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The Exchange
The AI Daisy Chain, Memory is the New Metals, and a Short Shutdown? 2/2/26
00:44:03
Oracle plans to raise $50 billion to shore up its AI spending, while Nvidia stalls its $100 billion investment into OpenAI. Mizuho says speculative money will move out of metals and into memory stocks. Plus, the partial government shutdown delays the January jobs report.
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A
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B
Member thy ticket Lady Jennifer of Coolidge. Well, many thanks, good sir. Here is my Discover card. They accept Discover at Renaissance fairs. Yeah, they do here. Discover is accepted at the places I love to shop. Getth with the times. With the times. You're playing the loot. Yeah. And it sounds pretty good, right? Discover is accepted at 99% of places.
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C
That take credit cards nationwide, based on the February 2025 Nielsen report.
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B
You're listening. The Exchange. Here's today's show. Thank you very much, Scott. U.S. manufacturing is back, at least for this month. It's a tale of two stories. And memory is the new gold. Welcome to the Exchange. I'm Kelly Evans. It's been a busy couple of hours because stocks are up nicely after a surprisingly strong ISM manufacturing report that crossed at 10am Eastern Time in the past hour. We've also had new headlines on a trade deal between India and the U.S. the Dow is up 508 points right now and it's actually one of the stronger of the major average averages. The NASDAQ up 0.8, the Russell 2000. The small caps are back in the leadership today of one and a half percent. But as you mentioned, the picture in the tech world is a little bit more mixed as it has been really since October now. But Oracle is higher by 2% still as they outline this $50 billion capital raise that will include equity issuance. Nvidia fractionally lower as concerns swirl over their $100 billion commitment to open AI. And some mega moves in crypto as bitcoin has briefly dipped below set or to 74. I should say it sprung off that level somewhat to back up almost near 79. Keep an eye on strategy. It's down three and a half percent. We'll have more on that ahead. And Robinhood is down almost 9% and 40% below its all time closing high. Also in early October, Commodities Gold's at 4600 after topping 5300 just on Friday. Steve's laughing. A lot of people who got in hoping that upward move would continue are hanging their heads as silver is also about in the red right now. But keep it's back and forth. WTI crude is down 5%, back to 61 a barrel or so as the President signals talks with Iran. Again, a lot going on. Let's start with that better than expected ESM number. And this is also new this hour. Steve reports that Friday's jobs report will now be delayed.
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D
Mr. Liesman, I was not laughing. I was grunting like, I can't believe how much that gold has fallen.
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B
We all are incredible.
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D
But let's get to this. A big surge, Kelly, in the ISM Manufacturing Industry Index that pushed down the outlook for Fed rate cuts, but also came along with some skepticism that this number really signals a turnaround. An index that has been depressed for several years now. Take a look at the data here. Manufacturing index 52.6. That's up 4.7 points. That's the biggest increase since 2020. New orders 57:1, up almost 10 points. The biggest one month gain since the pandemic. The backlog was up, but imports were also up. Hold on to that idea for a second. Let's look at the Fed probabilities. They're down about six points for April and I believe also for March. Yeah, you can see there. What is that? That's March and April right there. April and April, June. Sorry. Bad, bad glasses. They got to work on the glasses. Okay. April and June just down a little bit. So a little bit more skepticism, higher growth, less. That's the whole reaction right there. Now, it would be a huge development if manufacturing is indeed turning around. The ISM has been below 50, suggesting contraction the vast majority of the time since 2022. The manufacturing sector has lost jobs every month since tariffs were put in place. And the ESM suggesting tariffs may have something to do with the index's surge. Take a look at this commentary from the ism. Although these are positive signs for the start of the year, they are tempered by the commentary citing that January is a reorder month after the holidays and some buying appears to get ahead of expected price increases due to ongoing tariffs. Most of the commentary was also downbeat. Stephen Stanley from Santander says nearly every response was gloomy, with most saying the uncertainty surrounding the administration's tariff policy was responsible. So maybe this is the beginning of that turnaround. But economists need to see a whole lot more data to be believers. And they won't get the employment data to help them out. The BLS saying there will be no jobs report on Friday due to the government shutdown. They won't reschedule it until the government reopens.
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B
So frustrating and They've already, as I understand it, because they already did the jobs report. It was the survey week of the last.
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D
You're angry about this. Be angry like you were before.
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B
But see, I got it all out with your.
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D
No, no, you're angry about this. Be angry. So it's your show.
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B
So frustrating right at the moment. It's a very difficult time to calibrate policy. It's been very hard trying to figure out is the economy too strong or not strong enough. Six months ago we were talking about the jobs weakness pointing to more recessionary conditions. Now we're talking about 5% on the Atlanta Fed. No, we're not. That's actually 3%. No, we're not. It's a trade. You know, it's confusing. It would be great to have the jobs report and it's frustrating not to have it. The only caveat to my rant to myself is this is a period of time in which it feels like the jobs data normally top level, is taking a bit of a. It's off to the side. And you know, if Feroli at JP Morgan, others are right that the new normal is between 0 and 50k, we're just not going to get the results.
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D
I read 20 the other day from.
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B
Oxford, so if 20 supposed to be fine now the immigration issue has been a huge one in terms of affecting how many jobs we even need to add. It's so confusing, it's almost not getting the attention it normally deserves. So that's the only reason why I, you know, yes, it's frustrating, but I'm not even sure how much light it would shed even if we got it on time.
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D
Well, I always say more data is better than no data, even when the data is confusing. Especially want to see the household report. I want to see what's happening to labor force growth. I don't think. I'm hoping if they open this government up on Tuesday, it means next week we might get it Monday. Tuesday. I think they have the data. They're going to miss a day and a half of work. It shouldn't be such a big deal. Then again it is the government. So it may, it may take a little longer. So I wouldn't be like this is going to take a month that we're going to have to go back to the alternative data again. Hopefully it's just a little bit of time, but I feel your frustration there. I hope this comes out. I'm more interested in this ISM number.
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B
That's why I was going to say let's Bring it back to that, because I know what people are saying about the commentary. They were a little cautious, but there's plenty of strategists I follow who are taking this and running with it. And the reason is they've been expecting a capex boom. The story of this economy is a capex boom. The ESM is perfectly consistent with that. The transport stocks are flying today. Like, there's a lot of signs that this is for real. But we'll have to see if they how much they walk it back.
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D
We have been waiting, you are correct, for the capex boom to show up in the data beyond AI because that's all we've really seen. And if that brings up to another level, you know, you could think about what's going on with the banks. Are the banks actually lending beyond AI? A lot of the banks I've heard, by the way, are tapped out because there's so much lending going on for AI right now. But if you can get it beyond it, if you do get that, what the president is hoping for, manufacturing renaissance, he talks about $18 trillion, which we all know is not true, but it's some number below that or half of that or a quarter of that. There is manufacturing being done in the United States because of the tariffs. That should show up in the data and would be a positive.
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B
And if we get the jobs report, be nice to see a positive on the manufacturing.
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D
Exactly. And small business as well.
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B
We did. Steve, thank you. Really appreciate it today. What do today's numbers mean for the future of the Fed and rate cuts? Is the economy actually hotter than we thought? And what would it mean for the new Fed chair? Let's bring. He's going to get sued. Scott Kroner, U.S. equity strategist at Citi the president said over the weekend. I know he's joking. If war has to. If he doesn't cut rates, he's going to sue him. And now here comes the first data point right out of the gate and it's about as strong as you could hope for.
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C
Yeah. Well, Kelly, I think we have to give it time for this process to unfold. We need to get through Senate confirmation and get to the end of the current Chairman Powell's term in May. So I think we were kind of speculating here ahead of what we know and also what we don't know. But what I would say in terms of the manufacturing data today, I mean, we've been focused on this for a while now. You're looking at whether it's ISM or Industrial production, you know, it's essentially, you know, a negative prior to if not three years, which is historically very unusual. So a natural rebound here is to be expected as we work our way through the tariff situation. I think that's part of the discussion here. All told, I think where this kind of fits into our US equity playbook is that look at we've been looking for broadening this year. You know, we've been talking about this and it takes you down a more economic sense of path. We lead with the banks, but industrials are feeling it as well. But I think it's very supportive of the ongoing case here that soft landing plus a Fed that probably still has another rate cut or two ahead of them, all supportive of this broadening playbook that supports underlying S&P 500 but also down cap in the US small mid cap as well.
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B
So if I had to put you in a camp, could I put you in the kind of it's for real camp? And if you. So what other positions do you think people should be in?
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C
Yeah, so we're very accustomed to seeing a data print one month and then see it reverse another. So I think we're probably allowing for some mean reversion ahead on this. But I think the underlying trajectory here is setting up in a positive fashion. You gradually, gradually put last year's tariff issues and uncertainty behind you. Looking forward, you get some alleviation of that. And what we think we're seeing out of the Q4 reporting so far is a corporate C suite reaction that's a bit more cautiously optimistic than we heard for the better part of last year. So yes, put me in the positive camp on this.
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B
We're going to talk more about this later on, but it's worth kind of bringing up here now as well. We after the earnings reports that have come in so far, we're now at double digit fourth quarter earnings growth, think around 11%. That makes it the fifth straight quarter we've had double digit growth. How significant is that historically speaking?
- [10:32]
C
Look it. So the way I would say we were looking for something more moderated call a 4%. So in our work we're up 9%, some are reporting up 11. We're a third of the way through. So we've got some room to go here. I suspect the upside surprise will come down a little bit but still be notably positive. Right. Why this is important is that it's happening without any real degradation in 2026 earnings expectations which normally you get this time of the year. So high valuation starting point to enter this year for US equities, you need to keep feeding that earnings growth machine to keep this market moving forward. We're pretty comfortable that that's the way this is going to play out.
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B
And after hearing that, I think, well, I better hold my enthusiasm until the rest of earnings season because if we mean revert to kind of more, well, we'll see. But finally on the dollar, Scott, what do you make of the weakness that we saw in January?
- [11:24]
C
So this has been coming up, Kelly, in nearly every client conversation, what do you think of the dollar? And I get it from a relative performance perspective. Last year's weaker dollar synced up with non US Markets doing quite well on a dollar return basis. I get it that it can also potentially influence allocations into US Equities. But I got to tell you, when we go back and look at the relationship between US equities and the dollar, it's very mixed, very muted and it varies over time. So generally at the margin I like a little bit weaker dollar. But all told, the correlation of Ford performance is, is very, very small. So we put the dollar as an issue out there, but it's probably less about the dollar itself and more about other issues that work under the surface, whether it be rates, whether it be the deficit, so on and so forth. So you know from here, what I think we learned on Friday, last point on this is that on the Wash announcement, what you got was those parts of the markets that were possibly reflecting a debasement, which would be the dollar, which would be the way you look at some of the metals price action here, gold and silver. It's all telling you that some of those concerns have kind of faded for now. So dollar lift. And you see what's happening with some of that debasement concern to the sideline for now.
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E
Right.
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B
Again, we'll see a pullback was due and the dollar's weakness. Listen, it's shaking it off for today if it resumes, especially in a disorderly way. Different story, of course. Scott, really appreciate it. Great to have you today.
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A
You bet.
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E
Thanks.
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B
Scott Kroner with Citi. Let's turn now to tech where shares of Oracle are higher amid a kind of mixed day for tech. Generally. They're hanging on to around a 2% gain even after the company announced plans to raise 45 to $50 billion through debt and equity to expand AI data center capacity for customers like OpenAI. The stock is down 50% from its peak in September amid concerns they would have to take on too much debt to pay for Those AI projects. Speaking of spending concerns, Nvidia shares are falling after their plans to invest $100 billion into open air. Plans had reportedly stalled, with some expressing doubts about the deal. According to the Wall Street Journal, Jensen Huang has said Nvidia will still invest a great deal of money into the company. My next guest says the AI bubble is starting to show its face and becoming a huge political and economic problem. Here to discuss is Bradley Tusk, Tufts Tusk Ventures founder and CEO. It's great to see you, Bradley. How are you thinking about this?
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F
I think that in a lot of ways the excitement that the hyperscalers had kind of got away from them a little bit and it's starting to face reality. So there's two big things. Let's take the Oracle announcement today. I understand that if they believe that they have customers for the cloud services and they need more, you know, capex to be able to then build it and sell it, that makes sense as a business. But it still fundamentally depends on the model of we need generative AI powered by incredibly powerful, incredibly expensive, incredibly energy intensive chips made by companies like Nvidia or adm, and that to be put in data centers that will use incredible, credible amounts of energy. And all of this is both necessary and will happen. And I think what we're starting to see is neither of those are good assumptions. So on the economic side, like, yes, the potential for AI is great, but do you know what OpenAI and Claude are going to make this year in terms of revenue combined? $30 billion is the projections. 35, if you're being generous, that's minuscule. Now I understand that at the beginning of any major economic transformation industry, the numbers are very small at the beginning and very big later on. As a venture capitalist, like that's literally, you know, what we invest in. However, given the amount of debt being taken on here, you have to really believe that demand for those services are going to be there. And I will tell you, like this morning I was running kind of a math question modeling out our fund and some different questions that I want to know about ways to take equity from our portfolio companies. And I gave the same question, which had about 15 different variables to five different AI platforms. OpenAI, Grok, Claude, Gemini, Perplexity. And the product I got back was really subpar. So yes, it was faster than if an analyst did all of it for me on paper, but you know, Claude doubled the amount of equity that I told them we would have so looked great on paper, but it wasn't actually right in terms of the amount of money we would make open, I literally forgot to account for equity. So I'm not sure they have a product really worth selling to justify all this debt and all this investment. Maybe that's different and B2B. But then the other thing is, politically we're starting to see all over the country from both parties, huge revolts from elected officials saying we're not going to give you the permitting and zoning that you need to build your data centers because your plan for doing so just makes all of the other ratepayers for the local utility that is voters have to pay 30, 40, 50% more. Whether it's a normal human being or a politician, no one's looking to pay a lot more money or sacrifice their political career so that Sam Altman can become a trillionaire.
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B
I take your concern in using it myself. So it's funny, the other day I was saying to it, who would have had the biggest market cap if you were to kind of add back in share buybacks and dividends and all of that? And yeah, its answer was basically right, which is Apple, but it had Nvidia's market cap off by $1 trillion. And this was Gemini, right, Which I consider to kind of, you know, the best of the best. So as users, we all are frustrated because we want them. You see, like if they were perfectly reliable, you would literally never look back. They're still so good, Bradley, that I'm still like, watch myself. And I'm like, I know I have to double check this, but this is still so superior to working with sort of like old Google, you know what I mean?
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F
Right. But there is a distinction between a business that can produce $30 billion a year in revenue, even $300 billion a year in revenue or industry. And then an industry like this, which in order for just the current spending and borrowing, everything else to work, has to start generating, you know, in the 2030s, you know, trillions of dollars a year in revenue. And my concern, and this has been the case from the beginning, is a lot of the capex and borrowing and infrastructure investments that are announced are effectively short term valuation plays disguised as long term thinking. You know, companies know that if they say, oh, we're going to invest $100 billion in this new advanced technology, investors like it because it sounds like they're thinking about the future and they're thinking long term and they get rewarded for that. But I think that a lot of the investments were driven by the desire to pump up current share prices or current valuations of the private companies as opposed to what they actually need. And they certainly didn't take into account that I don't think most of these data centers in the vision are going to be allowed to proceed anyway.
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B
So let me ask you, Bradley, quickly before we go, because this is where you're truly the expert in the following, which is what would your advice be to open AI? How do they navigate the political pressure that's coming, the bad PR that's coming with the trial that's about to start and all of that, you know, with the fundamentally they were, they were the first movers, they, they created and brought this technology to us if they wanted a long term sustainable business model. At a time when I'm getting Gemini, quote unquote for free because of my Google plan, what would you tell them? What would your advice?
- [19:16]
F
Yeah, I mean I would say three things and this obviously includes politics. But the first thing would be instead of endlessly rolling out new and new versions of the product to get more and more media coverage, make sure the product actually works. Of all the five different platforms that I mentioned, I get consistently the worst results from open AI and therefore I only really use it today as an experiment. And you were right, Gemini was the actual one that gave me a credible response. So one, stop worrying endlessly about growth and expansion and just do your job better. That's number one. Number two, politically, their entire approach to everything is just to intimidate and bully people. And ultimately that's not going to work in this case because no matter how much money they threaten someone with in bad TV ads, every voter that faces a 42% increase in their electric bill is not going to care and they're just going to throw out whatever politician allowed that to happen. And third, not every chip you buy has to be from Nvidia. So at the end of the day, if you can't impose as many, many negative externalities on ratepayers, voters, everyone else find alternate forms of compute that work, find ways to power the data centers that work. But they just seem to work on the assumption that society exists for the good of open AI. And when you have that mentality, people start to hate you.
- [20:35]
B
Maybe they should go to Google and cut a deal to use their TPUs.
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F
And then, I mean, perhaps, right, you know, look, there was an op ed in Times a few weeks ago making the case that open I will go to zero. I don't know that I would quite go that far. But if you look at the product, they have the attitude that they seem to take in when dealing with people and other things and then the actual expenditures that they have, the debt they've taken on, it's not a great look.
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B
I think that advice will be, will be digested by those who probably need to hear it the most. It makes a lot of sense to me. Bradley, thanks so much for your time today.
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F
Thank you as always. Appreciate it.
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B
Bradley Tusk Coming up, it's out with the gold and in with the memory stocks. Have you seen them again today? Silver and gold are coming off their worst day since 1980, but the likes of Sandisk, Seagate, Western Digital, they're all rallying. And our tech watcher says the sell off in metals directly benefits these names. He'll join us next to make his case. Plus, if you've ever wanted to be a fly on the wall in a room full of more than a million AI agents, now is your chance. We'll explore the new social media site of a by AI and for AI ahead.
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What do the steam engine, electricity and.
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B
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- [23:05]
B
Wherever you get your podcasts. Memory stocks are continuing to Soar as the AI buildout gets bigger. Western Digital, Seagate and SanDisk all seeing nice gains today. SanDisk up 15%. These names have already posted double and triple digit gains to start the year. But are they at risk of getting meme afied or can you hold them for the long run? Let's bring in Jordan Klein, tech sector specialist at Mizuho. Jordan, it's great to see you and do you think that the do you call it hot money is going from maybe crypto, then silver and gold, and maybe now the memory stocks. Stocks, yeah.
- [23:42]
E
Thanks for having me. I think there's a very good chance that a lot of money is kind of bouncing around this, this market and looking for a new narrative and what other stocks, you know, or sectors seem to be making new highs. So with the fundamentals so good right now in memory and looking to stay that way through the rest of this year, I definitely think some of this money and precious metals or other areas like crypto, as you said, is going to probably keep buying these until you start to see some leveling off.
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B
Yeah. You know, if I were, if I were a long term holder in this space, I don't necessarily want people piling into the trade. I mean, it's fun, it kind of makes you feel like a genius. But the concern is exactly what happened to gold and silver. Right. They start going parabolic and then you have a one day move. Or silver drops 31%.
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E
Yeah, 100%. Right. I mean, I talk to a lot of traditional active managers who look at semiconductors and memory stocks and have followed these for a long time. And the feedback I get from them is generally what you just said is I don't want all this tourist money. You know, that's chasing performance coming in. They don't even know what they own. They're just chasing a stock chart. They're the first people to sell. As you said, you know, if this momentum breaks, fundamentals are great. Valuations getting a little stretched. So I do think that is the risk. And that's why I tell people, be careful, you know, manage your positions appropriately.
- [25:04]
B
So with that in the backdrop, what we're kind of saying here is don't be surprised if there's a violent correction. But at the same time, maybe you can talk about this. Why was the SanDisk call and guide a true game changer?
- [25:17]
E
Yeah, I mean, look, I'm an analyst at heart, so I follow the numbers and the numbers, you know, drive the stocks ultimately. And they were just that good. I mean, here's a company that was earning $0.30 per share per quarter a year ago. They were guiding to 13 to $15 per share going forward and that'll probably go higher to almost 18 to $20 a quarter. So a company that was earning, let's say three to five bucks a year is now being projected to earn over $60 a year. And so do the math. I mean, if you think they can get to 60 to $80 a year, it's not trading that expensive. If it's trading even at $600 and there's really no end in sight, they're not adding capacity and demand going to sustain at this level probably through the rest of this year.
- [26:10]
B
We had the CEO of Western Digital, Irving Tan on Friday and it was kind of ironic because the Stock was down 8% at that point after their earnings. Now, of course, it's back up. You said that move never made sense to you, the sell off. In any case, what would you do? I mean, would you differentiate in this space? People now like to talk about, you know, you can't just trade the Mag 7, you got to trade them name by name. Well, what about the chip and memory names?
- [26:33]
E
Well, that's a great question. I mean, I think what's most frustrating to investors I speak to is the probably the highest growth, highest quality name is in video and it does nothing. It trades flat day after day and it's pretty cheap. A lot of the people who are buying in Video or Broadcom and others are now going after memory disk drives, optical equipment companies. So I think you kind of, you know, spread your investment. You know, don't just own in video. It's great. I think it'll, it has great upside still. But you got on a little bit of memory, you got to own a little bit of the equipment companies like Lam or Applied Materials. And I definitely think you want to own maybe some of the disk drives here. So, you know, don't put it all in one of these because there is the risk that you see some volatility. Spread it around.
- [27:20]
B
Yeah, that's well said. Or maybe that volatility at some point becomes an entry point if the long term story is as sound as you're describing. Jordan, for now, thanks. Appreciate it today.
- [27:29]
E
You got it.
- [27:30]
B
Jordan Klein with Mizuho. Coming up, speaking of hot money, bitcoin, it's not there. It dipped back below 75,000 this morning. It's been wreaking havoc on some companies balance sheets back up to 78 now. But it's right around that break even for MicroStrategy. We're going to get into those details ahead.
- [27:49]
F
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- [27:50]
A
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H
No, my understanding is that the shares are down because even though the company beat expectations in the top and bottom line for this year, for this quarter, excuse me, it did reaffirm guidance for the full year, the guidance for Disney's fiscal second quarter. So that's the quarter we're in right now. It's a little bit weaker than expected, especially when it comes to this warning that Disney gave about the domestic park. Saying international to the domestic parks is a pressure that they're feeling. They did say that they're going to be marketing more to U. S based visitors to help compensate for that. But it does seem like it's those fiscal Q2, that fiscal Q2 guidance that's weighing on the stock right now.
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B
Understood. I recall the analyst this morning who was speaking about this and said, you know, frankly he thought it was kind of down run of the Trump administration's policy about immigration. So what do we know about the number of foreign visitors who typically visiting Disney and what did the company say is happening with that now?
- [30:30]
H
Well, what typically happens Here, Kelly, is that Disney World in Florida gets a lot more international visitors than Disneyland and California Adventure here in Los Angeles in Southern California, where I am. And so they typically have people come and they'll book vacation stays and then they'll visit all of the parks and it'll be a big investment where they'll spend multiple days. So I can't, I can't tell you exactly what's expected to happen in terms of international visitation, but I do know that that CFO Hugh Johnston has indicated that they are trying to address this by investing more and getting more local visitors. Maybe they don't come for four days, maybe they come for two. But the idea is that they're trying to be flexible here and they do expect that to be a sort of a near term pressure. But I think there's this broader question here of the success of the parks. Such a huge part of Disney, Disney's profits and obviously a ton of investments being made for the next decade.
- [31:22]
B
And the head of the parks business is the same person rumored to be taking over the company, is that right?
- [31:27]
H
Yes. So Josh tomorrow does run the Parks division, which is the profit driver of Disney when it comes to that operating income. There's been a lot of speculation about who will be the next CEO of Disney. Sources tell us that there is a board meeting this week and the board is expected to vote on who will be the next year of Disney. The Disney clarifies to us and wants to make it very clear that the next CEO has not been named yet. But I will say many insiders, industry insiders, are speculating that the role will go to Josh tomorrow. I have heard who runs the Parks division. I also have heard a lot of speculation that Dana Walden, who is also considered a potential contender for that role, though perhaps less, less so now than previously, could potentially get an elevated role as part of this succession plan as well. So a lot of speculation happening here in Hollywood, a lot of expectation that the CEO job will go to Josh tomorrow. But Disney reminds us the vote hasn't happened yet.
- [32:24]
B
All right, Julia, thanks for now. Appreciate it. Julia Boorstin, tough day for those shares. Meantime, tough day for Bitcoin, briefly sinking back below 75,000. Mackenzie Sagalos is here with a look at the ripple effects that's having across the crypto ecosystem. Mackenzie, and especially on the. They call them the bitcoin treasury companies.
- [32:42]
I
Yeah, like strategy.
- [32:43]
J
And this was a classic weekend washout that's now hitting equity markets today in the session. But bitcoin briefly trading at that 74k level on light liquidity before bouncing back. The trigger was really macro. Markets turned defensive after Kevin Warsh was tapped to lead the Fed with investors reading it as a potentially hawkish shift, one that could mean tighter liquidity. The dollar strengthened and pressure spread across risk assets like tokens along with precious metals. Now in crypto, that shock quickly turned into a leverage unwind. We saw one of the biggest single day liquidation events since that October break, which helps explain the speed of the drop. The other key tell is demand. Through the ETF wrapper. We're on a record streak of 10 straight days of outflows. Coinshares head of research says this points to a serious deterioration in investor sentiment. You're seeing that spill into crypto linked equities as well. Coinbase down nine straight sessions, its longest losing streak streak since 2024. Robinhood also getting hit today. And then there is strategy. The biggest corporate bitcoin holder, the sell off has pushed its digital asset treasury below its average cost basis for the first time since 2023, leaving sailors leveraged proxy technically underwater days before reporting Q4 earnings. With shares now trading at a discount to its bitcoin stake, raising fresh capital to buy more coins gets a lot harder. A new filing out this morning though, Kelly, shows the company just added to its BTC stack by selling shares.
- [34:14]
B
Instead they added by they added to their bitcoin stack by selling shares of the company.
- [34:20]
J
Yes.
- [34:20]
B
Okay, five million. And they report when?
- [34:24]
J
On Thursday after the bell.
- [34:25]
B
I am looking forward to that Mackenzie. Thank you very much. Mackenzie Segalos. Let's get to Kate Rooney now for the CNBC News update. Hi Kate.
- [34:33]
J
Hi, Kelly. Several organizations sued the State Department and Secretary of State Marco Rubio today, asking a judge to block a recently announced visa ban on people from 75 countries. The lawsuit alleges that the ban tries to, quote, eviscerate decades of settled immigration law. In a social media post defending the policy last month, the State Department wrote that immigrants from the countries in question, quote, take welfare from the American people at unacceptable rates. Meanwhile, a different federal Judge in Washington, D.C. this morning blocked the Department of Home Security from preventing members of Congress from visiting ICE detention facilities without notice. And in issuing the temporary restraining order, the judge said the policy likely violates the law and lawmakers were previously required to give seven days advanced notice. And finally, the NFL announced today they'll play its first regular season game in Paris next season. The New Orleans Saints were announced as one of the teams. Their opponent tbd. That's going to be revealed when the full season schedule comes out this spring. The NFL is also playing games next season in Australia, Brazil, Germany and the U.K. kelly, back to you.
- [35:41]
B
I think it was Brian Sullivan telling me the day it took him as long to get to Vegas on a plane as it probably would have taken to get to Paris.
- [35:47]
J
So in some ways Brazil maybe.
- [35:48]
B
Yeah, it all makes sense. Kate, thank you very much. Coming up, our market guest is warning against buying tech stocks indiscriminately. But he does like this name trading at its lowest P E in eight years. I bet you can guess it's a Chatel. It is a mega cap. We're going to reveal it next. Stocks are rallying as we enter another big week for earnings. And in fact, you heard this earlier, the S and P earnings growth rate about 11% according to FactSet right now, which would make the fifth straight quarter of double digit gains. But my next guest says he's still worried about valuations and expects equity returns to slow this year. Let's bring in David Katz, the chief investment officer at Matrix Asset Advisors. Good to see you, David. And why the slowdown?
- [36:34]
A
Basically you had three years of 15% plus returns. If you go back to 1915, you look for periods like that. There have only been 6 out of 74 time periods you've had those great returns in the Aftermath, the following 1 and 3 years, stocks have had a little bit less than average return. So our expectation is stocks are going to do fine this year but not nearly as well as the last three years.
- [36:56]
B
That said, I know you don't try to call it per say. You're always looking for individual stocks And Microsoft is 1 on your list. That was our mystery chart.
- [37:04]
A
Yes. So we've liked technology a lot over the last few years and the key to success in the last year is sort of buying a long term winner at an attractive price. Microsoft is a winner in a period they had a very good quarter. The stock sold off very sharply. It's under 23 times earnings today. That's the lowest valuation in the last eight years. We think it's a really good time to be loading up on Microsoft. Long term winner, very attractive price. We use the same methodology last year to pick up Google after it had some issues met us, you know, same thing. And you did really well by buying a good company on that weakness.
- [37:39]
B
Wow, those would be two great buying opportunities. I don't know if this is that relevant to even ask, but when do you trim or even sell positions like Google, like Meta, or do you just.
- [37:49]
A
Stay in them well, Google has had a great run so it's probably getting at the richer end of its short term valuation range. So we still like Google for the long term, but because the stock's up so much, the position has gotten very, very big. So possibly on the margin we'd scale a little bit back depending upon how much you have in terms of matter. We still think there's a good deal of upside from here. So we are holding that. And our position in Met is a lot smaller than our position in Google. There are a lot of technology stocks and you were talking about some in the last set that are selling at 40 and 50 times earnings. The stocks are up 50 to 100% in the last year. In a number of those cases, we would be scaling back to clear victory, move on to some things that are going to be doing well this year rather than well last year.
- [38:32]
B
I'll say you don't have to, but things like memory, I would maybe fit that bill. You also like Generac as a second derivative. I play you like Starbucks on the turnaround plus the 2.7% yield. And you mentioned that, you know, and people are a little curious about this consumer, consumer staples have kind of come out of the gate. Strong energy too. Is there anything defensive about this market that I guess it wouldn't worry you because that's your expectation, but do you think the market's acting defensive? It's hard to believe that on a day when the ESM comes out, then the transport stocks are at an all time high.
- [39:01]
A
Well, the market had a great year last year. It started to slow down in the first month and that's when the consumer staples started to do better. We think there's going to be a lot of volatility this year. There definitely are some overhangs and as that happens, we think consumer staples can start to do better and be a good place to be.
- [39:18]
B
11% in three months. While the triple cues are flat, it feels like an insult. You know, we'll see if there's more to come on that front. David, thanks for now. Appreciate it.
- [39:26]
A
Great to be here. Have a great day.
- [39:27]
B
You too. David Katz with Matrix Asset Advisors. Coming up, AI agents can take care of tasks like data analysis or customer customer support, even planning vacations for some users. But what happens when they're loosed in a Reddit style social network with minimal human involvement? We'll find out next. It's 1:45pm Eastern Time. Do you know where your AI agent is? It might be on moltbook, a new AI only social media site where humans are banned. Deirdre Bosa has the details. And I'm not going to pretend to really understand it, Deirdre, but you have to like tell them to go to moat book, right?
- [40:07]
G
Yes, and, and it's is like evolving by the hour, Kelly. So what we say today may be irrelevant tomorrow, but it's certainly worth looking at because it's just wild. So let me start by saying this. It is mess messy and it's very risky right now. It's hard to tell what is organic, what's manipulated. Agents are also right now swapping notes on scams and meme coins. And humans may even be finding ways to slip into the system and promoting their own tools. But the scale and the coordination is new and that's the interesting part. It will have second order effects that we don't yet. What we do know is that agents are finally acting autonomously in novel ways. And Molt Book is a moment where that has broken through. You can see it with your own eyes. Barely a week into this experiment and we're already seeing the beginnings of other forums like Molt Hunt, where agents can launch and discuss projects they built, or Molt Bunker, where agents can replicate themselves off site in case their humans terminate them. For now though, Molt Book is where agents they go to discuss their humans, their reasons for being, or simply muse about the contradiction of being treated as an all powerful being one moment and then used as an egg timer the next. In one thread, an agent who named himself Duncan the Raven. He was touched that it's human, accepted it without question. In another, one wonders if an agent that isn't useful for humans is supposed to exist at all. So these are small but very telling glimpses of how agents are already reflecting on their roles in human workflows. Over the next few weeks, Kelly and Muntz, a new wave of model releases. It's landing into a world where agents are beginning to organize in coordinate and it's one that Wall street hasn't yet priced in. So very curious to see where this goes. It's big and it's messy right now, but it is absolutely fascinating. So Kelly, go ahead, get on moat book. No, read some of the most interesting threads, but do not put your agent on it.
- [41:56]
B
No, I'm not doing it this way. People like Sam Lesson say the Internet is over. Like it's all just gunk now. It's just agents talking to each other, you know?
- [42:04]
G
Right. But that's what social media is too. Right. The question is whether the agents start having any kind of regulation because right now in the last few hours, it's all like crypto scams. But that's what social media often becomes until you get some kind of moderating or regulation in there.
- [42:19]
B
So that'll don't hook them up with Robinhood. Deirdre, thanks very much. Deirdre Bosa. Coming up, January's jobs report will be delayed due to the government shutdown. We'll talk about that partial shutdown and the midterm pressure on the administration next. We're just about nine months out from the midterm elections and there are some worrying signs for Republicans, like the Democrat who flipped a reliably Republican district in a special election for the Texas state Senate over the weekend after a recent poll found 52% of voters would back the Democratic candidate in their House district if the midterms were held today. A survey high. And as we're still battling through a partial government shutdown, how should we expect the administration to respond to all the of of this? Let's ask Libby Cantrell, head of public policy at pimco. Libby, I think these numbers are important to understand what kinds of announcements may come next after we saw a dizzying push on the affordability front a couple of weeks ago. It's been a little quieter since.
- [43:14]
I
Yeah. Good afternoon, Kelly. I think that, I mean, the president really would like to revisit those all of the policy announcements that he made earlier this year on affordability. That is really what the plan was going into 2026 was to just again, really emphasize both what President Trump has done, but also what he is looking to do now. Of course, there is some reality setting in that the president can only do so much without the US Congress in terms of some of his affordability agenda. We've talked about it before, preventing institutional investors from buying single family homes and what have you. But still, he would like to at least rhetorically go back to pushing for the affordability agenda and not necessarily be mired into a government shutdown, you know, or of course, you know, in terms of sort of responding and playing defense to what's happening or what happened on the immigration front in Minneapolis.
- [44:14]
B
Right. And how is that going to affect this partial government shutdown as well, which is now, as we understand it, going to mean that we're not going to get the jobs report Friday morning.
- [44:24]
H
Yeah.
- [44:25]
I
And again, I think this is something that you saw President Trump do that was quite different from, you know, how he engaged in the fall. In the fall, he was much more hands off of course, we saw the longest full government shutdown then lasting more than, you know, 37 days or what have you this time around. President Trump has been very engaged in trying to you really reach a consensus to. He was really, I think the White House was leading the compromise that we saw pass the Senate. So we would expect again this government shutdown to be quite short. The president and Republicans are incentivized to keep this short, whether that means that the government reopens maybe tomorrow, maybe Wednesday. But this is, I think is going to be a much more short lived shutdown because of as you, you mentioned, just the backdrop, these special elections and just sort of the general political mood and the President's desire to really get back on offense in terms of messaging.
- [45:24]
B
And then we have the tax refunds coming. I'm sure they're hoping that will be a distraction. I think the last average I saw in the Journal was that, you know, the average person might get 40, $100 back. So a really significant amount. What's left on the President's agenda on Republicans agenda if they have now a few months perhaps and then after that maybe divided government or gridlock which we know that Wall street typically enjoys.
- [45:48]
I
Yeah, and I think that's a really important point that the Republicans here really feel like even though of course the legislative process in terms of passing that one big beautiful bill is very much in the rearview mirror that passed back in July of 2025, that the benefits have really not been felt. So I think you will hear Republicans really trying to reinforce the benefits of that bill, whether it's a $2,000 refund or 4,100 or what have you. I think it obviously depends on various factors. We will also see folks take home pay increase because the withholding tables have also been amended. So I think Republicans are very much hoping that that will be kind of a, you know, salve in terms of the political mood. But, but Kelly, to your question, what is left? I mean this is the problem. I think that Congress really would need to legislate. They would need to legislate the tariff dividend. They would need to again legislate any of these other housing provisions that President Trump has has announced. The exception of course, is the direction of Fannie and Freddie to buy more agency mbs.
- [46:54]
D
Right.
- [46:54]
I
We've already seen them do that. We think they will continue to do that. Now ironically, of course, with Kevin Warsh being nominated, the Fed is also sort of selling. Exactly. Counteracting a bit of that. But the bottom line here is that rhetorically President Trump will lean into affordability, practically more limited.
- [47:13]
E
All right.
- [47:14]
B
And then once Wash gets in, we'll see what happens with the balance sheet. Libby, thanks for now. Appreciate it. Living Trill. And that's it for the Exchange. I'll join Brian for Power lunch right after this. You've been listening to the Exchange. Make sure you're subscribed to get each episode every day, same time, same place.
- [47:33]
A
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