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A Buyback Ban, the Copper Crunch, and Where the Jobs Aren't 1/8/26
00:43:32
President Trump proposing new restrictions on corporate landlords and defense companies. S&P Global sees a copper shortage in the near-future. Plus, the structural shift happening in the labor market.
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- [00:00]
Eamon Javers
Before we had AT&T business wireless coverage, our delivery GPS wasn't the most reliable. Once our driver had to do a 14 point turn to get back on route.
- [00:09]
Brian Reynolds
A 14 point turn.
- [00:11]
Eamon Javers
An influencer even livestreamed the whole thing. Not good for business. Now with AT&T business Wireless, routes are updating on the fly and deliveries are on time. And the influencer did get us 53 new followers though.
- [00:25]
Alan Ratner
AT&T business Wireless connecting changes everything.
- [00:30]
Diana Olek
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Kelly Evans
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Diana Olek
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- [02:18]
Eamon Javers
Kelly, boy, do we have a lot of news for you from the White House today. You just showed Treasury Secretary Bessant speaking live in Minnesota. We're watching those remarks specifically to see what the treasury secretary has to say about the Fed, any guidance from the administration to the Fed and of course, any telegraphing at all of who the next Fed chair selection from this administration might be. So we'll watch that. Also take a live look in at the White House briefing room just a few feet from where I'm standing here. We are expecting Caroline Levitt, the press secretary and the vice president. J.D. van. To be in the briefing room today. We don't have a sense of the topics, but clearly a lot of these agenda items that the president has announced over the past 48 hours do have the vice president's fingerprints on them. So we're going to want to watch what he says there as well. And then you can put these in about three buckets, right? Defense, housing and auto loans. On defense, what the president has said is he thinks the American defense establishment broadly is too slow, charging too much and paying their executives too much money. He wants a $5 million executive compens cap for defense contractors and he wants to ban them from doing stock buybacks, which I think is something that rattled a lot of cages in the defense sector yesterday. On housing, what the president has said is he wants the big institutional investors out of the housing market. He thinks that that is driving up prices, hurting affordability for Americans around the country. And then on auto loans, what we heard from the treasury yesterday is the rollout of the implementation of this new tax deductibility of auto loan payments, with some caveats right under certain income levels for new cars assembled in the United States, but generally another attempt at affordability in the United States. The president quite aware, Kelly, that that's going to be the issue that is driving the 2026 midterm elections. And that is the issue that is foremost on Americans minds. And he wants to send a message from here at the White House that he's on the job.
- [04:13]
Diana Olek
Can you tell us what's next? Because this has been a lot, you know, in many of these sectors like housing. We'll talk more about that in a moment. But taken a little bit by surprise.
- [04:23]
Eamon Javers
Yeah, look, I've been texting with White House officials today, as you can imagine, trying to get a sense of what's next. We did see the president lay out that he's going to make a speech, an economic speech in Davos in two weeks, and he's going to talk more about his ideas on affordability. I think we might hear more from him then. And I think we might hear more from the vice president in the briefing room now, depending on the topic. Obviously, we've got this tragic situation in Minnesota that's playing out sort of side by side in real time in this news cycle. So the vice president might want to talk about that. But I think if you look particularly at the housing issue, that has its roots at least as sort of a MAGA issue, you know, in Charlie Kirk, the late advocate over the summer pushing for this idea of getting institutional investors out of the housing market, I think that is sort of a right wing populist MAGA idea that was embraced over the summer. And a lot of people see Vice President Vance as sort of one of the vectors of, for some of those, you know, Turning Point USA ideas to make their way into this White House and onto the administration's agenda. So I think watching the vice president here is going to be key as well.
- [05:29]
Diana Olek
Yeah, I didn't realize he had talked about that. Eamon, thanks very much. We appreciate it. For now, Eamon Javers.
- [05:33]
Eamon Javers
You bet.
- [05:34]
Diana Olek
Let's drill down on the president's proposal to ban Wall Street. They say Wall street, but, you know, where's Invitation Home space? I don't know. Atlanta, anyway, from buying more single family homes. Diana Olek is our expert. She's here with what kind of impact this would actually have on housing and affordability. Point being they don't want investors broadly to be in homes bidding up prices, taking that inventory in an inventory constrained situation off the market. Obviously, when a lot of these people got involved a decade ago, the situation was very different.
- [06:01]
Dana Telsey
Very different. Yeah. And in fact, they did put a price floor on the market back when it was crashing after the subprime mortgage crisis. But to answer your first questions, I want to go right to the raw numbers and that is that the big landlords, that's public names like Invitation Homes and American Homes for Rent and private equity like Blackstone and Pretty Am, they altogether own roughly 3% of the entire single family rental stock. That's about 450,000 homes out of 4 million. The vast majority of rental homes, which is about 80%, are owned by mom and pop landlords who own less than 10 homes each. Now the big landlords, though, are highly concentrated in specific markets and those areas could see an outsize impact if that was to go away and those homes were put out onto the market. So 10, take a look at where institutional landlords have the greatest share of total housing stock. That's Atlanta, Jacksonville, Florida, Charlotte, Memphis and Tampa, those round out the top five. Now, Florida overall has the biggest impact, but also Phoenix and Las Vegas, they finished up the top 10. They were again hardest hit during subprime. And this is all according to Parcel Labs, which tracks investors. Now, that's the share of the total housing market, but they have a bigger share of the rental market. So in Atlanta, for example, it's estimated that the big institutional landlords own between 25 and 30% of all rental homes. If they were to suddenly unload those homes, which I'm not saying they will, because we don't know what the administration and Congress will actually be able to do, then you could see prices there go down a bit just on that more supply. But for the overall U.S. housing market of 134 million homes, this couldn't be a game changer. Remember, many of these landlords, they actually build homes which we desperately need for both ownership and for rent.
- [07:44]
Diana Olek
So. So the investors, the ones who are accused of taking this inventory out of the market, are the ones who have actually been putting the inventory into the market.
- [07:51]
Dana Telsey
Yeah. American Homes for Rent is one of the nation's largest builders. They build communities which we've visited of entire rental homes. And these are higher end rental homes that, you know, people want the flexibility. People who could actually we interviewed a couple there a couple of years ago who were moving into one of those homes at American Homes for Rent Community. And I said, why aren't you buying? You can clearly afford it. They had a BMW in the parking space and they said, we just want the flexibility. And these are nice homes. They're managed. We don't have to deal with snow, etc.
- [08:17]
Diana Olek
Like a townhome. Almost exactly that kind of thing. Dana, stay right there. Let's bring in our next guest who says this proposal, if enacted, could have some unintended consequences. Alan Ratner is a managing director at Zelman and Associates. Alan, what consequences might those be that you're keeping an eye on? Welcome.
- [08:34]
Alan Ratner
Hey, good afternoon. Thanks for having me. Yeah, I mean, I think Diana touched on a lot of the main points, but probably the biggest potential unintended consequences is actually a reduction in housing starts, which is exactly the opposite of what the government is trying to achieve here. You know, Diana mentioned that the institutional investors have really pivoted their business model over the last few years. Previously, they were buying homes off the mls. Today, they're either buying homes from home builders, they're buying entire communities of homes that were intentionally built for rental, they're buying those from builders, or they're doing the building themselves. So if you restrict these investors from buying these homes from homebuilders, which is a big if you know this very well, could be a carve out in whatever bill is passed, if anything is passed. I would expect that segment of the market, not necessarily to go back into the for sale piece of the market, but it probably disappears.
- [09:27]
Dana Telsey
And Alan, I'm curious because we know that build for rent is 8% of housing starts at this point. And you talked about some of them and I did, about building their own homes, American Homes for Rent. Does Invitation Homes actually partners with names like Lenore and Taylor Morrison, how would affect those stocks perhaps?
- [09:44]
Alan Ratner
Yeah, that's right. And the share has come down a little bit in the last couple of quarters. We're actually below 5%, but we were closer to 8 to 9% over the last year or two. There's a lot of different strategies on how these investors acquire the homes. They can either buy one off from builders. When builders have excess inventory, they might sell to investors. That's a pretty small piece of the business. They can buy bulk homes, which is also, we believe, a very small piece of the business. Then the third piece of it is these specific communities that are built for rental purposes. You mentioned that AMH does the the development themselves and they build out the homes themselves. Most other investors will partner with the builder. So the builder will buy the land, they'll identify it as a potential rental community and then they'll forward sell the community to an investor that will ultimately buy the homes once the community is fully built out.
- [10:37]
Diana Olek
Kind of to get at what both of you mentioned. Alan, would you recommend people kind of stay away from these stocks for now or are there any other opportunistic ways to play this as. As the sands shift out here?
- [10:50]
Alan Ratner
Yeah, I mean, if you're talking specifically about homebuilders, I think there's still far too many questions to answer that. And you know, if we look back at prior bills that have been drafted and obviously didn't really go anywhere, there have been certain carve outs for new construction. And I think that makes sense from a policy standpoint because by encouraging the building of incremental rental stock, it does add more options for consumers on the rental side. And I think that has kept affordability actually in check in that segment of the market. So we're looking at homebuilding stocks today. You know, they're rallying. I don't know if that's based on some optimism that maybe there's a carve out here. I heard Bill Pulte's interview on on CNBC earlier today. It didn't sound like he's advocating for that, but I think that's going to be a very heavily debated topic over the next handful of weeks.
- [11:37]
Dana Telsey
Yeah, and I would say that's probably the builders are doing well because they react to mortgage rates and mortgage rates are low right now and lower today. But I'm curious, let's say in Atlanta, for example, where you do have such a big concentration of these institutional invest and they were to start to flood the market with those properties, A, what happens to those renters who are there and B, what happens to home prices in Atlanta?
- [11:58]
Alan Ratner
Yeah, it's a, it's a big question. And you know, notably there wasn't anything in the tweet yesterday that signaled for selling of existing portfolios. So if that were to enter the equation, I think that would create some disruptions and chaos in markets like Atlanta where there is a rather large or at least a larger ownership of these homes. So it could present some pricing pressure over a short period of time, depending on how the dispositions are structured. But you bring up an interesting point, Diana, in that the fact that people are living in these houses. You know, there's roughly 15 million single family rental households in this country and the vast majority of those homes are owned by mom and pops. So that's going to be unaffected by this. But there still are, you know, as you mentioned, several hundred thousand households living in homes that are owned by institutional investors. And if you're required to sell those houses, a lot of those households can't afford to buy a house. They either don't have the credit or the down payment to do so. So it would definitely cause some disruption.
- [12:54]
Diana Olek
Yeah. Alan, quick final question is the administration is clearly exploring more avenues to make housing more affordable. What in your firm's mind would, would really make a difference there?
- [13:03]
Alan Ratner
Yeah, I mean, we've a lot of proposals and Mr. Polti mentioned there's 20 or 30 on the President's desk and we'll see what ultimately comes to fruition. You know, the biggest issue we believe is on the local municipality level, the state level, related to the, the approval of future projects, impact fees that add costs for development. And it's a, it's a really difficult problem to solve. But I think if we could figure out some solution to either expedite projects through the approval process, that could reduce carry costs, it could reduce the cost for builders to build houses, and you might see an increase in supply. There's also A lot of potential things that can be done on the mortgage side, whether it's by buying more nbs that would bring spreads down, adjusting lpa that could potentially reduce borrowing costs for four buyers. So we're optimistic and we're hopeful that we'll hear more about those types of policies over the next few weeks as opposed to things that could be more disruptive to the market like this.
- [13:59]
Diana Olek
All right, we'll leave it there. Thank you both, really appreciate it. Alan Ratner with Zelman and Associates and our own Diana Olek. Let's turn now to the other area of the market that the President has taken aim at, which is defense. The stocks are higher on this big spending push. He's talking about a much bigger budget for the Pentagon, but he's also threatened to cut government contract contracts and mandate a cap on executive pay. Also, he's talking about halting buybacks and dividends if production and investment isn't sped up for more. Let's bring in Brian Reynolds, the chief market strategist at Reynolds Strategy. Brian, it's good to see you. Well, welcome, welcome back.
- [14:30]
Brian Reynolds
Hey there. Good afternoon. Welcome back to you too.
- [14:33]
Diana Olek
So we wanted to get your point of view on this in particular because, you know, few have quantified as much as you have how big an impact buybacks and dividends really have on the stock market. So can you kind of just put some numbers to this issue broadly and then how much you think defense fits into that?
- [14:48]
Brian Reynolds
Sure. Buybacks have been the biggest driver of stock prices since the pandemic hit. Retail has started to catch up, but institutions have been big sellers. So it's really a buyback driven market. And if the government wants to stop buybacks, they can try. The last president put on a buyback tax and the result was that we got more buybacks as companies just borrowed more money. So if you're a CEO of a company that's being targeted to stop buybacks, the question is, why would you be public? Why not just go private?
- [15:23]
Diana Olek
Interesting. So they might say, oh, if you're just aiming, I don't know if Lockheed would go private.
- [15:31]
Brian Reynolds
Why not, why not do a merger? But if you can't get your, if you can't get your share price up, if the government won't let you buy back your stock, you might as well just sell your stock to a private equity firm. There's been much bigger buybacks than Lockheed Martin and, or not only buybacks, but LBOs. And we've had a few years of limited IPOs, initial public offerings this year, it looks like we're going to change that with Space Tech and some other firms coming public. But Space X is one of the biggest defense contractors. Why would they go public if they can't buy back their stock later on?
- [16:09]
Diana Olek
Yeah, it'd be interesting if Space X had to comply with the no more than $5 million compensation camp. That would potentially refer to Elon Musk somehow. I, I mean, if it's all stock comp. Maybe that's different. And they might say, who cares about the salary? I'll take zero.
- [16:22]
Brian Reynolds
Well, the president and the CEO of that firm don't get along right now, so who knows? But that's a. Is as to whether that firm goes public or not. And that can have a big impact on the markets. That's capital unfriendly. And markets like to go where capital is welcomed.
- [16:40]
Diana Olek
Yeah. Let me ask you on the specific issue here, which is obviously the president wants, you know, a return to a US Industrial policy that is supportive of building more plants built, you know, having more. I know he said he was frustrated at the sort of the quality of some of the equipment used in Venezuela. They've been frustrated at the timelines for some of these new defense projects. Bring them online and, you know, timelines for them to take place. You know, there've been issues with kind of the reliability of certain parts of the jet fleet, all of those kinds of things. Right, Brian. So, you know, the President might say, well, I don't like the way that capital is being allocated here. I don't like where investors are pushing these companies to do buybacks or you could argue dividends or what have you. I want that, you know, this is a different animal. Like, this is important to national security. And I want those funds deployed to make sure that we have the best cutting edge, the quickest, the fastest, you know, production lines and all the rest of it. That would seem to supersede the traditional argument about capital allocation, right?
- [17:38]
Brian Reynolds
No, because if you're not satisfied with the product, the thing to do, not to do is to make it more unfriendly to investors. You want to make it more friendly to investors. You want to make capital welcome instead of being unwelcome. So if we go through with this, you will likely get more inferior, more inferior things such as helicopters, planes, ships. You want to make the builders earn enough profit to make it worthwhile for them to put the quality in. And from the bigger picture, the administration wants more plant and equipment spending in this country. But if you look at the level of Inventories, they've surged since the pandemic hit. We had a supply shortage and then we got a supply glut from everything from cars to houses. Everywhere you look, there's a massive surge in inventories over the last five years. There's no need to invest more, plant more money in plant and equipment. If you got such high inventory stocks, you need to make people want to spend their money and draw those inventories down. And there's been nothing along that line being proposed in Washington.
- [18:50]
Diana Olek
Yeah, yeah. And yet the ita, the defense ETF is up, you know, really well over the past three years. It's not as if this is a languishing sector like the energy space or something where production is quite high. Ironically, in terms of their stock price, I mean, the stock prices here have done really well. So that would seem to be supportive. You know, someone might with frustration say, well, the stock prices have done well, but I'm not seeing the output that I want. So they've had their chance and now we're just going to kind of push them to go that direction. So I guess the question for investors is many have jumped into the stocks now saying, look, you know, 50% increase in the Pentagon budget, the president wants more. You know, this is the place to be. And we're seeing all time highs for the fifth day in a row today. It sounds like you're taking a totally different tack here, which is, you know, in the ultimately this is going to be capital unfriendly and these companies are going to be worth less than they're worth right now.
- [19:35]
Brian Reynolds
Well, it's a capital unfriendly position, but that's probably not going to get put into play with this administration. They propose one thing and then it dies three weeks later. You've seen that with the tariffs. It was a, tariffs were a big deal 10 months ago. Now they're not such a big deal. So you can get better quality equipment if you change the incentives. But we're also in a global arms buildup. We've got geopolitical tensions rising around the world because this Venezuela situation may impact Cuba, it may impact Taiwan, and so that's good for defense spending. The thing is to get the right amount of defense spending, the right technology because the world is changing so fast. We're fighting wars with drones now. You couldn't have said that three years ago. So the world is changing. You want to make this more friendly to investors, not less friendly in order to get the best technology.
- [20:29]
Diana Olek
Understood. Brian, it's great to check in with you. We'll circle back soon. Brian Reynolds of Reynolds Strategy. Take a quick break. And then coming up, Coinbase is beating bitcoin to start the year. And now bank of America is upgrading it to a buy. They say they're getting closer to their goal of becoming the everything exchange. The analyst behind that call joins us to make his case. Plus, the Pulitzer Prize winning historian of global energy markets, Dan Yergen. He's here with his take on the commodities complex, the fallout from Venezuela and where he sees the metal trade going next. We're back after this.
- [21:03]
Alan Ratner
This is the exchange on cnbc.
- [21:08]
Dan Yergen
Thy ticket lady, Jennifer of Coolidge.
- [21:11]
Diana Olek
Well, many thanks, good sir. Here is my Discover card.
- [21:17]
Dana Telsey
They accept Discover at Renaissance fairs.
- [21:19]
Diana Olek
Yeah, they do here. Discover is accepted at the places I love to shop. Getteth with the times, with the tines. You're playing the loot. Yeah. And it sounds pretty good, right? Discover is accepted at 99% of places.
- [21:34]
Craig Steigenthaler
That take credit cards nationwide. Based on the February 2025 Nielsen report.
- [21:38]
Alan Ratner
Tonight's meal, Tilapia surprise with boiled cabbage. Begin cooking steps 1 through 50 now.
- [21:44]
Diana Olek
Are you kidding me?
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Dana Telsey
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Diana Olek
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Dana Telsey
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Diana Olek
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Dana Telsey
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Diana Olek
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- [22:10]
Alan Ratner
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- [23:10]
Diana Olek
Stocks are up, but bitcoin dipped back below 90,000 today. We're now back above that level. It's still down 28% from its 52 week high. While Coinbase is getting some attention today as well. B of A upgrading the name from neutral to buy this morning, saying while they're also 40% off the July highs, momentum is building around its product pipeline and user growth. Let's bring in the analyst behind the call, Craig Steigenthaler of B of A securities. Craig, welcome to you. And specifically what are you picking up on?
- [23:37]
Craig Steigenthaler
Kelly, thanks for having me on. So I think under the surface, because if you look at the share price, it's down a lot around 40% from last summer. But, but outside of that, they've been building up their product offering. So they did an acquisition at Deribit which expands them into options. They also had a product showcase on December 17, which many may have missed around the holiday season. But they, they announced their plans to, to launch stocks, ETFs, equity options and prediction markets. And another product they're working on that we're pretty excited about is called Coinbase Tokenize, which is a tokenization engine to let third parties and asset managers tokenize their products. And I think that'll be very important as we think of the trend of tokenizing real world assets.
- [24:24]
Diana Olek
RWAs and none of this is about Bitcoin.
- [24:29]
Craig Steigenthaler
So today Bitcoin is a high percentage of the trading volume at Coinbase. And basically every exchange we think that's a smaller piece going forward as more assets move on the blockchain. And that's already happening.
- [24:42]
Diana Olek
Right, but in other words, you think this divergence could like, does it matter what, what happens to Bitcoin from here in order to own Coinbase?
- [24:51]
Craig Steigenthaler
Also over the near term, there's a very high correlation between the two. So it would be helpful if the price of Bitcoin goes up in the next six months. Now the nice thing here is the price of Bitcoin has come down a lot from last summer, as you pointed out. It looks like it's sort of bottomed here. We're also only entering year two of an administration that has several policies that are positive for, for the crypto markets to.
- [25:16]
Diana Olek
Right. But when I think about, you know, base and all these infrastructure layers, I think, you know, this is a really kind of cool, innovative way of modernizing the whole financial system and in a way kind of becoming the whole financial system. And that's great. But I don't think you have to be a Bitcoin believer or anything like that for all of this to continue.
- [25:35]
Dana Telsey
Right.
- [25:37]
Craig Steigenthaler
Long term, no. Near term, yes, because there is that high correlation. But if you think about what is Coinbase Coinbase is the number one crypto exchange in the United States today. It's the trusted partner now. It can use that cornerstone to do a bunch of other things. So they're launching, or they've launched a blockchain called Base. It's permissionless, it seems to be decentralized. There's a lot they can do there, including launching a native token, which will incentivize companies to join Base, but also could raise billions in dollars of cash for Coinbase. So, so that's a pretty big thing. They also have Coinbase tokenized, which I think could help move asset management products and this is like $100 trillion market onto the blockchain. And also think about wealth. If you look across the street at the big wirehouses, basically they have almost zero allocated towards Bitcoin and crypto overall today. If that goes higher, you know, you're talking a few percentage points can literally equate to $1 trillion of buying of cryptocurrency. So, you know, when you take a step back, we still think we're a very early innings in this blockchain trend and it's just not all about Bitcoin. But the nice thing here is if you buy Coinbase today, the short interest is up about two times over last year, so, so we view that as a positive sign. And also long only's have really yet to buy this the stock. The largest three shareholders are Vanguard, iShares, State Street. It just went in the S&P 500 last year. They kind of still have to buy it. And also the valuation has a 20 handle next to it, not a 40 or 50 handle. So you can actually go in, get in a good entry point today.
- [27:17]
Diana Olek
Yeah, you think it could be 100. You know, your price target is about $100 up from here at 340. Quick final question. How do they stay differentiated at a time when, you know, talking. Tom Peterfy Last hour from Interaction Active Brokers. Their platform is increasingly resembling Robinhood's, which is resembling Coinbase's, which is resembling, as everyone's getting into prediction markets and you know, put it, putting all of these different types of things together, so can they maintain an edge?
- [27:41]
Craig Steigenthaler
So the lines are being blurred a little bit between a Robinhood and a Coinbase. But what is Coinbase? Coinbase is essentially a retail broker, an exchange, a clearing house. They have a partnership with Circle, with usdc, which is their stablecoin. But there's a bunch of different businesses here, but being one is important and I think they're, they're their largest liquidity pool in the United States. And being a highly regulated trusted partner is important because they're going to help traditional finance firms jump in, and they already have. In the last couple of years. They've helped blackrock and JP Morgan enter the crypto space and I think this institutional business is a big opportunity for them in the future.
- [28:24]
Diana Olek
Yeah, understood. Craig, thanks for joining us. To break it down. Appreciate it. Today. Craig Segenthaler with B of A. Coming up, Google's rolling out some new AI tools for users today. They're calling it Gmail for the Gemini era. And Alphabet shares are hitting their first all time high since late November. We have those details next as we head to break. Here are some other names hitting record highs today, including gm, tjx, parent company of TJ Maxx, Raw Stores, similar line of business there, Marriott and Hilton. More of the biggest movers after the break. Not every sale happens at the register before AT&T business Wireless checking out customers on our mobile POS systems took too long. Basically a staring contest where everyone loses. It's crazy what people will say during an awkward silence. Now transactions are done before the silence takes hold. That means I can focus on the task at hand and make an extra sail or two. Sometimes I do miss the bonding time. Sometimes.
- [29:20]
Alan Ratner
AT&T business Wireless connecting changes everything.
- [29:26]
Diana Olek
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.
- [29:40]
Kelly Evans
Leadership can look in many, many different forms. It really does come down to just trusting yourself.
- [29:44]
Diana Olek
Life is short and you just got to 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 the Exchange. You're keeping an eye on this. Dow rally up to 74 but the S and P is fractionally lower and the nasdaq's down half a percent today. Nvidia is a little bit weaker. Record high though for the Russell 2000. Here are some of the other movers this hour. We're watching those memory and data storage names which had a rip roaring start to the year. Seagate was up 50%. Now it's down 9% today. Similar for WDC. Micron's down three and a half for Western Digital and Seagate. By the way, this is their worst day since April. Meanwhile, Apple is on pace for its seventh straight negative session. Now that's the longest losing streak it's had since May. It's a 6% drop in that time. And elsewhere, Gap is soaring 8% after getting an upgrade to buy at UBS. They cite a coming inflection in sales and earnings and they're raising the price target to 41 from 26. It's currently around 28. For more on that call, you can go to cnbc.compro and let's get to Dom Chu now for the CNBC news update. Hi.
- [30:51]
Alan Ratner
All right. So, Kelly, one of the options reportedly being weighed by the Trump administration over Greenland is sending lump sum payments to a its people to help convince them to secede from Denmark and possibly join the United States. That's according to a Reuters report which also says that officials are discussing a range of 10,000 to $100,000 per person. Greenland and the government of Denmark have repeatedly insisted that the island territory is not for sale. The Venezuelan government said today it will release a quote, significant number of Venezuelans and foreign prisoners as a gesture to seek peace, many of them imprisoned by the Maduro government during mass detentions after the disputed 2024 election. The US and opposition leaders have demanded their release. And the Iranian government reportedly cutting Internet connectivity in Tehran and other cities as mass protests continue across the country. The latest round of unrest coming after exiled Crown Prince Reza Pavlovi, who is the son of the shah who is was ousted during the 1979 Iranian Revolution, called for Iranians to make their voices heard. So an interesting development there in the Middle East. Kelly, I'll send things back over.
- [32:02]
Dana Telsey
Indeed.
- [32:02]
Diana Olek
Don, thanks very much. Coming up, Dan Yergen will join us exclusively with the results of S and P Global's new study on copper demand in the age of AI. He was one of the first to really pound the table on the copper trade. We'll ask him if it's too late to take advantage of that next. And as we head to break, we want to mention we're launching CNBC Cures, a new initiative focused on raising awareness for rare diseases and improving outcomes for the people who have them. We've got a weekly newsletter you can sign up for by scanning that QR code on the screen. And on March 3rd, we're hosting the CNBC Cures Summit, a live event in New York City focused entirely on rare diseases. To register, go to cnbc.com cures and we're back after this. Copper touching an all time high earlier this week. It soared 30% over the past year amid surging demand. And a new study From S&P says it'll keep rising. They write that Demand will jump 50% to 42 million metric tons by 2040 as the metal is critical for powering data centers, homes, businesses and military systems. And S and P warns supply is limited. Joining me now in an Exchange exclusive is Dan Juergen, the Vice chairman of S and P Global. Dan, it's great to have you here. Welcome.
- [33:14]
Dan Yergen
Well, thank you, Kelly. It's very good to be back with you.
- [33:16]
Diana Olek
You know, I was trying to go back and remember the first time you published on copper Warning and trying to draw attention to the fact that so much was needed and were undersupplied and not that we can buy it, but I thought to myself, if someone had bought it then I mean, it has absolutely soared. So not that you're here to give trading advice, but is all of this bullishness now priced in or not?
- [33:35]
Dan Yergen
Well, I think that some of it is has to do with disruptions in mines that's occurring in some parts of the world, lack of the impact of tariffs and uncertainty about what happens. And also waiting to see what the Federal Reserve does overall. So I think those are the short term factors, but longer term I think prices are, if not at this level, at least pointing to the fact that the world's going to need a lot more copper, as you said, about 50% more than we have today. And the main reason is that the world is electrifying. We estimate in our own that in a bit by the year 2040, the world will use 50% more electricity than it does today. That's like building 650 nuclear power plants every year.
- [34:18]
Evan Sohn
Wow.
- [34:19]
Dan Yergen
Copper is the metal of electrification.
- [34:22]
Diana Olek
That's like building 650 nuclear power plants every year.
- [34:26]
Dan Yergen
Yes, that's, that's what the demand growth is looking like because a lot of the demand growth is obviously in the developing world. But now with the advent of, of data centers, AI you suddenly have this voracious appetite for electricity that is really in fact caught traditional utilities by surprise because they've been used to flat demand. We estimate that, you know, data centers used about 4% of U.S. electricity last year. By 2030, which is pretty close, will be more like 14%. And none of that happens without copper.
- [35:01]
Diana Olek
Hmm. You, I found it was in 2022 you guys first were talking about this. Over the past three years, you know, the price has risen. It hasn't risen like in video share price to be sure. And hardly anything has correct commodities investors know that these things are hugely cyclical. So they might say, okay, well I could get in on this trade now, but how do I make sure that there continues to be so much upside? Right. Because every. You turn around and then maybe there's a soft economic data point because they can react to that, or you turn around and, you know, supply is being brought online. I mean, that's traditionally what was the famous bet in the 80s where they said, I think commodities are going to outperform the S and P and you always lose. Right?
- [35:42]
Dan Yergen
Yeah, that's right. Well, I think, you know, I think that's true. I mean, cycles are there, and we have to remember that. Also, copper is called Dr. Copper, because one of the vectors of demand is a traditional core economic demand that we see in everything, and that's very responsive to gdp. So that will have an impact. What also matters is how governments treat companies who want to come and explore and develop copper mines. It takes an average, Kelly, 17 years to bring on a new copper mine. So you are making a bet on the future when you start a new mine. Hmm.
- [36:15]
Diana Olek
What would you say about the metals rally, broadly? I mean, it's. It'd be one thing if we just said, wow, copper is really a standout, but if anything, it's underperformed. We have platinum, palladium, silver, obviously gold. You've seen what's going on there. What explains all of this?
- [36:29]
Dan Yergen
Well, I'm not sure that I have the confidence to explain that. Obviously, gold is responding to a lot of the economic issues and the uncertainties that are there and, and concerns. But I think that all these metals will basically also be driven by GDP and where expenditures are. And what we did on the copper study is we said, you know, it used to just be core economic demand, you know, appliances and buildings and so forth. Then you had energy transition. And by the way, an electric car uses 2.9 times more copper than a conventional car. And last year, although they're not going like hotcakes in the US about 40% more of electric cars were sold around the world than convention than the US Total US New car sales. Then you have AI, then you have defense, and then you have maybe coming over the horizon, all those humanoid robots which are heavily wired with copper.
- [37:25]
Diana Olek
No, And I. Look, I welcome their presence in my kitchen. I cannot wait. But I take your point, Dan. You know, we'd be remiss, while you're here, not to ask about oil, which, of course, course, is kind of your first love, if I could call it that. And, you know, with the events of Venezuela and the administration reportedly trying to get that Price down to about 50 or lower this year. The oil price. Just what's your take on the whole situation? The global supply demand issue?
- [37:49]
Dan Yergen
You know, I know Kelly, you'd read my book, the Prize. I think I would say this is not a new chapter oil. This is a new book that's being written right now where the US is basically planning to take over the marketing of Venezuelan oil. And of course, you know, Venezuela, it's a huge amount of capital that will be needed to revitalize that industry and it's not going to happen overnight. But this is, it's a, it's a different reality that probably could not have really been imagined a year ago. But I think the point, your point about $50 in oil. There's no question the president likes the idea. He said it that he likes low oil prices because it means low gasoline prices. One of the questions is that the oil production that's most sensitive to oil prices is of course US Shale producers. So we'll have to see how they proceed over the course of if we are in this period of much lower prices.
- [38:43]
Diana Olek
Well, I look forward to the next book. You know, it was Liam Denning who turned me on to the first one, so I have to give a hat tip to him. But like you said, a new book, more than a new chapter. I mean, to you, this really is a big deal, isn't it?
- [38:53]
Dan Yergen
Yeah, this is, this is transformative, transformational and it's a completely twist from what has been where countries said, you know, it's our sovereign oil. And this is just rewriting, rewriting the whole story of probably the last 60 or 70 years.
- [39:11]
Diana Olek
Wow. Dan, thanks for joining us. Good to see you. Appreciate your time. Dan Jurgen with S and P Global coming up, Gemini is coming to your Gmail inbox. Like it or not. Google is rolling out a new set of features it's says will help draft emails and tailor search results details and how you can opt out if you want to amid AI data usage concerns.
- [39:29]
Alan Ratner
That's next.
- [39:33]
Diana Olek
Google is rolling out some new AI features on Gmail today that can access your entire Gmail history by default if you put it on users to choose to opt out. I should say Mackenzie Segalos has more in today's tech check. I welcome our AI overlords, McKenzie. Some people don't welcome them. What can you tell us?
- [39:50]
Kelly Evans
So this is Google rebuilding Gmail around Gemini. This AI personal assistant that's designed to understand you now lives in your inbox. Gemini can read across years of your correspondence to learn how you write and what you care about drafting replies in your voice. And Kelly, you can now ask your inbox anything. Your friend's electrician from a renovation 15 years ago. Gemini will find that answer. Google says all 3 billion Gmail users will have access to the tools. And if you're in the U.S. you are opted in by default to turn it off. You have to do it manually. So you go to either the Gmail app on your phone or to your desktop, head into Settings, scroll down to Smart Features and uncheck the box. And if you want to lock it down across your broader account, not just email, but other apps too, like Google Docs, there are additional boxes you'll need to disable as well. Now, Google says this is not about training its AI models about a product lead, telling me that your inbox stays in a unique isolated environment. They say the system is meant to power personalization for you, not train its LLM. And a word of caution here, Kelly. Opting out can come with trade offs depending on your account settings. Turning off these features may also disable some of Gmail's built in organization like those primary promotions and social tabs, which can make the experience feel a lot noisier. You go from inbox zero to inbox 15,000 like that.
- [41:09]
Diana Olek
Wow.
- [41:09]
Dan Yergen
Okay.
- [41:10]
Diana Olek
Which might be why some people have tried, but I am confused because I thought we already had these features. Like is it just the Gemini button that's been here for a while or is this something new?
- [41:17]
Kelly Evans
So this is something new. They had some auto generation of messages within the context of a particular thread. But we are talking about going back 10 plus years, really understanding how you speak and just having it be a more bespoke experience, just smarter and more informed messages that it's auto generating for you.
- [41:32]
Diana Olek
Yeah, because I don't know if it's this version I've already had or if there's some new version I messed around. It's. It's pretty good. I wish it were better. Honestly. It's not so much. I know others have more of the security and privacy concerns. I'm glad you asked them about that. But I just want it to work better. Yeah.
- [41:46]
Kelly Evans
And I think that that's like the big bet that Google is making, right? That the user experience is better. People won't even notice when you have some of these features automatically just become a seamless part of the experience. Which is why it's an auto rollout in the US and we've just seen that play out in the numbers in terms of adoption. It's really just become chat CBT vs Gemini when you think about the consumer experience and some recent data from similar web shows that they are really closing the gap like the trend lines in terms of adoption just are concerning for OpenAI and that's part of why they.
- [42:14]
Diana Olek
Call the code red. I was just about to ask about that. It has been noteworthy. Look at the stock right at new all time highs. What did we say the market cap surpassed Apple's again. So there they they had a rocky rollout obviously on the AI front but Gemini fabulous people myself included use it all the time if they can really get it to optimize better for Gmail, you know I have to imagine that's a lot even a lot more upside.
- [42:37]
Eamon Javers
Yeah.
- [42:38]
Kelly Evans
And so on the Gmail side you're thinking so much about the consumer and then Google Workspace there's a whole go to market team around selling this to enterprise. If I'm Microsoft I'm paying attention to their strategy here. And like you said it is now only behind in video in the mag seven in terms of market cap. $4 trillion now and it's just, it's Wall street rewarding their AI strategy. They were caught on the back foot when ChatGPT came out three just over three years ago and now they've really closed that gap. They are outperforming on the benchmarks and we really started to see that adoption curve flip in November when they rolled out Gemini 3. That was a game changer for the experience.
- [43:11]
Diana Olek
Yeah, it's a great product Mac. Thanks. Appreciate it. Mackenzie Segalos Coming up, job openings hit a 14 month low in November while hiring remained sluggish. Our analytics guru says the labor market isn't experiencing uniform stagnation, but rather a structural transformation. We'll dig into where the jobs growth is and isn't next. The November jolts data showed low hiring, low firing and low quitting, adding to the narrative that the labor market is kind of frozen. But my next guest data reveals something else at play. Something he says is leaving workers trapped. Joining me now is Evan Sohn, managing director at workforce analytics company Revelio Labs. It's good to see you Evan. Explain what you mean by trapped.
- [43:57]
Evan Sohn
Good to see you too, you know. So we left this great resignation where everyone was quitting to get a better job. Either they were leaving because they wanted to work remotely, they wanted better working conditions and of course they wanted a better salary. And what our data really shows when we looked at the sentiment data is that people are comfortable with the salary that they're Making. So that number one reason that people leave a company is to get a better job, is to get more compensation. If they're happy where they are from a compensation perspective, then there's really very little incentive for them to leave. And when we looked at the data that we came out with this morning, we saw that salaries actually did tick down a little bit, the salaries of the postings that we're actually seeing. So there's very little motivation to leave a company.
- [44:42]
Diana Olek
So what else are you picking up in the data? And we're going to get the jobs report on Friday. And here's the irony. There's a lot of people in the market that are cheering for a softer report because a too hot one would push rates back up, maybe make the Fed, you know, do fewer rate cuts and so forth. So what else can you sort of, what else is in the narrative?
- [44:59]
Evan Sohn
Yeah, so first of all, I completely agree, right. We want a decent job report. We don't want terrible, we don't want amazing. We want a decent one. And our data shows that we added about 71,000 jobs last month, were added in a few different sectors. So that's actually good in that it's the first time that we're seeing hiring increasing in a while. Obviously job postings are down. We started to look at some of the industries that really had a really rough time throughout 25. But first we can look at the winners. They're really only two industries that really had growth year over year and that was really the tech transformation. So that was information technology and then biotech and sort of health support were really the only industries where there was growth year over year. Everything else is really on the decline.
- [45:48]
Diana Olek
Yeah, and I guess that that's a less positive picture. It's one that says, you know, there's this debate about how much AI is of the market and of gdp. And you're saying it's really more that tech kind of is the only thing, only real positive going on in the labor market right now.
- [46:02]
Evan Sohn
Yeah, I would agree. Another statistic that we had in our, in our looking at the job report, looking at the job data, over 40% of jobs that were out there today had the words AI in them. Pretty incredible, right? So whereas you might have seen that 10 years ago need to have Microsoft Office experience, 40% of the jobs needed to have some sort of AI in them. Now clearly that's not all the jobs, not the blue collar jobs. But now we're really seeing AI not just be these people one off jobs, but really, really persisting throughout the entire overall job market itself.
- [46:34]
Diana Olek
I'd be remiss not to quickly mention, because this one I think everyone should snap up and pay attention to. Marketing and advertising collapsed 51% year on year. In other words, more than half of all marketing job postings disappeared. Is that I.
- [46:49]
Evan Sohn
Probably I think it's a combination of media spend is down and so where does that all come from? But really all jobs down 50%, you know. So here are the worst performing that you're seeing on the screen now. Really difficult to see that in terms of overall marketing and advertising. And I have to think that a lot of that is AI oriented. Things like video editing and content creation, which could be done still by an individual, but powered by AI. You're really going to be able to do that in a much more productive fashion.
- [47:20]
Diana Olek
AI on the resume but resume, she said.
- [47:23]
Evan Sohn
Definitely, definitely put resume on the Put AI on your resume.
- [47:26]
Diana Olek
Evan, thank you very much. Evan Son with Revelio Labs Power Lunch with Dom Chu after the break. 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.