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The Exchange
A Shadow Fed, A Cap Contrarian Call, and Chips & Caso 1/13/26
00:43:22
The Department of Justice’s probe into Fed Chair Powell could create a “shadow Fed” and backfire against the Trump administration’s goals of lower interest rates, according to Strategas. Why a limit on credit card interest rates could boost names like Visa and Mastercard. Plus, chips analyst Chris Caso’s favorite AI idea in 2026.
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- [00:00]
Mira Fertility User
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- [00:32]
Capella University Representative
Believe accessible education can make a difference. That's why we offer scholarship opportunities to all eligible students. Un futuro diferente esta mas cerca de lo que cres con Capella University.
- [00:43]
Mira Fertility User
Learn more at capella.edu.
- [00:49]
Kellyanne Evans
Thank you very much, Scott. Well, from who to how, why the next Fed chair might have to be different now. We'll talk about that on the show today. Plus, the president's latest affordability push and what's ailing MasterCard and Visa. Welcome to the Exchange. I'm Kellyanne Evans. Let's start with stocks. As Scott mentioned, they have some work to do. They're taking a breather today amid this barrage of political headlines amid earnings and a cooler than expected inflation report. That's not helping that much right now. The 10 year just a hair below for 17. But the Dow's down 351 points. The S and P down a third of a percent. We've also got Microsoft pledging that it not consumers will pick up the tab for data centers. The president praising the company saying more will follow. But Microsoft shares are down 2% on pace for their worst day in a month. Financials are also under some pressure, including J.P. morgan, which is down despite better than expected earnings. It's trading lower, nearly 4%, similar for Visa and MasterCard, with the President's proposed credit card cap potentially weighing on that trade. And we're also keeping an eye on oil prices. They're going the other direction to hit a seven week high today over Iran's supply concerns. 61 a barrel now for WTI. So let's begin in Washington with the president giving some harsh words to Fed Chair Powell even as Republican senators voice their concern about the DOJ's Fed investigation.
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Rick Santelli
Well, he's, he's billions of dollars over budget. So he either is incompetent or he's crooked. I don't know what he is, but he does. Certainly he doesn't do A very good.
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Kellyanne Evans
Job comes, of course, as Treasury Secretary Bessant reportedly told the president that the probe into Powell creates a mess. Emily Wilkins has more response from lawmakers on the pushback and whether it could turn into a roadblock for the next Fed chair. Emily.
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Emily Wilkins
Hey, Kelly. Well, look, Trump's comments, they've already led to some of the serious blowback on Capitol Hill. As you said, we are now at the point where, as of this moment, none of Trump's future nominees to the Fed will be able to get confirmed. And that's because Senator Thom Tillis, he has promised to block any of Trump's nominees until this investigation into Powell is over. Till sharply criticized the DOJ for the investigation, saying it statement yesterday that if there were any remaining doubt whether advisers within the Trump administration are actively pushing to end the independence of the Federal Reserve, there should now be none. Remember here, Tillis sits on the Banking Committee. That's the committee that must approve any Fed nominees before they go to the full Senate for a vote. And if you do the math, if even one Republican sides with all the Democrats for a vote, that's going to lead to a tie and bring any nominee to a halt. Just Tillis being there is enough. But look, he's not the only Republican on the committee with concerns about this investigation. You have Senators Kevin Cramer, Dave McCormick, John Kennedy, all telling me and other reporters yesterday that they do not think that Powell is guilty, although they've got yet to go as far as saying that they will not confirm a Fed nominee. Another senator, Lisa Murkowski, has backed Tillis on holding off on confirming any nominees until this investigation is over. And many other members of the Banking Committee I've spoken with tell me that they either need more time to understand the investigation or say the investigation needs to play out. But so far, everyone I've spoke to, none have outright supported this investigation into Powell. And Kelly, I think that is a very interesting break that you're seeing up here among Republicans on Capitol Hill and President Trump.
- [04:09]
Kellyanne Evans
Remind us what the timeframe is, Emily, of when we expect this all to begin to start happening, if it is in fact going to happen the way that we initially thought, or if now this throw some change of plans into how it will play out.
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Emily Wilkins
Well, I think what would of course need to happen is for the next opening to come. And then of course, it's a question if the investigation still will or will not be going on at this point. I think there are a lot of questions about how exactly is going to happen with this investigation. What it's going to mean, how long it's going to take. And I think that's kind of the main thing that everyone up here on Capitol Hill is watching and waiting for before understanding what kind of impact this is going to have.
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Kellyanne Evans
Understood. Emily, thanks for now. We appreciate it. Emily Wilkins, let's turn to our next guest who says the Powell probe will not only delay the confirmation for the next Fed chair, it could change who the nominee will be. Let's bring in Dan Clifton, head of policy research at Strategics, which is a Baird company.
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Capella University Representative
Dan, it's good to see you.
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Kellyanne Evans
And what are you thinking?
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Dan Clifton
Well, great to see you, Kelly. Well, first, this is an unforced error. The downside was much greater than the upside of being able to do this. And I always thought that there was an informal agreement since last summer between Trump and Powell that if Powell agrees to leave the Fed when his chairmanship ends in May, then Trump will not bring up the construction project anymore. Net line was crossed on Sunday one way or another, and that has all sorts of implications. I think Emily did a very good job of outlining the confirmation process, but one, it makes it more likely that Powell can stay on as on a seat as a regular member. And that's a very important seat. I think the Trump administration needed that seat for, for financial deregulation, possibly even some rates. Now you're, now you're going to see maybe like a shadow Fed if he decides to stay on. Of course, this may all change over five months, but it does increase the likelihood of that happening. And then second, is that as Emily laid out, it doesn't tell you who you know, it doesn't create a path for the Senate to begin to move the president's Senate, the president's Fed chairman pick. And that's important because we were expecting it over the next couple of weeks. And then if you take it, a lot of these senators have very good gross relationships with Kevin Hassett. They like him, but they're now going to be less likely to move forward on a Hassett nomination. And I think what that does is it raises the odds of Kevin Warsh and probably even some of the other people who are on the list, like Waller or even Rick Reeder, because they're not going to be as tied to the president now that the independence is being questioned.
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Kellyanne Evans
So thank you, Dan, for laying all of that out. And you have explained the big picture of what could have happened this year, which was the Fed board changes, the president gets more of his appointees in place. They do A lot of financial deregulation, which the bank stocks were obviously very excited about. You're saying this calls all of that into question. It almost feels then like it's the biggest setback for the president's agenda that he could possibly be facing this year. So.
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Dan Clifton
Absolutely. And I would say we were in an amazing place. I mean, the backdrop here for the U.S. economy is so great. We got, we got 500, 400, hundred billion dollars of tax cuts. We had the Fed cutting rates. We get the Fed balance sheet expanding, $57 billion a month, get financial deregulation coming down. That's why I would call it an unforced error. But, Kelly, this is so offsides that it's probably going to pass at some point and the president's going to need to move this process forward to get his new Fed chairman in. And we may be talking about four months from now, like how this was all a big head fake at the end of the day and nothing really materialized out of it. So I don't want to say it's a total setback, but it definitely created a hurdle for the President that could set back his entire agenda. Yeah, look at what happened today. Inflation numbers came out, inflation declined in 2025 despite all the tariffs. That's the message today. You go to the Detroit Economic Club, inflation's coming down, growth coming. And instead you're having conversations about this or credit card swipe fees or caps on credit cards. It just shows you that midterm election years are very different for governing than the first year of a presidency. And that first year was get all your economic plans in place. That second year, these presidents get much more populous to win voters, and it creates uncertainty for investors.
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Kellyanne Evans
Sue. And also, what are we now waiting on? The. Maybe you can give us the sort of legal explanation here of the DOJ's probe, because you're saying all of this depends on the time frame with which the President can now make his appointee appointment, that it moves through committee, moves through the Senate, that we then figure out if Powell. You're sort of almost saying he would almost have to stay on while this is all being so how quickly should we expect the DOJ to move along? What are the next data points to wait for?
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Dan Clifton
Well, I tell you, I read the DOJ statement last night as they're starting to walk this back a little bit, and they were like, it wasn't, you know, an indictment. It was just disappeared. You know, they're starting to walk that back a little bit. I do think that there's going to be pressure internally on the White House for being able to do that. And to Emily's report before this, before the segment started, you know, the Senate can move on the floor without the Banking Committee if Thom Tillis is saying no. But there are so many Republican senators that have questions about this that you're going to need some sort of resolution. And I think sooner rather than later is the way to go. So you could start moving your Fed process. Now. The President's going to interview Rick Reeder, so he's still not done with that process. But we were anticipating that this decision was going to come in late January of who he was going to select as the Fed chair. That person has to go through a background check and get everything ready for his hearing. And so it usually takes about 100 days for that process to work its way through. And we're coming up to that 100 day limit, which is late January before the Fed chairman. So we thought this process was going to start and I would expect you're going to start seeing a walk back from this, from the administration, given the consequences of how big of a deal this is.
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Kellyanne Evans
Right. And so that would have to come from the Justice Department. That signal, like you said, it's just a subpoena, it's not an indictment. I mean, what else would that time line or that language look like? Because investors have a choice to make, especially maybe financial investors, but bond investors, everybody. Right. And it's is this going to be playbook A that you're describing, which is financial deregulation, the Fed board looks the way that you were describing it, could the agendas proceed in that direction or is it going to be playbook B, where Powell is maybe in place, where there's a different chair perhaps than was previously anticipated, Maybe that financial deregulation agenda does not move forward. Where is that kind of turning point?
- [10:34]
Mira Fertility User
Yeah.
- [10:35]
Dan Clifton
So I think as you get to April May, if you don't see progress on the Fed's pick, that means that the Federal Reserve Board will have to select who the Fed Chairman is. They've done that once, ironically, it was with Jay Powell to keep him in there after his term expired. And that can, that vote can go anyway. Right. They can wind up putting Waller in there, they could wind up putting Bowman in there, they can wind up putting Powell in there. So I mean this is, this is, there's a lot of decisions that are going to have to be made if you don't have some sort of decision by May. What I would watch for is you know, is there going to be a grand jury? Is there going to be an indictment? And the reason why I think investors are a bit complacent about this right now for good reason, is that there's a low odds that even if this did go to a grand jury that Powell would be found of wrongdoing. Trump was not able to do that on Lisa Cook, he was not able to get it done on Jim Comey, he was not able to do it on the New York attorney general. I think, I think for right now investors are looking at this saying even if it does go through the normal legal process and that would take maybe a month or so, there's probably no there there on Jay Powell and that this can start to get resolved. So there are definitely pats there in that timeline. But I think you've got to see some real action on that nominee in the Senate Banking Committee by April if you're going to have that person in there by the time the chairman's term expires.
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Kellyanne Evans
Right. But I'm glad that you've kind of connected the dots all the way back to why this is such a big deal for markets and why they might be reacting in somewhat concerned way. Not so much again, just kind of the larger questions about independence. But really in terms of the agenda and kind of which, which path, how does the frost bomb go? Which choice are they going to make? So Dan, appreciate it very much today.
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Dan Clifton
Thank you, Kelly.
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Kellyanne Evans
We'll check back in soon. Dan Clifton with Strategic Guess the Dow is at session lows meantime down about 400 points points as we had the 30 year bond up for auction just a short while ago. Let's bring in Rick Santelli. Rick, how to go?
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Rick Santelli
It was a very good auction. This is the last of the coupon auctions for a total of 119 billion. This was 30 year bonds, 22 billion of them reopened meaning we're adding to an issue that already was primary auction and the yield was 4.825. The yield which was at the when issued market was 4.833. So the auction ended up with a lower yield which means the government got a higher price. And that's always good. So it's the exact opposite of a tail. This one stopped through almost one basis point and all the metrics were super solid. You know, the bid to cover was the best since June of last year. And if you look at the amount that the buffet did not have the investors take down, what the dealers ended up getting those leftovers, 12% less than the 10 auction average. So it was a good auction. And if you look at yields, they have come down just a bit. But I will tell you this, if you look at a chart from early December of 30 year bonds, what you'll find is that on a closing basis we've been in a really narrow, narrow range from a yield of 4.79 to 4.87, whereas yesterday a two year close at a one and a half month high yield close, the 10 year close at a four and a half month high yield close. So the 30 years kind of off on its own. And we want to continue to pay attention to all the dynamics here, especially of course what the treasury is going to be borrowing and what their needs may be. And we may learn more about that in about five in about 50 minutes.
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Kellyanne Evans
Kelly, back to decent auction stocks are still at session lows. Bond market doing what it can. Rick, thanks very much. Rick santelli, Meantime, Microsoft is pledging that its data centers will not increase power prices for consumers earning praise from the president, but the stock is under pressure today. Eamon Javors joins us with all the details.
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Rick Santelli
Eamon yeah, hey there, Kelly. Microsoft introduced these five core principles earlier today. It's all about trying to stave off some of this political angst that we're seeing in communities around the country. As data centers get built there, they're driving up water prices, electricity prices, making a lot of noise and all of that. So Microsoft trying to stave that off by making these commitments. I interviewed Bret Brad Smith, Microsoft's president here in Washington, earlier today. I asked him what they're hoping to accomplish here and here's what he said.
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Bret Brad Smith
It reflects the fact that AI and cloud leadership today requires many things.
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Dan Clifton
One of them is sustaining the confidence of local communities so we can buy land, build data centers and operate them. And what we pledge today is five things addressing five issues that are important to local communities across the country. Electricity, water, jobs, taxes, and skills. We spell out what we'll do in every community where we buy, build and own our data centers.
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Rick Santelli
So what are the five things? Take a look. Here's what Microsoft is saying. They say we'll pay our way to ensure data centers don't increase your electricity prices. We'll minimize our water use and replenish more of your water than we'll use. We'll create jobs for your residents. We'll add to the tax base for your local hospitals, schools, parks and libraries. And we'll strengthen your community by investing in local AI training and nonprofits. Now, Kelly, the fact that Microsoft has to do this, I think, you know, is just a reflection of core political reality, which is that some of these data centers are provoking political controversies in the local communities where they are. You saw the president posting on social media about this, saying he's helping to lead the way by working with these tech companies to lower the cost of energy in some of these communities. So all of this is about making these data centers politically palatable so that this data center build out for I can continue.
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Kellyanne Evans
We've, we've run the numbers of joked but not joked before. Amen. That you could give everyone in a state like Indiana, you know, a couple hundred dollars and it would only cost a company like theirs a few billion. Right. So not that they're going to actually do that, but it's in the conversation. The idea that, you know, consumers need to not feel the pinch in order to support these rollouts.
- [16:32]
Rick Santelli
And if anything, they've got to get a benefit on top of not feeling the pinch. Right. Something, it was something for the community.
- [16:37]
Kellyanne Evans
In this little sweetener. Absolutely. Amen. Thanks, Amy Jabbers. Microsoft's Brad Smith also had another message in that conversation, and it was a warning about China's momentum in AI let's turn to Deirdre Bosa for more on that in today's Tech check. Hi, Deirdre.
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Capella University Representative
Hey, Kelly. So Smith said that Chinese models are gaining adoption globally and if the US Slows down, the gap could close faster than anyone expects. Now, this is a calculated move weaponizing national security to counter friction at that local level that is now slowing amid this build out at home. It's a playbook that Jensen Huang helped define and one that we're likely to see more of from Big Tech as governance becomes the new bottleneck. In AI Smith's comments, they follow a report from Microsoft late last week that puts numbers around this warning. It shows Chinese open source models like Deep Seq gaining real share outside of the west, most notably, as you can see here in Russia and Africa. But don't ignore North America here. Microsoft puts adoption of deep seek at 6 to 10%, which isn't nothing. Kelly. The messaging here cuts both ways. In the US Big Tech is talking up the risk of China closing the gap to press for speed and flexibility. In China, though, it's also happening. Alibaba and other executives, they recently have been publicly downplaying their own progress, perhaps as a way to get access to Nvidia chips, which they still need to move faster. So for investors, keep an eye on this narrative change aimed at policymakers and don't forget to take it with a grain of salt. It's interesting what the Chinese are saying, Kelly, because they are not slowing down. But as we get these headlines about Nvidia and restrictions, they want to make sure they have access to the top technology.
- [18:14]
Kellyanne Evans
But so what do you think? Microsoft's not game. But you know, point of view here is in this message, Deirdre, they're saying.
- [18:23]
Capella University Representative
Make sure that we don't get slowed down by local regulations because at stake is this whole race with China. China is centrally planned, right? We've seen sort of the charts about their electricity generation versus ours and they're just going straight up. Ours is flattening out. And a lot of that has to do with the ability to actually build these data centers and the increasing pushback we're seeing from local localities, which brings.
- [18:47]
Kellyanne Evans
It all full circle to why they want support in ramping up those efforts. Deirdre, thanks for now. We appreciate it. Deirdre Bosa Coming up, Visa and mastercard shares under quite a lot of pressure today. Is it the president's proposed credit card rate cap that has been rattling the market? And we'll dive into more detail next. Plus, with stocks hitting records and trading at lofty valuations, our strategist has two names, including this one he calls a value play in AI. We'll reveal it coming up on the Exchange.
- [19:16]
Rick Santelli
This is the exchange on cnbc.
- [19:22]
Mira Fertility User
We've been trying to conceive for a while, but my cycles are so irregular my doctor doesn't listen. Period. App doesn't help. We missed way too many chances and I'm not guessing my way through 2026. So I got Mira. Mira tracks four key hormones with the same tech fertility labs use, but from home. It found my ovulation in minutes. Now I get clarity every morning and I intend to keep it that way. And hey, for a very limited time, you can get an exclusive 25% off using code NEWYEAR25 at Miracare.
- [19:52]
Rick Santelli
This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Join host Keith Lansford for this information packed daily market Preview delivered in 10 minutes or less, including projected stock updates, monetary policy decisions and key results and statistics that may impact your trading. Download the latest episode and subscribe@schwab.com Market Update podcast or find Schwab Market Update wherever you get your podcasts. 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, a 14 point turn, an influencer even livestream 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.
- [20:45]
Dan Clifton
AT&T business Wireless connecting changes everything.
- [20:56]
Kellyanne Evans
Shares of MasterCard and Visa down about 4% today. Could be these concerns about the President's plan to cap credit card rates at 10%. But my next guest says the fears could be a little bit overblown and the change could potentially benefit the stocks in the long run. Let's bring in Dan Dalive, he's the senior analyst at Mizuho. Dan, let's start with are we sure and maybe this is a simple question, that this is the reason why these stocks are down today?
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Dan Dalive
Yeah, I'm pretty much sure that it's a combination of, of what happened yesterday with the 10% cap. It's kind of the backlash of that and kind of continuation on that. Of that and then also kind of the fear on the, on those swipe fees. So I think the fear is that the President is very focused on payments and not in a good way. And I think that's why the stocks are down.
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Kellyanne Evans
But why are they down more today than yesterday on this news? You know, it's always fascinating when it takes a day for things to sink in sometimes like a Fed rate cut.
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Dan Dalive
I thought about this, you know, heavily yesterday as well, but it's because of what we don't know. So it's down today because people are saying, well, he's now focused on our space. What else is he going to say in a tweet, you know, overnight that's going to cause even more havoc in the space. So I think, I think this is, again, my assumption is it, it's pricing in something that we might not know or kind of the uncertainty of what comes next. I mean, that's just my assumption today.
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Kellyanne Evans
Visa and MasterCard, our AUD knows this, you know, better than anyone. But they are, you know, processors. They're not the ones extending the credit. So why do you think they would be affected by a cap simply on a reduction in volume? Or would it actually get to the heart of a business model that relies to some extent on all of these.
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Dan Dalive
Rates so, you know, you know, payments more than most people? Because they actually don't exactly. They're just processors. Right. And they're just a channel between the banks and the consumers. They make like 10 basis points or 15 basis points regardless of whether or not it's a credit or a debit transaction. And, and what I think is going to happen if this actually were to go through, I mean you need the Congress, etc. It's going to throw a lot of people into the hands of like Buy Now, Pay later, like a firm. Right, or even PayPal. And what's going to happen there is one credit transaction that's gone is going to create for Buy Now Pay later transactions because people settle those Buy Now Pay later transactions through debit. So I actually think in a weird way it's a positive catalyst and I'm surprised the market's not seeing that.
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Kellyanne Evans
That's a great data pipe, people. I couldn't understand why Buy Now Pay later names were not just down fractionally yesterday, they were down rather sharply. Wouldn't the obvious competitive move be that they benefit from any pullback in credit on credit cards?
- [23:27]
Dan Dalive
Exactly. And that's why I think, you know what it reminds me of? I mean we've been doing this for a long time. It reminds me on when, when the sector traded down when stablecoins first were talked about. It's literally the same pattern. The charts looks the same, look the same. And you know what it was? It was a giant buying opportunity for payments. Visa, MasterCard and the buy Now Pay Later. So I think this could be another sort of massive buying opportunity. On those fears.
- [23:51]
Kellyanne Evans
Do you think all of this is, you know, all noise and no actual policy change or do you expect that we will get some changes that that will be impactful?
- [24:01]
Dan Dalive
We don't know. Look, there has been a lot of like legislation and I think what's going to end up happening is I think it needs to go to Congress and I think the President is making a lot of good, you know, good, good points here. Right. It's nothing here is unfounded. I think that the fact that us interchange in credit is much higher than others. So those, those things make a lot of sense. But I think at some point there'll be some sort of resolution down the road that might be a little bit worse for the banks and a little bit better for consumers and merchants, but not completely annihilate interchange.
- [24:35]
Kellyanne Evans
Right. And it always ends up, you know, the announcement day. Everyone loses and in the long run it's sometimes feels like everybody wins. Maybe that's too optimistic. Dan, appreciate your time. Thanks.
- [24:45]
Dan Dalive
Thanks.
- [24:45]
Kellyanne Evans
Dan Dala with Mizuho. Coming up, a sneak peek at tonight's special two hour program of Warren Buffett A Life and Legacy. Featuring never before seen interviews with the greatest value investor. Pretty value investor. The greatest investor of all time. We're back into.
- [25:04]
Mira Fertility User
We've been trying to conceive for a while, but my cycles are so irregular. My doctor doesn't listen. Period. App doesn't help. We missed way too many chances and I'm not guessing my way through 2026. So I got Mira. Mira tracks four key hormones with the same tech fertility labs use, but from home. It found my ovulation in minutes. Now I get clarity every morning and I intend to keep it that way. And hey, for a very limited time you can get an exclusive 25% off using code NEWYEAR25@miracare.com not every sale happens at the register.
- [25:37]
Kellyanne Evans
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 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.
- [25:58]
Dan Clifton
Sometimes AT&T business Wireless Connecting changes everything.
- [26:04]
Capella University Representative
At Capella University, we believe accessible education can make a difference. That's why we offer scholarship opportunities to all eligible students. Un futuro differente esta maca de lo que Chris con Capella University. Learn more@capella.edu.
- [26:24]
Kellyanne Evans
Let's get you a quick check on the markets which as mentioned, we're moving towards session lows a short while ago the dow down almost 400 points and it's still the underperformer. By the way, the small caps are in the green today. All of this after the softer than expected inflation report this morning. Salesforce, Visa, JP Morgan, those are some of the decliners. L3Harris hitting an all time high on news the US government will invest $1 billion in the company's growing rocket motor business. That's the unit making motors from missiles like Tomahawks and Patriot interceptors. Interestingly, those shares are only a fractionally this hour. They are planning an IPO of that part of the business later this year. They say the US Government will be a shareholder when the company goes public and it did pop 11% premarket on the news, but is now pretty much given up all of those gains. We're also keeping an eye on those crude prices, prices at their highest since November, over $61 a barrel after the President canceled all meetings with Iranian officials and announced secondary tariffs on companies doing business with Iran. We're waiting to see an executive order with those details. Energy also is the best performing sector today amid that surge pushing ExxonMobil to an all time high, surpassing its previous high 14 months ago. And this would be the first four week win streak the stock has had in over a year and a half. Occidental, Chevron, ConocoPhillips there in the green today as well. And speaking of big oil, how do you like that term? Berkshire Hathaway is the largest shareholder in Occidental and Warren Buffett is America's probably most admired and most followed investor. And now in a series of never before seen interviews, viewers will get an inside look at his philosophies on business, philanthropy and life. Becky Quick joins us now with more. Welcome, Becky.
- [27:58]
Becky Quick
Thank you, Kelly. It's great to see you. And that's right, we sat down with Warren Buffett a few times over the last year and Even once about 13 years ago when we were in Washington, D.C. we took all of that together, put it together for tonight's show and we talk about how he became Warren Buffett the teacher, the trusted investor, the voice of authority that could calm the markets over the years. As he passes the CEO baton to Greg Abel, Buffett reflected on the six decades that he sat atop Berkshire Hathaway, building it from a textile mill to the massive conglomerate that it is today. And that huge cash pile of over $350 billion that he's amassed along the way. We asked him how the company size has impacted and changed how it operates over time.
- [28:38]
Dan Clifton
It got more difficult. And I mean, because it's harder to do, it's harder to compound extremely large numbers than small numbers. And I've always known that. I mean, when I had $112 to buy three shares of City Services Referred.
- [28:55]
Rick Santelli
Doubling my network was not a remote possibility.
- [28:58]
Dan Clifton
I mean, I just had to go out and, you know, sell more bottles of Coca Cola or do something door to door. So there's just no question that we can't, we can't do what we did before. That doesn't mean we can't do anything, but we can't, we just can't do it.
- [29:14]
Becky Quick
Kelly, that interview was from March when we sat down with him. And he said on that particular day, if someone had come to him with $100 billion idea that day, he would have written the check that afternoon. And he still feels that way. You know, you come to him with great idea, he's willing to spend it. Cash is not their favorite place to be. But they're also never going to overpay.
- [29:31]
Kellyanne Evans
For a deal with all the investors in all of the world trying to kind of bring that someone's got to have $100 billion idea. But anyway, what about the next generation? You know, what happens as he starts to pass the baton with the company, maybe also with his wealth?
- [29:43]
Becky Quick
Yeah. The children, the three children who are Susie, Howie, and Peter, are now responsible. He's made it very clear that they're going to be responsible for giving away his fortune. And by the way, that's around $150 billion today, even though he's already given away more than $50 billion to philanthropies to this point. And this is a pretty big undertaking. We got the chance to sit down with the three of them and talk to them about what they see happening in the future. And kind of looking back at how they got to this point, too, what's pretty interesting is, you know, they grew up with Warren Buffett, and turns out he's kind of always been Warren Buffet, even at home. Listen to what he was kind of teaching them when they were kids.
- [30:22]
Bret Brad Smith
But, you know, we used to. I mean, not that this is any.
- [30:24]
Rick Santelli
Big deal, but, you know, we'd earned.
- [30:25]
Bret Brad Smith
This allowance for, you know, cleaning out.
- [30:27]
Rick Santelli
Gutters and cutting the lawn and raking leaves and stuff. But Warren got pretty clever and he started giving it to us in quarters.
- [30:36]
Kellyanne Evans
And then he bought a slot.
- [30:37]
Bret Brad Smith
Dimes.
- [30:38]
Dan Clifton
Yeah, dimes.
- [30:39]
Becky Quick
It was a dimes.
- [30:40]
Dan Dalive
Dimes.
- [30:40]
Bret Brad Smith
The first. Yeah.
- [30:40]
Rick Santelli
And then he bought the.
- [30:41]
Chris Grison
He got it all back.
- [30:42]
Dan Clifton
Yeah.
- [30:42]
Rick Santelli
And then he bought the slop machine. So he would get most of his allowance back. At least with me, he got a.
- [30:48]
Dan Clifton
Lot of it back.
- [30:48]
Kellyanne Evans
But, I mean, we were all up there. The neighbor kids would bring their dimes over, that is.
- [30:52]
Becky Quick
And by the way, Howie went on to say that he's pretty opposed to gambling. I can understand why. Those were lessons that were taught early. You're going to lose it and lose it all.
- [31:02]
Kellyanne Evans
They look like him. I mean, when you see his sons, who, you know, they're not spring chickens, I mean, it's so funny to watch. And they remind you of him.
- [31:10]
Becky Quick
Mean, definitely some family resemblance there.
- [31:11]
Kellyanne Evans
That is very funny, Becky. Thanks very much. Thank you. Hours tonight it is.
- [31:15]
Becky Quick
It starts at 7pm Eastern time and two hours and we're pretty excited about.
- [31:19]
Kellyanne Evans
Awesome there. You can catch it beginning at 7pm Eastern right here on CNBC. And we appreciate making the time as well.
- [31:25]
Becky Quick
Thank you.
- [31:25]
Kellyanne Evans
Thanks. Let's get to Pippa Stevens now for the CNBC news update.
- [31:28]
Becky Quick
Hip up.
- [31:28]
Emily Wilkins
Hey, Kelly. The Republican Lighthouse Oversight Committee says it will seek to hold former President Bill Clinton in contempt of Congress. He failed to appear today for a deposition as part of the panel's probe into Jeffrey Epstein. Hillary Clinton has been called to testify tomorrow, but the Clintons submitted an eight page legal letter today calling the committee's subpoenas invalid and legally unenforceable. South Korean prosecutors are seeking the death sentence for former President Yoon Suk Yeol. He faces rebellion charges in connection with his short lived declaration of martial law. And December 2024 prosecutors say he was trying to prolong his rule. But the former president says he was trying to raise public awareness about the danger of the liberal opposition Democratic Party. And the Environmental Protection Agency says it will change key air pollution rules by focusing only on the cost to industry. For decades, the agency also considered how much money is saved in health costs. Public health advocates called the change dangerous and warned the it could lead to more asthma attacks, heart disease and premature deaths. Kelly?
- [32:31]
Kellyanne Evans
All right, Pippa, thank you. Coming up, here's your last look at our mystery chart. It's a name our strategist calls an AI value play. It's down 30% from its recent highs and trading at only 10 times earnings will reveal it ahead. You can also send me your guesses, by the way. And as we head to break, check out lumber prices because they're popping to their highest level in nearly three months. We'll get the latest read on new home sales ahead. Stocks are lower today despite that cooler CPI print. We had our guest at the top of the hour, Dan Clifton, suggesting it could be some of these policy changes, some pressure on the Fed and then investors aren't pleased about. But my next guest says the economy is meantime in a good place and the biggest problem really is valuations. Joining us now is Chris Grison. He's the chief market strategist at MKI Capital Management. First of all, Chris, welcome. It's great to see you.
- [33:22]
Chris Grison
You too, Kelly. Nice to be with you.
- [33:23]
Kellyanne Evans
Second of all, so you are in the camp that says, you know, the economy looks pretty good, you know, normally that would underpin stock performance. Do you think the president's populist push, whatever we're calling it, let's not use a regulatory word, is having an impact here, though.
- [33:37]
Chris Grison
I do certainly. It's it's really sector by sectors, like having little landmines in an otherwise very nice environment. So, so you got the credit cards today. You know, you might have another populist theme tomorrow that affects a different sector, health care. So, so you got to watch out for that. But, but the economic backdrop is as good advice as I've seen it in probably five years. So that. That seems terrific. Valuations, of course, are a different matter.
- [34:04]
Kellyanne Evans
Right. And we mentioned, you know, with Visa and MasterCard under pressure, the president, of course, cap fees, like you're pointing out, it's also he's supporting the swipe fee legislation that obviously would do a lot more to affect their business models. But what a guy like you, who's seen a lot of these announcements come and go, look to pick up stocks like these on this moment of weakness.
- [34:20]
Chris Grison
Yeah, I mean, Visa and MasterCard are not cheap. They never are. But this swipe fee stuff is really the important thing that's happening here. It's not the 10% cap, which really doesn't affect Visa and MasterCard, but the swipe fee goes directly for their geese that's laying the golden eggs. So that we need to pay attention for. And I wouldn't underestimate the populist surge here. So I think this swipe fee legislation actually is worth taking a step back. And I actually wouldn't jump in and buy these in MasterCard today. I wait for some clarity because all the Democrats will vote for it. So you need, you know, a half dozen Republican senators to get on board. And I think the train might leave the station. So I think there's more risk there than the market thinks.
- [35:04]
Kellyanne Evans
You know, in January, when people. In January still is January, when people are putting together their year ahead. Chris, they were able to build a story that was more about deregulation. And the president's going to get his Fed board. They're going to be deregulating. That's going to help the financial stocks. You've got the economy now all of a sudden, the narrative is flipped. We don't know if the President's going to get his Fed board. We don't know what's going to happen with that deregulation, whatever is going to happen with the financial stocks. And now he's throwing more regulation at all these different parts of the market. Is that going to remain a bigger overhang or do you think they're going to shake this off and move back towards highs?
- [35:36]
Chris Grison
I think as long as corporate earnings come through solid, and I think the president is savvy enough and tuned into the business enough that he may tinker on the margins. But. But he's not going to do something that's so dramatic that it would stall the earnings growth that is really pushing the market. So. So I think that the problem is valuation is not the economy. I think the economy is. The US economy is like an ocean liner that is very difficult to stop once it's gotten going. And it's really going full steam right now.
- [36:08]
Kellyanne Evans
So you like Dell, is that right?
- [36:11]
Dan Clifton
I do.
- [36:11]
Chris Grison
That's our secret, right? That's our secret chart. Right. And I do, because obviously these data centers are a huge thing for Dell. They're the largest provider of servers into these data centers and we're talking about hundreds of thousands of servers. And the important thing here is that unlike the Internet bubble of the late 90s, the companies that are driving this are extremely well healed. You've got Microsoft and Amazon and Google. And these guys have the money and they will spend it and they don't want to fall behind to their competition. So the good news is I think this spending continues for 2026. The bad news is I think it continues to inflate a bigger and bigger bubble as we get down the line. But, but I don't think that's yet. I think we're in the fifth or sixth inning. I don't think we're in the eighth inning.
- [37:01]
Kellyanne Evans
I think a large portion of our audience agrees with that. So where else would you be looking? We showed ups. So that's a stock that, you know, I. Every time I wrinkle my nose at one of your stock picks, I know you're probably onto something.
- [37:11]
Chris Grison
Yes.
- [37:11]
Kellyanne Evans
No, no.
- [37:12]
Chris Grison
I have something I call the gag factor, Kelly. So if I can make you or other investors gag, that's a terrible idea. I know it's not consensus and I know it has a pretty decent chance of getting investor support in the future. And then the stock price goes up. So UPS is certainly one of those ideas. The stock is down more than 50% from its highs. Amazon is yesterday's news for UPS. It's taken them two years to kind of wean themselves off. You know, it's getting over a bad relationship. So there's four things that's great about ups. Nobody likes it. It's got the gag vector. Earnings are finally starting to come through. It's one of the few inexpensive stocks with a great balance sheet. And this is the favorite part is you get paid 6% in a safe dividend while you wait for all these things to come true. So I think that's pretty.
- [37:54]
Kellyanne Evans
Every time you talk about, I think Echo, I think he's right. And, you know, maybe I'm going to own a bunch of basket of Momo stocks just in case. Case. It's like my hedge is the High Flyers. Right. Just in case.
- [38:03]
Chris Grison
Well, on a little of each.
- [38:05]
Kellyanne Evans
Chris, thank you as always.
- [38:07]
Dan Dalive
Sure.
- [38:08]
Kellyanne Evans
Santi with me. Capital Management coming up, the homebuilder ETF perking up more than 12% since President Trump called for Fannie and Freddie to buy 200 billion in mortgage debt as part of his affordability push. We'll dig into the latest housing data and how the spring selling season is looking. That's coming up right after this. After that drought due to the government shutdown, we finally got some new data on new home sales this morning at an interesting time. Everyone is in the same outfit. It's in the air, I'm telling you. Diana Olek is here with the numbers. Hi, Diana.
- [38:42]
Capella University Representative
Hi, Kelly. And when you say new, it's still September and October, but look, we got the data finally on both and both beat the streets expectations. New home sales did dip slightly from September to October, but the big takeaway is that October sales were 18.7% higher year over year and the highest October read since 2020. Now this count is of signed contracts. So it's people out shopping when mortgage rates first dropped at the start of September, then just kind of hung out between 6.2 and 6.4% on the 30 year fixed. Today. It is of course much lower at 6.07%. Now the median price of a new home in October was down 3.3% from a year ago and the month supply of homes for sale was also down 15%. The Homebuilding ETF ITB is higher on the day. Stocks had taken a hit though last week when President Trump said he was going to ban big Wall street investors from buying single family rental homes. And that's because public names like American Homes for Rent and Invitation Homes, which still aren't doing so well, also build homes and buy homes from builders. Analyst Ivy Zelman told me it's not a good idea. Frankly, I think it would be really bad if they can't develop the communities that are purposely built for rent. Now you can read much more about that and see a video podcast with some surprising predictions from the CEO of data center giant Digital Realty in the free Property Play newsletter, which just dropped today. Kelly?
- [40:02]
Kellyanne Evans
Yeah, let's be a while to see the impact, but the homebuilder stocks are, I mean, up 12% since this news is. That's a big move.
- [40:10]
Capella University Representative
Yeah, I mean, look, the homebuilders do have a long Runway. They've been really beaten up over the past year when mortgage rates rates were much higher. As I said, they did drop into September and that gave them a boost in October. We have not gotten any of the data from November. And we did see housing starts and building permits drop in October. We got that newish data last week. So we really need to see what was happening at the end of the year. But for now, at least, we do have much lower rates, which are going to be a boon for the builders.
- [40:35]
Kellyanne Evans
Yeah, that's true. Diana. Thanks very much, Diana Olek. Appreciate it. Coming up, GMO's Tom Hancock told us yesterday there are better ways to to play the AI trade than Nvidia. He had a number of them. But Wolf is out with a note today that suggests otherwise. They call Nvidia a favorite idea for 2026. We'll discuss that when we return. Welcome back. Wolf Research naming in video its favorite AI idea for 2026. The shares are up 36% over the past year. That said, they've largely underperformed competitors like amd, intel and Micron. And it's that lag that has Wolf so bullish. Joining us now, the man behind the call, Chris Caso, the senior research analyst at Wolf. I'm sure I'm not the first to make the chips and queso joke, Chris. Nevertheless, that'd be a great time.
- [41:44]
Bret Brad Smith
That's the name of our webcast. So there you go.
- [41:46]
Kellyanne Evans
Perfect. So you know better than I that this is such a battleground, you know, whether you can still stay within video because there's so much potential upside or whether it's time to rotate, as our last guest argued this week, that it's time to rotate into other parts parts of the industry. So why does Nvidia have so much staying power, you think?
- [42:03]
Bret Brad Smith
Well, I mean, first, you know, we're actually rotating, you know, within this space. And our favorite pick for most of the last year has actually been Micron, which, you know, at the time we considered that sort of the poor man's way of playing AI because of the attractive valuation. The fundamentals we saw around that, it's not so poor anymore. Micron's up about 300% year to date.
- [42:25]
Kellyanne Evans
Amazing call, by the way. If you're rated Nvidia has that much upside, it's and it's going to triple. That would be quite something.
- [42:32]
Bret Brad Smith
That would be great. But, but, you know, right now, you know, we see the opportunity in Nvidia because the multiple has pulled back a bit. Stock hasn't done much in the last six months and we do see some pretty strong fundamentals ahead for, for this year. The most important thing, however, and I think what's most misunderstood about Nvidia is most of this upside. Much of this upside is actually coming from pricing. And I think the concern on Nvidia right now is about competitive pressure is others who can do chips and I, you know, are they going to be able to to maintain their market position. And we think the pricing tells the story there about both the sustainable competitive advantage they have as well as their ability to sustain the margins.
- [43:17]
Kellyanne Evans
Who else? So when you say that you to some extent you are rotating, right? But for instance when you say Micron was the pick last year, but this year do you just say, well, it's kind of, it's in the market now. I'm curious what you would do with with as as others are looking elsewhere for the next big upside. You landed back at Nvidia?
- [43:37]
Bret Brad Smith
We did. And I said and to be clear, we still like Micron. We still have an outperform rating on that stock. It's just that it's much less non consensus as compared to last year. But Nvidia's case right now, again the multiple is in the low 20s right now on 26 numbers. We see upside to those numbers. And again, you know, we talked about the pricing dynamic as you go into 2027. They have another big product cycle, the products called Ruben Ultra where you have more memory on the chip, you go from two GPUs to chip to four GPUs, you increase the power. The whole premise of Nvidia right now is one, delivering value to the customers, providing more performance per watt, more performance per dollar, so that you can do more inference with the same amount of money which the, you know, folks like like OpenAI surely need in addition to again, you know, meaning maintaining that competitive advantage against everyone else. And that's what we see over the next two years, which is why we think it's a good value right now.
- [44:38]
Kellyanne Evans
And what's your response when people say look at Gemini. I mean every time you turn around, look, we're using it in the house more from a user point of view. It's being integrated into Siri now. So we're recreating the app, Apple, Google, iPhone, I don't want to call it monopoly. If they're using different types of processing units, these TPU's at the margin, does that erode at Nvidia's, you know, possible addressable market?
- [45:03]
Bret Brad Smith
Well, it's already in the market. TPU has already been in the market now. And I absolutely believe that TPU is Nvidia's biggest competitor right now because the Performance of those products are, you know, closer. Closer to Nvidia than everyone else. But there's good reason for that because Google's been at it, you know, it's a TPU is going on its seventh generation right now. So they're really the only ones with that staying power that have been at this long enough. And I should say it's not just the chip itself, but it's also all the networking and the systems right now. The chip performance alone is not enough to drive the performance that the customers need right now. There's a lot of other things. Things. And so I absolutely believe that that TPU is the closest competitor. But it's also because it's owned by Google, it's not going to be sold to the entirety of the market. There's another factor as well that Nvidia has, which is a software advantage. They've got the best developed software tools for, you know, not just the big hyperscalers, but for some of the Fortune 500 companies that are developing their own AI as well. And that software provides them a competitive advantage as well that even Google can't match.
- [46:11]
Kellyanne Evans
Yeah, why? And if you don't like that, you've got a few other names in here. Texan, semi. The semi, the poor man's way to play you say is with a mat. Is that right?
- [46:21]
Bret Brad Smith
That's right. And it's not as poor as it was last year and all the semi cap names have run since the beginning of the year. But you know, certainly the capacity needs to be put in place in order for what's happening with AI. And you know, again, you've seen this big move in memory. The reason why you've seen the move in memory is because they're out of capacity. And in fact the memory suppliers are out of the physical space to add capacity right now to go to the end of this year into next year. That space is going to be.
- [46:47]
Kellyanne Evans
Just jump in for a moment. The President is speaking on stage. You want to listen to Chris Caso? Thanks. Let's hear from President Trump.
- [46:54]
Emily Wilkins
Hey girl, what's happen?
- [46:56]
Kellyanne Evans
Is that your antiperspirant?
- [46:59]
Emily Wilkins
Yeah.
- [47:00]
Dan Clifton
Let me see that can.
- [47:01]
Emily Wilkins
Aluminum butane. I cannot pronounce that. You have to switch to native deodorant. Native's simple formula has only clean ingredients. It gives you effective 72 hour odor protection with no hydrocarbon propellants.
- [47:17]
Capella University Representative
Wow, this smells heavenly clean.
- [47:19]
Emily Wilkins
Effective 72 hour odor protection isn't a myth, it's native.