D (2:48)

Blind squirrels find nuts every once in a while. But essentially I think what happened is a combination of things. But businesses didn't seem to hire quite as many people during the pre holiday season. So the way the seasonal adjustments work in the modeling, when there are fewer layoffs in January, it ends up with this sort of perversely strong number on payrolls. Right. And I think that the texture of payrolls in January, plus all the revisions that we saw back throughout last year really tells the bigger story, which is that hiring has slowed very significantly. I would bet that when all is said and done, this January number is actually going to end up looking a little bit lower. But economic forecasting these days has become much more of a case of sort of guess the number more so than the kind of mosaic interpretation of what's fundamentally going.

C (3:31)

We do have the unemployment rate as well, so that gives us sometimes a better signal of like these, you know, at least it stopped going up. So we have that. So what is the broader narrative here? Is it one of do we need to create more hiring or has has the break even pace come down so much that, you know, we're kind of fine the way that things are?

D (3:51)

I think right now we're probably okay where we are. The prime age participation rate hit the highest level since I think April of 2000. Right. So we've reversed 25 years of a little bit of slack in the labor market. And I think, you know, there's multiple ways to interpret that. Maybe that might mean that more houses need to be dual income, or it might mean that slower household formation has just resulted in more individuals having to work in that age range. A number of different interpretations, but the point is that there isn't an enormous number of people that are looking for work that can't find it. They can't find it with no jobs available. Now that that is a little bit worse for people who are entering the labor market, especially college graduates. But my guess is that this year there are going to be more businesses that are looking to employ people to use AI tools that they maybe invested in last year. And who better than younger people who are most familiar with it.

C (4:40)

There was a number from our friends at Revelio Labs, Steve, that said $65,000 is the entry level salary, which was the lowest in since 2021. So that, you know, on top of the unemployment data, varsity was just freaking people out a little bit about what's happening to some of those entry level jobs.

E (4:54)

I think that's a big issue and something we're going to have to keep following. Workplaces change, technology comes along and you have two kinds of people. Those who are out there running around with their hair on fire, things are going to be terrible and those who say things are going to be wonderful. And I always like taking the in between on that because I don't have much hair to get on fire. So that makes things a little easier. I do think I've been puzzling all along about what to think about this January jobs report. And I think I came to had the most peace when I read Tom's report this morning, which was, you know what? It probably suggests some stabilization in the job market, but it's wrong to think that this is the place where we're stabilized because it's a little bit too strong and there's a little bit too much noise in it. So. And I think the market kind of came around to that like, like, let's just give it another month here to see where we're at. There's a massive expectation of job firing that may not have come to fruition because you didn't have the hiring in the early part. If you look at the, at the retail trade data. And so basically the market, especially when it comes to the Fed outlook, that is unchanged and that's really the story.

C (6:06)

So what is the Fed outlo outlook now? We've seen a slight, slightly less expectation of cuts. Is that, is that the way that I would put it in that marginal.

E (6:14)

Now I want to make an editorial point. Can I turn to camera one and make that editorial point just for guys, get me on camera on this. Hassett and Navarro don't talk about the jobs report before it comes out. Okay? Period, end of story. There's a reason, and I'm not saying you are front running the market here, but here's what happens is you get this kind of volatility and some of the volatility we saw today may have come from people who took a position based upon what Navarro and Hassett said. It's why they shouldn't talk about it. Okay.

C (6:45)

And they were talking.

E (6:46)

Thank you for giving me that opportunity.

C (6:47)

They were Talking about weakness, but still everyone's conclusion is that there's weakness. It's weird. It's like what they said is what everyone's concluding, right? It's just that the number on paper is, do you know what I'm saying? Like, so is the number strong and they're wrong or the numbers weak and so actually they were right. Do you know what I'm saying?

E (7:04)

I think if they were talking about the longer term, you know, demographics is the most important factor, right? We have two things. It's the dirty little secret of economics, Kelly, as you know, that if you can tell me what population growth will be 10 years from now and what productivity will be 10 years from now, I can tell you what growth will be. That's all I need, the demographic stuff. In fact, if you give me a second, I'll tell you the first, the first joke that Alan Greenspan I ever heard him tell.

C (7:33)

He said, I don't know any jokes of Alan Greenspan.

E (7:36)

It was a funny joke back at Jackson Hole years ago. He said, we don't know a lot, that's for sure in economics. Like we don't have formulas and stuff. We do know one thing. The vast number of people that are 35 today in 30 years will be 65. That's kind of funny, right? I got a little chuckle out of you. My point being is that the demographics are inexorable. If we're not going to have, if we're going to get rid of the undocumented immigration and, and by the way, the documented immigration, you're going to bring down your labor force outlook and you're going to bring down your break even rate on payrolls. You can't get away from that math.

C (8:12)

All right, so the point that we're about to get the 10 year auction results and you would say the Fed is priced still for one cut this.

E (8:17)

Year, two cuts this year. I want to give Tom the last word on that though. I don't want to take his word away.

C (8:22)

Do you think we're going to get two cuts?

E (8:23)

I want to know what you think the run rate is for jobs where.

D (8:27)

Yeah, I think like somewhere around like 50k a month.

E (8:29)

So Halfset Navarro. Right, about that.

D (8:31)

Yeah. I think that what they were talking about were talking about the revisions. I think it's like, oh, look, when they come out with this number today that says, oh, job growth during the first year of this administration was actually significantly worse than we had said. Don't worry about that. Actually, everything's still okay. I don't think that they had the number that was going to come out for January. It was more so knowing like from months ago that we were going to.

E (8:52)

Get talked today a day and two days before the jobs number came out and people took a trade on that.

B (8:57)

That was.

C (8:58)

Look, if we can just go back to Friday morning, the first Friday we get the report, we can I go back to normal. That's what we want.

D (9:05)

I can't tell you how many times I mess up thinking it was January versus February data. And I realized it was because we're further into February and I was already ready to look ahead to the next month. A few days will throw me off.

C (9:16)

All of us.

F (9:17)

Yeah.

C (9:17)

Thank you guys. Rick Santelli has the 10 year auction results. Rick, on a day where we've seen some for, for the recent month trend some pretty big swings. So how did it go?

A (9:27)

Oh yeah, we've seen some big swings because the market's been ahead of the data on the stock side. The auction, well, it did not go well. As a matter of fact, the yield at this auction of 10 years to the tune of 42 billion was 4.177. The when issued market right at 1 o' clock Eastern was 4.163. Basically a basis and a half of tailing. And boy, that always takes a lot of weight from the grade. It was weak bid to cover. Dealers took 13.4 versus a 9% 10 auction average that was the weakest in terms of ending up getting stuck with that buffet table on the dealer side since August of last year. I gave it a D plus dog plus. It was not a good auction. Yesterday's auction for three years was a good auction and we've seen a lot of good auctions. What makes this even more important, Kelly, is that every fourth auction is a fresh auction. Then you have two reopenings. This is one of the fresh auctions. So we want to pay particularly close attention to exactly how it's going to all turn out. And ultimately yesterday we closed at a lowest. Let me take that back. If we had closed today at 413 where we opened, it would have been the lowest yield close of the year. Obviously it reversed and it came back down. The takeaway is what you were just conversing about, that the short end is still up about five basis points in a two year. The long end is up about half of that and that really is the story. And we could look at percentages way down there in Fed fund futures and say, wow, they're still looking at one or two tightenings. You know what I was looking at for the March meeting? We sliced it down into single digits that fast and that same thing can occur on any given day. We have important numbers. So if you're looking more than one and a half meetings out, good luck.

C (11:24)

We've still got CPI this week to get through. Rick, thank you for now. Rick Santelli again, kind of a weak grade there for the 10 year auction but the three year as you said yesterday, did a little better than that. Here's a snapshot of the markets digesting it all and we've seen negative now across the board after the better than expected jobs report initially futures were up and that was up a couple hundred points. But as we talk about the shifting Fed probabilities, no longer. And once again the move lower circles around the ever changing software narrative. The IGV is back down after a 7% run higher in the past three days. Names like Unity, UiPath, HubSpot, DocuSign, AppLovin, they're all down more than 5%. Unity which had earnings today down 28%. Let's bring in my next guest who is sticking with tech despite some of these swings we're seeing and says concerns over circular investing capex are overdone. Joining us now is Nancy Tangler. She's the CEO and CIO at Laffer Tangler Investments. I was thinking about you Nancy, because wasn't ServiceNow one of your names or favorites over the years? So ServiceNow, you know, Salesforce, all of them from top to bottom to the names that we were just talking about. What do you make of the moves and what do you do with the names now?

G (12:35)

Yeah, well so we had exited Salesforce and Adobe Kelly on concerns that not necessarily the concerns the market has today but concerns over just that the management teams didn't seem to be getting in front of this and you know sales. Adobe has underperformed the market for five years and it's a negative return in an in a bull market. So we were, we got out of those stocks a while ago. I actually still think ServiceNow is a survivor and will ultimately benefit from the growth in AI and so we're picking our spots. We added to three names last Thursday that was luck, Microsoft, Palantir and Apple as a defensive tech and then we are looking for an opportunity to add to service. Now it just you don't want to get in front of a falling knife but we think it's a survivor. The investment business is about being mostly right so we hope we're right on this one. But it's part of our portfolio for sure.

C (13:36)

So I find this. You know, one thing I think that makes this challenging for investors is you have to know quite a lot. You have to be quite familiar about using all of these tools. So if you are an investor and you have a deep, you know, familiarity with ServiceNow or many of the others, and you can have a high conviction about whether it will or won't adapt. It's ironic because Bill McDermott is one of the people who talks the most about AI and the acquisitions that they're making and the ways that they're pivoting. So I wouldn't expect him of all people to be blindsided. But I read the research that says, you know, their model could be more easily replaced or disrupted. And so I'm just curious how you kind of have conviction about that one.

G (14:15)

Well, one of the things you have to do as an investor is you do have to bet on management. And he is one of the best managers in Wall Street. He's also hopping mad. So I think they will, they will make the pivots, I believe, and they will be successful. They're not, they're not in the dark about what's going on. I think Adobe has serious problems. But, but it's also important to note, you know, I was on your air, I was actually on your show on Deep Sea Day and we, we advocated buying and remember the infrastructure names got hit dramatically as well. And we were adding to those last Thursday, just as an FYI. But if you look at the performance from Deep Seat to Liberation Day name like broadcom was down 14 and a half percent. It ended up from Live Day till the end of the year, it was up 102%. Google was left for dead. We were adding it in our portfolio, our value portfolio in August of 2024. It was down 18% during that period, 100% from Liberation Day till the end of the year. So you just have to be aware that the algos are driving the short term. The hedge funds are jumping in and creating this volatility and you will be, I will be wrong about some of these names, but I do. It is a part of our portfolio and we've been able to outperform the S and P consistently for the last number of years. So I think you just have to have some courage in these periods and know that when you're wrong, you've got to exit. And that's what we did with Salesforce and Adobe.

C (15:44)

There's so many different ones I want to ask you about. Nancy, because market moments like these seem to be a rare opportunity. You know, there's only so many sectors in the market. There's only so many times one of them is going to trade down 20%, whether it's software, the others and to think through whether you get broad exposure, tactical exposure. Stay on the sidelines and wait it out. Like I, I just love hearing about this. Which brings us to a couple of other interesting areas to talk about. So, for instance, Netflix down another 3% today. I don't think you and I have discussed that one per se. It's trading below 80. I understand the concerns about whatever will or won't happen with the Warner Brothers deal, but I just wonder, does that one catch your attention to be in an Allah Google position going back, you know, a year ago?

G (16:25)

Yeah, I think once the narrative dies down, that's a name you want to step in and buy as a defensive streaming company. We own and part of one of our five for 25 last year, in addition to ServiceNow was Spotify and that portfolio. Those five stocks, even with ServiceNow and they were up like 28%. So I sent you a country song that I wrote with the help of Crock and Suno. Is that a threat to Spotify, for example? It may actually be a beneficiary. It may actually benefit Spotify. They seem to think AI Music will. They'll pivot into it. We think as. As investors. And we have a very modest starting position in Netflix and we'll be adding to it as soon as some of this narrative sort of slows down and we start paying attention to fundamentals because the earnings report was pretty good.

C (17:17)

Yeah, I can't believe I missed that. You have to send it again. As long as I can do the vocals because this is my dream. This is how I resurrect the childhood dream. Nancy, with the help of AI So a couple of other just in areas quickly. And you can just take whatever one you want for this last question here. Consumer staples have been ripping. Not sure how to think about that. We're finally seeing some price cuts on that side. Can't really tell if that's a positive or a negative. Industrials breaking out, you know, the kind of materials. Parts are still strong. Caterpillar has been, you know, and hardware obviously has been the trade. But that's not one that you and I usually discuss. So are there other international stocks of just. We just keep hearing people over and over again pounding the table. I mean, Marianne Bartels this morning said that could be a 10 to 15 year run, not even of outperformance. She said she thinks that and us are going to do well. So are there any there in particular that you think are, you know, are really attractive here?

G (18:10)

Yeah, so. So we think consumer staples is a trade. If you go back and look over the last five years, it's underperformed materially. But every sort of first quarter for the last few years we've seen those stocks rally and then they sell off. Consumer discretionary is a favorite and we've been expanding our exposure there. But last year we were increasing our exposure to industrials. You and I talked about ISE Manufact manufacturing was starting to show signs of recovery in the production side was expansionary for two months before the whole number improved. So we are exposed there and way overweight to the S and P, almost double the S and P weighting. And then we do own the hardware name. So you know, those are the picks and shovels that we've been talking about for three and four years. And so our value portfolio, which is really garbage, you know, is up 24 plus percent last year and it's up over 7 this year. So if you pivot at the right times, it's hard to do. We sort of do it at glacial speed to keep turnover down. But you will see the benefits as the market shifts. But you can't get this market to continue to go up without technology. Just not possible.

C (19:17)

All right, that's a good place Zenny to leave it. Nancy, thank you so much today. Really appreciate it.

G (19:21)

Thanks Kel.

C (19:22)

Nancy Tangler with Laffer Tangler Investments Coming up. How about shares of Generac? They're surging despite a miss on the top and bottom line. Today investors are focusing on their strong forecast helped by its growing data center business. We will talk to the CEO that next. Shares are at the highest level in more than three years. Plus Mazda, the Japanese automaker at its highest level in a year and a half. Its big bet on lower priced vehicles paying off in a big way here. We'll hear directly from them about that just ahead on the Exchange.

A (19:53)

This is the exchange on cnbc. Comcast business helps retailers become seamlessly restocking frictionless paying favorite shopping destinations. It's how nationwide restaurants become touchscreen ordering quick serving eateries and how hospitals become the patient scanning data, managing healthcare facilities that we all depend on. With leading networking and connectivity, advanced cybersecurity and expert partnership, Comcast business is powering the engine of modern business Powering possibilities restrictions apply. 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 MarketUpdatePodcast or find Schwab Market Update wherever you get your podcasts.

C (20:57)

Not every sale happens at the register. Before ATT Business Wireless, checking out customers on our mobile POS systems took too long. Basically a staring contest where everyone loses. It's crazy what people will say during an awkward silence. Now transactions are done before the silence takes hold. That means I can focus on the task at hand and make an extra sail or two. Sometimes I do miss the bonding time.

H (21:21)

Sometimes AT&T business Wireless connecting changes everything.

C (21:28)

Welcome back to the Exchange. Shares of Generac are soaring almost 18% today and that's despite a miss on fourth quarter earnings following a drop in residential sales. But who cares? The company is expecting stronger sales growth this year due to data center opportunities. With us now for more is Aaron Yagfeld. He's the chairman and CEO of Generac Holdings. Aaron, it is great to have you here. Welcome.

I (21:50)

Thanks for having me, Kelly.

C (21:51)

And I certainly don't mean to make light of what's going on on the residential side. I mean, was that a supply issue or a demand issue?

I (21:57)

More of a demand issue. You know that that side of our business really depends on power outage to happen. So we just didn't get a landed hurricane last year. So without the outages, you know, that business was, was slower back half of.

C (22:08)

The year because I'm thinking to myself, all I heard for weeks now, I guess was that in January with the big, the big ice, people were like, it was, I was, I was trying to imagine what must be going on with your business. So it's interesting that maybe there was some supply if there was a spike, but most of the time, if you know, four days in advance, who's going to install one of your, you know, generators with that, that period of time.

I (22:29)

That's true. But I will say, you know, we're off to a much better start at the beginning of the year than we ended the last year.

C (22:33)

And talk a little bit about the guidance. What are you seeing on both sides of the business now for 2026?

I (22:39)

Yeah, we actually think Residential is poised for growth next year. I mean, obviously, you know, we're assuming normal outage environment comes back. You know, we see some of that activity. It was, it was off 90% last year, year over year in terms of the outages. And that's just again, sometimes you get years like that where the weather doesn't, doesn't, you know, doesn't cause outages. But for the most part, you know that we're assuming that's going to return to normal and we've got a little bit of price in there as well, so that's going to grow. But, but the, really the headline story for us and you kind of, you picked up on at the beginning here is our commercial and industrial business which, you know, we launched a new product line geared towards large backup generators and obviously for the data center market, you know, there's a, there's a massive kind of birth of supply there. And so we're stepping into the breach, so to speak, and really ramping up our efforts around data center backup.

C (23:25)

Your shares are up 58% since January 1st. I mean this is extraordinary. And it echoes what's going on with Vertiv today. It echoes what's going on with Trane, it echoes what's going on with Lumentum and the Memory players and all the rest of it. How quickly. I would just love a little bit of illustration if you can. You know, we're many of us familiar with the kind of whole house generator you have. They're expensive. I mean they're several thousand dollars often. How expensive and how big is one for a data center?

I (23:50)

Yeah, so the individual gensets themselves are about three and a half megawatts in size, which is, you know, the size of a larger than a 53 foot semi truck basically. And the, you know, the ASP on those, the average sale price is about 1.5 million. So and a data center itself, you know, a fairly decent sized data center could have a couple hundred of those machines. A couple hundred on the ground. Yeah, so you're talking about obviously each project just being an enormous amount of potential revenue. And obviously with the number of projects with $650 billion of capex that's going to be deployed here by the hyperscale group just next year and here in 2026, the upside is staggering.

C (24:30)

So a typical data center might have a couple hundred of your commercial generators that each cost about a million and a half dollars.

I (24:37)

Absolutely, yeah. There are data centers being built today on the drawing board that, you know, take a gigawatt of power. So you know, you're talking about just a tremendous amount of backup power that's required to support that kind of an operation. And these are operations, they they can't have an even, even a second of downtime. Right. I mean, you need to have the true five nines of reliability because every second matters in terms of their commitments they've made to their customers. And, and it's just, it's untenable. So they have to invest in, you know, these types of backup assets to protect those revenue streams.

C (25:08)

So I assume we're talking about natural gas powered generators.

I (25:11)

These are diesel. These are diesel backup, actually.

C (25:13)

Diesel. Okay. Because I was going to ask if you could comment generally on the kind of availability and interruption or lack thereof of power for on the commercial side. Again, the Journal has some reporting about how there have been some issues with NAT gas availability. The pricing a little bit amid this general kind of rush for more power. How is that affecting your customers, so to speak.

B (25:35)

Speak.

I (25:36)

Yeah. So again, these are diesel sets because, because of what you said, you know, the reliability of natural gas, which is generally quite, you know, quite a bit better than obviously the reliability of our power grid, you know, in terms of uptime. But there are, you know, pockets of constraint, especially as you build out these networks. And you do have some other constraints in terms of being able to bring natural gas into certain areas of the country. And that is leading to some, some challenges. So using diesel backup, you have the fuel contained right there on site for, you know, for an outage to happen. You don't really have to depend on anything else. You can dep depend on your own resources, having your own diesel fuel. So NAT gas doesn't really play a role too much in at least on the backup side for primary power. Different story. It's not a market that we play in, but obviously feeding gas turbines and other forms of power that use NAT gas, that can be a consideration.

C (26:22)

That's fascinating. Aaron, please come back. We'd love to hear more about it as this build out continues.

I (26:27)

Absolutely. Thanks for having me, Kelly.

C (26:28)

Aaron Yagfeld with Generac. And speaking of energy, Pennsylvania Governor Josh Shapiro will join power lunch next hour. Power he's pushing PJM for an extension on the current price cap on power costs. That's first on cnbc. Interview is coming up in just a few minutes. And still ahead here, Schwab is lower again after their biggest drop in nine months yesterday on a competitors a tax planning tool. Fears of disruption are also going beyond stocks and to the labor market on signs it could lead to more layoffs. We have those details ahead.

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Order today at 1-800flowers.com/sxm. That's 1-800flowers.com /sxm. Welcome back. And we're watching these markets which have initially responded positively to the good jobs report this morning, only to sell off briefly had everyone negative. The S and P is now back in positive territory by seven points and the small caps are the worst performer today down about a percent. As for some of the other movers got to watch Mattel having its worst stay since 1999 with a 22% drop after it missed estimates on the top and bottom lines and gave weaker than expected guidance. JP Morgan downgrading the stock to underweight, saying Mattel is heavily reliant on the core toy business and especially Barbie, which has seen sales declines over the past couple of years and probably won't return to growth until 2027. For more on that story, cnbc.compro and quick check on Meta Bill Ackman's Pershing Square has taken a new stake in the company. Pershing says its Meta stake was 10% of its capital as of the end of the fourth quarter. The shares are about flat today, but of course have been on such a nice run. And Robinhood having its worst day in nearly a year after a mixed quarter with crypto trading revenue missing estimates and down almost 40% year on year. But the company is staying bullish on crypto and says diversifying into banking and wealth management this year will help offset some of that decline. Robinhood shares are down 11.5% to Christina parts and Evolis. Now for the CNBC news update. Christina Kelly. Alex Murdoch is back in South Carolina courtroom today appealing the conviction for murdering his wife and youngest son. His defense arguing there's a lack of physical evidence tying him to the crime and that the judge made prejudicial rulings that prevented a fair trial. Murdoch is also serving a separate 40 year sentence for stealing more than 12 $12 million from clients. The organizing committee for the LA Olympics is reportedly meeting today to discuss the status of Casey Wasserman as chairman. The Wall Street Journal reports the meeting was called after Wasserman's name recently surfaced in the Epstein files. Wasserman or Wasserman apologized after the emails became public. He has not been accused of wrongdoing, but several clients have left or have threatened to leave his talent agency since the email else became public. And Britney Spears has sold her music catalog to publisher Primary Wave. NBC News reported the price tag was $200 million. Primary Wave was also owns the rights to Steve Nick's music or Stevie Nicks and as well the from the states of Prince and Biggie Smalls. I would have thought she would have got more than 200 million for that, but it's a nice number. Yeah, that's a big pocket lint right. Just to have that. Christina, thanks. Coming up, we'll speak exclusively with the head of Mazda's North American business as the company finds a way to grow sales in the US despite the tariff threat. And it has to do with smaller vehicles. We'll do more on that next. With the shares at their highest level in a year and a half as.

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C (33:15)

Welcome back. Shares of Mazda are at their highest level in a year and a half on a 12% pop today. The automaker is targeting about half a million US Annual sales by the end of the decade, despite increased costs and the threat of tariffs. And they're doing it in a kind of familiar way, the crossover SUV that we see everywhere. Now let's bring in the head of Mazda's North American business, Tom Donnelly with our very own Phil LeBeau. Phil.

J (33:39)

Thank you, Kelly. Tom, good to be here with you. And we'll talk about the new CX5, which is in the background here. Part of a lot of your success here in the US But I want to start first off with your view about the state of the US consumer right now and what your dealers are hearing about people when they're coming in to look for buying a new vehicle.

H (33:57)

Sure. First of all, happy to have you here joining us. Yeah. The state of the consumer, the state of the industry right now. I mean, there's a degree of uncertainty. We hear from some of our dealer partners about consumers having a bit of anxiety in terms of making purchase decisions right now. We see it a little bit in some of our shopping dynamics and some of our shopping data where you know what's happening in terms of industry volume. But quite frankly, we are also seeing with some of our digital metrics where the overall shopping volume is still historically strong for us. So they may be extending their purchase decision a little bit, but they're still shopping.

J (34:31)

And that's part of what you're noticing, people taking a little bit longer when they want to pull the trigger on a new vehicle.

H (34:36)

Right. So specifically feedback we get from our dealers is if customers are making decisions in two weeks or three weeks, they're now taking five and six weeks. And again, we see with our digital shopping metrics in January and February, they're comparable to what we see in December. And December is historically one of the best months of the year. January and February are a little softer. So there's people out there shopping. They're just, just taking their time with their decision at this point to make the right decision.

J (35:02)

Most of your vehicles are imported from being made in Japan. The CX5 is a good example. You do have some Manufacturing here in the United States in Alabama, but there is a tariff impact here. How have you been able to mitigate that cost impact? And do you feel like there's enough certainty now that you can go into 26 saying, okay, we now know what the playing field looks like?

H (35:23)

Yeah. The way I would frame it is we know how score is being kept now. Right. So we can maneuver appropriately. We've made a number of different adjustments in the last, let's say nine months or so. So the plant that we have in Alabama where we build the 650, we are working to increase production there. We have a capacity of 150,000. We're at about 130,000 right now. So market reaction to that vehicle has been very successful. We're growing double digits year over year there with six, five, as you mentioned of. We'll talk about here in a little bit. Produced in Japan, it has been our best selling nameplate really since introduction 10 or 10 years or so ago. We're very confident in how the market will receive it as we talk about some of the enhancements we've made to that product. But we feel like we've been very nimble in the decision making we've made.

J (36:09)

Which is what you have to be with the CX5 base price little under 30,000, going up to 39,000. So you're in the sweet spot of that market when it comes to auto affordability. If it was made here in the US would you be able to lower that price even more?

H (36:23)

Let me talk about the affordability and that's something that's top of mind for consumers in every purchase decision or every industry at this point, as you acknowledge with CX5 starting at price of about 29, going up to about 38, 39 plus. We feel like the value and the content in this vehicle really positions us well. Best in class suite of safety features, the driving dynamics that Mazda is known for, the bold design of it, the expanded utility that we offer. So we feel really confident with this particular vehicle. So we feel like we're well positioned. And if you look at the range of our model portfolio, I mean we have a starting at price of 25 with the Mazda 3 going up to 60, where the average transaction price is 50,000 plus. We feel like we're working well positioned for the.

J (37:08)

Are you seeing increased demand for those people looking for a vehicle, let's say at 35?

H (37:13)

No question in two areas. So for instance, Mazda 3, which is our lowest, you know, our entry level vehicle, we've seen month over month, double digit gains over the last three months there, which indicates that people are absolutely migrating to that part. Talked a little earlier about certified pre owned. Now, while it's not a new vehicle, it's in that price point of 25 to 60, say 35. We had our best year ever. We sold more than 75,000, which is a significant number for us. But it just is indicative that people are shopping in that, let's say 30 to $40,000 range in a big way.

J (37:46)

And real quick, last question here. You mentioned something earlier. Explain this for our audience.

H (37:50)

Sure.

J (37:50)

Are you starting to see people now say I want a sedan instead of a crossover or hatchback?

H (37:56)

Yeah, we're absolutely seeing that. Where with Mazda 3, where we have a sedan option, the demand for Our sedan is 2 to 1, our hatchback version of that, which is a bit different than our initial forecast. We had expected that the hatchback would be about 2 to 1 to Sedan, but there's definitely an interest in a demand in the sedan. Mazda 3 especially the sedan still lives. No question.

J (38:17)

Tom Donnelly, CEO of Mazda North America. I appreciate you joining us and great.

H (38:21)

To have you here.

J (38:22)

Rainy weather in Southern California.

A (38:24)

Yeah.

J (38:24)

But we'll go get it one of these days. Kelly will send it back to you.

C (38:26)

Like my sedan. Gentlemen, thanks very much. Really appreciate it. Coming up, the viral post by one a startup CEO and his major warning about the labor market. And as we head to break, gold and silver are popping today. Although gold 1 1/2 percent, silver 4 1/2 percent, not too shabby. Different story for bitcoin though, which is back below 67,000 on a 2 1/2% drop. We're back with much more right after this. Brokerages joining software as the latest sector to get hit by growing fears about AI disruption. And today a new warning is going viral on suggesting that the market may still be underestimating the scale of the upheaval ahead. Deirdre Bosa explains in today's tech check. I saw this one, Deirdre. You know I did.

F (39:15)

I know you did. Your algorithm is feeding you all of this AI content. But you know, this actually went beyond tech circles to Kelly. And what it's essentially saying is that the gap between possible and here it is collapsing faster than anyone outside of AI understands. And so this post from Matt Schumer, he's an AI startup CEO. It really hit a nerve. So his honest version of what's happening in AI essentially comes down to this. AI doesn't just help him do his job anymore. It actually replaces the technical work. And he's warning that what is happening to tech workers is coming for everyone else else. Now critics are calling this a 5,000 word ad from a guy whose startup. Hyper. Right. Depends on you believing the hype. But love or hate the message, the market itself is backing him up by selling the stocks that progress is coming for beyond stock moves to the jobs story, it may be next. Salesforce just cut a thousand jobs. Workday cut 2% of its workforce. These are the companies that are being disrupted and they're already shrinking headcount while the companies replacing them are running with just a fraction of the people. Take Anthropic Kelly. It is a 4,000 person team that is disrupting companies that still have tens of thousands of people on the payroll each.

C (40:26)

I hadn't seen that about the layoffs at Salesforce. And where did you say workday?

F (40:32)

Workday was about two weeks ago. Salesforce was just, it was very quiet. Right. But you have Benioff saying big things like he could replace, you know, lots of people with AI.

E (40:41)

Huh.

F (40:42)

Amazon has said the same.

C (40:43)

Yeah, and look, at some point those numbers will flip and the disruptors will have more. I mean I firmly believe they will have more employees. The fact that anthropic already has 4,000, I mean that's actually pretty high number.

F (40:52)

Yeah, but will they have 70,000 like Salesforce does? I actually don't know if that's going to happen because they're starting their AI native, they're starting with these tools which is essentially what the post is arguing. And yeah, that's going to be different from company to company, but that's why we're talking about software.

C (41:08)

Software.

F (41:08)

Do you need a 70,000 person workforce for some of the software that's happening? I don't know.

C (41:13)

Yeah. All right, Deirdre, thank you very much. Appreciate it. Deirdre Bosa. Coming up, shares of the ad tech firm Mountain, well they're soaring on earnings and AI is also a big reason for that. CEO Mark Douglas joins us next with Mountain popping about 30% today. And speaking of AI Vertiv, I mean it's all about. But look at these moves in the market. It's incredible to watch an innovation just fully unleashed like this invertive, which was a SPAC by the way a few years back, is trading at an all time high after a beat across the board and strong full year guidance tied to AI driven data center buildup. Its orders are up 250%, its backlog has more than doubled and the shares are up 19%. Right now. We're back in a moment. Welcome back. Shares of the digital advert Mountain are soaring today after their fourth quarter earnings. They were record, by the way. Revenue grew 36% year on year. Net income nearly 35 million. That compares to the net loss of 4 million in the quarter early a year earlier. The shares are now up about 15% month to date, still down from the IPO last May. For more on the earnings, the ad landscape and I, let's bring in Mountain CEO Mark Douglas. Great to have you here, Mark.

E (42:29)

Welcome.

B (42:30)

Yeah.

C (42:31)

Okay, so everything is about AI right now. And you, by the way, you've been saying this. So what are you experiencing? How are you using these tools firsthand in your business?

B (42:40)

Well, we're using it throughout our business for all aspects. Coding, sales, marketing. In the marketing side, we introduced Quick Frame AI, which AI creative tools we are now putting out, I think just in last week, three generated videos. Anything you see from Mountain that doesn't have Ryan Reynolds in it is AI generated.

C (43:00)

Why can't the Ryan Reynolds one also be generated? I feel like he would support that at some point. You just got to.

B (43:07)

There's a union in Hollywood that's not so keen on that. But we're using it. And what that's doing is those AI tools are allowing our customers to create commercials faster and at lower cost. And I mean substantially lower cost.

C (43:21)

Could you give an example by.

B (43:22)

Yeah, so we could. I'll give you a personal example. We put out a video last year week, had like, basically it was about the show, heated rivalry, had hockey players in it, fully AI generated. That would have taken six weeks, maybe $75,000 to create an actual hockey rink. It was done in under a day, nine versions by the second day and cost $500.

C (43:44)

Wow. Really?

B (43:45)

Fully AI generated. You go to We Are Mountain, our Instagram account. You can see it.

C (43:49)

So when you watch that, what are you. We were just talking about this viral AI post by the guy who's like, you don't understand. Understand what's about to happen. You're in a business that might presumably be at the receiving end of that a little bit, but you're watching these tools make what you do easier, faster, cheaper. But so what are you thinking as you watch that?

B (44:06)

Well, the thing is, is that I think the prediction is that a lot of people lose their job. We're actually creating more work. So I didn't create that video. We hired. We actually went on Instagram, found in a really good creator, and then he used our tool in order to Create that video with general. He's busier than ever, doing a lot more content. So I think what you're seeing is the cost is coming down like the production costs, but the amount of activity is going up substantially. And that's actually just doing more for our customers and more for the people creating all that video.

C (44:37)

I totally believe that. I mean to me it seems. What did the Internet do? I mean look at the like we jobs changed, right? Those who use the Internet more effectively in jobs that were kind of Internet based or driven were more plentiful and in demand. I mean why wouldn't a similar version of that happen now?

B (44:52)

Yeah, and it's democratized. So you know, at Mountain our goal was democratize television advertising. Make it so any size business can access television as an advertising medium. And the biggest obstacle was creative. Well now we're democratizing, building the creative, also leveraging AI models. We're partnering with Google, with Open Air with a bunch of different companies on the models. But we've created an environment, environment that makes it really easy for Very, very interesting.

C (45:18)

Okay. So on the client side, you know, whoever is on the receiving end of all these ads is that the Netflix is or more traditional tv. Just what does that look like right now? I mean where are you experiencing especially when some of these businesses are in periods of transition, shall we say?

B (45:32)

Well, they're not in any way resisting that. I think they just see, they're seeing the same thing. That growth in the overall media industry is going to come from the S and P market market, small and mid sized businesses and they want the creative to be of high quality and the quality that we're able to produce, our tools able to produce is there and it's only obviously only going to get better. So they're embracing it. I think some consumers want to know what is AI generated and what was filmed. And I agree with that.

C (46:02)

I do too.

B (46:03)

Yeah, absolutely. You know, in email marketing we have a can spam app.

C (46:07)

Right.

B (46:07)

That kind of sets rules. I think this should be something similar for AI generated video.

C (46:11)

And how is just like a bug on the screen or some.

B (46:13)

Yeah, exactly. Or the Mountain logo would be good.

C (46:17)

Or just a business logo to make it clear where this came from.

A (46:20)

Yeah.

C (46:20)

A final comment on how you think these different verticals are doing Netflix versus the others. We talked a couple of years ago about what a fan you were of the shares at that time and obviously they've hit a soft patch on this whole WBD drama. Any comment there?

B (46:32)

Yeah, I think Netflix, I mean the whole drama in terms of, you know, who's going to buy Warner Brothers. I still think that it kind of looks like it's leaning towards Netflix, but my opinion is it's nice to have for Netflix, must have for Paramount. And when it's a must have, I don't think, you know, kind of the final act has been played. I think in terms of looking at Netflix as a stock, I continue to say their ad business is a big backlog of revenue. One out of every two new subscribers, they send a pass or signing up for the ad tier, they haven't yet fully monetized it. And that's just a growing backlog of revenue as they get better at monetizing it. I would personally, I think it's an opportunity to buy. Right.

C (47:12)

That's fascinating. Quick final question. You mentioned that, like, let's say you're a small business and it now costs you only 5, $500 to make an ad. That would have been 75,000 in the past. And maybe I'm not comparing making the right comparisons. How much would it cost to air that on Netflix? Like how accessible really is it to get now small businesses to get their, their ads out there?

B (47:29)

Well, I think for Netflix and others, the cost is actually fairly attractive. It's comparable to similar costs at, on Instagram or Tik Tok, and in some cases even a bit less. So there's a lot of opportunity for small business.

C (47:44)

Mark, thank you. You can fly back over El Paso. Anyway. Mark Douglas from Mountain. Appreciate it very much. That's it for the exchange. Power lunch picks up right after this break.

A (47:57)

Building a portfolio with Fidelity Basket Portfolios is kind of like making a sandwich. It's as simple as picking your stocks and E ETFs, sort of like your meats and other topics and managing it as one big juicy investment. Mmm. Now that's pretty good. Learn more@fidelity.com baskets Investing involves risks, including risk of loss. Fidelity Brokerage Services LLC Member NYSE SIPC Member.