steph? >> the india etf. big fan, my favorite place to invest around the globe outside of the u.s. 1.46 billion people and they are going the third largest country by 2030 and it's down 8% from its highs. >> that does it for "halftime." "the exchange" starts now. courtney, thank you very much. welcome to "the exchange." i'm kelly evans, and here's what's ahead. it's time to play chess and not checkers. our market guest says that's what the president-elect will be doing, and he's bullish on the market because of it. he just raised his year-end targets for this year and for next year. he's here with his new numbers and where he's seeing the biggest opportunity right now. plus, amazon investing another $4 billion in openai's biggest rival. we'll have the latest, the impact on the a.i. landscape and on google as google's battle with the doj goes on. and why trump's pick for

energy secretary is bullish for nat gas and for this name, our mystery chart today. our analyst calls it a direct beneficiary, and he joins us ahead to make his case. you know the deal. tweet me if you can guess this one. let's start with the markets, though, and dom chu with the numbers which were red this morning. >> they were red this morning, but now, we are green again. and we're, believe it or not, working on a five-day winning streak for the broader s&p 500. that's where we're going to start in the large cap s&p 500, which currently sits at 5,968. at the highs of the session, we were up 24, so we're just about there. we were actually down 4 as kelly points out at the lows. that's the trade end. we're less than 1% away from record high levels. that high water mark in the s&p is 6,017. that's the number we're watching there. the dow industrial is at 44,225. it's up 354 points, about 0.75% gain there and relatively, maybe, about 0.1% gain for the broader nasdaq composite, 19,000 on that big figure up about 27

points. the laggard, if you will, on the day so far. that's the trade. a thematic element today, retail very much in focus not just because of the shopping season but also because of catalysts in the market right now. gap stores, up about 10%. earnings report. but more focused on the updated and upped outlook from the full year for gap. ross stores, off price retail, up 3%, not so much focus on the earnings but they also up their full-year forecast. deckers outdoor, one of the better performers in the s&p, up 5.33% because they get a buy rating and it goes on the conviction list. tapestry up 4% here because they, having a bend in their merger, are now putting it in place, an accelerated stock buyback program. that's the retail state of play. another record high that we are putting up right now. we are back above the $99,000 mark on bitcoin, just a stone's throw away from $100,000. i will point out that the high

watermark here is roughly $99,525. we were less than $500 away from that six-figure print, but we're still up roughly 1%. bitcoin prices have carried a lot of stocks along with them, coinbase, robinhood, marathon and others, so keep an eye on those, kelly. >> dom, thank you very much. lot of news in the tech world today. let's start there with google down again after yesterday's sharp selloff, down about 4% on the week, following the doj's push to sell its chrome browser. and then there's amazon. news was out it's upping its the investment in anthropic to bring it to $8 billion total. we have reporters on both of these stories, kate rooney with the amazon and anthropic latest, deirdre bosa with that google chrome. what it all means for the stocks, start-ups, welcome to all of you. kick things off for us, kate. what do we know?

>> big news this morning, another $4 billion investment into this a.i. start-up, anthropic, a rival to openai. you've probably heard both of these names at this point. it brings amazon's total to $8 billion. that is by far one of amazon's biggest outside investments and venture investments, one takeaway is its recognition that amazon seemingly ask cannot do alone. gene munster has been in the camp that amazon has been behind at points in a.i. he says this news is bullish for the a.i. trade. when it comes to amazon, says that trade is still on, shows they do have plenty of time to catch up, and underlines a lot of confidence, as well as -- in anthropic from amazon. it has been their horse in this a.i. race and it's not just a cloud and aws story. yes, the point here, in some ways, is to drive growth for aws. their store their data on amazon's cloud, so that's one big flywheel effect, but amazon is also going to be using their chips, so amazon designs these nvidia competitors, trainium

chips, and part of the agreement is they use these chips to train their massive foundational model so that is another key thing to watch. anthropic is really nipping at the heels of openai, this funding battle is heating up and that's one way these start-ups compete is just on cash. microsoft investing more than $10 billion in anthropic, so it does let them compete on more of an even playing field. so, interesting stuff, kel, but that's kind of where we are. >> amazon shares are fractionally lower. deirdre, why is google down again today? >> probably on the antitrust. we've really saw shares plummet yesterday, and i think some of that is continued. i think it's probably less about this anthropic deal because similar to what kate said, people i talked to say that anthropic is plan a for amazon, but it's more of a plan b for google, because google already has a lot of the ingredients that you need in the a.i. arms race. it has distribution, researchers through deep mind and hardware,

so -- and i think that that makes this race really interesting, because the investments from megacaps into these a.i. darlings, they always come with strings attached. in this case, amazon is saying that aws is now the primary trainer for the next models. someone i spoke to questioned that and said, are they going to be moving off google? that doesn't seem to be the case because anthropic does still use google cloud. it uses google tpus, so it will be interesting to see how google answers back with this, but again, kelly, the stakes are lower because it has a lot of its own ingredients needed for gen a.i. whereas, as kate said, amazon really is betting on anthropic, but it does come at a time when google is sort of down on the count, right? all of these antitrust threats are weighing not just on the search business but could also impact how google is able to compete in the generative a.i. race. >> for sure. justin, let me bring you in on that. the department of justice had

suggested google sell chrome but google itself is going to come up with alternative suggestions for how to kind of meet this. what do we -- for how to basically change its business model? selling chrome doesn't get to the problem that it seems the courts had with google, so what do you think that they might propose? >> yeah, sure, thanks for having me on, kelly. i think, overall, you're going to see a much more benign response from google in december, much less aggressive changes they would have to make. the trial will be in april and decision next summer, and then, probably google will appeal. so, we won't get a final decision for a couple years, but i think google's response will be, you know, no asset sales and a much less aggressive proposal, and they'll hash out in court next year. so, a long process, never had a break-up in our investment history, including the microsoft case, so a lot of room to go before we get a final decision. >> do you think that the selloff and the shares make sense? or is it an opportunity? >> we definitely think it's an

opportunity. what they're doing with a.i. overviews is very interesting, and i think they'll have an opportunity to better monetize search next year. there's a lot of cost-cutting that they're doing. their head ount growth is much lower than revenue growth, so you're going to have margin improvement, and a lot can change with the new doj leadership next year. so, i think the case will take a lot of twists and turns between now and sentiment's pretty negative at this point. >> i love the a.i. overviews, actually. i find them very useful. justin, here's my question. so, i've seen analysts and maybe you're among them, saying the usefulness will actually help people use google search more than they might have otherwise done. that could be a fill-up to results next year and they also think it could help with the ad click-through rates. can you explain how it would help with ad click-through rates when it is much harder to see an ad with these a.i. overviews than it was in the past. >> google is suggesting usage is increasing, as people get more familiar with the format, it's even increasing more.

the monetization side, about 60% of google clicks -- google searches are zero-click searches. so, they have a significant percentage of searches that have no monetization currently. a.i. overviews gives you a much broader answer area, and second, people interact with it more, so more queries per search, and i think with that broader landscape in search results, those zero-click searches will start seeing more ads and probably have better click-through rates on ads going forward. 60% of searches have no clicks, and i think that can shrink with a.i. overviews over time. >> just a final question on that, and i promise i'll move on, but do you think, then, we're going to see ads into or next to the a.i. overview as opposed to just further down the page? >> yeah, they could put links on the right side, or they can integrate small text ads or maybe even picture ads within the overviews. it takes up quite a bit of real estate if you see them. >> it does. >> six or seven lines, and there is opportunity to integrate ads in there.

>> interesting. little like picture pop-ups or something. i'm tracking. i can see now maybe if they get this form factor right. deirdre, what would you add to that? >> justin, i'd push back a little bit, because while these -- what we got from the doj is pretty radical in the words of google, even if a little bit of it happens, especially the stuff around data, and data is well and truly the gold of the generative a.i. era, how might that affect its position to compete in this race? things like sharing data. that would give competitors like openai, which has been reported maybe looking at developing its own browser. how would that position -- do you think that investors might be complacent on that point? >> for sure, the doj proposals will be very detrimental to search results. we don't think that will be a final outcome, by the way, but those were pretty detrimental ten-year sharing data with potential a.i. and other

competitors would not be positive for search. so, we'll see where this case goes, but i think you're right. if you just look at the proposals, those would be negative for google, but we don't think that's the final outcome. >> kate, just to turn back to amazon, how are they expecting to use anthropic technology if that's at all where the conversation is going? how are they deploying a.i.? is it to optimize ad load in their own verticals on the website? is it just simply that they benefit from all the cloud compute obviously that if they let anthropic do its own thing, it can ultimately support? which direction do they go? >> i would say the biggest benefit would be to the bottom line when it comes to spending on cloud and chips. so, that's where you're going to see it flow back through to amazon. they offer claude, which is the chatgpt competitor to aws customers, but if you think about the shopping experience, they've got their own proprietary -- it's called rufus. their bet is they're going to be

the agnostic third party provider and they have not said this, but particularly about these getting commoditized but the bear case for a lot of these large language models is that they're going to get commoditized. amazon is sort of positioned if that is the case to say, we don't care who's the winner, we're going to give you access to everybody. that's been seen different ways depending on who you ask but that's been their play here, they're going to give you access to everything. one last point on amazon. the regulatory environment. they have been really hamstrung by -- you think of the i-robot deal. they have not been able to do a lot of m&a. there is an appetite from wall street for amazon to do more deals on a.i. they're not getting a board seat, not getting any sort of control over anthropic, but folks i'm talking to would say it's something to look out for when it comes to amazon. they have a lot of cash on the balance sheet. there are plenty of a.i. start-ups out there. you might see more deals, but something to watch going into next year, guys. >> good stuff. kate rooney, deirdre bosa and justin post, thank you very much. we appreciate it. let's get to the other big story this week, and since the

election, which is bitcoin getting closer and closer to hitting $100,000. just above $99,000 right now, in fact. it's up more than 40% since trump's win on the hopes of a more crypto-friendly administration, and that's not the only catalyst as michael saylor, the cofounder and executive chairman of microstrategy pointed out on "squawk box" earlier today. >> participants in the market are buying bitcoin 20x faster than the supply is coming from the miners. there's a major demand-supply imbalance and that's going to continue for the foreseeable future. >> well, my next guest agrees and says investors are actually still early in the game when they get into bitcoin now. joining us is hunter horsily, the founder and ceo of bitwise asset management. there's a lot of pent-up demand for bitcoin. >> yeah. it's remarkable, kelly. in some ways, it feels like bitcoin has been around forever now. we've been talking about it for years. it's 16 years old. but i think that 2024 was really the end of an early chapter in

the beginning of a mainstream chapter, and we serve, you know, we manage about $11 billion in client assets. we serve thousands of advisors, and the clear impression we have is that investors are engaging now. they view it as finally having matured enough, having the regulatory clarity they need, so somehow, it feels like the beginning of the next stage of the journey. >> we were talking about this earlier in the week, but we're somewhere between 18 and $19 million of the 21 million coins being mind? >> about 19 million. 19 million of the coins. there's not a lot of -- as michael from microstrategy said, there's not a lot of new coins being mined, and that means that for new investors, there has to be somebody on the other side of that that's willing to sell, and that influences price, and so, i think we've seen a very strong demand side, and there's not a lot of supply for those investors.

>> bill miller has been making the case for a decade now that basically, when -- if you just have a lot of high net worth households all deciding they want to own one bitcoin, for instance, that alone could drive up the price to something well north of where we are right now. i think he would echo those sentiments that it's still early days. >> absolutely. i think it is absolutely early days, and again, it's kind of hard to imagine it's been around for so long, but i'll give an example. so, we -- as mentioned, we serve thousands of wealth management teams across the country. the day after the election, one of my colleagues got an email from a client. the subject line was, "it's time." and the content of the email was, effectively, that they want to go ahead and proceed with making a 1% allocation to bitcoin. that hasn't even happened yet. i have a call later today with the cio of a $50 billion-plus firm, and they said it's time, and the next step is to write a white paper in q1 of next year. so, what we see across the board

is traditional capital markets participants are activating, but most of that is still in front of us, so i think -- i think bitcoin is a lot of room to run. >> who's selling? every time we see the price wiggle, that means somebody decided it was a good price. do we know the share of institutional versus retail ownership these days? >> yeah. retail ownership is very high in this space. i believe it's north of 50%. maybe north of 60%. so, you know, in terms of who's selling, it could be a variety of different stories. there's a culmination of retail investors who want to take some gains and also there's a large segment of hedge fund traders who are running strategies and trading around volatility that are often supplying, you know, sitting on the supply side as well as, of course, the miners. so, it's hard to put your finger on exactly who it is, but in general, the demand side has been so strong that it's pushed the price higher as it's outstripped the supply.

>> wow, look at coinbase now at $308. its run also continues. a lot of these. coinbase is up -- could it have doubled in the past two weeks? it's just remarkable. real quickly, before we go, hunter, do you think they're going to be disintermediated by etfs or is coinbase where it's at? >> coinbase is just moved incredibly since the election, and i think this reflects the, you know, the characteristic of this new chapter, which is a world in which there's no longer a regulatory headwind, but the space is being embraced, and i think people view coinbase's future much more optimistically. i think the story on coinbase, which they've said in earnings calls, is that t amazon for crypto, and they've now built out a number of business lines, servicing both on-chain activities and investment in the space, so i think there's a ton of opportunity ahead for coinbase. and i think we're going to see a number of ipos in the future, and people are going to realize there are several large crypto

businesses that have been sitting privately that will come to the market as well. >> that would be enjoyable. i hope that's the case. i think like you were saying, there's so many alt coins or meme coins that have just been up huge the last couple weeks, and they still are the go-to for access to some of that. hunter, thanks for joining us. >> my pleasure. >> hunter horsley. coming up, new data are rolling in and all showing the same thing, a post-election surge in business confidence. but one key measure of uncertainty is also growing alongside the general optimism. we'll tell you what it is and what it could mean for business investment over the next four years. plus european equities have been basically dead money this year. with the ieb etf flat while the s&p is up 25%. is the set-up getting more attractive or less so heading into next year? we'll look at the latest data out of europe, what it means for the dollar, and what it means for investing abroad. "the exchange" is back after this.

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welcome back to "the exchange." fed surveys are clocking a surge in business confidence. steve liesman is here with a closer look. steve, what can you tell us? >> kelly, several recent regional fed surveys are showing a surge in economic optimism.

it really shows that post-election enthusiasm on businesses is not limited to wall street, but it also comes with a rise in one gauge of a policy uncertainty that could limit how much real economic gains we get from that optimism. the philly fed manufacturing survey's outlook for business condition rising 20 points to 56.6, its highest level since 2021, even while the assessment, you can see there, of the current conditions, remains pretty depressed. kansas city fed. their six-month outlook jumped four points to its highest level since january. new york fed's empire state showing an unprecedented 43-point surge in current conditions. it's the biggest gain since the pandemic. you can see here, gains in manufacturing optimism. they can be linked to increases in new orders for capital goods or business investment, not one for one, but that business investment, that orange line, you can see has been kind of lackluster the past several years. the regional fed surveys were

conducted largely after the election and they suggest the optimism over the potential tax cuts and deregulation from the incoming administration. wall street is also capturing the imagination of the manufacturing sector. it could coincide with a cyclical bottoming of the manufacturing sector as well but a measure of economic policy uncertainty. this comes from the university of stanford at chicago. it comes from newspaper articles, shows that increase in uncertainty, likely linked to the unknowns of the trump administration, tariff policy and a lack of clarity on taxes and deficits. that same uncertainty extends to what the fed does in part because of uncertainty over fiscal policy, so kelly, the december rate cut probability, now at about 53%, about 50/50 or a flip of a coin. >> a coin flip, wow. there have been so many meetings like this that are truly live this year, steve. that's interesting. stay with us, because there was some optimism in today's data as well. the s&p global flash services pmi for the u.s. rose to 57 in

november. that's a near three-year high, even with manufacturing remaining somewhat soft, 48.8. slight increase from october but still suggests contraction is below 50. my next guest says tariffs have him worried about growth. he's the chief economist at wells fargo, and jay, it's great to see you. kind of tie this all together for us. what are these data points telling you? >> well, it's telling me that right now, the economy's doing very, very well. particularly the service sector part of the economy. and we've known that for some time now. the services continue to do very well, and i would expect that's going to continue. i guess the question as you go into next year is in terms of tariffs. you don't put tariffs on services because we don't import that many services but if there's a lot of tariffs on goods, that could take a real hit to confidence next year. >> maybe the way to say it differently is if you look at the data, it all tells us things are great right now, but what do you think is going to happen?

do you think things are going to start to roll over into next year? how long is it going to take to figure out what's going to happen under the new administration? >> that's a great question. i wish i knew the answer to that. i think what you have to do is i think you have to do -- take president-elect trump's word about tariffs very seriously. now, he's talked about 10% across the board, 60% on china. now, does that happen on day one? i wouldn't say that necessarily does that. and maybe we, you know, he exempts certain countries, maybe he exempts certain sorts of goods, et cetera, but you know, it's -- i think you have to take that seriously. and to the extent that you do see tariff increases taking effect at some point next year, that's going to push up consumer prices. it's going to push up the rate of inflation. it's going to slow growth, and it's also going to leave the fed to -- it's going to have a real quandary about what to do if inflation goes up and growth slows. >> the december's a coin flip. they have inflation already kind of looking sticky. we have rumors about -- i don't

know what he's going to be at this point, but it's clear there's going to be a lot of pressure on the fed to both be accommodative, jay, but also, i don't think anyone wants inflation to break out. what do you foresee them actually doing over the next couple meetings? >> so, you know, right now, i would say, knowing what i know right now, i would say i think they probably cut in december, you know, steve was just saying it's a coin flip. i think that's kind of true. but then, i think that you really start to slow down the pace of easing at that point. you're getting closer to neutral. people don't really know where neutral is. they're feeling their way there, and let's face it, if the home that we have right now carries over into next year, it's going to make it a little bit more difficult for inflation to continue to come down, and i think at that point, the fed really wants to start to slow down the pace of easing. >> steve, do you think they'd ever keep a rate cut in the bag so they can do it in january or february to kind of allay some political pressure instead of shooting that arrow in december?

>> no, i don't think so, but i want to get back to what jay was saying, and i wonder if he thinks or what you think, kelly, this idea that president-elect trump could get the benefit of the optimism about his policies without the uncertainty if he were to step forward and offer a statement of principles about what he thinks about how far the deficit can go, about what he thinks about tariffs being used on a punitive rather than across the board basis. and i think that that push-me/pull-you between the uncertainty over here and the confidence in good policies over there, they could cross each other off, and he may not get that benefit unless he steps forward with some kind of statement of principle. maybe he's involved, right now, obviously, in putting his cabinet together and not so clear on the policy, but if he were to be more clear, i think the market would benefit greatry from that. >> we have to infer the

principles -- maybe he'll prove us wrong jay, maybe there will be a scroll or a long tweet. we'd all love that clarity, but it seems like the sausage is being made in realtime, depending on how the economy is, depending on how his meetings with foreign leaders go, depending on what he hears from a ceo, don't you think? >> yeah. you know, i certainly think that i agree with steve. a statement of principles would be very, very helpful here, but clearly, the president-elect has a lot on his plate right now. he's got to figure out who his treasury secretary is going to be, and that will be instrumental in terms of any sort of tariff policy, still putting together his economic team, and so i don't think we're going to get that statement of principles for quite some time. if we get it at all. >> indeed. gentlemen, thank you very much. appreciate your time. jay bryson with wells fargo and, of course, our own steve liesman. still to come, trump is tapping a shale exec to serve as his energy secretary and one analyst says this natural gas name will be a direct beneficiary. it is our mystery chart. some of you are close, but

you're thinking too nat gas-y. energy more broadly. we'll reveal it when the analyst joins us and the "the exchange" is back right after this. it's all thekeep this world. it's the go-tos that keep us going. the places we cheer. trust. hang out. and check in. they all choose the advanced network solutions and round the clock partnership from comcast business. powering more businesses than anyone. powering possibilities.

welcome back to "the exchange," everybody, i'm tyler mathisen. the federal highway administration has approved new york city's congestion pricing plan. it begins just after midnight on january 5th. the plan will charge most motorists a reduced rate of $9 to enter midtown manhattan and lower, but it isn't a done deal yet. there are at least nine lawsuits pending over the plan. that $9 is down from something like $16 that they were proposing some months ago, but it's up from zero. hyundai and kia are recalling more than 208,000 electric vehicles in the u.s. that could lose power. regulators say the vehicles' charging control units could get damaged and stop charging the battery. the recall affects some ionic 5 and 6 vehicles and luxury genesis ev variants from 2022 through 2025, as well as 63,000 kia ev models from '22 to '24.

and after bringing news to new yorkers for 50 years, the legendary anchor chuck scarborough is stepping down. at the end of his 6:00 p.m. newscast on thursday, the celebrated anchor said his last broadcast will be december 12th, but he will continue to contribute to special projects at the new york station, which is also owned by our parent company, nbc universal. chuck scarborough, what an amazing career he's had. more than 50 years, kelly, in the anchor chair. >> quite a run. congratulations to him. tyler, thank you very much, and i'll see you shortly. coming up, the s&p 500 is marching back towards its all-time high of 6,017. it's up 25% now since january. but wall street's already looking ahead to the next big milestone moment. morgan stanley, goldman-sachs, and ubs seeing a price target of 6,500 for the end of next year. bmo's brian belski betting on 6,700. ed yardeni says the s&p hitting 7,000, as does our next guest. he joins us with the key drivers and where he's finding opportunities next.

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welcome back to "the exchange." services here in the u.s. were really strong as we were just discussing, but it's a very different story about the economy across the atlantic.

seema mody has a look at the latest data and what it's telling us, seema, about business there and how it could fare into next year. >> yeah, kelly, when you compare the u.s. and europe, we're seeing divergence in economic data with european business activity taking a sharp turn lower, composite pmi staying to a ten-month low of 48.1 in november. europe's two biggest economies, germany and france, that typically hold up the region, remain the most challenged. tourism, really, the only bright spot right now. the european central bank does have a mandate to keep inflation at 2%, and the central bank is in the process of cutting rates, but with services inflation still hot, the concern is that policymakers may not be able to deliver as big of a rate cut at its next meeting in december. also at play is the u.s. election. european equities have fallen about 5% since trump won while the s&p 500 has gained about 4%. experts say the threat of tariffs, of potential reduction in the u.s. trade deficit, will prompt an even weaker euro,

which just hit its lowest level against the dollar since 2022, so a two-year low. though, today, hsbc analysts writing that given the strong run in the ollar since the u.s. election, we could be in a period of some consolidation, kelly. >> it keeps feeling like sentiment about europe can't get worse. i think they've said germany's economy has been in and out of recession for i don't know how long now. there was that report on competitiveness which showed they had this huge struggle ahead of them and the collateral damage is this soaring u.s. dollar which is not damaging stocks here too much, but it's still going to have an impact. >> yeah, and europe's biggest economy, germany, is sort of stuck in this period of stagnation, and then you take -- if you zoom out and look at the european stocks 50, the index, it's down on the year and the three biggest losers on that index, ricard, caring and l'oreal, which tells you the consumer story, not holding up well as well across europe. part of that has to do with the

chinese consumer not traveling back to europe the way they were before the pandemic. we'll, of course, see how that stimulus could affect that story. >> that's a great point, and maybe that could give them a bit of hope at the end of the tunnel. seema, for now, thank you very much. seema mody. while trump's policies may mean pain overseas, my next guest is staying bullish on the u.s. and says they'll boost inbound investments and improve exports for u.s. companies. joining me now is the chief investment officer of equities at federated hermes. it helps to put a round number on things when we're talking about the end of this year and for you, even the end of next year. you still see a lot of upside ahead. >> we do, kelly. we think, you know, we're moving from strong to stronger here in the u.s. with the trump agenda coming in, providing another leg of growth. so, we've set a target for next year of 7,000 on the s&p, and 7,500 by the end of '26. you know, we just see pretty

much a pretty strong growth rate going forward, lower inflation, lower interest rates, reinverting yield curve, deregulation helping profits, lower taxes. it's a pro-growth agenda that we're dealing with here. >> do you worry about the soaring u.s. dollar? when i saw 108 on the dollar index this morning, that really caught my attention. >> well, it's good for u.s. companies in the sense that, you know, it gives them more pricing power, and maybe offset a little bit of the tariff increases that are coming. it's one of those offsets you get that people don't think through when they just kind of multiply the tariff increase by volume, but the stronger dollar helps offset that. good for u.s. consumers. so, net-net, no, i mean, generally, a strong u.s. dollar is good for u.s. stocks, kelly. >> i forget the term we were just using with steve and jay bryson. they said the business community might be calmed down if trump

were able to present a list of what he's actually trying to achieve with tariffs that would do x but not y, you know what i mean? i'm not sure if you feel the same way, because from where you sit, it sounds like you see them as much less of a threat than others might. >> yeah. i'm smiling, kelly. i saw you smiling during that interview, because i think you were thinking the same thing i'm thinking. chess players don't, you know, send out a list of their next three moves, and a lot of the folks that have been upset about tariffs, upset about the tax cuts and their impact on deficits are kind of playing checkers, in my view. i mean, couple moves down the line, lower taxes, generally, will lead to a bigger tax base and higher revenues. that's what happened last time. revenues came in a lot higher than what we projected when trump cut taxes. same way with tariffs. the threat of tariffs. first of all, a lot of the increase from tariffing prices go through the companies absorb

them rather than pass them off to u.s. customers. it improves u.s. investment, which is good for growth. and there's other offsets going on within the broader agenda that you've got to kind of also consider that are disinflationary. all the deregulation, all of the government efficiencies, increased availability of government workers to help a labor-short committee, deregulation, lowering costs for u.s. companies, lower taxes improving earnings, and lowering costs for a lot of goods going to the consumer. so, it's not a simple, you know, tariffs up, prices up, in my mind. >> no, i think you've made that clear through that illustration. you've got 7,500 as a round number on the s&p for the end of next year, 7,000. is that right? no. no. 7,500 for 2026. >> we look at it, kelly, yeah, we have 7,000 for the end of next year, and 7,500 for sometime in '26.

but frankly, the market often gets to our targets ahead of us, and you know, that's not that surprising. we're not that far ahead of everybody else in our thinking, so we'll see. this year, we were at 6,000 right now, or close to it. that was our target for the end of next year when we started the year out, so the market sort of caught up to us. >> you're not worried that -- and again, maybe simply by drawing the contrast to europe, we can explain why u.s. stocks seem to be doing so well but there have been a lot of frothy signs. we've seen massive inflows into equities. some of the meme stock names were jumping 20% as soon as the election happened. obviously, crypto's been on a tear. so, since you've been through these cycles for so long, steve, is there anything in this behavior that says the market's getting a little ahead of itself? >> well, any bull market, you're going to see some froth, kelly, and we have a little cash on the sidelines if there's a pullback. we'd love to see one, especially if the bond market overreacts at some point and goes to five. we'll probably put some more money to work in equities if

that happens. but you know, on the other hand, kelly, i look at a lot of the names we own in our portfolios, particularly in the small cap space and the value side of the portfolios. there's an awful lot of stocks i want to buy here. you know, not everything is trading at 35, 40 times earnings. so, there's a lot of room to run here. i remember i was on with you back in early july, and we had made the call of a broadening out trade, and you just look at how much the market has moved since. the s&p's -- i think the mag seven are up roughly 3% from that point, but the russell 2000 is up 17%, i think, as of today. >> that's true. >> but there's still a lot of very attractive stocks in the small cap space and in those value indexes, so we think it's a pretty healthy market. sure, there's some froth. i'm not a bitcoin guy, but that looks a little frothy to me. but you know, generally, we think the market, broadly, looks frit attractive. >> i think you're right to remind us of that call from the

summer. those names, we've been putting them on the screen but so everyone can hear them, trex is one you like. citizens financial. you've got salesforce. is that right? you like halliburton, spotify. there's a lot here. >> yeah, it's a broad -- that's one of the things we like about it. it's not just two or three sectors here. on the tech side, it's really going to be, i think, next year's going to be the year of software. already starting to see a move in these stocks, salesforce finally breaking out to a new high and now that a.i. has started to come into play in terms of users of a.i. starting to use it, salesforce is right in the ddle of all that. we think the software trade in tech is the trade for next year on that side of the market. we like the regional banks. they're beneficiaries of almost everything that's going on right now. we like home builders. you know, we think trex is a kind of housing play in some ways, and that's looking up, a

great franchise with a lot of growth in front of it, trading 40% of its high. there's an awful lot of attractive stocks out there, kelly, for all the froth. >> we had that ceo on recently, he talked about how they're getting into railings. but i take your point, especially on a name like salesforce, and to say that next year is the year of software when silicon valley is ready to walk away, you always bring it, steve. good to see you. steve auth with federated hermes. still to come, the retail etf hitting its highest level since march of 2022, and it's on pace for its biggest monthly gain since may. gap is actually helping to drive those gains. the shares are up nearly 11% on an earnings beat into and a gui rate. it's among the least at least 50 u.s. retailers that boosted interest rates on store credit cards in the months before the fed started cutting, a move that helped protect their profit margins. to learn which other stores have

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welcome back. want to draw your attention to shares of ally financial. it's reportedly considering a sale of its credit card business. on that news, the shares are up nearly 4%. this, of course, is coming amid a new incoming trump administration that's talked about capping credit card rates, nothing official at all on the table, but still some big news omfr ally and the shares are rising. "the exchange" will be right back.

it's our son, he is always up in our business. it's the verizon 5g home internet i got us. oh... he used to be a competitive gamer but with the higher lag, he can't keep up with his squad. so now we're his “squad”. what are kevin's plans for the fall? he's going to college. out of state, yeah. -yeah in the fall.

change of plans, i've decided to stay local. oh excellent! oh that's great! why would i ever leave this? -aw! we will do anything to get him gaming again. you and kevin need to fix this internet situation. heard my name! i swear to god, kevin! -we told you to wait in the car. everyone in my old squad has xfinity. less lag, better gaming! i'm gonna need to charge you for three people. wall street is getting bullish on ge vernova this week. that was our mystery chart from earlier. wells fargo initiated coverage with a buy rating yesterday saying the a.i. power surge will be met first and foremost by nat gas, which benefits ge. william blair said the company is the best positioned stock to benefit under trump's pick to head the department of energy. liberty energy's ceo chris wright, the shares are up about 4% this week. they have had a great year. joining me now is head of energy and sustainability research at william blair. this would not have been the first one to come to my mind, so

i'm eager to hear why you think it's going to be such a standout. >> happy friday to you. yeah, i can't think of a better pick, and you know, maybe secretary that i helped work with in 2013, but i think chris is an excellent pick, particularly because he's pro-human. you know, he believes that energy is essential to life, and to power modern society, we're going to need more of that. and i think that having that logic and reason and bringing that to the table is something we need more of, and so i'm quite excited, and i think, yes, as you mentioned, it's quite a positive for gev and probably a negative for some of the solar names too. >> so, okay, let me back up for a second. what is ge vernova -- i love, by the way, that the spinouts of ge, the break-up has generally done quite well. what is ge vernova, and how do you think it will kind of see its different lines of business

benefit? >> yeah, so, when ge broke up, one of the spinouts was the power business, so you saw, you know, it's really broken up into three different pieces, so you have ge power, which is largely the turbines, so these are nat gas turbines to make electricity. that's what makes up 40% of our power today. electrification division, which is largely the switch gear that you might see at a substation, for example, and then they have the wind business, which gets a lot of attention. it's the -- a much smaller component, and quite frankly, the least profitable of the businesses. >> okay, that explains it, because i think of them as kind of the green energy play, and i think, well, wait a minute, you're talking about a trump administration and a nat gas and you're telling me vernova will benefit, but if wind is such a small part of -- is wind going to remain part of the portfolio at this rate? >> listen, we would love to see them divest a bit or wind that down. i know that's probably not a

popular statement to many, but we don't see that as, you know, as a driver going forward. actually, we think it's a drag on the profitability of this business. so, we are very bullish on the power turbine business, and they also have some nuclear there as well in terms of up in canada. they have an smr program that will come on later in this decade. so, that is really the driver, and the profitability, which is what's led to the outperformance in the name. >> oh, the stock's up 78% since august, which is stunning. is the $500 price -- it's in the mid-300s right now. would your $500 per share target be only if they divested of the wind business? >> no. i mean, listen, as long as growing that wind business is not part of the strategy, which would take down the profitability, we actually, you know, it really is not -- our

fair value of the stock is based on the ebitda or the profitability of that power business expanding up to about 16%, and the electrification business expanding from, you know, the 11, 12% range up to 15%. so, not heroic reaches, and then, you know, just growing the top line as well. >> well, for a stock that's up 168% to $350 and you think $500 is a modest increase from here, it really says a lot about how well this business could be positioned if you're right about all of that. jed, thanks for joining us. really appreciate your time. >> thanks for having me on. and that does it for "the exchange." i'm sorry. william blair. tyler is getting ready for "power lunch" and i will jn him on the other side of this quick break.

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♪ (animatronic santa) ho, ho, ho! (vo) time to move? make it easy with opendoor. sell your home in any season, for any reason. (animatronic santa) look at me! i am festive! welcome to "power lunch." alongside kelly evans i'm tyler mathisen. we're joined by sir rat seti. we are focusing on your investments being with stocks. higher again. the dow leading once again all three averages higher by nearly 2% for the week getting close to those all-time highs. serrat what do you make of this? 2% gains this week. there was a little bit of