The Exchange (CNBC)

Episode: Market Highs, Memory Mania & Playing Defense 1/7/25
Air Date: January 7, 2026
Host: Kelly Evans

Episode Overview

This energetic episode dives into the day’s key market stories amid record-setting stock highs and dramatic swings in the energy, housing, and tech sectors. The panel addresses the impact of U.S. policy moves on Venezuelan oil and U.S. housing, the meteoric rise of memory and chip stocks, and the evolving playbook for investors as 2026 gets underway. Guest strategists and analysts weigh in on what’s fueling the market rally, warning signs to watch, and where to play offense or defense in the months ahead.

Key Segments & Analysis

1. Venezuelan Oil: Supply, Sanctions, and Market Impact

Timestamps: 01:03 – 08:01

• Brian Sullivan (CNBC correspondent) reports on the U.S. deal to process and distribute sanctioned Venezuelan oil. The expected shipment is 30–50 million barrels to start, possibly continuing “indefinitely.”

• Valero shares pop as it specializes in refining the heavy crude from Venezuela.

• Key uncertainties:

  • How quickly can Venezuela ramp up its exports?
  • Will U.S. firms (e.g., ConocoPhillips, ExxonMobil) return to Venezuelan fields?
  • What kind of tax or legal incentives might be necessary, given Venezuela’s instability?

• Oil prices fall (~2%), potentially benefiting U.S. consumers but squeezing American oil producers, raising risk of layoffs if prices drop too low.

• White House mechanics: Eamon Javers relays new controls:

  “All proceeds from the sale of Venezuelan crude oil and products will first settle in U.S.-controlled accounts at globally recognized banks to guarantee the legitimacy and integrity of the ultimate distribution of proceeds.”
  — Caroline Levitt, White House Press Secretary [06:38]

• Open political/economic questions:

  • Is this purely a resource transfer, or was there a quid pro quo with Venezuela?
  • Who decides where the proceeds go, and will U.S. companies actually get paid what’s owed from past disputes?

2. Housing Market Jolt: Trump Targets Institutional Investors

Timestamps: 08:01 – 11:51

• Diana Olick reports on President Trump’s surprise Truth Social post pledging to ban large institutional investors from buying more single-family homes—aiming to restore affordability and support young buyers.
• Market fallout: Stocks of major rental home owners (Invitation Homes, American Homes 4 Rent, Progress Residential, and Blackstone-affiliated units) tank by 5-6%.
• Reality check: These institutions own less than 5% of U.S. single-family rentals, largely concentrated in select metro areas.
• The administration has floated multiple other housing fixes (i.e., longer mortgages, capital gains changes), but the bar for restricting institutional ownership is high—likely requiring an act of Congress.
• Broader perspective: Policy pressure on both homebuilders (called to Washington in December) and mortgage markets, but no easy solutions. The move may buoy shares of mortgage and retail real estate firms in the short term.

3. Markets at Highs: What’s Driving the Rally?

Timestamps: 11:51 – 14:41

• Guest: David Zervos (Jefferies Chief Market Strategist)
  • Sees energy policy and housing reform as the pivotal macro stories—key for the election-year market narrative.
  • “If our president can get house prices more affordable, get interest rates down and gas prices down, there’s going to be a much different outcome in November for the Republican Party than if those were to go in the other direction.” [12:24, Zervos]
  • The market is “obsessed with inflation,” but rising unemployment is a real (and underappreciated) risk.
  • Less enthusiasm for a “blowout” jobs number—moderation would suit equity markets best.

4. Investment Strategy: Playing Defense and Playing the Curve

Timestamps: 14:08 – 18:29

• Zervos’ “Red, White & Spoons” Trade
  • Traditional “booze and blues” (100% stocks, levered bond portfolio) worked well, but he’s shifting to favor S&P plus short-end fixed income—i.e., bet on Fed cuts, less on long Treasuries.
  • “[T]he insurance is really going to come from the Fed and the lowering of rates... the short end is better this year.” [16:47, Zervos]
  • He now sees the Fed acting more quickly in the event of geopolitical or economic storm, with “neutral” interest rates “closer to 2 than 3%.”
  • Fixed income “insurance” may work better with shorter duration bonds this cycle.

5. Memory Mania: Boom in Chip & Storage Stocks

Timestamps: 21:04 – 25:28

• Host Kelly Evans and Mehdi Hosseini (Susquehanna, Senior Analyst) dissect the blazing rally in memory makers (Micron, Western Digital, Seagate, Sandisk).
• AI drives demand: Memory/storage capacity for AI applications is a new bottleneck.
• Jensen Huang (Nvidia CEO) quote from CES: “Memory, a completely unserved market.”
• Industry data: SK Hynix and Samsung reportedly planning 60–70% price hikes for memory chips this quarter.
• Hosseini: “For the past 20 years memory has been... famine or feast... driven by smartphone cycle. Now we’re in a different paradigm shift. ... Given the secular trends, everybody is kind of confused as to how to plan and prices are going, going up more than anticipated.” [21:04]
• Profits/margins: Where does the cost land? Likely to be squeezed at the OEM level (Dell, HP, Supermicro), as memory costs eat a bigger share of the compute budget.
• Hosseini: “I think memory guys should be able to maintain or expand margin. ... If they want more billions of revenue they have to deal with lower gross margin.” [24:56]
• Outlook: Analyst has raised estimates for all the big memory names; secular demand likely trumps cyclical worries for now.

6. AI in Finance: JP Morgan Ditches Proxy Advisors for AI

Timestamps: 28:22 – 31:14

• Leslie Picker reports: J.P. Morgan becomes the first major asset manager to fully scrap external proxy advisory services, replacing them with an internal AI-powered tool (“Proxy IQ”).
• Jamie Dimon has criticized the influence of proxy firms ISS and Glass Lewis.
• JP Morgan memo:

  “By harnessing advanced AI, we no longer need third party data collection or voting recommendations in the US, cementing our first-mover advantage and reinforcing our unwavering commitment to vote solely in the client’s best interests using our information advantage.”
  — JP Morgan internal memo [30:13]

7. Global Macro & Defense: Playing Geopolitics and Commodities

Timestamps: 31:14 – 37:43

• Guest: Marco Papich (BCA Research, Macro & Geopolitical Strategist)
  • Turns bearish on U.S. equities in the short term; cautious due to “stickiness” of the 10-year Treasury yield and waning AI CapEx story.
  • “AI Capex story doesn’t look as great as it did last year. ... We need global growth concerns to be resolved. We need to see a little bit more out of China.” [31:27, Papich]
  • 12-month view still bullish (S&P 500 target: 7,500), but expects volatility and possible correction in the next three months.
  • Positive on industrial metals and commodities—“age of empire premium” as resource nationalism accelerates globally in the wake of U.S. intervention in Venezuela.
  • “If America is going into Venezuela for the oil, then other countries are going to go into other countries for other commodities...” [35:43, Papich]
  • “Chuck Norris Premium”—the idea that very successful U.S. interventions (like Venezuela) may embolden more surgical actions, fueling new geopolitical risk premia in markets:

    “The Venezuela intervention was so extraordinarily successful that it behooves any policymaker to want to repeat it. ... I worry about Iran.”
    — Marco Papich [36:44]

8. Hollywood & AI: Netflix Chases Warner Bros, XAI Raises Big

Timestamps: 37:43 – 41:32

• Streaming shakeup: Julia Boorstin interviews Netflix Co-CEO Ted Sarandos as Netflix pursues Warner Bros —a shift away from Netflix’s traditional build-over-buy approach.
• Sarandos on innovation:

  “You have to create an environment where people can say there are no sacred cows here... it’s a great way to position yourself as a curious thinker inside our business if you challenge conventional wisdom. Because I think Netflix was built by challenging conventional wisdom on almost everything.”
  — Ted Sarandos [41:32]

• AI funding boom: Kate Rooney reports Anthropic signs a term sheet for a $10B round (valuation $350B), Musk’s xAI raises $20B—both racing to expand data center capacity, with demand for memory chips as a growing constraint.

9. Defense & Tech Sector Picks: Investment Opportunities

Timestamps: 43:51 – 46:33

• Jeff Kilberg (KKM Financial) on Defense stocks: Lockheed Martin is a favorite; defense sector ETFs (e.g., ITA) have surged thanks to global tensions.
• Chip/Mem stocks: Micron is his largest holding; sees short-term consolidation or pullback after explosive gains, but long-term story remains positive. Warns new buyers to wait for “price discovery” or use options.

Notable Quotes & Moments

• Brian Sullivan on Venezuela:

  “It’s not like tomorrow US companies are going to say, okay, guess what, we’re going to go into Venezuela, which is still relatively unstable. ... They actually don’t even really know who’s kind of in charge of Venezuela at this point.” [03:47]

• David Zervos on Election-Year Markets:

  “If our president can get house prices more affordable, get interest rates down and get gas prices down, there’s going to be a much different outcome or much more likely to be a different outcome in November for the Republican Party...” [12:24]

• Mehdi Hosseini on Memory Chips:

  “As more tokens are created, we need to store them and move the data around and storage becomes very critical. ... The cost of memory, including storage, including DRAM is going to account for more than the compute.” [21:29]

• Marco Papich on Commodities Geopolitics:

  “If America is going into Venezuela for the oil, then other countries are going to go into other countries for other commodities...” [35:43]

• Ted Sarandos on Netflix Culture:

  “You farming for dissent which is part of the original culture that helps alive and well on Netflix. Meaning you have to create an environment where people can say there are no sacred cows here...” [41:32]

Segment Timestamps Reference

| Segment | Start | End | |-----------------|------------|------------| | Oil & Venezuela | 01:03 | 08:01 | | Housing | 08:01 | 11:51 | | Market Drivers | 11:51 | 14:41 | | Strategy/Fixed | 14:08 | 18:29 | | Memory Mania | 21:04 | 25:28 | | AI in Finance | 28:22 | 31:14 | | Macro/Commod. | 31:14 | 37:43 | | Streaming/AI | 37:43 | 41:32 | | Defense/Tech | 43:51 | 46:33 |

Takeaways

• The U.S. government is deploying big, market-moving policy levers (oil, housing) to shape the 2026 economic and electoral landscape.
• AI demand is straining the memory and chip ecosystem, fueling sharp rallies and challenging old sector dynamics.
• Election-year strategies, global resource competition, and the “Chuck Norris premium” hint at volatile but opportunity-rich markets.
• Investors should be mindful of both short-term exuberance (memory, defense, AI) and longer-term risks related to bond yields, global growth splits, and geopolitical unpredictability.

This episode is an excellent snapshot of how financial media, policy, and market narratives converge at the outset of a pivotal year.