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>> welcome to bearings roundtable where we get behind the headlines and prepare you for the week ahead, i am jack otter, the s&p 500 logging within 20% gains in back-to-back years, with the rally continued in 2025 board, bank of america security ahead of the burger lady and her daughter right now. later pressure is going to break up google chrome alphabet, what's ahead for the tech giant in osaka by. we begin with expert panel three things investors to be think about right now, on the bearings roundtable my colleagues ben levisohn teresa and jacob sonenshine. decent gains for the stock market this week, the dow hit a new high. you say would you look under the hood is better than it looks by the numbers. this was a week when you think the tech stocks must've done well, the magnificent seven did well, this is all about the other stocks in the s&p 500 around 400 or more of the stocks went up this week that was enough to propel the market higher despite not much news out

there. it was to buy everything that had been dominating the market we had good earnings from dear and gap, the stockpot, this is a good thing to see it expanded in the market higher initially without tech, nvidia reported earnings nearly doubled from a year ago in the market. >> the market completely ignored going into the. the option market was projecting a .6% move in either direction it moved .5%. he got no reaction and that's what we seen and exhaustion of the big guys you see elsewhere, the chips did well even with the nvidia doing well and software stocks are doing better than the and etf ibg, it was over 2% this week and he did really well, that is what's happening as people moved away from the big tech stocks and looking elsewhere.

the bond yields we were watching them carefully down a little bit this week, it could be worrisome as we pursue 4.5 level, the ten year yield dipped a little bit that is well below 4% we seen eight weeks of higher yields for the two-year period and people are watching bulk we are going to get readings on both the second reading of the recorded gdp it's not supposed to change around 2% reading it pc which is a fed's favorite metric, that's was committed two-point to percent up from 2.1, a real beat on inflation could stop the market in the tracks. jack: thank you. meanwhile teresa we saw it was the best of times and the worst of times for retailers, a tale of two shoppers. >> that is true we had walmart and target earnings this week, another great quarter for walmart and target had the worst day in years unfortunately. not only was a quarter bad but guidance was also bad, what is

interesting when walmart reported they said shoppers were buying essentials like groceries which is a bread-and-butter but there also buying from general merchandise which has more discretionary. target said we will do well and they said that spending was down, you might be asking what is going on is this target specific problem i don't know to tell you i'm doing my best distress is from target you should see my credit card bill is not good. it's scaling up more quickly, target has been lowering prices it has the reputational value, it's just fives. >> the problem with target lowering prices and get them further with margins in the agreement stock.

and reported earnings. it's been a tough year for the snack food makers with ozempic and the other weight loss drugs there was concern on investors and people buying less of that stuff and rfk junior nominated for health and human services and if you're of a government crackdown on oreos and she does. the issue is that rfk junior wants to see food stamps not applicable to a certain food and unhealthy food that band died foods if you think a fruit loop that is owned by kellogg, that stock is doing okay but is not good for the business, her shoes, kraft heinz and pepsi have a rough go since the election by the way, the stocks are way down and it's more than 20% for crafting hines in her she's coming from lower income consumers and in terms hold your

horses and another congress is going to be going with hhs in the worst case scenario for froot loops with european froot loops versus american, the colors are quite as bright, the stocks rally in this week are investors getting too optimistic. angry americans and watching s&p 500, she will tell us what to expect let's review. okay. we're not gonna talk about traffic or weather. if anyone brings up lawn care, i will handle it. hosting can be extremely difficult for young homeowners turning into their parents. oh, are you done with this? i'll just take that. okay, he's still drinking. right. oh, look what the cat dr-- no, no.

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>> the s&p 500 seen gains of 25% this year up nearly 200-point since election day, deregulation

and tax concealing investor optimism. one of the core risks in the coming year, here to tell us bank of america security head of u.s. strategy. thank you for coming by. >> it is great to be here. >> thank you for having me. >> long before the election if you call back to march 2009, the s&p touched 666. we are now at 6000, heckuva run in the recent report you pointed out over the course of the run we've gotten a little pricey on the stock market. >> no doubt no way to sugarcoat evaluations, the market looks expensive. statistically expensive on almost any measure you can think of. does that matter is the big question in what we found evaluation is very important for the long-term, the next year or two, the entry point, the

starting valuation of the market doesn't explain that much of what is going to do over the next couple of years there is more important factors to think about. >> one i want to comment on i never heard before that you added cpi to the price-earnings ratio of the market, where does that put us. >> this is an old trader rule that i picked up from my former boss. it is interesting. a rule of thumb if you add the cpi to the trailing pe of the s&p 500 if it is really high that is a danger zone and it is very low, that is where you want to own stocks, there is a trade-off between earnings in the p/e ratio and the idea if you're an inflationary environment, the p/e ratio should be lower because journey should be higher. i think what is a little bit unnerving about that, we are in an environment where inflation is a completely under control and we have a fairly elevated multiple. i think it is warranted given the makeshift and s&p 500, we are looking at a completely

different animal. >> because tech stocks deserve a higher multiple than industrial. >> is mostly asset growth, labor like companies whereas in the 80s it was 70% manufacturing and financials and very little of the asset high margin stuff. today we are looking at a different benchmark which has the potential to become even more efficient and labor like over the next decade. jack: that is the good news, the more bad news investors are quite bullish which means fewer people left to buy, that is a contrarian statement and a little bit concerned on the policy front, tariffs and immigration that detract from earnings. >> tariffs and immigration are not inflationary, whether or not they decimated earnings is an open question. i think with tariffs, the good news companies have been really aggressively about shifting sourcing from china to other areas of the world over the last

ten years. even though the tariff sound really negative, the actual impact is more contained than one might expect, what could get ugly if we start to see a tariff war with retaliatory tariffs from china and the rest of the world. then you see deeper cuts to earnings in the range of 10% s&p earnings which would be pretty dire from just an overall fundamental perspective. immigration, tighter immigration is a risk to labor inflation but the positive offset is the idea that people are making more money, real wage growth is what are the biggest drivers of consumer discretionary. jack: let's move to a couple other quick things. first of all what is the investor playbook in the environment that you just described, pricing stocks look good for a while, potential for inflation, where do you go.

>> i don't know if there is a playbook. i think there are a lot of? surround policy but where i see the best value with the lowest downside risks is one pocket of the market that does not get a lot of attention which is large-cap value stocks, these would be big energy companies, big financials, real estate, utilities, yielding companies rather than growing companies. i think were in an environment where your average retiree is looking for yield, they controlled the wealth of household net worth and they are currently in money market funds were if the fed is cutting their yield goes down and they start to risk up and look for yield elsewhere. what is interesting retirees own little income equity, they own all tax at this point or the majority is tech. i think there is a rotation to come. jack: one more quick point you like utilities and an incredible chart that shows unsexy utilities have done well over the long-term at the nasdaq. >> exactly.

yes. the hair is winning over, the nasdaq is actually losing to the utilities benchmark which i think is the power of dividend reinvestment, i think that's what we see there. jack: thank you so much, have a wonderful holiday. >> google is in a monopoly battle with the department of justice which is pushing for the tech giant to sell the prone web browser but investors will wake up. we will answer that next

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should they be worried about the parent company alphabet, the cover story written by our very own variance associate editor al root who joins the panel to explain it all. this goes back to august when a judge ruled the alphabet had violated the sherman act. now we hear what the states and the feds want google to do. >> google is a search monopoly is the u.s. judge. >> and anyone who has used the internet. >> now in the revenues phase, it should people's confidence a little bit, there is pretty severe ideas but i think investors think about what the justice department is looking for almost like a wish list, they want to end exclusive agreement, google pays money to apple, apple makes google the default search engine. they want that gone, maybe they should sell android or chrome, maybe they should license their search engine to other people give away the secret sauce essentially for free and babel

has as a search engine that seems very severe but that's a wishlist. these things will be appealed and were looking at 2027 according to wall street before any of this is ultimately resolved. >> i'm not going to take another change order we will just say ask al. here's the next question, this is not the first problem google faced when a.i. hit us all like the biggest thing since sliced bread. there was a concern instead of giving these add responses on google that you would get real text and there would be no ads in google would lose their revenue. >> there's two issues that we had to do with antitrust is that existential and maybe more important the a.i. disruption is the exponential for search. what were finding out, people are scared and worried in the feedback you are totally wrong, google searches going away, the dinosaur. the data does not bear that out. nai search, now will be typing google we get the a.i.

summaries, it's turning into when apple added maps or images, it is turning into an enhancement of the search product and google search is still growing, what about monetization, there is ads in the a.i. summaries, some of google's competitors adding ads in the search business is changing it is going from add support and links in the answer. i'm just subscriptions, 100 million subscribers, chat gpt so fearful of investors mind that came out two years ago, 10 million subscribers, we are going to add to ads in subscriptions and eventually when you execute instead of the search engines taking the affiliate fees or commissions. >> of chrome is for sale who is buying. >> sometimes i like when wall street has no clue it took people by surprise, what is chrome, we likened it that you're going to lop off a foot and hand the foot to another party, that does not really help anybody. it doesn't make a lot of sense,

could be spun out standalone evaluation as debated 20 billion. again i will say any of the divestiture's, how do we break google being the default option for everybody, as long as you give people a choice that is okay so the kicking around these ideas, the wildest idea, the person that would like it most would be tiktok can you imagine tiktok which has issues buying chrome the browser is like you can't make it up. >> let's take it to a logical conclusion, google has all these other pieces, has self driving cars, youtube and what am i forgetting, the cloud business and that it has search, how much are these pieces worth. >> that's how we approached it, we thought given what tesla is doing 25 or $26 a share, the cloud business, $50 billion, going 35% a year, $25 a share. youtube. a billion hours of youtube

watched on the planet everything will day based on where netflix is trading, that is closer to $65 a share, let's take that out that leaves $50 a share for the search business, seven-time search earnings. if you put a market multiple on search you get $260 for alphabet stock. if you get breakups, to put a market google historical and alphabet historical, you are at 230. i think you should use the fear to buy the stock. >> the other thing with the new administration coming in, as it would be more regulation. >> i think the vote has sailed the opportunity to regulate the companies was long ago and that's why you have a justice department trying to regulate search because congress could not do it. we will get remedies and fines and solutions to the monopoly problem but the regulation

question is going to continue on for years to come. >> "the bottom line", google is a by, by the fear. ben and jacob have a pair of investment ideas and teresa will make a rare case for actually buying airline stocks. stay right there. confident. measured. ready. the markets, like life, will turn and challenge us. but when emotions run high, we stay grounded. with the hcm buyline, we work to empower investors, in navigating market volatility and complex conditions. we provide a diverse portfolio with proprietary mutual funds and etfs aimed at growth and preservation. so you can invest with confidence. visit howard c.m. funds dot com. you founded your kayak company because you love the ocean. not spreadsheets... you need to hire. i need indeed. indeed you do. our matching platform lets you spend less time searching and more time connecting with candidates.

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jack: back in 1949 ben graham wrote what some people say is the best investment book ever written the intelligent investor, he warned against air transport stocks, that advice has definitely stood the test of time. >> far be it from me to contradict him. i will say while holding airline stocks long-term is about as

appealing as eating airline food read in the short time they could be. where they don't stink. we might be coming up to one of the periods right now. there is a trifecta going on in terms of airlines, yet the problem sets. causing less capacity on the ultra low fair side of the equation. you have lower fuel prices and continued demand. all of that is really helping an analyst see margins coming up in profits coming up at least for a while. jack: what names do you like. >> united has done a lot to reinvest in its business and has a strong international franchise and on the domestic side alaska is doing well it seems like there's successfully integrating the hawaiian acquisition in the management team. >> delta is the gold standard of the business we fly delta mf liquid fire and it's been a while since the seat next to me was empty for flyers were to see for a while. >> for flyers is good to be terrible, investors may be a little less.

>> at the neck pillow let's go to actionable ideas, would you have for us. >> i like pinterest i like stocks that are down 10% or more i take a look at those, what i saw when i looked at pinterest the company where the market is saying is this company going to do closer to 20% revenue growth or 50% revenue growth at the small company adding advertisements in a.i. into its platform in getting shoppers to buy stuff the difference between 15% 20% revenue growth is a lot, if the food segment on the site and back as they will at some point revenue growth looks more like 20% i think the stock pops. jack: do you have at pinterest board. >> no. >> what interact suitable idea. >> medtronic and medical device idea and the stock is been stagnant, there has been concerns from ozempic that the weight loss drugs will make it so people don't need the medical devices anymore but they had earnings this week that were quite good, they raise their guidance and they drop 1.5%.

there was nothing wrong with earnings, you read the analyst on the stock and they came out and said these are great earnings and lots of bust we would like to see higher-margin and new devices come through, by the time you wait for that to happen the stock will move it on the tragedy moving average and it's looking pretty interesting. jack: thank you, if you do gladiator and wicked this weekend, enjoy and have a wonderful thing skipping. to read more check out barron's.com and that is all for us, have a wonderful thing skipping. we will see you next week on "barron's roundtable". larry: hello, folks, i am larry kudlow. venezuelan gang member sentenced to life in prison for the murder of laken riley in georgia.