tv The Exchange CNBC February 21, 2025 1:00pm-2:00pm EST
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earnings last night. it's well on its way continuing to not only mine but also refine rare earth elements and create magnets from them. >> conagra as money rotates out of momentum and into staples, it's a great play. you get a 5.5% dividend yield. >> unitedhealth. even if i'm wrong on the justice case, it's going to do quite well. it's going to take forever to determine. >> all right, i'll see you on the bell. >> thank you very much, scott, and welcome to the exchange. i'm kelly evans, and here's what's ahead. markets are in the red today. in fact, we're near session lows right now on a batch of bad news. consumer sentiment, weak inflation expectations hitting a three decade high. and services which had been the stalwart hitting its 25 month low. we will talk market implications and political fallout. plus the golden chainsaw. it was the argentinian president's gift to elon musk at cpac. capturing the doge approach to spending cuts. will they actually work? are economists says yes, and that it
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will boost u.s. productivity? she'll tell us how. plus, the radical energy idea, one investor says, will give the u.s. a leg up on one of its biggest, let's say, frenemies. and why? he says stick with gold in this era before all that, let's get to dom chu with that market action. as i mentioned. 443 on the ten year. >> dom yeah. 443 on the ten year. so we are seeing a bit of a flight to safety towards those government bonds. and as you rightly point out, kelly, this is the session low right now the s&p 500 is down 67 points. it's roughly a little over a percentage loss there to 6050. that's the current level right now. even at the highs of the session we were down just about three points. so it's been a generally negative day. the nasdaq composite is off 1.5%. the bigger decline here of the major three indices 19,006 81 is the last trade there. that's about 281 points. the downside and the dow industrials notably so down about 566 points. it's a one and one quarter percent decline to 43,006 13 i'll tell you the reason why. and it has
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to do with united health care. but one place to keep a close eye on is what's happening with the semiconductor stocks. the ticker sm, the vaneck vectors computer chip index etf, is down 2% today. i put up the 50 and 200 day moving averages in these lines right here to show you we are just above them right now, and we are just about in the middle of a trading range that has been in place for this particular etf, going all the way back to around september october. the reason i bring it up is a major catalyst, arguably the biggest catalyst of the earnings season comes up next wednesday on wednesday, when nvidia reports its results after the closing bell on wednesday. until then, the options market right now is currently pricing what could be an 8.25% move up or down in nvidia shares ahead of that going into that report, by the way, that's less volatile slightly than it's been over the last eight quarters. so keep an eye on those computer chip stocks. and of course the stock of the day has to be united healthcare dow component. by far the biggest drag on this wall
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street journal report that says, according to sources familiar, that the justice department is opening up a civil fraud investigation into some of the medicare billing practices of this health insurance giant. unitedhealth has responded saying that they have they are not at all. they say it's misinformation and that they always operate at the highest standards with regard to their particular practices. unitedhealth shares down about seven and a three quarters percent. that's $39 to the downside. it's worth about roughly 300 points. of the 566. the dow is down right now. so if you're looking for a stock of the day, it's got to be unh. we'll keep an eye on that and see what other developments happen this afternoon. i know you'll have much more on that later on the show. >> indeed. soon we will. don. thanks. the word of the month has been uncertainty. under the new administration, what's uncertain for investors is if this is more or less than usual. and in fact, there is a way to quantify that. let's bring in senior economics reporter steve liesman. steve, welcome. and what can you tell us? >> you know, fed officials, the
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unknowns of fiscal. policy seem equal right now to the problem. >> with inflation for figuring out. >> where policy is going. several fed officials making that clear yesterday. rate cuts are on hold until inflation comes down. and the effects of fiscal policy come into better focus. raphael bostic, the atlanta fed president, said very succinctly. pervasive ambiguity calls for caution and humility. while the effects of uncertainty haven't shown up in any data, it is tracked in several indices. here's one the economic policy uncertainty index. it shot up after the election, came back down, and now is the highest it's been since the pandemic. in fact, it's higher than at any time during the biden or first trump administrations outside of the pandemic. and you can see it's back about 60% of that uncertainty level from the pandemic level there. the trade policy uncertainty index, it has never been higher, far surpassing the levels from when president trump put tariffs in place in 2018 and might be at peace in crashing or declining consumer sentiment, increasing
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inflation fears. professor steven davis he created the economic policy uncertainty index with others. he tells me high levels of policy uncertainty encourage businesses to cut or postpone investments in hiring as they wait for the operating environment to become less risky and the rules of the game to become less murky. the paradox for investors and the fed these high levels of uncertainty come with elevated business optimism. raising the uncertainty over which will win out when it comes to the economy. >> and on that note, stay with us, steve, because our next guest says the uncertainty won't matter as much in the bigger picture. she thinks inflation will fall as doge makes cuts to federal spending. that's the chainsaw reference. and that government layoffs will not just lower costs but will boost private sector productivity. joining us for more is nancy lazard. she's the chief global economist at piper sandler. nancy, welcome. and you know, it's a big issue to delve into. could you just set the stage by telling us what you think of the data this morning? poor sentiment, high inflation expectations. and that's the
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backdrop against which all of this is happening. >> so to be sure, the economy. >> is going. >> through a little bit of a soft patch. is it simply due to uncertainty or is it also due to the extreme weather that we've had? is it in part related to what's going on in california? unfortunately. >> with the. >> very, very horrific fires and spending there, near term is being held down. is it also potentially related? consumer spending in the fourth quarter was very strong. retail sales in particular rose 7% quarter to quarter annualized run rate. so was there a pull forward into the fourth quarter. and we're just seeing a little bit of that here in the first quarter. and i'll add one more. easter is very late this year. it's in late april versus last year. it was in march. so some of this is due to, to be sure, uncertainty around tariffs. some of this is due to high price levels. but there are other factors. and it's a soft patch. we don't think it's economies at risk of dipping into a recession. >> so nancy, the problem i think
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for doge is that the more they do right off the bat, the less they're hoping to have to do in the long run. i mean, that's my opinion, not theirs. but in other words, you want to get bond yields down. you want to get spending on a better trajectory. you come in with kind of a shock and awe approach. and yet they have inflation expectations going up. and the ten year is better today. but i don't think we want the ten year going down because it looks like, you know, the economy is weakening or the consumer is. >> so let's put doge in perspective. and in order to do that, you really need to look at what happened over the past four years. first, regulatory costs stored under the biden administration. those are huge, have a huge impact on inflation. if companies costs go up, they're obviously going to try to pass that through to the to the consumer. we've never seen the kind of surge in regulatory costs we saw over the past four years in history, a huge shift up from trump, from trump, 45. there's big efforts obviously happening right now to reduce that regulatory cost. second, government spending soared, had the biggest increase in a non
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war environment really on record back you had some similar increase during the vietnam war and also entitlement programs in the late 1960s, 67 68, 69. that was a very negative precursor to the inflation, economic inflation backdrop that we have. so along with regulatory costs contributing to inflation, the massive surge in federal outlays, which were up 10% in fiscal year 2024, are so far in the first four months of this fiscal year, up almost as much. it's one of the single biggest contributors to inflation, and we don't think that's appreciated because quite frankly, nobody on wall street remembers the late 1960s. i had to go back and study it and see the bad path that set for the 19 for the 1970s. so absolutely, you get a decline, an outright decline in government spending, which is highly debated on whether or not we're going to get that right. but if we see chipping away at federal outlays, yes, we think that along with less regulation, will
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improve productivity, help to put downward pressure on price. and quite frankly, end this horrible bifurcation that we've seen between high income consumers and lower income consumers. >> so i. >> i'm a i'm just a little confused that nancy is talking so logically now. and it does not appear to me, nancy, that there is as much logic behind what you're talking about as is going on in the process of doge right now. for example, you talk about the idea of the regulations that were passed in the biden administration, but it's unclear to me that there's a connection between the people being laid off in the federal government, and the regulations passed by the biden administration. maybe there are some, but you hear people being laid off, for example, running nuclear related activities, people doing a variety of things that have nothing to do with the increase in regulation. so i'm a little confused how you can even
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think about making a forecast based upon i don't know how much doge is cutting. there's, it seems to me, not that much transparency about it that causes me some concern to say, yeah, all the things you're talking about, nancy, make a lot of sense. and bringing down government spending is probably a good thing, but it feels and looks like there are people being laid off throughout the federal government that might be involved in providing vital services of the federal government. so i'm a little bit skeptical right now of saying that there's a forecast you can make about an intelligent outcome from all of this. >> so federal government employment rose 8% from its pre-covid level. private employment, if you exclude federal, state and local and education and healthcare, which i label public employment, private employment rose only. it's only 3% higher. federal government has been this giant sucking sound of taking resources from the private sector and making government
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bigger. that destroys productivity, that increases inflation. and so, to be sure, you know, my heart goes out to those that are unfortunately being being laid, laid off. but it's a just a limited number of people. we're talking about. we've counted about 100,000. maybe it's more than that this week. everybody who's watching this newscast and everybody in this country got squeezed from higher price levels. and to be sure, the tariffs are going to make that worse, which is a bad idea. but even prior to the tariff talk, we know inflation was sticky. and price levels of core cpi 20% higher than its pre-covid trend line. so unfortunately, there's costs for certain groups of people with this government and hopefully with this government downsizing. i agree with you. we need to really see the effects of this. but the benefit benefits the entire country through a sustained shift down in lower inflation and an improvement in
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productivity, which raises living standards. so i think we have to get out of the moment. it's only been a month. and what i'm trying to do is stay focused on the bigger on the on the bigger picture. >> so you have a quick last word button if you can. >> i'll have to check it out. but i saw what i've seen, nancy, is that federal government employment as a percentage of government spending is about flat and has been for many, many years. the other thing i would counter is we've had. >> a. >> pretty good surge. not not as a percentage of the services delivered by the government. so i mean, spending has definitely gone up for sure. and i'm not here to say we shouldn't get rid of wasteful spending. it's more the process that seems unclear to me. the other thing i'd point out, nancy, is that we've had a surge in private sector productivity, that a little bit counters one of your arguments here. now, there's not always room for greater private sector productivity, but we've had a pretty good surge in that in the
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in the wake of the pandemic. >> i have to leave it there. i hope satya nadella, when he says, you know, if we hit 10%, he'd feel good about that. i said, yeah, i would feel pretty good about 10% productivity, too. nancy, come back. let us continue the discussion. we appreciate it today. nancy lazare, steve, thank you. as always. our steve liesman just want to get to that stock disaster of the day, which we mentioned earlier on unitedhealth shares plunging 7% for their worst day since march 2020 or near abouts on a wall street journal report that the justice department is investigating the health insurers medicare billing practices. bertha coombs, we bring you in for the quick synopsis here of what's going on. >> well, the justice department is reportedly pursuing a civil fraud case against unitedhealth for overbilling in medicare advantage, according to the wall street journal, citing unnamed sources. now, the issue surrounds risk adjustment payments in medicare advantage. sicker patients with multiple conditions. they incur higher risk adjustment reimbursement payments to the plans. now, the
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insurers say they coordinate care for these patients to keep more of them out of the hospital, more so than traditional medicare does. but an hhs inspector general report last year found that cases of risk diagnoses that were not actually supported by actual care resulted in about $7.5 billion in overpayments in 2023 alone to the top 20 medicare advantage plans. it was the second oig report in five years that looked at this and recommended better oversight. now, scott fidel of stephens notes that this has been a perennial source of contention between insurers and regulators, and the biden administration actually clawed back overall medicare rates to account for that. while ubs analysts say unitedhealth has actually prevailed on risk adjustment audits, which the company notes hitting back today at the report. in the statement accusing the journal of reporting misinformation on medicare advantage programs,
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saying we are not aware of the launch of any new activity as reported by the journal, we are aware that the journal has engaged in a year long campaign to defend a legacy system that rewards volume over keeping patients healthy and addressing their underlying conditions, adding any suggestion that our practices are fraudulent is outrageous and false. now, the justice department does have an ongoing medicare overpayment case against unitedhealth that started way back in 2017 with a whistleblower, as well as cases against ella vance and kaiser permanente that were brought more than three years ago. this is an ongoing issue, kelly. >> it's interesting that it started with a whistleblower. you always wonder what they saw or what they know. that really kicked this off. bertha. thanks. bertha coombs, my next guest, says these issues aren't exclusive to unitedhealth. they just happen to be better at it than the other insurers, and the industry as a whole will have to make some big changes to stop fraud. let's bring back mike desjardin. he's the ceo of anomali, which uses ai to
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uncover costly defects in health payment data. mike, i know we brought you back. we just saw you the other day. but on this issue in particular, what can you tell us? what are risk adjusted payments? >> yeah. well, i think. >> you. >> know. >> when you're. thinking about. an issue like this, whenever you're. >> talking about improper. >> payments in. >> healthcare fraud. >> of course, is one. and your previous guest discussed it and the. department of justice has to. >> get to the bottom. >> of it. but there's also. waste and abuse and abuse. >> you know, of. >> of medical billing. >> practices kind of in the incentives. >> that exist. >> and the analogy. i give is. >> is more. >> like hiring an attorney to try to find every tax loophole you possibly can to pay as little in taxes as you possibly can. not fraud, not illegal. and united. >> just happens to be quite. >> good at that as it gets to. >> risk adjustment. >> and all risk. >> adjustment really means is looking at. >> your. >> panel of patients and diagnosing essentially what. conditions that individual might have. and when we. >> start talking. about abuse in healthcare. >> what that basically means is. >> whatever that risk adjustment score is. >> related to diagnoses. are those diagnoses. greater than
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maybe the procedures that that patient is having saying, hey, you might have diagnosed this, but you didn't treat it. so, you know, really, should we be paying for it? >> i think that's where. >> some of the questions come in into into the fore. >> you know, when you were on just a few days ago, we were talking about how to kind of find the real areas where you can make a difference in terms of spending, maybe some ways, maybe even some fraud. and you brought up medicare advantage, which this happens to circle around. is that so? does it surprise you that this area is under scrutiny? >> no, it should be. >> you know, i think medicare advantage is a great idea and it can work and it can lower costs. and i think. >> that it should. >> and personally, i believe. >> in the program. >> and i think that united health and humana and you know, cvs, aetna and the other organizations that have an. >> enormous chunk of. >> that market need to be, you know, organizations that are driving us forward. i think the problem is it just isn't working right now. the goal of medicare advantage is to lower the overall expenditures of medicare. and your previous guest cited the oig. >> report.
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>> the congressional payment advisory committee actually suggests that last year, medicare advantage overpaid 22% above medicare to the tune of about $83 billion. and if that persists over the next ten years, we're talking about, you know, $1 trillion. and what's happening over that time period is medicare advantage is growing. it's 54% of medicare eligible individuals now, in ten years will be more like 60%. and those folks are getting older. and as we know, care gets more expensive as they get older. so if the incentives continue to be, you know, to find, you know, these diagnoses for individuals, you know, so that they can communicate to the government that they need more money to manage them because they're sicker, then there needs to be better oversight on, you know, really are they and how apples to apples, you know, is this comparing across medicare and how these companies are managing, you know, patients more broadly? i mean, even in our own business, we work we don't work with the government, we work on behalf of health systems. but we're constantly
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asked by health systems to monitor, is medicare advantage paying the same as medicare because they're supposed to pay what medicare pays? and oftentimes they don't. so there's lots of room to understand this data better to ensure you know that medicare is paying the right amount for medicare advantage. >> and what's frustrating is that all of this oversight would require more man hours. and maybe this is an area where i could help by kind of using technology to sort out these differences. but the problem is so complex that fixing it sounds equally so. mike, appreciate it today. thanks for joining us. >> absolutely. >> mike desjardin is the ceo of anomali. still ahead, walmart having its worst day in over a year yesterday. and wells fargo sees headwinds for retail more broadly especially on the immigration front. that analyst joins us next to explain and with the names most exposed. plus following warren buffett, our market guest is making buying names that make tangible, useful things. that's what this name does. our mystery chart today. shares are flat to start the year, but tweet me if you think you recognize it. and as
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we head to break, here's another check on stocks hovering near session lows. the dow low down 648. we're 30 points off that now. the russell 2000 are the worst performer down 2.25%. we're back after this. >> this is the exchange on cnbc. >> individually each of us is great. >> but from here you can see we're one big team. >> at atlassian, we believe real progress takes all of us working together on new sources of energy, cars that drive to the future, even pizza deliveries. together, we can go beyond where we've ever been collaborating from anywhere on everything. atlassian makes software for teams to do what is impossible alone.
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you found it, then? >> of course i did. >> good boy. >> get invested. join the club. >> jim cramer is an excellent teacher. i don't have the. >> time to do this full time for. >> the value. >> that we get. the investing club is very. >> much. >> worth it. join the club new member savings and soon go to cnbc.com. join jim now. terms and restrictions apply. >> weeknights. after looking into the reasons why people sold disney at the quarter, i'm sticking with my gut that this was an excellent quarter for disney. and the weakness in the stock since the quarter is indeed a clear b the way i approach work post fatherhood, has really trying to understand the generation that we're building devices for. here in the comcast family, we're building an integrated in-home wifi solution for millions of families like my own.
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>> welcome back to the exchange, piper's nancy lazard telling us just now she expects spending cuts to have a deflationary effect on the economy. but one offset to that, the trump policy that could be inflationary, could be the immigration policy. and it could also hurt certain retailers in particular. for more, let's bring in wells fargo's ike boruchow. i'm glad to have you here because i actually wonder, you know, when we've heard anecdotally about the way that some, you know, parts of the hispanic areas with a big hispanic community, we've seen people shy away from public places, retail, grocery stores for fear of what's happened over the past month. could that be one reason why we've seen a miss in retail sales lately? >> yeah. hey, kelly, i. >> think we're going to learn more. you know, the retailers really. >> start. >> to report in earnest in the next week. you know, walmart was asked on. >> their call. >> about this. >> they really didn't. >> give a good answer or an answer at all. but look, undocumented, undocumented immigrants. >> you know. >> make up 6 to 7% of the population in some key states. think about california, texas,
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florida. there should be some concern from from a consumption standpoint, especially those types of businesses that are going to cater to, you know, more of a lower end, especially a hispanic end market. >> right. and to be clear, we're not just talking about, you know, places where the undocumented immigrants shop, but also there's plenty of immigrants or people who are here legally who have been concerned that they might get swept up in something like a status check and just don't want that issue, don't want it to involve their families and so forth. and so are kind of steering clear. so the impact is more broad than just those directly affected. what does it mean for the retailers like the off price ones. you mentioned ross stores for instance in particular. >> yeah. look, i mean for our for our sector, it's hard to pin down. i would say the glaring subsector where we see the most potential headwind would be off price. to your point, when we think about off price spending, they overindex to the hispanic population and clearly their low end retailers, you know, based on the work we've done, ross by
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far, especially the ross dress for less and their deep discounts concept really cater to that that core customer in a big way. and i would say not far behind them would be burlington as well. tj is more is more of a higher end consumer. so i wouldn't i wouldn't throw them in that bucket. but those two for sure are going to get questioned on that. >> you're also looking at burlington. is that right. >> correct. i think ross is kind of by far number one. i would say number two would be rlington. when we rank order the potential guys, that might might be the most impacted. >> yeah. and it's early. a lot of this is speculation. but have you heard anything directly from those companies. or can we see there's no kind of weekly sales figures or anything like that to track is there? >> there's not. and like i said, the retailers are going to start reporting next week. so we'll get some information there. but look, broadly speaking the problem is retail trends are slowing down. the last 3 to 4 weeks have been very choppy february a month to date. foot traffic is the worst we've seen in a year. so i think the
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question we have to ask ourselves is what exactly is driving this? is this have something to do with policy and immigration, or is this just a holiday hangover? is this unseasonable weather? but i don't know. i see the confidence numbers ticking down. i mean, the consumer is showing some anxiety about what's going on in the world today, whether that's the white house terrorists or what have you. so there's just a lot of stuff going on and a lot of volatility, and none of that is good from a consumer standpoint. >> i appreciate the data points ahead of as we're going to hear from from several of these big names, is there anyone you'd mention or any area where you feel a little bit more confident that trends are actually hanging in there? >> yeah, i think it's because we're talking about pressures that are really all top down. i think when you talk about your long ideas, they have to be kind of bottoms up. you need idiosyncratic stories that are going to work right now for us. tapestry fits that criteria. cp fits that criteria in terms of what's going on in that portfolio. a lot of optionality. we like the bath and body works story, inflecting revenue off of trough levels. and in e-commerce
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we actually like the real deal. it's really taking a couple years to really fix the business model, and it's really starting to inflect in a big way under new management. so there are some good long ideas out there. you just kind of have to search for. >> the real, real. i have not heard that on the long side in quite some time. that's interesting. the market cap is probably too small now for me to even mention. thank you very much. appreciate it today. we'll check back in soon. ike boruchow with wells fargo. speaking of the white house. check out shares of apple, which are off session highs, but getting a bit of a bump after the president confirmed meeting with ceo tim cook yesterday. trump said cook told him he plans to build apple plants in the us because of tariffs. worth noting apple is the only name in the mag seven that's in the green today. as we head to break, here's another check on stocks, which have been falling throughout the past hour. the dow down 641. the ten year down to 442 is briefly even a bit lower. we're back after a bit lower. we're back after this. stay with us.
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and set up in any room of your and set up in any room of your house. 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! your cnbc news update. new york city mayor eric adams. >> is corruption case. >> has been delayed indefinitely. a u.s. district judge in manhattan ruling today that he would appoint an outside lawyer to present arguments against prosecutors, bid. >> to. >> dismiss the case. >> to. >> help him make a decision.
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>> the ruling. >> comes as a number of prosecutors resigned, instead of following orders. >> from the. >> acting deputy attorney. >> general to drop. >> the case. south korean police say they're building a case against impeached president yoon over accusations that he obstructed an arrest warrant stemming from a criminal investigation into his brief declaration of martial law last year. police say a warrant issued from the court in december wasn't executed until january 15th. because the president refused to comply, and presidential security blocked investigators for days. >> and betty white's. >> status as an american icon. >> is complete. the u.s. postal service said it will debut its postage stamp honoring the. first lady of television in los angeles on march 27th. the service. >> said. >> the stamps will retain their value equal to the current price for first class mail. >> back over to. >> you, kelly. >> all right. thank you very much. softbank ceo masayoshi son. just taking the stage at the future investment initiative summit moments ago, expecting to provide more details on that half trillion dollar commitment. stargate. of course, deirdre bosa has the latest in today's
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tech check. hi, deirdre. hey, kelly. >> as you said, he just took the stage. i'm listening for that first question. we'll bring you some of those headlines as they roll out. but here's really the point. the softbank openai relationship has become one of the most, if not the most important partnerships in ai. so you can bet that this panel at fii will be well attended and watched. masa and sam altman's strategy positions them as really leaders, pushing the frontier on ai by spending hundreds of billions of dollars through projects. stargate along with partners and investors. their mission is to build the next generation of large language models and reach agi or asi before anyone else. this is a hugely capital intensive strategy, and it's really at odds with another shift in the space called distillation. that deep sea really broke onto the scene. this is the idea that a small team with virtually no resources can make an advance model by essentially extracting knowledge from the larger one. this is what companies and startups in china and academics
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are now doing. now, openai is former most important partner microsoft ceo satya nadella. he had some really interesting comments on the evolution of ai building this week on a podcast, when asked if he would spend hundreds of billions of dollars on compute to compete on the frontier like project stargate is doing. he said he was taking a more balanced approach. now. he said that there will be overbuild, and he's happy to lease capacity to serve the next big model. and that's really key serving versus building the glory of building the most advanced ai, versus the practicality of making ai accessible, efficient and cost effective. now it is a debate between long term visionary investment, masayoshi son and immediate impact. that's what nadella hit on. and it's really the strategy emerging from china as distillation levels the playing field in this ai race. now for more on distillation and how it's shaping the future of ai development. it will be really relevant to this. masayoshi masayoshi son conversation as well. do check out our latest tech check take
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published today. just scan the qr code on your screen or find it on youtube. kelly, i'm eager to go back and listen to whatever masayoshi son is saying. >> yes. do tell. as that happens, deirdre, for now, thanks. appreciate it. deirdre bosa. let's give everyone a quick last look at our mystery chart with our market guests. taking a page out of the buffett playbook. tweet me if you think you can guess it. and the stock sell off more broadly is gaining steam. the dow down more than 700 points the ten year around 4.42. the exchange is back with more after this. >> tech check is sponsored by comcast business. powering possibilities. >> individually. each of us is great. but from here you can see we're one big team. at atlassian, we believe real progress takes all of us working together on new sources of energy. cars that drive to the future, even pizza deliveries.
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custom tax management, empowering advisors with solutions to build the portfolios of the future. today, next on the red carpet we have gina costa... looking simply stunning... with this season's hottest accessory. -[ cellphone vibrates ] -oh, what's this? she's opening her fidelity app... to buy that stock... for exactly the amount she wants... no fees or commissions... what will gina do next? gina has roller derby at 6:00 pm.
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i'm there. get started investing for as little as $1. talk about easier investing. >> get invested. join the club. >> he makes the complex simple and not to make irrational decisions. the return on investment for the club. pays for itself. >> join the club new member savings and soon go to cnbc.com. join now. terms and restrictions apply. >> welcome back. we see stocks extending yesterday's losses. the dow now down about 1100 points or 2.4% in the two day period. to be clear right now we're down 680. that's a 1.5% drop. 2.5% for the small caps. tough sledding for my next guest who says this is an emotionally charged market and that more volatility as the vix spikes requires stillness. she's got the names that can ride out this wave of uncertainty. julie beal is chief market strategist and portfolio manager at kayne anderson rudnick and a cnbc
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contributor. how frustrating is a day like this, julie? and a week like this. welcome. >> thank you. >> yeah. no, i think this is actually one of those markets where you really have to have a lot. of conviction. and that is what allows you to stay zen. >> that's the real key, is you don't want to just be doing things for the sake of doing things. it's the opposite of the old adage, don't just do something. sit there. >> as long as. >> you have good. quality companies, you should be able to ride out this turbulence. that's another kind of a deep allusion there to buffett and munger, who famously said, you know, inaction is the hardest thing. you're trying to emulate them in other ways, too. tori, what was our mystery chart? julie, what was our our some of your stock picks? oh, okay. that's not one advanced drainage, julie, is what we were teasing today. i don't think anyone would have guessed that. why is that on your radar? >> yeah. you know, i think there's so much excitement and hype around ai, and i think i really do think that it's going to be very transformational technology. but i also think it's going to be really flattening technology in terms
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of suddenly it's going to be really table stakes to have a high level of information access analysis, optimization. and for me, i'm really much more excited about companies that are grounded in the physical, real world. right? ai isn't going to fix clean water the way that advanced drainage and their pipe solutions are. so i think companies that are really grounded in, in the world that we have are actually more compelling to me because they're better able to differentiate themselves. simpson is another great example. that's a company that, you know, has 70% market share in the kind of sure tie, strong tie for structures, for home building or something like a west pharmaceutical, which, you know, manages the injectable drugs. it's the drug delivery systems. we know that there's going to be more injectable drugs. ai ioio ally touch that. and so it's these kind of real world companies that i'm really attracted to right now. >> yeah. all of that said, do you look at the broader economy right now, some of the data points lately on consumer and none of these stocks are really
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consumer plays, but there has been a bit of a weakening. >> absolutely. and i think that it's really important for us to bear in mind that while we look at all of the data around infrastructure spend, manufacturing, all of that, what's so critical is to recognize that we thought there was going to be a recession in 2023. we think that there are so many challenges facing this market, and the fact of the matter is it's the jobs market. stupid, right? the strength of the jobs have really been what has propelled this economy. and it makes sense. this is a consumer driven economy. the more that we can recognize that the health of the jobs market is what really is going to determine our fortune, especially in the near term. i think the better we can all recognize that. >> yeah. i also thought we were going to have a recession then. it was amazing that we skirted one. although in hindsight, if it was fiscal, i mean, we had a big debate about this top of the hour, right? you know, is it better for the economy, for us to kind of push back on, on the size of the government, on the size of the federal workforce, put that into the more productive private sector or
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not? >> yeah, i think that, you know, we have this tendency of we really don't want to have cycles, but cycles are kind of a natural function of earth. you know, it's a natural course of action. and there is a lot of good creative destruction that happens in cycles. what we want to do is we want to kind of let the companies that are not good companies, the zombie companies, fail, and we want to take care and protect of the, you know, the employees. that's where we really want to focus ourselves. i think what concerns me and what concerns lots of people is just the level of deficit spending that we have. it doesn't really give us a lot of levers to pull. if we do hit a recession, and we do suddenly need to have unemployment to a much more robust level, i think that's just a really natural concern. and, you know, i understand the need for more government efficiency and i think that's tied to that. >> so let's kind of back out. then you look at the small caps. that's one area where people were hoping for a lot of catch up, but they just continue to struggle a little bit. what would you say about the prospects for that part of the market or kind of for stocks here more broadly, while we
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navigate all of this? >> you know, i think what's really important to bear in mind with small cap is to think about the makeup of the index one. there's more leverage and more of that leverage is floating rate debt. and so they are more sensitive if we're going to have higher interest rates for longer. the other thing is there's a big makeup of real estate and banks. right. and so there's some sensitivity in there that we have to kind of think about. the last thing i would say is small caps have a really high proportion of non earners. and so for us i think really small cap is a place where passive doesn't make a ton of sense. you don't want a ton of exposure to these lower quality companies. you can find high quality businesses in small cap. you just have to be really choosy. >> yeah, i agree with you, by the way. i could end up benefit the users, us, the companies, you know, more than the sellers. i guess that's that's a story for another day. yeah. julie thanks very much for joining us julie beal with kayne anderson rudnick coming up meta. remember that 20 day win streak. now it's making some big changes in its compensation structure a new filing revealing a big bonus boost for executive officers say
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for mark zuckerberg. while the financial times reports they've reduced yearly stock options for by about 10% for thousands of employees. this comes a week after meta started laying off 5% of its workforce. the shares are basically flat today, but down 6% this week after snapping that epic winning streak on tuesday. here's another look at stocks, with the dow breaking below its 50 day moving average for the first time in a month, the nasdaq also below that technical nasdaq also below that technical leve (♪♪) car, this isn't the way home. that's right james, it isn't. car, where are we going? we're here. (♪♪) surprise!!! the future isn't scary. not investing in it is. car, were you in on this? nothing gets by you james. nasdaq-100 innovators. one etf. investment objectives, risks, charges, expenses and more in prospectus at invesco.com when i started walton goggins goggle glasses, i had no idea what i was doing.
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>> 2024 changemakers meta's. >> head of. >> business. >> ai clara shai. >> is at the. >> center of the ai revolution. >> after driving innovation. >> around how companies connect with. >> consumers via. >> social media and then leading ai at salesforce. now she's taking on the big role of running meta's new business ai division. we're building business ai's from meta, and we already have these trusted relationships. with 200 million small businesses around the world. very soon, each of those businesses are going to have these eyes that can represent them. >> and help. >> automate redundant tasks, help speak in their voice, help them find more customers, and provide almost like a concierge service to every single one of their customers, 24 by seven. i just think that's so incredibly rare and also so incredibly, incredibly important that we have people from different backgrounds and experiences creating these technologies and also using these technologies. she noted how unusual. >> meta is in.
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>> the tech space to have three women leading its key ai divisions, including her, the head of its research lab and also its ai for consumers division, are both women. you can find my full interview with shai on cnbc.com. we're going to be posting it on wednesday. and tune in on monday. we'll be revealing the new cnbc change makers list online and on squawk box. kelly, back over to you. >> julia thank you very. >> much julia. >> boorstin. still to come crude oil down more than 2% today as macro concerns reignite. it's now negative on the week and year to date. one investor has a bold idea for america to control energy prices. we'll talk about that next. and as we head to break, check out shares of coinbase at session lows, erasing their earlier gains after it announced the sec has agreed to end its enforcement case. here's what co founder and ceo brian armstrong told squawk box. >> first of all, just this is a huge day for us and also for the 50 million americans who hold crypto. the whole crypto indust ithe world. i think it's a really important signal
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that this small group of activists in this prior administration who tried to unlawfully attack this industry were going to be able to turn the page on that, finally get some regulatory clarity in america. they're fully withdrawing the case. and so we don't we're not changing anything about the business. we're not paying a single dollar as a fine, which i believe is quite unprecedented in sec quite unprecedented in sec history. it's odd how in an instant things can transform. slipping out of balance into freefall. (the stock market is now down 23%). this is happening people. where there are so few certainties... (laughing) look around you. you deserve to know. as we navigate a future unknown. i'm glad i found stability amidst it all. gold. standing the test of time. you founded your kayak company because you love the ocean. not spreadsheets... you need to hire. i need indeed. indeed you do. our matching platform lets you spendme
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to boost production and strengthen america's energy independence. but my next guest says forget production incentives. the u.s. should join opec. plus, not only will that stabilize energy prices, he says, it would give america a leg up on china. here to make the case is shawn filer. he's the chief investment officer of equinox partners. shawn, it's great to see you. welcome. >> thanks, kelly. >> on a day like this, it's all out the window that we get lower oil prices. the economy is a problem. we don't treasury. we don't need to worry about the mar-a-lago accords anymore. you know. tell me, though, why? i mean, stabilizing oil prices. yes. let's put aside the sort of geopolitical history with opec. wouldn't that raise costs for consumers? it seems like the president now, with everything
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that's happened, will probably want to do the opposite. >> so the idea that we were going to produce 3 million additional barrels a day, and that was going to drive the oil price down, i think that that idea sailed pretty quickly. and we saw we saw that idea in the inaugural, second inaugural. and then by wednesday he was calling on opec. so if trump wants to control the oil price, he's going to have to work with opec in some way. opec is just under half of. >> the world's. >> oil production. and their mandate is to stabilize the oil price. and so i think that conversation and that partnership is going to make sense because of the coincidence of wants here. >> but what you're talking about would be great for oil producers if we if we kind of were all part of this idea. yeah, maybe, maybe a little bit higher or stable oil price. but again, i thought that he and besson and everybody are trying to bring costs down. i think they're going to have to do more now, because look at how consumers are pushing back on high inflation in the first month already of his term. >> yeah. the problem. >> is just there's a geological reality. that the trump
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administration. >> is. >> is dealing with. and you have oil production in the united states flattening out, not increasing at $70 oil. and you can see this in the oil service companies in the us. oil and gas companies themselves is there's just not an appetite to drill and expand production in the united states at these oil prices. and so if trump wants a freer hand. >> to do things. >> like increase the maximum pressure campaign on iran, he needs to do a deal with the saudis, he needs to do a deal with opec, and he needs to do a deal to do a deal with russia. >> well, it makes me think that even if we didn't do something like this officially, that it could be a de facto policy, which is fascinating. so anyway, let me move on, sean, and talk about something maybe a little less controversial, which is gold. highly consensus. everyone starting to understand now the central bank gold buying. but what inning of this are we in? how much further could this go? how much higher could the gold price go? >> so gold prices have almost doubled over the last five years. so and over the last four years, we've added $1,000 to the
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price of gold. and the largest buyer in the gold market, central banks. so a lot of the forces driving central banks to buy gold are not going away. so the overindebtedness of the united states, the concern about us macroeconomic policy and us restrictions on on the dollar. right. so the 2022 freezing of the russian foreign foreign central bank assets has had a real chilling effect in terms of global demand for dollar assets from central banks. >> yeah. and the interesting thing about this is to me, it's sort of once everybody knows and once everyone's piling in and assumes it's going higher, i'm kind of looking for the next piece of the story. but but do you think this is the story? >> well, yeah. that thousand ton a year of demand from central banks that's been consistent now for three years. and, you know, in terms of net additions to central bank balances of gold reserves, that's been true since 2008. so this is not the first
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inning of the story. but i think in terms of the continuing demand for gold from foreign central banks. and then the other issue that you, you, you addressed with the mar a lago cortes, right. that waning demand for longer dated u.s. treasuries that you see from foreign central banks. so those are two sides of the same coin, and i don't see that dynamic changing anytime soon. >> and just, you know, there are some viewers who know what you're talking about, and others go, wait a minute, what are the mar-a-lago accords? i think we're going to hear more about this idea. we'll see what happens with the ten year lately if there are macro concerns. but you talked about this. what last year? what this idea that we would potentially almost kind of require our partners to buy long term u.s. debt to try to bring yields down. do you think that ever be a reality? >> it's tempting. >> right. so there's a lack of demand for longer dated treasuries. you see that in scott bissonnette's comments just yesterday that he's not going to be in the near term, making any effort to term out u.s. debt, which is something he had talked about prior to the
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inauguration. and it's just not possible because there's not the demand there for that longer dated debt and so compelling or incentivizing foreigners to buy that debt is certainly attractive and certainly help manage long term interest rates in the united states. and i think the real question is how you do it. do you compel them or do you in some ways incentivize them or lend them the money to buy that long term debt, in which case that would be perhaps beneficial to long term interest rates, but would also be a kind of closet form of qe if we go down that path. >> no, absolutely. it all kind of i understand why people say that's why we want gold, and we'll see what happens with the with other assets from here. sean, thanks for the time today. appreciate it. thank you. sean filer with equinox partners. and that's it for the exchange. don't miss our exclusive interview with jp morgan chase ceo jamie dimon on monday. and i'll join brian sullivan for i'll join brian sullivan for power lunch after last month's massive solar flare added a 25th hour to the day, businesses are wondering "what should we do with it?" i'm thinking company wide power nap.
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but i know these attack vectors. oh, had a little upgrade have we? ♪♪ okay, so that's how you want to play. ♪♪ >> and welcome to power lunch alongside kelly. you just saw moments ago. i am brian sullivan. explosive allegations against. >> massive insurance company unitedhealth. >> the company accused of bilking. >> taxpayers for billions. >> the story will. >> blow your mind. >> and a new study. >> has a plan to beat a's energy needs without taxing the grid's power. couples could be the answer. and speaking of couples. >> why are baseball. >> and espn apparently breaking up? we'll tell you. and what it may say
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