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Dollar Destruction, Another Powell Pause, and Tech on Deck1/28/26
00:39:37
Why there could be more pain ahead for the dollar. Economist Claudia Sahm says the Fed is in wait-and-see mode as both downside employment risk and inflation cool. Plus, will this earnings season separate the wheat from the chaff when it comes to the Mag 7?
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- [00:01]
Kelly Evans
Gas, snacks, tolls. This trip is draining my wallet. Yeah, but we'll be with family. You're in a good mood. What's your deal?
- [00:08]
Metro by T-Mobile Spokesperson
What's my deal? I saved at Metro with no activation fees and I got one line of 5G for just $25 per month. Kept the phone I love and a 5 year price guarantee on my top.
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Kelly Evans
Text and data detour to Metro.
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Metro by T-Mobile Announcer
Get that more for your money feeling.
- [00:22]
Kelly Evans
Only at Metro by T Mobile. Just bring your number. $30 first month and $25 after with autopay not available. If with Metro or T Mobile in the past 180 days. Oh, could this vintage store be any cuter?
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Metro by T-Mobile Additional Voice
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- [00:34]
Kelly Evans
And the best part, they accept Discover. Except Discover in a little place like this? I don't think so, Jennifer. Oh yeah, huh.
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Metro by T-Mobile Announcer
Discover's accepted where I like to shop.
- [00:43]
Metro by T-Mobile Spokesperson
Come on baby, get with the times.
- [00:46]
Frank Pizignano
Right.
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Kelly Evans
So we shouldn't get the parachute pants? These are making a comeback, I think. Discover is accepted at 99 of places.
- [00:56]
Michael San Sataro Silva
That take credit cards nationwide.
- [00:58]
Kelly Evans
Based on the February 2025 Nielsen report. Your listening to the exchange. Here's today's show. Thank you very much, Scott. We are an hour away from the Fed decision. A little more from that to the Powell press conference. And the S and P is at a new record high with a new milestone under its belt. Welcome to the exchange. I'm Kelly Evans. Stocks are in a holding pattern for the moment. The S and P just below that 7,000 record level right now. The Dow and S and P down fractionally. The NASDAQ's up 10 points for 25 for the 10 year. And the precious metals are flying once again with gold. Gold crossing above $50 $300 for the first time today and having its best month. Get this in more than four decades. Silver also up about 8% after taking a similarly sized tumble yesterday. And the dollar stabilizing after hitting a four year low after the President seemed to shrug off concerns about it being down 10% over the past year. This will be one to watch after we hear from the Fed later on. And that's where we start today with the final setup for the Fed meeting. Steve Liesman is live in Washington. Steve, where we're not expecting any moves on the rate front today. It's more about the language and of course seeing the Fed chair you need.
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Steve Liesman
And it will be Fed Chair Powell's first time Kelly taking question since he accused the administration of launching a criminal investigation into a building renovation as a consequence of where the Fed is setting rates. You'll face Questions about that from the press. But also with the Fed on pause, what will it take to get them to cut again? Take a look at this. The Fed by its own account is on the high side of neutral, but they're divided by how much. Some say the Fed is at neutral, others say neutral is an eighth of a point away, others a full percentage point below where the Fed is right now. The Fed is similar divided on the outlook for the year. Eleven officials in the December projections dialed in one cut or less, eight had two cuts or more. Kevin Flannigan from WisdomTree telling me even if they do keep the door open to further rate cuts, we're at the end of the rate cut cycle. So there could be with the makeup of the committee a little bit more unanimity around the pause this time around. That is to bring back cuts. Gregory Daiko VY Parthenon says the Fed will need to see either clearer, more durable evidence of disinflation or a renewed labor market downshift. As for the markets, it's pricing in a 61% probability of a cut by June and 59% chance of a second cut by December. So some confidence but not overwhelming so that the Fed will get on with rate cuts eventually. Of course, much of what happens this year depends on who leads the Fed, who else the president appoints to the Board of Governors, how much legal authority the Supreme Court grants the president to fire governors. It's also going to depend on whether Fed Chair Powell decides to stay on as governor along with the outcome of an ongoing criminal investigation.
- [03:45]
Kelly Evans
Kelly a lot riding on all of those variables. It's almost like today is the side story. But I'll give us some glimpses, Stephen to all of that for now.
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Metro by T-Mobile Announcer
Thanks.
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Kelly Evans
We'll let you go get ready for that. Steve Liesman we'll see at the top of next hour the dollar index, of course coming off its biggest one day decline since April and falling to its lowest level since 2022. We heard from the Treasury Secretary this morning, Secretary Bessant doubling down on supporting the greenback's strength, saying sound policies will help money flow in and telling our Sarah Eisen the US Isn't meddling in other markets.
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Metro by T-Mobile Spokesperson
Are we intervening in the currency market right now, strengthening the yen happening?
- [04:22]
Steve Liesman
Absolutely not.
- [04:23]
Metro by T-Mobile Spokesperson
Is that something you're planning to do? There was word that the New York.
- [04:26]
Kelly Evans
Fed was was looking for prices. Again, we don't comment other than to.
- [04:32]
Ron Krishewski
Say we have a strong dollar policy.
- [04:37]
Kelly Evans
And on that no comment. We saw a big move in the yet. I mean he did say no to her initial question. And look at what the yen did in response. Big move directly following that, it's trading around 153 right now as it continues to strengthen. For more on the moves in the currency market, let's bring in Rick Santelli. Rick, unpack this a little bit for us.
- [04:55]
Rick Santelli
You know, first of all, I don't know any of my sources or the way I monitor these markets so closely that really believed that the US would be intervening on behalf of the Japanese selling dollars and buying yen. So I'm glad that Bessen so quickly said no because I just don't sniff that in the air. But much more importantly, kind of going against what the President kind of flippantly said yesterday, strong dollar policy. You know, I don't know that the administration, I know Scott Bessen understands, but having a reserve currency gives you lots of leverage in other areas. Okay. And I think whether it's foreign policy, there's a lot of pluses. You don't want to lose that. And that big move in the dollar yen you're talking about, it was real. However, put a two day chart up. We still didn't get above yesterday. So we need to give some context here and the greater context is how counter trend this bounce in the yen is. Let's look at this. The dollar yen on the 13th of January traded a one and a half year high against the 22nd of January. The euro traded a 35 year high against the yen. On the 22nd of January. The pound traded a 17 and a half year high versus the yen. So the moral of the story here is, is that we don't want the President going out there talking about a weaker dollar. Treasury Secretary should do what all treasury secretaries do and say we believe in, you know, strong dollar policy and just let it be. You know, the President likes to sanction and do tariffs. A lot of the leverage he gets there comes from being a reserve currency. Kelly.
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Kelly Evans
I don't think they think that's in doubt, Rick. I mean what I hear is an administration that is pretty comfortable that despite everything you're reading about online on social media about dollar debasement and losing the reserves and all the rest of it, that they don't see that playing out and the data is not there to support that either. And so what are traders saying that we could still weaken from here? We were in the 80s in the early 2000. So these levels are not low by any means. Historically?
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Rick Santelli
No, no, no, no, no. Historically the amount of time the dollar index really after like oh, 3 is spent, over 100 is prior, is minimal, really is minimal. And I agree that the debasement trade, I don't believe in that. The reality here is, is that it's a fiat currency trade that move gold and I think the dollar and a lot of other foreign exchange areas kind of get caught in the kind of tornado of that.
- [07:29]
Kelly Evans
The only real substantive thing I wonder about, and I agree, I think a lot of people are piling into metals now. That's just kind of a meme trade. But the substantive move is this weakening in the yen because when the treasury secretary said, no, we're not involved, are traders now going to pile back on and push that back up towards 160 now and almost kind of push them to, to get involved?
- [07:49]
Rick Santelli
Well, here's the thing. I definitely don't see the US Intervening, but that doesn't mean the bank of Japan wouldn't get nervous should a resurgence in selling the yen occur again, even though history dictates that they should probably not intervene. I think that may be a possibility.
- [08:05]
Kelly Evans
Yeah, absolutely. And there it is again. You can see a little bit of that weakness after those comments this morning. Back up to 153. Rick, thanks very much. Rick Santelli, thank you. Now, while Chair Powell's press conference could kind of get into politics today, let's say my next guests are laser focused on what he will say on the labor market because that will ultimately determine the pace of rate cuts and the dollar this year. Joining us now is Claudia. Sam is chief economist at New Century Advisors and Stephen Whiting is the chief investment strategist at CIO Group. Welcome to both of you. Steve, I'll just start with you and the expectations and no move today, but do they leave open concerns about the labor market or do they get rid of those with more hawkish tilt, do you think?
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Steven Whiting
Well, private sector employment rose 29,000 per month on average in the fourth quarter. Now, again, we've got to remember this is a quarter that's tracking close to 4% GDP growth for the third consecutive quarter. There were a few distortions in private sector employment from the government shutdown. So it's a slowdown in the labor market that's very real. While massive growth in data center spending is pushing up gdp. I think the Fed's perspective, they don't have a GDP target. They have labor market concerns. So I think it's very plausible that if they can see inflation subside deeper into 2026, they're going to be focused again on the labor market. And probably take some additional action about.
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Kelly Evans
The you know, we talked to Mike Froli at JP Morgan a week or two ago and they've come out and said they don't think there's going to be any more rate cuts. And I said to him, well what about the weakness in the Labor Market, this 29,000 pace you mentioned? And he said that's the new normal. The new normal is between 0 and 50 for a healthy labor market.
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Steven Whiting
The reality is if we're seeing a technological force and demographic forces too, which little more complicated but a technological force push up structural unemployment, there's little the Federal Reserve can really do about this and still meet its inflation mandate. But I don't think the Fed will stop trying. Right. So in that case we think that the Federal Reserve will still try to act with countercyclical policies and push us a little bit lower and better that they do that that eventually plunge us back to zero rates in qe.
- [10:11]
Kelly Evans
So you think the bigger concern, in other words, you want them to ease a little bit now so that we don't have an economic blow up that results in zero interest rates again.
- [10:18]
Steven Whiting
Well, we can't always prevent every economic blow up. Yeah, but there are all sorts of instabilities. There are some financial instabilities. There's difficulty meeting employment and inflation mandates in a period of technological changes. So all of these things are hard for the Fed. I think that 175 basis points and rate cuts has given them a pause today. They're in the neighborhood of doing the best they can.
- [10:40]
Kelly Evans
Claudia. Sam, are you in the camp of more cuts here or no?
- [10:45]
Metro by T-Mobile Announcer
I expect there will be more cuts, not imminent. And I do think the Fed is in a position. They've done 75 basis points of cuts late last year. There is fiscal support coming on early this year, household and business tax cuts and there's some sign in the data that the labor market may be stabilizing. The unemployment rate kind of leveled off late in the year. So I think the Fed is in a place where they want to gather evidence about what's happening in the labor market and gather a lot more evidence about what's happening in terms of inflation. I just think it's going to take some time but they are still pointed in the next move is down, not up.
- [11:21]
Kelly Evans
But it sounds like you're saying you're not sure the next move should be if the chair sounds like you this afternoon with Dow's going to be down a thousand points.
- [11:30]
Metro by T-Mobile Announcer
No, I think they really want to stick to the Evidence and the economic conditions. This, this is a Fed that has been in risk management mode for years. Like this really is a defining characteristic of the Powell Fed. And they moved on. Downside risk to employment that seemed to be building. Those seem to have backed off some. We still have elevated inflation. Inflation is still running above the 2% target. There is a risk that we get stuck kind of close to 3 and not 2%. And the Fed needs to be sensitive to that. There are some signs in the data, and I think Powell may mention this, some signs that we are going to get some relief on the inflation side that that's turning. But they just want to build the case before they start cutting further.
- [12:11]
Kelly Evans
I forget who it was on the show a few days ago, Claudia, who said the President doesn't realize that Powell is the biggest dove on the committee. Right. Because he seems to be staking out a position where, where people could differ and they could, they could say more what you're saying, they could say there's a risk that this becomes entrenched. 3% is the new 2%. The Fed's not going to finish the job. Powell actually has usually taken the other side of that so far. I mean, they did the cuts last year. He's talked about productivity. He seems to be more sympathetic to the labor market. Do you think that's correct?
- [12:42]
Metro by T-Mobile Announcer
Well, so Powell is very cognizant of what's happening in the labor market. And if we think about the 175 basis points of cuts we've seen in the last few years, they have been motivated by trying to shore up and insurance to the labor market, like inflation is elevated, but inflation is not elevated in a way that you want to risk a recession over it. So, and I think Powell sits very much in the middle of this committee. There's, there's a wide disagreement. There has been for several years now. What's happening with inflation? What is it going to take to get inflation down? There's a lot of disagreement. I think Powell is very aware of the labor market. The Fed has moved to support the labor market. But you know, inflation is an issue too. So it's a big balancing act and he's done a good job with it so far.
- [13:23]
Kelly Evans
To both of you, Claudia, first to you. Are we going to import support inflation because of what's going on with the dollar? Does anything happening and that you see all of the discussion about this, is there anything that you're worried about?
- [13:35]
Metro by T-Mobile Announcer
Well, so the piece of evidence the Fed wants to see right now is goods inflation starting to turn down. That's been the reasonable base case. The tariffs pass through. We see that extra inflation that's coming from goods subside. A weak dollar could, you know, put put some pressure in the other direction. Like we need to see that improvement. So it's not a good sign. But these aren't huge effects. I don't want to like over issue of the dollar being weaker.
- [13:59]
Kelly Evans
It does make me scratch my head a little bit, Steven. And this is for another discussion. But you know, in the literature, when you look at what Stephen Myron was writing about before he joined the administration and kind of this reorchestrating of the trade system, to Rick's point, you want to keep the reserve currency but maybe weaken it and do all these things. The concern from tariffs is that the dollar would strengthen to offset that impact. And yet the opposite is happening. So if they run into a situation where we still have tariffs, 30 billion a month or whatever, it's still there and we have a weaker currency, that could potentially be a double whammy in terms of that imported inflation issue.
- [14:33]
Steven Whiting
The chance that we're going to see sort of somehow a spiral I think is relatively low. But I just think clients across the world, our clients, the CIO group, we're seeing lots of concerns that the US is going in an independent direction, that it bears the costs of global tariffs, that there have been very clear things that have happened, some cost to have this trade uncertainty. We've seen tariffs drives $185 billion last year and yet we've seen manufacturing employment decline every month since April. Right. So the costs of uncertainty are very high. And you know, we take a look and you were talking about this earlier, I mentioned 4% GDP growth for the third consecutive quarter and yet the strongest performing assets are gold and silver. So this type of uncertainty is very concerning for portfolios and for investors. Barring that, we should be able to come out of this and put together a pretty strong expansion. So it's very important that US policy uncertainty come down.
- [15:29]
Kelly Evans
So do you then stay exposed to US equities which have continued to hit new highs International, I mean there's a lot of the stock markets globally seem to be quite merry about all of these developments.
- [15:40]
Steven Whiting
Ironically, the US does some things exceptionally well. Software commercializing, AI a good deal of what we do in health care. But we've incrementally moved to add non U.S. assets. Right. And that is definitely to get exposure. And year to date we're 4% stronger in non US equities than we are in the US and we're keeping allocation to the CIA group and things like assets like gold, which are again like you said, behaving like a meme stock.
- [16:07]
Kelly Evans
But you're in it, you're in the trade. You're not fading it yet. That's interesting, not jumping out just at this moment. We appreciate both of you joining us to kick things off. Obviously it'll be a busy next hour. Claudia Sahm, Steven Whiting, we appreciate it. Coming up, three MAG7 companies are also on deck to report results after the bell today. We'll tell you how high or low the bar is ahead of those prints. But first we'll hear from the commissioner of the Social Security Administration on that program and the launch of Trump accounts for newborn babies. JP Morgan I think is the latest company to say they'll match contributions. 45 minutes until the Fed move on. Interest rates or lack thereof. We're back after this. This is the exchange on cnbc. Gas, snacks, tolls. This trip is draining my wallet. Yeah, but we'll be with family. You're in a good mood. What's your deal?
- [17:00]
Metro by T-Mobile Spokesperson
What's my deal? I saved at Metro with no activation fees and I got one line of.
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Kelly Evans
5G for just $25 per month.
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Metro by T-Mobile Spokesperson
Kept the phone I love and a 5 year price guarantee on my top.
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Kelly Evans
Text and data detour to Metro.
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Metro by T-Mobile Announcer
Get that more for your money feeling.
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Kelly Evans
Only at Metro by T Mobile. Just bring your number. $30 at $25 after with autopay not available. If with Metro T Mobile in the past 180 days, ABC's David Muir, the most trusted anchor in America.
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Michael San Sataro Silva
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Kelly Evans
Thank you for making World News Tonight with David Muir, the number one newscast in America. Most trusted, most watched. David Muir on ABC Guys, it's no use putting it off.
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Kelly Evans
That's tommyjohn.com comfort Tommy, John comfort perfected the Treasury Department's Trump account. Summit is underway in Washington. We've been hearing from a number of high profile players there all day long. Sarah Eisen joins us now with Social Security Administration Commissioner and IRS CEO Frank Pizignano, a familiar face to our audience as tax season kicks off. Hi, Sarah. Hi, Kelly.
- [18:25]
Metro by T-Mobile Spokesperson
It's good to see you. Yes, he used to run fiserv and now is in charge of, as you say, the Social Security Administration and CEO of irs. Rick, it's good to see you again.
- [18:33]
Frank Pizignano
Great to see you.
- [18:34]
Metro by T-Mobile Spokesperson
So, so we're here at this event and it's all about the Trump accounts, which are now law and people can opt, opt in here we have that going on. We have tax filing season starting. Is it going to be more complex this year because of all the changes?
- [18:47]
Frank Pizignano
Well, of course, change always creates more opportunity to make things better and cause more quality control. So we went through a huge quality control test and runs to make sure everything was in good shape. We declared Monday was first day of filing season, which was on time, maybe even argued by some early and you know, we've processed millions of tax returns already and began refunds coming out for those early filers.
- [19:21]
Metro by T-Mobile Spokesperson
I would imagine you're getting them early because people are expecting bigger refunds.
- [19:25]
Frank Pizignano
Well, yeah, I mean we, we always have a tranche that comes in before and we don't start the processing till filing season. But you know, we already are sending refunds out on some of those.
- [19:38]
Metro by T-Mobile Spokesperson
What's your, what's your guesstimate on how big the refunds will be this year?
- [19:42]
Frank Pizignano
Well, I think we think there was going to be, you know, let's call it these are different estimates out there, but you know, call it 200 billion more of refunds. Individuals will get, you know, $1,000 or more, some would argue 936, but it's all stimulus now. Also remember, this is going to reduce people's deductions for this year 26. So it's a double effect. You should expect us to have the best filing season ever. You know, as we did at ssa, we're producing the best numbers ever for the public and that's what we're going to do at IRS here, too.
- [20:25]
Metro by T-Mobile Spokesperson
What do you mean you're producing the best numbers?
- [20:26]
Frank Pizignano
Well, if you go to wait times in field office, wait times on the phone, amount of time it takes us to turn around a disability claim, amount of time to take it apart, your people.
- [20:38]
Metro by T-Mobile Spokesperson
Now after Doge, how are you doing?
- [20:39]
Frank Pizignano
Well, it has nothing. You know, here's the way I look at it. First of all, we are using technology. We are right now are about to pierce 100 million digital users for SSA and we will roll out in the Next few months, a mobile app that completely transforms how if you look at our transaction volume and you'll see this happening at irs, it's more online than it is in person. You know, the largest thing we do, we, we had 29 hours of downtime on the web. Now we have none. Serving the American public better. And what you're going to see during this tax season is a digital first agency which is able to take all the changes and deliver both more efficient. Exactly.
- [21:35]
Metro by T-Mobile Spokesperson
That's why you did with fiserv. So, Frank, there was this revelation that came from the Social Security Administration that members of DOGE, when they were, were working here, we're able to obtain private and sensitive information. Can you just tell us what happened with that information and what's being done about this?
- [21:52]
Frank Pizignano
I mean, right now, right now, you know that's under review, right? There was a, there is a series of law cases going on. And I think though, that the people had, is all before my time as commissioner had, had assigned access. These were not people who broke into a system to get information management had given them access and they were, they were moving data around. And we did a total review. We saw it and we reported on that occurred.
- [22:27]
Metro by T-Mobile Spokesperson
But you don't know what's happened, what they've done with that data?
- [22:29]
Frank Pizignano
Well, I don't think, I think we do and I think it'll all come out. But I would say, you know, we're doing a triple review. But I would say, you know, America's, America's data is secure and in good shape.
- [22:42]
Metro by T-Mobile Spokesperson
Will there be charges here?
- [22:43]
Kelly Evans
Is that.
- [22:44]
Metro by T-Mobile Spokesperson
We don't know yet.
- [22:45]
Frank Pizignano
No. I mean, there's, it's a much larger. These were all cases that got derived, you know, way before, during that time period where there might have been more chaos than required. And right now we have complete stability.
- [23:03]
Metro by T-Mobile Spokesperson
All right, well, keep us posted on that. If we do go into this partial government shutdown, what will that mean for tax filers and more importantly, refunds? Does that get delayed?
- [23:12]
Frank Pizignano
No, we, we, we work through, we work through shutdowns and people don't get paid. And what I saw was the great workforces at IRS and ssa. I mean, every field office was open at ssa. We had, we had people, people in working on all the preparedness for tax season. I mean, that was an unfortunate democratic shutdown, but it was not anything that was going to break us because we know how to come in and do the job. And you know, on the 24th and the 26th, they were declared holidays and we gave volunteers the opportunity to come in. And they came in at IRS and they wanted to get the work done for tax season. And we opened offices at SSA and 66% of people volunteered. We have great career workers that want to do the right thing for the American public.
- [24:07]
Metro by T-Mobile Spokesperson
So that's good that people's refunds won't be delayed. It was great to catch up with you here at the Trump Account Summit. Frank Bicnano.
- [24:13]
Frank Pizignano
Oh, my pleasure.
- [24:14]
Metro by T-Mobile Spokesperson
Good to see you. The commissioner of Social Security Administration and now CEO of the IRS as well.
- [24:18]
Kelly Evans
Kelly back you try, you know, I've heard 35 hundred, 30 $800, Sarah. It's going to be, you know, the big, biggest in history, I guess tax.
- [24:27]
Metro by T-Mobile Spokesperson
Refunds, these $200 billion, I mean that's.
- [24:30]
Kelly Evans
Not, that's, that's a boost, nothing to sneeze at, as they say. Sarah, thank you very much. Sarah Eisen, Coming up, shares of Texas instruments soaring nearly 10% today after stronger than expected guidance and a 70% surge in fourth quarter data center revenue, which they said will now be reported as a separate business segment. We'll have more movers after the break. 35 minutes until the Fed decision. We're counting down to that moment at 2pm Eastern. The exchange is back after this. There's so much more to enjoy when you fly in Emirates economy more legroom, delicious regionally inspired meals, complimentary free flowing drinks. And with the latest movies, TV shows, music and live sport, some of the best entertainment in the skies and our family services. Make your journey simple and fun. Plan your next trip and start the.
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Metro by T-Mobile Spokesperson
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Kelly Evans
Fly better gas, snacks, tolls. This trip is draining my wallet. Yeah, but we'll be with family. You're in a good mood. What's your deal?
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Metro by T-Mobile Spokesperson
What's my deal? I saved at Metro with no activation.
- [25:41]
Kelly Evans
Fees and I got one line of.
- [25:43]
Metro by T-Mobile Spokesperson
5G for just $25 per month. Kept the phone I love and a 5 year price guarantee on my top.
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Kelly Evans
Tuxt and data detour to Metro.
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Metro by T-Mobile Announcer
Get that more for your money feeling.
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Kelly Evans
Only at Metro by T Mobile. Just bring your number, $30 first month and $25 after with autopay not available if with Metro or T Mobile in the past 180 days.
- [26:00]
Steven Whiting
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Rick Santelli
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- [26:30]
Kelly Evans
Welcome back to the Exchange, where we're definitely in a wait and see holding pattern here for the Fed decision shortly, but Seagate is helping to push the S and P above 7,000 for the first time today, soaring 20% after beating estimates and giving strong guidance. Its shares are now up 60% to start the year and that's only the third best performer behind SanDisk in Western Digital. All of those names are leading the S and P today as you can see there. Lots of green in the chip space and the memory names elsewhere. Starbucks is also higher after posting its first US transaction growth in two years with same store sales climbing 4% as new CEO Brian Nichols turnaround strategy appears to be bearing some fruit. That said, they've moderated their gains and are up 1% at this hour and they're only up 7% since he became CEO 16 months ago after leaving Chipotle. So again, something to keep an eye on in that turnaround there. Gold is hitting a record high and on track for its best month in over four decades. You got that right. Silver also back within striking distance of a new high. Pippa Stevens is here with a look at all these crazy moves.
- [27:29]
Metro by T-Mobile Spokesperson
Pippa and Kelly, it's important to remember that these gains come on top of silver and gold's big year last year, which was the best since 1979. Now the latest lag being driven by dollar weakness as well as safe haven demand from geopolitical uncertainties and falling interest rates. But by some metrics, this rally is starting to look very stretched. Gold is now trading at a 110% premium to its 200 week moving average. Now over the last 45 years, the largest premium has the largest the premium I should say has ever been is 75%. That's according to Matt Maley from Miller Taboc Stock. Now the silver move has been even more extreme with retail investors piling in. Still Citi raising its three month target to 150, saying that the metal is behaving like gold on steroids. Saxo bank adding that silver is increasingly showing signs of having moved into bubble territory. Now it is important to remember that unlike gold, silver is both a precious and industrial metal which makes up about 68% 60% of its demand demand meaning that demand destruction can and will kick in. But for the time being, retail is fueling this with Vander Research saying the metal is hotter than Nvidia seeing the largest single day retail inflow on record, nearly doubling the prior peak back in 2021 during the silver Squeeze.
- [28:45]
Kelly Evans
Kelly, that is wild. Every day. I just want you to give me all the hot. It's crazy, these moves that we're seeing. We appreciate it. Pippa Stevens. Let's get to Courtney Reagan now for the CNBC news update. Hi, Courtney.
- [28:56]
Metro by T-Mobile Spokesperson
Hi, Kelly. Homeland Security announced today that the border agency involved in the shooting death of Alex Preddy in Minneapolis last week and have been placed on administrative leave. And Ms. Now reports the two agents who fired shots have also met with the mental health professional. Standard operating procedure for any agent involved in a fatal accident. The Department of Justice telling a judge that it has reviewed, quote, several million pages of files related to Jeffrey Epstein and wrote in a filing that the review will be finished in, quote, the near term, but did not provide a specific specific date. The latest DOJ filing comes more than a month after the legal deadline to release all its files. And legendary rocker Neil Young is gifting the people of Greenland full access to his music catalog. Young says he hopes the gift will ease the stress and threats residents are getting from the US Government amid the president's push to acquire the Danish territory. Everybody loves music and can take you back to a special time in your life. So hopefully that works for some of those people that are feeling some stress.
- [29:49]
Kelly Evans
Kelly, Indeed. Courtney, thank you very much. Coming up, four of the Mag 7 stocks are on deck to report this week, but only one is in the green today. We'll discuss the top tech names to buy next with less than half an hour until the Fed decision. Much more right after the spring. The S and p crossing above 7,000 for the first time ever today with a helping hand from tech stocks. But it's the memory names leading the gains once again, while our malevolent seven thesis continues to play out in the mega caps. Nvidia and Tesla are rising today, but the other five are down. We're going to hear from Tesla along with Microsoft and Metta after the bell and from Apple tomorrow. Let's bring in Michael San Satara Silva, capital CIO, who has six of the Mag 7 in its top holdings and they're at each other's throats lately. Michael, welcome. You concerned about this kind of grinding? I hesitate to call it underperformance, but the triple Qs are roughly flat since October.
- [30:45]
Michael San Sataro Silva
Yeah, it's sad when flat is underperforming, right? You've seen such a rip in small cap and mid cap that everybody wants all stocks to work all the time. No, it's okay. You know, earnings, free cash flow are what matters. So they got to let them open their mouths. And I think as we go into earnings, you're going to see a lot of information coming out of the large cap companies, particularly these guys in tech. And as they continue to exceed investors expectations and their fundamentals are strong, I think the stocks continue to do well. It's so it's, it's okay if they're flat for the first few weeks of the year.
- [31:13]
Kelly Evans
Is this a Gemini problem?
- [31:16]
Michael San Sataro Silva
No, I don't think so. I think it's really company specific. Right. If you look at Microsoft and you look at their last quarter and they're going to open their mouth tonight, you're left with a company whose supply is not meeting their demand. Right. They need more compute power. They're working real hard to add that power, but that's going to take some time. We've seen Azure growth, you know, decidedly better than expected and accelerating last quarter that 36, 37, 38% type of number. Now I think we'll see a 38, 39% type number this quarter with another acceleration. There's no problem fundamentally with, with their business or with their ability to monetize AI. Gemini is doing great and Alphabet is capitalizing on it. But I think Microsoft has its own issues. Meta is an example. Also reporting tonight, we own Meta as well in the Virtus Sylvan focused growth fund. This is the cheapest of the stocks in the group. Even after the rally, it's up 20, 22 times forward. So you've got a relatively discounted stock, but they're spending hand over fist. Right. They had a big capex spend last quarter and you're left more specifically with okay, where's the new return going to come from? We know ad spend is good. We suspect that the ROI on that ad spend continues to climb. But what other ad and what are the revenue streams will we see specifically from Meta to justify the massive capex? We need to see some guidance on that too. So not just Gemini, we need a little bit more company specific stuff to say. Show me, show me what you're doing. Show me where the ROI is, show me where the capex is going. Show me how you're meeting demand. I think company by company, these companies are going to look better or worse, sort of one at a time.
- [32:51]
Kelly Evans
But I suppose there's two schools of thought on this. One is the Yardeni research where I borrowed that kind of malevolent seven idea from, which is Basically that AI has put them all in each other's previously on Very well Protected Moats. So, you know, Microsoft and I mean, everyone's trying to be a chat bot. Everyone's now, you know, even Google and Nvidia competing on chips like that was not a thing before the rise of AI. So that's one school of thought which is that some gains are coming at others expense and they can't all continue to rise in their own lanes. The other school of thought, it sounds like you're maybe more in this camp. It's kind of the Sam lesson idea that ultimately I will make all of these incumbents bigger, better, faster, stronger. And this is not really a big IPO story or anything like that. And the gains all accrued to the Mag 7. So is. Is that kind of the argument that you're making?
- [33:39]
Michael San Sataro Silva
You know, I think, I think you have to go a little bit. I think you have to go company by company. To your point, I do believe that you're right in the sense that these guys are definitely competing with each other in places they hadn't expected maybe three years ago. But that doesn't mean everyone will win in each of their spots. Right? I don't see Meta, no matter how well they do in model delivery necessarily, you know, pushing Gemini out of the way and suddenly taking over search. However, I don't see Alphabet taking over social media the way Meta has. So they're still going to do all right in their lanes. The question then is how much of the total market can they dominate while the incumbents come up? I think you're going to see more and more pressure for competition in multiple industries across these guys. But right now we're still in those early stages, so it's a land grab. Spend as much as you can as fast as you can and make your processing on a watt per token basis as efficient as possible. Try to get to that maximum capacity cost ratio as fast as you can and you'll compete. I don't know if it's. I don't know if it's one or the other. I think it's probably a mix of the both. You're going to see winners and losers even in the mag 7, and even with the, with the guys that are up and coming. I think it's, it's a jump ball still.
- [34:57]
Kelly Evans
All right. And if nothing else, own ASML as you do and you can sleep well at night, I guess.
- [35:03]
Michael San Sataro Silva
Well, if you don't, if you don't own the memory, you might as well own asml. Right.
- [35:06]
Kelly Evans
Michael, thanks very much. Appreciate it.
- [35:07]
Michael San Sataro Silva
Thanks, Kelly.
- [35:08]
Kelly Evans
Michael San Sataro. Coming up, mortgage rates are breaking five straight days of declines and ticking ever so slightly higher today around 616. We'll get the latest reading on housing demand and talk about what a Fed pause today could mean for the key spring season. That's next about 20 minutes from the Fed's next move. And while the outcome is pretty much baked in for no move, Powell's commentary could still have a huge impact on mortgage rates. Diana Olich is here with more to explain. Hi, Diana.
- [35:37]
Metro by T-Mobile Additional Voice
Hi, Kelly. Yeah, mortgage rates barely moved at all this morning as markets are not expecting any move from the Fed today. Although of course, commentary, as you said, can always have the impact. But mortgage rates rose for the first time in a month last week with the average rate on the 30 year fixed going from 6.16% to 6.24%. And that caused a 16% drop in refinance demand. Home buyer demand was basically flat week to week mortgage rates were much higher a year ago. But that's not really exciting. Home buyers, in fact, in fact, homebuyers are backing out of deals at the fastest pace in nearly a decade. More than 40,000 signed home purchase agreements were canceled in December, representing 16% of all homes that went under contract. And that's according to Redfin. That's up from 15% in December of 2024. It's also the highest share since Redfin began tracking this in 2017. Now coming up to the all important spring market, home sellers are now outnumbering buyers by 47% and that is the largest gap in Redfin records that going back to 2013 and up 7.1 percentage points from November. It's interesting because inventory overall is actually falling, but that gap is still widening. So it's kind of an odd market and I would say very weak one heading up to the spring.
- [36:54]
Kelly Evans
I mean, normally if you told me that sellers were outnumbering buyers by 47%, I'd think prices were collapsing. The buyers could just say they could just name any price they want new.
- [37:03]
Metro by T-Mobile Additional Voice
No. And you'd also think that if sellers were outnumbering buyers by so much that inventory would be off the charts. But it's not. It's just that buyer demand is so weak right now that the sellers are outnumbering them and that's and you know, it's not going to help prices any because if you do have buyers in the market and there's a well priced home, you're still going to have competition for that.
- [37:21]
Kelly Evans
Exactly.
- [37:22]
Metro by T-Mobile Additional Voice
And most of it's on the higher end.
- [37:23]
Kelly Evans
Yeah. No. Or that kind of middle. People are complaining about a Facebook again the other day. Just getting outbid all the time. It's a weird market. Diana, thanks. We'll keep an eye on the ten year after the move today. The Fed decision coming up in about 15 minutes. And up next, Staple CEO Ron Krishevsky joins us with the issues they're seeing in the labor market and what it could all mean for more rate cuts. We're back right after this. My next guest says the Fed will only ease twice this year. Might be a lot for some people, but if the market wants more than that, it'll be disappointed. Joining me now is Ron Krishewski, the chairman and CEO of Stifel. They just reported better than expected earnings, announced a 3 for 2 stock split and raised the dividend 11%. We talked last year, Ron, about how strong a year you were having. So no surprise. But three for two, who can do that math?
- [38:10]
Steve Liesman
Well, that's the idea, Kelly.
- [38:11]
Ron Krishewski
I figured that when I come on, you won't know if my stock was up or down if I do a 3 for 2 stock split. So that's 2 for ones too easy. So I'm going to make you do some math here.
- [38:22]
Kelly Evans
You know, it is a sign of the times the bank stocks have been so strong. Would you say that you view everything going on in the economy now as a continued tailwind or sometimes I feel like you like to get in there and tell us, like to maybe tamp down the enthusiasm a little bit. How are you feeling about things?
- [38:39]
Ron Krishewski
You know, I think things are pretty good. We've gotten to the point where the yield curve is, you know, getting normalized here. You know, not everyone is is counting on huge rate cuts to power the economy. I think that things feel pretty good here. But of course, in my experience, you know, 28 years sitting in the seat at Stifel, whenever things feel really good is when the surprise comes out of left field that no one's looking for. So you got to always be cautious, Kelly. You know that. You know me. We've been talking a long time.
- [39:09]
Kelly Evans
Indeed. And so what should the Fed forget, what they probably will or probably won't? I think with all that's up in the air right now, most people are actually curious. Like, what do you think think they should do? We have our mock Fed next hour. We had three of them. The practitioners thought they should cut by 50. The four who were more academics thought they should not lower rates at all. Where are you?
- [39:29]
Ron Krishewski
Look, I think right now a pause is appropriate. I think that, you know, the Fed still trying to get to its inflation target. Inflation has not been killed, although the labor market appears to be softening a little bit. So there'll be some room for a rate cut. But today they should pause. We should get the politics out of the Fed a little bit. There's, there's room for another 50 basis points. Just think in history, Kelly, if you think inflation plus 1% on real terms, that's about where fed funds should be. That would indicate about 3, 3.2% and that's, that's where we should be. So I'm not sure that it's the real big news today. More important is what the 10 year does and what mortgage rates do.
- [40:10]
Kelly Evans
Do you care about the dollar, about gold, silver?
- [40:15]
Ron Krishewski
Well, that's two different subjects in some ways or the same one if you want to combine them. You know, Kelly, the move in gold and silver relative to the s and P500, it's very rare that you'll see the commodities up that much and equities up that much. And in fact we just wrote a report that speaks to the level of gold relative to the s and P500 and it's very high. Gold's 5200 an ounce bounce to the S&P7000. If you do that over time, you will see that that probably means that stocks are sort of compressing against gold. And what it really probably says. Most of our viewers will think about this, but people like the market and they're running toward hard assets. And what are they running away from? They're running away from money. And the reason you're running away from money is the deficit and all this money running around. So it's a really, it's an interesting time when you use gold and equities in the same sentence.
- [41:11]
Kelly Evans
No, I agree. And yet you kind of, meanwhile you have all your bread and butter, right? You're making deals, you're, you know, doing corporate advisory. And all of that still seems strong, I would imagine. I mean that's what's driven a lot of these stocks to, to the levels that they're at right now.
- [41:25]
Ron Krishewski
Well, it certainly hasn't hurt. With Stife, we just had record revenue record earnings record, fourth quarter, record this, record that. I mean the economy is strong and in importantly there's been a lot of things. You know, the tax bill, the immediate depreciation helped a lot of businesses. You know, tariffs have been a little Bit of a headwind, but. But those seem to just be more of a negotiating tool. Overall, it's strong. And you know, I was just in Davos, Kelly, and Secretary of Commerce Ludnick actually uttered the words 6% GDP growth in 2026. Now, I don't know if that's correct or not, but I would say from his lips to the economic God's ears, if that happens, we're going to have a pretty good year.
- [42:09]
Kelly Evans
Well, I think normally we'd go, that's just political talk. But then you see the Atlanta Fed number at five and a half. You're like, I don't know, it's not, not as crazy as it once sounded, I guess we'll say. So you're not worried about inflation? We got to go.
- [42:21]
Ron Krishewski
But you know what? You know, Kelly, I am worried because I don't think that inflation has been, has been slayed. The dragon has been slayed. That's why what gold might be telling you. And so there is no more insidious tax on the general population than inflation. And so we need to make sure that inflation, which was, which was really harmful to the average American since 2020, you know, just go to the grocery, everything is just up. And when people say inflation is coming down or the rate of inflation is coming down, prices are up. And we have to be very mindful about inflation. No question.
- [43:04]
Kelly Evans
Absolutely. Ron, great to have you here as we're about to hear from the Fed. Great to have you. Appreciate it. Ron Krishevsky with Power. Lunch is up after the break. You've been listening to the exchange. Make sure you're subscribed to get each episode every day, same time, same place, gas, snacks, tolls. This trip is draining my wallet. Yeah, but we'll be with family. You're in a good mood. What's your deal?
- [43:30]
Metro by T-Mobile Spokesperson
What's my deal? I saved at Metro with no activation.
- [43:34]
Kelly Evans
Fees and I got one line of 5G for just $25 per month.
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Metro by T-Mobile Spokesperson
Kept the phone I love and a 5 year price guarantee on my top.
- [43:40]
Kelly Evans
Tuxt and data detour to Metro.
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Metro by T-Mobile Announcer
Get that more for your money feeling.
- [43:44]
Kelly Evans
Only at Metro by T Mobile. Just bring your number. $30 first month and $25 after with.
- [43:48]
Metro by T-Mobile Additional Voice
Autopay not available if with Metro or.
- [43:49]
Kelly Evans
T Mobile in the past one.