let's get the latest from cnn's matt egan. matt, what can you tell us about these tariffs and what it could mean for the price of everyday goods? >> well, boris, we could be on the verge of the first shots being fired in what would be a trade war in north america. because remember, it's not just these 25% tariffs that have been threatened by president trump on canada and on mexico. it's also the retaliation that they have promised as well. and as you pointed out, this did not go over so well on wall street the moment that this news came out from the white house, that the tariffs are still on track to happen. we did see a noticeable dip in the stock market with the dow moving solidly lower. now look we don't know exactly what's going to happen here. it's still possible that president trump decides to delay when these tariffs get implemented or cancel them altogether. but we do know that he views these tariffs as sort of a magical negotiating tool that can solve almost any problem. of course, this would be a risky gamble because

cnn's matt egan joins us now. matt, there were there were a lot of concerns in the markets that this tech bubble was only going to last so long. and what might knock some of these giants off their pedestal a little bit. what's happening right now? it sounds like this startup company in china is sending some shockwaves through the markets. jim. >> absolutely, definitely shockwaves. we are seeing tech stocks take a big hit and it is being driven by these stunning developments in the a.i. space. so as you mentioned the dow is down only about 100 points right now. but the real action is over in the nasdaq. down almost 3% on track for one of its worst days in the past two years. now, this is all being caused by a little known chinese company that has stunned investors because they say that they are basically competitive with the more established a.i. players. so we're talking about deep sea. this is a startup company and it has its own a.i. model. the most significant thing here is not that there's another a.i. model th

let's get right to cnn's matt egan in new york. matt, why the panic by investors and why today? >> well, jake, wall street got rocked today by major developments on the ai front. the nasdaq losing more than 3%. and nvidia, which had been one of the hottest stocks on the planet, plunging 17%, losing more than $600 billion today alone. it's a staggering loss. and all of this was set off by a little known chinese ai startup called deepseek. deepseek stunning investors. and i would imagine officials in washington by saying that its new ai model can go toe to toe with chatgpt, google's gemini and other leading ai models. and here's the kicker. deepseek says that it's been able to do this without those next generation chips that nvidia makes, and at a fraction of the cost. deepseek says it was able to train its ai model for less than $6 million. all of this is forcing investors to rethink some of the major foundational ideas that they had had, right? the previous thinking was that you had to spend gobs of money to train ai models, and that you needed the next generation computer chips

cnn's matt egan is here. matt, why are some investors worried about the market's gains?t has been a blockbuster year. >> yes, sarah, it really has been. >> and i'm not trying to be a debbie downer on this friday morning there. >> i'm not. there are there are plenty of reasons to be optimistic about the 2025 economy. >> right? gas prices are in check. there's no recession in in sight. and paychecks are going up faster than prices. >> but markets are a clear risk, more so than in the past, in part because yes, they've gone up so much and kind of like when you're on a ladder, the higher up you are, the more you have to fall. >> last year alone, the s&p 500 increased in value by $10 trillion. that was just last year. the market is up by 20% or more in back to back years. we haven't seen that since the late 1990s under bill clinton. and so that is great, of course, for people with money in the market. but there are these concerns that maybe this is starting to get out of hand, that perhaps the price tags on some parts of the market is becoming untethered to reality. ubs, the

it's down more than 12% just now as matt egan joins us just now. matt, how did a one year old a.i. startup company from china rattle the markets like this? >> yeah, pamela it's stunning. and i'll one up you there. the company is only about a year old, but this specific model, it's only been around for a week. so what's happened is that deep tech has come up with this new a.i. technology that is competitive with the newest and best a.i. models on the market right now, and that is really surprising investors. and i would imagine officials in washington, because what's happened is that this company says that they were able to build this new model at just a fraction of the cost of what it actually normally would cost to build some of these a.i. models. deep sea says it only costs $5.6 million to build this new model. that is a drop in the bucket to the hundreds of millions of dollars that the other a.i. companies says that it costs. and this new model launched, like i said, about a week ago, but it's already at the top of the charts on the apple app st

cnn's matt egan joins us now. matt, you saw the numbers there for the nasdaq. obviously, deepseek is concerning for some of these western ai firms that have spent billions of dollars trying to grow their models using way more advanced chips. the chinese did it for a fraction of the price, with inferior technology. yeah. >> boris, this has been. >> a. real wake. >> up call for investors. it's really forcing wall. street to rethink what had been the hottest part of the stock market, and that is ai. of course. so this little known chinese startup says that it has developed an ai model that can basically go toe to toe with the leading ai platforms on the market right now, like google's gemini and chatgpt. and that in itself, of course, is stunning. but the real kicker is that deepseek says that it was able to do this without a those cutting edge computer chips, and b at a fraction of the cost. they say that they developed this next model. this ai model, by just spending $5.6 million to train it. that is a fraction of the hundreds of millions of dollars that other a

. >> counterintuitive, but we have cnn's matt egan to join us and break it down. what did the report say, matt? >> well, boris and brianna, this was a blockbuster report. it painted the picture of a relentless jobs market that just continues to defy expectations. and for main street, this is good news because it shows that workers are very much in demand. so the numbers show that the economy added 256,000 jobs in december. >> now that is a seven month high. >> that's 100,000 more than expected. and that chart shows that, yes, hiring slowed dramatically in october, but that was really just a blip. >> and it was a blip caused by hurricanes and worker strikes. >> and the economy has bounced back. the jobs market ended the year with a bang. and for 2024, the u.s. added 2.2 million jobs. >> that is twice as much as economists had expected when the year started. >> you can see the unemployment rate remains low 4.1%. it unexpectedly went lower in december. and i know that when people think about the economy, they think about the cost of living. but this report also showed

cnn's matt egan is in washington overseeing all of this today. it's great to have you there. what are the expectations, matt? >> well. >> john, president trump. wants the fed. >> to keep cutting interest rates. >> i think he's going to be pretty. >> disappointed today because. >> there's almost. >> no doubt on wall street about what the fed is going to do today. and that's a whole lot of nothing. >> investors are. >> pricing in a 99% chance that the fed keeps interest rates steady. just a 1% chance of a cut. so that's basically a done deal. now this would be the first pause from the fed since they started cutting rates last september. and it could be an extended pause. at least that's what investors think. wall street is pricing in just a 1 in 3 chance of an interest rate cut by march. that's the next meeting. low chance 50 over 50 at the meeting. after that, it's really not until june that investors have any confidence that the fed is going to start cutting interest rates again. so why is the fed pausing? well, first off, unemployment is low. inflation is still above the fed'

cnn's matt egan is here to break it down. >> and cnn's business editor at large and anchor of cnn's quests business. richard quest is joining us from the world economic forum in davos. first to you, matt. what can we expect? >> well, boris and kayla, look, the president has started off really hitting the ground running. he had this avalanche of executive actions that he signed. he's proposing sweeping reforms to everything from immigration and trade to regulation and energy. and anytime there is a change in power, there's going to be uncertainty. but there's even more uncertainty right now, just given the sheer scale of the changes that president trump is proposing. and there's a lot of major questions looming over the economy right now, whether or not these executive actions from president trump are going to be impactful when he's going to increase tariffs and how high they're going to go, and whether or not these mass deportations are going to starve key industries of workers. and what's notable is that despite all this rhetoric, the president is really inheriting a very healthy economy

thank you so much, matt egan. appreciate it kate. >> this morning, fox news host pete hegseth is in the hot seat. one of donald trump's more controversial cabinet picks is about to sit before the senate armed services committee and about to face likely hours of grueling questions. the post that hegseth is nominated for is a huge one. hence, all of the attention. the defense secretary oversees the largest agency in the federal government, an agency with an $800 billion budget. last night, democrats on the committee huddled with the senate democratic leader, chuck schumer, to go over strategy for today. some laying out their concerns as they left that closed door meeting. >> on the public record that we have right now, put aside all of the charges of sexual impropriety and alcohol abuse. there has never been a nominee for an office of such serious consequence. who is so unqualified and unprepared in recent american history. >> if there's any cabinet position that ought to have a steady and drama free individual, it

cnn's matt egan is here. numbers up. >> yeah, john, it shows that the jobs market ended 2024 with a bang. and this is really good news for main street. it shows that workers are still very much in demand for wall street. this is maybe not good news. we'll get to that. first let's get to the numbers. so this report showed that the economy added 256,000 jobs in december. that blew away the forecast by 100,000. think about that. that's a big beat. it is a really big beat. and the unemployment rate beat as well, because it went down to 4.1%. it was supposed to stay flat at 4.2%. there were some whispers, john, of an increase that did not happen. it went down. now when we look at the trend, we can see that yes, there was a big slowdown in hiring in october, but that was because of hurricanes. that was because of worker strikes. now the economy clearly bounced back in november and it stayed that way. this was a sustained rebound in december. now this is a relief. again i think for workers, when you zoom out and you

cnn's matt egan is here. att, to start, do we have any idea whether or not the president's going to go through with something and what that something may be? >> phil. >> it's not. >> clear yet. >> whether or not these tariffs are going to go into place. but what is clear is president trump views. tariffs as a magical negotiating tool that can solve just about any problem. and that belief must have been bolstered by last weekend, when colombia backed down in a deportation fight with trump after he threatened massive tariffs. but remember, we're not just talking about u.s. tariffs on canada and mexico. we're talking about them retaliating. and yes, a full blown trade war. and this would. >> be really. >> risky because it could worsen the cost of living problem that trump has promised to solve. remember, these are two of our biggest trading partners. last year alone, the u.s. imported $400 billion of goods from canada. everything from lumber and. minerals to oil. and it's also going to be a major problem for the

. >> thank you, chair powell, matt egan from cnn. following up on questions from the stock market, how concerned are you, if at all, about potential asset bubbles brewing in financial markets? how do relatively high market valuations factor into considerations about potentially lowering interest rates further? is that something that's in the back of your mind? >> so, we look-- we look from a financial stability perspective at asset prices generally, along with things like leverage in the household sector, leverage in the banking system, funding risk for banks and things like that. it's one of the four things, estimate prices are, and, yeah, i'd say they're elevated by many metrics right now. a good part of that, of course, is this thing around tech and ai, but we look at that, but you know, we also look at how resilient the households and businesses and the financial sector are to those things. so, we look at that mainly from a financial stability perspective and we think there's a lot of resilience out there. banks have high capital

matt egan from cnn. following up on courtney's question about the stock market from earlier, how concern redirect examination you, if at all, about potential asset bubble brewing in financial marks and how do relatively high market valuations factor into considerations of potentially lowering interest rates further? is that in the back of your mind? >> we look at from a financial stability perspective at asset prices generally, along with things like leverage in the household sector, leverage in the banking system, funding risk for banks and things like that . it's one of the four things, asset prices are and, yeah, i would say they're elevated by many metrics right now. a good part of that is of course this thing around tech and ai. but we look at that. you know, we also look at how resilient the households and businesses and financial sector are to those things. we look at that from a financial stability perspective, and we think that there's a lot of resilience out there. bank haves high capital, and

cnn's matt egan is standing by. matt, the fed will not be changing rates this time. >> there's not much in here. but what we do speculate about what they'll do next. >> that's right. >> no change in interest rates. the fed deciding unanimously to hit pause on interest rate cuts. this follows three straight cuts last year. now this decision was widely expected. it was well telegraphed by officials at the fed. and it's exactly what investors had been anticipating. now the fed is essentially in a holding pattern. officials are waiting for more information before they decide when or whether or not they'll be able to resume interest rate cuts. we didn't get many clues from the fed's statement that was released just moments ago. the fed did make some changes about how they're describing the economy. they inserted some new language that says that the unemployment rate has stabilized at, quote, a low level in recent months. and they're describing labor market conditions as solid. they also removed some language that had prev

cnn's matt egan has much more on this. what are you learning, matt?well, kate, across america, there's just not enough homes for sale. and there's so much demand. and so that has pushed home prices higher and higher. so zillow just came out with their annual rankings of the 50 largest metro areas. and for the second year in a row, the hottest housing market in america is buffalo, new york. there's a number of other cities in the northeast that are high up on this list, including hartford, connecticut. providence, rhode island, and philadelphia. in the midwest, kansas city, saint louis. the only city out west to make this list salt lake city. now, zillow takes into account a number of factors here, including home prices, how fast homes are selling, how fast they're being built, and also job growth, which is an important indicator of future demand. now, as i mentioned, buffalo leads this list for the second year in a row. i know that's going to be music to the ears of buffalo bills superfan harry enten. and as far as why this is happening, it's because

let's get right to matt egan to figure out what's going on here matt. >> well john this is really the big market selloff that we're seeing of trump 2.0. and it's all being fueled by a.i. and concerns about a new rival a.i. company. let's take a quick look at the market. we're seeing dow futures down 400 points a little less than 1% more significant losses, the s&p 502%. but look at this 4% drop for nasdaq. we have not seen the nasdaq composite close by 4% or more since late 2022. so this is a significant drop. and one of the biggest losers this morning is nvidia. nvidia. the a.i. superstar down almost 12% in premarket trading john that translates to a loss of $400 billion in market value. now here's the crazy thing. this is all being driven by a chinese startup that few people had ever heard of before a few days ago. so we're talking about deep sea. this is a chinese a.i. startup that is really raising some eyebrows in silicon valley on wall street. and i would imagine in washington, because it's rolled out this new model that is surprisingly competitive with the best stuff on the mar

cnn's matt egan is here with some new reporting on this. matt, what have you uncovered? >> well, john, we're just about. >> a. >> week away from president trump's threatened february 1st tariffs on mexico and. >> on canada. >> and look, this would be a risky gamble for. >> the president. >> these are two of our closest. >> neighbors. >> biggest trading partners. >> and economists say that this. >> 25% tariff. >> if it happens would. >> plunge both mexico. and canada into recession. particularly devastating for mexico because their economy relies on selling cars and appliances and food to the united states, and that this trouble could spill over into the u.s. in the form of slower growth here. also, potentially more illegal border crossings into the u.s. from mexico that these two countries would almost definitely retaliate by putting tariffs on stuff that's made in america, and that this could lift consumer prices for americans and potentially cause the fed to keep interest rates higher for longer. so there's a whole series of potential impacts here. the problem is that

cnn's matt egan is here to explain what we're seeing and why. matt. >> john, we've got a bit of a tech selloff this morning, and it's being caused by earth shattering developments in the a.i. space. so let's take a look at this. you see the dow down more than 140 points right now. the s&p solidly lower. but the real action is over here in the nasdaq 600 points lower. nearly 3% on track for one of its worst days in the past two years. and here's why. there's a chinese startup that few people had ever heard of until the past few days, and it has emerged as a real player in the a.i. arms race. it's called deep seek and investors, and i would imagine officials in washington are stunned to learn that deep seeks a.i. model has developed technology that can actually be competitive with open a.i. and google and x a.i. and all these more established players. it's only been around for a bit, but deep seek has already vaulted to the top of the app store on apple as the most downloaded app, passing chatgpt, which is pretty shocking. look at that number one.

cnn's matt egan is with us now. this is the dow. what we really want to see is the nasdaq. matt. >> yeah, the nasdaq. >> because deepseek really caused a meltdown in the tech world, in the a.i. space in particular. and we look at how the market is opening up. you can see the nasdaq is up by half a percentage point. that is an improvement from yesterday when we saw a 3% drop. but i have to say this feels like kind of a fragile rebound. i don't know that this is all that confidence inspiring given the scale of the losses yesterday. now all eyes of course are on nvidia. that's the a.i. superstar that lost, as you mentioned, half $1 trillion in value yesterday alone. you can see again it's up. the selling has stopped but it's only up 3% a little bit less than that right now. >> so it was down what 17%. >> down 17% yesterday. so this is really clawing back just a small fraction of the losses yesterday. what's stunning is that nvidia started the week as the most valuable company on the planet. but the losses yesterday because of deepseek were so great that it lost that title. it h

cnn's matt egan has much more on this. you've been tracking this. what's the latest here? >> yeah. >> kate, listen, it was a wake up call. it really, really spooked investors. >> and it. >> raises a lot of questions about the state of the a.i. arms race and how president trump is going to respond. now, the fact that deepseek says that it trained its models on fewer chips at a fraction of the cost, that is what really alarmed investors. that's why we saw nvidia lose almost $600 billion, the most that any company has ever lost in a single day. and the entire market overall lost about $1 trillion yesterday. that's according to dow jones because deepseek rise suggests that maybe you don't need as many nvidia chips as we previously thought. and so this is raising some questions about those. >> this was a company that was like unstoppable. >> it was. >> it was something you and i have been talking about. >> going straight up but not anymore. listen, it's still it's still worth a lot of money. >> they lost more than many companies would wish to have. ever. >> that's that's a good

and cnn's matt egan is tracking that for us. he's here with us now. what are the expectations heading into this? >> well, kate, this is the last jobs report before president-elect trump returns to power. it could be a significant one because investors on wall street are on high alert, because they're worried that the economy might actually be too strong. and if these numbers come in hot, it may not sit well with investors. so the consensus is for the economy to have added 153,000 jobs in december, and the unemployment rate to be steady at 4.2%. now, if these numbers come in as expected, this would paint the picture of overall a healthy jobs market. yes, job growth has slowed from that gangbusters pace from a few years ago, but still, overall looks like it's in solid shape now. when we look at the trend, we can see that job growth has been pretty bumpy the last few months. and i think that chart shows that we saw a significant slowdown in hiring in october, but that was really because of hurricanes and workers who were on strike. then we saw a big incr

. >> cnn's matt egan joining us now.e've been talking about the threatened tariffs for a long time, but now he's putting a date on it. what does this mean. >> well look trump 2.0 is starting with shock and awe right. >> we got this avalanche of executive action from the president yesterday. and yet for the economy, for markets, perhaps the most consequential headline from yesterday was what we just heard from the president about these threatened february 1st tariffs on canada and on mexico. and look for consumers. the risk here is, of course, potentially higher prices, which would directly undermine what president trump is trying to do when it comes to fixing the cost of living. >> and make no mistake, no matter what trump says that they'll pay for it. every big retailer you're going to talk to in the united states says the prices it's going to be on the consumer. yeah. >> yeah. listen, that's exactly what has happened in the past, right? these are import taxes. they are paid by u.s. companies when they ship stuff in fro

let's bring in cnn's matt egan, because this one's a little confusing. when i looked at the top line, i'm like, oh, people aren't going to like this. >> yeah, john, this is a confusing report. there's some good news, some bad news. there's a little something for everyone. let's start with the bad news. 2.9%. that's the annual inflation rate. this was hotter than expected. it's the third straight month where this number has gone up. further away from that 2% goal. and this is the highest since july. also, the monthly number was a little bit hotter than expected. when we look at the trend, you can see that yes, there's been a lot of progress from the nightmare of two and a half years ago. and yet some of that progress has started to unwind and stall out in the last few months. now you can see it right here. you see it's starting to tick a little bit higher. that's not what you want to see. but there is some good news. and i think this is why the market is reacting very positively. core inflation, which excludes food and energy that actually cooled off. so

. >> chair powell matt egan from cnn. >> following up on courtney's question from earlier about the stock. >> market. >> how concerned are. >> you. >> if at all. >> about potential asset bubble brewing. >> in financial markets? how do relatively high market valuations factor into considerations about. >> potentially lowering interest rates further? >> is that something that's in the back. >> of. >> your mind. >> so we look. >> we look at from a financial stability perspective at asset prices generally, along with things like leverage in the household sector, leverage in the banking system, funding risk for banks and things like that. but it's just one of the four things asset prices are. and yeah, i'd say they're elevated by by many metrics right now. a good part of that, of course, is this thing around tech and ai. but we look at that. but you know, we also we look at how resilient the households and businesses and the financial sector are to those things. so we look at that mainly from a financial stability perspective. and we think that there's a lot of resilience out there. banks have