>> all right, pippa, thank you. you've been on triple duty today, too. appreciate it. a mixed picture for stocks today. the s&p up. we remain on record watch. weapon got a record for the dow industrials. nasdaq, small cap russell 2,000 finishing the day down slightly. tomorrow, it's chicago manufacturing pmi that's going to close us out, final trading day of the year. that does it for us at "overtime," "fast money" begins right now. >> morgan, thank you very much. live in the heart of new york city's times square, this is "fast money." and here is what's on tap tonight. striking distance. the s&p 500 just over a dozen points from an all-time high. the dow closing at a record high, and the nasdaq, well, down slightly, still up 44% this year. can the market keep its mojo? we'll debate that one. plus, all aboard, the transports having a red holt det december. up 25% for the year.

but can you still jump on the train trade? of course, the transports are much more than just that. and later, is the rebound in financials for real? the options action on apple and is tesla about to get yet another competitor from china? good afternoon, everyone, i'm tyler mathieson, coming to you live from studio b at the nasdaq. on the desk tonight, steve grasso, courtney garcia, mike khouw, and our guest trader for the hour, chris harvey from wells fargo securities. welcome one and all. and we begin with stocks clawing their way to all-time highs ahead of the year's final trading day tomorrow. the dow closing at another record level, the s&p just points from a record, and the nasdaq sort of essentially flat on the session. small cap stocks among december's biggest winners so far, and there's just one day left. the russell 2,000 jumping almost 14% for the month today. real estate driving big gains, rounding more than 9%.

it's the month's top s&p sector, by the way. is now a good time to pop the champagne and celebrate or should investors worry that a hangover is ahead? courtney, i'm going to begin with you and then go to chris, because i know chris has some thoughts here, but why don't you take it away? >> yeah, i think this rotation that you're seeing in the markets has really started in early october, i think that's going to continue. as we're ending the year, we look into 2024. you've missed a lot of upside by not being in some of these rotation trades, but i don't think you've missed out on all of this. if you are not in it, still a good time to get in. you want to make sure you are invested in not just the top seven companiesright now. those very well might slow down next year and there's a lot of room to run in things like small cap and real estate and the interest rate sensitive things you mentioned. you want to make sure you are diversified. >> the market is healthier for this broadening out. >> absolutely. >> that's been taking place in various sectors. some have been orphaned and left behind, but many have not. >> absolutely. and i think that's where you need to make sure that you are invested in these things, right?

because, you know, when the markets are looking forward you they're probably overanticipating the rate cuts next year. they are expecting four to six cuts next year, i don't know if that's going to happen, but in all likelihood, we're seeing a peak in rates. rates are going to come down at some point, and that's only going to continue to benefit things. and the economy is still on good footing. you want to make sure you are forward-looking. >> we're going to talk about rate cuts in a minute, folks, and if as many as the market expects is what you guys expect, but chris, i want to turn to you, because we were talking earlier, and you anticipate some sloppiness in the market as we turn the page to 2024. why, and where -- how it is fog to show up? think that's right. so, everything is priced in. perfection is not the right word, but we have a 250 number for 25, and we're 19 times at this point. that's pretty healthy. we think the underlying fundamentals are okay, but as we go from the macro to micro, some

is not as pretty as expected. if you look at the reports from n nike, fedex, the market was not appreciating the guidance. people really have to bring down guidance, but people want to moderate that guidance, and with equity markets this high, we think there's going to be a little bit of choppinessnext year. you want to -- you probably can buy that, but be careful and don't be too bullish entering the year. that's -- >> too bullish entering the year, but we just put up wells fargo's year-end 2024 price target, which, assume you still stand by, it is below where the market is today, so, that would suggest that it's not just the beginning of the year that might be choppy and troublesome, but maybe by the end of the year. there it is, 4625. >> that's right. one thing is, we put that target together back before the fed came out and did what it did, and that changed things a significant amount. the cost of capital's come down a lot.

and we'll look at that and take into account earnings and so on. we do think the first half is going to be more difficult, when you had the vix down at 12, 13, when everything is priced really well. there's a lot of optimism there, but if you get that pull-back, you can buy that pull-back, but it could be a pretty -- it could be 5%, could be upwards of 10% in the first half of the year. so, just be careful. a lot of optimism out there. a lot of people came into last year, excuse me, ended last year really negative, we had a great year this year, and now we're seeing the opposite. >> a lot of people pretty positive. we'll see what happens next year. though generally, when the market is higher by 20% or more in a year, the ensuing year is also a positive year, two out of three times. >> it is. and can you imagine having to make a price target or number for the s&p in january from 12 months out? >> oh. >> so, i think there's a lot of -- to chris' point, the fed didn't do what they did when he made his target.

>> right, right. >> that goes in right off the bat. you have to give -- there's probably a 5% error to the upside. i don't want to put words in his mouth. i just did. i got him in trouble with compliance. but when you look at the comments we've heard, so, the safe haven was the seven megacap stocks -- >> seven nondwarfs. >> right. that's where we saw the regional banks get in trouble. with that money migrated into where they had cash flow and fortress-like balance sheets. now it's coming out, saying, let's broaden out, because maybe we're not going to see a recession. i'm of the belief that we've already seen a recession at the back half of 2022. if we're going to see a soft landing, no recession, easier funding for the russell 2,000. russell 2,000, 40% of the russell 2,000 is unprofitable. so, immediately, when you look at these companies, if you give them better access to money, they're going to -- >> cheaper money, they're going

to have an easier shot at profitability. >> 100%. or they're going to survive, right? so, forget about being profitable. they're more likely to survive. so, that index can trade higher and that's what we've seen. >> mike, you've been listening patiently out there, wherever you are on the west coast, what do you think? >> yeah, i mean, obviously, i think that some of the names that really have seen the best gains this year, they could be vulnerable earlier in the new year. i sort of think back to the beginning of 2022 when we hit that january 4th peak and then sort of rolled over, you know, some of the best performing names in the russell 1,000, and i mention the russell 1,000 instead of the s&p 500 when i'm talking about the large cap companies, because there are some names in there that have really done exceptionally well that wouldn't necessarily be eligible for s&p 500 inclusion, and i'll include names like affirm in there, we talked yesterday about, you know, coin base, i think, these are the types of names where the companies are not profitable, and where i think that sort of

the bloom comes off the rose, they're the most vulnerable, for sure. but there are also some megacap companies that even now, if you were looking at them with fresh eyes, you would say, these are still reasonably valued. i think the most notable example of the bester erperforming stoc we've seen this year would be meta. the reason everybody hated meta was largely because we thought that mark zuckerberg with his controlling vote in meta was just going to focus on his own pet projects and was spending billions of dollars. the company is now cheap and is growing, let's call it 15%, 20% on the bottom line and trading at a market multiple or cheaper. so, i think there are some decent names. as courtney was pointing out, she said early october is when we really saw some broadening out of this rally, and the way to see that, if you are looking at this at home, is just take a look at rsp, which is the etf that tracks the equal weight s&p 500 versus spy. it's outperformed so far in q-4

by, you know, about 30, 40 basis points. >> yeah, and you see it up year to date up 12%, 7% for the month. all right, let's talk interest rates and the fed's policy on rates. a key topic in the cnbc delivering alpha survey that we released today. we polled 300 strategists and money managers and more than half of them, as you see there, 54% plus 19%, more than half of them believe that the fed will begin cutting rates in at least by the second quarter. a minority seeing it happen in the final half of 2024. chris, your reaction to this, to the majority of swamis saying, hey, they're going to start cutting before the end of the first half of the year, and they're also discounting a lot of interest rate cuts. >> all true. so, what we -- >> what if it doesn't happen? >> if it doesn't happen, then we've got a little bit of a problem. then we're going to have a repricing of risk and we're going to have an aggressive repricing of risk. and a lot of people are saying,

well, listen to all the fed governors, they're saying, well, calm down. what i say is, if your mom and dad say you can have ice cream and your older brother says you can't, you can still have ice cream. in all likelihood, the cuts are coming. they are probably going to come sooner than the market originally thought. if we get some economic data, or whether inflation data that kind of pushes it back, then we will have a bit of a problem. and the other problem we have is, the fed is now lowering rates. you're going to light up the housing market, you're going to -- that has a big multiplier on the economy. that has a big multiplier on the job picture, and also on wages. so, inflation may not be over and we may be dealing with it in the second half of next year, which could slow things down. >> courtney, react to that, and also to -- the market seems to be anticipating 150 or more basis points of cuts next year. something like that. which suggests six quarter point cuts or maybe they do 50. my -- more broad baseline question is, why is the fed

going to cult int interest ratet year? the economy's good. >> yeah, the economy's good, but if inflation is coming back to their targets and a lot of things are working itself out like supply chain issues, so, if inflation is coming down, they can start to bring rates down in order to match that. but i think that's the big question, right? if rates are coming to the extent that the market expects them to, is that just because inflation is coming down, or because the economy is softening or there's some sort of recession? there will be probably be less cuts in the market. but there are two reasons why the market can do well next year. rates coming down, which is going to be beneficial to the small caps, but also, profits accelerate next year and earnings improve, which is expected to, as we are seeing this earnings recession likely ending here, that is also going to be a really good thing for the economy. i think these are two things that can work together, but i think that's likely going to do well next year and that's going to boost the market. >> so, steve, the usfed cuts ras

so the economy does not go into a recession, is that partly what would drive the cuts? >> yeah. well, they're in restrictive status right now, which is what jay powell has said. so, the reason why -- i've heard that push-back of, why are we going to cut rates, what would the -- the economy is going to be in such poor shape, that's the reason why they're cutting rates? no, it's to courtney's point. inflation has fallen. this was a supply issue, a supply chain issue. that was basically self-created. so, he was right when he said it was transitory, he just had to expand on what that actually meant, but if you have a pce at 2%, there's no need to have rates where they are right now. you don't have to be crashing in the economy if milk, eggs, cheese, gasoline, if everything continues to fall in a dramatic fashion, then he's too restrictive, he's got to cut rates. nothing to do with the economy falling out of bed. >> all right. our next guest thinks the

broadening of the rally we've been seeing over the past couple of months could carry over into the next year. he's with us now with his 2024 outlook. we'll get to that outlook in a moment, but in the credit where credit is due department, you were soft landing before soft landing was cool. you still feel that way? >> we do feel that way. the pieces have come together. we talked about this a year ago that we thought the elements were in place to have a soft landing, a stable and healthy late boar market. really unprecedented job opening provided such a buffer that we could weather the higher interest rates. so, that's really come together and we think it's still playing out and in the latter innings of that soft landing now. >> what does that imply, then, for returns on equities and fixed income assets? >> we think both will be healthy in 2024. we'll probably return to more normal ranges, both for fixed income and equities. we don't expect gangbuster year.

we do think that it's a year for balanced approach to risk, but we think there's a positive backdrop for risk into 2024. >> so, you're looking for returns in equities that would be more along the historical average of 7% to 9%, something like that, or what? >> looking for a bit more than that, sort of maybe high single digits, but more likely low double digits. we think that's achievable, given the broadening of the rally and still what should be a strong megacap sector in 2024. we think that the rally will continue to be broad-based also it's been over the last couple of months here. >> steve? >> so, when you look at the path of the market this year and everyone talks about the performance was, you know, doubled pretty much from a handful of stocks, when you have to convince people of your thesis right now, what's the major push-back that you're not going to see the megacap deliver the earnings punch that they did

before? or is it that the lower tier stocks are going to outperform? >> you know, i think some of the push-back is just a bit of reluctance that the megacaps, can they continue to do well in 2024 and hold up the markets? we don't think they're going to be -- have the outperformance that they had in 2023, but we still think they'll do well and provide some leadership in the market. so, i think that's the biggest point, and i don't think investors have caught on quite as much as we believe will be the case in 2024, that the rally will continue to be broad. i think investors have been burned for many, many years over small caps and over value, and there's still a little bit of reluctance to jump into these area, and i think 2024 shows strength in these areas, as well. >> broad valley by size, by sector. and so forth. courtney? >> i'm curious on your take in bonds. you noted a little bit about that here.

what we've seen with investors, they are seeing really good yields on money markets and they're not wanting to touch bonds. they've done really well the last two months. people aren't necessarily seeing that when the equity markets are also doing as well, if not better. i'm us i'm curious on your thoughts on the bond market in 2024? >> we actually extended duration a couple months ago, at a time time when ten-year yields were around 5%. we think they are below e equilibrium now. we think we're going to see the ten-year yield back above 4%. we're not excited about extending duration here. we think bonds will probably return mid single digit range, investment grade bonds for 2024, but we think there will be better entry points if people are looking to extend duration, probably in the second half of the year, as growth resumes, and we think earnings accelerate and the economy stabilizes. >> chris, why don't you try out your thesis for 2024 and yung-yu.

>> before we get to our thesis, m&a has been lackluster this year. we have lower rates, good valuation, and economy that's kind of muddling along. seems like a great time for m&a. and if we do have m&a, do we have a lot more speculation in around that m&a cycle? >> we do think m&a is going to be a big story for 2024. probably the second half more than the first half, but we think m&a activity is going to pick up overall and we think that's going to boost some of the sectors, particularly probably biotech, where we expect to see a fair amount of m&a activity. interest rates coming down the second half of the year, a lot of companies sitting on big cash piles, a lot of private equity firms sitting on cash piles, as well, we think m&a is kgoing to be a big story the second half of the year. who does that benefit? biotech and some of the investment banks that are heavy in m&a, as well. >> why don't i get you to respond to what chris began by saying and that is that he seeps maybe the first half of next

year being a little sloppy, maybe, because of how far we've come and other factors, i don't mean to put worlds in your mouth, but that's what i do best. how do you react to that, to the idea that the first half of the year may be, quote, a little sloppy? >> well, we do think there will be a bit of a slowdown in consumer spending, and we don't think that q-4 earnings are going to be gangbuster. i think a lot of it depends on how much inflation stays down. we get these consistently low readings and whether the ten-year yield stays below 4%. if we get all those in place, i think we kind of muddle along in the first few months until we see better growth prospects in the second half and until the fed starts cutting rates. in terms of being sloppy, i think -- let's see what happens on the pull-back. if small caps hang in there, i would get more on mysist on mis

mystic. maybe not that our thesis is, you know, no longer holds, but maybe that it might be pushed off a little bit and some of that sloppiness that chris talked about could be in order for a couple months. >> all right, thank you so much for being with us tonight, have a happy new year, sir. appreciate it. >> thank you. >> mike, any thoughts, how to trade what we just talked about? >> yeah, i mean, one of the things that's interesting about that forecast for the coming year is that he's anticipating, you know, fewer rate cuts, i think, than the market is baking into the cake, and i think that the market could ultimately, in this instance, be a victim of its own success. i mean, just a little thought experiment, if we catch another 5% in the s&p from here, get us up to around 5250ish, get into those numbers, it is hard to imagine you're going to see the kind of rate cuts that everybody is anticipating. so, that might be part of what he's forecasting, if the whole picture is better than people think, you're not going to get the rate cuts.

and you could get the sloppiness that chris is forecasting a little later. >> steve? button it off for us. >> yeah, so, i think you can look at it a number of different ways. the path is lowering rates. depends on when it's going to happen. but when you look at where the market is, i don't think the fed is taking any cues from the market anymore, nor would they say they ever did. they are taking their cues from inflation. and i think you're going to see, if the market does have a sloppy setup in the first month or so, what will people do? they'll sell the small caps and they'll go right into the safe havens. i think ultimately maybe a test in january, but ultimately, the market's moving higher. >> all righty. coming up, will there be more microsoft magic in 2024? shares up big in '23, but can the climb continue into the new year? the latest price target hike out of wall street, next. plus, trance ports stocks having a merry holiday season. the group climbing 8% in december. so, which names can keep this trade trucking higher?

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welcome back -- oh, now i can talk. welcome back to "fast money," everybody. time for our call of the day. it is on microsoft. the stock on a tear this year, up 60% and one analyst says it could just keep on climbing. microsoft is having its iphone moment with its a.i. monetization. ives raising a price target to 450 and maintaining his outperform rating, predicting that its a.i. tool co-pilot could add another $25 billion to the top line by 2025. what do you make of the call, courtney? >> so, i think with microsoft, i think there's really three things it can continue to do well. number one, they are very likely one of the best who can benefit from a.i., which is clearly why this price increase is happening. but also, with the activision acquisition, you're going to likely see some additional opportunities in gaming. and also, when it comes to pcs,

everybody bought their pcs during covid, there's a three-year cycle. that's coming up again. that's going to benefit my have to ofmicrosoft, as well. all that being said, though, it's not something i'm overly weighting. but it's a company that's done so well this year, you want to own it, but there's a lot of other opportunities. i don't want to beat a dead horse, we've talked a lot about our small caps and our real estate, there's other areas i would add money to, but i still want to own microsoft. >> mike, let me turn to you, and note that in our delivering alpha survey, 39% say microsoft is the best big cap tech stock to invest in for a.i. and 44% say microsoft will be the best performer in the market out of that magnificent seven in 2024. your thoughts? >> yeah, i mean, kind of to courtney's point, at 30 times, that's the only challenge. it's usually going to trade at a significant premium to the market, it does right now at about 30 times versus let's call

it 20. but this is also a company that has nearly doubled eps over the course of the last five years, cash flow generation, and a great way to leverage a.i. across their platform. you know, i think it's often very difficult in situations like this. this is a great company, is it a great price? no. is it a fair price? yes. and i think that's a good enough reason to stay in it, if you own it. or to consider buying it if you don't. >> we talked, mike, last night, about sort of core holdings, stocks that ought to be in most diversified portfolios. is microsoft one of those in your book? >> yes. yes. sure. and i think the short, sweet answer to that is yes. i think that is, i thinkal fa bel alphabet is, meta is. we're going to be getting a lot of financial earnings coming up, that's going to be the news over the next couple of weeks, and that is kind of underperforming this year, and i think it's possible that if we're going to start to see an area to rotate into, that's one that you could take a look at.

so, that would include names like jpmorgan and things like that. >> chris, quick thought, either on microsoft or on big cap tech generally? >> yeah, what we like is we like software. we think software is going to outperform hardware. you have a lot of stability, great fundamentals. believe it or not, microsoft is still underowned by a lot of institutions, and so, you could see some upward pressure because of that. and overall, we think it's a good call, but really, that software versus hardware, the stability, and the fact that it's just not a crowded trade, believe it or not. >> and they are software, i mean, you said it. chris, thank you. there's a lot more "fast" to come. here's what's coming up next. planes, trains, and automobiles. the transport trade is fired up. so, which names can carry your portfolio to the next level? the traders give their picks, next. plus, betting on the banks. the group is on pace for its best quarter in more than two years. and our next guest says it's just the tip of the iceberg. why he's favoring financials in 2024, ahead.

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stand with palestinians and israelis for basic human rights. stand for all women. welcome back to "fast money." it's been a long december for the transport trade, and there's reason to believe maybe next year will be even better than the last. the group up nearly 8% over the path month, nearly 20% so far this year. the xtn s&p transportation etf, say that ten times fast, folks, also up more than 13% just this month. lyft, jetblue, union pacific, all helping lead the charge. steve, let's talk about

transports. and we were talking before the broadcast, there are transports and then there are transports, like a lot of sectors, there are the freight carriers, but then the airlines and lots of ways to sliver this sector. >> and if you think about what was the major catalyst, it all gets back to powell. so, once rates, if you look at them on a chart, everything jumped. every etf jumped. everything jumped as a whole, but transports specifically jumped because if you take off hard landing off the table, then the transports say, oh, we're going to avoid -- >> we're going to carry more freight. >> we're going to carry more freight. and then you have red sea. and if you have a confluence of events that are headwinds or potentially can increase pricing, for trant ports or they can avoid a recession, it's a recipe to have itrally aggressively and that's what you've seen these companies do. >> courtney? >> yeah, and so, you bring up airlines, also, which is kind of the other side of that, and that's the same thing.

if a recession is taken off the table, you're likely going to see this continuance of people wanting to travel. now throw something like a delta, likely going to be better positioned than something like a southwest for example, because of what you're seeing, is people have continued to travel, but the demand toward international travel is still pent up post-covid. so, the airlines that have the longer flights, international, they're going to benefit a little more and that's part of what that trade is. >> and delta, mike, is one of your holdings. can you talk about that or transports more broadly? >> yeah, we do own delta,and it goes to what courtney was talking about. there's been some buildout in capacity in europe, but i think she's right, there still is a good demand picture, and let's look at how something like crude did today. that was off a couple bucks. that represents 25% of the operating cost for an airline like delta. the other pressures, of course, that the airlines were facing is that there's a pilot shortage and labor issues with contract re

renego renegotiations. as long as demand stays in there, the employment picture stays where it is, it looks good. we have good free cash flow, i think this is a good place to be. >> all right, mike, thank you very much. and coming up, no new year's r resolution for the bank trade. the group on pace for its best quarter in more than two years. but can banks keep bumping in 2024? rbc's gerard cassidy will join us to lay out his take and why he says this group is just getting going. more on that when "fast money" returns. missed a moment of "fast?" catch us any time on the go. follow the "fast money" podcast. we're back right after this.

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welcome back to "fast money," everybody. we've got stocks closing mixed, with just one trading day left in 2023. what a year it has been. the dow gaining 50 points, a record close there. nasdaq snapping a four-day win streak, while the s&p is up five days in a row. a small gain there. on pace for its longest weekly win streak since 2004, and just 13 points, the s&p is, from an

all-time closing high. some names hitting their own all-time highs today would be mastercard, eaton corporation, parker hannifin, marriott, ross stores all trading at those all-time high levels, even though a couple shading lower. banks bouncing back in a big way to end the year. the kbe bank etf now in positive territory for '23, pacing for its best quarter since the fourth quarter of 2020. blackstone, jpmorgan, goldman sachs, american express, all touching highs not seen in more than a year today, and our next guest thinks it's just the start for the group, saying investors should go overweight in 2024. gerard cassidy is head of u.s. bank equity strategy at rbc capital markets. gerard, welcome. good to have you with us. who would have thunk that the financials would be doing as well as they have been doing, given the fact that it was just nine months ago that we had major failures of a couple of mid-level banks?

>> very true, tyler. and when you take a look at what happened back in the spring, it was very idiosyncratic. on top of that, there was no contagion. the reason there was no contagion, the fed moved very aggressively, which was good, of course, but those banks' business models were unique to them. but to your point, now that we see the fed might be at igts tem gnat rail for fed funds and we might have a soft landing in 2024, these are two huge positives for then banks,banks, especially when it comes for credit. that's a real positive for the bank stocks. >> one of the things in your report from december 14th that you point out is that once interest rates hit that terminal rate, and begin to roll over, historically speaking, that is a period when banks outperform the broad market and by a substantial measure.

take us through some of that history. >> sure, tyler. in fact, i'm glad you brought that up, because the classic example was the '94-95 time peered yo period, some people might remember greenspan raised rates from 3% to 6% ending in february of '95. the stocks bottomed at the end of '94, and that peak in fed funds rates was the catalyst for the stocks to go up 55% in 1995. another good example, tyler, was 2004-2006 tightening tycycle. same thing. the stocks outperformed in '06, they were up over 20%. the challenge, as we all remember, was the fps sinancial crisis hit in '08 and the stocks were decimated because of credit problems. so, those are good examples people can look to. and the important thing is credit. credit was not an issue in '95. it became a big issue following

'06 and the stocks behaved accordingly. >> steve? >> gerard, i call it jamie morgan, not jpmorgan anymore, because it follows one man at this point. i'm going to read you this one line. jpmorgan earned nearly 20% of all u.s. bank profits in the first three quarters of the year, taking in more than bac bank and citi combined. do we have to -- are we making this too complicated, just one bank to buy in the whole stratosphere of the financials? >> well, steve, it's interesting, because it was the stock to own this year, jpmorgan chase, it was the classic name, as tyler pointed out earlier, in the spring, when we had the bank failures, money flocked to the risk-off trade and jpmorgan was the direct beneficiary. if we are going to see a soft landing next year and the fed again is at the terminal rate. i think investors are going to start moving to risk-on, all of

the names would do better in a risk-on environment versus what we saw this year. >> so, let's talk a little bit about credit risks. if you see a soft landing or no -- no recession, basically, there's not going to be much credit risk. they are not going to have to write off bad loans. >> tyler, you're absolutely right, and the interesting part is, we have new accounting that came in to effect in january of 2020 called current expected credit loss accounting, and this accounting requires banks to look through their portfolio, through cycle, and set aside reserves. many banks are anticipating 5% unemployment over the next 12 months in setting up these reserves. unemployment, as you well know, is closer to 3.7%, so, if we don't see unemployment going much over 4.5% in 2024, the banks have already set aside a considerable amount of money to handle the expected losses in a 5% unemployment market, which

possibly we won't see next year. >> all right, gerard, thank you so much. have a happy new year, and i know you'll be a busy soul, because those banks start reporting the second week of january, jpmorgan, citi, coming out on friday the 12th, and then following the week, a torrent of them. gerard, thank you, again. appreciate it. >> you're very welcome. thank you. >> chris, what's the trade here? working for a bank, said the banker to the banker. >> as steve pointed out before, we did our outlook back in november, and wone of the thing we thought, second half of the year, we want banks, financials. that with the change with the fed, we're probably moving that from six months from now to probably six weeks from now. potentially. because he's right. if you are not going to have unemployment really rachet up, then that credit cycle is not going to bite the way you thought it would. furthermore, we may have some m&a, we could start thinking about looking at m&a activity.

portfolios have improved significantly. do we get a change in regulation? do we get a change in administration? but overall, when you look at the valuation, when you look at the credit cycle, and you look at the fact that these are not well-owned or overowned sectors, it becomes really interesting. the problem, or the one push-back you have is the kre, the etf for mid-cap and small cap banks, is up 40% since the low. that's tough to just kind of jump on right now, so, you might want to wait, and that's what we're thinking about. again, we're looking for that opportunity where maybe fourth quarter numbers aren't that great. we get a little bit of hiccup, we get a push-back from all the positive, from that, everyone thinking the fed's going to be really aggressive, and that becomes your opportunity. but overall, things are setting up very nicely for the banks and the financials. >> courtney, do financials interest you? and if so, which part? >> they are interesting. if we are right that a soft landing might happen, more people are borrowing, so that's

where the banks are going to benefit. some of your big names like your jpmorgan, is that the whole banking industry? i do think that is something that you want to own right now, it is one of the safer plays. >> courtney, thank you. and coming up, china's ev gold rush keeps getting bigger and bigger. we will kick the tires on the latest high-end offering from a tech giant famous for its smartphones. plus, this lowly laggard of the magnificent seven is up only 50% this year. options traders are betting apple is just about to retest its all-time highs. how soon? we'll get the definitive answer, right after this.

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welcome back to "fast money." the year's worst performer in the magnificent seven relatively speaking is on track to close out the year up 50%. apple ticking higher today, within striking distance of its all-time highs and one options trader is betting the tech titan could hit that target, all-time high very soon. mike khouw, what are you seeing and why? >> yeah, so, we saw calls outpacing puts by two to one. that's above average for apple.

unsurprisingly, the most active contracts are those that expire at the end of this week, but if you look to january regular way expiration, it was the 195 calls trading for a little over three bucks that caught my eye. over 15,000 of those traded, an institutional buyer paid $3.12 for those calls. why is that important? because the break even on that is $198.12, a penny above the all-time high that we just saw earlier this month of $198.11. so, that trader is expecting it to hit new all-time highs in three weeks. >> mr. grasso? >> yeah, my guess is that we've all been looking at this, whether it's the highest valued company in the world and how many headwinds are coming at it from all sides, and if you -- if you look at the path on the technicals, it looks as if we are going to blow past. we've been inches up to that $200 price mark and once you keep hitting that level, it weakens that resistance. i would say mike's pointing out

that person who made that bet is probably a safe bet where it's probably pops above 200. >> courtney, the company for the first time in a long time, they've had sales challenges, revenue challenges. what do you think of apple? >> yeah, i think longer term, actually, where their opportunity lies, you know, china has been their big story. i think india is going to be longer term when we're looking at sales and as that becomes a bigger source for them. shorter term, as we look into next year, one thing that's going to benefit is as the dollar weakens, they do have a lot of overseas business, that's going to help. >> help them as they repatriate. >> and you tend to get a lot of money getting into etfs, that is one of the largest holdings. i could see short-term this continuing to go up, for all those reasons. >> all right. let's take a break. coming up, a new contender emerges in the biggest electric vehicle market on the planet. we will look under the hood of the brand new ev offering from the chinese tech giant famous for its smartphones. more "fast money" after this.

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welcome back to "fast money," everybody. chinese consumer electronics company unveiling its entry into

china's world-leading electric vehicle market today. it's meant to compete with offering from tesla and porsche, when ithits the market next year. so, aiming high end. it has been developing the vehicle for some three years at a cost of $1.2 billion. they're famous for its smartphones, and says the new ev beats the porsche and tesla on acceleration. that's quick. and it has a range of up to, get this, 500 miles, compared with about 300. steve grasso? >> we're at a race to zero. all of these things are so fast, i don't even know -- who needs to go that fast? i mean, 0 to 60 in -- that's motorcycle speed at this point. so, when we look at them all, i said this in the past, the people who have to -- the companies that have to worry about the competition are the fords and the gms. tesla, if you own a tesla, which you do -- >> i do. >> you own a tesla, people rave about it.

mike owns a tesla. he loves the car. he has a couple of teslas, i do believe. so, if you own a tesla, you already have that brand loyalty. it's trying to capture the person making their first ev, and tesla has a lock on their clientele. gm and ford do not. >> all right, let's talk about it. what do you think, court? >> i agree with you there. i think here, especially in the u.s., tesla is far and away -- the model y is the best-selling car right now, but most evs are still sold in china, and i think that's something that -- elon musk came out and said, of his biggest competitors, it's china he has to worry about. they are clearly working on stuff that is creating competition there, so, i don't know how much here in the u.s. it's going to be a problem, but globally speaking, i think it is something -- >> i don't even know, do we bring in any chinese evs? are they banned or not? mike, do you happen to know, mike khouw? >> you know, i don't know about the chinese evs, although we are

going to be getting chinese parts in some of the evs that we do have. i'm kind of dubious about the claims that they're making here. 500-mile range, it's just simple physics. to outaccelerate a model s, you need to axel rate at 1.2 g, which is basically the limit for a street legal tire at this point. so, it's not a question of horsepower, it's a question of friction. so, that seems a little bit dubious. 500-mile range, also, the model y, i think, has about 3.8 miles per kilowatt hour, so, if you sort of work things out, you say, well, how big does the battery have to be, unless they have a huge sort of leap in terms of the efficiencies that they're car produces, which is unlikely, too, because tesla leads in this area. so, some of the claims they're making sound awfully ambitious. >> yeah, i've heard -- i believe there's a story circulating that toyota is developing a solid state battery that could bring to market in five years or more, but that's about it. that one could carry 700 miles,

so says some of the trade -- some of the trades here. final thoughts on the ev world? >> we were desperately hoping for an ev to take out tesla, i don't know why tesla's so hated at this point, but people hate the stock, and it continues to rise. >> and they keep selling the cars, as you say, the model y, probably the largest selling single model in the country right now. up next, we'll bring you some final trades on this next to last trading day of 2023. ♪ the biggest ideas inspire new ones. 30 years ago, state street created an etf that inspired the world to invest differently. it still does. what can you do with spy? ♪

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welcome back to "fast money." take a look at our very own melissa lee, today in "the wall street journal", part of our live ambitiously marketing campaign at cnbc. a great month for melissa. "fast money" on the billboard on the west side highway here in new york city and now "the wall street journal." congratulations to melissa and all. time for the final trade. let's go arne thound the horn. mike? >> yeah, we talked about financials, they're going to be reporting on the 16th of j january, i like goldman sachs. >> chris? >> communications space. xlc, great growth.

great opportunity, great momentum. >> communications. courtney? >> the rotation to value, i like at exxon. >> looking at exxon. and mr. grasso? >> servicenow, full disclosure, bill mcdermott, a good friend of mine. a hidden a.i. play. >> all right, thank you for watching "fast money." "mad money" with jim cramer starts right now. my mission is simple, to make you money. i am here to level the playing field for all investors. i promise to help you find it. mad money starts now. >> hey, i am cramer. welcome to mad money. i am just trying to help you make money. my job is to not just entertain and educate, i want to help you explain.