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Fmr. CFPB Director Rohit Chopra, Metal-Tariff Mania, Power of Super Bowl Ads 2/10/25
00:55:14
Elon Musk’s DOGE took down the CFPB this weekend with little to no notice. The agency’s now-former director joins us in a First on CNBC interview. Plus, President Trump announcing new tariffs on steel and aluminum imports into the U.S. And we’ll break down the best and worst ads of the big game, and hear from the CEO of Fetch on the heels of their $1.2M giveaway last night.
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- [00:01]
Kelly Evans
What does it mean to be rich? Maybe it's about measuring life and laugh lines and time, not by how much you have, but by how often it stands still. At Edward Jones, we believe the key to being rich is knowing what counts. Our dedicated financial advisors provide one on one support meeting you where you are through all of life's changes. Because what matters most is living a life you love. Let's find your rich together. Edward Jones Member, SIPC are you still.
- [00:32]
Scott
Quoting 30 year old movies? Have you said cool beans in the past 90 days? Do you think Discover isn't widely accepted? If this sounds like you, you're stuck in the past. Discover is accepted at 99% of places that take credit cards nationwide. And every time you make a purchase with your card, you automatically earn cash back. Welcome to the now it pays to Discover. Learn more@discover.com credit card based on the February 2024 NEL.
- [00:59]
Kelly Evans
You're listening to the Exchange. Here's today's show and thank you very much, Scott. Welcome to the Exchange on this Monday to kick off a busy week. I'm Kelly Evans. The president expected to announce new tariffs on all steel and aluminum imports into the US that should come this hour. Any minute really would make it harder for overseas companies to sell lower priced steel in the US Market. And that's why the US Makers are on the move. Take a look at Cleveland Cliffs, United Steel and New Car, New Core all shooting higher. Cleveland Cliffs is up 18%. Now we'll talk to one of the biggest players in the industry. He's had to close two of his plants in recent years. He says these tariffs can't come fast enough and we'll explain why ahead. But let's begin with the other big breaking story out of Washington. That all kicked off with a post from Elon Musk on X late Friday afternoon saying CFPB rip. Then came the directives to CFPB employees to stay home. We're talking about the Consumer Financial Protection Bureau. They were asked to stand down for from all work, Interim Director Russell Vogt, who's director of the omb, telling workers in an email on Saturday to cease all supervision and examination activity and pause enforcement actions. That was followed up with a Memo from the CFPB's Chief Operating Officer yesterday informing staff to stay home. With the office closed through the end of the week. Today, an error message greeting visitors on the organization's landing page. Let's talk about all of it with the man who was in charge of the CFPB until a few days ago. Joining Us now in his first TV interview since having effectively been fired by the President. I hate to put it that way. Rohit is former CFPB director Rohit Chopra. Welcome and thank you for joining us.
- [02:43]
Rohit Chopra
Thanks so much for having me.
- [02:44]
Kelly Evans
Are you employed right now?
- [02:46]
Rohit Chopra
I'm not. It's been just a few days since I wrapped up my time as head of the cfpb. And really what was in flight was a lot of big investigations over large companies, banks, non banks, big tech companies, who we thought might be breaking the law. So the news about really law enforcement being told to stand down. I'm really worried that this is just not going to be fair for all those mortgage lenders and banks and others who are following the law and are going to have to compete with those who just think they're above the law.
- [03:28]
Kelly Evans
So was this a surprise or. I mean, we've known for years now and people have been unhappy with the creation of the cfpb. This goes back to the financial crisis. It was created in the wake in 2010, I believe, and it was basically funded through the Federal Reserve or held accountable through the Federal Reserve. In other words, not through Congress and not through the people's power of the purse. Was that original sin why we ended up in this situation today?
- [03:50]
Rohit Chopra
Well, actually, every single federal banking regulator is funded through a dedicated funding system. And part of the reason why was to limit some of the political interference. Now look, at the end of the day, we should want to make sure that the CFPB is actually a strong cop on the beat because there was no agency focused on some of this. That's part of the reason we had a subprime mortgage meltdown. So I'm not really sure it makes sense to want to just put away a cfpb. It seems like you're almost baiting another crisis.
- [04:31]
Kelly Evans
That may be the case. But again, going back to whether there's other agencies that can or should be doing this work, what would you say were the most consequential actions taken by the cfpb in its 14, 15 year history?
- [04:42]
Rohit Chopra
Well, certainly we have uncovered over the years some major meltdowns and scandals, including the Wells Fargo fake account scandal, the return of billions of dollars of people who had been defrauded, but also some of the real plumbing of the financial system, making sure that data is protected, making sure the credit reports are accurate. These are things that are not controversial anywhere except for in Washington and perhaps by those on Wall street and Silicon Valley who don't necessarily want to play by the same rules as Main street, banks and lenders. We have to make sure there is meaningful oversight. And we know that large tech companies are eager to get into payments and banking. It's one of the reasons why the CFPB has put more focus on how they handle data and payments to make sure there isn't errors and fraud and surveillance and, you know, we'll see how this plays out. But at the end of the day, the work of the CFPB has been welcomed by people, no matter what their political stripes are.
- [05:53]
Kelly Evans
You mentioned some active work that's ongoing. Which agencies or which parts of the government are likely to pick up. If they pick up, where, where would that go? You know, agencies like the sec. I mean, there's plenty of existing ones. The doj.
- [06:06]
Rohit Chopra
Good question. Good question. The law gives exclusive enforcement authority on so many of these laws to the cfpb. So if there is nobody enforcing at the federal level, it is really unclear how this is going to work. And we lived that before in the years leading up to the financial crisis, there was no one really responsible, especially for those companies that were not chartered as banks in the mortgage market, payday lending and others. So I don't know, I really don't know who would do it, because the law that Congress has passed has assigned to the CFPB that oversight work.
- [06:48]
Kelly Evans
Just one or two more questions, one of which is, and we've seen this with some of the other diktats that have come out so far, the courts have halted them. And I understand that there was a lawsuit Sunday filed, you know, by the Treasury Employees Union that represents CFPB staff, saying that these actions by vote could be unconstitutional. Which is why I was curious if you consider yourself fired or merely kind of working from home.
- [07:12]
Rohit Chopra
Well, look, no, I was. I'm no longer employed by the cfpb. And as I said on this network many times, I was happy to pass the baton to whoever was chosen. But I also believe that if you really care about lowering costs, about making sure that everybody can achieve the dream of getting a mortgage and buying a home, you really need a marketplace that is not set up to exploit. You need one that's fair and competitive. And that's exactly what I think you want the CFPB to be working on. You also want the CFPB protecting people's data from intrusions by data, you know, data brokers, credit reporting agencies, and so much more. So again, I am really, I think the country would be worse off if we just defunded all the police over Wall street and Silicon Valley. That are really handling our money, our loans and our payments.
- [08:09]
Kelly Evans
Right. Although again, there are other agencies that oversee a lot of pieces of this, which.
- [08:14]
Rohit Chopra
Well, you keep saying that, but I think the issue is that there are laws that are specifically assigned for enforcement for the cfpb. The CFPB does not regulate securities.
- [08:25]
Kelly Evans
Right.
- [08:26]
Rohit Chopra
You know, it does not regulate the trading of commodities. But when it comes to consumer financial products, that's the agency that takes the lead.
- [08:35]
Kelly Evans
So let's take credit cards, for example, which is an issue that the President himself, Senator Sanders, have said, you know, we'd be better off capping rates at 10%. And most people think that's a pipe dream. Is that something the CFPB would have oversight of or where would that fall? Just typical legislation.
- [08:50]
Rohit Chopra
Well, the CPB does, does enforce on the Credit Card Act. It doesn't have the power to set rates like that, though. Over the past few years, we really have uncovered lots of abuses when it comes to fee churning and other practices in the credit card industry. But yes, you know, that proposal, that is one that the President has said he supports and others do as well. Americans are paying over $100 billion in credit card interest, and the interest rates have gone up far further than even the Fed has raised rates. There's real issues about whether that market is competitive and whether it's observing fair practices. So, you know, we'll see if that does become a legislative proposal. But even if it was passed into law, who on earth will enforce it if there is really no one at the CFPB doing their job, I guess.
- [09:43]
Kelly Evans
You know, you break the law, you break the law. It's someone, someone I would imagine is going to hold you accountable somewhere, actually.
- [09:51]
Rohit Chopra
Who will do that? When we have laws, we need them enforced. Sometimes laws provide for individuals to take companies to court, but many of them do not. And it requires law enforcement to be able to look at the whole picture, look at all the facts and go to court. You know, the CFPB has done that routinely. It doesn't always win, but it makes sure that it is watching so that consumers are not routinely cheated. And that really is a very important part of a market here in the US So for the.
- [10:30]
Kelly Evans
And remind me how many employees there are at the agency. What is their status right now, especially with this possible lawsuit in the works to stop this action from taking place?
- [10:39]
Rohit Chopra
Well, there's about 1700 employees. I don't know the latest. My understanding from media coverage is that they're really not supposed to be doing any work. That means those law enforcement investigations. That means that oversight of banks and other financial companies, the handling of consumer complaints. And I think I'm already getting calls from some in industry worried about this because it could be chaotic. You know, the mortgage industry, for example, relies on some of the rules and guidelines that are issued by the CFPB when it comes to making sure that the mortgage market is working. So I don't know what is going on, but I don't think anyone on Wall street should even want to see this kind of chaos or a situation where bad actors who are egregiously violating the law can do so with impunity.
- [11:35]
Kelly Evans
Super interesting. Rohit, want to thank you again for joining us to explain to the extent that you can the events that are taking place. Extraordinary really for those of us who remember when this was created to see what's come now full circle. Thanks for taking the time.
- [11:48]
Rohit Chopra
Great to see you.
- [11:49]
Kelly Evans
Rohit Chopra, formerly of the CFPB and shuttering that agency, is just one of many caught in the path of President Trump's war on government waste. My next guest says American exceptionalism is peaking and preparing to go. Joy in Japanese from 1990 and Chinese exceptionalism from 2010 in the tank. That's some strong words from Bill Smead. He's the chief investment officer at Smead Capital Management. So Bill, I mean, I think of you as a real patriot and this is quite a word of caution from you.
- [12:18]
Bill Smead
Well, yes, the people are confusing political improvements with an effort to extend a euphoria that Charlie Munger called the biggest of his career because of the totality of it. See, this is euphoria. We put out a piece right after the election euphoria of the first couple of days. And if you look, I think the S and P is lower than it was a couple of days after the election day euphoria. And that's because go back to 1980, Ronald Reagan was that was going to be great for business. And Paul Volcker did what he had to do to break the back of inflation with 18% 90 day T bills while Reagan stood down the air traffic controllers psychologically breaking inflation. But despite that, the market went down 22% over the first 21 months of his term. And that's with record low participation in stocks, stocks that went from seven and a half times earnings on average to six. And we've started out this with the with the most expensive market as measured by seven or eight main ways of measuring like Buffett's GDP to market.
- [13:37]
Kelly Evans
So let me just back up for a second Bill, I mean, do you, do you. What we're all trying to figure out is what does this mean? Let's just say for the s and P500 for investing in the stock market, you know, I see some making the argument that as these government jobs are trimmed, that will make the US economy more productive in the long run. For example. That doesn't sound like the argument you're making. You see this as more. How do you expect this all to play out? Exactly.
- [14:02]
Bill Smead
No, no, the, the argument involved, it has to do with the economy, the on the ground economy. And people have to understand that from 1964 to 1981 the on the ground economy did great and stocks did terrible. They've got to realize a lot of.
- [14:23]
Kelly Evans
Inflation during that period. I don't know if they'd say it was doing great.
- [14:27]
Bill Smead
Well, think about it like this. We went all the way to 1/4% interest rates from 18% T bills in a 40 year stretch. Of course people bid the price of common stocks up in reaction to that, that the future income stream got more viable as the riskless rate went down. The riskless rate is no longer going down and people are ignoring it and continuing to bid up very exciting stocks that are the last major trend, which was technology Fang, then Magnificent seven and now AI. And that is the last trend. They're bidding that up even though, even though we're at the point where in prior historical circumstances where a very legitimate development came to pass, you had to start getting away from it. And so it, to me it's very bizarre that the riskless rate is going up despite the Fed cutting rates for a while and people continue to capitalize tech and growth and quality wide moat 35 times earnings stocks and putting 60 times earnings on Costco like they did Coca Cola in 1972.
- [15:44]
Kelly Evans
Well, let's talk about some of the names that you think are much more attractively valued and Amex, you know, Lennar, Horton, Simon Properties.
- [15:54]
Bill Smead
Well, Simon, the Simon family is basically the, the, the Berkshire Hathaway of, of real estate and they have done a fantastic job for us. Remember five years ago, Kelly, in the middle of the COVID closures, no one was going to want to shop. Well, that's been changed now to no one's going to want to shop in downtown large cities. But people like to shop. We found out that 60% of the stuff is going to get shopped for. But, but more important, you hear all these people talking about nuclear and, and, and data centers and all this kind of thing. Natural gas is how we make electricity and that's the largest source of electricity in the United States is natural gas. And that's a natural byproduct of, of providing oil and gas. And those stocks are just cheap as all get out. They're hated and vilified, left over from the religion called esg. And, and they're so afraid that Trump is going to ruin them the way that Drill Baby Drill did back in the 2016 time period.
- [17:02]
Kelly Evans
That said, EPA does have a 5%. But let me just ask you this, Bill. For the, for the kinds of industries, the sectors that you like, are tariffs a threat or an opportunity?
- [17:13]
Bill Smead
If the, the tariffs, I'm a, my, my economics major taught us, David Ricardo and comparative value. If someone can make something better and less expensive than you, go do something else and let that other country produce it. So that's, that's just my natural philosophy from the way I was educated. And so I believe that it will be inflationary. I believe that when, when UPS cuts their Amazon deliveries in half because the USPS is going to charge $5.35 for the last mile versus $3.10, that's inflationary, that's a 60% increase in price. When the dock workers get eight and a half percent per year, compounded for six years when the machinists at Boeing get eight and a half percent. And then you throw, and then you throw tariffs in on top of it, it can't help but be inflationary. The only way you can stop disinflation would be to retract the $12 trillion of federal government monetized debt. And it's almost impossible to do that at this stage.
- [18:17]
Kelly Evans
Well, we'll see. I know they're trying to chip away here and there, maybe revalue the gold holdings. Bill, thanks very much. Appreciate your time today. Bill Smead with Smead Capital Management. We've got some more breaking news out of the White House. Let's get to Eamon Jabbers. Eamon, what's the latest?
- [18:31]
Eamon Jabbers
Kelly, we're about to see President Trump in the Oval Office. They have called the White House press pool here to go in. So we'll see that momentarily. I'm told that what we're going to see here is the president officially signing those steel and aluminum tariffs that he talked about yesterday, 25% across the board tariff on steel and aluminum. What we're not going to see, at least at this time, is the reciprocal tariffs that he'd also talked about on countries that have tariffs against the United States. That set of tariffs is going on a separate track, I'm told. Not clear whether that's later today or later this week, but we're not going to see that at this event that's coming up here in a short amount of time. We're also going to see, Kelly, the president signing an executive order related to the Foreign Corrupt Practices act, according to a White House official. Now, that's important. That's the law that makes it illegal for American companies to bribe foreign officials overseas. What President Trump is going to sign, I'm told, is an executive order that pauses enforcement of that by the Department of Justice and the Attorney general until they can issue new guidance about how they're going to enforce the fcpa, the Foreign Corrupt Practices act, going forward. Now, the exact wording of that is going to be important. Critics will immediately suggest that this is President Trump trying to loosen up rules to allow American companies to bribe officials overseas. The details of this will be important because American businesses have complained for a long time that the FCPA and enforcement of it makes it impossible for American companies to compete, particularly in the oil and gas sectors, infrastructure construction and other businesses that do business with foreign governments and in foreign countries around the world. So we'll look to see what the exact language is. I'm told what to expect is a pause in enforcement of the FCPA until they can work out new enforcement guidelines for the Department of Justice relative to American companies that are engaged in alleged bribery of foreign governments overseas. Kelly so a lot coming up here. We'll see the president here in just a couple of minutes.
- [20:42]
Kelly Evans
Yeah, but to your point, it sounds like the business community, Eamonn was saying that it was somewhat vague and confusing sometimes to comply or that the costs outweighed the perceived benefits.
- [20:52]
Eamon Jabbers
Yeah, I mean, the biggest complaint from the business community for years about FCPA has been that it makes it difficult to compete Right. With Western governments around the world that don't have an FCPA equivalent. US Companies simply can't operate in some of the places where culturally it's deemed necessary to make certain payments and the like in order to win business, to hire people who are politically well connected, that sort of thing. That's something that US Businesses generally have wanted to have lifted. You know, but reformers and good government folks have said for years, look, what the FCPA does is it makes the United States a leader in global anti corruption. The idea being that the United States can use its massive economic capacity to set the terms for the rest of the world, saying we don't believe that bribery of government officials is a good practice and we're not going to do it. And that might cost us some business on the margins, but that's going to set the tone for the world. This administration now reevaluating the terms of that deal, altering the terms to suggest that they're going to have a pause now in enforcement.
- [21:57]
Kelly Evans
Yeah. Interesting to see enacted in 1977, was dormant for a while in terms of enforcement until the Bush and Bush and Obama administrations, which started collecting more revenue from it. Eamon, again, so many different interesting developments to follow. We appreciate you bringing all this to us. We'll, we'll let you go for now. Eamon Javors at the White House this afternoon. Still to come, Powell is heading to Capitol Hill tomorrow for the first time since July to testify before the Senate Banking Committee. Our economist says he's not quite ready to join the camp. Forecast suggesting zero cuts this year. We'll ask what he's expecting Powell to tell lawmakers next. Plus, as mentioned, President Trump announcing plans to impose a 25% blanket tariff on steel and aluminum imports that's boosting shares of American producers today Cleveland cliffs by almost 20%. We'll ask North America's largest steel, tube and pipe manufacturer what it'll mean for his business and for his consumer prices ahead. Stay with us on the exchange.
- [22:52]
Bertha Coombs
This is the exchange on cnbc.
- [22:58]
Kelly Evans
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- [23:25]
Scott
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- [24:29]
Kelly Evans
Welcome back to the Exchange. Will we get any more Fed rate cuts this year? After that strong jobs report Friday and the spike in inflation expectations, a lot of economists are starting to think no. But my next guest isn't ready to go that far. Here to explain what he sees differently about inflation is Michael Darda, the chief economist and macro strategist at Roth Capital Partners. It's good to see you, Mike. And you know, to me it feels a little bit like some of the inflation is cost push and some of it's idiosyncratic and but it all seems to be sticking around longer than we had hoped. So I'm curious how you would explain kind of the broader trends that you see.
- [25:07]
Michael Darda
Well, Kelly, I think we've made a lot of progress and I think that's what Paul is going to say this week. If you go back two years, we were 350 basis points, points above the Fed's target on PC inflation. Now we're 60 to 80 basis points above on a year to year basis. And if you just look at the monthly figures, core PC inflation annualized at 2% or less in six out of the last eight months. So I think that's a pretty good track record in the sense that the Fed was able to do this and avoid what typically happens, which is a recession and a big stock market crash. So, you know, I think you have to give them credit. I was skeptical that they'd be able to pull this off. They're pulling it off and I think what Powell is going to say is economy has held up better than expected. We've taken the short rates down 100 basis points. We're just going to sort of see what happens from here. And I think it's completely premature. I mean, it's February 10th. No one knows what the situation is going to look like in the fall of this year in December. So I just think it's a little early to say, okay, you know, all further rate cuts for the year completely off the table. The market's only pricing in about a cut and a half now. So, you know, we'll see. The Fed, I think, is going to retain a lot of flexibility here.
- [26:27]
Kelly Evans
Are you surprised? The terror that consumers seem as aware as they are about tariffs. You probably saw that data from Friday inflation expectations, you know, a quarter, a third maybe of respondents cited tariffs as a reason why they think prices are going to be higher. We've seen a lot of pull forward in demand. So curious how that's all going to work through.
- [26:45]
Michael Darda
Yeah, I'm a little skeptical of some of these surveys with the University of Michigan data. There could be some political biases and it wouldn't be the first time that we've seen that these sudden spikes tend to either be revised away or reversed. We got some data out of the New York Fed today on inflation expectations that looked much better behaved. So, you know, now look, the bond market inflation expectations have moved up pretty considerably since the fall of last year, but they were rolling over hard going into the fall of last year. It looked like the labor market was losing steam rapidly. So the Fed's rate cuts reversed that. And at least, you know, you look at the 10 year horizon for the TIPS market, 240 basis points that, you know, that's a good level, that's consistent with price stability. So that means the Fed is doing it right. We shouldn't worry so much about whether there's stability in short term interest rates. Really what we want is nominal stability in terms of nominal spending and inflation over time. That's the Fed's task, not to just keep the short rate fixed at some level and then have the business cycle go off the rails. So they're basically getting it right here. I hope that can continue.
- [27:57]
Kelly Evans
And what's interesting, Mike, is I think you are like other voices we've spoken to recently. You have more of a bias towards value, towards, towards some of the health care stocks, towards the small caps, kind of staying away from the S&P 500 and its dominance with the Mag Mag 7. But if the Fed ends up looking at this and saying we see job growth slow or you know, what have you, like you said, but they see stickiness in prices because of tariffs and they don't cut rates more, then wouldn't that be a broader risk to the economy? Wouldn't that be a risk to things like value and small caps?
- [28:29]
Michael Darda
Oh, no doubt. I think anything cyclical, if the economy stumbles or the Fed has difficulty in tracking a neutral rate because of these supply side cross currents, that's probably the bigger risk. And I think, you know, anything that is hitched to the business cycle could end up not performing particularly well. But if we go back to the late 90s, early 2000, the last time we were in a frenzy driven by the technology sector with super high valuations, we saw a seven year period of outperformance for small cap value stocks. In the wake of that, including through a recession period and nearly a three year bear market for the S&P 500. And so in my view this is an area, I think that as long as we're committed to a multi year horizon, which individual investors should be doing, they shouldn't be day trading in my opinion. Yeah, I think, you know, I think it makes a lot of sense.
- [29:23]
Kelly Evans
I even heard about he wasn't advocating but just pointing out the outperformance. Rich Bernstein said look at the European small cap value space. When that's outperforming, which it has this month, the past month or so, you know, things have changed. Mike, thanks so much. It's a good check in with you. We appreciate it.
- [29:39]
Michael Darda
Thank you.
- [29:39]
Kelly Evans
Michael Darda with Roth Capital Partners. Coming up, the chip stocks haven't fully recovered from last month's deep sea induced sell off and now OpenAI is reportedly close to developing its own first custom AI chip. Is it another headache for the semi stocks or just a head fake? We'll talk about that next. For 140 years MultiCare has been in Washington prioritizing long term solutions, partnering with local communities and expanding access to care. Together we're building a healthier future. Learn more@mycare.org Are you still quoting 30 year old movies?
- [30:21]
Scott
Have you said cool beans in the past 90 days? Do you think Discover isn't widely accepted? If this sounds like you, you're stuck in the past. Discover is accepted at 99% of places that take credit cards nationwide. And every time you make a purchase with your card, you automatically earn cash back. Welcome to the now it pays to Discover. Learn more@discover.com credit card based on the February 2024 Nelson Report.
- [30:50]
Kelly Evans
Welcome back to the Exchange. I'm Bertha Coombs with your CNBC News Update. President Trump says Palestinians would not be allowed to return to Gaza under his plan for US Ownership of the territory, according to a clip released today of an interview with Fox News. The president's assertion contradicts statements last week from both Secretary of State Marco Rubio and White House press Secretary Caroline Levitt, who said the relocation would only be temporary. Arab nations, including US Allies Egypt and Jordan, have sharply criticized the entire proposal. The head of the Office of Special Counsel, a federal agency that looks to protect whistleblowers, is suing President Trump, saying he was illegally fired. Hampton Dellinger argues in the suit that he can only be removed for inefficiency, neglect of duty or malfeasance in office. And Sony is giving PlayStation plus members five extra days of service following a network outage. This weekend company said the PlayStation Network had fully recovered as of Sunday from a operational issue. Players had issues with logging into their accounts, visiting the PlayStation Store and launching online game. Hopefully it was back by the second half of the Super Bowl. A lot of people turned away. Good point Bertha. Thank you very much. Bertha Coombs first chat GPT came along and disrupted the entire Internet's business model. Now its owner OpenAI is looking to disrupt the semiconductor space as well. The company, according to Reuters, is getting closer to creating its own in house custom AI chip. Deirdre Bosa has more in today's Tech Check. Deirdre hey Kelly, so this is really a strategic move designed to give Open Air more choice for training and running their AI models and reduce the reliance on Nvidia. But reading between the lines, this may have just as much to do with its evolving and increasingly complicated relationship with Microsoft. When Project Stargate was announced earlier this year, OpenAI Microsoft, they tweaked their agreement. Microsoft was no longer the exclusive cloud provider to OpenAI, but it moved to a model where Microsoft has a right of first refusal for cloud computing hosting. So even though Microsoft now allows Open Air to negotiate with other cloud vendors like US or Google Cloud, those companies have no incentive to give Open Air a good price. Microsoft will just match it Negotiations over cloud contracts, they are fierce and time consuming. As one source I spoke to put it, negotiating with a company that has a right of first refuse fuso contract with Microsoft, that is a waste of time for the others. So Open Air developing its own custom chips may be one step toward untangling its Microsoft relationship. Project Stargate, Masterson, SoftBank, Oracle three more factors that could give Open Air even more leverage in its AI infrastructure future. Now it also just speaks to these shifting dynamics in the AI landscape, Kelly where models themselves are being commoditized and the real moat is infrastructure and distribution. And certainly OpenAI has its eye on those two pieces over the weekend Sam Altman posting about where they are according to similar web in terms of most visited website I believe it's 5 or 6. No surprise Google has the top with search and YouTube and then it's the meta properties. I'm getting more and more used to using that. Kind of like the I tried to ask it last night name the last 10 Super bowl halftime shows but I was googling it and then I had to open a webpage and the webpage wasn't helpful and I was like AI is better AI. Does this give you the answer right away? I didn't actually go and use it because then I was like, but I liked the super bowl ad. Deirdre, thanks for now. We appreciate it. Deirdre Bosa. Still to come, steel prices spiking to a 10 month high as the president announces plans to impose a 25% tariff on imported steel and aluminum. American producers are getting a boost today. But what will it mean for US Manufacturers? We'll ask the CEO of Ziegelman Industries about that next. Welcome back. The White House is expected to announce a blanket 25% tariff on all U.S. imports of steel and aluminum. It's unclear exactly when it would go into effect, but shares of the U.S. aluminum and steel producers are popping on the news, as are steel prices, by the way. But Cleveland Cliffs a good barometer of 18% today. My next guest says these additional tariffs can't come soon enough as he's had to close two plants here in recent years. Joining us for more is Barry Zecelman, the chair and CEO of Zecelman Industries. It's the largest independent steel pipe and tube manufacturer in North America. And I don't know anything about steel pipe and tube, Barry, so please try to like break this down for me. What has been happening, we've, we've had a lot of these tariffs going back to the first Trump administration. They've been in place for a long time. What has been happening to your business?
- [35:37]
Scott
Yeah, I mean, tariffs go back a long way. But what's happened is, you know, President Trump put in 232 tariffs on aluminum, steel. He negotiated with certain countries to back down those tariffs and put in place kind of quote unquote quota system, if you will, and they'd agree to limited imports. But what's happened is a lot of those countries have violated those agreements. I mean, Mexico in particular with us. I mean, they're, their imports of steel conduit have gone up eight, nine fold, decimating our industry, taking it from 2% market share to 20% market share. So, you know, there are targeted tariffs that need to happen. I think, you know, President Trump putting in a trade policy like this is trying to get the conversation going. But more importantly, it's not just about tariffs on steel and aluminum that the producers make per se. I think we have to look further down the value chain, you know, the whole supply chain. And what this product goes into, US Steel, Cleveland Cliffs, Nucor, sdi, all sell me steel. They wouldn't be in business without me. So you have to look at the consumer of this product and then what we compete against and we compete against Products that are using steel from the likes of China and India and other countries like this, shipping them in through the trade backdoor, if you will, like Mexico, and then taking over our markets with dumped products. So they're circumventing other dumping duties that are already on this deal, transforming it into another product and quote, unquote, changing the country of origin and a substantial transformation and otherwise coming in under the guise of these trade agreements, all at the expense of our communities, our workers and our business.
- [37:21]
Kelly Evans
And let me ask you something. So our guest at the top of the hour made a point that I think a lot of people themselves learned in school or are curious about, which is to say, you know, if someone, if Mexico, China, others are going to dump cheaper steel into the global marketplace and other players can use that steel to make things more cheaply that ultimately compete with US Goods in the global marketplace, then if we tariff what's happening here in order to protect our industries, are we just going to end up losing in the global export race?
- [37:54]
Scott
No. I mean, I mean, it's an easy argument to make because it's not that sophisticated. It's okay, we're going to put a tax on it or a tariff and it's going to cost more and the consumers will have trouble. It's actually the other way around. Look what happens when you take product out of making it in America. You take jobs away from Americans. You take capital investment away. The last time two 32s were put in, the US steel industry announced $30 billion of investment here in the most efficient and modern steel mills in the world. I've invested over a billion dollars in my company in plants becoming way more efficient. We're the most efficient 2 producer in the world, but the product that we buy to make our steel of is 80% of the cost that goes in. So when you have that as dumped product as the substrate, then countries can target you annihilated industry and then they own it.
- [38:47]
Kelly Evans
No, absolutely. And we've seen this time and again. I have so many more questions. Let me try to ask you just the most important ones. I don't know if you caught the 60 Minutes report interview with Robert Lighthizer a couple of weeks back, but they actually use steel tariffs as an example. And I don't know where this research comes from. Tried to find if it was Peterson or something similar. They said the steel tariffs back then protected a few thousand jobs in the steel industry, but cost 75,000 other jobs in other industries that use these inputs and were therefore paying higher prices. Couldn't produce jobs so far. Can you comment on that phenomenon that researchers are pointing to and saying, okay, whatever you tariff might help that industry, but what happens to the broader customer base?
- [39:28]
Scott
Well, I can absolutely comment to that. Exactly what I said earlier. We didn't go farther, far enough down the value chain. So you know, when those jobs then leave America and go to Mexico to be made with cheaper labor and no environmental controls, and then other steel that comes in from around the world from the likes of Russia and China, circumventing duties, they take jobs away from America. So we didn't go far enough. And that's the problem. Yeah, I mean, no question. Why does General Motors pick up and go to Mexico from, from here in the US I mean for the weather. They went there because the labor is cheaper, the taxes are cheaper, there's less environmental regulation.
- [40:09]
Kelly Evans
These tariffs now go far enough. Barry, this new 25% blanket tariff, does that go far enough?
- [40:16]
Scott
Not at all.
- [40:17]
Kelly Evans
What would.
- [40:18]
Scott
I think we need to go way further down the value chain. I'll give you a specific example. We all know what a hydraulic cylinder is that moves. Some of us move the blade on. Well, like if you look at a bulldozer, a caterpillar machine, that shiny piece of steel that moves in and out that cylinder is made here and assembled here with lots of high value jobs and many parts that go into it. So what happens now is you tariff the steel so that I make the hydraulic, the main cylinder from. Now they've moved that manufacturing to Mexico. They bring in the cylinder from India or China. China. They bring in the bearings from China, they assemble it there with very cheap labor and they ship the whole cylinder in. So you took away all of those jobs from, from the US Fixes that need to go downstream and tariff those products as well and provide jobs for the communities here. Cheap is expensive. When you move a product out of the US and make it somewhere else, you're losing the tax dollars that we pay on the income tax.
- [41:19]
Kelly Evans
Just to be clear. So if I, if what would be the verbiage if they're tariffing steel, but you're using the example you described. What else should be tariffed in order to get at that whole value chain?
- [41:29]
Scott
Well, I think that products are that heavily, heavily use of steel, right. Maybe it's by a kilogram weight, maybe it's by the percentage of steel that's in it. I think they need to go way down the value chain. I mean look at a car, right? A car has a ton of steel in it. So you just showed steel prices that went up 100 or $150 a ton in the future.
- [41:49]
Kelly Evans
Future.
- [41:49]
Scott
So are you telling me that consumers aren't going to buy a car because it cost $100 more? So, last question, incentives on cars of, of, of 2, 3, $4,000.
- [41:59]
Kelly Evans
Absolutely. One more just because highly relevant as a customer then of US Steel, as you mentioned, would you have any problem with Nippon buying that mean, do you perceive that that company needs to be modernized? Do they now that there's maybe just going to be an investment? What's your view on that potential, you know, tie up?
- [42:18]
Scott
Well, I don't think that they need to be bought. I think that if there was the right comprehensive trade policy that was long term in the U.S. u.S. Steel would do just fine. They've invested capital, they have good facilities. They need to invest more, but they need the environment to do that. We can't invest long term when every four years we get the rug pulled out from under us. How do you make hundreds of millions and billions of dollars of investment when you don't have a landscape that is stable enough competitive? I am not afraid of competing with anybody in the world. No problem. But I can't compete against governments. And my single biggest problem in my business is competing against dyslexic trade policy. It's a problem.
- [43:02]
Kelly Evans
Understood. Barry, thank you for so articulating this all so well, helping us understand the vagaries of the steel industry to really appreciate it today.
- [43:10]
Scott
The time I appreciate share, of course.
- [43:11]
Kelly Evans
Best of luck. Barry Zuckerman joining us. We're back after this. Welcome back. The White House is expected to announce a blanket 25% tariff on all U.S. imports of steel and aluminum. It's unclear exactly when it would go into effect, but shares of the U.S. aluminum and steel producers are popping on the news as our steel prices, by the way, but Cleveland Cliffs a good barometer, up 18% today. My next guest says these additional tariffs can't come soon enough as he's had to close two plants here in recent years. Joining us for more is Barry Zuckerman, the chair and CEO of Zecelman Industries. It's the largest independent steel pipe and tube manufacturer in North America. And I don't know anything about steel pipe. And to Barry, so please try to like break this down for me. What has been happening, We've, we've had a lot of these tariffs going back to the first Trump administration. They've been in place for a long time. What has been happening to your business?
- [44:01]
Scott
Yeah, I mean Tariffs go back a long way. But what's happened is, you know, President Trump put in 232 tariffs on aluminum, steel. He negotiated with certain countries to back down those tariffs and put in place kind of a quote, unquote quota system, if you will, and they'd agree to limited imports. But what's happened is a lot of those countries have violated those agreements. I mean, Mexico in particular with us. I mean, their imports of steel conduit have gone up eight, nine fold, decimating our industry, taking it from 2% market share to 20% market share. So, you know, there are targeted tariffs that need to happen. I think, you know, President Trump putting in a trade policy like this is trying to get the conversation going. But more importantly, it's not just about tariffs on steel and aluminum that the producers make per se. I think we have to look further down the value chain, you know, the whole supply chain. And what this product goes into. U.S. steel, Cleveland Cliffs, nuclear, SDI, all sell me steel. They wouldn't be in business without me. So you have to look at the consumer of this product and then what we compete against, and we compete against products that are using steel from the likes of China and India and other countries like this, shipping them in through the trade back door, if you will, like Mexico, and then taking over our markets with dumped products. So there's certain circumventing other dumping duties that are already on this deal, transforming it into another product and quote, unquote, changing the country of origin and a substantial transformation and otherwise coming in under the guise of these trade agreements, all at the expense of our communities, our workers and our business.
- [45:45]
Kelly Evans
Barry, let me ask you something. So our guest at the top of the hour made a point that I think a lot of people themselves learned in school or are curious about, which is to say, you know, if someone, if Mexico, China, others are going to dump cheaper steel into the global marketplace and other players can use that steel to make things more cheaply that ultimately compete with US Goods in the global marketplace, then if we tariff what's happening here in order to protect our industries, are we just going to end up losing in the global export sport race?
- [46:18]
Scott
No. I mean, I mean, it's an easy argument to make because it's not that sophisticated. It's okay, we're going to put a tax on it or a tariff and it's going to cost more and the consumers will have trouble. It's actually the other way around. Look what happens when you take product out of making it in America. You take jobs Away from Americans, you take capital investment away. The last time two 32s were put in, the US steel industry announced $30 billion of investment here in the most efficient and modern steel mills in the world. I've invested over $1 billion in my company in plants becoming way more efficient. We're the most efficient 2 producer in the world, but the product that we buy to make our steel of is 80% of the cost that goes in. So when you have that as dumped product as the substrate, then countries can target you annihilated industry and then they own it.
- [47:11]
Kelly Evans
No, absolutely. And we've seen this time and again. I have so many more questions. Let me try to ask you just the most important ones. I don't know if you caught the 60 Minutes report interview with Robert Lighthizer a couple of weeks back, but they actually use steel tariffs as an example. And I don't know where this research comes from. Tried to find if it was Peterson or something similar. They said the steel tariffs back then protected a few thousand jobs in the steel industry, but cost 75,000 other jobs in other industries that use these inputs and were therefore paying higher prices, couldn't produce jobs over. Can you comment on that phenomenon that researchers are pointing to and saying, okay, whatever you tariff might help that industry, but what happens to the broader customer base?
- [47:52]
Scott
Well, I can absolutely comment to that. Exactly what I said earlier. We didn't go farther, not far enough down the value chain. So you know, when those jobs then leave America and go to Mexico to be made with cheaper labor and no environmental controls, and then other steel that comes in from around the world from the likes of Russia and China, circumventing duties, they take jobs away from America. So we didn't go far enough. And that's the problem. Yeah, I mean, no question. Why does General Motors pick up and go to Mexico from here in the US I mean for the weather. They went there because the labor is cheaper, the taxes are cheaper, there's less.
- [48:32]
Kelly Evans
Environmental regulation with these tariffs now go far enough. Barry, this new 25% blanket tariff, does that go far enough?
- [48:40]
Scott
Not at all. What would I think we need to go way further down the value chain. I'll give you a specific example. We all know what a hydraulic cylinder is that moves some of us, moves a blade on a. Well, if you look at a bulldozer, a caterpillar machine, that shiny piece of steel that moves in and out, that cylinder is made here and assembled here with lots of high value jobs and many parts that go into it. So what Happens now is you tariff the steel so that I make the hydraulic, the main cylinder from now they move that manufacturing to Mexico, they bring in the cylinder from India or China, they bring in the bearings from China, they assemble it there with very cheap labor and they ship the whole cylinder in. So you took away all of those jobs from, from the U.S. what fixes that to go downstream and tariff those products as well and provide jobs for the communities here. Cheap is expensive. When you move a product out of the US and make it somewhere else, you're losing the tax dollars that we pay on the income tax.
- [49:43]
Kelly Evans
Just to be clear. So if I, if what would be the verbiage if they're tariffing steel but you're using the example you describe described what else should be tariffed in order to get at that whole value chain?
- [49:53]
Scott
Well, I think that products are that heavily, heavily use of steel, right? Maybe it's by a kilogram weight, maybe it's by the percentage of steel that's in it. I think they need to go way down the value chain. I mean look at a car, right? A car has a ton of steel in it. So you just showed steel prices that went up 100 or $150 a ton in the future. So are you telling me that consumers aren't going to buy a car because it costs a hundred dollars more?
- [50:18]
Kelly Evans
So last question.
- [50:19]
Scott
Various incentives on cars of, of, of 2, 3, $4,000.
- [50:24]
Kelly Evans
Absolutely. One more just because highly relevant as a customer then of US Steel as you mentioned, would you have any problem with Nippon buying that mean, do you perceive that that company needs to be modernized? Do they now that there's maybe just going to be an investment? What's, what's your view on that potential, you know, tie up?
- [50:42]
Scott
Well, I don't think that, that they need to be bought. I think that if there was the right comprehensive trade policy that was long term in the U.S. u.S. Steel would do just fine. They've invested capital, they have good facilities, they need to invest more, but they need the environment to do that. We can't invest long term when every four years we get the rug pulled out from under us. How do you make hundreds of millions and billions of dollars of investment when you don't have a landscape that is stable enough? We are competitive. I am not afraid of competing with anybody in the world. No problem. But I can't compete against governments. And my single biggest problem in my business is competing against dyslexic trade policy. It's a problem.
- [51:27]
Kelly Evans
Understood. Barry, thank you for so Articulating this also while helping us understand the vagaries of the steel industry to really appreciate the time. I appreciate it, of course. Best of luck. Barry Zuckerman joining us. We're back after this. Welcome back. Last night's blowout win by the Eagles made it easier than ever for the super bowl commercials to seal the show. But did they? Let's ask Mark Douglas, the CEO of adtech firm Mountain, who joins us along with Fetch CEO West Schrol. His company gave away more than $1 million in the final two minutes of the game. Gentlemen, welcome to both of you. Appreciate it today. Mark, I don't know. I actually liked the ChatGPT ad with the black and white dots. At least my kids did. But did anything really jump out at you?
- [52:08]
Mark Douglas
Well, ironically. So my opinion was. I'll back up. My opinion was is that The Super Bowl 2025 was humorless, or at least the ads were. And since companies couldn't figure out how to how to tell a joke, instead they figured out how to talk about their product. And I thought Fetch was one of those companies. I thought they poppy. I actually bought Poppy on the spot after I saw the ad. The ads that told me what they actually do are the ones that I actually responded to.
- [52:38]
Kelly Evans
Why was it so humorless, Mark? You know, someone else was making the point that, you know, back in the day, for Independence Day, they teased that movie in such a clever way, and now everyone just does these traditional trailers and it all feels so boring and predictable.
- [52:49]
Mark Douglas
Yeah, I mean, I think there were attempts at humor, but, I mean, maybe there's another writers strike going on in Hollywood that I don't know about. But, like, people could not tell a joke in 2025. They should be embarrass.
- [53:03]
Kelly Evans
All right, with. With that introduction, let's turn it over to Wes of Fetch and Mark. Stay with us. So, Wes, you guys did come up with something a little bit more clever. And this was late in the game when we don't really know how many people were watching. So what can you tell us about engagement?
- [53:18]
Bertha Coombs
Well, first and foremost, I'm not a comedian. So that's why we decided, let's do something that's more on brand. Let's reward people for watching the end of the game, which turned out to be the most boring game you could expect. So at least we gave people something fun to do that they could actually look forward to. And we ended up host. We did that 30 second commercial, and in the two minutes following that 30 second commercial, we had 1.3 million people download the app and sign up for Fetch. So many so that even Apple was struggling to keep up with the download velocity. And then we had well over 3 million people that were live and engaging on that live stream, which we had, which is the first one we have ever done, and kept them all captivated and interested because we had an average watch time of 9 minutes and 20 seconds from those. So people were definitely captivated.
- [54:10]
Kelly Evans
So people were still watching and they were still engaged. But your customer acquisition cost has to be pretty high, right?
- [54:16]
Bertha Coombs
You know, for us, we actually did the commercial as a form of being able to work with General Mills, one of our partners, just to show a bunch of the brands and advertisers we work with that Fetch is here on the national stage. I mean, 1 in 10 US households already use Fetch every single month. So for us, the growth was actually a byproduct of the success of the B2B campaign that we were doing that culminated with the super bowl commercial. So for us, it was all upside. It was awesome.
- [54:43]
Kelly Evans
That's super interesting. Mark, let me bring you back in here again as an advertising guru. What are your conclusions then from the fact that people spent $8 million, you know, and with Wes is example aside, what did they walk away with?
- [54:57]
Mark Douglas
Well, I think like if you look at Fetch's example in the words they literally just use is like they came onto the national stage and so brands that did that and you know, and kind of announced who they were and announced what their product is actually did really well. I don't think those downloads will just end tomorrow that they're getting. I think, you know, they started some momentum and momentum they already had, they built on it and now they're going to continue. So I think it's a good investment if for that if your brand, old school brand, humorless ad, you know, it just didn't work. There were some brands that created moments and I thought those worked really well. Like the ad that the one Take Me Home Rocket Mortgage, where even like, like you couldn't listen to that and not start hummingbirds it singing it. Apparently they even showed that ad at the super bowl and people in the stadium started singing it and it just kind of created a memorable moment that fits with the rock and mortgage brand Take Me Home.
- [55:59]
Kelly Evans
I'm almost thinking, Wes, that are these going to evolve into more of like a vc, like a shark tank kind of moment for startup companies and those who want to make their debut on the national stage instead of the traditional brands who are going to, you know, we think about the Budweiser's and the Pepsis and those who are just going to shell out money year after year to kind of stay relevant.
- [56:20]
Bertha Coombs
I do think consumers are demanding a lot more right now. They're not ready for just like another humorless joke that doesn't land. They want something that is truly engaging and unique. The thing I will say though is shooting our commercial is by far the easiest part of it. The actual execution of hosting a live stream that is at that scale. To put it in perspective, Trivia hq, which a lot of people remember from a couple of years ago, we're doing terrific with hosting these. We had more live people concurrently viewing our livestream than they ever had on their biggest night. So the actual tech infrastructure that we had to put in place to do that was incredibly difficult. But that being said, like Mark talked about, it was us showing what our brand is. Our brand is about people having fun and getting rewarded while they do it. So it was well worth the investment because it was our way of just bringing out what our brand was to the brands watching and consumers.
- [57:13]
Kelly Evans
Do you think, Mark, that's kind of the direction we're heading?
- [57:17]
Scott
I do.
- [57:17]
Mark Douglas
I think that you're going to. It starts with just more younger emerging companies moving on to television as a medium, something we've talked about a lot. And I think them getting into the super bowl, you know, is just an extension of that and will continue. And it. But it's unique, unique to the super bowl and a few other key events. We can draw that big an audience. So I don't think you'll see that across, you know, every basketball game or something like that. It's going to be these big moments.
- [57:46]
Kelly Evans
To Julia's point, she has reported Julia Borson for us as well, that, you know, there's no guarantees for viewership or ad or any of this. The super bowl is its own beast. You pay to get in, you get what you get and you don't get upset like the moms say. Thank you both very much for your time. Appreciate it. Wes, cool story and I'd love to know how it all turns out, you know, a year or so from now. Wes Schroal of Fetch and Mark Douglas of Mountain. And that's it for us. Thanks for watching the Exchange and I'll join Brian Sullivan for Power Lunch right after this break. You've been listening to the Exchange. Make sure you're subscribed to get each episode every day, same time, same place. For 140 years, MultiCare has been in Washington prioritizing long term solutions, partnering with local communities, and expanding access to care. Together, we're building a healthier future. Learn more at multicare. Org.