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The Health of Health Insurers, 'Dumb Money' Durability, and Altman's Tech Job Warning 1/27/26
00:40:19
Health insurers face pressure after a new Medicare proposal. How meme traders have changed investing, five years after the GameStop mania. Plus, is OpenAI's hiring slowdown a canary in the tech jobs coalmine?
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A
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. Get it 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 that take credit cards nationwide.
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B
Based on the February 2025 Nielsen report.
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A
Not every sale happens at the register. Before AT&T business Wireless checking out customers on our mobile POS systems took too long. Basically a staring contest where everyone loses. It's crazy what people will say during an awkward silence. Now transactions are done before the silence takes hold. That means I can focus on the task at hand and make an extra sale or two. Sometimes I do miss the bonding time. Sometimes.
- [00:55]
C
AT&T business Wireless connecting changes everything.
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A
You're listening to the Exchange. Here's today's show. Thank you very much, Scott. The S and P hits the new record today. Retail money is on the chase and tech is on the rise again. For now. Welcome to the Exchange. I'm Kelly Evans and take a look at the Nasdaq which is leading markets higher today as we await Mag 7 results. It's up almost 1%. The S&P is up 27 points. Getting really close to 7K now about 23 shy of that mark. Very different story story in the Dow though, which is down more than 500 points. UnitedHealth alone is shaving more than 400 points off of that. We'll have more on that shortly. And by the way, the small caps are also lower today. But some of the names are jumping. Micron is up as it invests to build chips in Singapore. Cor we've up for a second day on its new infrastructure deal with Nvidia and an upgrade. Those shares are up 12% and Corning soaring almost 17% on its deal to supply Metta with fiber optic cables for its data centers. All of that said, let's begin today with some rather dour news on the economic front. Consumer confidence dropping to an 11 year low this morning. The Fed having to weigh that weakness against other stronger economic reports like gdp. Their two day meeting is today and tomorrow as speculation mounts over who might be next to lead the Fed. Steve Liesman has the latest from the CNBC Fed survey. Hi Steve.
- [02:20]
D
Hey, Kelly. While the market focuses on the outlook for rates from the Fed, there's an equal concern with the outlook for the Fed's independence to set those rates. Especially with a president who continues to push the Boundaries of that independence. The CNBC Fed survey finding that compared to Powell, the next Fed chair is expected by 72% of respondents to be slower to respond to inflation and also quicker to respond to unemployment by 67%. That is, they are seen as more dovish than Powell is. On the question of who the next Fed chair will be, we have warship 50%. That is different than its former Fed governor, Warsh. That's different from the prediction markets, which has Reeder well near 50%. Reeder's down at 14% in our survey, Hafsa at 11%. But as to the next Fed chair should be. That is the preference of the respondents. Waller once again topping the list with 44%, Warshire 25 and Reeders all the way down at 6%. Reflecting the change in the expectation of Hassett being named Chair to Warship, 56% of respondents now say the next Fed chair will conduct policy independently of the President. That's up from 41% in the prior survey. The control that the President has over Fed over the Fed will depend on how many appointees the President has on the Fed Board of Governors. That's linked to whether Fed Chair Jay Powell will stay on as a governor after his term as chair ends. He hasn't said, but 42% of our respondents think he'll stay and 42% think he'll go. So it's a dead heat right there on what Powell will do. Meanwhile, 61% of respondents say their concern about the Fed's independence would increase if the President had a majority of those appointees on the Federal Reserve Board of Governors.
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A
Kelly, we'll come back to this in a moment with Julia. Steve, but what did you make of the consumer sentiment number this morning? And again, to kind of set the stage here a little bit, the University of Michigan one has been. Has had a lot of bouts, both under Biden and under Trump, of falling to these record lows and leading to less confidence in the survey and so forth. This is the conference board. We haven't really talked so much about this one having the same issues. You know, people say, oh, these surveys are all politicized now, or what have you. This appears to be a read that has more to do with perceived weakness in the labor market. And at a time when we're all weighing whether the Fed's going to drop that emphasis or not, I have to imagine this leads them to say we're still concerned about the labor market and therefore we might end up still doing, you know, one more cut or two.
- [04:54]
D
I think Those are excellent questions. I don't know that I have answers to them. I would say that the Fed will look first at how consumers spend and less at how they feel. As you know, Kelly, there's an interesting disparity between those two things. Often that people get, you know, pessimistic numbers or pessimistic attitudes in these surveys and they go ahead and spend. So that's going to be the key. Our survey suggests that consumer spending should remain relatively strong. As for the reflection of the job market, the data is showing us that it's a low fire, low hire environment. Certainly some of the pessimism about the job market could be picking up that low hire. And again, I think the Fed will ultimately follow the data here. What I'm hearing and seeing both in the survey and from Fed officials is that they do not see the labor market falling through the floor here, that there is some expectation of weakness, but not tremendous. In fact, Kelly, there is. The outlook for unemployment in our survey is only only 4 1/2% by the end of this year and about the same next year. We're at four, four now. So at least for the forecasters, there is not an expectation of a serious deterioration in the labor market.
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A
So, so you would take the consumer confidence number with a grain of salt.
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D
It was one of the front page stories I wrote in the Wall street journal in 2000, Kelly, was this notion that, I'm sorry, 2001 in the wake of 911 with incredibly depressed consumer sentiment numbers, we sold more cars than ever in our history. Of course there was an incentive there, leading to the idea that you don't know what people are going to do to, you know, the price they're going to not do it at. So it's an interesting split. These consumer sentiment numbers can tell us about the outlook. But for big ticket purchases down the road, if people are really afraid of their jobs, if they're really depressed about the outlook, but ultimately there can be big differences and I would follow the spending more than I would the sentiment.
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A
I'm going to look that story. Look, look up that story, Steve. And we need a page tear, I think. Want to see that byline anyway, Steve, thanks.
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D
Send it to you.
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A
Yeah, thank you. Steve Liesman. Let's bring in our next guest now who expects one or two rate cuts this year. But going back to the question about the Fed chair, she says she'd remove that expectation for cuts if the Fed chair, Powell and Fed Governor Lisa Cook stay on regardless of who the president nominates to replace Powell. Let's bring in Julia Coronado. She's the founder of Macro Policy Perspectives. Julia, it's great to see you and feel free to layer in your own thoughts about the consumer confidence number on top of all this.
- [07:31]
E
Yeah, absolutely. So the conference board is extremely valuable for exactly what you pointed out, assessments of labor market conditions. And we've got a long history, it's got a pretty reliable track record mapping into actual labor market data. So while I agree with Steve, the confidence doesn't map into spending so much, but the assessments of the labor market do tell us that we're still in this. Not just low, higher, low fire, but slow bleed. We've seen the unemployment rate drift higher over last year. The consumers are telling us that, yeah, demand for workers is still lower than the supply of workers. And so it's consistent with slowing wage growth and an upward drift in the unemployment rate. So this notion that we've perfectly stabilized here. Yeah, maybe, but that may be a premature. And ultimately that's a forecast. It can go either way. And what we're seeing is that labor market conditions are, you know, not great.
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A
So. So you were expecting a cut or two this year for more or less political reasons under a new Fed Chair the President appoints. Now, would you expect a cut or two based on what we're seeing in this data?
- [08:45]
E
So this data is sort of consistent with our assessment of labor market conditions, which is that we, we actually do forecast an upward drift in the unemployment rate, something that will lead to another cut or two as the year unfolds. So that has been our baseline forecast. And I would say what we're seeing in the conference board numbers supports that forecast. As far as the sort of political pressure and influence on monetary policy, I think we've gotten some relative good news in the sense that the subpoena and the threat of an indictment seems to have led to somewhat of a backlash in Congress and sort of a resolve on the part of Chair Powell. I think odds that he stays have gone up as a result of this more recent pressure campaign. And that could lead to more protection of the institution, more stability in the FOMC, and a slower rotation in personnel.
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A
Right. All of that said, I just wanted to sort of clarify this so because originally you said, look, if, if Powell and Cook stay on you, you might not expect any more rate cuts. But now we have this data, and I'm not trying to make too much of one data point, but if you're saying you expect an upward drift in the unemployment rate, then do you think a Cut or two is warranted regardless of personnel.
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E
Yeah, I think if we realize the upward drift in the unemployment rate, a cut or two is justified ultimately, again, depending on what's happening with inflation. But assuming that we get at least stability to some potential downward drift in the second half of the year, then you could adjust the fed funds rate lower on the basis of a rising unemployment rate.
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A
Right. So. So that's not a political influence per se.
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E
So it's sort of a magnitude. So we kind of agree with the FOMC tilt. Their baseline forecast is tilted towards a.
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F
Cut.
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E
Either none or maybe one or maybe two, depending on how you expect the data to play out. That seems to us like a fair assessment of where we are in terms of their dual mandates. But again, the idea of adding in a cut or two is that you've got a new chair potentially leaning more in that direction in a committee that's willing to be somewhat differential to that.
- [11:03]
A
You know, prior to this morning, I would say most of the data points had had people recalculating the stickiness of inflation. Are we, is 3% the new 2%? Are we okay with that? GDP is back up at 5 and a half percent. Again, Atlanta Fed, we don't know how exactly it'll shake out. Yeah, so that had kind of been the concern was, hey, we're running it hot and now we're going to change the Fed chair. Now all of a sudden today makes you sit back and go, are we running it hot or is the labor market. This is the case, a lot of the doves have been making, I mean, that the labor market is weak enough that, you know, we have room to cut a couple more times.
- [11:40]
E
Yeah, I mean, I think that the running it hot is mostly a financial conditions assessment and what we see in the consumer confidence numbers is evidence of the K shaped economy. So yeah, the average consumer is not doing so great. Wage growth has grinded lower to where it's barely beating inflation and consumers are feeling that pressure. To Steve's point about auto sales, auto sales got, you know, they went down quite a bit in the fourth quarter and automakers are assuming a pretty price sensitive, budget conscious consumer in 2026. So yes, the stock market and anything tied to AI is, you know, everything's coming up roses. But you know, for the average consumer who is depending on their labor income to finance their spending, you know, it's not a disaster, we're not falling off a cliff, but it's, you know, it's not great. Consumers aren't feeling a wash in prosperity right now.
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A
All right, Julia, thanks so much. It's going to be an interesting meeting tomorrow. Maybe it'll be a nothing burger, but they again, as always, have to kind of walk this very fine line. Julia, thanks so much. JULIA cornell, Macro Policy Perspectives let's turn now to the markets. It feels funny to say the Dow's at session lows on a day when the Nasdaq's up 1%, but that is the case. And the S and P hit a new record high this morning as it's getting closer to 7,000. The Nasdaq, by the way, is still around that October resistance level. On that note, let's bring in Scott Kroner, US Equity strategist over at Citi. Scott? You know, Julia, we were talking kind of through the difference here of the impact that the new the Fed chair announcement is going to have overlaid with the data and everything else going on. So how are you telling equity investors to think through where rates are going right now and kind of the announcement risk around all of this?
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B
Hey, Kelly, so I'd say there's, you know, the starting point is which rate. So you know, house view is we we get nothing burger tomorrow out of the Fed, as you suggest. We think there's room for another two cuts this year, if not three. The nagging concern is regarding the labor condition. No question about that. But for the focus on fed funds, you're still looking at a 10 year yield which hasn't budged versus where the Fed first began easing a while back. So in terms of how you actually resolve this remains to be seen. Obviously, the inflation outlook is part of this. I would say from my perch, looking at our at our equity call for this year, we're less concerned about inflation as a function of this labor condition and the influence and read through to aggregate consumption levels. And we're also looking at the playbook longer term is probably having as much of a disinflation component to it as anything.
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A
Hmm. Are you maybe we can show the dollar and for what it's worth, Rick Santelli said the five year auction just now was a little weak. I think he gave it a C minus. So are you concerned about the weakening dollar, some of the parabolic moves we're seeing in the metals, you know, this idea of, I mean, choose your word, dollar, crash, you know, sell America, all of these kinds of things.
- [14:42]
B
Yeah, we're definitely keeping an eye on this, I wouldn't say concern yet, but what I would remind is that we've got a fairly aggressive and optimistic view towards the S and P this year our 7700 target assumes that we can hold current valuations about where they are and and you know appreciate courtesy of what we still think is a very confident look towards the earnings growth picture. However, however, as you begin to watch the the 10 year yield hover in this 420 range when we think it ends the year sub 4 when you look at the dollar trajectory and the potential of what that can do in terms of incremental swings to non U S buying intentions for the US it does weigh into how we think about that valuation picture. Not an issue yet, but certainly something that we're monitoring as we go through the Q4 reporting period.
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A
So just to be clear and because not many people are expecting the tenure to go below 4%. I mean some are as you said that's your view but explain how you think that affects U.S. valuation.
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B
So essentially what happens is that are the premise for how we hold 24 times trailing or even look at 20 to 23 times forward is that lots of things have to happen into the way we think about a fair value assumption for the S and P. We do our own, our own work on this. But what I would say is going into this year, six weeks ago when we're putting out our forecast embedded in that holding this current fair value paradigm had been a fairly stable if not gradually improving dollar along with this downward trajectory in 10 year yields. So again we're a month into the year, it's very premature to say a major change in our view. But what we're identifying here are some areas of concern that we're going to have to monitor I'd say in the, in the weeks months ahead.
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A
I see and look, it could be like last year where the dollar index hit 110 and then went on a straight path down. Right. So who knows. Quick final question. What do you think of Mag 7 earnings? You worried about them, not worried about them.
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B
Now there again, you know we're very aggressive in terms of our full year earnings picture for the S and P. We've already been modeling into our 320 estimate Kelly, a scenario where the Mag 7 we're now onto the Elite 8 as a reminder continues to give us a beat and raise but about half the magnitude of last year's. So we're assuming that we're going to get a fairly steady drumbeat of good news on that. What I would point out though is is that as we look at the broader index, this Elite 8 Mag 7 construct versus everything else everything else is still actually more expensive versus its own history than the lead Adar. So essentially what's happened to your earlier point on this part of the market kind of trending sideways is that is actually right now set up to have the more attractive relative value valuation opportunity as a function of where peg ratios P E to growth ratios are. So we think that there's still opportunity here on the long side and the I play and why we maintain it overweight on tech.
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A
Who's the eighth who? It's it's the Broadcom.
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B
It's it's it's its weight has now surpassed a couple of the other MAG7 constituents.
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A
Look, it deserves a spot at the table. We're going to have to keep expanding it at this rate. Good problem to have. Scott, thanks so much. Really appreciate it today.
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B
Thanks Kelly.
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A
Scott Kroner with Citi coming up not so magnificent. The health insurers are tumbling after the Trump administration has proposed keeping the rates Medicare pays them based unchanged. That's leading Humana to its worst day since 2009.
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G
Unh.
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By the way, also gave weaker than expected full year revenue guidance. Those shares are down 20%. We'll look at what to do with the space next. Plus silver big reversal yesterday. Pulling back from its record high as gold prices aim for their best month in more than 40 years and are slightly higher at this hour. We'll get a technical take on the moves we're seeing in metals and the dollar index near a three month low. We're back after this. This is the EXC on cnbc. Oh, could this vintage store be any cuter?
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Right.
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And the best part? They accept Discover. Except Discover in a little place like this? I don't think so.
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H
Jennifer.
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Oh yeah, huh. Discover's accepted where I like to shop. Come on baby, get with the times.
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Right.
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So we shouldn't get the parachute pants. These are making a comeback, I think. Discover is accepted at 99% of places that take credit cards nationwide.
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Based on the February 2025 Nielsen report.
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Before we had AT&T business Wireless coverage, our delivery GPS wasn't the most reliable. Once our driver had to do a.
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D
14 point turn to get back on route.
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A
A 14 point turn. An influencer even livestreamed the whole thing.
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D
Not good for business. Now with AT&T business wireless routes are.
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A
Updating on the fly and deliveries are on time. And the influencer did get us 53 new followers though.
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C
AT&T business Wireless connecting changes everything.
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At Capella University, we believe accessible education.
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Can make a difference.
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That's why we offer scholarship opportunities to all eligible students. Un futuro diferente estam mass serca de lo que cres con Capella University. Learn more at Capella. Eduardo welcome back. Shares of UnitedHealth are plunging today nearly 20% after issuing softer revenue guidance for 2026, despite a modest Q4 beat. But of course, it's yesterday's news that's really dragging on the whole sector, with several of the big health care names tumbling after the Trump administration has proposed keeping the Medicare Advantage rates flat for 2027. My next guest says she'd be a buyer of several of these names here, which are selling off today. Let's bring in Jessica Tassen, senior research analyst at Piper Sandler. Jessica, welcome to you. And I thought Stephanie Link put it nicely last hour when she said, look, at some point these companies are going to get out of the business. So are you being buying these stocks because they're going to get out of the Medicare Advantage business or because they're staying in it?
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H
Not at all. So, hi, thanks for having me. I would say for UnitedHealth specifically, Medicare represents about two thirds of their premium revenue between Medicare Advantage D, SNP standalone Part D and Med supplier. So they're absolutely not getting out of the Medicare business. But I would say last night cms published the 2027 advance rate notice for Medicare Advantage. This happens every year around the end of January. CMS proposes rates and finalizes them in April for the subsequent year. This year, in light of what we're accelerating trends across fee for service and Medicare Advantage throughout 2025, CMS somehow arrived at a point.09% expected average change in revenue for 2027. That's down from about 5% in 26. And it's clearly a problem, right? These rates are nowhere near sufficient to cover what are rising cost trends. But I would emphasize that United is not getting out of this business. If anything, given their scale, infrastructure and resources, they're kind of best equipped to weather the challenging rate environment. This is more just, you know, a risk and ends up being bad for beneficiaries where Medicare Advantage has proven to provide extremely high consumer satisfaction. It improves, it improves outcomes, it democratizes access to care, it aligns incentives and it lowers costs over time. So these challenging rates are more just a risk to the entire industry and ultimately for beneficiaries, not necessarily for UnitedHealth Group specifically, in our view.
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A
I mean, there's, there's so many fascinating things that you talked about there. So why, why is the rate flat? I mean, I know you're not on the inside of this, but you're saying that it's not enough to cover the cost of delivering this care, is that right? So, so what's going to happen? I mean the shares are down then because what do they expect the knock on effects of this implementation then to be?
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H
Yeah. So the rate is flat because of a couple of different things I would say. First and foremost there is, there's kind of a headline number or an effective growth rate which is 4.97% according to CMS. Our estimates had put it closer to 6 and a half percent. So already your effective growth rate for 2027 is kind of below expectations. I would say in addition to that, you've got a combined close to 5% headwind from a couple of risk adjustment changes that CMS is proposing to implement in 2027. So. Right. 5% kind of top line or headline growth rate, less the 500 bits of year over year risk adjustment and headwind gets you to about a flat rate. Flat, flat advance notice relative to 2026. In terms of just, just what that means. Right. You have cost trends or utilization plus unit costs that are growing at, at high single digit, possibly double digit rates year over year in 2026. That's a continuation of an acceleration that we've seen over the course of 2025. And so just as rates are flat against that accelerating trend, you get just kind of a widening spread between what you're paid and what ultimately you have to reimburse as a payer.
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A
Yes. So which is to say with all the information that you have your fingertips so nicely, that doesn't sound like a great business to be in.
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H
I would argue that it is a very noble business to be in. We know that 34 million seniors in 2025 chose Medicare Advantage. It's a business that we believe aligns incentives appropriately, reimburses both NGOs and providers for high value care. And it has the best potential in our view to, to improve outcomes, democratize access to care for all beneficiaries. And so I would, I would say our view, and I believe United's view, you know, is that this is a noble and correct business to be in. Rates will fluctuate year over year. But I would say United's large scale infrastructure infrastructure, meaning their significant value based care business put them in a better position to endure a challenging rate environment than most other mao's.
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A
Yeah, I appreciate the chivalry. You know, I mean it's, it's, it's admirable but you know, is it sustainable? And I guess if the administration is basically saying, you know, we don't want to shell out as much for these, you know, enormous cost centers than. And what's the best case scenario here? That it's just a one year passing thing.
- [25:07]
H
Yes. So we have an opportunity in April to see the, the advance notice rates get revised higher based on more recent experience. So the advance notice is based on, on claims through to Q or 3Q of 2025. We have an opportunity for some positive revision in April at the time the final announcement comes out based on more recent experience, meaning 3Q, 4Q, 2025 claims. So that's your first kind of potential opportunity. If that doesn't occur, we would expect to see that in 2027. NGOs continue to pare back benefits, meaning reduce benefits for beneficiaries and pull out of certain geographies and certain types of plans. Right. You know this, that will be the second consecutive year of that happening at a, at a kind of industry wide scale. And I would hope that, that the message at kind of the federal level is received at that point. Right. Which is that rates are insufficient to cover cost trend and we need to reinvest in Medicare Advantage for this, for the sustainability of the program.
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A
We'll see if they are receptive to that message. Certainly the alarms are going off for investors here who have already been through a tough time in the space. Jessica, thanks so much for joining us to break it down today. I appreciate it.
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H
Thanks for having me.
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A
Jessica Tassen with Piper Sandler. Coming up, we're marking five years since the start of the Gamestop meme saga. We're going to look at how retail investors permanently altered the investing landscape during the pandemic and how Wall street is adapting. That's next. Not every sale happens at the register. Before AT&T business Wireless, checking out customers on our mobile POS systems took too long. Basically a staring contest where everyone loses. It's crazy what people will say during an awkward silence. Now transactions are done before the silence takes hold. That means I can focus on the task at hand and make an extra sale or two. Sometimes I do miss the bonding time.
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C
Sometimes AT&T business Wireless connecting changes everything.
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A
Is it time to reimagine your future? The right business skills may make a difference in your career. At Capella University, we offer a relevant education that's designed to focus on what you need to know in the business world. We'll teach professional skills to help you pursue your goals like business management. Strategic planning and effective communication, and you can apply these skills right away. A different future is closer than you think with Capella University. Learn more at Capella. Edu. What made you confident that you could do something that hadn't been done before?
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G
I have no fear of failure.
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E
Trailblazing women, changing the game One of.
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My favorite pieces of advice Think about what your boss's boss needs. Leadership can look in many, many different forms. It really does come down to just trusting yourself. Life is short and you just gotta.
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Think big to accomplish big things. Julia Boorstin hosts CNBC Changemakers and Power.
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Players New episodes every Tuesday, wherever you get your podcasts. It's the fifth record intraday high of the year for the S and p and the Dow's at almost 500 points. Dom Chu is here with a closer look at the day's biggest movers.
- [28:21]
F
How about we focus on what's happening with the Nasdaq? You mentioned the Dow and the S and these new record highs. The Dow kind of lagging a bit, but if you take a look at the NASDAQ Composite Index, we are going back and with this winning streak pushing back towards the record highs that we saw back in October of last year, if you take a look at this kind of bluish grayish line, the one that's kind of coalescing around this market right now, you'll see that's the 50 day average price for the for the NASDAQ Composite Index. We're just slightly above there now that this trading range has been in effect pretty much since the record highs. On the high end you're talking roughly 24,000, 24, 0, 19 is the record high and on the low end roughly 22,000, just a little bit below that, we're pretty much stuck right in the middle. Emblematic of that kind of push and pull, that kind of coalescing around that 50 day average price on a rolling basis has been some of the themes from a stock specific perspective here. Just look within technology, computer chips and memory storage. If you take a look at the best performers on a three month basis within the Nasdaq, Western Digital, Micron, Seagate, the biggest gainers there, memory chips, storage, that sort of thing, a big story there. Meanwhile, if you look at some of the biggest laggards within the NASDAQ 100 during that same span, ARM Holdings, Qualcomm and Broadcom acting as that kind of tug of war plays out there, and maybe even more so, emblematic of that, check out the biggest influences on that NASDAQ trade Some of the biggest stocks out there, Nvidia shares pretty much flat. We're down 1% for the three month span there. Alphabet shares are up 25%. On the upside, meanwhile weighing it down. Shares of metal platforms down 11%. So that tug of war is playing out just like that. And by the way Kelly, as we talk about the setup going into the four key earnings report this week, Microsoft, metal platforms, Tesla, Right. All of these trades coming together in Apple, each of those stocks is down going into their earnings print on a three month basis. So we'll see whether or not that's the catalyst for the return to record highs or whether or not this kind of move back towards the lower end of the range continues. Kel, I'll send things back over.
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Is the bar low enough? We'll find out. Don Banks.
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F
You got it.
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Shares of GameStop extending yesterday's gains higher 5% on the week after famed investor and early GameStop buyer Michael Burry said he believes in CEO Ryan Cohen and quote likes the setup. This comes on the five year anniversary of meme stock mania when a group of online traders first sent GameStop shares soaring, essentially transforming the investing landscape permanently. Kate Rooney has a closer look. Kate?
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H
Hi kelly. So yeah GameStop at the time really did bring a lot of negative attention to retail investors. The incident was sort of synonymous with stock market gambling, so called dumb money. Consensus was that retail would retreat after that frenzy. But we have seen the opposite in the past five years. This group more active than ever and a much more important force in the markets. Last year for example, JP Morgan found retail flows were 17% higher even than that peak mania back in 2021 around all of the meme trading retail participation is now near 20% roughly of daily volume. That's up from low single digits before COVID That's according to BlackRock and Robinhood. Steve Cork tells me on higher volume days that's closer to 40% and then 90% of Robinhood's two and a half million clients, companies who joined just in that January 2021 month they are still on the platform. They stuck around. There has also been this outsized appetite to buy dips. They have been concentrated some of the Mag 7 names Palantir which helped them outperform at least last year. Vander Research also noting a record move into silver which has actually seen they say more turnover than in video this week. Institutions are also paying close attention, especially hedge funds rethinking short selling after retail investors went after those shorting GameStop. If you remember Tom Lee, who I also spoke to, says his clients are also watching social media and sentiment really closely called retail difference makers and then underlined this massive impending wealth transfer. So 76% of household wealth, he says, is held by people over the age of 60. He's estimated $120 trillion. Kelly is going to be inherited in the next few decades. Brokerage firms are also starting to adapt, really try to cater to younger traders. You got 24, seven trading and then prediction markets booming. They're all trying to get a slice of that.
- [32:34]
A
As big a force as corporate buybacks in the market. That was Brian Reynolds noting how significant the retail investor flow has been. Great, Kate, thanks very much. Kate Rooney to Contessa Brewer. Now for the CNBC news update. Contessa.
- [32:46]
G
Hi there, Kelly. The fatal midair collision in Washington, D.C. that killed 67 people January last year was the result of systemic failures. The National Transportation Safety Board released their findings today after a year long investigation. And they cited overwhelmed air traffic controllers who relied too heavily on pilots separating their own aircraft from each other in the crowded airspace. Regulators also blamed the FAA for not acting on recommendations on ways to make the area safer. Nearly half a million Americans still don't have electricity or heat after this past weekend's deadly winter storm. Temperatures are still plummeting around the country. Power outage US shows more than 100,000 customers still don't have power in each of three states, Tennessee, Mississippi and Louisiana. The ice has been very thick and that's a real problem. Yale is going tuition free for students from households making as much as $200,000 a year. Students from families making less than 100,000 will pay nothing. Tuition at the Ivy League school next year is 72,500. When adding in room and board and other fees, it rises to about $98,000. Hey, they should look at, you know, some elementary schools in Manhattan and compare prices is all I'm saying.
- [34:02]
A
Yeah, they're getting close. I think it's crazy preschool. Anyway, we could go on. Contessa, thanks very much. Contessa Brewer. Coming up, is yesterday's reversal a sign that metals momentum is starting to fade? Silver's up 50% this month, trying for its best since 1979. Copper is nearing its first six month win streak in 15 years. Do you chase it or fade it? We'll get a technical take on the whole group next. As America celebrates its 250th anniversary, CNBC spotlights the companies that rose with the.
- [34:37]
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Nation and continue to shape its future.
- [34:44]
A
I am Lisa Laird Dunn, 9th generation and CEO of Laird Company, America's oldest distillers. The origins of the company start back to 1698 when my family arrived here from Scotland. They came here for safety, to find a new way of life. Since apples were plentiful right here, they felt that that would be the perfect crop to work with. Laird's applejack is the original American spirit. My ancestors were Revolutionary war dragoons under the command of General George Washington. So when he was in this area, we did provide the troops with applejack. We've always remained true to ourselves, to our craft, to our value, to our vision. Our product has not changed. The actual recipe, the process, how we produce our product is still off authentic. Currently we have three generations that are working together. I am extremely proud and excited that I could pass my passion on to my two children to continue our legacy. I think the largest pivot during the history of Laird Co. Would be during prohibition. Not many companies re emerged once they had to shut down. My ancestor had the foresight to petition the federal government for a permit. We were allowed to produce 1 million gallons a year of apple brandy for medicinal purposes. Once prohibition was lifted, we had the inventory. America has a culture that celebrates entrepreneurship and individual success. We embody the American dream and we've been able to continue that American dream for 300 years. Tech layoffs are revving up again. Pinterest shares are down nearly 10% today after the company announced a restructuring that will eliminate 15% of its jobs. Meanwhile, Amazon is reportedly set to cut another 14,000 positions. Even AI startups are making changes with OpenAI. Sam Altman saying the company plans to dramatically slow down hype. Is this a tech story, Deirdre, or is this. And back to our favorite Chad GPT versus Now it's Claude. Now it's all about Claude. Are they just. Is this just a cute way for him to disguise the fact that they are laying people off?
- [37:10]
G
You know, that's a really good question. Is this like an open air thing or is this a broader thing? Well, I'm going to argue that this is both. But it also tells us something really interesting about, you know, how we should be looking at AI at the moment. So the shift is interesting for OpenAI because of course, it's not exactly known for its financial discipline. There's that in a town hall. Sam Altman, he warned employees that aggressive hiring can actually be a signal of poor planning and a setup for layoffs. Once I starts doing more of the work, that is what Pinterest and Amazon are doing right now. Now this gets at a broader shift that investors should be watching closely, especially as big tech earnings gets underway. The next phase of AI, it's not just about expansion, it's about leveraging what you already have. So for example, if CapEx continues to climb, the investors should be asking how targeted the build out is, what they're doing with what they've already built. They should also scrutinize utilization rates at those data centers and look for productivity metrics like revenue or free cash flow per employee rather than just raw headcount. In other words, who's getting the most out of what they've already spent or workforces that they have already cut? Anthropic CEO Dario Amodei. His essay that was published yesterday, it had a very practical point underneath the warnings, which I know got most of the attention, and it's this. As AI systems mature, the constraint shifts from building faster to managing and deploying what already exists. So that framework that lines up with what Sam Altman is signaling here with hiring, and it's one that investors absolutely should be paying attention to over the next few weeks when we get big tech earnings. So, Kelly, it's a little bit of both. OpenAI needs to show some discipline, but as a whole, probably needs to show some, some discipline.
- [38:46]
F
Right.
- [38:46]
G
Show how they're leveraging what has already been built out with, you know, billions, hundreds of billions of dollars.
- [38:52]
A
Yeah, I still, I don't know, I, you know, I like to remain a little hopeful. I think maybe all these new tools I like. Who was it the other day your friend over at DeepMind was telling, I think this was in a CNBC interview, said, yes, said, you know, it's urgent that all young people learn how to use these tools or anyone in the workforce right now. The way in which they show. I really think there's going to be as much opportunity created from these tools as there are, you know, positions or people eliminated from it.
- [39:17]
G
Right. Kelly, I know you'll enjoy this, but my kids went from asking for video game time to asking for compute credits. They've been spinning up their own apps and they're looking at it saying, can.
- [39:26]
A
I use your account?
- [39:27]
G
Because I ran out of credits here and that's sort of like the shift. At least that's happening here. I'm not saying the apps are any good. No, just say we do building them.
- [39:35]
A
I let them use Microsoft Paint and they make, you know, I help make some silly image and then I put it in Gemini and I say, bring this to life. Right. It's silly. But now, now, of course, I can't get them to stop. But anyway, exactly. Deirdre, thank you for now. Deirdre Bossa, appreciate it. Coming up, the Korea ETF is lower overnight after the president threatened to hike tariffs on some of its exports. But investors use that as a buying opportunity to gain exposure to Asia's best performing market. They've pushed the EW Y ETF to a record intraday high. And with global trade shifting amid continued threats, we'll talk more about where to invest overseas next. Speaking of trade, don't miss a first on CNBC interview with Treasury Secretary Scott Bessant Tomorrow at 10am Eastern on Squawk on the Street. The glued to our TVs for that one. We're back after this. Mother of all deals. That's how India's prime minister described their new free trade agreement between India and the EU today. The deal, which has actually been decades in the works, represents about a quarter of global GDP and covers a population of nearly 2 billion people. It also closed on the same day President Trump says he plans to raise existing tariffs on South Korea for dragging their heels on a US Trade deal. But my next guest still sees big opportunities overseas. Here now with his international trades is Tim Seymour, the CEO of Seymour Asset Management and a CNBC contributor. And boy, did they pile into the Korean market. Tim, welcome.
- [40:59]
B
They did.
- [41:00]
C
And they've been piling into it all year. The EW wide, the South Korean ETF is up about 25%. But we all know what's been going on in memory. And if you want the mother of all memory countries, it's Korea. And Hynek said an announcement this morning that they've got exclusivity on Microsoft's new chip. That's enough to send the stock up 8%. They're also just jockeying to see who can report earnings first. On Thursday. They both report and they've kind of moved it. So both reports are at the same time. There's a lot of competition there. Samsung's up 35% this year. So if you want exposure to the part of the semiconductor trade that's been working for the last three months, a lot of it's in Korea. That's part of that story. But yes, it's a, it's a day when these global trade headlines that are inspired by fallout from Washington or just, you know, changes that as, as you noted, have been in the works for some time. There's a lot to do around the.
- [41:51]
A
World even as and this is just crossing, but it's not a terrible surprise, but J.D. vance has warned South Korea against targeting American tech firms, for instance, like Coupang, amid this trade escalation. So the temperatures are being turned reportedly we are seeing the temperatures turning up. But why are investors now ignoring it? It's sometimes you wonder why investors pay any attention to these headlines and other times you wonder why they ignore them.
- [42:17]
C
Well, first of all, South Korea has been a strong ally of the US For a long time and so much like headlines on Japan, I think people see the big political picture as such. I also just think that strategically it's going to be very difficult to move too far away from some of the capacity that Korea is giving us. So and Korea is also very delicately positioned between the US And China. I would say overall, as far as this global trade goes, we're talking about dollar weakness a lot this year. It's happening again. But I think the Asian currencies, notably the South Korean yuan, we've seen the Chinese yuan as is appreciated, which is surprising given at times they've really fought that. But they are trying to get this reserve currency status. So there's there are politics. Obviously the mother of all currency trades is the yen and what's been going on there. I think also discussions at least hints out of both Japan and us that there could be intervention is enough to also push the dollar lower. That's part of this trade. It's a trade that I think will.
- [43:18]
A
Continue to work in five seconds. What does the EU India deal tell you?
- [43:24]
C
It tells me that Europe and India but I love saying this because it shocks people. Europe's deregulation path is more extreme than the US And I think it's fantastic for spirits, it's fantastic for textiles and whatnot. It's great for autos. It's great for investing in Europe. Take a look at that. I think it's important you have been.
- [43:42]
A
I meant to make sure that I need this needs to get out there in the public conscious as you've been saying this, Tim, it's an excellent point. I appreciate your minding us of that. Thanks for the show.
- [43:49]
D
Appreciate the footnote.
- [43:50]
A
Tim Seymour, thanks for watching the exchange. I'll join Brian Sullivan for Power Lunch right after this quick break. You've been listening to the exchange. Make sure you're subscribed to get each episode every day, same time, same place. If you your parent or spouse served in the military, you could join our family. Our members saved an average of $70.
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