at 3:00, closing bell, josh the final trade is what? >> reddit, sticking around. >> thank you. >> jimmy? >> delta air lines. >> stephanie? >> eli lilly is way over you i that final stretch, see what stocks do, see you at 3:00. thank you very much, scott. welcome to the exchange. i'm kelly evans. here's what's ahead, stocks are weaker today. our guest said there's a different crisis, the market is underpricing. . the news from president trump he'll be creating an external federal revenue service, the s&p is up.5% since the election. plus, tiktok denying a report it's weighing a report to elon musk.

the most likely path forward. the sectors, strategist coming out top this earnings season. dom chu has the very latest. >> that's right, kelly a very symmetrical market. especially for the s&p 500 on a broader large-cap basis. at 5824, down 11 points, now at the highest of the session we were up roughly 35 points and down 31 points at the low, so, again, fairly symmetrical. we're tilting to the negative side today. 5824 is the level you want to watch, that 100-day more medium to longer term average price for the s&p 500, on a rolling basis. the dow industrials, just about flat on the session right now

the nasdaq composite, the tech-led selloff might be a little bit steam the mid-day. 80-point decline there. as for some of the stocks that are making news, take a look at what's happening with the housing sector, in addition to what happened with interest rates earlier, kb homes decidedly positive, well highs off the pre-market sessions so far. d.r. horton. home depot are all generally positive given what's happened with the better than results from kb homes and what was at the time being a drop in interest rates. speaking of those interest rates. check out with the benchmark for a lot of mortgage-lending america, we're unchanged. at one point on an intraday

basis, we got to around 4.75%, before ticking higher to the highs of the session, now where we stand right now, kelly, you recall over the last several days here, just about the highest level since november of 2023. so with interest rates being a big deal, whether housing is going to be some kind of casualty or beneficiary that's remain to be seen. we got some better innation news this morning, producer prices rose just two-tenths last month, the core was flat. ahead of the cpi report we get in the morning. my next guest is michael shoemaker from wells fargo security. he joins us along with steve leishman. why is the 10 year backing up on the ppi report. >> people are nervous, kelly,

you think about this amazing confluence of political events and also shifts in inflation, you got cpi tomorrow not just in the u.s. but also in the uk, the inauguration just a few days away there's a lot to take away. >> that being said, does that tell you -- you said there's a risk that the market is underpricing, people can probably guess it, you think it's the tariff risk, why? >> tariff risk is an interesting thing, people say, tariffs, what does that mean, they're inflationary, the bigger impact as far we're concerned is the longer-term effect on growth. they reduce growth, if we think donald trump does push tariffs aggressively relatively early in his term you'll see growth slow globally, does it mean recession in the u.s., maybe not, elsewhere, it could. it's a big factor out there.

that could happen. >> so you'd be a buyer of bonds because of the tariff risk instead of being in the camp of putting upward pressure on inflation. >> well, actually, i had a very nuance view. five years and in, you got the tariff risk going one way but against that there's the chance republicans actually come together, they pass a bunch of legislation and they not just extend the current tax rates they reduce taxes in some area. the budget deficit goes up, long-term rates go up. tariffs could drive yields down but some sort of spreadthrift moment in washington pushes rates to go up. we recommend people stay to the extent they own bonds five years and in at this point. >> this kind of answer the question, why aren't markets,

why aren't bond investors taking a bigger sigh of relief from the better ppi data. trump just announced an external revenue service to literally collect tariffs, more talk than action, that announcement wouldn't seem to go in that camp? >> well, i'd be pretty consistent about that, kelly, i think that the president-elect meant what he said when he talked about tariffs, a lot of rose-colored glasses thinking on wall street and his supporters he didn't mean it, guess what, i think he does mean it, tariffs across the board tariffs. i think what michael is talking about is one aspect of why the bond market is unchanged or yields are unchanged but two other aspects, they're a little bit contradictory, the first is that the number was good today but there were stuff in this number that can make you a little nervous about the cpi

tomorrow, for example what's happening with airline fares and subsequently making you nervous about the number it won't be as good, the cpe won't be as good as we got in the ppi today. the second reason that's interesting to me, about the lack of movement in the bond market today is something we've talked about, kelly, it's not necessarily inflation that's bothering the bond market, we've talked a lot about how the tip yield spread that tells us what the bond markets, inflation expectation is, it's up but not nearly as much as the ten year is up, so this tells me maybe the bond market is less worthy about inflation, more worried about bigger deficits and also potentially positioning itself for higher growth in the trump administration. >> the only thing about that is the fact that the dollar has been so strong, normally you'd think debt and deficit look at

what's happening in uk, a top-level concern the pound is mrun nling, over here the dollar is surging. we're already at historic highs. really going back to the 1980s, if this move extends itself even more what's going to be the fallout for the economy and the markets. >> ts really interesting, kelly, when you think about the u.s. dollar, dollar strengthens that would make us comfortable but we're in that camp. for the dollar to strengthen versus the chinese currency, or against the pound or the euro. as far as the economy, i think it's a by-product of a lot of things, one big reason, the main reason the u.s. dollar is strengthening, you got this positive interest rate differential which has gotten bigger, rates are higher here

con consequently the dollar has been gaining. now, what it could mean for other countries, pretty big negative in a lot of cases but in some interesting countries or countries that have large manufacturing basis they may vary. if tariffs are in play, maybe you don't sell more goods to the u.s. but perhaps to other countries. there's a buffer there. a very interesting thing. >> i just think it's fascinating. look tariffs are going to hurt china more than the u.s. the euro looks like it's heading to ity. >> kelly, i think, look, we've had a lot of focus in this country on the kons tunesy of people affected by foreign imports. we have not had much focus on the people who benefit from u.s. exports and that's a part of the

economy that's going to take it on the chin if there are retaliatory tariffs and the strong dollar, i'm nterested in how this economic political pendulum is going to swing. somewhere some time along the line the people who are exporting stuff from this country, they're going to raise their head and say, hey, mr. president, what about us? >> the interesting thing about that, steve, the dollar is too strong and that was before this 10%, the dollar is too strong but the trump administration is going to em rate that with tariffs. >> tariffs make the dollar stronger, they basically take dollars off of the system, so i don't understand -- >> but the effort. >> i read a bunch of stuff. >> to take the revenue raised and say by rebalancing through

tariffs they'll try to achieve the same amount. the strong dollar hurts u.s. exports. by punishing our rivals globally hope to get that advantage back again. >> i'll let michael comment on that. >> that sounds like democratic redistribution to me. >> thanks, steve. pretty interesting theory for folks on the tariffs side. the idea that a lot of people who are exporters are going to get hurt, i understand that, on a macro basis, it's not a huge number, so 11% or 12% of exports are accounted for, but still it's a lot of people and if you think about who trump voters have been over certainly this cycle and probably the previous two as well, a lot of folks in manufacturing businesses, if they take a hit there's going to be a bit of political backlash there as well. >> but michael, my concern is

the 40% of u.s. -- of s&p 500 profits that come from overseas, i don't know the extent those will be affected by retaliatory tariffs. >> but a lot of the tariffs that we earn overseas are in places like europe. if our allies threaten retaliatory tariffs they don't get access to our defense. >> michael, we'll let you go. steve, you got some headlines on banks and the california wildfire response. kelly, this is a normal thing that the regulatory agencies put out in times of disasters like this, and what

they do is they're urging the banks to work with their clients in the areas affected by the wildfires, and they're not saying they're going to look the other way but they say they'll recognize that they're working with these banks under unusual circumstances in the wildfire. kelly, you've seen these before each time, they just put this one out when it comes to the california wildfire areas and the effects on banks and clients and urging them to work with your clients, to work through this period of time. >> all right, lot of investors are looking through the regional banks and see if anyone has extra risk and that's still ongoing. >> appreciate it, steve, as always. energy is leading the market again today after being one of the worst performers last year the mag 7 is under pressure again. will we go back to the same old, same old?

let's ask the chief investment strategist at schwab. what do you make of this new playbook thus far? >> thus far, we're two weeks into the year, we were likely to see a continuation as it relates to the second half of last year not from one area to energy over the course of the year but an ongoing basis. back into the prior leaders. the magnificent 7 we saw that in the latter part of this year, the broad combination of uncertainties from a policy perspective. you've been spending a lot of time in the less ten minutes talking about federal policy, monetary policy uncertainty. that moves the needle. on large caps versus small caps.

so i think that's what we're likely to continue to see. today it's in favor of energy. >> as we start to hear from some of the bigs this week, maybe it last all year if they're going to outperform here. >> we assume it will continue to normalize, that's to the benefit of the financials. the earnings profiles look good. that's big picture backdrop for financials. one outperforming sector and that's communications services. you got a pretty sharp earnings improvement, in fact if you look at all 11 sectors in terms of fourth quarter expectations only communications services has seen kind of an upgrade and that

carries into 2025, so you still have that dominator leverage, even though you don't have an valuation story you have at least the earnings doing more of the heavy lifting. >> communications services, is this amazon, who else is there? >> meta is, i think it's the biggest within communications services. amazon is actually a consumer discretionary. among the seven you incorporate, they think they're the tech stocks but it incorporates the growth trio, technology, communications services and consumer discretionary, so understanding what sector they live in, is really important when you're trying to make a sector call. one thing i'll say going back to

sector recommendations we've been a bit more focused on factor-based research and stock selection, so picking stocks, deciding on what characteristics, or factors, that's where there's more consistency among the sharper sector rotations, strength of balance sheet, positive earnings revision and that analysis and screenings can be applied across the spectrum of sectors. that overweight/underweight is a trickier thing to do among the sharp sectors reation. >> there's going to be some companies that can handle it better than others. consumer discretionary is the only place you're underweight right now, and why is that? >> we do think that we're likely to see a little bit of pressure on the consumer particularly from a rate backdrop, so we've had incredibly strong consumer

spending, strong retail sales, it's not our base case that we'll see a weakening in the labor market, but i think any faltering in the labor market could probably change very quickly the trajectory for consumption, because i think that's been the primary pillar of support. >> good to see you. thank you for the time. coming up, would china consider selling tiktok u.s. operations to elon musk. those are the reports, which tiktok denies. rising insurance costs, we'll talk about how they're coping with that stubbornly high interest rates and choppy consumer spending. stay with us. >> announcer: this is "the exchange" on cnbc.

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powering five years of savings. powering possibilities. comcast business. welcome back. china is reportedly weighing the sale of tiktok to elon musk as one potential option. they deny that report calling it pure fiction. david faber is here with more. david, what's the latest. >> kelly, as you might imagine, i go back to reporting on this the early fall of 2020, that was the first time of course there was a preparation for potential ban of tiktok under the former

trump administration and plenty of people trying to set themselves up as potential buyers, looking back in my notes, but this morning making more calls on this and people close to bytedance they were unaware of conversations between bytedance, owner of tiktok, and elon musk. they wouldn't say whether the chinese government in fact had conversations. that would be somewhat unusual, the chinese certainly quite deliberate. it would be seen as being out of character. as has been the case, if tiktok is banned here, the chinese government would not allow bytedance to sell the app to any number of potential buyers who would certainly to be happy to try to actually take it off of bytedance's hands. where things stand right now, waiting, waiting on the supreme court, which we may hear from as

soon as tomorrow in terms of a decision whether they'll issue an injuncture. or and this seems to be perhaps some believe is a more likely outcome, do they pose an administrative delay, that allows the trump administration time to figure out how they want to deal with the law itself and gives them the chance to setting the standards under the law. that's where we find ourselves. it's interesting, shares of meta are down again, down across the board but it's down more than many sort of the other names. one would expect if people be believed we were only ful a days away from a ban of tiktok -- >> what happened to oracle, odd that the chinese would be against selling it at all except

to elon musk. >> yeah, i mean, the belief has been and what i continue to hear is the chinese government is not going to allow the u.s. to say, you have to sell this and then do so. that it would simply be shut down. you're right, when it comes to oracle, remember that's way back, project texas, moving all the servers and data to texas. but congress believes and therefore acted that in fact there's still a back door to china and it still can have influence over the app and therefore is a national security risk. >> i love your point, we'll ask mark about that, why aren't the stocks, the rivals acting like this is about to happen if it is. if the ban takes effect in just a few days but tiktok refugees are already flooding to another app, the only problem it's also chinese. more in today's tech check.

>> even more chinese. when i lived in china something like a business or an app was american with chinese characteristics to make it seem more acceptable. but the rednote is fully chinese and it's embracing its chinese characteristics and many americans who are flocking to the app are do so . look at the red app at top of this image. you can only see it description included in chinese. it translates into little red book as in the little red book, the guide to communist ideology and revolutionary principles. a staple of chinese communist propaganda. here's how it's welcoming american users into its fold. >> hi, tiktok refugees.

welcome to red book. >> users are finding out that you shouldn't be posting about politics on this app, because chinese users aren't allowed to post about politics or religion or drugs, in other words, rednote is more censored than tiktok, less aligned than tiktok to western norms. if you ban tiktok, do you let in something far more damaging to u.s. eco system. kelly, why aren't american rivals, stock prices rising in anticipation of this ban, because a lot of users aren't going to american rivals, they're going to sigh these alternatives. >> appreciate it very much. there's at least one u.s. platform that might benefit big

time if tiktok goes dark. that's our mystery chart today. to build the drama, mark, before we reveal this name, there's this sense online, meta lobbied to ban tiktok, we don't want to use meta platforms. yeah, we'll just go use this chinese thing. >> my guess is that 100 million-plus people in the u.s. who use tiktok are going to go to find the content they loved on tiktok. right on reels or youtube shorts and sometimes on snap. we hosted a panel on this topic earlier this week, we think there will be a supreme court order tomorrow morning, just a short order. our guess is that the majority of the court is going to vote to uphold the law, therefore it goes into effect on the 19th and i don't think tiktok goes dark

on that day, the service will degrade over time, it will removed there the app store and upgrades won't be allowed. a bit of a shocking event over the last couple of events, shocking to investors. it's the law of the land and i think the supreme court is going to uphold it. >> it's interesting, because as we know the apples and the googles as the world they'll have to back away from it immediately. people might still be able to use it? >> that's my best guess, i'm not sure. the law was -- this was not -- this was not quick legislation and this wasn't something that didn't -- this legislation had very strong bipartisan support and the arguments that tiktok was making in front of the supreme court i don't think were convincing, they were arguing that chinese assets should have freedom of speech, rights, in

the u.s. i don't think that convinced most of the supreme court justices. so i think you'll get six or seven to uphold the law. >> perhaps narrowly and perhaps on the simple issue the chinese collection of the u.s. user data. they don't have to wade into content moderation. you think snap could be one of the bigger beneficiaries. probably not being as talked much now, why would you look in that direction? >> well, i'll give you two reasons. one, it depends on where the users go, if you love certain type of content on tiktok you'd love to follow that content on other platforms. instagram reels, shorts, we did check to see where the top content that's being followed on, viewed on tiktok goes, you can find a lot of it on those

other platforms. second thing is, what are advertisers going to do? advertisers are on tiktok for reach and frequency and a particularly ad format. our guess is that 60%, 70% of tiktok ad budgets will go to meta. 30% will go to youtube and 10% to snap. that 10% could mean an incremental revenue to snap. >> you don't have an overweight on the name, you're still market neutral on it. the bigger beta really going to that name versus so much the others. mark, thanks for your time today. we'll see what happens. >> thank you. coming up, the pandemic saw a generational influx of new investors into the stock market, so how are they ing now? that's next on "the exchange."

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welcome back. cnbc update. negotiations get closer to final ides a deal for the hostages, the meeting to discuss potential deals to release hostages. norovirus soaring in america, cases more than doubled last year because of a new strain of the virus for which of us have no immunity and apparently congestion pricing is working, the mta said an early read traffic in new york city down 7.5%, those by the way who don't live it, $9 tax it hits drivers in new york city below 61st and drivers coming from brooklyn and queens are going to pay a toll for the first time. but it's working in reducing traffic. coming up on "power lunch," facing down the government's debt problem.

patrick mchenry will join us. >> i was all wound up about congestion pricing. i'll save it. we'll talk to mchenry. appreciate it. two entrepreneurs are finding new ways to beat the market. frank holland, do tell. >> thank you very much for having me right now. they released a book today called "you deserve to be rich." the con-founders have thousands of views on youtube and more than a million followers on social media. they're emphasizing, be as educated as you are enthusiastic. >> everybody's talking about bitcoin, that trickles down to

xlm, so these waves happen based off of news cycles and what's currently making money in the economy and it's our job to kind of position the ship not just to jump on the different waves but to educate people. >> the pair say the surge and then the selloff in quantum computing stocks highlight a real shift from a hold on for dear life to a more strategic philosophy. >> we learned a valuable lesson over the past week, with the quick fall of quantum chips. but it's interesting, i think it says a lot of people are paying attention to it, the fact the quantum computing over the past six months, people are looking to find trades to get in is important, but we want to make sure that we're educated around that space before we make a decision. >> they say a retail investor

inflection point, more than a half of retail investors don't have a college degree, a real shift. >> it's fascinating. it doesn't surprise me based on the conversations that i've had a lot, people who have these amazing stories, lot on the younger side as well, working during the pandemic, got more interested in the stock market, did better along the way. >> what's interesting, if you hock at a schwab survey from last year, genzers they started investing at 19 years old. the average investor didn't start investing until 30. >> it's huge. >> compounding. >> when we look at how people are investing in etfs, they're saying 2025, that's the year of

the exotic tf, they want different ways to play the market and potentially beat the market. >> if you start at 18 instead of 30. >> index funds are a very safe to play the market. >> frank, appreciate it. rising rates around the globe are putting the spotlight back on to commercial real estate, a of the break we'll check in with the ceo of one company with retail properties across the country. 'ltalk about the biggest headwinds he's facing. - right? - mmm... this store doesn't have agentforce, so an ai agent didn't tip off the stylist as to what i might actually wear. - yes. - oh. that's a commitment. [glass knocked] hey bud! whaddaya think? you know, people can see you out here. ha ha ha ha, yeah, yeah, right, right, ha ha. love you, too. agentforce helps retailers prevent fashion fails.

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that's something i want to believe. [skateboard sounds] the california wildfires have now killed at least 24 people and a new round of high winds in the area threaten to fan the flames even more. the three biggest incidents we're watch having burned through more than 40,000 acres combined. the palisades fire only 25% contained. the economic toll of those fires

keeps climbing. goldman estimating just the insured losses between 10 and $30 billion. the insured losses one of the costliest natural disasters in the country. commercial property risks are also rising in states like california and florida, joining me now is joey agreen, agreen property. is this becoming a rise in cost burden. >> it has. as you mentioned we have properties across all 50 states, the fire zones, a critical aspect of where we invest the capital. 2400 properties across all 50 states, a large blanket policy to cover it, unfortunately the smaller investors today even a bigger hurdle for them where to

deploy. >> your shopping centers, you want to build where there's a population. >> they have to build the strip center, finance the strip center and insure the strip center at the end of the day. we have the ability to have blanket policies that get pass through to larger retailers. it's really the small business owner whether it's a retail or land, that's going to feel the pressure. >> your stock mix, it's walmart, t.j. maxx. >> yes, the biggest and best retailers in country. >> we're starting to see choppier results this morning, nike shares are at another 52-week low, how do you know you're betting on tenants with

staying power. >> 30,000-foot lens, we invest in recession-resistance. the largest nondiscretionary in those respective sectors. walmart, the retailers with core, durable brick and mortar services today, regardless of the macroenvironments. in a postcovid world where the acceleration of that multilevel deployment to consumers continues to accelerate. >> remember the death of the shopping mall, how many narratives the death of the shopping mall. >> today, we see the exact opposite, today it's really back to the store, retailers such as walmart and t.j. maxx and auto

zone, spent a decade investing in e-commerce fulfillment, their distribution centers, all of the different modalities to bring the goods to the home. becoming the hub of the experience. forcing customers to come to the stores through discounts, encouraging consumers to come back to the store. >> i'm curious, though, if we say the economic is a challenge, consumer spending, especially with your mix of retailers, what do you do when one of the biggest problems for the retail business is high interest rates, the fed cuts and they go the other way. >> look, everyone was waiting for the fed to cut. we were aad of the curve here,

we felt that misnomer was frankly strategically wasn't appropriate for our business model. we've given guidance to 1.$1.3 billion deployed across our growth platforms this year. $2 billion of liquidity, $1.1 billion of forward equity and said, irrespective of the election, or what happens with the fed, the 10 year treasury, we want to pre-advertise our balance sheet to take advantage of the opportunities. that's paid off. we think this is going to have a world of haves and have nots. do you think we could be turning a corner here in terms of the economic results, the shareholders results. >> we had a tremendous 2024, right, in 2025 we're positioned to continue to drive earnings,

to continue to drive dividends with a fortress balance sheet. and so, again, the haves and have nots are appropriate today for those who are real estate investors but also those retailers. sales are no longer skewed, they're normalized today. e-commerce is critical. we're at the end of really a cycle of free money, that's over. we have expensive capital out there and retailers have to be productive and they have to win share at the end of the day. >> joey, appreciate it. joey agree. after the break, eli lily shares are shrinking after the drugmaker cut their guidance. lily is the worst performer on the s&p today, down nearly 7% for its worst day since march 2021. more after this.

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eli lilly cutting guidance as demand for mounjaro and zepbound fail to meet expectations. >> reporter: kelly, i sat down with theresa graham, ceo of roche. she said we should expect to see more from roche. >> i don't think we have yet begun to scratch the surface to help us address some of the cardiovascular and metabolic diseases. we're actively looking at the landscape, seeing the other ways that are available and how the science is evolving. >> reporter: i also caught up, their heart drug to be approved by the end of march.

and not delay with the change of administration. >> with respect to the change of administration a greater period of uncertainty, not just for our industry but for many sectors of the economy and our focus is going to be around trying to make sure that we play our part in continuing to deliver innovation for patients based on this remarkable platform that we have that could provide so much opportunity for so many different diseases. >> reporter: you might have noticed that both women are wearing pink today and that's because today jpmorgue wrap is trying to awareness for female leadership in the industry and later today the coverage of the healthcare conference with a live interview with neil kumar. >> appreciate it. coming up, the unofficial start to earnings season upon us, the big banks report tomorrow. guidance will be a mixed bag, that's next. a.

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my head set as we start getting results in, where do you think things will be strongest and weakest. >> strongest in communications services, that's the metas and netflixs of the world. financials and the tech sectors have had the smallest revisions into this quarter, we feel confidence in the numbers and didn't immediate to lower the bar before they report earnings. >> we were just talking about communications services. basically you think, mag 7, tech, financials, something to keep in mind, markets are looking for pretty strong results. the flip side in. >> the more defensive sectors, staples, the weakest earnings growth. not shockingly this quarter and next year for that matter. >> where does energy fall in that mix? the sector that's coming out with a decent start to the year?

>> energy has among the weakest earnings growth next year, in this upcoming quarter that's going to get reported soon because it tends to track oil prices, if they stay sustained, earnings will have higher revisions into the first quarter. that will reflect what happened with oil prices in the fourth quarter. they weren't strong until very recently. >> where else would you be looking for standouts? >> you know, when we look across the numbers, tech, financials, are the strongest trends, it's just amazing, the weakest ones are the most defensive. the industry level, semis, transports, parcel stocks, consumer services, discretionary you don't see on that list at a high level. the pocket of discretionary, the

market weight, amazon and those names should be strong. >> interesting about the transports. chris, thanks. appreciate it. that's it for us today. thank you for tuning into the exchange. i'll join brian sullivan for ""power lunch"" after this quick break. rning. 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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