experience at fortune brands innovations i fundamentally believe if we don't disrupt, we will be disrupted. there is a clear need for products that are going to make people safer, that are going to make environments better, that can be good for business, good for people and good for the planet all at the same time. >> it is fabian here at cnbc global headquarters. welcome to worldwide exchange. here is your. >> five. >> at five. >> $1 trillion. that's the damage on wall street after concerns about chinese i deep sea tears. through tech leading nvidia to the largest single day stock wipeout in history. president trump calling it a wake up call. and we have the calm after the storm. stock futures are holding steady as investors look for a possible entry point to buy the dip. in washington, the senate confirmed scott besson as the next treasury secretary as he looks to take on the trump tariff agenda. plus a look at the massive wealth wipeout courtesy of deep sea and two key earnings

reports and the numbers that you need to be watching. it is tuesday, january the 28th, 2025. you're watching worldwide exchange right here on cnbc. and good morning. thanks so much for being here with us i'm frank collins. get you ready for the trading day ahead. we begin, as we always do, with a check of u.s. futures. after yesterday's sell off, fueled by the emergence of chinese ai tool deep seek that has many investors seeing a threat to u.s. tech dominance, also raising a lot of questions about stock valuations. the president weighing in on the impact of deep sea glass night. >> the release of. >> deep sea ai from a chinese company, should be a. >> wake up. >> call for our industries that we need to be laser focused on competing to win, because we have the greatest scientists in the world. >> so again, the president calling deep sea a wake up call. and as you wake up today, we are seeing a bit of a rebound when

it comes to futures. take a look. we're in the green across the board this morning. big switch from what we saw yesterday. so right now take a look at the s&p up about 24 points right around a third of a percent. the dow essentially flat up about 50 points. the nasdaq the biggest gainer up over a half a percent right now in the premarket or roughly 150 points. we want to take a look at some of the biggest premarket gainers right now. and again, we are seeing a rebound on wall street. take a look. these are the s&p gainers a lot of the stocks that fell yesterday rebounding today. so arista networks up about 6%. this is an ai infrastructure play is one of the names that was hit hard yesterday nvidia we just mentioned biggest stock wipeout in history yesterday just about $600 billion this morning up about 5% again a rebound. vistra constellation energy broadcom. other names that were really hit during the sell off. we want to stick with that deep sea fueled sell off nvidia. we want to go back to as i just mentioned, losing nearly $600 billion in market value. so this stock has fallen into bear market territory. it's also moved below its 200 day moving average. you can see it right here just below

its 200 day moving average. first time in two years. you see the huge impact of deep sea right here on this company over the last month down about 9%, but again about 20% off its most recent highs. so moving in to bear market territory this morning a bit of a rebound. nvidia shares up about 5%. so we've also seen an uptick in investors using options to play the ai trade. we've also seen more inflows into so-called levered etfs. so check out this action. check out the action on this chart of the sox and the sox. all these are ways to play chips with three times the exposure, either to the upside or to the downside. look at the right hand side of the screen. i think it's pretty clear to see which ones had the upside and which ones had the downside. it's inverse the bear one. again, people looking to play the downside gaining yesterday, people looking to play the upside they lost yesterday. basically moving kind of in inverse directions up about 19.5%, down about 21.5%. we have gunjan banerji of the wall street journal joining us to discuss this later in the hour. we also want to take a look at bond yields this morning. they eased back a bit as investors

they just look for safety. take a look at the benchmark right now at 4.56. moving back about five basis points from the level we saw yesterday. there was also a two year auction yesterday. our rick santelli said you know demand was relatively strong. i believe he gave it a c plus. we all saw that move back about five basis points as well on the short end of the curve. and we have to look at cryptocurrency this morning taking a look at bitcoin. remember it trades around the clock back above 100,000 up about 2% right now trading at about 102,825 a coin. all right. that is your setup. we want to turn our attention back to the markets. what else on a day like this. the discussion yesterday was really dominated by deep sea here on cnbc. take a listen. >> i think. >> there's a. >> component of today's sell off where people. >> are very reasonably recalibrating their expectations. >> markets don't like uncertainty. they like visibility. they like moats. so markets are a little scared today. to me it's an overreaction. >> i'm kind of skeptical of the reaction of the market. i think.

>> it could be overblown. >> joining me now is robert teeter, chief investment strategist at silvercrest asset management. robert, good morning. how are you? >> good morning frank. >> great to see you again. all right. so i think that last person really hit it on the head. there was this idea that the us had dominance when it came to ai. we had a lead and a bit of a moat, and some of our biggest companies in the public and private space, i'm thinking nvidia and openai. they had a significant lead over our chinese rivals. has that significantly changed in your mind beyond this knee jerk reaction to deep sea? has that changed the investment thesis? when you're looking at portfolio management? >> well, it doesn't change in. >> terms of the. >> us megacaps being. >> fantastic companies with a lot of business to do and a lot of demand in front of them. i think the wake up call. >> and. >> the thing that changes a bit is it shifts. >> investor focus away from those that are involved in the build out on the ai side, towards those that are the users. and so anytime you get this intense competition, the likely outcome is costs come down and when costs come down, you get broader use of ai and

broader opportunity to deploy that ai in a way that improves productivity and margins. and so we're really excited about that part of the story. we view that as sort of the next leg here, this transition into folks using ai more broadly to bring down costs. >> all right. so you're saying it kind of switches over to the companies that are on the user side of things. but i do want to talk to you about valuation. a lot of these companies have seen big run ups. they've seen big expansions when it comes to their multiples. do you have some concerns about the valuation in this market, especially after moves like yesterday, where we're really seeing some selling on the news and a lot of questions about what are these companies, what's the appropriate valuation considering? and again, if this is true, that another company or another country can create very similar ai models for about $6 million in a very short period of time, about two months. >> i think that's going to be the tug of war this year. there's no question that the outlook and demand for the things that these companies are producing, the us mega-cap companies, the demand is going to continue to increase. but we're starting to get into this question of, are we priced for

perfection? and i think you hit the nail on the head valuations, really the critical part of that story. and so we've really focused on the earnings side there and said that, you know the valuations are quite elevated. that's one of the reasons why any blip of negative news is going to trigger these swift downdrafts. and you set the stage for a lot of volatility this year. i think if you look through that volatility and you try to play the earnings side of it, the stocks look pretty decent. but you really have to be concerned about short term volatility. any news could really trigger a change as we saw yesterday. >> all right i want to talk to you about just as far as this trade when it comes to retail investors. we actually have vanda research here on the show. and they talked about retail investors actually beating the market last year with about a 41% gain. we have some new research from them. again this is according to vanda research retail investors. they bought a record $562 million of nvidia stock yesterday during the deep sea led sell off. what's your take on that? the fact that retail investors at least they're 100% buying the dip. i think that's one of the questions for everybody. >> yeah i think for the market

overall buying the dip here makes sense as it relates to, you know, these particular sectors that are being a bit disrupted by the news out of deep sea and the changes in the competitive landscape there. it depends a bit on portfolio construction. you know, some people were very much under owned in these areas. and yesterday's dip presents a pretty interesting buying opportunity to gain some exposure to these fantastic companies. but if you're overexposed, i think it's a good time to take a little profit and start broadening out again into some of the users of ai, we see some great opportunities. yesterday's rotation was indicative of that. you had areas like healthcare and financials and consumers performing quite well. i think on the basis of the fact that they will now have access to cheaper ai to reduce costs in their businesses. >> all right. robert teeter, good to see you as always. thank you very much. >> thanks, frank. great to see you. >> lot more to come here on worldwide exchange, including the one market mechanism that may have played a huge part in yesterday's sell off. but first, chinese tech leaders line up behind deep sea in its campaign against u.s. tech dominance. we are live in beijing coming up. also, we have sam altman

weighing in on china's ai success. we speak with a former openai executive about what's really at stake here. a very busy hour still ahead on worldwide exchange returns. stay with us. >> good morning. everyone.eady for the big meeting? >> i have to write this project plan. >> i just need to reply to 40 emails. >> linda. >> oh, their day disappeared. >> too many emails, messages, docs. >> that's why i have grammarly. >> it's ai that. >> helps me write faster and. better everywhere. >> it just. >> cleared it for the whole company. >> it was lost in the dark. >> grammarly for business. >> enterprise. >> ready ai. >> are you having a hard time growing your sales? is it tough getting new customers? try info free. com hot sales leads. you'll get unlimited sales leads, mailing lists, business profiles, person search, email marketing, and free crm. i got

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>> welcome back to worldwide exchange deep six ai model upending the global markets and the tech trade yesterday. but the chinese startup is generating a different type of reaction back at home. our eunice yoon joins us now from beijing with more on that part of the story. eunice.

>> thanks, frank. >> well. >> there has been. >> an upswelling. >> of. >> national pride. here with a lot of people saying. that that deep seat is. >> a. >> national triumph. >> the state media. >> has been. >> saying that deep seat shakes up. >> the. >> quote. myth of u.s. tech invincibility. the chinese tech. >> community has been on board a cybersecurity firm. the ceo. >> of qihoo. >> 360 said. >> that deep. six shows that we should have confidence that china will eventually win. >> the ai. >> war with the u.s. another ceo of a popular game called. blacksmith black myth, wukong said that deep six. ai success could change the national fate. now, of course, the perception here in china is that the us is trying to suppress china's efforts to be a winner in ai, and in fact, the that that is one of the main concerns going forward. frank. >> so, eunice, obviously, we saw the response here on wall street

here in the us, a lot of our us tech companies selling off on the news. but what's the sense when it comes to the chinese tech companies? is there potential for these companies to possibly partner with deep sea? is this a tailwind for their businesses and their ability to build out their ai products? >> well, there's definitely a feeling that a deep sea has opened the door for other ai companies to be able to do well. deep sea, though, has been having some capacity issues. there have been some concerns here that maybe that is going to be one big problem for them. in fact, in the state media, of course, there's been a lot of positive stories about the founder, about the company, about the potential for the tech community. but one interesting comment by the founder is almost an admission that some of those us tech controls have made it difficult for the company to be able to expand even further. in fact, he was saying that it's the chip issue that the us tech controls, that the chip

constraints are really the bottleneck for any further expansion by the company. >> yeah, really interesting story. big reaction, of course, with nvidia, with the idea that they used less advanced nvidia chips. but important to note, they did say they used nvidia chips. so it's kind of two sides to it right. eunice yoon live in beijing. eunice great to see you. thank you very much. all right. still on deck here on worldwide exchange. taking a look outside of tech, two big earnings reports that are out before the open this morning. we have the trades ahead of the tape for boeing and for starbucks seeing some different reaction here in the premarket. boeing shares up just about 1%. starbucks falling more than a half a percent. we'll have it half a percent. we'll have it coming ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ at state street, we know everyone's trying to get somewhere. ♪♪

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acknowledge that change is hard, but if people understand it's for the right reason, then you get the power of the organization with you. >> welcome back to worldwide exchange reports. fourth quarter results before the opening bell. shares are relatively flat since the company announced thursday it expects to post a loss of five. 46 a share, a number that was well below analysts estimates. boeing, citing the impact of the machinists union strike last fall. charges related to job cuts and certain parts of his defense and its space business. shares right now up about 1%, however. let's bring in ken herbert. defense and aerospace analyst at rbc capital markets. ken, good morning. good to see you. >> hey good morning frank. how are you? >> all right. so, ken, you got a price target of 200 bucks. a bit more optimistic than the consensus of about 188. does that signal you have confidence in boeing's ability to ramp up production of the max to 38 a month? that's something a lot of analysts have told us is really key to the turnaround here. >> yeah, that's fundamentally it. we need. >> to see better execution from. >> boeing, which obviously.

>> translates to better cash. >> flow and getting the. >> max to 38. >> a month. >> both from a deliveries. i would say more importantly, near-term as well as production. key to that, key to that bogey to get to the free cash generation or break even for the company. but bottom line, we are confident we do start to see better execution, which translates to better cash, which obviously is the most important metric for boeing at this point in the recovery. >> all right. so we just mentioned that boeing shares relatively flat since they pre-announced that earnings loss. when i look at some of their suppliers i'm thinking like a howmet aerospace a triumph group. those shares are actually down. what does this report mean for their suppliers and also for their biggest competitor, airbus? >> well, it's important to remember that boeing has significant inventory, especially on the mac. so suppliers will likely be running at production levels and lower than boeing for several quarters as boeing works down inventory. so you do see some lingering destocking risk for some suppliers. so that's obviously i think what you're seeing now is reflected in that sentiment. and

broadly speaking, when we think about competition for boeing, boeing just needs to take care of its own business here. it needs to execute. and i think it's got a great opportunity to do that. and if it can, i think you've got continued room for the shares to work. >> all right. ken herbert $2 price target overweight rating on boeing. earnings coming up. really appreciate your time and your insight. thank you again. >> thank you frank. >> and for our audience, you don't want to miss an exclusive interview with boeing ceo kelly ortberg that's coming up today on squawk on the street, coming up at 9 a.m. eastern. that's a cnbc exclusive. you don't want to miss. all right. looking at starbucks as well. also set to report its latest results after the close today. the coffee giant's troubles not expected to ease up. earnings and revenue are all expected to fall year over year, and u.s. same store sales are also likely to remain under some pressure. for more on what to watch, let's bring in brian harbor, analyst at morgan stanley. brian, good morning. good to see you. >> morning, frank. >> how are you? >> all right. similar story here, brian. you have a bit more optimistic price target on starbucks than the rest of your peers. you're at 115 consensus right around 106. but at the same time, you think u.s, same

store sales, they fall by 5%. china, same store sales fall by 10%. that's a bit more pessimistic than your peers. if i'm an investor, how should i read that? what is this saying to me or what you're saying? how should i read your views on this turnaround? >> well, i think everyone. >> knows this is still. >> going to be a tough quarter, right? i do think. >> that if you look at us. >> traffic, it will be a little bit less. bad than the prior quarter. >> but i think you're. going to. >> start to see an upswing in the coming quarter. and as we go. >> through this fiscal year, you're starting to see some of these small changes in us stores. i'm pretty optimistic that things can get better from here. so that's where, you know, we're in this for the longer term, right? >> yeah, i mean we're definitely seeing some small changes. we saw a big change at the top bringing in brian niccol. huge change there and a lot of small changes. things like no more free water. you can't just use the bathroom. you can't just hang out as much as you could. i think they stop upcharging for, like, oat milk, things like that. but when you're looking at this turnaround effort overall, what are the signs that we have seen a full turnaround, at least

in the us business? it seems like the china business is facing a lot of domestic competition and maybe some anti-american sentiment, but we're talking the us business. what's a clear sign of the turnaround? >> well, certainly i'd like to see them get back to traffic growth. right. i think that will happen in the second half of this year. but it's also important if we think about sort of the corporate cost structure. there is some indication that they're taking actions there. we want to see them get back to earnings growth. right. that's not going to happen this quarter. i do think that we can see that much more in 26 and 27. but they're taking the right actions there right. we've seen sort of some announcements in that regard. there also as they put new labor into stores. you know i think that will help drive traffic over time as well. right. >> all right. when we're looking at brian niccol and his performance as the new ceo, what what what's like kind of his i don't know a better way to say it, but his report card, what's a sign that the changes that he's putting in and the culture that he's trying to shift, that these moves are working in your mind? >> yeah. look, he's been there for just over a quarter, right? so i think it's hard to give him

a grade at this point. but but like i said, some of those financial metrics will be key to it. right. also just how does it feel going into a starbucks. right. i do think you're sort of seeing service improve. i think we want to see service times improve. he talked about that being a key part of it. you know, do the stores feel more fresh and welcoming? he's made it very clear that that's a key part of what he wants to see out of the us stores. and so i personally have seen some of that. we want, you know, everyone else to see that. but i do think that will still, you know, take a year or more as they roll that out. >> yeah. i remember a couple quarters ago that that bet on putting oil in coffee. it never quite made sense to me. i don't know if you're a fan, brian, but. >> we've gotten rid of that. right. that's that's no longer on the menu. and there's been some menu changes. right. which which are part of it? >> yeah. i don't go into starbucks very often, but that always seemed very odd to me. brian harper, your price target for starbucks 115. great to see you. thank you very much. company reports after the bell. >> thank you. >> all right. as we get a break here on worldwide exchange, we're watching shares of apple.

very rough start to the year, but one of the few mega-cap tech names spared from the selling yesterday. taking a look at shares this morning, you can see they're just down fractionally over the last week actually. apple up 3% again spared from that deep sea sell off. stay with us. we're back after the break. >> how's the quarter coming along, kate? >> what? he thinks your name is. >> kate and hates when people correct him. >> pretty great. >> define pretty great. >> we added. >> koopa's ai. >> powered total spend management platform. so we're finding new efficiencies and multiplying margins. >> so you. >> can mind. >> your business. >> so you can mind. >> your business. >> no, that's not what i meant. you all. >> should be laughing harder. >> some people thrive on. >> the edge. >> we are improving. >> lives by. >> bringing intelligence. >> to the edge. lays edge ai. >> technology processing critical data with blazing speed, bringing. >> the most sophisticated ai. >> intelligence to computation at the edge.

>> distinctive efficiency, limitless innovation. >> make smart decisions with precision and agility. now publicly available. trade. today. blaze. life on the edge. >> where do. >> tariffs fit in? >> they are an. >> economic tool. >> they're an economic weapon. >> the question is how they. >> get used. >> we've reduced our. >> china exposure. >> from 50 to 25%. and we've been working to reduce it even further. >> it cannot. >> be about removing all the rules. it's about all of us operating together. >> the partnership with openai to us is a critical partnership. we love it. it's working. >> if you use the us estimates of how much. >> power we're going dude, i really need a new phone. check out my new samsung galaxy s25 ultra. it's got galaxy ai. imagine this thing running on our superfast xfinity mobile network. and i also heard that it can do multiple things with a single command. —with google gemini. let me try it. add recipes with overripe bananas to my “dessert ideas” note. that's what you chose to ask it? i had other things planned. ask how to get up to one thousand dollars off

the new samsung galaxy s25 ultra with xfinity mobile. >> i'm playing in the super bowl next to saquon, the same chance that they spend $6 million. so the point is like it's my view that like this is much bigger than i think they're telling me

in terms of ultimately the hardware and actually the build out. >> the more efficient things get, the more demand we will have, not less. i actually think over the long term this is a good thing, not a bad thing. but clearly the market disagrees. >> i'm so long. >> i do see it as a buying opportunity. >> i just don't think it's going to be a knee jerk response. this is a fundamentally huge moment and a sort of a wake up call to america. >> all right. that was a number of guests across cnbc yesterday. of course. deep sea dominating the conversation. all of them sounding off on the chinese ai triggering the largest single day stock wipeout in history. welcome back to worldwide exchange i'm frank holland. coming up this half an hour, we'll have much more on the sell off as the markets they kind of work to bounce back. we'll look at the factors that fueled the frenzy and what president trump is saying about the chinese tech. but first, let's get you ready for the day ahead. we start this half an hour, as we always do with a check of us stock futures. after yesterday's sell off, fueled by the emergence of deep sea. it's an ai tool out of china that many investors see threatening u.s. tech dominance, also raising a lot of questions about stock

valuations. as we mentioned, the president weighing in on the impact of deep sea last night. >> the release of deep sea ai from a chinese company should be a wake up call for our industries that we need to be laser focused on competing to win, because we have the greatest scientists in the world. >> so again, trillion dollar sell off yesterday, a bit of a bounce back on wall street this morning. take a look. you see the s&p up about 27 points. just under a half a percent. the dow up about 51 points fractionally higher. it's really the nasdaq seeing the biggest gains up just about three quarters of 1% or 170 points. i want to take a look at some of the nasdaq 100 premarket gainers. right now. you can imagine a lot of stocks that sold off yesterday bouncing back today right there at the top of the list. that's nvidia. remember huge sell off yesterday bouncing back up more than 5% yesterday. some other chip names on there as well. broadcom up about 4.5%. energy names took a big hit. constellation energy down double digits yesterday up about 4.5% yesterday. marvell technology rounding out some of those top gainers. all right. we

want to stick with deep seek and the fuel and how it fueled the sell off yesterday. let's talk nvidia. remember the chip stocks they sold off nvidia alone losing nearly $600 billion in market value. look at that chart. you can see the decline right there. the stock's fallen into bear market territory. it's also moved below its 200 day moving average for the first time in two years. that's that yellow line. kind of hard to see right here. but again below its 200 day moving average. we also want to take a look at treasuries. bond yields. they eased back a bit as investors. they just kind of look for some safety. taking a look the benchmark at 4.56% moving back about five basis points. similar story for the two year. there was actually a two year auction yesterday. our rick santelli gave it a c plus rating. obviously a lot of investor demand for bonds again looking for safety. and we want to take a look at bitcoin back above 100,000 right now. remember bitcoin trades around the clock right now at 103. moving higher from the levels we saw just about a half an hour ago up about 2%. but for the week in the red down about 3%. all right. we're going to turn our attention back to the markets and of course back to deep c and

nvidia trying to rebound after its historic $593 billion wipeout. more than half of the $1 trillion in the total stock market lost stock market value that we saw loss yesterday. again, nvidia bouncing back a bit this morning, up about 5%. retail investors possibly helping to fuel its move higher. we heard from banda moments ago that retail investors they bought a record $562 million in nvidia stock during yesterday's selling perhaps even more this morning. let's dig deeper into the reasons why and the lessons that were possibly learned i don't know, maybe they were learned, maybe they weren't. gunjan gunjan banerji from the wall street journal joining us now. gunjan. good morning. great to have you here. >> good morning. thanks, frank. >> let's start off with this news from vanda. retail investors buying a huge chunk of that nvidia stock yesterday 562 million. what do you make of that on a day like that to see retail investors dive in. >> i know. >> i mean there. >> was just carnage. >> out there in the. >> stock market yesterday. >> it was really a. bloodbath with nvidia. >> down 17%. i mean, we haven't seen losses like this perhaps ever. but if there's anything. >> i've. >> learned from chatting with individual. >> investors the past.

>> few years is do not underestimate. >> the power. >> of the buy the dip strategy. >> i mean. >> time and time again, individual investors have really piled into the. >> market in. >> times of stress. >> to try to play. >> these comebacks. >> and that's exactly. >> what we saw yesterday, especially with some of these. >> leveraged funds. >> i'm thinking of a. triple levered semiconductor fund, a triple levered nasdaq fund. those were some of the top buys on the fidelity platform yesterday. >> so i mean i think we're all thinking about this. you sent this to us earlier today. so it's the stock. so it's a semiconductor bull three time shares. so it gets three times the performance. on the upside. >> not for the faint of heart. >> not certainly not. and then the triple qs similar thing three times. so why explain this one to me. because i don't quite understand it. the market's going down. why would you buy a three time upside etf when you know you're going to take three times the losses, right. >> i mean these were. really incredibly hard hit yesterday. these funds saw double digit declines i think 30% declines

50% declines because when nvidia is falling 17%, they might fall say 50%. but this rally the past few years has just. been built on a mountain of speculation and triple leveraged funds in options. and we saw. >> that all. >> play out yesterday. a lot of investors were piling into these stocks thinking, if i buy this etf on a down day, maybe i'll get, you know, that three x return on an up day. >> all right. we have vanda research on if you do. well a few weeks ago a couple days ago. either way retail investors they beat the market last year 41%. a lot of people here at cnbc, they're questioning like, how could retail investors do it? but here's how they did it. they piled in to this i trade and these really these these big mega cap tech stocks as we're going forward does deep sea does that change that sentiment. does that change that thesis for a lot of these retail investors and maybe even institutional investors? >> it's fascinating. i was on the phone with big institutional investors, many nvidia shareholders all day yesterday. i think a lot of them were freaking out. i think a lot of investors woke up and realized, hey, we are all exposed to the

exact same ai trade. and guess what? this disruptor that that we thought was going to change the world. nvidia it might be disrupted. what we're seeing as of now is individual investors aren't quite as deterred as perhaps some of those institutional investors were yesterday. >> not deterred. but i mean, i think everybody has to at least think for a second about the idea that nvidia has this big moat, that openai's this global leader. doesn't that at least change the thesis on piling into these names and our retail investors? are they thinking about the v word valuation? we talk about it a lot here, but i've never heard a retail investor mention valuation or what a stock's trading at. >> i mean that's a great point. we've seen the equity risk premium right. the extra reward for owning stocks versus bonds that fell into negative territory in december for the first time since 2002. and yet we saw continued fund flows into the market. that did not deter individuals from piling into the market. whether that changes now is going to be a really key thing to watch as it pertains to these ai stocks so far. i think

what the data shows us is that a lot of individuals did pounce in to buy this dip, and it reminds me of 2022 when we had this huge technology sell off and some of the biggest buys for individuals that year were stocks like meta stocks like tesla. and then they were quickly rewarded the following year. >> all right. so you've done a lot of reporting about what some people call the gamification of investing. you've compared it to poker. you've looked at some other developments and it seems like it's even spread. it's gone from retail investors, especially during that reddit rebellion. you know, it kind of started there, but it seems like it's moved maybe return into institutional investments as well. does this shake that? does this shake that dynamic where people believe you put money in, it goes up, you know, the markets are safe. does this change any of that? >> i think that's what everyone is wondering right now. a lot of investors i spoke with yesterday said this could be the beginning of more pain in the markets. i think that's what everyone is trying to figure out. is this a one day or a two day thing, or is this the start of a longer sell off that we see in the market that lasts months or maybe even years? because let's

not forget this ai trade has dominated markets since 2023. >> all right. one other question i want to ask you. i know a trader. he's, you know, an institutional trader. he's big on the nvidia long is the triple long etf. the envy i want to make sure i'm saying it right. the mvl i believe it is. when i look at the chart here it's up about 90% over the last year. is there a chance we're making too much of this, too much of this idea of these leveraged etfs? i mean, yeah, you know, it went down yesterday, but people have had significant gains. and we got to remember the market doesn't just go up. >> so it's really important to remember these etfs are supposed to be trading tools. if you hold on to these for a long period of time. and i think that fund might be an exception. typically you're going to incinerate your money, even incinerate. >> you're not going to lose it. >> no. these can just burn a hole in your portfolio if you hold them for long periods of time. i'm thinking of the etps tied to the vix etps you know that offer this leveraged exposure. they are typically supposed to be trading tools which may help explain why you

saw people kind of jump in on on a big sell off like yesterday. >> so they're not investments. they're trading tools. and if you hold them too long you can incinerate your money. i don't know you for overstatement. so i'm going to take you at your word. really great to see you. great to see you very much. all right. so we are also hearing from openai founder sam altman overnight, taking deep seek at its word on its $6 million price point. he's praising the model, the cost and the new competition with much more on the insider take, let's bring in zach kass and ai futurist and a former executive at openai who headed up its go to market strategy. good morning. good to see you, zach. >> good morning. >> good to. >> see you. >> all right. so a lot of sell off yesterday was fueled by the idea that our perception that nvidia and openai, they had these moats that were perhaps impenetrable, at least a significant lead over foreign rivals, specifically china. in your mind, has that been shattered or do we just need to reassess what that moat was? because it seemed like a lot of that moat was based on capital and scale? well, i'll. >> start by saying, i. think

outside of the investment world. >> i think. a lot of people have been waiting for a moment where we. >> started to see the research. >> commoditize. and certainly this is one of those moments. i mean, seeing a chinese firm produce a gpt four equivalent model. >> of any kind was remarkable. then to. >> see it actually be so economically efficient is truly astounding. calling something, calling a paradigm shattered because of one model is pretty complicated, but i do think it is a reminder to everyone that just because we live in a world today where models require. >> an exceptional. >> amount of compute and exceptional amount of data and exceptional amount of energy, does not mean that we will always live in that world. the architecture can change, and of course, how the models get trained change. so you know, we are we are now, you know, entering a new world where we're going to see much better, much smaller models that just require a lot less compute. >> all right. so if you don't mind me, bottom lining, it

sounds like you're saying that scaling capital are not as important, as important as they used to be. it's more about innovation. i think a lot of people are praising deep sea for the fact that, you know, necessity is the mother of invention, and they just couldn't get all the ships they needed. so they found a workaround. >> that is exactly right. >> i mean, you. >> know, people are like, oh, is this a pie in the face to openai? and the answer is, of course not, right. we in the united states, we're operating with the resources that we have. and we happen to, you know, have raised a lot of this money in a low interest rate environment and purchased an incredible amount of chips. and in china, they don't have that same luxury. and, you know, i will remind everyone the firm that that built deep seac and r1 was a quant firm right. so it was a hedge fund trying to find alpha that basically went out and said, how can we build a competitive model? and then they've gone and open sourced it because they're not economic actors. but you're right. i mean, the scarcity in this case drove a lot of creativity. and i think that's actually pretty good for the world. we just don't we haven't priced it yet. >> all right. we were just showing a sam altman post, basically saying that deep sea

was impressive and, you know, as a lower cost model. so i do want to go back to this part about the idea that it is a lower cost model. it only costs $6 million, developed in two months. hedge funds doing it. any questions about the veracity of some of these claims? that it was only built for that amount of money, over that amount of time, and without those advanced chips? any questions about that? because there are some times that we get information from china that isn't 100% accurate. >> yeah, i think it's fair to question whether or not this model was actually trained with the number of, of chips that they're, they're suggesting. that being said, we probably have a safe assumption that that, you know, it's in the order of magnitude because we roughly know how many chips, you know, china has access to. and we can make some assumptions around, around how the model is trained. taking deep seek at its word is probably a fair thing to do at this point. >> all right. what about the us response? we have we saw the president do an executive order related to ai that raised some

eyebrows. some people were concerned about the possible impact to national security. when we're looking at the development of ai and the idea of the us having dominance, or at least a lead when it comes to ai, how significantly has that changed? do we need to see a government response, a private company response, a partnership response? what would you say? >> well. >> you know, we're in a world now where national security is not just a government issue, it's a private sector issue because so much innovation, so much novel scientific development is coming out of the private sector. and that's the new normal for sure. i think that, you know, biden's executive order, which which was meant to basically strangle the amount of chips and services that that china could have access to, you know, you could argue did not have the effect that that they wanted to have and in fact, may have actually fueled some other innovation to call it the end of us supremacy in ai is, i think, is misguided. i would remind people that i think that the research at this point, we should assume, starts

to commoditize, which is to say there will be this convergence, the scientific convergence where lots of people start arriving at pretty interesting discoveries around the same time. that's not bad necessarily for the united states. obviously, we wake up one day and feel like, oh, you know, our rival has something that, you know, we would want and that makes us scared. and with respect to chip stocks, you know, i guess it probably would spook me as a, as an investor to say, hey, maybe all these chips won't be necessary. but i think what we have to explore is the reality that someone just invented a much less expensive way to do something that we've decided is exceptionally important. these high powered ai models, and inevitably right now, there are many us companies trying to turn deep sea innovation into their own. and so the idea that there won't be measures and countermeasures here that serve the market, i think is actually missing the broader point. and jevons paradox basically says the cheaper that something gets, the more we consume of it. and so we should all hope and want for

this technology, ai in particular, to be as inexpensive as possible. and this is just a great step in that direction. >> all right zach, we got to get going. i need a very quick answer. does this mean, at least in your mind, that open source is the way to go, that these proprietary models are the thing of the past, and open source is where we're going to see innovation going forward? >> well, the short answer is sure. the longer answer is, look, the good news now is we live in a multi-modal world. the idea that one model is going to rule them all forever is just not probably not correct. and we should just expect to build a world with many, many models. and that's great. >> all right. zach cassie a futurist. good to see you. thank you for your time and for your insight. >> thanks for having me. >> all right. coming up here on worldwide exchange, an apparent new player in the fight for control of tiktok, the tech giant that president trump says is throwing its hat in the ring. we're going to be back in just a moment. stay with us. >> nothing stands still. >> not technology.

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here in the comcast family, we're building an integrated in-home wifi solution for millions of families like my own. in the average household, there are dozens of connected devices. connectivity is a big part of my boys' lives. it brings people together in meaningful ways. >> welcome back to worldwide exchange market flash on sap. fourth quarter earnings and revenue falling short of expectations. but the german software giant is raising its fiscal 2025 outlook, forecasting a significant increase in operating profit on accelerating cloud revenue growth and a strength and strength around its business, ai and its data capabilities. take a look at shares of sap. they're falling about three quarters of 1%. all right. coming up here on worldwide exchange, the one word that every investor has to hear today in the stock pick that every investor needs to know. plus much more on the dilemma

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this story. not a bad relocation for you, emily. good morning. >> oh, frank, this is i mean, i think i can speak for everyone here that d.c. is very happy to be in miami this week. and congress, you know, they're really moving ahead with trump's agenda. as you noted, the senate last night confirmed scott bessent as treasury secretary. he had all republicans and 16 democrats voting for him. of course, the senate still stuck up in cold d.c, but down here in miami, house republicans are working today to hammer out the details of a bill that would help fund trump's crackdown on on immigration and border security. it would put into law some of his early actions on increasing oil and gas production. plus, it would extend those tax cuts that trump implemented in his first term. speaker mike johnson has made it clear that he will stick closely with trump. he told reporters last night that trump is right to reassess fema, which trump previously said he wants to eliminate. johnson also supported trump on tariffs. >> the congress. >> will back. >> up the white.

>> house and we will move as necessary on any country. this was a message to columbia and anyone else. you have to participate. you have to take back your the illegals who came here that come from your country. and if not, then we will act and we will engage with sanctions or any other measures that are appropriate to back up the president's agenda. >> after johnson spoke, trump doubled down on his pledge for a whole new set of tariffs on a number of major industries. in the very near future, we're going to be placing tariffs on foreign production of computer chips, semiconductors and pharmaceuticals to return production of these essential goods to the united states of america. >> trump isn't the only one to pay house republicans a visit down here in miami. vice president jd vance is also expected later today for lunch. mike johnson has said that he wants to leave this retreat on wednesday with a blueprint of that major piece of legislation that republicans have been working on. frank.

>> so, emily, one quick thing i do want to note. you're rubbing it in our nose, too. we are also here in the cold in the northeast. while you're in miami, it's not just the people in d.c, but on a serious note, i want to go back to semiconductors. we heard from the president about deep seek and everything else. but where does congress stand when it comes to this development? >> so what i heard from members of congress last night, and that includes speaker mike johnson. they're really thinking about this as a us versus china thing. i mean, remember, the house had that select committee on china, the chinese communist party, and the chair of that committee told me in a statement. he said, look, we have concerns about this. we're going to have to work swiftly to place stronger export controls, and that we can't allow ccp models such as deep sea to risk national security. and johnson also said that, you know, pointed out that china is getting a leg up on us, up on us with ai, and he called it a serious threat to our economy and our security. so definitely, you're hearing more concerns from members of congress. the president last night struck a bit of a lighter tone, said he could see this as

as a positive asset. i think that might be a bit of the businessman mindset there. but of course, we'll be closely keeping an eye, i think, as lawmakers learn a little bit more about deep sea. a number of folks who i talked to last night said, hey, we're trying to still better understand this, better understand what it means for the us, for china, for american and national safety. so i don't i don't think the story is quite done with dc yet. i think lawmakers are still trying to wrap their minds around some of the new information we're hearing. >> all right. emily wilkins in miami. emily, good to see you as always. thank you very much. coming up here on worldwide exchange, the mag seven member bucking yesterday's sell off. our next guest says is properly positioned to navigate the deep sea storm. that name in our mystery chart will be revealed. stay with us. and if you haven't already, you should follow our podcast. if you missed worldwide exchange, check us out on apple, spotify or other apps. we'll be spotify or other apps. we'll be right back. gold bond believes touch says everything. it says... i see you. i feel you. and...i know you.

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business. >> don't miss the cnbc premiere episode of shark tank tonight at 9:00 eastern. >> for me. squawk box is breakfast with the most interesting people in the world. >> it's a privilege. >> to. >> get. to talk to them every day. >> it's more entertaining than any other morning show, but you might get some useful information. >> squawk box weekday mornings, 6 a.m. eastern. cnbc. >> when breaking news or market volatility affects your portfolio, we are there for you. >> what i learned from jim is that, you know, to stay calm, not react to any single event, but really have a longer time horizon. >> go to cnbc.com. join jim. >> welcome back to worldwide exchange. as we close in on the 6 a.m. hour check on a few stories that we're following this morning. the deep sea market sell off wiping out about $108 billion worth of wealth. the world's 500 richest people. nvidia ceo jensen huang losing more than $20 billion by oracle's larry ellison lost more than $22 billion. bloomberg reporting wall street banks they're trying. to sweeten the deal to offload debt tied to elon musk's musk and x. the report says the banks are adding

a claim on the social platform stake in musk's artificial intelligence venture, x ai, as part of any deal, to the tune of a reported $6 billion. trump administration ordering a pause on all federal financial assistance programs that freeze targets areas including domestic infrastructure and energy products, diversity related programs, and foreign aid. with social security and medicare being exempt. and president trump says that microsoft is in talks to buy tiktok. the president making the revelation while speaking to reporters yesterday, adding he would like to see a bidding war for control over the social media app. all right, turning back to the markets and another check on futures, take a look. as we've been talking about all morning long, we're in the green across the board. right now. we're seeing the s&p up about 25 points. just about just over a third of a percent right now. the dow up about 2930 points. just saw it move right now fractionally higher. the nasdaq the best performer up 150 points or just about three quarters of 1%. for more on the trading day ahead, let's bring in vicki greene, founding partner and cio at g squared private wealth, also a cnbc contributor. good

morning. always good to see you. >> good morning frank. >> all right. see you in a bit of a rebound in the futures right now after that huge sell off yesterday. $1 trillion in market cap value lost. what's your word of the day. how do you see today shaping up? >> the word today is jeavons. >> as in. >> jevons paradox. >> we're all learning. >> about this. >> microsoft ceo reminded. >> us of it. yesterday that as costs. >> come down, as. efficiencies grow, the adoption, demand. >> and. >> consumption does continually rise. you know, think. >> about when apple. >> first announced the tgs computer. >> it cost. >> about 4 or. >> $5000. >> for a household. >> to buy a personal computer. >> as efficiencies in computers got. >> better. >> we. >> actually sold. >> a lot more computers, and it was better for. the computer industry. and so most. >> everybody on the tech side was saying, this is a good thing that's happening. not fun yesterday in stock market. let me clarify that. but overall technological advancements are a good thing. and if this is the sputnik moment that hey oh my goodness, we're in competition. and they aren't terrible about what they're. >> doing with ai in china. >> we responded very well to sputnik. we had space dominance. and so i look at this and i say, yes. was it a wake up call? did

it fundamentally shift absolutely everything about the ai and power story? in my opinion, no. >> it didn't shift everything in your mind. did it shift some parts of the market, specifically chips? we saw that huge sell off when it comes to nvidia yesterday almost $600 billion. we are seeing a rebound yesterday. but if these claims are true and it's a big if that they were able to develop deep seat with less advanced nvidia chips. doesn't it change that part of the story. >> part of the story. so that's the training part. but then you actually have the inference and the actual usage of ai, which does take a ton of compute power. so you're going to shift exactly where the chips are going to be used. if we have a much faster adoption of ai because these models are cheaper and more readily accessible to everybody, companies and individuals, then we're going to see more need on the compute side for actually running and inference and using the ai models versus the compute needed just for the training. the compute for training was what this was all about. and if it does lower costs, it lowers significant barriers and it makes it more accessible. but that still means we actually have to run all this. we still

have all our cloud computing we need to do. i don't necessarily see chip consumption going down. it's just shifting where these chips are going to be used for just for training, or now they're actually going to be picked up for utilization. there absolutely could be a period of disruption as markets are readjusting trajectory. but it didn't seem nvidia was upbeat about this. again, most of the tech ceos were saying technological advancement is a good thing. this isn't a huge threat to us. this is going to make everything happen faster. >> all right. let's see if you're putting your money where your mouth is. vicki, what's your pick for us today and why? >> it's meta. if anybody is using ai the best it's meta. they're actually figuring out how to monetize it and make money off of it. so now if they don't necessarily need to spend $65 billion on training new ai models, they can build a better mousetrap per se. then there's more money for them to spend on enhancing their platforms and continuing to increase integration and social media presence, and how their users are about what 2,025% of them are using their their ai. so for me, i look at this and say, maybe they're not going to spend 60, 65 billion on the data

centers, but i tend to think they're still in an arms race and they're going to be hesitant to pull out capex. but i think they're going to do 48 billion in revenues, 28 billion in net income, and just absolutely crush earnings wednesday. >> victoria greene, great to see you. your pick for us today is meta. thank you again. one more quick look at futures in the green across the board. after that huge sell off following the development of deep tech or the emergence of it yesterday. that does it for worldwide exchange. squawk box starts right now. >> good morning. fallout from the deep sea sell off in tech and energy stocks yesterday. we are going to show you everything that's happened and what's going on this morning. of course, the biggest losers, including nearly $600 billion in market cap wipe out for nvidia and an earnings alert we're going to hear from boeing, jetblue and general motors this morning. we'll bring you a first on cnbc interview with gm ceo mary barra. plus, hours after scott bessent was confirmed as treasury secretary, president trump throwing cold water on a report that bessent favors a gradual tariff policy.

we'll break it all down. it is tuesday, january 28th, 2025, and squawk box begins right now. >> good morning. >> everybody, and welcome. to squawk box right here on cnbc. we're live from the nasdaq market site in times square. i'm becky quick along with andrew ross sorkin joe is out sick today. let's take a look at what's been happening with the u.s. equity futures at this hour. it's a prettier picture than it was yesterday at this time when you saw the nasdaq indicated off by over 1000 points this morning, there's a little bit of a bounce back, but emphasis on little there. nasdaq has actually indicated up by about 150 points. the dow is up by 40. the s&p up by 25. and it does come after a very volatile day for the markets. yesterday