on energy prices, gas prices and the expansion of real wage growth which we think could result from small business optimism and spending, capital expenditures. we think that's a good spot. >> weiss, last but certainly not least. >> i think it's going to work out. >> thanks, everybody. i'll see you on closing bell. thank you very much, scott. welcome to "the exchange." i'm kelly evans. here's what's ahead, elon musk, the trump-backed a.i. initiative one of our gegss could answer the most important question in a. icht trade, certainly levitating today. how much of a catalyst it will continue to be for the chip stocks. jamie dimon is saying that a strong dollar isn't bad.

stay small to avoid it altogether. if you're looking for opportunities outside of the u.s. there are three international markets set to skrout perform under trump 2.0 we can only guess one of them. here's another one. it's not as obvious if you think you know it tweet me and we'll reveal it ahead. dom chu brings us the afternoon news. >> the lede, the stock market overall, at least for one key index the broader large cap s&p 500, which currently sits at 6,094, up 45 points, we do have a new highwater mark, it was 6,099 back on december 6th. it's one point higher at 6100. that's your new record level. 6,094, up 45 points, near session highs. about 27 at the lows.

again, new record highs here, the dow industrials a couple percent away from their own record highs. it's up 100 points. the nasdaq composite, that trade leading the way higher. up 1.5%, good for 280 points, less than 1% away from a record high for the composite index. one of the big driving forces for that tech media trade is netflix, currently up 10.5%, a new, at least earlier today a new record intra-day level for netflix trades as well. surging over the last year, almost a doubling in terms of total value, maybe key for some investors, way more subscribers than this past quarter on a consensus basis. and then, if you're looking

elsewhere within technology check out the chip stocks. this stargate project for infrastructure on artificial intelligence that president trump just unveiled with so much the key players if technology, check out the chips stocks, nvidia, arm holdings, all generally higher on some of this optimism. as you start possibly hundreds of billions of dollars, the chips, keep an eye on those. >> dom, thank you very much. the chips trade and stargate specifically is where we begin. my next guest says it help answer one very important question, will there be enough funds available before generating a return on this nvestment stargate suggests the answer is yes. chris, great to have you here. lot of people seem pretty

confident that there's going to be a payoff, right. >> exactly right. the point we're making if you go back a year ago, you know, certainly two years ago the numbers we were looking at for nvidia specifically the main question we got from investors is, where is this money coming from, one of things that the stargate announcement helps to answer, here's an example of some folks who are willing to spend a loft money and particularly ahead of the return of investment on a.i., one of the questions investors have had, right now, some projects that have high return on investment and some projects are, you know, still waiting for roi, one thing this announcement is saying, yes, companies, particularly these companies here are willing to invest ahead of the roi because the roi over the next five, six years is going to be so high.

>> chris, more broadly, you kind of get into the details of stargate, a lot of this was in the works already, this was a supercomputer partnership first reported back in march, maybe there's ten data centers or 20, now you got softbank involved and arm, but why do you think the stocks are reacting the way they are, maybe arm's kind of newer involvement, is it sustainable? >> some of these stocks pulled back more recently. in the case of nvidia some questions about the transition of the new product ramp at blackwell, how strong is that first half versus the second half and our view is, you know, a transition period we're expecting a much stronger second half. micron, they've been going through a cyclical downturn. we feel once you get to tend of

that, the stocks start to react as to a reaction of what's going on in a.i. under pressure in the short-term reasons. you know, obviously people go back to, you know, what the real prize is over the next few years. >> that was qualcomm, what are some of the names that could be the next movers in what's been a very hot space? >> so, our favorite in this space is actually micron. and, you know, because of the cyclical part of the business it's still correcting that's happened, a very good place in a.i., the memory that goes into a.i. services in new business is going to be good driver. we also like nvidia, which everybody likes right now, we think they're the long-term winner. and marvell, for the broad

market like what nvidia does. >> i think marvell is up big but a much smaller market cap. chris, stand by. a news alert on qualcomm. kristina with that. exclusively used qualcomm chips, this expands the partnership qualcomm already has with samsung, this marks a big shift in their strategy, they used both qualcomm chips and in-house processors, they'll only use qualcomm's latest snapdragon elite processer which will allow on-device a.i. processing. it's touted as the world's fastest mobile system on chips. you can run gemini directly on the phone you don't necessarily need a connection to the cloud although everyone using a hybrid

model at the moment this comes at a time where samsung has been looking to close the gap idc research pointing to apple as the global market leader as samsung right behind, conflicting research saying that samsung is number one. and other data saying that apple is slowly looking market space in china. preorders open today with the release date of february 7th. the bigst takeaway here all samsung phones will be ing qualcomm chips. >> kristina, samsung faces existing challenges with its chip development. >> well more so with its foundry business, samsung is provider, there was just report coming from south korea this morning that samsung is looking to cut its capex spending. hearing this report, who's going

benefit? if samsung's business isn't doing well, not using their in-house chips it will benefit given its position with qualcomm. >> all right, thank you. qualcomm shares are taking a bit of a leg higher, up 2.5%. thank you, kristina. chris, would you add anything to the significance of what you just heard. >> it's something, luckily, we've spoken about it before, if you go back in the last generation, about two years ago, qualcomm did supply almost all of the chips for samsung phones, over the last year and the last generation of '24, their share dropped to about 75%. the reason why the share is going higher because of samsung's own difficulty getting their leading edge manufacturing business on par where tsmc is.

qualcomm is a beneficiary because they pick up those sokts and qualcomm does those chips at tmsc. the share of 24 last year's phone is about 75%. >> intel is struggling with its boundary. what's the takeaway here. >> all roads go to tsmc. tsmc has a big advantage. samsung is still trying to get there, which is equivalent of where tsmc is to get that working. it's not yielding high enough, we believe, they had to make that difficult decision to kind of shelf their internal product. >> chris, thanks. appreciate it. meantime, president trump's election and the likelihood of

fewer rate cuts this year from the fed have been pushing the dollar higher, up 5% since the election in november, can be a headwind for companies earning money in those cheaper foreign currencies. and ceos are weighing in. >> what that means, your economy is strengthening versus others generally, it will bounce around, of course tariffs can change the dollar, but the most important thing is growth, good economic growth is good for the united states, and so, you know, we should be wishing for that, it should have some negative effects for some companies but better growth around the world. >> my friend jamie, easy for him to say, it's -- the stronger dollar hurts us from a bottom line standpoint. we've seen an acceleration of the strength of the dollar in the last couple of months, it had an impact on the quarter.

it overdelivered. it will have an impact on the balance of the year. >> what portion of revenues and, from p&g for some of these staple companies can be substantial what they earn overseas. my guest says a stronger dollar will help small businesses. small caps have been through the worst of times and best of times from the election. >> we really like small caps. listening to the president's inauguration speech it certainly focused on lower tax cuts, deregulation, all things that should improve the u.s. economy, very good for the dollar and certainly, that will help smaller cap domestic companies that have their sales here rather than multinationals 37 we like small caps a lot. when you look at valuation, you're talking about small caps

trading at a 20% discount to their historical valuation at 20% premium to that valuation, so, if you look at the last decade, small has underperformed large by 5% annualized. i think it's time for small caps to, you know, have some outperformance at this particular point. >> sandy, i finally took small caps out of my 401(k), 529, i'm done, i don't need them, why do i need them? you guys go through and pick base on quality and all those factors the stocks that you think will do well. to own them broadly with rates as high as they are, they didn't make any money for three years. i don't know, they've lost me. >> yeah, well, i hope that's a contraryian indicator, we don't like to follow the herd, we look at the broad market, you look at 1999, 2021, just trading

historical, you know, highs on forward price to earning. 2000s wasn't very good. 2022 wasn't good. tougher for the larger cap expensive tech stocks and the names that we own we think money is going to flow into them. it's been some times since that's happened. >> uk small caps have outperformed in the long run because there's been a dirt of megacaps. there was no microsoft and all of that. s&p 500 argument, you think it's overvalued? >> yeah, we heard from jamie dimon earlier, if you look at historical charts going back, you know, 100 years, we're overextended every way you can think of, so to us that opens the door for areas that have

been completely avoided. as you mentioned earlier that's what the opportunity is, small is cheap and large is expensive and at some point there's reversion to the mean and when it happens it can happen quickly. we just want to be prepared. >> if you could give examples coming through the sector, where do you feel most confident? >> we like a company called optioncare, very simple business, had pickups in the third quarter. they pre-announced fourth quarter, looks pretty good. 20% upside on those shares. we like ligand pharma. we like that one at all. and we like pool corp, sales are

maintaining and repairing your swimming pool. they continue to maintain them. we like that as a very dominant company. so, three names that we like that we think are undervalued and underloved and hoping money can be allocated towards this sector. >> some capital is reallocated, just man. sandy, really appreciate it. thanks for joining us. >> thank you, kelly. there's the case for u.s. small caps and u.s. equities, but how are emerging markets expected to do under this second trump administration, india and mexico were big beneficiaries. steve amodi is here with a look at what can now. >> reporter: the return of president trump opens the door of wide range of potential

headwinds. well respected investor said you still can make money verseas but you have to be more selective. going all-in on india. >> india will continue to do well. it's a huge domestic market. more importantly, india is very adept at trading with the u.s. they're able to operate in the u.s. and the relationships between india and the u.s. are much better than with china. >> fund managers see india as less vulnerable with a trade war with the u.s. mentioned trump's close relationship with prime minister modi which is expected to yield bigger investments in the country in the coming year. brazil and turkey can also outperform under trump for similar reasons, both countries

also holding a large deficit with the u.s. compared to other emerging markets. hsbc also thinks these three countries have at their disposal access to tools if tariffs were imposed. and options to weaken their currency, kelly. >> india, a narrative, they get the manufacturing benefit. turkey and brazil, why again. >> these countries aren't in trump's sort of direct eye when it comes to tariffs and therefore are less vulnerable to a trade war, also when you size up the health of those two economist in comparisons to others, they're holding up relatively well, they're in position to use these counteracting measures like fiscal policy to respond to tariffs. >> it's like they always say with the stock market, you want the stocks that are out of the news, could be true for countries.

>> yes. >> seema, thank you. coming up, it's the ale of two economies and two presidential policies. the impact they're expected to have on inflation and fed rate cuts. but first data -- closing one of one its centers. >> this "e isthexchange" on cnbc. it all started with a small business idea. it's a pillow with a speaker in it! that's right craig. pulling in the perfect team to get the job done. i'm just here for the internets. at&t, it's super-fast! you locked us out?! and when thrown a curveball... arrggghh! ahhhh! [crashing sounds] we had everything we needed. is the internet out? don't worry, we have at&t internet back-up. the next level network for small business. ♪♪ i sold a pillow!

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omni luxe ledcom. >> welcome back! welcome back databricks has closed $10 billion in equity financing, $5 billion in debt and announced a surprising strategic investor. so the race between closesource and opensource a.i. that's heating up this year. stargate is supercharges openai ambitions. but another opensource faction is emerging offering but fish ensy. meta's invested in databricks, aligns two of the major companies in this camp. >> the game is completely shifted from sort of making

these massive models, took a very long time to prepare, to now you can actually for very few dollars, not much at all, research at berkeley they can build the reasoning model for $350 just last week, you can create these models that do thinking for much, muchless. >> in other words, the shift essentially levels the playing field. breakthroughs from chinese's deepseek raising the question is a.i. model-building still a good investment? project stargate says yes, but the stakes are rising. a group of investors buying shares on the secondary market, the company is not yet public. data from forge global shows shares trading at a premium since mid-december when databricks announced this massive fund-raise. secondary markets, though, it's

more valuable at $65 billion. indicating strong demand of databricks to ipo. >> so it's still possible, again, maybe the investors in the public markets would wish to get in early on. >> if they do it this year, there seems to be strong indication just by the fact alone it raised $10 billion in venture investing and debt. this is a select group of investors who are able to do this. what the secondary markets tell us, these are smaller retail investors that are interested in getting into a name like this before it goes public, it would be massive, very interesting a.i. ipo were it to happen this year. >> look at the markets. thanks on the flip side, coming up the number of bankruptcies

backed by private equity are at a record high and showing no sign of slowing down, which sectors are more vulnerable to that and one entertainment name making a comeback after it filed for bankruptcy in the depths of the pandemic. the details coming up on "the exchange." >> announcer: tech check is sponsored by comcast business, powering possibilities fold and deliver your laundry and dry cleaning at the touch of a button. >> i do not. >> trust other. >> people with. >> my laundry. rinse guarantees your satisfaction. i've been using it for months. now with no issues. okay, let's watch this. >> wait, i'm gonna do my laundry. >> better hurry then. all schedules sign up for rinse. >> rinse.com to get $20 off your. >> first order. want the fastest working glp one for half the price? row now offers fda

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and today we'll give you a copy for free. get your free copy while they last at. it's not an option.com it's not an option.com. welcome back to the exchange. i'm brian sullivan, the house will vote again wednesday on the laken riley act, the bill expected to pass after the senate approved the measure to clear the way for president trump's signature, if signed into the law, the bill will allow. i.c.e. to arrest and detain undocumented immigrants who are accused of theft. bill menendez will be sentenced ne week after a judge denied his request for a

new trial. lawyers for the former senator have yet to comment. and some relief in rent prices the cost to rent in the u.s. fell to its lowest level in three years, redfin says the beadian a rent for an apartment is just under 1600 bucks a month, redfin said that rent affordability will continue to improve this year as wages increase and rental prices will stay flat. not sure they've been to new york city any time recently. coming up, we'll speak more about president trump's agenda with the stargate a.i. infrastructure project, which companies will benefit and more importantly, kelly, what exactly is it and why are so many stocks moving. >> indeed, across a lot of different sectors. speaking of the president, we're taking a deep dive into the white house's economic agenda to see whether these new policies will help rebalance the economy or not. speaking of the president, trump

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that we get to use every day. >> squawk box live from davos morgan stanley's ted pick, workday's carl eschenbach, liberty global's mike breese, honeywell's vimal kapoor,

blackrock's larry fink stayof tx tomorrow, 6 a.m. eastern. welcome back. if you've been a little confused by what's really going on with the u.s. economy lately you're not alone. we get superstrong job growth than the manufacturing sector is still contracting. consumer confidence has slipped. what kind of economy is president trump actually inheriting. we have look at that and therefore, steve, which kind of policies should be used to address it. >> yeah, it's a conundrum, president trump talks about the economy like it's in a deep recession with soaring unemployment and lagging growth, the data show while there are meant of problems there's historically low unemployment, all that raises the question, are president trump's policies the right ones for what really ails the economy or just part of the economy? the programs outlined so far are

a mix of hits and misses. he's worried that the policies that trump wants for an emergency and we're not in one. the danger is that you stimulate too much as you might in a recession, raising inflation risks and forcing the federal reserve to respond. trump policies on tariffs, immigration, which could reduce the labor force to decline. then on the other side, there's regulation, pro-investor policies. and energy policy all of which could help on the inflation run and serve as outset by boosting supply. what if the deregulation story is right, and the cost of doing business just goes down, and that's good for businesses and consumers? it's positive supply shock and that's disinflationary. what you have, you have uncertainty over how much of these policies get enacted, what

their economic impact is, freezing the federal reserve in its tracks at least for now, kelly, what happens if you adopt economic policies for an emergency that don't exist? >> stay with us, steve. let's dive deeper into the president's efforts to reshape the economy. i'll let you each of you, gentlemen, don, to you first, where do you see an economic emergency? >> think that would be on the fiscal front, the deficit, 6% of gdp is out of whack given the stance of our economy right now. i agree with steve's framing in how i would think about the trump economy and what his policies are. tax trade, fiscal and regulation and immigration. on those fronts i think they wash out to a more neutral

position. i think when you start factoring into policies that will be necessary, spending cuts and tariffs we might be able to keep the deficit at 6.5% of the deficit. >> normally we'd say that's an emergency. mark, two would you say as you look around, where do you see an economic emergency? >> it's not just the fiscal itself it's the economic effects, the fact that inflation still isn't fully under control and that interest rates are in the 4% and 5%. if we don't get our fiscal house in in order it will tough to get inflation or interest rates down. >> steve, i'll turn to you, if the emergency is really on the deficit piece why we're seeing such urgency from the president to look at revenue sources along with spending cuts to rye to close it.

>> well, the problem with it, your guests agree that the president isn't strictly oriented toward solving the deficit problem, now it's a bit of hypocrisy from the democratic side, president trump has to solve a deficit problem, that was true under biden and he didn't do it, unfortunately it's going to be more true. the way that these things might offset, no guarantee that the magnitude of either side is going to work or get enacted. we talked last week about how deregulation can end up being, kevin wrote about this in the wall street journal last week the notion of deregulation as a disinflationary impulse, it's new idea, an interesting idea, it's a new one we haven't seen yet. the tariffs, the tariffs could be one-time rise in the price

level. but in this environment just because you have 10% tariff doesn't mean you can't rise prices by 15%, there's all those concerns, i think, some well-oriented or well-focused ideas but if they offset they better be past in an offsetting way. >> gentlemen, to the issue of manufacturing, don, i think certainly the president's team would say there's a national emergency there, they kind of viewed it's shiefl so much, it brings into questions of national security, look at what happened when we needed to send artillery to ukraine we couldn't do it that quickly or the pandemic hit and we don't domestic manufacturering to rely on, from that point of view, do you degree that might be an emergency and if so will it be the best remedy to fix it. >> i think tariffs are growth negative, those are taxes. they can of course have some sector implications, day can act as a subsidy to domestic

manufacturing, of course if their import cost goes up, net beneficial for growth. number one, republicans are focused -- they're thinking about adding 120 billion or more to defense spending. an also, republicans are going to be looking for something pro-growth to add to the tax bill, one of those ideas for example could be full expensing for structures, that's an idea that i think that would be more constructive than trump's idea for a tax rate for manufacturing. those ideas can help, you know, with the state of the u.s. manufacturing. >> mark, same question, even as we're watching decent economic numbers, manufacturing data is contraction, we lost manufacturing jobs last month, how do you view that. >> this is a long-term trend driven by trade patterns that makes us wealthy on other fronts. you want overall strong growth.

they should be looking at a stable neutral tax code will promote more of everything and lower interest rates and that gets back to this deficit reduction if companies can borrow more easily they can produce more stuff. >> mark, is there anywhere else, we talked about the deficit and manufacturing, anywhere else we face an economic emergency or you think is kind after on idea where we're playing from strength right now. >> not a near-term economic emergency, our trust funds medicaid and medicare are a few years from unsolvency. when today's youngest retirees turn 70. i would be focusing on those pretty darn soon. >> not without a lot of time. steve, bring this all together for us. >> one area that kind of is emblematic of the sort of weird

focus that happens here, which is i read last night the executive order declaring a national emergency in energy. we may have better opportunities for energy, we may have a great horizons in energy but it's very hard to see how we have a national emergency in energy, we're at all-time highs on energy production, so there's more we should do with lng and natural gas, but that's the sort of thing you worry that the focus is in one area that's kind of doing okay but not in some of these other areas that need help and assistance, applaud to the president on focusing his policies on working class americans. all of those perhaps bode well, but you have to be careful not to sort of focus on the politically popular groups at the expense of the broader maco economy. >> don, a quick final response

on energy, what you think that might indicate or if it's necessary? >> yes, sometimes the emergency declaration can be unlock certain powers to be easier. trump's focus is right, getting energy costs down is positive that helps keep inflation down and ultimately good for growth. >> the deficit, manufacturing, entitlements and maybe energy, there's lot there in his effort to reshape the economy. thanks, guys. appreciate it. coming up, red lobster, party city, the upperware, spirit airlines, well-known companies that declared bankruptcy last year, we'll dig into that and talk to the ceo of chuck e cheese. as we head to break, don't miss our exclusive interview of the ceo of alaska airlines after tomorrow's results tomorrow.

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cnbc.com. slash disruptors to apply before february 10th. let's get a quick show and tell, the chart and tell the story, it's william sonoma, hitting an all-time high, after the company continues to face potential trump tariffs. here's what she had to say. >> so we've reduced our china exposure from 15% to 20%. we've been working to reduce it even further, the great news, we design our products ourselves so we can move them around and we've seen this coming. . the last time this happened we were ahead of the curve. we can go back and look at the tapes and then see what happened. we were able to get through it and we did move a lot out but we also were able to come up with new, great, other places to do business and better products and it affected everyone.

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at gamescom. welcome back to "the exchange." bankruptcies are actually hitting their highest growth since the great recession and there may be more pain to come.

kristina is here with a look at some of the most vulnerable companies as well, kristina. >> a doom and gloom kind of story, we're seeing a wave of corporate bankruptcies not seen since the aftermath of the great recession, will are some big names that have gone under from your local party city, to popular restaurants like red lobster, companies are struggling, many are owned by private equity firms. last year we saw 694 companies file for bankruptcy higher than the covid pandemic. party city, but you'll recognize other names, too, big lots, spirit airlines, red lobster, consumer retail and industrial companies, each made up 28% of all filings and why is that, interest rates staying up, their debt keeps getting more expensive and consumers are

watching their wallets closely. over a hundred bankrupt companies were backed by private equity funds. that's actually a new record, new record for p.e.-backed firms. they've been stepping in taking on more distressed borrowers. >> you pa make a great point, what's different in this bankruptcy wave since the pandemic financial crisis is high rates and the private ek with ity companies when you load up with debt and if that's your whole strategy and it doesn't pan out that's a big part of this increase. >> pretty interesting, too, the growth rate of p.e.-backed companies is growing at a faster clip. could also be the exposure. lot of the bankruptcies are falling within health care, two major names announced this year -- >> which is surprising, because health care is supposed to be the recession-proof industry.

>> is it because they're selling the properties they own the hospitals and then leasing it back to their own company? how these hospitals and medical facilities are run. >> an area that's under scrutiny from politicians and exactly. >> maybe for a reason. kristina, thanks. my next guest has walked this bankruptcy road, they filed chapter 11 in 2020 and exited it the same year, the parent company of chuck e. cheese, the ceo has focused on rejuvenating the brand to the consumer. including monthly subscription programs. thank you so much for being here. >> bracelet to be here, kelly. >> you're like netflix, you have a subscription product, do tell. >> all new for us, we started testing a two-month subscription over the last several years, we

saw a tremendous demand as our cast typically families under 50,000, $60,000 they're looking for more value, we saw over 400,000 passes. we rolled out a membership this fall, over 100,000 members. we're meeting that value-conscious consumer. >> would you have had to file bankruptcy if the pandemic didn't strike, in other words, were there still -- would a restructuring have been necessary. >> covid was really tough. we didn't have the balance sheet to survive covid especially a environment we are, a high-touch area, you know, who's to say if we were going to have to

restructure now. we went through restructuring and we raised bonds in early '21. we deployed that capital. this is the all-new chuck e. cheese. every single chuck e. cheese coast to coast in the united states has been completely remodeled. all-new look. we got active play. brand-new floor to ceiling jumbotrons and have a live character program as well for chuck e. cheese. >> i'm looking at the trampoline and thinking maybe i need to revisit. you mentioned i was kind of joking about the netflix thing off the top, were you trying to make shows or kind of a product that help capture that new generation and bring them back in. >> absolutely. we're catering to a newration of

kids, consuming entertainment in different ways. how we can exploit this incredible intellectual property for kids 3 to 8 years old. look for ways to license and franchise as well. >> also should mention, i think, cnbc did a great write-up of this whole journey, pizza is a nonsignificant part of your success. >> we're a scratch-made pizza, we make our own dough, cut our own vegetables, it's a delicious product. >> so you're stacking up against some, we have publicly traded dave and busters. a number of entertainment properties that are out there, you were public before the buyout, would you take it public again based on how these trends are going. >> something we'll work with the board and look at where their exit is. you talked about private equity,

we have an incredible board. we just finished this incredible remodeling program and invested over $50 million, so this is the year we're going to move out our two-year pass. all-new entertainment and menu. all right here. we have tremendous white space, we're in 18 countries worldwide right now. a tremendous upside for global expansion. >> what can you tell us about the consumer broadly at this point, dave, earlier it's been confusing to get a read on the economy. >> it has been. we tracked our consumers, parents with kids 3 to 9 years old, we track them every single month, in may, you looked at families making over $100,000 and making less than 100,000 having the same concern with the economy, inflation, just budgeting and as we got deeper

boo the year and closer into december we saw that, we saw those families making under $100,000 more concerned with those making above $100,000. we did see so much the pullback around that december time period, pre-holiday, credit card data, a pullback on entertainment and media. >> we'll see what might be going on there. david, thanks for joining us. great to hear the story and we hope to check back in soon. >> come see us at paramus. >> that's it for us. thank you for watching "the exchange." i'm join brian sullivan for "per lchowun" right after this quick break.

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