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No Rate Cuts This Year, The Crude Conundrum, and Housing Catalysts 1/14/26
00:43:31
JPMorgan’s Chief US Economist makes the case for the Fed to hold interest rates steady in 2026. With oil prices climbing amid Iran tensions, Citi calls this crude’s “show me moment.” Plus, why real estate is shifting from “frozen to functional,” according to ‘Owning Manhattan’’s Ryan Serhant.
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Frank, thank you very much. We've got the case for no rate cuts this year, oil to $70 and some more big moves on the housing front. Welcome to the Exchange. I'm Kelly Evans. Let's start with the second day of losses for stocks now with the NASDAQ the biggest decliner down more than one and a half percent this hour. Dow down to 75. Nvidia and Tesla are weighing on that index with some news around. Both names that we'll dig into ahead. Both of them down more than two. The big banks, they're under some pressure as well after their earnings reports. Wells Fargo is down more than 5%, but Citi and B of A are down similarly. Bitcoin is rebounding, though it's around 97,000, just a hair below that level right now, first time above 96k since last November. That's sending the crypto treasury companies sharply higher today with bitcoin strategy leading mine, I should say, in strategy leading the gains, which are somewhat more modest at this hour. Let's begin with some new data points on the economy, all of them solid this morning. November retail sales seeing the biggest monthly increase since July. Existing home sales stronger than expected in December. PPI inflation essentially as expected. Against this backdrop, our next guest doesn't see any rate cuts this year and in fact thinks the Fed's next move will be a rate hike in 2027. Joining us now is Michael Feroli, the chief US economist at JP Morgan. It's great to see you, Mike. Welcome. Good to see you. So I have that right correct I mean, because I almost had to say I don't believe it. I can't this tell me you're no move this year and then a hike next year. Sure. Let's take the near term first. I mean I think after we saw the data this morning, we, we think inflation, core PC inflation next week will be above 3% and then that retail sales data suggests that GDP growth in the fourth quarter will continue to run strong. So I think the case for a cut in the near term is pretty weak. Then as we look out longer term, the case for a cut is that rates are accommodative. Again, I think if you look at financial markets, I think if you look at GDP growth it doesn't look like, I'm sorry that rates are restrictive. And I think if you look at financial markets or GDP growth doesn't really feel like rates are restrictive when we, when we see how strong those, those variables are performing. So I think as time goes on, I think the FOMC will be revising up their estimate of what the neutral interest rate was is and as that occurs, I think the case for a rate cut goes down. So this is very similar to what Larry Linds, he was saying earlier this week. He said he thinks that Chair Powell needs to make a clearer case to the American public that rates are already accommodative or easing or whatever word you want to choose. And the way that he looked at, I think he cited, you know, 2.8% on core PCE and a 1% neutral rate or something, you can add this up better than me. But said, you know, if that's 3.8% and we're at 3.6, you know, in other words, the Fed is already pressing on the gas. It's already. Do you think that's true? Because I know others would say if you look at the more recent kind of forward looking inflation data, maybe inflation's lower than that. And so that's not necessarily the case. I wouldn't necessarily say the Fed is pressing on the gas, but again, I think the case that the Fed is restraining the economy with rates in the high threes just doesn't really kind of jive up with what we're seeing again, not only in the real economy but also in, in financial markets which are generally pretty boomy right now. So that doesn't feel like the Fed is holding back the economy or markets for that matter. If everything is strong on the economic front, why is the labor market so weak and the unemployment rate rising or has risen? Point 1.2, something like that. Normally not a great sign right now. Certainly a lot of the slow growth we're seeing in jobs is due to slow growth in labor supply. Now you're right that the unemployment rate has been gradually trending higher, though we did see in the most recent print came down some and so it hasn't. That upward momentum seems to have been arrested over the past few months. So again, I think you're right to point to the unemployment rate, but it isn't looking quite as worrisome as it was, let's say a few months ago. And when we say we added, I think, was it 50 or 40,000 jobs last month and same with the month prior, the month before that was really bad in October. But is that good enough that you know, can we, can we add jobs at around 40 or 50,000amonth and feel good about that versus when we used to add 150 and 200,000? And that's what I think to many people, myself included, still feels normal. Yeah. So I think we do have to get used to a new normal in job growth, which is to say given demographics, given changes in immigration policy, the new normal may be something like 0 to 50,000. That should be enough to absorb new entrants into the labor market without seeing upward or downward pressure on the unemployment rate. So it is again, there's definitely some sticker shock I think of getting used to this new normal, but I think it's going to be with us for a while. Do you think that's why the 10 year yield which had started last year closer to 5%, came all the way down below 4 in late October and it's kind of stalled out and then reversed higher again. Do you think that's what's going on here? I think that's part of it. Obviously you've had the Fed moving in that period as well. So I think that's been certainly a factor as well. Yeah. So Mike, if you were the Fed chair, then what you're saying, they're meeting in a couple of mine, by the way, I'm not sure trying to bring you into that discussion, but they are meeting in a couple of weeks. You know, we had gone from the market anticipating a couple of cuts this year. And I don't know where we're priced right now. Probably still for one or two. Yeah. Which means if you're right and if the Fed believes this, you know, the market would be caught way off sides, not to mention it would be a political, you know, explosion. Yeah. So I think the market already has little doubt that the January meeting should be no action. And I think as we go through the year, the market can gradually reset its expectations. Now, some of that is probably pricing in some tail risk that you could see a recession in which case we're going to cut a lot more than 25 basis points. And the market may also be perceiving a little bit of political influence seeping into Fed decisions which, which we don't. Which we don't foresee. Right. And so I guess I'll just leave it with your message for investors is until or unless the inflation reports come down a lot because many people were taking a victory lap on the recent CPI data and saying that's a couple of months now, that it's been better than expected. But you're saying it's premature to declare that inflation is conquered and that if anything, the Fed might have to hike again next year. We see some lingering inflation pass through from tariffs into consumer prices. I think that's right. We don't see big inflation worries, but I do think again with growth humming along, the case that the Fed should cut just because it perceives that the neutral rate is lower, I think is, I think that may be a little bit presumptive. Quick final question then. You said again, tell me the number you think that core PCE is running and where do you think it's going to be by the end of the year at this point? Yeah. So we think next, I think it's Thursday when we get the core PCE number that will show 3.1% on a year ago basis by the end of the year. We still see it in the high two. So it's some modest progress, but not getting all the way back to the low two is what you would like to see. Very, very interesting, Mike. Thanks for making the time. Really appreciate it. Michael Ferroli with JP Morgan now on the back of that stocks are lower for a second straight day as investors weigh the latest economic data plus the bank earnings, plus the political headlines. The NASDAQ is seeing the biggest declines right now, but my next guest remains bullish on that trade, saying productivity gains will lead growth stocks higher this year. Let's bring in Nancy Tangler. She's the CEO and chief investment officer at Laffer Tangler Investments. Nancy, great to see you. Do you want to start just responding to, I don't know if you caught a portion of that interview with Mike and he's saying core PC 3.1%. Maybe there's no more rate cuts coming. Yeah, I Don't see that, Kelly. And by the way, I'm not saying we should have rate cuts or not, but. But I think that, that in addition to productivity, what you've seen is wage gains that are now above inflation. Productivity is, is improving to the extent that it was greater than GDP in the third 0.9%. Now it's a notoriously volatile metric, but the trend line is important and it looks like we're in an uptrend for productivity. We've been pounding the table on this one for about three years. It is analogous to the 90s. I think we can survive with higher rates and a little bit higher inflation, but. But that is not the way that the rest of the world views this. And I think the Fed will probably cave, maybe not at the January meeting, but certainly as we go through the year. And it's important to note, you know, this hand wringing over job jobs is a little bit troubling to me because you can have a static job market and that's what we've got. We've got kind of a tepid job market. Last time we saw that, where we had a sector that was growing was energy, oil and gas extraction and we went from being a net importer to a net exporter without adding jobs to the sector due to capex spend and technological advancements. So I think that's what we have to kind of look at. And then the fact that new job or new business applications have skyrocketed above levels we've seen except just below what we saw briefly in Covid. So if you're a software coder and you're starting a new business, that that's a pretty high productive, high pay business or. Yeah, so I think that's where we have to focus instead of just looking at these numbers that have been revised so dramatically. And by that I mean the jobs numbers. It's a great point and I love what Mike said, which is, you know, zero to 50,000amonth might be the new normal and maybe that's fine, but I just want take a step back because the larger story for the rally the past couple of years has been this is more like the 70s and 80s, right? Once inflation's coming down, once rates are coming down, once the Fed's cutting because the biggest problem was inflation. And we dealt with that. It's really, really bullish. But I listened to Mike for holy. And I watched the 10 year and I think to myself the biggest risk then to this rally is really one where all of a sudden those rate cuts are not continuing. So what, what percentage odds would you assign that scenario? Because that's probably a bigger concern for growth stocks. That's probably a bigger concern for the markets. If the Fed has to stop all of this and turn its attention back to kind of the vanquishing inflation phase. Yeah, I just don't see it, Kelly. I mean, I would, I would assign a probability of less than 20% because you are seeing housing come in, energy prices are down, the core, the tariffs are going to lap in a couple of months and that will, I mean, it's still, the cost increases are still there ostensibly, but you aren't going to see additions to inflation and core goods from, from tariffs. It's now in the numbers. So I don't see it. And I think this is an economy that is in transition and that we've seen that many times before, most recently in my view, in the 90s. And during that period, some of the norms, some of the things that you count on don't necessarily come to fruition. And so I don't see the Fed sitting on their hands for the whole year. However, in the 90s we did get one hike and it didn't derail the stock market rally. So, you know, if that needs to happen, I'm okay with that. I think the Fed is becoming less and less important to the, to the argument as earnings growth continues. But as you saw in my notes, our mutual friend Brian Reynolds is concerned because corporate tax receipts in the fourth quarter were lower than expected and that's an indication of earnings. So we're watching that pretty closely. Yeah, we did just check in with him on that the other day. So looking back at your ideas, some of them in here, I mean, kind of absolutely fit the narrative that you're crafting, which is Amazon and Google. You know, there's, there's others in here as well, which AMD and Tesla and CrowdStrike. Would there then be a case, Nancy, for kind of just sitting on your hands, broad ownership of stocks? You don't worry about it. And symbiotic is up there as well, which is what we hear a lot less about. Or is there anything more tactical that you would do right now? Well, I mean, we always use volatility as our friend because we're long term investors. We're not, you know, we're not trading for tomorrow, we're trading for the next three to five years. And so during the tariff tantrum, we added to Tesla at 240, Palantir at 88, Nvidia at 108. So that's how you make money over the long term. Yeah, those names have come in some, but they're well above the levels that we stepped in. So you've got to have courage, you got to know what you want to buy and then you've got to be able to step in and do it and then, you know, remain vigilant and watch management, watch earnings growth and watch revenue growth because that's what really matters. All right. You're not concerned about the banks today, anything like that, Anything from earnings season thus far? I'm concerned. You are? I'm always concerned. You know what I mean? I mean, what do you make the Bank Wells down 5% the second day now of some of these. I don't know if you know, if we've turned into a new populist cycle where every time you turn around there's basically a regulatory headline on the tape. Yeah. And unnecessarily. So I think the administration or the president is floating policy ideas to see which one's going to stick. But note that One of our 6 for 26 was Dr. Horton and housing has taken off. So, you know, I don't know what to say except that it's exhausting and I hope he finds the right policy solution so we can see stop talking about some of this nonsense. No more balloons, I hear you saying. Nancy, thank you very much. Really appreciate it. Today, Nancy Tangler with Laffer Tangler Investments. Don't miss a big interview tomorrow morning with BlackRock chair and CEO Larry Fink. He will be on Squawk on the street tomorrow around 9:00am Eastern. We've got a news alert on Xai. Meantime, Kate Rooney, what's happening? Hi, Kelly. So the California State's Attorney general is opening an investigation into Elon Musk Graphics AI Co. X. The AG here, Rob Bond is saying in a statement the chat bot known as Grok appears to be facilitating large scale creation of non consensual sexually explicit deepfake images, including those of children and minors. Goes on to say that users have been taking ordinary photos found online and then using grok's image generation tools to create new images without consent. Calls the volume of these incidents shocking in the same release here and also questions whether Musk's company took adequate steps to prevent the misuse of that technology. X has not publicly responded yet, but Musk did address this on social media on his platform last week. The company also last week raised about $20 billion. Even amidst some of this controversy does threaten Xi's ability to partner with enterprises, for example, does add to several investigations already out there from UK and Europe around some of these deep fake issues. And Kelly, it could set a new legal precedent. So we'll see where this goes back. Kate, thank you very much. Appreciate it. Kate. Ro out west coming up, oil could top $70 in the next three months. That bold call from Citi's head of commodities who joins us next to make his case. Plus Ryan Sirhant will join us to react to all of the policy moves on the housing front lately. Homebuilder stocks are still up 12% in the past week. That and more coming up after this. This is the exchange on cnbc. 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 vacation early in Emirates economy. Fly Emirates fly better thy ticket Lady Jennifer of Coon. Well, many thanks good sir. Here is my Discover card. They accept Discover at Renaissance fairs. Yeah, they do here. 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And he closes with myga. Make Iran great again. My next guest saying Brent could hit 70 bucks in the next three months. As we work through all this. Joining us now is Citi's global head of commodities, Max Layton. Max, welcome to you. What would that imply for WTI prices? So we think Brent prices can hit $70 in the next few days and ti prices wti up to around 66, $67 and $67 would mean we've gone from we were below 55. So this is a, this is a big rebound. It's not terribly catastrophic yet. But you could hear the President, the public adjusting to the reality of paying less than, you know, I think the national average of 283at the pump, it's going to start going higher. It could crack above $3 again. So with that in the background, what do you think is going to be in the foreground as it relates to the conflict in Iran? This is. It could potentially all happen very quickly, right? Very quickly. I mean, that's certainly in the President's interest with respect to his desire for lower oil prices. He will want the geopolitical risk premium, which has been rising, risen by around $5 over the last few days, we think can rise at least another $5 over the next few days, especially if there's military action or these protests continue. Also. I mean, Russia, Ukraine is not just the Iran risk. Russia, Ukraine risks are elevated and we're having a lot of supply disruptions in terms of exports from a number of different countries. So there's a few bullish factors now, but it's quite plausible that a lot of these things pass by with the winter passing and with some kind of resolution in Iran. Right. What. So what would you say people in the market are anticipating in terms of potential supply disruptions from Iran? Because what's the supply situation there? As it is? Yeah, I mean, as it is, it looks like it's fine. So the regions that are the big or near the big oil producers that the oil production doesn't look like, there's been, you know, from what we can tell, significant protests in those areas. So there's no obvious signs of disruption at this point, which is why it's all premium. But for reference, back in the middle of last year, the oil price went from Brent, went from the low 60s all the way up to $77. And there was practically no disruption then either. So for, you know, there was, that was a 15, $16 move higher in the oil price on no disruption, pretty much all premium, all geopolitical risk premium. And that's. Yeah. So this is a fraction of that so far. Jeff Curry was on last week before, really, to his credit, before this kind of started to take off again. And he warned, he said, you know, he's not so convinced that the market is that oversupplied this year, which was one of the reasons why we've seen prices down so much. He said, yeah, there's extra storage on floating barrels, but it's not like you're see Inventories overflowing everywhere. Could you give me your take on what you think the supply situation is both right now and for the remainder of the year? Of course, yeah. No, look, I agree with him. A big part of the reason we've shifted our view. So, you know, Citi, we've been bearish for the last couple of years with myself as kind of head of commodity research, we've been bearish from 80 down to $60. But in the last three, four, five months we've shifted to, you know, an above consensus neutral to any very slightly bearish view, which has actually been one of the more bullish views, if not the most bullish view out there on crude oil. And that's been all about the uncertainty. Part of that's about the uncertainty around exactly what the demand level is. There's a huge variation both on the demand and the supply side across not just the street, but the consultants, third parties. There's a big debate about exactly what the level of demand is, level of supply is, and there's a big range on the estimates and that just takes away some of the certainty around the balances. And that's why oil's in a show me moment. Show me the surplus. There has been something of a surplus. Most of it's getting absorbed by China though and most of it's being impacted by supply disruption. So between China stockpiling and supply disruption, there isn't that much of a surplus at the moment. Having said that, all this can change very quickly. So obviously geopolitical, geopolitical risk premium can completely collapse. If there was some kind of more certainty around Iran, you could have Russia, Ukraine deal at some point. Perhaps it's our base case actually that happens around the summer of this year and all of a sudden you're in a world there where you've got pressure for OPEC to cut production again. So this can change rapidly. But I think that would be the bottom line when people say, and I've wondered this myself, how can all of the, the metals be flying, for instance, a copper or some things that are more demand sensitive while oil stays where it is? And maybe it's as simple as that, those extra barrels can still come online more quickly, for example, with the oil price than they can for precious metals. Yeah, certainly the supply, well, the supply dynamics are very different between oil and the metals and metals generally constrained supply environment, whereas oil, we've had OPEC returning the barrels fairly aggressively over the last 12 months and that's been the big difference between the two on the supply Side the other big difference is there's been massive capital allocation towards precious and base metals. It's been precious metals consistently for the last 12 months. I mean, just to put a number on it, people, at this gold price spending, we estimate roughly almost a trillion dollars annualized on gold, on physical gold. Physical gold. And that's up from like 300 billion five, six years ago. It's a massive increase in allocation to gold. Is it all central banks or is it now hedge funds and you know, the public and everybody else? Yeah, back in 2022, the Delta was central banks. Since then they've been pretty stable consumers in dollar terms. So roughly allocating the same dollar amount to gold. And the big deltas investors is really investors and that that investor capital allocation and precious metals really broadened. Started shifting into silver in the third quarter of last year and more recently into copper and aluminum and that kind of shift into base metal. Something we certainly expect to continue over the next 12 months. All right. Well, we know it can be hot money. Sometimes they'll go to oil if it looks good enough. Maybe. Maybe they're too burned. Max, thanks very much. We appreciate your thoughts today. Max Layton with Citigroup. Coming up, the president says anything less than US control of Greenland is unacceptable. Will that be the outcome of today's White House meeting with officials from Greenland and Denmark? We have the latest from Washington next after this, The perfect night in good shows, comfy clothes and Gorton's Seafood. Skip the reservations and make restaurant quality seafood at home with Gorton's. From crispy fish fillets and fish sticks to popcorn shrimp. That goes perfectly with your movie lineup. No matter what kind of night you're craving. Gorton's has been making seafood easy and accessible for over 175 years so you can enjoy the goodness of the sea right at home. Visit gortons.com to find recipe inspiration or a store near you with Venmo. Stash a taco in one hand and ordering a ride in the other means you're stacking cash back. Nice. Get up to 5% cash back with Venmo Stash on your favorite brands when you pay with your Venmo debit card. From takeout to ride shares, entertainment and more, pick a bundle with your go tos and start earning cash back at those brands. Earn more cash when you do more with Stash. Venmo Stash terms and exclusive max $100 cash back per month. See terms@venmo me terms. Saving on your education should be a right, not a competition. At University of Phoenix, you'll get the best scholarship or savings you qualify for. Simple as that. Explore scholarship options at University of Phoenix. Vice President Vance and Secretary of State Rubio are meeting with officials from Denmark and Greenland at the White House today. Let's bring in Eamon Javors with the latest details. Eamonn? Yeah, Kelly, that's right. I want you to take a look at this live picture that we're looking at right now. This is the Danish Embassy here in Washington, D.C. and you can see that they've got mics set up for an apparent press conference. We were expecting this presser to start about a half an hour ago, and it appears to be delayed maybe by as much as a half an hour from now. So we'll watch that scene to see if Danish embassy officials brief reporters on whatever happened at this White House meeting today, which we are hypothesizing is over. No official confirmation from the White House today about what time this was going to start, what time it was going to end, or any readout at all on the contents of that meeting. So the first information we get on this meeting may come from the Danish side at that embassy here in Washington. But you saw the president last night take a look at what he had to say on social media saying the United States needs Greenland for the purpose of national security. It's vital for the Golden Dome that we are building. NATO should be leading the way for us to get it. If we don't, Russia or China will, and that is not going to happen. You saw the president pressed earlier this week, Kelly, on this idea of, you know, why do you need to physically take possession of Greenland when you have a security agreement? It is a NATO ally. The US Military has operated there for generations. There are no apparent restrictions on US Military activity there. The president said, I just, I need it psychologically. Because when, psychologically, you own a place, you can do things differently than if you don't own it. So that appears to be the state of mind of the president going into this session. And we'll wait for any readout officially from either the Danish side at that presser we just looked at, or from the White House if they decide to give us any details today. You and I, Eamon, remember the meeting with Zelensky, what was it? Right. About a year ago, probably. This feels like, you know, it's a different situation. But to see the delay, to know what might be going on behind closed doors. We've seen it in public what can sometimes happen during these meetings, and I can only imagine what might be taking place. Yeah. And you're going to have to imagine because we're not going to have cameras in there, unfortunately. I'd love to be in that meeting and see what is actually being said. But you know, to some extent, not having cameras there might help to the extent that you want to lower the temperature a little bit and have everybody off their talking points and postures and try to have an honest conversation. That's a little bit easier to do sometimes when the cameras aren't in the room as they're not expected to be in this case. Now, we'll see that at some point, you know, both sides will start to fill us in on what happened and we might get a sense after the fact, but we're not going to have that live confrontational moment on camera that we had with Zelensky. We don't think, you know, at least not this. We don't think. You never know. Never know. Never know. I mean. Thanks, Eamon Javers in our Washington bureau. Let's get to Pippa Stevens now for the CNBC news update. Hi, Pippa. Hey, Kelly. The Trump administration has put an indefinite pause on visa processing for 75 countries, countries including Brazil, Iran, Russia and Somalia. A State Department spokesman says it aims to limit applicants likely to rely on government assistance. The Trump administration has yet to release a full list of the countries affected. Top officials from Taiwan are reportedly traveling to Washington this week. Bloomberg reports that they will meet with the Trump administration officials about a long delayed agreement to lower U.S. tariffs as well as to boost investment in the U.S. according to the report, the terms of the deal included decreased on tariffs to 15% from the current 20%. And Academy Award winner Zoe Saldana is now the highest grossing actor of all time. After Avatar, Fire and ash hit 1.2 billion at the global box office last weekend, Saldana officially passed Scarlett Johansson and Sam Jackson to top the list, helping her stats. Saldana has now starred in the the three highest grossing films of all time, the original Avatar, avengers, endgame and 2022's avatar the way of Water. That's amazing. And yet she kind of flies under the radar, at least my radar. I don't, I don't follow much of that, but you know what I mean, it's good. Well, I haven't seen any of the Avatars, so clearly I need to do that. I saw the first one. It was, yeah, years ago. But kudos to her for identifying. It's like making a good investment, jumping in and doing well with it. Pippa, thanks Pippa Stevens coming up. He's practically the face of the luxury housing market. Ryan Sirhant joins us with his read on the latest sales data. All of these policy proposals we've been getting and what it all means for the housing market with a number of builders up double digits in the past week. Stay with us. Welcome back. Some promising data from the housing market this morning. Let's get straight to Diana Olich with the details. Diana? Well, Kelly, let's start with mortgage demand, which spiked sharply higher last week after President Trump's post on social media that in an effort to lower rates, he would order Fannie Mae and Freddie Mac to buy $200 billion in mortgage backed bonds. Rates briefly dropped below 66% on the 30 year fixed and that was enough to juice refinance demand, which surged 40% higher for the week and was 128% higher than the same week one year ago. Applications for a mortgage to buy a home, which are less sensitive to sudden rate changes. Mortgages increased 16% for the week and were 13% higher than the same week a year ago. The increase there was probably driven more just by people returning from the holidays, easing home prices and more inventory available for sale. Now, mortgage rates have moved a little higher to start this week, but rates have been on the lower end for several months and that caused a big beat on existing home sales in December, which rose over 5% from November and were up 1.4% year over year. Now the one red flag in the report, we had been seeing more inventory, but it was down 18% from November to a 3.3 month supply, which is considered quite lean. That kept prices in the positive. $405,400 was the median sale price up 0.4% annual annually. Now that is down from a 1.2% annual gain in November. So the gains are shrinking. Sales continue to be more robust on the highest end of the market and homes are actually sitting on the market long. Kelly. All right, makes sense, Diana. For now, thanks. Sticking with housing, market Watch finds there are now more homeowners with a 6% or plus mortgage than with those below a 3% rate. So could all of this start unlocking inventories ahead of the spring selling season? Here to discuss is Ryan Sirhant, the founder and CEO of Sirhant Real Estate and executive producer of Owning Manhattan. Ryan, welcome to you. What's going on in the market? Do tell. It's busy. It's busy. It's thawing. It feels like spring and it's only January 14th. The market's moving from what I like to say frozen to functional. Refinances are up. You know, that's, that's the, that's a big, big number for us. But home purchase applications are up a lot. People are actually coming out of the market, which means that people weren't stuck, they were just waiting. So, so it's a good time, it's a good time to be in the marketplace. And like Diana was saying, there was this surge of refinancing activity really on one day and it seems like mortgage rates coming below 6% even if they're rebounding back high. I mean is that what you think is, is, is it the rate? Is it, you know, the president shining a big light on this. What's, what's kind of moving people here? I think the president shining a light on it obviously helped the narrative, but it doesn't necessarily fix the math. We need more homes and we need cheaper money. So existing home sales are going to tick up as people come out of the holidays. But what we need is builders to build more. You know, for the last 25 years, not even just during COVID we've under built in this country and now we are, we are paying the price. So rents are up, incomes are up, etc. I think families really don't need narratives, they don't need rhetoric. Right. They need, they need new roofs. But rates do help. You know, we just did a million dollar purchase. I think it was the rate was 5, 8, 75 on a 30 year fixed. If you're willing to do a 51 arm, you know, in urban markets, above a conforming number, which is 832,000, you can get into the fours now. Wow. So a five one arm, we just did a deal this morning, 4.875% which is above that conforming limit. So people are getting into the force. A 5:1 arm means you're locked in for how does it work? You're locked in for five years and then adjusts. So you're paying interest only for five years and then you adjust to the, to the fixed number. Right. So you get pre approved now because of Dodd Frank back in the, you know, the great financial crisis, you get pre approved on what that total fixed number is today, but you're just paying the interest for five years. So in, in luxury markets, right, high end markets where you're borrowing millions and millions and millions of dollars and you're betting on either moving or the market moving. Right. 517-1 10 ones are incredibly popular and they're relatively safe depending on the borrower. Does all of this make you think we're just kind of like building a house of sand? I mean like at some point, and we heard Director Pulte say this last week, you know, the administration doesn't want home prices to fall. They want more people to buy homes. They don't want prices to fall. And we seem to be going through all these hijinks to try to get people in there, even with leverage and, you know, whatever levers we can pull. No, I think if people want to say this is a housing emergency, then you have to treat housing like infrastructure. Because without the infrastructure of a great and healthy house market, the economy just doesn't move. So kind of like I said before, like, we don't need narratives, we don't need stories, we don't need ideas. We need roofs. Yeah. We need actual homes being built and you need to incentivize homebuilders to do it. You know, I'm in Manhattan right now, I'm in New York city. After, after 9 11, there were tax abatement incentives or 21A and a 421G tax abatement that incentivize developers to build by deferring or abstaining from all real estate taxes. And we had the biggest real estate boom we've ever had. For better or for worse, we have to think about this now on a national level. How much federally owned land is there? You know, who owns more land to build on United States than anyone else? The government. So let's remove rhetoric and let's get to roofs. Yeah, I appreciate the way that you're kind of framing that. There was this famous paper 15 years ago by Ed Lemur that said housing is the business cycle. So you are actually correct, right, in how the ripple effect of all of this. So does it keep going? I mean, do we just get a little bit of a fill up to a little bit of a higher level or can we get some more momentum here so we're not seeing a depression in prices? We still have record low inventory. To your point before, affordability is a real, real issue. Gen Z, let alone Gen Alpha, aren't growing up getting excited to pay mortgages anymore. Someone said to me the other day that my, my grandfather worked in a factory so my dad didn't have to. And I pay a mortgage so my kid doesn't have to. Interesting. There's a real generational mindset shift now on what we do with the money that we have, the money that we even know we have. But it's about attacking this from the supply side. It's not just a credit side. So it's zoning reform across the country. It's incentive for builders across the country. It's unlocking inventory that's been frozen by mortgage lock ins. Right. And over regulation. If we don't do any of those things, we're just treating symptoms. Right. It's sick care and we're not actually treating the underlying disease that is affecting anyone out there who's looking to purchase a home they could actually afford. Few people understand and can talk about the real with the coolest hair like you do. I don't even know what to call that. But Ryan, thanks very much. It's your frozen look for the frozen market now. Ryan Sirhan, thank you, sir. We'll check back in soon. Speaking of rates, be sure to catch Steve Liesman's first on CNBC interview with Chicago Fed President Austan Goolsbee tomorrow on on squawk box. That'll be at 8:30am and coming up, China closing the door on Nvidia just as the US relaxes restrictions. We're going to have those details ahead. And we're watching shares of applovin down nearly 10% today for their worst day since October even as Evercore initiates coverage with an outperform just a day after Morgan Stanley raised their price target by 50 to 800 a share. App Lovin not loving it still up 200% from its 52 week low back in April though. Big volatile name. We're back after this. Welcome back. Dow is down 340 points at the low in video down 2%. That's also been weighing on the Nasdaq, which is the underperformer. Dom Chu has a closer look at the biggest movers. All right, so Kelly, we're going to kick things off with cybersecurity, many of them on the move. To the downside, as you can see here, a lot of factors at play, but perhaps the biggest drivers are headlines. First around a reported crackdown on US And Israel based cyber firms by Chinese authorities. Reuters is reporting that the Chinese government has told domestic companies to stop using products and services from those firms in question, citing national security concerns. That's having an effect on the broader names like Palo Alto Networks, Fortinet and others. The effects are being felt of course, broadly across the industry, even the ETFs that track cybersecurity like the Global X Bug ETF ETF is down about 1% as well. Next up, you got shares of Travel companies. And again, a slate of different catalysts driving the action, mostly to the downside. China a factor again, shares of Chinese travel e commerce platform Trip.com are taking a big hit after Chinese authorities announced an antitrust probe to the company. US Listed shares are taking a hit. Also in focus though, other travel stocks taking a hit amid a recent slate of headlines regarding possible slowdowns in travel demand by international travels travelers to the U.S. that's according to new data from the World Travel and Tourism Council again. And then analysts at B of A are looking at recent air DNA data on short term rental markets that showed a slowdown in growth for average daily rates in North America and Asia Pacific. And we're going to end on an analyst call for Rivian. Those shares are lower after the EV maker was downgraded to a sell rating from a prior neutral. If you look at that rating, they're citing things like newer or fewer new near term AI related catalysts and the potential for downside risks in the anticipated launch of the company's new line of R2 SUV's. So take a look at the 9% drop in Rivian. For more on those and other calls of the day, just head over to CNBC.com pro subscribers. Get all the access to detail and context around those analyst upgrades and downgrades. Kel, I'll send things back over. That travel story is something Don Bang. Coming up, Nvidia finding itself in a bit of a tug of war between the US And China. The Trump administration relaxing export restrictions while Beijing just tightened them. We'll have the details next. The Trump administration clearing the way for Nvidia to sell its H200AI chips to China. The Commerce Department saying it will now review chip applications for exports on a case by case basis. This Eunice units in Beijing with the details and with China's response. And Eunice, what can you tell us? Well, Kelly, the Trump administration, as you said, has approved the H200 chip for China under certain circumstances with certain conditions. But it looks as though the Chinese government may not want them. There are reports that have been emerging that Chinese officials have been telling their customs officials not to allow the H200 into the country and also instructing local companies, tech companies, that they should only buy these, these chips under special circumstances. Now, this comes after President Trump had said that he had an agreement with President Xi Jinping to export the H200 into the country. The national security community, though, has been warning that these chips could be used to upgrade the Chinese military's technological systems. These Chips are believed to be six times more powerful than Nvidia's H20 chips and what the Chinese can do themselves. What was also interesting is that just tonight the state media has been saying that this US policy for the Nvidia H200 chip for China is discriminatory. Kelly. So what comes next for, you know, China clearly trying. Both sides are playing this game of, of we want to have leading technology, we sort of need access to each other's products, but we're both trying to also develop standalone industries that could compete with each other as needed. Exactly. I think that, that what we're seeing is that national security is really taking precedence for both countries and especially here in China because as you said, from a financial and technological sense, it doesn't seem to make a whole lot of sense. A lot of Chinese companies, companies do want to have these Nvidia chips. For my conversations with them, they say that Nvidia is, you know, great. They have like all the infrastructure around them is, is so much easier to use, that these chips are much more efficient. You don't have to buy as many when it comes to say, for example, the Chinese chips. So, you know, it makes sense from the Chinese perspective. It makes sense from Nvidia's perspective, of course, because of the sale. But again, this national security really looks as though it's taking the greatest priority. Yeah, very, absolutely. Eunice, appreciate it very much, our Eunice Yoon. And while Nvidia is caught in the middle of these tensions, a new AI model out of China may show the country doesn't need the chip maker or is trying not to need them. Anyway, let's get over to Deirdre Bosa for more on today's tech check. Deirdre. So Kelly, on the same day that Nvidia gets the green light for China bound sales, Chinese AI darling Jeep, who releases an advanced model that it says was trained entirely on Huawei chips. Now, if that claim holds, it breaks the narrative that Frontier needs American silicon and makes Nvidia's China comeback more temporary. So Jeep was backed by Alibaba and Tencent and it just went public in Hong Kong last week. Shares are up 85% since then. By publicly crediting Huawei's Ascent chips, they're signaling that domestic hardware can finally do the heavy lifting. To be sure, Jensen Huang, he will still sell chips in China. Performances, performance, as you and Eunice were talking about. But now in video looks more like a bridge for the Chinese to buy time for their own domestic chip makers. So Nvidia and Other American advanced chips nice to have for sure but less and less a need to have. So China's strategy as volume insiders tell me that the US strategy needs to be efficiency. Nvidia remains the luxury brand for the west west and for private markets. Anyone basically that can afford those chips and get them Huawei and friends they become the utility provider for countries and companies that just need good enough. What Aaron Gin, founder of Hydra Host, that's an AI data center services and management startup he calls a Costco or wholesale strategy. The idea is that you go to Costco for the flat screen that's one or two generations old. It's not the best but it's cheap and it's available in bulk. So if you need to light up a wall, you got 100 of them and you swap out the ones that British break. That strategy, this brute force strategy, it makes up for Nvidia speed and efficiency and that's the route the Chinese are going until they catch up. I wish we could use them and compare. Right, because if it's true that it's good enough then the whole AI trade could be called into question much like we saw with Deep Sea last year. But if it's, if it's okay in some instances but you still want the latest. I mean look at how Gemini has been able to rise, right? It does that by being better than ChatGPT and so I'd love to know where Shipu falls in that discussion. I mean the reason Gemini is able to do that too. Don't forget that vertical stack advantage, right? It's TPU's. Its model was entirely trained. Gemini 3 trained on TPUs and being served on those TPU. So where does GPU stand? I mean no, it's not anywhere as a model. It's good for an open source model but no, it does not compete with like the best versions of of Gemini and Chad GPT. But again it's this idea of being good enough. If you're let's say like a company that is not using AI to code the most advanced applications. You're a marketing firm that just needs an AI that is really good on reasoning and creating images which is what Jeep is latest does then maybe that's good enough. You're going to pay less and it's going to be open source. You can host it on your own servers perhaps. But I still to me that doesn't call into question kind of the dominance like the best of the best. But it, it would suggest there's something for everyone totally to the side point. What's going on with the gems in Gemini? Deirdre, have you experienced this? What's your issue? I have my own issues. So ChatGPT for me remains superior because you have all your little folders in memory on the left. Gemini. While great and fast, they keep glitching out on the gems. You go, you save a whole project, you go to check it, and it's gone over and over again. This happens. I just tried to create a new gem, a new project, and I had the exact same. You know, Kelly, I'm switching between. I just started using Claude code. I'm gonna have more on that later this week. Absolutely blowing me away. I can't stay. I will share that. I wanted to, but I am astounded. Okay, all right. I'm trying to mess around with that. I probably don't have time, so I'm relying on you. I just started like an hour ago and I've already created. Send me your stuff. Send me your stuff. I will. We'll talk, Deirdre. Thank you very much, Deirdre Bosa. That's it for the exchange. And I'll go join Brian Sullivan for power lunch right after this break. It's native. Hey, girl. What's happen. Is that your antiperspirant? Uh, yeah. Let me see that can. Aluminum, butane. I cannot pronounce that. You have to switch to native deodorant. Native's simple formula has only clean ingredients. It gives you effective seven 72 hour odor protection with no hydrocarbon propellants. Wow, this smells heavenly. Clean. Effective 72 hour odor protection isn't a myth.