clinging to that breakout high. real breakout is 45. i'm anticipating it. >> we've got dow down, about 600. again, economic data. the jobs report was really strong. yields took a big jump. and stocks took a big drop to say the least. watching big tech cap. i'll see you in a couple of hours. the exchange is now. thank you very much, scott. and welcome to "the exchange." i'm kelly evans. here's what's ahead. markets are reeling from the earnings. yields are rising, stocks are sinking and the broader market has eerate raced election gains. that's different between the past three times, between election and inauguration day. don't expect to start yelding lower. good news is, he thinks it might not be so far off. plus we'll look at the markets and other things going on.

days after an illegal sports block was moved. disney, fox and warner brothers are pulling the plug. the question is why? what's next? and what does it mean for the broader landscape, which continues to shift rapidly. >> and the quest for greenland. why trump wants it and whethers his attempt to a82ir it. let's start with today's sell- off. and dom has more for us. >> it is a sell-off. and that bear means, we are kind of near recession lows now. if you look across the major indices. we have dow down 641 points. 1.5% decline. for the broader-based s&p 500, current level is 5831, which is down 86 points. again, 1 1/2% decline there. even at the highs of the session, which is right where we opened. we were still down 28 points. but at the lows of the session, we were down 111.

triple digits on the s&p 500. doesn't happen all that often. watch these levels. and by the way, the nasdaq composite down a similar percentage amount. 305 off the composite ibdex. let's put some of these moves in context across the course of the full year. for the s&p500, we noted that 6,099 is the record high. we're currently at 3454. i put the blue line in there. which is the blue average. the pink and purple, the 100- day moving earning. the point here, we at one point today were below both of them. 5820 right now is where that purple line is. keep an eye on that. we also have to watch what is happening with those devastating and deadly wildfires out in california and los angeles specifically. we have insurance companies, property and casualty ones. big names we know, like

travelers, allstate, chubb, all to the down side on some of the perceived exposure of what they might have, and what it could total. lemonade also to watch. down 6% right now. the one you want to keep a close eye on is a name we don't talk about often at all. that's mercury general. it's about a 3 1/2 billion property casualty insurer. they get a bulk of their business from california. and they provided saying they could see some losses exceed their insurance there. keep an eye on mercury general there. they have a sum based on that particular move and disclosure. and the 10-year yield, hitting the highest level since november of 2023 at this point here. on the heels of, like, kelly noted, economic data and elsewhere. 4.75% is where we're at. got to 4.79 as the highs. but you have to go back to november 2023 for these rates.

kelly, back to you. >> hard to see it in plain print there at 475 on the 10- year. dom, thanks. that has stocks sliding on a better-than-expected jobs report. and dashed more ropes of rate cuts this year. 260,000 jobs added. average hourly earnings. from maybe a fed point of view, could say, it was good, slightly less hot. if that were not enough. here's where it gets really interesting. the university of michigan's 10:00 a.m. survey. showed inflation jumped to highest level of t, up to 3.5%. similar to and despite this one- two data punch. my next guest says she is still expecting to rate cuts. joining me now is diane swan. welcome to you both. diane, there are some firms. i think bank of america now expects no rate cuts this year. make the case.

>> well, i actually can't make a strong case for two rate cuts. we have a couple of scenarios. and one of them only has one rate cut with a very low probability of that actually occurring, depending on the outlook for tariffs. and you're seeing that in consumer reaction to tariffs both in december and early january. as you pointed out, the consumer sentiment sort of expectations of front-running tariffs, which is its own self- fulfilling prophecy. that will push prices up. so that's something we're watching very closely. so it really is dependent on policy, and where we go from here. that said, this was a great employment report that is good. it does contradict some other private sector reports that showed a more cooling in the labor market during the month of december. so one month does not a trend make. and i think some of the market reaction is a little bit too

overly weighted on how much inflation is embedded in that employment report. >> especially. and we'll get into this maybe a little later on. but if a lot of this is on the expectation of tariffs. last time around, they were a little contractionary. but what were those points, diane, that you see, that tell us, there's other signs of a labor market that is actually softening? i'm curious? >> so what we've seen is, you know, the hiring rate has fallen precipitously. the reason we've not seen a lot of increase in unemployment is that layoffs are also low. that's good. the quit rate has fallen. now, in the month of december, suggested a reversal of that. but one month does not a trend make. that's great if it is the beginning of a new trend, but also bad in terms of a reacceleration, and potentially, wages being to the point of it being worrisome for the fed. i think other weakness we're seeing in other indicators, everything any the adp report, to the hiring index, a lot of

these realtime indicators, that have been closely correlated with the overall labor market conditions, have now, in this month, broken apart. so it's hard to sort of square that. and i think the one concern i have is that some of what we're seeing is also because the holiday season was all compressed into the month of december. we saw hiring by retail, not in november. but in december. because of that later-than- usual holiday season. it was a good holiday season and a strong end to the year. that is good news for the consumer. it is somewhat worrisome for the fed, especially given how many people were on vacation, during the survey week, which was before a record holiday travel season. >> steve, where are you watching? >> i want you to reread the top of the show. we were so glum about 256,000 jobs. and the unemploy sment rate sank by a tenth to 4.1%, with

exuberance, ms. evans. these are good numbers. plus, you just heard what diane said about the retail, holiday shopping was good. i think what the market is coming off of. i have a theory on this. the market thought it was going to get a freebie. thought it was going to get strong economic growth and fed cut. you're not going to get your cake and eat it, too. the market is coming to terms with that. the question is, is the fed too loose? i don't think so. hiconversation with people in san francisco. >> even before this report came out. yeah. and whether or not the fed ought to have cut. i think there's still a case to be made for the fed to be on or around where it is now. quarter up, quarter down, i don't know. we had ghouls bee on today. >> he didn't walk it back really. >> he didn't walk it back. still continuings the fed will be a fair bit lower. "fair bit" is the term he used

in 12 to 18 months. i think the market is coming to terms with it is going to be a higher rate. or even a higher neutral rate. as you know, productivity is higher. you have this potential boom. there's some people that thought they looked at the numbers this morning. joe was one of them. he thought he maybe saw a trump boom in the numbers. i talked to other economists about that. >> i noticed that manufacturing was negative. >> that is something you would have expected to be high er. >> in the long run? if you look at the jobs i put together, guys in the back, you'll see -- they're so good in the back. >> there's that retail number. >> some of the likely suspects in there. 70,000 are if health. so retail -- i'm sorry, leisure and hospitality. retail was higher. state and local government, that's been a big source, and there's that manufacturing number, reading your mind, kelly. putting that on there. >> because it jumps out. that's not a great sign. >> it would be a thing, if it

was a trump boom, either from tariffs or whatever you'd expect that number to be a positive. >> diane, you bring us the angle. we are talking about jobs. still, i feel like it was angle that we overlooked. was there anything that jumped out to you, speaking of this big picture report? >> again. what is really interesting, kelly, and you know that we always track this. we actually track child care distress sort of index. and that is still very elevated. the number of women in particular having to scale back on the number of hours they work "voluntarily." and i say that pointedly, because they say child care problems, not that they're choosing this. are causing them to scale back. and we know from some very detailed data that we've gotten from the bureau of labor statistics, that it actually is very low-income women that are scaling back. and we also know that on a more dour note, the pulse index from

the census shows that hunger in the united states has picked up. and the less that working parents can actually care and provide for their children is a major issue. and this is at a time, when birth rates -- and you've done more than your fair share, kelly. but birth rates, overall, in the economy, are very low. and so this is really kind of the amount of stress and duress due to child care issues. and elder care issues as well. that's still in there. >> i'm glad you mentioned. because i think also, it's a way to get back to this inflation problem. expectations, economic expectations actually came down. so there are some of the -- and you wonder if the standard of living, the cost of living, if those pressures are still top of mind. >> i think they're there. you also have some enthusiasm when it comes to the incoming trump administration. you have some uncertainty associated with that.

the fed's first response to this will be to be on hold for longer. i don't see any pricinga the all, for a rate hike in there at all yet. >> yes. they could tinker with qt a little bit. maybe extend it tallets longer. depends how spooked they are. and we don't have to wait very long. cpi, next week. because there was no rest for the weary. >> no. then we get inauguration. and fed meeting. maybe now for quite sometime. we'll leave it there, and really appreciate both of you all's time. steve liesman and diane sworchg. >> where are we now? >> we are much higher. rates have been rising since the start of the year. today was a big one. the average year on the 30-year fixed rose nine basis points to 2.74%. and that was of course, after the hotter-than-expected jobs

report. that is higher than may of last year. and in the past six weeks, we are up 66 basis points. and from the most recent low in september, rates are up over a full percentage point. here comes more math. if you are buying the median- priced home, which is around $400,000 today, and you're putting 20% down on a 30-year fixed, your monthly payment principle and interest is up. although the gains are shrinking. but there's more supply on the market. and that's not because people are listing their homes. it's because homes are just sitting much longer on the market. because, kelly, they're not selling. >> all right, diana. thank you very much. we appreciate it. by the way, the home builder sector is in the red. it's been feeling the pain. one of the stronger areas in recent years. now perhaps not happy that it is raising again. prospect of higher rates. next guest says it's the biggest risk to markets,

without softer employment data, we will continue to move higher. and equities will continue to struggle. here with me now is chief strategist piper sandler. >> thanks if are having me. we have this sort of ominously ticking over our shoulder. not a huge deal. but what do you think is the bigger story here? >> it's rate. it's been rates. and ironically, if you look at market breadth, that peaked in september. where it bottomed out. as bond yields have crept higher. beginning with rate incentives. then remember, december, breath started becoming focus. and now it's engulfed the entire market. we thought four and a half was the line in the sand where we become more systemic. and now what you're seeing behaviorally from investors is people are extrapolating. talking about the rate hikes. 10-year going up 5, 6%.

>> the crazy thing to me is to say, look. we're at 476. the highest we've gotten in the cycle is 5.4. we're within 30 basis points now. now, that high was a high -- i'm not sure if it came before or after the silicon valley problems. but seemed to be a huge head wind the first time around. second time, there are a lot of parts of the market that aren't holding up. but doesn't it all feel like the same level of seriousness that we saw a year and a half, two years ago? >> yeah. that was around september or october of 2023, where we got the 5% on the 10-year. the big shock was in 2022, when rates were really low and there wasn't a lot of inflation risk price on the markets. valley was high. credit spread was tight. somewhat of a credit equity backdrop and risk backdrop coming into this year. the risk as i see it, as long as rates are going higher from what appears to be a systemic level, the equities are going

to continue to struggle. i think essentially, equities and bonds are the same thing right now. >> well, you make a good point that back in 2022, we went from 0.5% in 2020. and did so. now people are used to rates where they are. does it make that much of a difference, from maybe cutting twice on holding them steady or hiking a little bit? >> it's not only interest rates. it's the dollar. the dollar has been more correlated to the 10-year, than any point in the last 40 years. the dollar is at an all-time high today. we look at a trade-weighted broad dollar. it's not that we have to get used to rates. it's the expectations, where we have to get all of these rate cuts. pairing that back. it's sentiment. can that's why you're seeing equities move around. not because earnings have radically changed but because sentiment has changed. >> what do you do? there's not a lot of people who come on this show and say i want to stick with mag 7. but if this persists, sounds like

that's the only game in town. >> fundamentally perhaps. what we've seeing on a day like today is the low quality, high- beta, no profit stuff is getting hit. and a lot of expensive stocks are getting hit. in addition to the rate. our outlook in 2025, we're actually, i would say, more constructive on the economy than we are on the stock market. and with the view that if things get a little better or stay good, rates are going to stay here or move higher. of course, we have the cards of tariffs and who knows what else is to come. our view is they still price out. and now we're pricing that risk back in. and that shows up in the form of lower p.e.s. >> you're staying away from small caps then? >> yeah. small caps don't have earnings. >> especially if rates stay up where they are now. >> the only reason is because their p.e.s went from 11. using the s&p600. from 11 to 17. basically by the election. all of it has been multiple

expansion on the view that rates are going to come down. we're going to get better growth. rates staying out longer, pushes out that higher likelihood of pickup and small cap earnings. >> in a nutshell. do you recommend? i know you said high stocks in trouble. is it the mag stock you stick with? or sort of the high quality and those kind of names? >> real quick. we see some better improvement in manufacturing. it's already started. that should give us better earnings breath. so i think we have been really leaning into growth for the last two years. we're looking more for quality value, versus quality growth this year. >> you're willing to say the value name. that's a dangerous bet. >> quality value. quality value i know for sure. michael, thank you for your time. michael canterwitz with piper sandler. launching a sports streaming service.

disney, fox and warner brothers are walking away from the joint venture. does the decision open the door. laura martin joins us for her take on that. and her surprising top stock pick for the year. plus, former nato stream allied commander agrees with trump that greenland is vital to america's national security? but what is the best way for the largest island which says it is not for sale. the admiral joins us.

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free for a year, plus a free 5g phone. . welcome back to the exchange. some surprising news this morning. venue, the joint sports streaming venture, between disney, fox. it has been called off. the disney fubo deal just earlier this week, had settled a lawsuit keeping the venue from the launch. so you thought, finally, it's clear sailing. that makes this decision out of left field. for more on the media. let's bring in needham entertainment specialist, laura martin. am i making too much of it? >> of course not. it's entertainment market. i would say, the minute disney bought 50% de facto. i think what they were telling you is, they are, and they gave

up 30% of hulu live. they were telling you, they're distancing themselves from the virtual mvp. like category and therefore linear tv. it's just another step showing they're moving toward streaming. 100%. because they are going to launch the espn app, which is a streaming app in the fourth quarter. s okay. >> so they are telling you, they are abandoning the linear tv ecosystem, including virtual mvps. >> i think i understand. but the terms make me confused. say what you're saying one more time, but without saying virtual mvps? >> basically, sports is moving to streaming, right? and espn is going to be the next nail in the coffin of linear tv. because it's going to offer a streaming espn. disney wants to do streaming. it doesn't want to do anything in linear. and what vegnu venu.

>> and i thought. look at the way we're writing. it says, venu, streaming vv called off. but it was not streaming, streaming. >> it was streaming with linear tv and had 20-minute ad lows, which the consumer doesn't want. it was a way to offer a skinny bundle for linear but it was predicated on linear tv. and disney said, we're out. we're going into the app world, where you can watch on an app. stop and start programming. we can put sports on there. and it's just going to be us, disney. we're not doing joint ventures anymore. >> where they acquired fubo, is fubo a streaming play or still linear tv play. >> still a linear tv play. >> so what was the point of that, then? i thought the whole point of

that acquisition was to settle fubo's launch of the venu. >> no. i think it's to off load the management of the -- call it a skinny bundle. the linear tv assets to david gandler. but disney is like, we're done. we don't want to focus on that anymore. we want to do streaming only, with apps in an app store on mobile devices. that the super interesting. i appreciate walking me through this. the question becomes, these dynamics have shifted in the past few months. it was supposed to launch this past fall. it's only january. market conditions have changed incredibly quickly. and they must see significant upside. p if i'm an invest, i go, well, there's still kind of a linear cash cow. streaming is a tougher competition. and i could see investors being a little nervous about that. >> yes, but i think, look. companies have to make -- a great ceo makes a strategic

call, and bob iger is making it. he is making the call that stream suggest future and linear is dying. he's going to get on and make it happen. he's the biggest sports broadcaster. and he's going to make it available on an app on all mobile devices, ask you're not going to need your cable box. >> warner brothers is down nearly 5%. i wanted to ask you about your top spot, which is roku. and i don't know if that's part of the story. >> no. not part of the story. we really like -- we think consolidation has to happen in media. and we're optimistic that trump, doj, and ftc will be more productive. the fact that walmart bought visio, which is linking television ads to purchases. we think roku is in a good spot with its 85 million homes of installed base. and it's sort of apple-like

system, where it takes a fee on every programming app on its devices to benefit from consolidation. as well as, you know, accelerating growth in smart tvs. >> i know we gotta go. but you cover warner brothers. what do they do now? >> you know, i think it's problematic. i see a consolidation between the linear network. i think linear tv. i think it will hasten the demise. and warner brothers is heavily dependent on linear. >> leave it on that fine note. laura martin of needham. coming up, tesla has been having a bumpy ride since christmas. and down back to back for the first time since august. saying the execution risk is high. the alt anysis back. "the exchange" is back after this. if it's covid, paxlovid. paxlovid is an oral treatment for adults...

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at least 10 people have now died, and more than 180,000 have been evacuated, as wildfires continue to burn through the los angeles area. the palisades fire is tearing through more than 20,000 acres since tuesday, and is only 8%

contained, according to cal fire. to the northeast, the eaton fire, burning through 14,000 acres, and only 3% contained. the sunset fire, not seen here, but near the hollywood hills, has been contained with no structures destroyed. but the kenneth, hurst and lydia fires continue to burn in los angeles. >> reporter: the two biggest fires, among the five active fires in the area are that fire that you mentioned, the palisades fire, which is now about 8% contained. that's a lot of progress compared to where it was. eaton fire is causing so many problems. still at 0% contained. and according to officials, a firefighter was seriously injured in the last 24 hours or so. trying to fight this fire. if you look around, you can get a sense of how vast the destruction is.

over 150,000 people have been in this area. we'll walk a little. and i'm going to go slow, just because cell service here is challenging. but you can see how much destruction there is. this home -- there is nothing left. and over here, there is a -- what was, we think, a for sale sign. now, there's just nothing left for people to come into. and here and there, you'll see one home, just standing perfectly, as if nothing had happened. that's the thing about these fires, with the santa ana winds, is that you get those embers moving. and essentially, the fire jumped, where it will decimate entire areas. then one pocket will look like it's okay. and then more destruction goesa away. the santa ana winds have died down. that was in the forecast. and it's providing a lot of relief for firefighters. but ultimately, they say those winds are going to pick back up. as we head into the weekend and next week. and that's really concerning for ray lot of people. particularly in this community,

where there has already been so much destruction. take a look how much it goes. it's everywhere you look that that fire could spread more. and it's already at 0% containment. and it will not only stay at 0% containment, kelly. but also get a lot bigger. we talked about our construction. he feels like the city and the state failed, and that the community wasn't prepared to deal with something of this magnitude. kelly? >> oh, the frustration was clearly mounting. next's ellison barber. let's get over to brian for the cnbc update. >> yes. i'm brian sullivan. cutting yet another big company. facebook and parent company meta, confirming to cnbc it is cutting its diversion, equity and inclusion program. it is the latest reversal by companies to do away with the programs. some say are better aligned

with incoming president trump. not involved in the daily organizations. wall street journal reporting, an ethics plan set to be released for the family says the company will not enter into new contracts. however, the plan does not say if the organization will pursue contracts with private companies. and last year was the hottest on record. the world meteorological said, temperatures have gone up, beyond 1 1/2 degrees celsius since prehistoric times, all driven by climate change. >> brian sullivan, thank you very much. the media, wrapping up with opening arguments over the fate of ticktox. the app still set to be shut down or sold in about a week, unless the high court intervenes. deirdre bosa. what did we learn? >> tiktok argued that the real law is the speech itself.

while government said america's national security is at stake. here is what really matters. that january 19th deadline, that would force a sale or ban of tiktok. that stands as of now. but conservative justice samuel alito, did issue the possibility of the stay, putting the law on hold, as they decide how to proceed. that's expected to be fairly swift. maybe as soon as next week. but remember, if that ban takes place, january 19th. that all said, though, kelly, one could argue, it ultimately may not matter which way it goes. chinese companies have proven incredibly resourceful, and users, incredibly resistant to workaround. chinese users simply used vpns, which there were many of them, to access them anyways. american users will also find a way. there is also the question of how effective other restrictions on china have been. this morning, wooerp talking about the semi export ban.

and how they backfire. making chinese companies more resourceful, more innovative, rather than hurting their progress. here's one example. other chinese apps. like temu. they have swaths of american consumers, and we're not talking about banning them right u. some say, focusing on american competitiveness, versus crippling rivals. that's a way to make sure america dominates. it's kind of like what oracle said about recent chip restrictions. they said, we don't need a ride. we need government to get out of the way. the government is determined to litigate. >> no. i don't think sheehan presents quite as much of a risk in terms of influencing the mentality of americans. although maybe cheap fashion does. deirdre, thanks. the president also wrasming up his rhetoric on greenland.

saying he won't rule out. we'll look at the form er supreme commander. admiral james stavridis is next. business. it's not a nine-to-five proposition. it's all day and into the night. it's all the things that keep this world turning. it's the go-tos that keep us going. the places we cheer. trust. hang out. and check in. they all choose the advanced network solutions and round the clock partnership from comcast business. powering more businesses than anyone. powering possibilities.

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welcome back. president-elect trump doubling down on his desire for the u.s. to control greenland this week. saying he wouldn't on an economic deal to happen. and while my next guest agrees to some extent, he thinks trump should take a more business- like approach. joining me is someone who spent a lot of time there in greenland and knows a thing or two about national security. former navy admiral stavridis. >> let's back up and look at history here. in 1867, we bought alaska. probably the best deal we've ever made. we bought from russia. around that same time, kelly, we had at least a good offer on

the table to buy greenland. didn't work out. flash forward to 1917. the u.s. virgin islands, where many of us have vacationed quite happily. where did we get them? we bought them from denmark. so it's not crazy to think about some aspects of getting real engagement in greenland. but the idea of simply invading it, which would be at that at that tat amount. there hasn't been a big operation. let's get engaged, let's do business with them final thought here, kelly. the prime minister of greenland said, greenland is not for sale. >> right. >> but we're open for business.

let's take him at his word. >> so the experts say, this would give us access to the northern sea route, which is controlled by russia. that greenland has rare earth. it has uranium. so there are some student opportunities there. one question -- would it be a territory, if it became part of the u.s.? and does that mean they can act? what can they access? of america? do they get access to social security and welfare system? or is it not all of that? >> it would depend on the way in which we acquired it. so if we purchased it outright, and if the greenlanders, and there's only 56,000 of them, think about this for a minute. greenland is three times the population of texas and has a population just over 3,000. but if they were to acquies in it. you could see puerto rico, commonwealth. you could see an association,

which is what we have with marshall island. we could structure a way in which to bring them into the fold but realistically, kelly, i don't think the greenlanders want to join up with us. i don't think denmark wants to walk away from them. let's bring it together. construct economic incentives. if we do that, we'll get the geopolitical access we want. >> it's a fascinating discussion to have. you go back to where the u.s. made land purchases, and expanded territory. but if there is a specific interest. and many made the time. how would you imagine thhey are taking this news, when they see trump literally talking about greenland or the panama canal or chinese interactive? what do you think they think about all of this? >> i think they have two reactions. one is, it's good for them in the sense that we're always

critical about putin using military force to take over ukraine. we're very critical about the idea of china using military force against taiwan. so when a u.s. president, even musingly says, well, i can't rule out military force to take greenland or the panama canal, china or russia will like that, because it puts a better light on their actions. on the other hand, what they don't want is an activist, determined, forward-leaning, chief executive, leading the united states. they worry about trump. he's hard to predict. >> right, going into -- >> he's a big deal-maker, and we'll see what he decides to do. >> and i keep thinking about china, seven, eight, nines. they are the ones in incursion. and the u.s. has never done anything in recent years to counter that. russia making incursion. now, all of a sudden, comes the u.s. and i do wonder if there's a message in that, too. hey, if push comes to shove.

like we can do this also. but we'll see. admiral, appreciate your time today. thank you so much, admiral james stavridis. >> coming up, now that elon musk has secured a spot in the incoming administration at home. he's setting his sight on e.u. the details and his potential motivations are next.

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get the 5-year price lock guarantee, now back for a limited time. powering five years of savings. powering possibilities™. elon musk, looking to extend his political influence beyond the u.s., and throwing it around overseas a bit. steve coback is here. >> backing president trump's campaign. we have elon music moving his mike to the e.u. moving to social media influence via x to bolster his personal and political goals. yesterday, during a live chat on x are with alice widel, afd, a far right political party. musk echoed his previous endorsement of afd in coming elections. >> as i said publicly, i think

only afd can save germany. and i want to be very clear about that. only afd can save germany. end of story. >> a little history about afd. it is a right-wing party. establishes anti-immigration, including anti-muslim immigration. also, they have tried to downplay events. in the chat, musk addresses that and asked wibel directly what she thought of hitler. >> jewish people have been highly educated, very cultivated and were vehicleful back in germany then. and then, he enforced the envy of the population against these people. and it was a socialist measure taken against them. so he was nothing else, an anti- semitic socialist. and we are exactly the

opposite. >> now, kelly, these positions have kept the afd out of main stream politic negligence germany. and musk is using his mega phone now to try and change that. but he also has a number of businesses throughout europe that he could influence with his political positions. musk had a lot on the line in germany, with tesla's giga factory in berlin. but the e.u. recently put a 7.8% tariff on tesla vehicles imported from china. failing to moderate content under the law. a decision is expected soon, saying whether x is a risk to elections and civil discourse across the european union. and then there's starlink reportedly getting a contract from italy. although prime minister denies the two have twoaken about contract. and next political focus could be united kingdom. musk held discussions with supporters in the country, on how to oust prime minister

starmer, observe the next election, kelly. correct me if i'm wrong, but isn't it biggest part of germany? >> i know they're pollinga the something like 20%, very small. and i know also know that they're not expected to win big or be sheet seated in these next elections. >> all right. steve, kovac. talking about musk. tesla. catalysts around future growth drivers have been more than fully recognized, which could support the share price. but he also lowered to neutral risk. shares of tesla down 5 today. joining us now is john murphy. john, did i get that right? you raised it almost $100, but downgraded it to neutral? >> correct. there's a fundamental call here and stock market call, we can talk about. but a lot of good news is reasonably expected in the stock. and 490 is our fair value on some of the parts basis. and we'll look for an entry

point, particularly lower than it is now. >> we're at 397. 100 of upside -- >> correct. >> sounds almost like a bicall. but it's not? >> we're -- we're positively predisposed to the company, and the potential value it will create over time. but remember, we upgrade the stock when it was $170. that was less than a year ago. so it's an incredibly volatile stock. there is execution risk that has not been taken into account in the stock at this point. there's a couple of things, first, they need to launch a low-cost model, then another model, second half of the year. they also need to get gsd moving in the right direction, as far as increased subscribers. they need to launch a robotaxi fleet. sometime this year on a testing phase. there's a lot to get done. and we do think there are potential issues. that might view the growth on

the near term. that's why we went to a neutral. >> got it. so this, too you, is about execution risk on those major initiative risks that they need to deliver? >> correct. on vehicle launches. there's probably the greatest risk. that's something that historically, the company has had a hard time with, as there haven't been that many new- vehicle launches. this is somewhat new to them of the x, x, 3ny, none of those have gone well in the past. i think the second level is around sd. and recognition of the consumer. i think once you've driven in an fs2, paying $92 a month is kind of a no-brainer. but advancing in technology to full autonomy, which is what you'll need for full robo may take longer. i think on the hardware ide, you might have small disappointments. and on the software side, you may have? , you know, misses relative to expectations as well.

>> you're also talking about, how if they were to do, for instance, a capital raise, that would be a positive. i know it might be a near-term negative for the stock. but even a step like that might be necessary to cackle some of these launches. >> if you put on your cfa hat, as you just did. 5%. that is 5% dilution. that's not necessarily good for a stock. but if you're raising $65%. and using that money to, you know, to ramp up your compute power and your capability around fsd. then your new product launches. i think most growth investors would like that. and for that reason, i think the stock could be bid up on that. >> interesting. >> when we're looking at the puts and takes of the year, that could be a real positive if that were to occur. >> by the way, i can't put the hat on, because i was level 1. i can only put on a visor. >> i'll lend you mine. >> john, thank you for your time. john murphy, with bank of america. that's it for us.

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