Markets Chasing History, Tesla's Bull Run, 2024 Top Picks: Social Media 12/27/23

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Carl Quintanilla (0:30)

Market moving insight and analysis. Join Jim Cramer, David Faber and me, Carl Quintanilla on the opening bell hour of CNBC Squawk on the Street.

Sara Eisen (0:38)

Good Wednesday morning. Welcome to Squawk on the Street. I am Sara Eisen with Scott Wapner live from post night of the New York Stock Exchange. Carl, Jim and David have the morning off. Take a look at futures improving throughout the morning, getting a higher start, at least if you look at S&P and NASDAQ futures, both pointing higher. Dow futures unchanged. Our roadmap begins with the stock market momentum on Wall Street. The S&P 500 within half a percent of a record closing high.

Scott Wapner (1:05)

Also ahead, Tesla joining the December rally, the stock doubling year to date ahead of the company's quarterly deliveries report.

Sara Eisen (1:11)

Plus the latest on Houthi rebels attacking vessels in the Red Sea. One shipping giant says it will continue to avoid the area. We'll begin though with the markets chasing history here. Scott, we know the level to watch now.

47.96.

Scott Wapner (1:25)

And change.

Sara Eisen (1:26)

We're getting closer.

Scott Wapner (1:27)

Getting closer.

Sara Eisen (1:28)

But interestingly, this rally, which yesterday it started on our show and really picked up steam throughout the day into the closing bell, being led by the Russell 2000 index of small caps. And I think it's hard to ignore the one and a half percent move that you've seen there.

Wondering if the Russell is gonna break out. We're at a 20 month high. It's been in this sort of stuck narrow range underperforming the rest of the market. As the market picks up steam, it broadens out into small caps.

Scott Wapner (1:54)

I think just since this really rally got going in the last days of October into the very first days of November, the Russell's up like 23, 24% over that period of time. So it's gone from nowhere to everywhere, really, really quick. You have people like Tom Lee suggesting you could get 50% gains out of small caps in 2024, because they've dragged so much.

And his whole thesis is what you know, economy performs well, inflation comes down, Fed cuts a bunch of times, and then it's time for the rally to broaden out.

Sara Eisen (2:25)

I think he believes inflation is coming down like a rock now, which you could make the argument if you look at some of these six month annualized charts of things like core PCE, we're lower. We're back down to the Fed target kind of ranges.

Scott Wapner (2:38)

So what was it we had the, who was the former Fed economist we had on yesterday?

Claudia Sahm (2:42)

Claudia Somm.

Scott Wapner (2:44)

Who suggested the last mile. I'll never forget this, the last mile is the easiest.

Sara Eisen (2:48)

Well, that's what Jenny Ellen says.

Scott Wapner (2:49)

I know, but that's sort of counterintuitive.

People think the last mile is gonna be the hardest, the stickiest maybe to get inflation down to target. I was just struck by the fact that she said that she thought it was gonna be the easiest and that would play right into the bullish hands.

Sara Eisen (3:03)

The only question at this point is how do financial conditions impact that? Because we've seen this steep drop in treasury yields.

That's gonna bring rates down, mortgage rates, credit card rates. I mean, it's good. It's relief for consumers and relief for Americans, but it also threatens to undo some of the progress on inflation. And that's gonna be one of the tells. By the way, the 10-year note yield this morning hit a new low of 384.4%, lowest level since December 21st. The German 10-year boomed yield hit the lowest level in a year.

So we continue to see these sinking treasury yields, which has been fodder for this rally.

Scott Wapner (3:38)

How about, you know, as we look at these forecasts, do you see Goldman's 10 forecast for 24? Cause it plays right into what you're talking about.

Number one, GDP, I highlighted what I think are the most important. GDP growth will beat expectations. Consumer spending beats expectations, right? So growth is good. The consumer hangs in. Core PCE inflation will fall below the 2.4% forecast, and the Fed's gonna cut five times.