good morning, and happy friday it's 5:00 a.m. at cnbc headquarters the dow set to drop triple digits at the open, at the closing of a volatile week. amc and other short stocks with heavy short interests continue to battle hedge funds and it is friday, january 29th, 2021, and you're watching "worldwide exchange" right here on cnbc. ♪ ♪

good morning, wherever in the world you are right now. i'm frank holland in for brian sullivan let's get right to the markets this morning stock futures indicating the dow will drop more than 250 points at the open. down 277 right now however, the nasdaq is the most in the red, the tech heavy index still impacted by apple and facebook trading lower since really strong earnings reports but we are seeing a bounce back in some of the so called reddit stocks, that includes game stop, and amc. you see game stop up here with 115% this comes after robin hood announced it would allow limited stocks and restricted trading in many of the names td ameritrade, schaub and others put trading restrictions in place this week. robinhood ceo vlad tenev speaking to cnbc addressing the widespread criticism his firm is now facing

>> i want to address misinformation that's out there because there's a lot of it. we absolutely did not do this at the direction of any market maker or hedge fund or other market participants. the reason we did it was because robinhood is a brokerage firm. we have lots of financial requirements there was no liquidity problem, and to be clear. this was done preemptively, so we did this proactively, and thousands of other securities remain tradeable on the platform, customers that held these positions were able to sell them, and we're doing what we can to allow buying and to remove these restrictions in the morning. robinhood is raising

$1 billion from the existing enves tors, a -- investors. spilling over into the global markets, asia closing lower overnight, and the major european markets seeing a lot of red this morning our julianna tatelbaum joins us from our london newsroom, and what are you seeing over there. the retail frenzy, whether this is a fascinating story to watch or if it has actual implications and potential risks for financial market stability we are seeing the benchmark trade down by 1%, very evenly spread losses across sectors, and across regions, the auto sector, one of the key bright points this morning. otherwise the majority are trading lower. one that investors are watching closely today is the european medicines agency decision on

astrazeneca, they're expected to make a decision around whether to approve that drug later today. the listing of gamestop, to give a sense of how it's traded overnight, currently up 113% the volatility continues in this stock. frank. >> thank you very much really appreciate it joining me now is hennessy funds portfolio manager josh wine, a lot to get into this morning. thanks for being here. >> thank you, frank. good morning. >> let's kick things off you are bullish in the market, some see a potential bubble. the elevations that many of us are giving a side eye to, may look cheap down the line current interest rates are a factor can you explain for us >> thanks for having me, the 10-year at 1% in earnings at the s&p 500 are at 22% to put those together, that's an earnings yield of 4 1/2% on the

s&p. that spread over the ten-year of 3 1/2, that's pretty much where we were before we started talking about the pandemic about 12 months ago or 13 months ago so in that light, i think that the market, you know, you always have to look at interest rates there's always this choice between the risk free rate, and risk assets, so yeah, i'm very bullish on the market, but, you know, you can drown in a river that's on average 2 feet deep, and it's things like gamestop and other things obviously are dominating the news that can knock people out of the game, and i think that, you know, minimizing the stakes here, and just playing the long game is a big deal as trite as that sounds. >> speaking of gamestop, bed bath & beyond, amc, some of the reddit revolution stocks as melissa lee calls them, how do you see those impacting the market over the next week even because we don't really know when this whole thing is going to wrap up >> sure. it's a great question. i think it impacts, you know,

the brokerage firms that are, i guess, quote enabling the trading, and they're going to have to figure out how to, you know, watch their own balance sheets, and you know, make sure there's liquidity for their counter parties and the clearinghouses i don't think it affects the market i mean, i think that, you know, i think i heard gamestop was the largest holding in the russell 3,000 at some point. anyone buying or selling game stop is aware of the casino environment that surrounds that. i don't really see, i think what affects the market is vaccination time lines and, you know, not so much even in the u.s., but i think globally, i think the eu is struggling and south africa and many other countries, so i think that -- i think gamestop is fun to think about because it kind of came out of nowhere to some degree. the victims are quote hedge funds, people don't typically feel badly for hedge funds, but right now, we're trying to find the victim there will be one or many, but i think that that's noise.

i think the market will trudge along and be just fine and we can talk later about some names, but there's plenty of value out there, and you know, i think it will be fine. >> let's get into talking some stocks, either you or the funds you own, have owned, your bullish on mid cap stocks, in particular, the russell outperforming over indexes that makes sense your picks are they a reopening play or a play that can kind of ride out any kind of uncertainty we might see >> i suppose to some degree, they're a reopening play they have performed throughout the pandemic, so looking at like a bj's wholesale club or big lots, which are in our tennessee mid cap 30 fund, i mean, they've done quite well through the pandemic we know the story with grocery and retail, and they fit squarely in that camp. i mean, i would point out that, you know, both are, you know, the market's at 22 times

earnings, you know, big lots at about ten times earnings bj's at about 18 you know, both, you know, strong generators of free cash flow big lots pays a dividend, good dividend growth, you know, good balance sheet, so on and so forth, and i think at a time like this, it's really important to kind of look at very basic approachable aims like at big lots and realize there's value, there's growth, there's strong balance sheets you're not, you know, just trying to sell to another buyer or buy from another seller this is not a trading play this is an investment, and i think that things like this will start to get more attention as people get, you know, clearer heads. >> josh wein, we really appreciate the insight have a great day. >> thanks, you too. turning to washington, president biden wrapping up his first full week in office, among the agenda items, a push for a $1.9 trillion covid relief bill.

nbc's tracie potts joins us from the nation's capitol with what we can expect. good morning, tracie. >> what the president wants to do is speed up the process, get money in people's wallets. other things, like vaccine distribution, republicans are trying to slow it down and break it up. the white house confirming overnight they're not having that the president having this meeting today to talk about how the delay in covid relief out of washington is affecting businesses and workers and families >> as we continue to battle covid-19. >> reporter: president biden in a hurry to get $1,400 payments to plamericans. >> the first thing i got to do is get it covid package passed. >> reporter: his 1.9 trillion, includes vaccines in los angeles, people camping out hoping to get a shot. >> if there's any chance i can get it, it's totally worth

staying in line for all day. >> reporter: republicans say biden's plan costs too much. they want to break it up the white house says no, but he'll negotiate. >> we'll keep trying until the end, but there's an urgency here. >> reporter: with extra unemployment running out in just over a month, democrats want a vote next week with or without republicans. >> it would be very disappointing, madame president, if democrats decided to shove a partisan bill through congress without even attempting to work with republicans >> reporter: the white house covid response team briefs again today, now faced with the new south african version of coronavirus showing up in two south carolina patients who have not traveled. >> if we continue to have a slower than expected vaccine rollout, the newer strains could start to become the dominant strain and that would be a disaster for the country >> reporter: it's unclear how well the current vaccines can fight the new versions of this v virus. meantime, the white house confirming overnight that

alejandro mayorkas, the incoming homeland security secretary will oversee the effort to reunite families separated at the border it's part of the immigration orders that were delayed until next week. mayorkas isn't expected to be confirmed until monday frank. >> as always, a lot going on down there in d.c., we appreciate it. thank you. when we come back, continuing coverage of a volatile week on wall street what high profile investors, brokerage firm ceos, regulators, and politicians are saying about what many are calling a reddit trading revolution. first, as we head to break check out this morning's biggest stock winners and biggest losers stay tuned, you're watching "worldwide exchange" right here on cnbc.

if you're just waking up, futures down this morning. the dow set to drop 250 points at the open. the nasdaq, the most deeply impacted, the tech heavy index e trading lower despite lower reports. check out the volatile short squeeze stocks we have been watching all week. eye popping numbers here, gamestop up more than 100%, bed bath & beyond up only 17% right now, if you look at cost corp., one of the companies that has a lot of people scratching their head, there's thoughts this is

about nostalgia, where does koss corp. come in, shares up 11 percent. let's not forget it is still earnings season. let's get a check on some of the stocks moving on quarterly reports. s.a.p.'s 4th quarter net profit fell the software maker confirming declines in operating profit and revenue which it preannounced earlier this month reiterating the guidance this year, saying the shift to the cloud will drive long-term growth visa, beat forecast as payment volume rebounded the company announcing an $8 billion stock buy back. visa is not providing guidance for the year due to the covid crisis like many companies mondelez benefitting from higher demand for snacks and of course oreos in developed markets renewed lock downs in europe and north america forcing consumers to stay home on the holiday season, and stock up on their

favorite snack food and chocolates. turning to a sector that tells us a lot about the broader global economy we're talking about transports 3 billion ecommerce shipments this holiday season. that's a record. it was also the ultimate test of the profitability of the residential ecommerce. fedex and ups improved their revenue per piece and volume simultaneously on their ground divisions that handle almost all of ecommerce that was previously thought to be nearly impossible in b to c part of that, the push to click and collect. ups offered a target gift card for up to 15 bucks for picking up a package at 15,000 access locations, including the ups store, and michael's fedex offered a $5 walgreens credit for returning packages at one of the 9,000 drug stores: both have learned from amazon where an estimated come from the warehousing and shipping of small and mercdium sized busine that are a higher margin business than larger retailers

smb's have climbed to a quarter of volume, and delivery increased by 62% ups partners with square to offer discounts of 55% off shipping rates to attract more and more of those smb's. fedex saying we are prioritizing business from small and medium customers and ensuring we protect the business that will stay with fedex for the long-term. fedex partnered with big commerce to give discounts of 40% to ground shipping just about a third of small businesses, they still don't have a web site according to some estimates, leaving a lot of room this year for that higher margin business to be won. still to come here on "worldwide exchange," why washington politicians are taking notice of this week's trading volatility and what many of them say should be done about it a live report from d.c. still ahead. check out the biggest stock win sk winners and biggest losers stay tedun you're watching "worldwide

exchange" right here on cnbc cutting edge made user friendly. in other words, we want a hybrid. and so do retailers. which is why they're going hybrid, with ibm. a hybrid cloud approach with watson ai helps manage supply chains while predicting demands with ease. from retail to healthcare, businesses are going with a smarter hybrid cloud, using the tools, platform and expertise of ibm. cell phone repair. did you know liberty mutual customizes your car insurance so you only pay for what you need? just get a quote at libertymutual.com. really? i'll check that out. oh yeah. i think i might get a quote. not again! aah, come on rice. do your thing. only pay for what you need. ♪ liberty. liberty. liberty. liberty. ♪ these folks, they don't have time to go to the post office

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officials say 25 structures were damaged in monterey county and at least one person was injured. there's controversial in new york this morning over the true toll covid has taken on the elderly. a month's long investigation by new york attorney general letitia james accuses the state of under counting covid related nursing home deaths by as much as 50% the report says the state did not report nursing home residents who died of coronavirus while in hospitals and it claims some nursing homes failed to isolate residents who tested positive. governor andrew cuomo defined to comment. but new york state's health commissioner says the department of health has consistently reported numbers based on the place of death. and the legendary cicely tyson has died at the age of 96. she paved the way for black actresses. the ground breaker was honored for that very thing by former president barack obama in 2016

tyson said that receiving that medal of freedom was her most important accomplishment frank. back to you. >> you know, certainly a legend, just an amazing career, and i think one of the best things about it is that she got exposed, or younger people were exposed to her in "how to get away with murder," and "the help" in recent years, people can appreciate this talent. >> started as a young girl in harlem, kicked out of her house and an iconic influence for generations. >> certainly have to celebrate her life happy friday. robinhood ceo, why his company limited in gamestop. and what happened next you can listen to us live on the cnbc app "worldwide exchange," we're back in a moment. stay with us sofi made it so easy to pay off my student loan debt. they were able to give me a personal loan so i could pay off all of my credit cards.

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good morning, stocks under pressure as wall street closes the books on a very volatile week we're seeing some wild swings in gamestop, amc and those other stocks with heavy short interest individual investors, they continue to battle hedge funds, broke rages, including robinhood are introducing trading restrictions and politicians say they are now ready to step in. it is friday, january 29th, 2021, we've got it all covered you're watching "worldwide exchange" right here on cnbc ♪ all right yeah

♪ >> welcome back, i'm frank holland in for big papa brian sullivan let's get right over to the markets, a lot to watch this morning. stock futures indicating that the dow is going to open 250 points lower actually, the red got deeper here, 282 points lower but we're seeing a bounce back in some soft so called reddit stocks, including gamestop and amc. robinhood announced it would allow limited buys of the volatile stocks. the online platform had restricted trading in many of the names yesterday, interactive brokers ameritrade, put trading restrictions in place. robinhood ceo vlad tenev speaking to cnbc yesterday, addressing the widespread criticism his firm now facing. >> we realize customers are upset with this. it was not an easy decision. ultimately the team made the correct decision here. so what we can do is move forward, focus on giving customers the most stable and

reliable platform going forward, and we have invested a lot in that, and we've actually seen some great progress and taking all the steps we can to make sure customers can buy the securities that they want to buy without restrictions in the future. >> and you can watch the full interview with robinhood ceo on cnbc pro. meantime, "the new york times" is reporting robinhood is raising $1 billion from its existing investors the trading platform is in need of cash even after tapping several hundred million dollars from its credit lines. lawmakers on both sides of the aisle are starting to issue warnings that all the market activity around gamestop could warrant legislative scrutiny ylan mui joins us with more from exhale when you see ted cruz and aoc on the same side, you got to raise an eyebrow. >> reporter: that's right, and good morning republicans and democrats on capitol hill say they want to take a closer look at what happened this week, and now both the house and the senate are

planning to hold hearings on this the chairwoman of the house financial services committee, maxine waters wants to reign in abusive practice, and her focus is on short sell, gamification, and the systemic impact on capital markets and retail investors. no date has been set for either hearing, and there are no witnesses yet announced but it's clear that lawmakers smell something fishy, and they want to find out more here's senator elizabeth warren on cnbc yesterday. >> there are rich people on both sides of this, people who are trying, it appears, to manipulate this market, and that's what we don't know the details of for a long time now, the s.e.c. has pulled back and not made sure that we have an honest market >> reporter: now, a lot of the ire is focused on robinhood. representative ro khanna tweeting that there should be an

investigation into robinhood's decision to stop purchases of gamestop that shows the need for financial transaction tax on hedge fund shorting and s.e.c. regulations on short selling practices. as you alluded to, the backlash is creating strange bed fellows when congresswoman alexandria ocasio-cortez tweeted, this is unacceptable, it was gop senator ted cruz who tweeted back, fully agree. but there's at least one republican who is warning against a knee jerk reaction here, senator pat toomey is cautioning both regular tors and congress from needilily inserting themselves into the markets and should accept the consequences of decisions, gains and losses. >> interesting stuff on capitol hill another big issue for lawmakers, stimulus, what's the latest on that >> reporter: yeah, so next week, congress is going to undertake a complex but very important process. both the house and the senate are going to vote on a budget resolution, and that is really

the first step in a process known as reconciliation, which allows democrats to pass a covid relief bill without republican support. they only need 51 votes to do it and the reason why this vote is going to be so important is because it is going to set the price tag for the stimulus bill. we expect that number to be $1.9 trillion, which is what biden had proposed but the debate over that, especially within the democratic caucus itself, will show you where the support lies for different pieces of the program, and whether there's even appetite for going that big. already we're hearing some progressive democrats saying that that $1.9 trillion should be a floor, not a ceiling. others are really worried about going that big this fast, and so there is going to be an porn debate around the size of the package, but once they take that vote, that number is locked in they will not be able to go any higher than that number, though, frank, technically, they would be able to come in below that

number with the size of the package, but the reality here is if you get a $1.9 trillion blank check, it's highly unlikely you're not going to spend it all. >> ylan mui with the latest from washington. today markets the first week of president biden being in office he signed 24 executive orders from mask mandates to climate initiatives. for more, let's bring in raj good morning. >> good morning, how are you >> we're going to get into the executive orders in a minute, but you say that covid-19 is the greatest ask ccelerant of inequ and inequality in human history. can you explain how that's impacting the u.s. and the markets? >> kcovid-19 is the greatest accelerant since world war ii in the united states. we have seen gleobally 2,200 billionaires have gained net

wealth while 60% of american households are getting by week to week. we see child hunger and real suffering at all time highs in terms of post world war ii history in the united states, so it is a tremendous inequity. globally we have seen about $28 trillion of economic value be wiped out that's an estimate by the international monetary fund. and 425 million people pushed back under a global poverty line that's by the world bank so that's actually why the rockefeller foundation has committed a billion dollars to a global recovery that is both green and equitable and, you know, partnering with and working with the biden administration to tackle covid-19 in the united states but just as important around the world is actually step one in that effort. >> and raj, you worked in the obama administration so i'm sure you're keeping some eyes on this administration let's talk about president biden's executive orders, what do you think of the ones he signed so far, and have any of them addressed the situation that you're talking about?

>> well, you know, it's executive orders and policy making, and i would say that the commitment to vaccinate 100 million inoculations in 100 days, could be exceeded, and should be exceeded, and opening the majority of k through 8 schools across america within 100 days, and the executive orders and the resources to invest in global vaccination of $4 billion requests to rejoin the world health organization, and to fund covax, the international collaboration of nations and partners to purchase and distribute vaccines in the emerging world is critical otherwise, you know, we're just going to keep getting more variants as we see real replication happen in high volume and high population places where there's a lot of incidents and there's not a lot of public health response, and that's a real threat to the future of the u.s. economy and the global economy, so these are critical and necessary steps, all of which are achievable.

the rockefeller foundation has done some of the pilot studies on schools, for example, around the country to demonstrate that, in fact, it's safe for kids to go to school under the right conditions if we can make investments and provide technical support to those schools so our kids can get back at it. >> let's talk about climate change, certainly a global issue, the biden administration has also addressed that in the early days how does climate change impact inequity and inequality as well? >> in general, we see that these major crises, covid-19, and climate change, which is coming, is already here, and is coming faster than most people appreciate, is going to cause and exacerbate great intecequits in society if we're ever to have a chance to make investments to recover from the current crisis, and create jobs both in the united states and around the world, now is the time to invest in a green recovery, and the biden administration plans to put $2 trillion into infrastructure as it relates to a green

recovery it's going to be really important on a global basis, the foundation has invested in efforts to, for example, bring renewable energy to places like northern india and eastern africa the reason that's important is the alternative is hundreds of gigawatts of new coal financed by china as a development pathway for the rest of the world, and we will never tackle climate change without truly global coordinated action, so rejoining paris, and having secretary kerry lead that charge is an extraordinarily positive sign towards american renewed leadership on global climate change >> let's turn back to the u.s. economy. the biden agenda is obviously unfolding in front of our eyes right now as we speak. what do you think investors need to know about some of policies, initiatives, and executive orders that you expect to see coming up. >> first, i think you'll see much more stability in terms of how america handles its trade relationships, and how america

handles its overall governance of the economy you'll see a real focus on making sure that working american families benefit more from federal action. we saw, you know, in the past we've seen and i mentioned how so much of the actual benefits of the programs that were put in place, take the ppp program, went to larger corporations and did not reach lower income minority owned businesses around america. i think the average application was about $20,000 from black and brown owned businesses and 2/3 of those businesses never got any benefits whatsoever. so going forward, i take encouragement in the fact that the proposals put forth are squarely focused on working families, help those who are hurting, focus public health resources on those communities that have the highest rates of incident and mortality, and do it in a science based way that is, you know, clear eyed about the nature of this threat, and how this could be a long-term threat if we don't act in a coordinated global way.

>> i think we all hope it is not a long-term threat raj shah from the rockefeller foundation, thank you very much for your time. caught up in the short interest trading frenzy, we're going to talk about the carrier, and the entire industry. that's coming up next. first, as we head to breaks, novavax said the covid vaccine was 89% effective in its phase 3 clinical trial shares jumping on the news. "the new york times" reporting facebook is looking to court independent writers by working on news letter tools for journalists, part of the company's new journalism project. and over advice he gave to perdue pharma and other manufacturers. stay tuned, "worldwide exchange" will be back in a moment

these folks, they don't have time to go to the post office they have businesses to grow customers to care for lives to get home to they use stamps.com print discounted postage for any letter any package any time right from your computer all the services of the post office plus ups only cheaper get our special tv offer a 4-week trial plus postage and a digital scale go to stamps.com/tv and never go to the post office again.

welcome back to "worldwide exchange." if you are just waking up, futures right across the board the dow on track to open up 297 points lower it keeps falling this morning from earlier levels. the s&p and the nasdaq both also on pace to open up at least a percent lower. and check out some of the volatile short squeeze stocks we have been watching all week long gamestop up more than 100% koss corp., and bed bath & beyond up 13%. a lot of talk about the airline industry right now, america becoming the latest stock to get caught up in this whole reddit trading

frenzy it's now the most shorted u.s. carrier. for the health of the sector, major airlines have reported q4 results, we can officially say 2020 saw $34 billion of losses for the u.s. airline industry. his toric, i would assume. joining us now steven kenlt. is this a historic loss for the airline industry >> it absolutely is a historic loss, and the crisis has been unprecedented. you were spot on in terms of your production of 2020. >> we're hearing domestic covid-19 testing would be a head wind for them even though public health officials believe it's needed we see a company like southwest reporting its first annual loss in about 50 years. have we actually seen the bottom for airlines or can they fall

fu further? >> i think in terms of what we're seeing operationally if you look at the daily tsa through-put numbers, they did bottom in mid-april of 2020, and you have seen a recovery in non-business travel that's been extremely uneven so we had a couple of days in december where we passed a million passengers per day, and now we've rolled back down so with very little business travel we get to these typically non-holiday periods and travel itself is very rough so i think in terms of the earnings side of that, you know, that's harder to say do we have another suppressed period for three weeks or three months, that will be a big determinant, so it would be hard to get as bad again, as we were in april of 2020 but we're hardly out of the woods. >> so steven, american airlines has also been touched by what melissa lee calls the reddit

revolution that stock up double digits this morning, up 1% intraday yesterday, so are the fundamentals, and just the financials out the window on a stock like this. do you just look at this retail investor frenzy, are you willing to buy, where are you at on american airlines? >> certainly, so i think when we look at this phenomenon, and we try to ascertain what sort of fundamental drivers are going into the rally, why is this happening, is this a big fundamental shift or is this some kind of retail investor slash social media type initiative where the latter, it's very hard to put math on that, so when we look at american airlines, you know, some fundamental blocking and tackling, you know, the carrier reported a $2.2 billion net

loss it's got $34 billion in net debt reported for the end of the 4th quarter. that's $13 billion more than delta or united. and that doesn't even include $7 billion in pension liabilities, so why should this one be having a big rally. we'd still like to do fundamental blocking and tackling on this one, so we are quite cautious on the recent price action. >> i don't think you're the only one, steve steven trent, thanks a lot for your insight we appreciate it on deck, from mark cuban toto senator elizabeth warren, why high profile investors, business leaders are telling cnbc about this week's trading frenzy and subscribe to our podcast, "worldwide exchange" in audio form, check us out on apple, spotify, and other apps. "worldwide exchange" will be right back

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people who are making the push aren't who we expect them to be. that's why i like it when you bring people out of nowhere to really show the inefficiencies in the market, it's a good thing. >> there's a laudable sentiment that people want to be connected to our economy, that they want to participate, but there's also great danger here anytime stocks depart from fundamentals, they return eventually, and people get hurt. >> we've watched the internet now over the last ten, fifteen years, thanks to the rise of social media and all of this infrastructure really bring a lot up revolution of so many industries we have seen this across so many different sectors, and now it is happening to finance, and i

mean, it's nothing short of remarkable. >> there will be a shakeoff, a lot of people will lose a lot of money, and on the longer end, that's never good for business the customers lose money, that's not good for business, but i think they should pay attention to what they are buying and why they are buying it, and they should buy stocks because they think that the companiesare doing well and that they'll do better and the stocks will go up for that reason, not because of a short squeeze. >> investors investing in gamestop should be able to do it, you know, they should be warned of the risks obviously, and they shouldn't be putting their life savings into it or food they need to eat, but i think it's terrific. >> there are going to be a lot of people who are going to lose money around this, a lot of money that they can't afford to lose this is why we need an s.e.c. that has clear rules about market manipulation and then has the backbone to go in and

enforce those rules. >> and that was just a taste of the powerful news makers on cnbc yesterday talking about this trading frenzy we're going to take a look at the futures this morning in red across the board, the dow on track to drop more than 250 points at the open now, let's talk our financials over the last three months, the s&p 500's financials have been a clear market outperformer. dom chu joins us now with a closer look. >> it's the value trade that's come back, frank, and that's a big deal here because it may signal a changing shift in investor sentiment towards what types of stocks they want to look at in 2021. it was big tech last year. maybe it's big tech again right now, but still, take a look at the out performance for sure because if you look at the s&p 500 in etf form, the ticker spy, it's up roughly 13% over the last three months. meanwhile, the financial sector etf is up 23%, a huge out performance there. again, just three months, 10% of the gap there. but it's not everybody that's

participating. yes, they're all broadly higher by industry group and stocks but take a look at the real out performers here, it is the banks. maybe intuitively so, given the rise in interest rates and everything else, but according to data from wide charts, they took a look at every stock in the sector, and equally weighted them into baskets based upon industry if you take that equal weight basket, the banks are up 39% over the course of the last year look at the asset management firms, up 30%. now, the insurance companies are up 20, and data and exchange operators, roughly 3% declines there. if you take a look at the overall picture for what's actually outperforming, frank, it is the banks right thousand the issue is whether or not they can stay that way. that's a theme to watch in the coming weeks and months. >> interest rates impacting a lot of sectors, including materials and industrials, what's your take on them with the current interest rate environment? >> on the financials versus

materials and industrial. >> exactly. >> it's more the idea right now if there's any one sector that's most levered to interest rates, it will often be the banks, and not just because they have financial instruments at play but because they make their business from it if those interest rates start to normalize, get back to higher levels, if the gaps between long-term rates and short-term rates become bigger and bigger, that might signal the banks have more power ahead to kind of get their business models in place, and full steam the other issue right now is whether or not you do see some of these banks continue to pay back dividends, share repurchases, that's been a big theme for many banks since the great financial crisis if they continue to do that, there may be more of an investor impetus to go into banks if they know they're going to get paid dividends and share purchases. >> what everybody in the world is talking about, the reddit revolution, what's your take on the latest developments, also gamestop back up again this morning after dipping yesterday. american airlines now part of

this >> so the thing that i'll be watching closely is whether or not you do see these trading curves being gradually lifts, whether or not it adds to volatility the reason it's important right now is because we have options expirations coming up not too far in the future, of course today, and then again in the next couple of weeks as well if those options markets and expirations start to get very messy and chaotic, that might signal that perhaps you do need to ratchet back some of the risk of types of stocks, and maybe the brokers were right in what they did the real reason this volatility is happening, is straight up leverage if people are using margin accounts, and options markets to play in these, the volatility gets exacerbated way beyond that i can tell you this, frank, if you told investors that they could only buy the stock with cash outright, not borrowed money, not using the options market, i doubt you would see

these types of volatility in the stocks. >> dom chu, thanks. back to the broader markets and despite yesterday's gains, the major averages are down 1% for the week your next guest says patience is the rarest commodity on wall street, and he's sitting until he gets a clearer picture of where the extquities are going. jeff saut, good morning, thanks for being here. >> good morning. >> a lot of people believe the market is in a bubble, perhaps pop in days with the reddit revolution certainly not helping things but you believe that the bubble, if there is one, is only confined to megacap tech stocks. can you kind of explain your theory here? >> well, i mean, you look at stocks, you know, that have gone up huge, their valuations are not appropriate for the fundamentals backing them up we played the rally pretty hard, and then about four weeks ago

our intermediate and short-term models/sales signal, we saw half our trading positions, in retrospect, we should have sold them all but there hasn't been that much of a correction. when the market peaked four weeks ago, around 37/87. we're at about 37.77 right now there hasn't been much of a draw down i still am not comfortable going long right here on a trading basis, but we haven't disturbed any of our investment positions because we think longer term the bull mark is alive and well. >> so you're a bit bearish on big tech, but bullish on disruptive tech. where can investors find exposure to that, should they look at individual stocks, sector or etf. >> my investment model is simple, investments are not all that complicated and we start with mutual funds. i invest where i know the portfolio manager, and then

because i've talked to these portfolio managers, i hear individual ideas, and i was an analyst, i was a portfolio manager, and i can spend 30 minutes looking at the fundamentals of an individual company, and decide if i want to start buying it. it's a pretty simple strategy, but it actually works very well as long as you manage the risks and keep your losses small >> so jeff, speaking of fundamentals, what's your take on the reddit refr volution, th impact it's having on stocks like gamestop and american airlines. >> i don't play in those kind of stocks it's nonfencsense. if you're looking for stocks that aren't bubbles, those are the stocks in bubbles. you can look at stocks like raymond james, whose fundamentals are solid and the stock is not that expensive. >> what's your take on the russell's out performance, what does that say about the economy when the mid caps often seen as reopening index are doing better

than all the others? >> i think that's right. over the long-term, small caps and mid caps tend to outperform. valuations there are cheap or cheap relative to the market. and people are still woefully under invested and i think money will find its way into the small and mid cap space, and i think that's a good space to be in right now. >> jeff saut, we appreciate the insight. thanks for joining us. >> my pleasure. we're going to take one more look at the futures this morning before we go all red across board this morning. the dow looking like it's going to open up more than, just about 250 points higher. seeing a lot of changes this morning. the nasdaq and s&p also in the red. that does it for us here on "worldwide exchange. "squawk box" is coming up next

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well, good morning wall street is bracing for another roller coaster ride for gamestop up more than 100% after yesterday's selloff. now, robinhood and other platforms are facing backlash over the decision to limit buying we'll bring you andrew's new one on one interview with the ceo of robinhood. plus, apparently earnings season rolls on. we can focus on some of these. hopefully we'll bring numbers from drug maker eli lilly, and an interview with ceo david ricks. it's friday, january 29, 2021, and "squawk box" begins right now. ♪

good morning, everybody. welcome to "squawk box" here on cnbc i'm becky quick along with joe kernen and andrew ross sorkin. and let's take a look at the u.s. equity futures as we crash into this friday we have seen the market kind of exhibit a lot of volatility this week, as you probably know wednesday was the biggest loss that we'd seen for the markets in about three months. thursday, yesterday, we made up some of that ground. dow was up by 1%, so was the s&p 500, nasdaq up by a half percent, this morning we are giving back much of the gains. the dow futures are indicated down by 240 points s&p futures down by 35, and the nasdaq is off by 155 points, at least in the premarket activity and if these losses that we're seeing right now in the futures were to hold through the session today, you would be looking at both the dow and the s&p 500 down for the year to date, down for january. not the case with the nasdaq just