← CNBC's "Fast Money"
CNBC's "Fast Money"
Trump Picks Kevin Warsh For Fed Chair… And Big Tech’s AI Spending 1/30/26
00:44:04
President Trump selecting former Fed Governor Kevin Warsh to succeed Jerome Powell as Fed Chair. The market, treasury, and dollar reaction, and what to expect from Warsh as Trump continues to push for lower rates. Plus tech earnings continue next week, with investors eyeing the massive AI capex plans. If the investment will pay off, and which company has the edge in the artificial intelligence race. Fast Money Disclaimer
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- [00:01]
A
The Jack Welch Management Institute at Strayer University helps you go from I know the way to I've arrived with our top 10 ranked online MBA. Gain skills you can learn today and apply tomorrow. Get ready to go from make it happen to made it happen and keep striving. Visit strayer.edu Jack Welchmba to learn more. Strayer University is certified to operate in Virginia by Chev and has many campuses including at 2121 15th Street north in Arlington, Virginia. What made you confident that you could do something that hadn't been done before? I have no fear of failure. Trailblazing women, changing the game One of my favorite pieces of advice Think about what your boss's boss needs. Leadership can look in many, many different forms. It really does come down to just trusting yourself. Life is short and you just gotta think big to accomplish big things. Julia Boorstin hosts CNBC Changemakers and Power Players New episodes every Tuesday. Wherever you get your podcasts. Live in the NASDAQ markets in the heart of New York City's Times Square. This is fast money. Here's what's on tap tonight. The wait is over. Donald Trump finally announcing the pick to leave the Fed. But what should markets expect from Kevin Warsh, a fight against inflation or the rate cuts the president has been calling for? We'll debate that. And half of Max 7 earnings are in the books, but some big names still to come. What did we learn about the trade in the past few days and what should we expect from Alphabet and Amazon next week? Plus, could gaming stocks like Roblox be the next victim of the AI boom? Bitcoin continues to break down and new CEOs at Wal Mart and Target take the helm on Sunday. What will the leadership changes mean for the companies and the stocks? I'm Will as Lee come to you live in studio. Be at the Nasdaq on the desk tonight, Tim Seymour See Brasso, Bono and I said and Mike Koh. We start off with the news. The markets have long been waiting for President Trump selecting former Fed governor Kevin Warsh to succeed Jerome Powell as chairman of the central bank. The announcement via Truth Social this morning comes after years of Trump criticizing Powell for not lowering rates fast enough and even a criminal investigation by the DOJ over central bank renovations. Stocks closing the day down though off their lows of the session. The S and P managing a gain for the week and all major indices up in January. But a real question brewing in other markets. While longer term Treasuries ticked higher, the two year rate hit its lowest level in two weeks and the dollar rebounded from four year lows, notching its best day since July, suggesting maybe the market thinks Warsh may be more hawkish than expected. Expected. So that begs the question which Kevin wash will we get? The hawk who's rallied against inflation may keep keep rates high or the dove who will make the cuts Trump wants for more let's bring in Steve Liesman and Steve's also got some headlines from Michelle Bowman.
- [02:44]
B
Steve yeah, just before we get to the new guy, let's get to some of the existing folks here. Feds Fed Governor Michelle Bowman says she sees three cuts this year with the only question about the timing of implementing the cuts that she sees. She still sees downside risk to employment. Says the labor market remains Vul bowl could have voted, she said for a cut at this last meeting because policy is still modestly restrictive. But she has seen some signs of stabilization in employment as was mentioned in the statement. The Fed, she says can afford to take time and keep policy powder dry for a little while. She does mention the Fed gets two jobs reports and inflation reports before the March meeting. So maybe that's more alive for her than it is in the market. Meanwhile, the 55 year old Warsh would take the helm with immediate expectations that he would cut rates. But the question is how much cutting can he really do? The President saying in his announcement that I have known Kevin for a long period of time and have no doubt that he will go down as one of the great Fed chairman, maybe the best on top of everything else he essential casting and he will never let you down. You have to wonder if the President is reassuring himself that Warsh won't let him down cuz that's how the market is priced. At least right now futures markets have only priced in a cut. When Warsh takes office that's the 349 in June and another one by year end, that's the 313 in December. And then it goes sideways into 2027. Of course a lot can happen. The economy can change. But if the US economy does as well as the President advertises it will, it seems doubtful that his new chair will give him the low rates and the cuts he so desires. Melissa?
- [04:20]
A
Well there's the element of the committee. I mean the committee may not vote for rate cuts and then there's just this, this notion that if he does get into office and manage to get through a rate cut, the question about Fed credibility which could really cause ripples in the market.
- [04:39]
B
You know there's the committee Melissa. But there's also the much more powerful bond market. Right. And if you follow Jeff Gundlach, who, you know, says that the Fed follows the market, I don't know if that's 100%. Sure. I think there's a little bit more back and forth than Jeff puts out. But, but in general, it's not a bad trick to follow what Jeff Gundlach says and make money that way. And so the bond market is going to constrain what he can do. And Kevin knows this. Right. He's been working with Stan Druckenmiller for a very long time under one of the best investors of all time. And there's just no way that Kevin Warsh can go further than the market will let him go. And, and also, as you suggest, Melissa, with that feedback, further than its committee will let him go.
- [05:26]
A
Right. Steve, thank you. Steve Liesman, Pleasure. What do you make of the pick in the market reaction?
- [05:32]
C
Well, I think the market reaction has to be taken in the context of we had a dollar that was so oversold in a short term basis. I mean, the dollar was down almost 2% this year in a straight line. I don't think that Kevin Warsh was a major reason why the dollar rallied today, although give it any number of reasons. I, I think what Steve points out is very important and he's reputed to not necessarily be an ideologue. I think it's fascinating that today's the day, on a day when we had a PPI number that frankly tells me that fears of getting back or not getting back to an inflation target are very much warranted and that intermediate good prices are things that we haven't really felt the total follow through in the flow through from tariffs. So I mean, I'm not saying inflation has run out of control, but we get this announcement on a day when PI today was not the Fed's friend, if there's someone that's looking to cut. So I think it's important to get some stuff out. I appreciate the balanced and rational approach to how Mr. Walsh is going to do his job, because I think he will. He's been around a long time. He's been around markets. I think there's an important dynamic that Trump recognizes. He needs to have a candidate that also can get through Congress and get through a Senate that needs to appoint him and at least approve him. And that's kind of what's been shown in the last few weeks how important that is to Trump.
- [06:49]
D
The most important thing to Tim's point is that you needed someone who's not a Trump puppet. And there's no way anyone's going to say that Warsh is a Trump puppet. He might tilt from hawkish to dovish, but he's been there since 06. He's seen the great financial crisis. He's seen a number of other crises. He's seen Covid. He was not a proponent of large qe. So I think that's what most people looking at the Fed don't want more of. We went from a $9 trillion balance sheet or I should say before pre crisis, I think it was around 4. We went to 9. Now we're down around sixes. I think he's probably going to keep it right there. I don't think there's anything to worry about. He's going to be palatable for both the Democrats and the Republicans and both the hawks and the doves. So I think it was a great pick. It was surprising to me that he didn't go with someone a little more dovish.
- [07:41]
A
All right, let's get more from CNBC contributor David Zervos. He's chief market strategist at Jefferies. David was one of the early contenders for Fed chair last year. David, great to see you. I don't know if you're upset or relieved, but putting that aside, what do you make of the pick? You know, we were speaking to Adam Krista, fully of vital knowledge earlier in the previous hour, and he said, you know, there's a small market negative aspect to this in that war wants to shake up the Fed. He said something in a, in an interview with another network about breaking heads. He wants to re examine the models, look at re look at how things are done. Is there any risk introduced by that?
- [08:21]
E
Melissa? I think, I mean, we should step back and think about all the candidates. And I think all the candidates kind of said the same thing along those fronts that they wanted to kind of question how the Fed does business, what all these PhDs are doing, how, how the models have failed both them and, and their mandate of maximum employment and price stability. I think there are a lot of great questions and Kevin's a great person to begin to answer them. And I think he's thought a lot about it since he left back in 2011. So I would just kind of put it all in perspective that these are, this is an amazing group of candidates. And I said that from the beginning that, that what a, what a treat it was for me to even be included in it. And I just think we are, we're lucky to have someone like Kevin, and we would have been lucky to have someone like Rick or Kevin Hassett as well. They are fantastic picks and they will do a great job. And I think the market is kind of telling you that the market didn't respond that much to this, even though a lot of people wanted to have this bearish response or negative response at the long end, you know, it wasn't, it wasn't what many had thought.
- [09:22]
A
I mean, is the market reaction, the lack of market reactions that really tell you that we don't really know what he's going to be able to do at the end of the day? I mean, that's what it seems to me.
- [09:33]
E
Remember, Melissa, I think we all have, and maybe the President even has a little bit of a elevated view of what a chair can do when they walk in. There's 11 other people on that committee and it's one person, one vote. You have to do a lot of convincing. You have to do a lot of persuading if you want to move this committee in a significant way away from the tendency that it's sitting at today. So, I mean, Kevin's a great orator, he's a great thinker and, you know, maybe he'll have success. I think Kevin Hassett or Rick Reeder or many of the others on that list could have also had great success. But we're lucky to have had all of these picks, in my opinion, and we're lucky to have Kevin there. He just, he has the experience that that many did not have being there on the board for five years, I believe. And he brings, look, it brings a healthy questioning of all of what has been done over both the global financial crisis where he had a lot of criticisms, and then what we learned over the COVID crisis. So I think making a big deal out of this early is probably unlikely and we should all be thanking our sort of lucky stars that we have such qualified people overall to sort of man the ship at the Fed. I think, you know, not to, not to get, you know, too focused on the past, but we've had some pretty poor candidates roll through the Federal Reserve building and one might even argue some still there. And this is a huge step up over many that, that have been there and are, are there now. My David.
- [11:02]
C
Tim, so play the role that maybe you might have played or, but let's, let's play the role of really the market now and, and interpreting both where we are with inflation, but also where the market is positioned for a Fed and frankly, where we are seeing Some pretty solid growth numbers and where again today we had a pie number that, that to me and in a one off says there's some upward pressure on intermediate goods that could still feed through. Where do you think the market has priced this? Where do you view this balance of, of that inflation genie? And ultimately though, pretty solid macro. I mean is the Fed behind the curve or, or should they be sitting tight?
- [11:42]
E
I think it's one of the most fascinating macro environments we've been in in a very long time. We've had incredible growth not just this past year in 2025, but actually 23 and 24 were great growth years and the unemployment rate's been rising the whole time. It's just such an unusual period of incredible growth. Strong equity, strong earnings, strong profits and just not a lot of job creation. And I, I think, you know, Rick Reeder talked a lot about that in some of his analysis going into all of this. I think a number of other commentators have pushed on it. I've certainly pushed on it. I think it makes for, and I think NSC director has to said, look, this is supply side growth. We're seeing more disinflationary pressures over the long run than inflationary pressures because it's coming from productivity. So I think Kevin will be this Kevin, Kevin Warsh will be open to those ideas and kind of is a student of the Greenspan era in the 90s when we had this last. So I'm optimistic that we're not going to get too caught up in this idea that oh, strong growth is some reason why we need to be preemptively hiking. I think that's a mistake and I think, I don't think Kevin will be making that mistake. I think we have a lot of reasons to be excited about how far inflation has come down and how stable long run inflation expectations have been. They've been unbelievably stable throughout all of this inflation shock post Covid. So to me the inflation side of the mandate is more or less. I know we're sitting at 3% in core PC, but it's more or less done only because inflation expectations just remain so solidly anchored in and around 2%. When you look at every piece of data from the TIPS market to the yield curve to the survey data, it just, it's just remarkable how, how clean inflation expectations came through this message.
- [13:28]
D
Hey David, you know, Rick Reeder brought up an interesting point just to further your explanation on this that the Fed doesn't really have much effect on inflation in their toolbox. But they do have more of an effect on mortgage rates. Can you extend on that thought?
- [13:44]
E
I mean, I think Rick's absolutely right. They do have a lot of ability to move on, on yields. And I think the Treasury, I think Secretary Bestin has shown that he's willing to use the GSE balance sheets, which are part of the balance sheet of the treasury under conservatorship, to try to drive that as well. So I think there's, there's a lot you can do there. But I would push back a little bit on the inflation because at the end of the day, one of the biggest components of long term interest rates is inflation expectations. And again, they are very well contained. So I think we have some room to bring mortgage rates down even without seeing significant rate cuts, just, you know, driving some of the, the mortgage purchases that the treasury wants to do through the GSEs, maybe changing some of the fee structure and the like that the GSE charged to guarantee the mortgages. But, you know, we need, we need to really think about housing affordability in a different light. We need to think about how people get down payments, how youth can access the housing market. And more importantly, we just need kind of the job picture to clear up because it's really those younger home buyers who, the ones that are sort of angry and are voting with their feet a little bit in the last election in November, away from the Republican Party that are saying, hey, you know, we need to figure out a path forward here that works. And this, you know, this isn't really working. When we have student debt, we got credit card debt, we've got a degree, and we're still not able to get a down payment for a house. And this mortgage market's inaccessible. So someone's got to come up with some good plans. And there are a lot of them out there and the Fed will be part of that, but I think it'll come more from the administration than the Fed.
- [15:16]
A
All right, David, great to see you. Thank you.
- [15:18]
E
Always a pleasure.
- [15:21]
A
All right. So Mike, what's your take on war in the context of the markets? I mean, it seemed like every day there are lots of crazy moves in the market. At the end of the week, though, we're basically flat on the s and P500.
- [15:34]
F
Well, we are flat. I mean, we had a pretty wild day though, didn't we? I mean, first of all, taking a look at the precious metals and what went on there, I think that was pretty wild. If we take a look at the options market, what they're implying in terms of uncertainty, not just over the next 30 days, but going out to the end of the year, we take a look at the VIX futures curve. So Spot Vix was up about 0.56, which is actually slightly more than you would normally expect to see it up on a Friday with the market down 29 points or so. So sort of a simple heuristic, a way to think about it is that, you know, for a 1% move in the S and P, you might expect to see the VIX move one point and we can see that relationship didn't really hold today. VIX actually was up and actually the VIX futures curve basically broadly was also, was also higher. And one might think that with less uncertainty with respect to the Fed choice, that some of that curve might have actually flattened out a little bit. But then you take a look at rates and you know, what's interesting here is that when you think about the real problem that we're facing with rates, we have a real fiscal imbalance. You need to grow your way out of it. So if you have a Fed chairman who is going to focus on that and it's going to try to control inflation, possibly by paring off the balance sheet slightly, but keeping the short end a little bit lower basically to sponsor a bit of growth, you know, that does seem like a good recipe as long as inflation expectations support it.
- [16:56]
A
Bono, and what's your take?
- [17:00]
G
Well, listen, I think it had been quite volatile, volatile leading up to this Mike spoke to today. But I think some of the price action of volatility that we've seen, particularly in precious metals and some of the base metals, you know, the whole dollar debasement narrative was in full effect as well as Fed independence or lack thereof. So I do think warship selection does shore up some of those concerns. And you saw that reflected in some of the profit taking that we saw on the precious metals as well as some of the reversal that we've seen in $DXY and some of the related type of trades there. So I think it's net net positive. The unknown is kind of taken out. I will say I do think some of the spike up in VIX that we saw today is attributable to the fact that we are in the middle of earnings season and we have some of the mega caps which are a large weighting of that, moving tremendously. Microsoft, for example, yesterday. So I do think you're seeing a bit of shift away from indexing being used as a hedging tool to indexing now being more of an Accurate hedge. And you know, the more that we see the market being driven by the Mag 7 and that core mega cap techs, you will see a better correlation with the VIX there. And I think we saw some of.
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A
That play out today on metals specifically. Tim, I got to go to you. Did you. Do you think there's a lot more downside flush to happen?
- [18:19]
C
Well, yeah, first of all, I don't think war shows anything to do with the gold pullback today. I mean gold rallied 32% this year if you want to have a reason for it. But I mean gold was, was stratospheric. I'm not taking victory laps here. But last Friday I said I think gold. I was selling gold calls. I said I was selling copper calls. I said this is a place where this has gotten overdone. I couldn't feel more secure about a gold trade. I couldn't have felt more insecure about the price action in terms of where we were going in the short term. I think gold could pull back a little bit more. I think 4600 is a probably good level in gold. None of this is a sign that markets are unsteady. You know, in other words, and the debasement trade, which is now a term out there that I think is. I think we're in an environment where there are two or three macro dynamics that aren't going to change overnight. I don't think the Fed's going to change it. I don't think we're going to go see a dollar completely reverse course. But trades get overdone. And I think that's what happened. I mean the move in silver was, was comical and just as comical on the way down. But we were talking about it, it was commodity on the way up.
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A
We were saying that it was the memeification of the silver and gold trade. So you can't market fundamental drivers. On the downside, if you're saying a meme ification drove the trade higher.
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D
Yeah, I think it's more of a trading aspect. Markets do look for a reason to actually revert back to where, where they were. They did have incredible moves if you look at where they both started the year. But I would say off of this bottoming or this ratcheting down. Look for the supply demand deficits in the metal of your choice and pick the one with the biggest one.
- [19:51]
A
We've got a news alert on Disney. Julia Borson's got more on this. Julia. That's right, Melissa. Disney's board is set to meet next week. According to Sources close to the situation and the board is expected to on a successor for CEO Bob Iger when his contract expires, which is set to happen at the end of this year. Now we may get an announcement from the board as by the end of next week. Now Iger is reportedly planning to step down as CEO and pull back from daily management, according to sources cited in the Wall Street Journal. So now the focus turns to the two executives seen as frontrunners for Iger's CEO role. To replace him, Parks chief Josh Tomorrow and entertainment co chair Dana Walden. Disney does report its quarterly earnings on Monday morning. We're going to be watching to see what the results say about Iger, about Iger's legacy as well as Dana Walden and Josh Tomorrow's divisions and seeing how the results may indicate which of these leaders is best positioned to replace Iger. Back over to you. All right, Julia, thank you. Julia Boorstin, I wonder what the predictions market says. I'm just joking. I don't, I don't know if you have a comment on either of these two candidates or on the earnings that we're going to get on Monday morning.
- [21:07]
C
I don't have a lot to say on the candidates. I will say that, you know, in a world where here we were talking about a shake up at the Fed, how about a shake up at Disney? You know, Iger comes back in to replace Chapek and the stock's done zero and the stocks, you know, bounce a little bit. I think in terms of the numbers that we're going to see. I continue to be encouraged by the strength of DTC and the margin profile, frankly. Overall, the re bundling dynamic that has Disney pulled into a lot of other kind of former legacy streaming packages is something that actually enhances some of the network power that's already there. I think a bit of the feeding frenzy that seems to have gone on around Warner Brothers is something that also I think plays in well into the intrinsic value of the Disney property. It's all about dtc. To me. There'll be some cyclicality in Parks. Parks I don't expect a lot.
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A
I'm sure these two candidates are amazing managers, Mike, but it may say something. You're choosing between parks and entertainment and the entertainment side of, of Disney, the business, show business side of Disney.
- [22:08]
F
You know, I mean, when it came to Disney, it used to be a single property that we always thought of first and foremost. And now I think actually Parks is playing into it because I think that's a little bit less influx than than what we're seeing going on elsewhere. So I think that's an important part of the business to keep an eye. Mean, just based on the price action that we saw late this week in Disney, plus some of the options activity that we saw late this week, there was an uptick in sentiment. I mean, we can see that just in the price alone. Today, I think the stock was up, you know, $1.30, something like that. So you're showing a price that looks a little bit lower to me. I'm not exactly sure why I have it. I have it up a bucket buck and a quarter today. But, you know, we had a lot of call activity. 40,000 calls versus probably 19,000 on average. So they're positive going into the print. And I think this was an expected move.
- [22:59]
A
By the way, Kalshee does have a contract. I mean, you can, you know, what, 6% for tomorrow. So. So the guy who runs Parks. Yeah, okay.
- [23:09]
D
Parks is now 38% of the overall revenue. Obviously. Entertainment's still the bulk of it is 55%. And nobody's Iger. So I think the stock really likes the Iger premium. With him in this last stint, the Stock is up 20%.
- [23:25]
A
Coming up, the revolution comes for gaming. Roblox shares plunging as Gemini makes its first foray into the video game space. Is it game over for the trade? Find out next. Plus, Exxon and Chevron both out with earnings this morning. What the quarters say about the oil trade? Don't go anywhere. Fast money's back into.
- [23:44]
C
This is fast Money with Melissa Lee right here on cnbc.
- [23:51]
A
The Jack Welch Management Institute at Strayer University helps you go from I know the way to I've arrived with our top 10 ranked online MBA. Gain skills you can learn today and apply tomorrow. Get ready to go from make it happen to made it happen and keep striving. Visit strayer.edu Jack WelchMBA to learn more. Strayer University is certified to operate in Virginia by Chevin. As many campuses, including at 212115 straight north in Arlington, Virginia.
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- [25:18]
A
Right for you. What made you confident that you could do something that hadn't been done before? I have no fear of failure. Trailblazing women Changing the Game One of my favorite pieces of advice Think about what your boss's boss needs. Leadership can look in many, many different forms. It really does come down to just trusting yourself. Life is short and you just gotta think big to accomplish big things. Julia Boorstin hosts CNBC Changemakers and Power Players New episodes every Tuesday, wherever you get your podcasts. Welcome back to Fast Money Gaming Stocks Unity Software Roblox intake to plunging today after Alphabet rolled out its latest tool to Google Ultra subscribers. The model called Project Genie allows users to generate interactive worlds and create characters with just a simple prompt. The big tech company is calling it an early research model. I mean is this sort of the displacement moment that software is suffering right now? Bono and.
- [26:21]
G
Listen, I think directionally the moves are right. In the short term I think the extent to which you had the sell off and I think the relative moves were accurate. For take two for example. This is a deep pocketed large budget operation with a self contained type of narrative. So I don't really see that disruption there. And Roblox in terms of the coder user base and the breadth scope of who it reaches. Again I think there is somewhat of a moat there. I think Unity, rightfully so, was off more than the others because I think the value proposition is very similar there and I see the most crossover there. Ultimately I think that these tools are going to be used by all three companies and bring down costs of producing games across the board. So I do understand the shock short term, but I do expect in the long term these moves are end up being overdone in the immediacy.
- [27:12]
A
Mike, what's your take?
- [27:14]
F
Yeah, I mean kind of to what Bono was saying. I mean unsurprisingly given the move we saw today, there was a big knee jerk reaction going on in the options market. It traded more than six times its average daily volume. But what's interesting is that if you exclude the volume that was associated with expiration today and next week, and I will often do this when I see a big gap, I'll say okay, let's throw out what's going on for the options that are expiring right now and next week because that's basically a knee jerk reaction where people are trying to hedge just the moves over the next couple of days, push it out a little bit further. And if you do you go beyond the February 13th Friday there, you're actually seeing that the top three most active contracts were all upside call buying. So I think that there's some view here that that maybe this is just going to take a few more days to play out and that maybe it'll find its footing.
- [28:01]
A
And I saw the story today and I saw the move in these stocks and I felt really bad for guys junk.
- [28:06]
E
Tim yeah, it's often not the only sentiment.
- [28:10]
C
You're not the only one. And it's this, there's a lot of concern for guys junk out there. Having said that, I do think the gaming dynamic of of AI's impact on software bring it back to Roblox. Roblox is completely round, tripped a massive move and is down 40% three months even more so and looks like it's really all the way back to a level which people are truly assessing not only the engagement factor, but also just what is going on with the big trends. I actually think roadblocks is interesting here and I reached out to my two channel checks which are the the people in my house that are major roadblocks and they don't seem to be concerned. I do think think also this age verification dynamic of roadblocks is something that's actually not helping in terms of engagement.
- [28:58]
A
There's a lot more fast money to come. Here's what's coming up next.
- [29:03]
C
More big tech on deck. Alphabet and Amazon highlight next week's earnings action. Do this week's reports change the setup for investors. We dive in next. Plus a bitcoin breakdown. Crypto stocks crushed as the digital currency hits its lowest level since November. Should you brace for more pain or bet on Wanna come back? You're watching Fast Money live from the NASDAQ market site in Times Square. We're back right after this. The new year brings new health goals and wealth goals. Protecting your identity is an important step. Your info is in endless places that could expose you to identity theft leading to lost funds. LifeLock monitors millions of data points per second. If your identity is stolen, our restoration specialists will fix it, guaranteed or your money back. Resolve to make identity, health and wealth part of your new year's goals. With LifeLock, save up to 40% your first year. Visit LifeLock.com SpecialOffer terms apply at Capella.
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- [30:27]
A
Trailblazing women, changing the game One of my favorite pieces of advice, think about what your boss's boss needs. Leadership can look in many, many different forms. It really does come down to just trusting yourself. Life is short and you just gotta think big to accomplish big things. Julia Boorstin hosts CNBC Changemakers and Power Players. New episodes every Tuesday, wherever you get your podcasts. Welcome back to Fast Money. Stocks closing out a winning month on a down note. The Dow losing 179 points, the S&P falling almost half a percent, the NASDAQ dropping about 1%, but all three were up about 1% for the month of January. The small cap Russell 2000 meantime, jumping more than 5%. Chevron and ExxonMobil both managing gains after earnings is morning, the energy giants beating earnings estimates, Chevron seeing its best day since July and Tesla rising as much as 5.6% on a report that the company could merge with Space X, which is valued around $800 billion in the private market. Mike, would you be more of a fan of Tesla if it did merge with Space X?
- [31:33]
F
Well, I mean, if you take a look at Tesla, I mean, and its valuation, you have to assume that, you know, all of it is sort of, I'm not going to call it pie in the sky. That's not really fair. I mean, but I think what we can say is that Elon, the futurist in the robotics side and the AI side and the FSD side and also for Space X, these are sort of common themes. Yes, these ideas about data centers in space. It's easy to see how he could sort of spin a story that sort of draws all of these things together. And the valuation of Tesla, it doesn't really tie to anything, but that kind of, you know, basically the future of technology story. So it doesn't surprise me much that this conversation has taken place because there have been experiences in the past where Elon has talked about the intersection between his companies. And so it doesn't really surprise me that much. I have to say.
- [32:21]
D
I did buy it off of this because I like buying these headlines. I've been involved in the story before. I haven't been involved with it in a long time. I saw the headline run humanoid to Mike's point, Humanoid robots, full self drive data centers in the sky, space X valuation. So I think there's a host of reasons to reach for the stock. I don't think you necessarily have to do that. This does have a knack of retail tracing, but I am long it now. I just want to be a part of that story.
- [32:46]
A
I don't know if you want to go Tesla or the energy stocks.
- [32:49]
C
Let me go energy. Sounds like there's enough pie in the sky out there. I think the move in energy stocks is sustainable. And if you look at Exxon, we just had earnings. So this isn't just about Venezuela and what might be. This is about Guyana and what is this is about a fully integrated company that's never been more efficient and isn't throwing a lot of money into Capex. You know, it's been a 20% move since the beginning of the year with a move in Brent that we talked about yesterday. Finally struck 70 bucks even if there are Supply Dynamics. So I think the integrateds look great. I think Schlumberger looks great. Offshore integrateds look even better in this environment.
- [33:25]
A
We've got a news alert on the NFL ESPN reporting the Seattle Seahawks will go up for sale after the Super Bowl. The team playing in the championship game for the first time since 2015 have been owned by Paul Allen's estate since his death in 2018. Coming up, max seven earnings. Season rolls on with Alphabet and Amazon set to report next week and a long time tech watcher saying there's one specific bottleneck that could hold these names back. He will join the fastest right after this.
- [33:55]
C
Missed a moment of fast. Catch us anytime on the Go Follow the Fast Money podcast. We're back right after this.
- [34:09]
A
Welcome back to Fast Money. Apple, Microsoft and Metta all beating earnings expectations when they reported this week, but investors still have questions about the payoff of massive spending. Microsoft reporting soaring capex alongside slower growth in its closely watched Azure cloud unit. Next week we'll get more reports headlined by Alphabet on Wednesday and Amazon on Thursday for what big tech results are signaling. Rick Sherland joins us here on set. He's founder of Sherland Partners and senior advisor to Wedbush Investment Banking. Rick, always good to have you with us.
- [34:37]
H
Thank you.
- [34:37]
A
First, I want to get your take on the week that was because it's a very interesting week in terms of in particular the software names and the death spiral that software seems to be in and how every report that came out, no matter how the company did in relationship to numbers and estimates, got sold off. What's, what's your take?
- [34:54]
H
Yeah, the market is in a very foul mood this past week.
- [34:57]
A
Very.
- [34:57]
H
Yeah, Microsoft really didn't miss significantly and you know, you had ServiceNow and a few others. Even stocks that didn't report got hit hard. So I think there's been this view that because you can vibe code that software is replaceable now. And that's very much an oversimplification because for the enterprise space coding is a small part of software. It's building the workflows and understanding the domain and having that expertise that's 80% of what it's all about. So I think you're guilty until proven innocent. I think in this kind of market, if you have a Choice, you buy AI native because you get 50, 100% growth. There just aren't a lot of public software companies that are AI native right now. So I think the SaaS universe is kind of under the gun for a little while and it's going to be a show me. Unfortunately for that market, there are an awful lot of companies that were thinking they could get out this year in an IPO. A lot of VCs have a lot of these names that didn't get out in 21 last time the window was open. And a lot of private equity hasn't really had an exit in quite a long time. So I think this has got to be a very frustrating environment for them. But for Now I think SaaS is just going to be, you know, kind of show me, show me stocks.
- [36:14]
C
So Rick, let's talk. I think you have a core thesis here that the, you know, the cloud is still capacity constrained and that ultimately, you know, all this consternation about demand is, is hogwash. If I may talk about that. Because again, markets haven't treated a Microsoft who's investing heavily in infrastructure or the other players. This whole, you know, capex spend and you, you go all the way back with companies, these companies and the whole dynamic of where they were free cash flow machines and are now companies. We're thinking about some of those dynamics. Talk about it.
- [36:48]
H
Yeah, great. So let me share a perspective with you. You've got 1900 LL M models out there, a very long tail of models and variants. You've got five companies that will be oligopoly leaders in that market. The names we all know, the leadership keeps changing like every couple months. You've got benchmarks out and now it's Gemini and you know, Next it's, it's ChatGPT and then it's Llama or you know, somebody else. Xai what's important is that you differentiate in the market by having a robust stack of software that encourages people to write to your platform and, and be a part of your ecosystem. Which is exactly what Microsoft did around the Windows platform. Everyone wrote for Windows. It's what Oracle did around the Oracle database. You have to go up the stack into the applications layer and provide all the tooling so that the market standardizes on your platform. And then it doesn't really matter like, well, who's the latest leader because they're all so close in the benchmarks, so they're building an ecosystem. And what's really interesting is that the enterprise market is just starting to engage with the LLM models. Now. The enterprise market pays, the consumer doesn't really pay. 5% of consumers will pay for what they use. So you're doing inference, but you're not getting paid for it. But with the enterprise market they pay and they are big users of inference. So I think demand is just getting started. And what will drive that demand is, is Agentix. So you're integrating with your enterprise systems. Your agents are now interacting with each other in the background, doing things they didn't do before. But you're also doing reasoning. And LLMs are not very good at reasoning. In fact they're terrible at it. So they do these long chain of thoughts and the longer the chain of thought, the more they kind of hallucinate and forget what the constraints are. But it burns up an awful lot of information cycles. So I would argue that in terms of demand, we are really just getting started with demand. There shouldn't be any concerns that we're going to burn up all the capacity that we can fund and build the capacity or more of the constraints of building more data centers, not the demand side.
- [39:04]
A
So in terms of building that ecosystem and getting everybody to build on, on your LLM, where are we on that?
- [39:11]
H
So it's fascinating to see. I saw something today. OpenAI talk about they've got 60 apps in their app store. They've hired somebody to run a high profile person to run their apps business. So Anthropic has been more focused on the enterprise market, not so much on the consumer side. So they already have, you know, 80% enterprise driven business. And so those businesses write to the APIs that call that LLM. And so they already have a business in the enterprise. And DAVOS Guys at OpenAI, Sarah Fryer I think it was said that we're about 40% enterprise right now by the end of the year will be 50. And so you can see them recognizing that's where the money is. And so they're trying to build the stack that we described now. And so it's just they all recognize they need to do a whole complete stack.
- [40:06]
A
Ok, so you mentioned two companies that are going to be going public in theory this year. We play this game on fast money called Would you rather so I mean, and I know that you're not an analyst, you don't wear that hat anymore, but in terms of the business open air versus Anthropic and you meant, you mentioned that anthropic is definitely more focused on enterprise at this time, although OpenAI is trying to move in that direction. So which one would you rather? Which one has a better prospect?
- [40:31]
H
Well, you'll have XAI also which if, if we read the press it says.
- [40:35]
C
That when you're rather, rather by the.
- [40:37]
A
Way, I know he brought in a third option but that's fine, you can.
- [40:40]
H
Do that as three. It's like well Xai be part of SpaceX which you know, in June Elon says my birthday, maybe we'll go public then the planets are aligned or whatever. So yeah, you're going to have more choices and I would say it's a function and you can't really answer the question yet because it's going to be like a back and forth basketball game where they, the lead keeps changing. So the race right now is not so much let's deliver a little better results in our benchmark. It's like let's build a complete stack and prove that we can attract developers to our platform which gives you durability and higher margins in the business. So I think the market outlook for these players is very good and they will turn around and compete against the very companies that are hosting their products today. They'll compete with Microsoft, they'll compete with Google and others in the stack business because they'll have even the companies that write their applications on the platform. These guys will turn around and compete against a number of those applications companies because if they say well we should have some of that ourselves and we're used to that in the industry. We've seen it from Oracle and Microsoft and others. So I think that addressing the issue of bubbles, there is no bubble in demand, it's just getting started. So you build the data center and they will come. So I don't, I don't see there being a concern about a bubble of demand and you know, the financing costs are big and so there's concern that, well, will we have the demand down the road? Absolutely. Because as I see this market inflecting on the enterprise space, it's really just getting started and there's going to be so much demand for inference going forward. I don't think it's an issue.
- [42:23]
A
Rick, great to see you. Hope you'll come back.
- [42:25]
H
Thank you.
- [42:25]
A
And Sherlin Partners. Coming up, Bitcoin breaks down the cryptocurrency off to a rough start this year and hitting its lowest level since November. What is next for bitcoin Right after this. Welcome back to Fast Money. Crypto getting crunched. Bitcoin dipping below 82,000 earlier today, hitting its lowest level since late November. It did recoup some losses and is now trading just under 84,000. Bitcoin Treasury MicroStrategy briefly hitting a more than one year low, but also bounced back for more than 4% gain today. Bono, what do you think is going on here?
- [43:07]
G
Well, I think this is, you know, somewhat symbolic of risk off sentiment across the board as it pertains to Bitcoin versus MicroStrategy. I think it's one where the bitcoin holdings have more than masked the true operations of the business. I used to look at this as a way to kind of essentially own the operating business for free. But given the convertible debt, although I do think it's on quite favorable terms for the company, the dilution risk given where it struck is quite low. And to my knowledge, I believe there's zero coupons. So essentially it's not really a cash drag in the immediacy. It's really a matter of whether you think that bitcoin continues to drift lower or starts to kind of base and edge higher. In the latter, I would most certainly prefer to own MicroStrategy just because you kind of get the levered kicker. You know, I do think that what we're seeing in terms of tokenization is supportive of the overall altcoin and bitcoin narrative.
- [44:01]
D
You know, when you look at it, I agree with what Bono and said. Microstrategies cuts both ways. You get that leverage on the way down, the way up. So I do agree with that. If you want to torque it a little bit on the way back up. A host of reasons why it could have been sold off. Geopolitical gold is the new bitcoin. There's a lot of reasons why rates. There's a lot of reasons why it could have sold off, but I'm waiting to see that stabilization and I have not seen it yet.
- [44:25]
A
All right, coming up, meet the new boss. Big C suite changes have taken effect at both Target and Wal Mart. That will happen actually this weekend. What the insiders are saying as the stocks see vastly different prices, performance, more fast money into. Welcome back to Fast money. Retail giants Target and Wal Mart have moved in opposite directions over the past year, but both will see new CEOs take the reins on Sunday. What will the new leaders bring to each company? CNBC's Courtney Reagan's got more on this. Hey, Court. Hi, Melissa. So both Michael Fidelki and John Furner are multi decade employees at their respective retailers Target and Wal Mart, but facing different circumstances. Both stocks are up a similar 6 to 7% so far in 2026. But as you pointed out over the last 12 months the movement was in very opposite direction. Sources tell me John Furner is viewed as a servant leader like his predecessor Doug McMillan, but the next vintage he's insightful and willing to embrace change. Furnace worked across disciplines, geographies and formats. He's been integral to recent technology investments and connected he's connected in retail beyond Walmart, from mom and pop retailers to lawmakers thanks to his three years as NRF chairman. Now Michael Fidelke at Target hasn't been as involved in the broader retail community, but has a similar down to earth leadership style. He's from Iowa, born on a farm, I'm told. He's a straight shooter. He eats in the employee cafeteria. He seeks the word on the ground before he makes decisions. And Fidelke's top priority is returning to growth with particular focus on recapturing that Target style cachet, but at affordable prices. He's already been given a running start to start deploying this playbook. And sources do say the acceleration office that he ran has proven that he's willing to challenge the status quo when it's necessary. Melissa Court, Thanks. Courtney Reagan, Mike Coe, which one do you like?
- [46:12]
F
The status quo is the status quo is just fine at Walmart. So that's just basically keep doing what you're doing because they're doing it very, very well. Target obviously is the place where they have a lot to work on. And if he's not up, you know, if he's not concerned about upsetting the Apple card, I think that's a good thing. Options market reflects that too. We saw calls outpacing puts by about 2 to 1 on on above average bullish volume there.
- [46:32]
C
Well, I think most people are aware that target is the T and Timbo and so they not. I mean obviously I think what else would have really said there? I think we have seen a little bit of change in terms of the segment dynamics and relative value.
- [46:46]
A
Up next, final trades, Final trade time.
- [47:05]
F
Mike Coe I like Alphabet and I like options Google options going into the print next week. 5% implied move following.
- [47:16]
G
I would use Karen's three day rule of caution but I think taking too is going to give you an opportunity.
- [47:20]
F
To own it for the long term.
- [47:23]
C
Timbo yeah, Pfizer. Tim's Pfizer reports next week. I think there's some plus in their oncology business amongst other things.
- [47:30]
D
Steve I'm going to go with a T stock. It's going to be Tesla and it's not the T in Tim's T bow. Timbo Timbo what I say T Bone yeah, it's okay.
- [47:39]
F
Anyway people get confused.
- [47:41]
A
Thanks for watching. Have a great weekend. Matt Money Jim Cramer starts right now. All opinions expressed by the Fast Money participants are solely their opinions and do not reflect the opinions of CNBC or its parent company or affiliates and may have been previously disseminated by them on television, radio, Internet or another medium. You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of an opinion. Such opinions are based upon information the Fast Money participants consider reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy and and it should not be relied upon as such. To view the full Fast Money disclaimer, please visit cnbc.com fastmoneydisclaimer@ Capella University, we believe accessible education can make a difference. That's why we offer scholarship opportunities to all eligible students. Un futuro diferente estam mas cerca de lo que cres con Capella University. Learn more at Capella Eduardo.