These are typical, typical signs that you see. You know, after what you see before, there's a bubble. What we're going to see next year, I think, is some of these companies come to market. And I think what you will see is you'll start to see clarity where you actually get to see, you get to digest and understand some of the fundamental financial information coming from these companies as they report. And that will really fuel, I believe, in actually more growth in these tech companies. I think we're probably just at the precipice of actually happening.
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Contessa Brewer
What do you think fuels the opportunity for the smaller guys, the guys that, you know, the big guys are trying to keep out? And, and do you think that some of the big guys that are right now private go public next year? Are we going to see more IPOs for open air Anthropic?
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Jamie Cox
Yeah, I don't know exactly what will happen, but I assume that you're going to, you're going to start to see them come public. And the reason is, is because they really do need to legitimize themselves and doing. And going public will do that. In addition, there have been so many reports of electricity deficiencies and the infrastructure play. And what I notice is, is that people tend, investors tend to overestimate the ability for the infrastructure in terms of investment, but underestimate the software portion of it. That's what's really going to define the moment for us is what comes next, what's happening right now with Nvidia and some of the infrastructure plays. There are plenty of money to be made there, but the real money to be made is what the productivity enhancements. We all know this, this is not something brand new. It's not, not in the market. We just haven't seen it yet, but we're going to. And if you look at the economic data that's been released in the past couple of months, one of the things that gives me the greatest sort of hope is we're starting to see some increase in gross domestic income. And if productivity growth picks up, that will legitimize the AI enhancement piece of this productivity. And that's going to create a lot of value for investors over time. And I think that's where people need to pay close attention. And it's not just going to be with the largest tech companies. It's going to be very broad based. It's going to enhance the earnings potential of many companies in many sectors. Industrials, financials and others.
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Contessa Brewer
Yeah, in fact, Jamie, I'm looking at the, some of the names here in your strategy list. Raytheon, Apple, BAE Aerospace, Saab, Motorola, Safran, Schneider Electric. What are those names have in common?
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Jamie Cox
A lot of its defense, a lot of it is security. You know, one of the things that's interesting about defense is that, you know, defense companies only care, you know, who's in, who's in charge. They only care that the government spend money on defense. And I think you're, you're seeing that in Germany, you're seeing that around the world in the United States. So that's what is common in that. But what is more interesting is, is you actually have some Southeast Asian companies who have started to get some religion on corporate governance. They're actually doing things that are really important like, you know, doing share buybacks and treating investors well with dividends. And you can see it, you know, materialize in Japan and South Korea where the markets are, you know, significantly more than many of the economy markets here in the US And I think that's where the stories are. People need to pay attention. We've been paying attention to metals and silver and all this kind of stuff, but it's really a weak dollar trade and you really want to play it. International markets are way easier and way less volatile than try to play it through the metals market.
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Contessa Brewer
I mean, I'm looking at the metals right now. You've got gold off a percent. Silver is down almost 10% today, copper down almost 2%. Platinum off by almost 9%. Is this a good time, if you're not already in this space, to get in?
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Jamie Cox
Well, I think that if you really want to play in industrial metals, copper is the better place. I mean, if you really believe that there's going to be a significant surge in industrial demand for, you know, data centers and things like that, copper makes a lot more sense. I feel like a lot of people are buying the gold and silver trade because they have this debasement of the dollar theory. And that may play out, it may be right, I don't know. But I do know that if people are, if there's an infrastructure play and data centers are being built and there's a lot of copper demand, that seems more realistic and more reasonable to me. So if you're paying, if you, if you really want to pay up for industrial metal, that's probably the better one.
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Contessa Brewer
Jamie Cox with Harris Financial Group. Jamie, I appreciate your time today. Happy New Year.
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Jamie Cox
Happy New Year, Contessa.
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Contessa Brewer
All right, so we mentioned Apple there. Let's drill down on that company. Really kind of a rough year for the tech giant with an executive exodus tariff crisis. What looks like an AI failure. The stakes are high going into 2026. Steve Kobach is following this and today's tech check. So how's it looking for 2026?
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Steve Kobach
It's going to be all about. So like you mentioned, this year it was the tariff thing that was the biggest drag on the stock. In fact, if you look from August6, when Tim Cook went to the Oval Office with President Trump and gave him that golden trophy and said we're going to invest $600 billion stock has been up about 35% since then. So it's up about 9% on the year. And the rest of it, the hangover here is artificial intelligence. Now, as you alluded to, they failed to deliver that Siri update that was supposed to happen in March. They said it's going to happen next year. Now, a lot of people think that means March of 2026. And look, we know what it's supposed to do, we know how it's supposed to work. But is it going to be good? And by the way, what investors contestant really need to pay attention to, it has to be so good that it convinces people to upgrade their phones. Because unlike chat CBT or Gemini and so many other chat bots, Apple intelligence and this new version version of Siri is going to be free with their iPhone. So Apple needs to make sure people are buying These new phones in order to enable those new AI features. That means anybody with a 15 or lower would have to go out there and buy it. So that's the one thing. The other thing they could possibly do is they could change their mind and say we're going to do a subscription fee for these new advanced features. Maybe they introduced some stuff that they didn't show us already. But it's been a long time coming. It was June 2024 when they first announced Apple intelligence and here we are. It's by the time they actually get it out the door, it's going to be about two years later.
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Contessa Brewer
The thing that I find baffling is that Apple has always led the way in new tech in getting especially consumer facing technology. What is taking so long?
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Steve Kobach
It's not what led the way in the sense that they'll take something that's already there and just make it better. Right.
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Contessa Brewer
I mean, at least if you want to look at BlackBerry leading exactly. On smartphones. But you know, but then they took.
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Steve Kobach
That idea and made it so much better.
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Jamie Cox
Right.
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Steve Kobach
And so people were expecting them to do the same with artificial intelligence. What was the problem there? Part of it could be the team that they had in place. So John Giann, Andrea, he was the head of AI. He's out. He got pushed out most likely and he is going to be out of the company at the beginning of next year. There's a new head of AI who is not even reporting to Tim Cook yet. That could be part of it. The other thing is they decided to mostly build it themselves as opposed to what they're going to do next year. Partner with Google or Anthropic or Chatbots to do it. And they couldn't make that happen.
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Contessa Brewer
The AI is a piece of that.
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Steve Kobach
Right.
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Contessa Brewer
How much of a piece is the affordability of the Apple ecosystem? Because.
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Steve Kobach
Meaning what?
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Contessa Brewer
Well, if you've got people who are affordability focused that it's an easy choice to go with an Android over an.
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Steve Kobach
Apple product, you also got to keep in mind that is true, but especially here in the United States, there are so many deals. We see these commercials all the time. You turn in your old phone, you get it for free. The carriers give you these enticing deals in order to get you to subscribe to them. They pay Apple upfront and you pay them back over time. So a lot of people are. And you know, they end up getting their phone for basically zero down, let's call it, and you kind of lease it over time. So the affordability of the phones becomes less of a problem. It's these subscription fees that they're laying on top of it that could affect kind of what you're talking about.
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Contessa Brewer
Interesting. Kobach, thank you.
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Steve Kobach
Thank you.
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Contessa Brewer
Appreciate it. Coming up, the biotech ETFs, XBI and IBB seeing big gains this year following a surge of M and A in the sector. The big players are just scooping up these smaller names to grow their pipelines. Will this trend continue? Who could be Next? We dive in. Plus a legendary 6 decade 10 year comes to an end. Warren Buffett officially steps down as CEO of Berkshire Hathaway today. The stock has underperformed significantly since his retirement announcement. Will 2026 turn that around? The exchange is back right after this. What made you confident that you could do something that hadn't been done before? I have no fear of failure. Trailblazing women, changing the game. One of my favorite pieces of advice, think about what your boss's boss needs. Leadership can look in many, many different forms. It really does come down to just trusting yourself. Life is short and you just got to think big to accomplish big things. Julia Boorstin hosts CNBC Changemakers and Power players. New episodes every Tuesday, wherever you get your podcasts. Welcome back to the Exchange. Deals were the name of the game in the pharma space this year. According to learning partners, $65 billion worth of deals were recorded through just the first three quarters of the year. That's nearly double the activity we saw in 2024. Will that carry over into 2026? Let's ask Jared Holtz, Mizuho securities health care equity strategist. Jared, thank you for joining us. Are you expecting to see more M and A in the space?
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Jared Holtz
Thanks so much for having me. I am. I think this, this coming year, 2026 is going to be pretty similar to 2025. I think there were about 22 transactions in biotech north of 500 million. I think that's roughly right. And so yes, I think next year.
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Contessa Brewer
Will be pretty similar in any particular space. I mean, the GLP ones have been sort of the theme of this year. Are you looking at new trends in this space?
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Jared Holtz
I think it's very difficult to predict where the next deal is going to come from in terms of the therapeutic category. Obviously this obesity situation has been, you know, so remarkable. I'm not really sure there are that many companies left to be acquired. The one that I keep on looking at, I think a lot of investors are circling is structured therapeutics. That's gpcr. They've had data recently and they seem like they could be a decent player in this industry even if they took 5% of the market. If the market estimates that the, that the entirety of the GLP1 class is going to be above 100 billion.
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Contessa Brewer
What about the efforts that the White House is taking on controlling drug prices? There looks like there is going to be some arm twisting going on where drug prices are concerned. And then you have the subsidies for the Affordable Care act insurance expiring today. Does any of that affect where these companies go for the next year?
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Jared Holtz
Well, I think the drug pricing discussion is one of the more interesting ones in all of health care. This year has been very active in terms of the industry coming to some sort of negotiation, some sort of terms with the administration over the price of drugs, either new drugs or existing. My sense is that the government's going to walk back a little bit from drug pricing as this major issue if they believe that a lot of it has been tackled already. And if that's the case, then I think the pharmaceutical industry, large cap Pharma, Lilly, Pfizer, Merck, etc. Probably feel better about how they're positioned in the market in 2026. That could allow for more, more dealmaking. As we were talking about earlier, as far as the subsidies are concerned, I'm not quite sure how that's going to work out. You're right. They expire today. There's probably. There's a good chance that there's some sort of agreement made over the next couple of months, but I don't think it's going to have a huge impact on biotech near term.
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Contessa Brewer
We've seen the Health and Human Services Secretary Robert Kennedy, making clear his priorities for the nation's health and the ways that that trickles down. There's been some changes at the fda. Does, does the leadership of those agencies matter for this coming year?
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Jared Holtz
I think it does a little bit. I think investors have been very keyed on this topic. I've been kind of thinking all along that the negatives surrounding biotech were so extreme to begin with that the new administration in terms of the HHS leadership, FDA was not that big of a deal. I think that's somewhat been proven right by how the IBB and the SBI performed year to date, putting up 30 plus returns, 30% plus returns. But I'm not really sure. I think a lot of it is noise. There have been a lot of headlines regarding HHS and the fda. I'm not particularly worried about it, but I think the street still wants to see a little bit more consistency out of the messaging of those groups.
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Contessa Brewer
Jared, it's great to talk to you. Thank you so much for giving us your perspective on the new year.
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Jared Holtz
You bet. Happy New Year.
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Contessa Brewer
Coming up, retail's rough year. We'll have a look at the haves and have nots in this sector with some surprising winners at the top of the list. And as we had to break, here's a look at the commodity complex this year. Silver is really the standout, up 142%, hitting an all time high on pace for its best annual gain since 1979. Gold also had a great year, best in 79 as well. It's up 65%. And platinum with a gain of 122%. And then look at copper on a tear, 41%. The question is, will all of these data centers make good use of copper and drive that even higher? What didn't participate in the commodity complex rally was oil. It's down 20%. The exchange will be right back.
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Congress may have clawed back funding for public media, but public radio's mission to.
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Eamon Javers
Serve you and your community will not.
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Contessa Brewer
Waver as the NPR network enters a new chapter. Your support is critical. Visit donate.npr.org what made you confident that.
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You could do something that hadn't been done before? I have no fear of failure. Trailblazing women, changing the game. One of my favorite pieces of advice, think about what your boss's boss needs. Leadership can look in many, many different forms. It really does come down to just trusting yourself. Life is short and you just got to think big to accomplish big things. Julia Boorstin hosts CNBC Changemakers and Power Players. New episodes every Tuesday, wherever you get your podcasts. Welcome back to the Exchange. Let's take a look at markets right now and you can see they're in the red across the board, fractionally. We've seen that all week. On this holiday trading week, the Dow is off by a third of a percent s and P500. The same NASDAQ composite down by a quarter percentage point. And you've got the Russell 2000 down by 410 of 1%. Let's take a look at the top Dow performers for the year. As we've discussed this week, you saw Caterpillar taking that top spot as it's looking to become a more tech centric company. It's putting its equipment to work in these data centers. Investors are now heading toward the picks and shovel part of that trade. It's down today Almost half a percent, but up year to date by more than 58%. Goldman Sachs coming in second as favorable interest rates, bullish credit demand, a stable economy and solid capital market activity lifted the entire sector this year. It's up 54%, down fractionally on the day. And Johnson and Johnson clocking in at number three. Strong performance in some key drugs. You've got a strong pipeline, new product launches and management optimism helping drive that move higher. It's in the green today by a tenth of a percent and up 43% this year. On December 8, federal prosecutors in Texas unsealed documents that revealed an investigation into a massive smuggling network that stretched across the United States and around the world. Dubbed Operation Gatekeeper by the feds, the investigation wasn't focused on drug smuggling or stolen goods, but rather an alleged secret underground network of suppliers for Nvidia's graphic processing units, or GPUs. Eamonn Javers joins us with a follow up on that story. Hi Eamon.
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Eamon Javers
Hey there, Contessa. You're right. The government said a hidden smuggling ring was sending chips to China in defiance of American national security export control laws. The smuggling syndicate allegedly involved operatives illegally entering the United States, phony front companies and a secret warehouse shipping operation in New Jersey that was penetrated by at least one undercover agent working on behalf of the US Government. Here's how the operation allegedly worked. That empty office space in Sugar Land, Texas, ostensibly served as the headquarters for a company that was actually run out of an individual residence in nearby Missouri City, Texas. Federal prosecutors allege that the company purchased Nvidia components from an American electronics firm and then shipped them to Singapore and then on to Hong Kong. In another case, a Houston based company allegedly purchased computer components from a firm in Southborough, Massachusetts, shipped them to a logistics facility in Secaucus, New Jersey, where they were relabeled with a phony company name and shipped to a New York warehouse. Paperwork suggested the components would then be shipped on to Australia. An Nvidia spokesperson told cnbc that the U.S. government's export control process is rigorous and comprehensive. Even sales of older generation products on the secondary market are subject to strict scrutiny and review. The Nvidia spokesperson said. While millions of control GPUs are in services at businesses, homes and schools, we will continue to work with the government and our customers to ensure that secondhand smuggling does not occur. And on the same day that federal prosecutors announced this investigation, Contessa President Trump made a social media post that could undermine the whole operation. Trump said on Truth Social that the United States would Now allow Nvidia's H200 GPUs, the most powerful GPUs seized by authorities in Operation Gatekeeper to to be exported to China. Trump said those exports would be allowed provided that the US received a 25% cut of the sales. And the President added that Nvidia's most advanced AI chips, the Blackwell and Rubin GPUs, are still not authorized for export. So that throws federal prosecutors case into some question here. Defense attorneys for the men charged have said in court filings that the government's claim that this alleged smuggling threatened national security can't be right because the President is allowing it to happen. Contessa, back over to you.
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Contessa Brewer
That's got to be frustrating for the prosecutors and for the investigators who went after this isn't the problem in the first place the smuggling, like labeling boxes falsely for export? Seems like that would be criminal.
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Eamon Javers
Yeah, it's a surprisingly low tech smuggling operation for a high tech product. What the allegation in this case says is that there was this facility in New Jersey, in Secaucus, in a warehouse where Chinese operatives were going in, taking these Nvidia GPUs and simply slapping fake labels on top of the GPUs. So they had a fake company they called Sankeyan. That Sankeyan label was just slapped on top of the Nvidia label. And then they changed the bill of lading descriptions of what these items actually were to sort of nonsensical terms to try to fool export control officials at the point of embarkation. So, you know, clearly it's old fashioned, low tech smuggling. I mean, this is right out of like a prohibition, you know, whiskey run. But in this case, this is Nvidia GPUs going to China.
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Contessa Brewer
Do you know, I mean, Nvidia chips have just been in such high demand, we've talked a lot about whether there's enough supply. How did the smuggling operation get hold of these GPUs in the first place?
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Eamon Javers
They seem to have purchased them from resellers of Nvidia gear. Right. So they don't seem to be purchasing them directly from Nvidia, but from other third party companies. Now it's not clear in the documents because oftentimes they're referred to just as company one and company two. So you don't know exactly who they're referring to. But a lot of this seems to be more or less legitimate purchasing activity by a company that's on its face based in Houston, for example. And then in reality that company is shipping them offshore even though sending documents and certification to the original sellers saying this is for legitimate US Based purposes and then out the back door it goes to China.
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Contessa Brewer
Eamon Javers, thank you for bringing us that update. Appreciate it. Let's get to Seema Modi now for a CNBC news update. Hi Sima. Contessa Here the top stories we're watching. Immigration and Customs Enforcement officials are Planning to spend $100 million on ads and influencer campaigns as part of the so called wartime recruitment push. According to the Washington Post, which cites internal documents, the agency will target gun rights supporters, military enthusiasts, patriotic podcast listeners and others as it seeks to bring in thousands of new deportation officers. In other news, Iran appointing a new central bank governor today after an economic crisis sparked a mass protest in the country. The former governor resigning on Monday following demonstrations over rampant inflation, the collapse of in the country's currency. The Real, by the way, has lost nearly a half of its value against the dollar in 2025. And France planning to introduce a ban on social media for children under 15 in the new year. According to local media reports. A draft bill that is set for debate will also prohibit mobile phones in high schools. French President Emmanuel Macron has signaled he wants his country to follow Australia's first in the word social media ban for under 16 year olds, which came into effect in December. Contessa, Always a battle against those devices. Seema, thanks. Coming up, the New York Stock Exchange is getting ready to ring in the new year. And who else but Bob Pisani there to help lead the celebration? Boy, are you a fight for sore eyeballs.
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Bob oh, Contessa, my old friend, it is so great to see you. I am so happy to be back here on the floor of the NYC. You know, I spent almost 30 years down here, so a good part of my heart remains down here on the floor. And one of the great traditions of the New York Stock Exchange is the singing of Christmas carols and sentimental ballads at this time of years. This is a tradition that goes back to the 1860s on the floor of the New York Stock Exchange. We have over 100 of the old members here and we're going to continue that great tradition when we return. Don't go away. Stay with us.
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Through up years and down years, it's been a staple, the singing of the 1905 song Wait Till the Sun Shines Nelly floor of the New York Stock Exchange. It became a prominent tradition during the Depression because of the song's message of hope and happiness during what were really troubled times. Bob Pisani is on the floor with the traders for this year's rendition. Bob, it's all yours, Contessa.
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You know, this tradition goes back literally to the 1860s, the singing of Christmas carols and sentimental ballads on the floor of the New York Stock Exchange. For decades, Art Cashin led the annual singing of that particular carol that you mentioned. Unfortunately, Art passed away last year, but the tradition lives on. Here with the annual rendition of Wait Till the Sun Shines, Nelly is Peter Cashin and Art Cashin iii. Peter, take it away.
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Steve Kobach
Yeah.
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Contessa Brewer
One, two, three. Wait till the sunshine Melly as the clouds go drifting by we will be.
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Happy Nellie go to cry down the.
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Mother'S lane well, but sweethearts, you and I Wait till the sun shines Nelly falling. And Peter, of course, the important point here, your father passing away about a year ago today. He always wrote a poem every year. And Peter and Art have continued that tradition. They had a poem out this year as well. But tell me what. What do you think Art Cashin would have said about this year? What would have surprised him? I think there are a lot of things it would have surprised at the market being as resilient as it's been. It's been a very, very interesting year, even with all the political turmoil in the world and the. And the strife. But I will say is dad often said every single year, there's no place on earth he would have rather lived than here. And I thank everybody, I thank the Maguires for coming out. That family has styled this tradition for as long as my family has. Even longer, as a matter of fact. And I'm proud to have my brother and my family alongside of me and my NYSE family, of course. Jimmy McGuire, of course, also led the singing for many, many years, along with Art Passion. And we remember Jimmy and his family, which is also down here. Peter Tuckman, let me turn to you. You have been always helpful in organizing this. It's not easy getting 100, 125 people from all over the United States to come back down on the floor here. Your thoughts as we conclude 2025 and your thoughts about 2026. You know what? I think the best part of this whole thing is that we've been coming here for so many years. This is not a job for most of us, you know, this is, you know, if you never. If you find something you love to do, you'll never work a day in your life. And I think everybody here feels that way. So they have no problem coming back to celebrate this and to honor the families that have been here forever. 2025 was a year that everything could have been thrown. It was everything that could have been thrown at a market was. And we still closed out 52 record highs on this year. So the most resilient market, the most resilient brokers in the world. 26. You know what I look forward to? It is still one of the leading.
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Indicators of this market.
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And I think it's going to be another great year. All right, Peter, thank you very much. Thank you, Contessa, of course, on behalf of everybody down here, the New York Stock Exchange, Contessa, all my dear friends at cnbc, and of course, to you at home, happy, healthy and safe, 2026. And remember, the one thing you can count on is the New York Stock Exchange will be here and so will cnbc. Tessa, happy New Year.
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Happy New Year to you. But, Bob, you don't get off the hook that easily because since you have been gone from daily duties for cnbc, a lot has happened. You are our ETF expert. You were there when bitcoin, Bitcoin, ETF started to be a thing. And I've pulled them up. I'm looking at the ETF down 64% this year. You've got the Bito down 47%, Grayscale off by almost 8%. What are you making right now of the Bitcoin ETFs, and what do you think about 2026?
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Well, if anything, again, I'm an ETF guy. You may have different opinions on bitcoin. Some people don't think it has a lot of value. Some people think it's real digital gold. What we do know is the market has voted that if you do want to own bitcoin, the safe way to own it is through an ETF structure. And just look at the tremendous success that BlackRock and the other nine or ten ETF holders have had. They've cornered a significant part of the market. So people have different opinions on bitcoin and what its value ultimately may be. But the market's definitely voted that the safe way to own it is through an ETF structure.
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All right, Bob, thank you for the wrap up there of the ETFs. I just throw that at him. Nothing like ending 2025 with a hardball. Thank you and happy New Year to all my friends down on this floor of the stock exchange there.
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Thank you.
- [31:44]
Cadessa milestone moment to another. Now, today marks Warren Buffett's last day as the CEO of Berkshire Hathaway. Buffett is stepping down after leading that company for nearly 60 years. He took it from a $7 stock to a more than $500 stock with his most notable investments, including Coca Cola, Apple, Geico and BNSF Railway. Berkshire is down 6% since Buffett announced his retirement in May and lagging the S and P for the year. Greg Abel will take over as CEO, but Buffett won't step away completely. He'll remain chairman of the company and plans to continue coming into the office each day. For more on Buffett's legacy and what's next for the company is is Ann Winblad. Hi. And managing director at Hummer Winblad Venture Partners and a longtime Berkshire Hathaway shareholder. It's good to talk to you today. I'm just wondering, do you remember when you bought into Berkshire Hathaway?
- [32:47]
Ann Winblad
It seems so long ago.
- [32:48]
Contessa Brewer
I can hardly remember.
- [32:49]
Ann Winblad
Probably about 35 years ago. For me, not as long as many of the Berkshire shareholders.
- [32:56]
Contessa Brewer
Do you think that having Buffett at the helm as chairman will continue to keep his presence and a steady reign on the company, or do you expect to see some real changes in the strategy, in the way that Berkshire operates?
- [33:13]
Ann Winblad
Well, Warren as chairman will be an advisor to Greg, a cultural anchor and a real long term thinker, which is Warren's, one of Warren's many strengths. So Greg is very fortunate to have him around. Definitely the company will operate differently because there will be a new person as a CEO. But will the company fundamentally change in its strategies?
- [33:41]
Contessa Brewer
No. In what way do you think that Berkshire Hathaway could evolve that would be a benefit for shareholders like you?
- [33:52]
Ann Winblad
Well, Certainly with over $300 billion in cash available, it gives Greg the chance to sit back and be patient like Warren has always been, or to pounce when he can. So we'll learn a lot more over time with Greg. And Warren said he's going to be mostly quiet. But we can assume that Warren will still be going into the office as he does every day, and that Warren will always be thinking about long term strategies. So the culture of Berkshire Hathaway, which is what I've invested in, which is patient, long term, careful but decisive investing, will probably still remain.
- [34:40]
Contessa Brewer
It was interesting when you apply Warren Buffett's questions about the investments that you're making. And as I understand it, the questions are, do I understand the business? Does the business have a durable moat? Do I think highly of the leadership? Does the company have a consistent and efficient financial engine? And is there predictability versus the constant need for reinvention? Given that criteria, what do you make of the push Toward AI.
- [35:11]
Ann Winblad
Well, definitely the recent investment in Google stands up to all that criteria. If you look at Google as a company, they do have a moat. They do have a predictable business. They do have strong leadership. They're not needing to reinvent themselves. They're leveraging expertise and building on their innovation culture. And they are a predictable cash machine. So that is Berkshire Hathaway's definition of value investing. They decided to invest at a time where the multiple was not low because a good company and it had a long term benefit to Berkshire shareholders. These are the same criteria we apply when we're building companies from scratch. We look at these day after day, year after year to say, are we building real companies? Have they established a moat? Does the business have, have great leadership or do we need to fix that? Does the company have a consistent and efficient and definable business model? And do I really, really understand where this company is going? This is a great benefit that Berkshire has brought to shareholders is they really understand these companies when they invest in them.
- [36:32]
Contessa Brewer
And thank you so much for sharing your perspective with us today. Appreciate that. And winblad with Hummer winblad Venture Partners.
- [36:39]
Ann Winblad
Thank you.
- [36:40]
Contessa Brewer
Coming up, rosier days ahead for retail. Despite tariff woes and consumer concerns, that sector is set to end the year higher by 8%. We discuss what Wall Street street is forecasting for 2026. And before we had to break, let's, let's check out shares of Warner Brothers Discovery. That M and A mania has pushed the stock up 172% this year. It makes it the fifth best performer in the S&P in 2025. But today the shares are flat. The Exchange is back in two. Welcome back to the Exchange. Retailers are closing the book on 2025 and this was a rough one. Bernie Reagan joins us with a review of how the stores performed.
- [37:20]
Bernie Reagan
Yeah, it was quite a year actually. I mean, the retail theme for 2025, when I was trying to think about what it was for me, was sort of surprising and for two reasons. I would say the resilience of the consumer and retailers ability to mitigate most of the tariff cost to mute the impact for consumers. So the XRT was up 7 1/2 percent. That's half of the performance of the S&P 500. So not great. But if you would have told me that that would be the case in April, I would not have believed you. You can see the very dramatic drop here. And all, all of these charts, all of the indices that track retail from that April 2nd tariff announcement. Now consumers were value seeking to be fair. And I don't just mean value with price, though that's part of it, but also value and item attributes. So if there was value, consumers would buy it. Low price players they soared five blow up 80% Dollar General gained 75% Dollar Tree 64% but specialty mall brands, they also did well. American Eagle launched campaigns with Sidney Sweeney and Travis kelsey. Shares grew 59% in 2025. Victoria's Secret stealthily gained 200% in just the last six months. 32% for the year. UBS does have a buy for both AEO and Victoria's Secret for 2026. Now as Macy's gets smaller, its shares gained 30% for the year. Kohl's new CEO led the department store to 45% share growth. Tapestry's deal to buy Capri that was blocked in late 2024. And thank goodness, I guess for Tapestry because Shares target gained 96% this year, but Lululemon shed 45% under internal missteps. Target, it missed out on that discount rally too because of a lot of internal mistakes. Both of those names are getting new leaders in the new year at least. Target for sure. Lululemon is looking pvh Deckers RH among the biggest losers of the sector because not everybody can be a winner. And if you look to 2026, Jefferies says it is more constructive but still selective when it comes to retail stocks. Nike is its top pick, but it does suggest a short for on holding, while UBS puts on holding on its buy list along with Ralph Lauren, tjx, Signet and a number of others.
- [39:20]
Contessa Brewer
Is there one consistent theme though, like if you stop doing promotions, if you start doing promotions, if you have customer friendly CEO or, or employee friendly CEO, is there a common theme for the for the kinds of retail that do.
- [39:37]
Bernie Reagan
Well, the best thing I could come up with, and it sounds really generic and I was trying to explain it as a sort of idea of value. So Dick's executive chairman Ed Stack said to me, just because a baseball bat is priced right doesn't mean a consumer will buy it. But if that baseball bat helps that kid score more home runs or improves its stats in some way, the consumer.
- [39:58]
Contessa Brewer
Sees value in that no matter what.
- [40:00]
Bernie Reagan
Then we will sell it no matter what it costs. And so that's where that's where it kind of started to be tricky is where are consumers finding value? Yes, price is part of it, but those item attributes are another part. You can't just put up a private label that's less expensive but if it's not great and the consumer's viewpoint, they're not going to pay for it just because it's priced lower.
- [40:18]
Contessa Brewer
Courtney, thank you very much. It's a, it's a big industry to cover. It is really well.
- [40:24]
Bernie Reagan
Thank you.
- [40:24]
Contessa Brewer
Still ahead, Robinhood among the top performing names in the S&P 500 this year. The company bets big on prediction markets. Will it come out as the top dog? One analyst tells us the winners and losers for this space next. Welcome back. From crypto and stocks to sports and political events, prediction markets are booming. Weekly volumes on Kalshee, a CNBC data partner, and on Polymarket topped nearly $3 billion last week with December volumes up 16% month over month, according to Piper Sandler. My next guest says strong growth in sports betting continues to drive that momentum. But as more platforms enter the space, the big question is who wins and who just gets left in the dust? Let's go now to Patrick Mullie, who's the senior research analyst at Piper Sandler, the author of the note on which that data is based. Patrick, good to see you.
- [41:14]
Patrick Mullie
Good to see you, Contessa. Thanks for having me.
- [41:15]
Contessa Brewer
On what is fueling the spectacular growth that we're seeing. And it's not just Robinhood and Kalshi and Polymarket. It's also new entrants as well.
- [41:27]
Patrick Mullie
Yeah. So I think right now I would bucket prediction markets into two separate buckets, if you will see, of sports contracts and you have non sports contracts, sports is driving the majority of growth right now. If you look at a platform like Cal, she's driving about 80% of volumes in any given week. And a big reason for that is that prediction markets are regulated at the federal level by the cftc. So unlike if you're a retail user in a state where sports betting or sportsbooks is not yet available, you're able to access a similar product through prediction markets. So I think there's no doubt that some of the pent up demand in those states for the sports contracts has been driving a lot of the growth. And then if you look at the non sports contracts, things like weather events, economic indicators, we're seeing strong growth there, almost 50, 250% annualized volume growth. We think that's pretty much driven by just a number of retailers, retail platforms beginning to offer event contracts. Just overall awareness of the space is growing quite, quite rapidly. And we think that'll continue in the coming year.
- [42:30]
Contessa Brewer
I know you don't cover the gambling companies, but I do. So you've got DraftKings and FanDuel, which is owned by Flutter. Jumping into the fray fanatics as well, has jumped into the predictions market, much to the chagrin, by the way, of some of their peers in the gambling industry. In fact, they've been kicked out of the gambling trade association. Do you think there is such a thing as too many players in this prediction market space?
- [42:59]
Patrick Mullie
I think it depends on the types of contracts that you're looking at. The sportsbooks, it seems, are framing this as it's a way for them to enter states where they've been unable to enter in years past. But I think going forward, offering some form of prediction markets is going to be key to retail platforms if they want to attract this kind of newer wave of retail trader. I think it'll follow a similar dynamic to what we saw in crypto. You saw a lot of retail brokers off the start that were very hesitant about crypto, didn't know if they wanted to offer it. Since then, they've embraced it and now they're offering it alongside cash equity and derivative trading. So I think you're going to see a similar dynamic play out in the retail space, and I think you'll see the number of platforms that are offering these types of contracts grow in the coming years pretty significantly.
- [43:45]
Contessa Brewer
Patrick, you said in your most recent note this week that you're particularly excited, excited about the growth on the sports side of this equation that, that it's up. You know, what was the number? More than a thousand percent over month over month and year over year. Yeah, it's incredible. Okay. But that is still a question that is being battled out at the federal level in the courts. The states are fighting tooth and nail. Tribes are saying it violates their sovereign right to offer gambling. Can prediction markets continue this trajectory of growth if sports are not a factor?
- [44:19]
Patrick Mullie
Yeah, there's obviously, you know, a number of legal battles that are ongoing at the state level. I'm not a lawyer. I'm not going to speculate around what could potentially happen there if it was to go in the state's favor. I think it would no doubt impact the growth of prediction markets and the trajectory right now, just given that it's such a large part of the market. But, you know, you look at a platform like polymarket, it's one of the most downloaded apps in the US Even before they rolled out trading to US customers. So what does that tell us? It tells us that retail traders are using it to act as an information source. They want to get information on the odds of any specific event occurring. And I think it goes well beyond sports.
- [44:59]
Contessa Brewer
It's exciting times. Patrick Muller, you and I are going to have lots of conversations in the future. Happy New Year and Happy New Year from the Exchange. Thank you for watching. You've been listening to the Exchange. Make sure you're subscribed to get each.
- [45:11]
Bernie Reagan
Episode every day, same time, same place.
- [45:15]
Contessa Brewer
What made you confident that you could do something that hadn't been done before? I have no fear of failure. Trailblazing women, Changing the game One of.
- [45:24]
Bernie Reagan
My favorite pieces of advice Think about.
- [45:27]
Contessa Brewer
What your boss's boss needs. Leadership can look in many, many different forms. It really does come down to just trusting yourself. Life is short and you just gotta think big to accomplish big things. Julia Boy Boorstin hosts CNBC Changemakers and Power Players. New episodes every Tuesday. Wherever you get your podcasts.