head into the last two trading days of the year. >> crazy. >> it's hard to believe. all right, folks, we'll leave it there for you. we'll be back tomorrow on power lunch. thanks for joining us for an hour today. we appreciate you watching power lunch. >> closing bell starts right now. all right, kelly, thank you so much. i'm scott wapner here at the new york stock exchange. beginning with stocks on the hunt for new highs and whether jeremy siegal thinks we will get there. we'll ask him in just a moment when he joins us right here. can't wait for that. in the meantime your score card with 60 minutes to go in regulation looks like this. s&p within striking distance of a new record close. we do have a new milestone today for the nasdaq 100. even several cap stocks have been muted today including apple falls even as an appeal's court grants a stay in that closely followed watch band story. interest rates always a big story. falling slightly on the long

end. that's after a decent treasury action. wow. takes us to the talk of the tape. the road ahead for stocks in the final stretch of the year and beyond. let's welcome in professor jeremy siegal of the wharton school. let me wish you a happy new year. i look forward to many conversations with you next year, which will hold what, do you think, for stocks after this incredible run we've had since november 1? >> yeah. i'm still bullish. i think the set up for next year is very good. you know, i said january 1 and then -- last january 1 right before different consensus that we would have 10% to 15%. i didn't expect it to go beyond that. but i think that we could definitely get another 10, 12% in 2024. earnings estimates, usually they're too high going out. i think 240 for the s&p might be

too low. from some of the things that i'm seeing in what is happening. and so i see, it's a tale of two markets. the s&p, yes, 19.5 times earnings. but the value stocks are 14 and 15 times earnings right now. and if we're going to get that soft landing, which looks increasingly likely, that's a real buy in the market in my opinion. >> well, i feel like the bulls are coming out of the wood work right now, which is concerning to some. for example, 12 reasons why stock investors will see the s&p hit 5400 in 2024. i'm not going to read you all 12. but among them, consumers have purchasing power. housing is going to recover. inflation turning out to be transitory. high-tech resolution is boosting productivity. what do you make of that number? 5,400 by the end of next year. 6,000 by the end of 2025. >> that's even above what i

think. it's not impossible. i mean i've often said a lot of people think 15, 16 is the right ratio for the market. i've often said it is 19 or 20. if we're going to get a good earnings coming in next year and 2025, you know, enthusiasm can definitely bring this market a lot higher. >> i mean the whole implication here, the feds pull this off. we have this soft landing. the fed cuts multiple times, maybe a handful, because it can. not because it has to. inflation has come down closer to target and jay powell, the fed chair, feels comfortable enough that they can cut rates because inflation has come down closer to charter it? >> yes, and it should cut rates. as inflation goes down, you don't want the real rate, which is a rate they said minus inflation to keep on going up. so you need just

to keep the same stance of tightness that you would want it to go down. by the way, i think a lot of people say, you know, the only reason the market could go up is if the fed actually lowers, you know, tremendously. that's not right. what was bullish about jay powell's december fed meeting was showing flexibility. saying listen, if i see a slow down, i'm lowering rates because the last thing you want to have happen is him to be as stubborn on the way down as he was on the way up two years ago. and i think it is more than whether he lowers rates or not, but he's prepared to lower rates. that is what i think is the great comfort level of the market. the fed in a way has the economy's back in 2024 in a way that you were not so sure of. let's say three or six months ago. >> you're making the argument

that is very simple. you believe they're your friend again after being a foe? >> yeah. after messing up terribly in terms of keeping it way too low for way too long, you know, they finally got it. i was worried they got it too hard, but they did stop raising it. but what we will have to do because you know i look at liquidity and that money supply. very honestly it has been stagnant over the last six or nine months. so that is another reason why we need to lower rates to keep the degree of tightness from increasing. also we've got to get liquidity moving again. we have to get the deposits moving again. bank reserves moving up. in other words we have to supply 5, 6% liquidity to get a nominal gdp rising at that rate. right now we've had really no growth in liquidity over the last six or nine months. that will bite if he doesn't lower rates. >> and goldman says they are

going to lower rates five times. that's one of their 10/4 forecast for 2024. when do you think the first cut should happen? >> i think the first cut should happen in march. and i think really, it is completely data dependent and the feds, as we have talked about, scott, completely data dependent depending on the inflation, the economy is doing. and so i mean they're smiling now because basically they say hey look, maybe one of the first soft landings on the half a century. so in a way they're satisfied with what's happening, but they really are looking at what all the data is. i think it is impossible to just absolutely predict when that cut will come. but if they see any slowdown either jobless claim rise. you know, so far i think after christmas sales were not great, but not disastrous.

if anything cumulates to the downside, basically powell says we're ready to lower rates. that's the comfort level of the market. >> so professor, what grade are you going to give the fed chair over the stretch? they may have waited too long, but we don't grade it in the beginning of the term, but the end of the term it. what do you give them? >> you know, i have been asked that. should you just give the final and forget everything in the middle? the problem is because of inflation, why are people unhappy? because we've had 15%, 20% or more inflation. that's not going away. remember we keep on talking that they are not going to bring the prices down to 2019 levels. it'll just stop the bleeding. in a way we can't just say we'll grade on the final exam and we'll grade on what we see in the last six or nine months. the fed in my opinion put us through far more inflation than they should have if they

increased rates earlier. i'm not saying they wouldn't have had any inflation. i'm saying we would have had less inflation, less on the happiness, i think, with so many people. when they look back at the last four years, don't forget a lot of people still have not gone up with inflation. and so in a way, i can't give them more than a c. >> a c? >> that is only because he's basically done pretty well in the last six to nine months. >> a c? i mean how are we grading him on a c if we are having a conversation that they may have arguably pulled off a soft landing without crashing the economy? and here we have the s&p 500 near a new all-time high. the unemployment rate never went up to what people expected it might. the economy never went down to where people feared it might go. how could he possibly get a c? >> well, you know, you're

talking about what's happened recently. how did we get into this situation? i mean you're saying, you know, he was a reckless driver that powed down a passenger, and now we're giving him an a because you got him to the hospital in time, so he didn't die. i mean i'm not going to forgive him for getting into the situation just because, okay, he's got us back to a 2% range, you know, some time later. you can't forgive the damage that was done from 2020 to 2022 when the money supply increased incredibly when he never raised rates and put us through that inflation. i'm not going to give him higher than a c. >> i'm not suggesting they didn't wait too long to start raising rates. i mean i think it's pretty obvious that they did. but we did have that thing called a pandemic. not to mention he's not the one who passed the inflation reduction act, which arguably overstimulated an already stimulated consumer. so don't you give him any passes

on that? >> i don't give him passes because he didn't have to hand the money to the treasury. yes, i agree with you 100%. the government overstimulated, you know, four packages of almost $10 trillion. the last two or three were unnecessary. but what powell should have said, hey guys, you passed those laws, you get the money, go to the bottom marker right now. you borrow it. interest rates could have gone up earlier, and we would not have had the inflation that we had. that's what he should have done. that's what an independent central bank is suppose to do. >> people are saying right now that they're being too political in what they're trying to do leading into an election year. how would you address that? >> well, i think politics is never out of the fed. however, i do think it is appropriate just on economic basis to lower rates. so i don't see them lowering rates too much at this point to say hey, i'm going to try to

help, you know, the incumbent administration. how independent they actually stand. i said this many times. the fed is a creature of congress. it was created by congress. it has to do the bidding of congress. so you could never separate the political from them. but we would have an independent central bank, and that is when the independence back in 2022, powell should have came in and said guys, you overexpanded, you get the money. you, that would raise the interest rates back then. and i guess, i really cannot forgive the fed for those two and a half years. >> all right, you're a tougher grader. i mean i know a lot of people that graduated from the wharton school and we'll have to talk to them about what it is like because it sounds like it was tough, professor. let's bring in cameron dawson of new edge wealth into the conversation. all right, cameron, i'm not going to ask you to grade the fed because i want to know more of your market view here after

this incredible run we've had, and what it means, not only for as we turn the calendar, but more substantially into 2024? >> yeah, i think professor siegel's base pace of the 10% to 11% isn't unreasonable at all. it's effectively saying we get earnings growth, that earnings going from 24 into 25, 10% to 11%. and then acknowledging the fact that from a market capway to bases, you're already at the high end of prior ranges evaluations at 19.8 times. if we look on a forward basis, there's only been two times in history over the last 30 years, meaning we've been over 20 times. it was during the covid policy era kind of bubble. and then the internet tech bubble. so we don't see a lot of upside to evaluations. we think that you could possibly see some upside to earnings growth. we aren't thinking there is upside to gdp estimates for 2024, which could lift earnings estimates. it just means there could be volatility in trading through the year depending on

evaluations go. depending on where liquidity goes that provides opportunities for additions. but needing to remained disciplined if things get too exuberant or overextended, and evaluations get too high, it could be an opportunity to lighten up. >> all right, professor, cameron is a student of market history. how would you address the comments about evaluation, which you suggest are justified at higher levels? >> well, again, i'm going to bring out the two markets. you have the magnificent 7s selling at what, 35 times earnings. nasdaq at 31. and then you have those other, what, 493 stocks selling at 15, 16. you have mid cap selling at 12, 13, small cap selling even lower e. you have europe selling at 12. i mean i'm not going to go around the world. but really, yeah, when you add in the magnificent 7, valuations are on the high end of history. when you take out those seven, which is everything else in the market, i think given the

outlook, they're at the low end of history. >> do i want to bet, cameron, on the seven or the everything else? because the everything else is outpaced a seven at least since the rally got turbo charged in the end of october until now. so what does it mean for where we go next? >> i think you have such a lower bar in the everything else, both on valuation and on earnings. because we do know the magnificent 7 really earned its outperformance this year because earnings were so strong. they do decelerate a lot next year. i do wonder if we're making an everything else argument. are we implicitly making a growth verses value rotation trade argument as well because growth has absolutely trumped value this year. a lot of it is because 50% of the growth index is the magnificent 7. so if we start to see those names give back some of their outperformance or at least not go up as much as the other names, could this be the year that value u does a little bit better? we're going into this year balanced between growth verses value, but it is something we're keeping in the back of our mind

given the distinct outperformance that growth has had over the last year and questioning if it is sustainable. >> professor, what do you think? is it sustainable? what do you think about this growth verses value? >> what is amazing about this year is absolutely it reversed almost penny to penny from what happened in 2022 where value outperformed growth by a huge amount. they reversed. i looked at the two years and they are both exactly equal. s&p, russell value, and russell growth are at a 0 or plus 1%. so we had a tremendous value surge in 2022. big growth surge, unusual for such a fast turnaround. but now when i look at those relative evaluations. i'm saying again, hey, i think it's values turn for 2024. i think when you say, you know, the other 493 stocks, you are

saying you're betting more on value than growth next year. >> well, i mean it's just because of the make up of the market. cameron, of course, all of it comes down to what earnings are going to be. we're not expecting gang buster earnings growth for fourth quarter numbers, which we get in the middle of january. but they do need to live up to the hype or a lot of what we're talking about is moot? >> yeah, it is interesting even with this rally we've had over the last couple of months and these feelings of a better economy. having the soft landing, avoiding a recession, you've actually seen earnings estimates for '24 and '25 get slightly cut. it's not enough cuts to be a bright red flashing bright light saying danger, will robinson, we have an issue. however, it's something to your point, it has to deliver. i think the other interesting thing is that this year we have seen big upsides to gdp estimates. they started the year at .25%. they're ending the year at

2.5%. yet earnings estimates for '23, '24, and '25 have not budged at all. so if we get the better economy than what is currently expecting, which we do things that are out to the gdp estimates, doesn't translate to the earnings estimates or are earnings well calibrated. >> cameron, of all -- since we are talking about the everything else trade. i guess we will refer to it that way for the time being. which of the everything else that lagged is going to be the surprising winner? or certainly one of them that outperforms in 2024? >> yeah, we would look to the three areas that have seen the most outflows from the sectors as kind of fertile ground for picking those everything else winners. that would be financials, healthcare, and energy. because you've seen such huge outflows from those sectors to people giving up on the sectors. what we're finding in those areas is stories from the earnings side. as well not having that high bar

evaluations. you contrast that to tech. it's not to say there are great opportunities in tech. we have some great catch up trades that we would benefit from. but we think there, you've seen such huge inflows as well as much higher bars and earnings expectations that we just prefer to look in some of the areas for the new buys with the low bars. >> professor, tom lee was on with me a week or so ago and he said small caps are up 50% in 2024. the russells have been amazing as of late. what do you make of that prediction? >> well, i mean not impossible. i probably don't think that it will be that high. but yeah. i mean the small caps, they are selling for 12, 13, up radio% increase to bring it up to 18 or 19. that's pretty much where s&p is today. so even with that and also that means earnings are going to go up because the

earnings, listen, i think a lot of those earnings for the small caps were predicated on the recession that they just haven't changed. oh my goodness. you know, it will be a recession. those recessions, the type of earnings, they just kept on being pushed quarter by quarter forward if that recession does not materialize. i think the upside is pretty strong in those stocks to be sure. >> we will make that the last word. happy new year to you both. i look forward to many more conversations like this one in 2024. cameron dawson, jeremy siegel, we'll talk to you soon. >> thank you, scott. let's send it over for a look at the biggest names moving as we head towards the close. kristina? >> reporter: i will stick with bio themes today. we'll start with biotherapeutics. it's down about 19, 20% after the food and drug administration put the company's drug trial for lung cancer therapy on hold after reports that a patient died. switching gears now to shares of regeneron.

they're about 3% higher after winning a patent infringement suit over drugs used for macular degeneration. the west virginia ruling came out just right before 2:00 p.m., so you can see that stock pop that happened right after that. and lastly shares of biontech firm cytokinetics up after posting encouraging data on the treatment for a form of heart disease. that's why you can see shares are up 79% higher today. scott? >> all right, kristina, thank you. back to you soon. we are just getting started. up next a dose of reality for the healthcare space today. former fda commissioner, scott gottlieb sizes up the recent spree in that sector. tells us which companies he thinks could be ready to make the next move and whether any of the deals are likely to happen. that's a big question. we're live from the new york stock exchange. you're watching closing bell on cnbc.

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back on closing bell. it's been a big week for astro seneca. here to break down what it means is the fda commissioner, scott gottlieb on the floors of pfizer, and also a cnbc contributor. dr. gottlieb, it's great to see you again. welcome back. >> thanks a lot. thanks for having me. >> what is it with this spending spree? >> when you look at the deals that got done this year and certainly large deals. the deals that were over $5 billion in valuation, a couple themes emerged. three of the seven deals done that were over $5 billion were done in the neurology field. four of the seven were in

complex formulations, particularly biologics. including the two deals done in the last 24 hours. i think the fact companies are looking to do deals with more complex formulation reflect some influence of the recent policy changes in washington where the inflation reduction act is going to impose price controls on pharmaceuticals sold within the medicare system. those price controls will be implemented at nine years, the small molecules, and 13 years for biologicals and complex formulations. so i think companies are now starting to shift investment capital into those areas, and looking for areas in particular where there are formulation challenges and manufacturing challenges that create natural barriers to entries. so you're not dependent on patents alone as washington starts to erode the monopoly conferred by patents. you want to look for other ways to protect franchises. the deal making and the venture capital flows for that matter reflect that. >> was this a mistake by the government that's led to this? >> well, i think it's certainly a mistake to create such a large differential between small molecules and biologicals.

that's going to change incentives. it's going to force people to try to shift capital into those areas where they can protect their franchise for longer duration of the time the problem is the cbo doesn't do a good job of modeling how changes in incentives will change behavior when it comes to flows of investment capital. they have never historically done that. this is a blind spot for congress and the administration when they crafted this legislation. there was a perception in washington at the biologicals represented the more integrated side of the industry. therefore they want to protect it better. but that was short sided. you're seeing certainly with the deal making and the venture capital flows, that change in how people are now starting to use their capital. i think you're going to start to see it also reflect in pharmaceutical pipelines. they're a little slower to react because of the company's leverage to the particular area of discovery if it has a good small molecule franchise. they won't shut that down overnight. what they will change are the kinds of deals they do and what is also going to change overnight is where venture capital allocates their money. so they're

starting to allocate in places where you have complexity, where you're going to have more protection conferred not just because they have 13 years of protection from the price controls, but they're a part of the copy once they go generic. if you look at the biologicals, once they are subject to competition, they are on the order of 40% verses the small molecules, which is 95%. that's why you see drugs that are facing the competition, but still maintain a robust franchise. it is just less competition in the markets. that's where you're seeing the capital flow. but consumers are going to lose out in public health because of a lot of drug targets. particularly the mental health that just can't be attacked with things like the antibodice. you'll see capital switch out of those modalities. >> we mentioned the deals and then the caveat if they happen from a regulatory environment. what is your outlook from there? >> i'm on the board of pfizer. they closed the deal with seattle genetics. i think the companies do have some guidance and some perspective on what deals they

are able to close. if you are certainly investing outside your core area, we don't have any direct competition within your pipeline. i think what you're seeing companies do and contemplating deals that we're certainly seeing it in the conversations that i'm having is to impute longer periods of time to close the deal. you know the ftc will have a first and second review. then you may have to litigate. so you'll have to structure these deals to give them a longer time horizon to close the deals. some of the deals won't get done because of that. but now companies wide open on what they need to do to get these deals closed and they will start with the destruction of the deals that way. >> and what i think are just such an incredible advancements in so many different areas, the last frontier, of course, is the brain. you would reference the number of deals related to neurology. where are we in this last frontier of substantial drug developments that become as ground breaking in that area as drugs have become in some of these other areas and issues that people

have? >> look, it's a last major organ system that where she not figured out of the organ itself until recently. we are getting much better understanding how diseases in the brain will arrive. not just mental health disease, but the degenerative disease like par kinsons. you're starting to see capital flow back into that area after a decade when it really came out when people had a perception that was hard to drug the brain. now you're starting to see people make investments back into that space. the small molecule deals that got done this year and the large ones, the ones over $3 billion, $5 billion, excuse me, we are all in neurology. if you look at the deals over $5 billion except for neurology, they were all in complex formulations. so i think you're going to see a bid start to get put under assets in that space because it really is a perception that we're about to track the biology of the brain and yield some fundamental patients. >> when people ask you about the weight loss drugs, the obesity drugs, whether the whole space is overhyped or not.

how do you answer that? >> i certainly don't think it is overhyped that we're going to see data start to accrue seeing the secondary benefits of these drugs, particularly in cardiovascular disease that will show the important readout this year and in june that will look at whether or not their drug chose the same kind of advantages that the drugs showed in reducing the risk. and by use of these weight loss drugs, the patients that have the risk factors, they have been subject to a heart attack or stroke in previous years. so i think as these studies will start to accrue as we get more readouts, you're going to see substantial benefits from these drugs. not just in reducing weight, but also reducing the diseases that were in that weight and that they will also have some milestones this year thatthe drug will be out there whether or not it will expand the label. that will be an important

milestone. but ultimately you'll start to see the other benefits of these drugs. not just in reducing cardiovascular risk, but the things like reducing the alzheimer's, reducing the risk of neurodegenerative diseases, and other things associated with inflammation and poor glucose control. >> what would your input be if you were still at the head of the fda? and you expect to be pretty important? >> yeah look, i'm not close enough to data. i'm sure if they are going to look very closely with that. we've seen the studies publish and the readout. the data certainly looks convincing. those patients in the trial were properly treated. they were all on hypertension medications. they still showed a substantial reduction in the cardiovascular risk from the weight loss that they achieved from that drug. so being able to reduce cardiovascular risk on top of already optimized therapy.

that's a substantial breakthrough in my view. and it's going to give cardiologists another tool. a whole new way to try to reduce the risk in patients who face, you know, cardiovascular risk from the prior mri stroke or primary prevention in patients who are overweight who face the risk of a heart attack or stroke who have not yet suffered such an event. >> and let me ask you about covid. there is obviously covid fatigue. there is clearly vaccine fatigue. what can you tell us about jn1 and the vaccine about that variant? >> you know look, it seems to spread more easily. it seems to pierce the immunity that people have required. the vaccines are partially protective with respect to that new variant. you're right, vaccination rates are low. a lot of people don't have immunity. they haven't had a recent infection and they have not been vaccinated this year. it does not appear to be anymore dangerous than prior strains.

it is just more contagious. cases are picking up. we're at 25,000 hospitalizations right now. concentrated in the midwest and northeast. but we're going to see that spread across the country. we are going to face a second wave of infection this winter. it's building right now. i don't think it will be anything near like the omicron wave last winter, but cases will be harder from where we are right now. >> dr. gottlieb, you be well. we'll see you soon. >> thanks a lot. >> appreciate your time. dr. scott gottlieb. straight ahead, momentum mayhem. nasdaq 100 looking to lock in its best year since 1999 on the back of outside gains by each of the mag 7 stocks. is the tide though set to turn for those names in the new year? we're going to ask one top tech investor how he's positioned. we'll do it next.

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keeping his eye on the names outside to outperform the market. welcome back. >> how are you? >> i'm good. thank you. which one are you watching outside the mag 7? >> well, you know, we think magnificent 7 stocks are going to do fine in 2024. just not at the relative performance that they saw in 2023. a lot ofthe opportunities. we think small caps, they will do well with lower interest rates. we think the financial sector would do well and even real estate will have a bid in 2024 due to lower interest rates. >> does that mean you think there will be a rotation out of mega cap into those areas? or is it going to be cash from other areas? >> i think it will be on rotation and i think it will be a combination of both cash coming off the sidelines. we saw evidence of that really starting in november. microsoft, for example, and shares of apple have actually

underperformed the market since the end of october, whereas small caps financials, real estate, a lot of these industries that are underperformed in the past year have started to outperform. >> which of the mag seven do you think will be the biggest surprise in terms of games in 2024? and then i want to ask you which one you think would be a big surprise to the downside? >> it is a great question. i think they will actually continue to outperform on the upside as a surprise. i think a lot of the companies, the a.i. initiatives, they are not yet fully recognized by the market. and to the downside, it could be in video. and the reason why we say media, because competition, it is starting to heat up from the likes of companies, starting their own. the a.i. chip initiatives from intel, for example. and so nvidia may be the company that will see

some underperformance, if you would. >> what about apple? it's fair to say significant questions about the sales growth. even though it's under $200 a share? >> and i think perhaps the fastest growth phase in the earnings growth will be the share appreciation, maybe pass the company without new initiative its. some of these new initiatives could be the company's a.i., generative a.i. business if there is anything sort of materializing. we do think the iphone next year could be a catalyst as well. the refresh cycle is going to be strong. but apple is getting into some tough conditions with this recent apple watch that we're facing, for example. >> reporter: who will have a

better year? because i think what the narrative was at the beginning of the year is not necessarily what the narrative might be into the new one. i say that for obvious reasons, all the hype around, you know, the open a.i. investment. everybody just said well microsoft has stolen the thunder from alphabet, so it will not give that up. stock performance year to date has been nearly identical. they have been trying to catch up, doing a fairly decent job in doing so and it remains optimistic. but which one will have a better performance and why? >> and we think it will be alphabet. first of all because of evaluation on a relative basis, alphabet's valuation is actually cheaper than that of microsoft's. i think the company's a.i. initiative so far has not gotten a ton of recognition as much as microsoft, for example. out of the two, we do think it's

likely alphabet will have better gains in 2024. >> okay, take care. we'll see you on the other side of the new year. have a good one. >> thank you. up next, tracking the biggest movers as we head back to the part for that. kristina? and soft bank getting a double win today and, of course, tesla is cooking up a new car revamp. details after this short break.

we're 15 from the closing bell. let's get back to kristina partsinevelos. >> well tesla shares are up 1.6%. one of the top s&p 500 winners today after bloomberg reported the ev giant was gearing up to launch a revamped version of its best selling model y car. and let's switch gears now. better late than never, right? japanese tech investor, soft bank, getting $7.6 billion worth of t-mobile shares after soft bank sold sprint to t-mobile back in 2020 a few years ago. softbank agreed to give up the shares in conditions they would get them back if t-mobile shares hit a certain threshold. that's why they're getting the windfall. and another win for softbank as well, arm hit an all-time high today. it was just above $74.

well above the $51 ipo praise, which is not even on the screen right now. softbank owns 90% of arm and that's why we care. >> yeah, that stock has been up a lot lately. thank you, kristina partsinevelos. coming up, the apple doesn't fall far from the tree. the lead iphone designer reportedly departing to join johnny to work on a project with openai sam altman. thosdeils ene tawh closing bell comes right back.

apple shares bouncing off today's lows. new developments in the ongoing legal battle over the latest addition of the watch. we're going to break down the details and what it could mean for investors. that and much more wn hewe take inside the market zone.

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react to fast-moving markets with dynamic charting and a futures ladder that lets you place, flatten, or reverse orders so you won't miss an opportunity. e*trade from morgan stanley all right, we're now in the closing bell market zone. here to bring down the crucial moments. and steve covak on two developing stories around apple this afternoon. emily, i'll begin with you. i had a conversation top of our program with professor jeremy siegel who is bullish. i want you to listen to what he told me, and we can talk on the other side. >> i'm still bullish. i think the set up for next year is very good. i think that we could definitely

get another 10, 12% in 2024. earnings estimates, you know, usually they're too high going out. i think 240 for the s&p, it might be too low. >> well. let's say you? >> yeah, scott. i heard him saying that earlier. you know, i think it is a little bit optimistic frankly. it's amazing to see what happened this year. of course, now up about 26%. that's on zero percent earnings growth. if you think about tax stocks, their earnings were up. some of the best earnings we've seen across the globe for equity that their stocks were up 58%. now you look into next year, analysts are expecting 12% earnings growth and that is on top of the multiple expansion that we've already seen, so we came in this year at 16.5 times

forward earnings, sitting at 19 times forward earnings right now, which is sort of the ceiling that we're bumping up against that high from over the summer. so i think there is a lot of optimism that's already baked into the markets. i'm not saying that we can't be okay, that we can't shop around here, but we're not starting from a great place. >> so you think we pulled a lot forward? >> yeah, absolutely. you know, it's amazing. i think really markets have rallied not only on the fed pivot, which has been absolutely critical. the feds played a huge role in this especially over the last month or so with this big 360 from chair powell. but you've also seen markets rising on the expectation that we're going to see double digit earnings growth next year. think about it, we're going to have less fiscal support. we'll have a much higher cost of capital. we still have the lag impact of the fed moving from essentially the loosest monetary policy we've seen in four decades to the tightest over the course of

18 months. we still haven't really seen that biting economy yet. >> maybe it doesn't bite it to the way it traditionally might because of all the stimulus that was in the system to begin with. inflation is coming down fast enough that the feds are actually going to be able to cut rates reasonably quickly and head off that in the pass. >> yeah. so that is the narrative now. it's a soft landing narrative. we've had this incredible fiscal stimulus that has been extended, causing these long and variable lags to be super long and variable for lack of a better word here. but we still think that higher cost of capital is going to hurt corporate margin. it's going to cause a lot more cracks in the labor market. then we'll have to really see how that plays up. the challenge with the soft landing narrative is that it is already baked into the multiple and it is already baked into the earnings estimates. again, the point that there is a lot of optimism there. on the bond side, there is some more opportunities here as you have seen some value created, not the opposite, which is what we've seen on the equity side.

>> how is it baked in though? i know the market anticipates things, but the fed hasn't even cut once yet. the economy is hanging in there. what makes you think that all of it is in the market? i think that i could easily suggest that it is not? >> well, i just think the idea that earnings have been flat this year. i mean look atsmall caps, for example. they're up 18% year to date. we've seen the biggest rally in small cap equities that we have seen in decades over the last couple of months. and their earnings are actually down 17% this year. so i think we completely ignored the fundamentals here. i think fundamentals are simply going to come back into the picture. this fed pivot party is going on and on and we are all still standing around the party, it is late at night with a lot of risk that's happening with the collapse and bitcoin has rallied. we've seen the lowest levels over the course of the year. i'm not saying that we can't have a decent year for stocks next year, but we have come a

long way, really, really quickly on this fed pivot. maybe the fed is not going to cut six times next year. we've got a little bit of a challenge on our hands. >> emily, happy new year. we'll talk to you soon. emily rollin. steve covak, a couple of big stories around the watch and then mr. jony ive? >> hey scott, yes. here is what's going on with the apple watch. they've got this kind of stay with the federal appeals court, which they have put in that appeal yesterday. basically this means they can't be, you know, any kind of legal trouble with the government if they do, in fact, decide to bring the watches back in. it is only until january 10 until more legal things get figured out. i just looked at apple's website and asked them a couple of times today. it is still not on sale. so despite this minor legal win, scott, apple not selling the apple watch right now in the united states. so things are pretty much status quo until like the next beat in this legal drama plays out.

>> the other story we're following all day, of course, jony ive, sam altman, and then the former head of iphone and watch design? >> yeah, that's right. yes. so with that this is really interesting. at least dramatically. it is not like openai is poaching folks over from apple. this one lead apple designer who was in charge of the iphone and apple watch design is now going over to join jony ive's independent design firm called love from. he started that after he left apple. they're working on some kind of mystery ai product. what that looks like is anyone's guess, but it is so interesting to watch the hottest company in silicon valley kind of take apple's design playbook in a time when apple is frankly bleeding design talent since jony ive's departure about four years ago, scott. >> well, specifically because ive and altman together, along with the other person, who knows. but there's a lot of optimism around it for obvious reasons.

steve kovach, thank you. i'll let you bounce. dow is up triple digits and the bell is going to start ringing in a couple of minutes. they're clapping already. s&p 500 inching closer to a new all-time high. there is the bell. we'll see you on the other side of the new year with morgan. well stocks eke out modest gains today as the s&p inches closer to a new record. it's just about 15 points give or take from its 2022 closing high now. that's the score card. the action is just getting started. welcome to closing bell overtime, i'm morgan brennan. jon fortt is off today. stocks stuck in neutral though, failing to hit record highs. the major averages remain on pace to extend an eight-week winning streak. coming up, the