Markets Setting Records, "iPhone Moment" for Microsoft, Tesla's Big Year 12/28/23

SPEAKER_1 (0:00)

What's on the horizon for financial markets?

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Jim Cramer (0:31)

It's Jim Cramer here. You're listening to the opening bell of CNBC's Squawk on the Street. Don't miss a minute of the action.

Sara Eisen (0:45)

Good Thursday morning, and welcome to Squawk on the Street. I am Sara Eisen with Bob Pisani today, live from Post Night of the New York Stock Exchange. Carl, Jim and David have the morning off. Take a look at Futures right now.

As we just continue this wind streak, we're right in the middle of the Santa Claus rally. Looks like the Dow Futures are pointing to a lower start. Everybody else is higher. NASDAQ Futures up 45, SMP Futures up a bit. We're less than 0.3% away from a record closing high. We'll see if we can get there today. Our roadmap begins with that record watch, SMP, inching closer to all time highs as the Santa Claus rally rolls on with the Dow and the NASDAQ 100, hitting their own records. Plus Tesla shares at a three month high and seeing the third best year on record, but will waning EV demand prove a headwind for growth in 2024?

And why one analyst thinks AI will become Microsoft's iPhone moment in the next few years.

We'll begin with the markets though, including record highs for the Dow and the NASDAQ 100 It's been a powerful, somewhat surprising rally fueled by lower interest rates. We continue to see new cycle lows for the 10 year. We're now at levels we haven't seen since July.

Bob Pisani (1:51)

4.8% right now, I believe on the 10 year, somewhere 3.8, excuse me, on the 10 year. The important thing here is 4793 That would be the closing high of January 4th, 2022 for the S&P. We're very close to it, you know, in fractions of a percent. That's the remarkable move for the year that we've seen. I think this time last year, remember, we were preparing for a recession.

Everyone was expecting it. Everyone was expecting an earnings recession. There were people who had 200 on the S&P 500 for the earnings estimates.

We're gonna end the year close to 220 We have $245 on the S&P for 2024 So the consensus was completely wrong. And I think two things happened that were quite amazing. One was the Magnificent Seven stepped in. The AI became the predominant paradigm, the biggest paradigm since the internet essentially.

And number two, the recession never came. The recession never came because the Federal Reserve essentially reduced inflation without dramatically slowing the economy. I think that is a remarkable story. It's extremely rare. And you and I both know, Sara, soft landings are very rare animals.

And that is the main story of 2023, in my opinion, the fact that we did not have the recession. Now, who knows if we'll have one in 2024 But the point is, if you would have made a decision based on a lot of forecast in 2023, in December 2022, you would have been making a lot of big mistakes. Essentially, staying with the market was the smart thing to do.

Sara Eisen (3:22)

And I think in the last few weeks, as it relates to this latest rally, which just got supercharged by the AI rally of 2023 and the lack of recession, really I think the surprise is how fast inflation has come down. The disinflation story that has allowed Fedshare Powell to pivot and has allowed the 10-year yield to rally. I was just looking at the low since July that we hit last night is 379 on the 10-year and we're just above there right now.

Bob Pisani (3:49)

And we were 5%.

Sara Eisen (3:49)

The dollar's been weak. It's gonna have a first down year since 2020 on the back of some of the weakness that we've really seen since December. All of these trades got supercharged and the question I think for 2024 is will inflation still come down?

Will this trend continue to be the friend of the Fed and of investors?

And will the economy stay soft, but not into recession? We got jobless claims today. You know, a little bit of a tick up, but nothing worrisome. They still remain historically low. It's a holiday season. So these weekly claims, first time claims can be a little bit volatile. Continuing claims, a little bit elevated as well, but nothing speaks to stress or any kind of math layoffs that companies are doing right now, which also I think Bob speaks to the fact that there's demand.