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All right, all right, I got it right. Let's get started. How many years have you been at the amazing? Yes, a few. Back when they barely had a ticker, I go back so far. Our roadmap does begin with tech stock volatility. Adobe shares are tumbling Microsoft, though. Record highs, Tesla and NVIDIA, those stocks, at least recently for NVIDIA, saying it's a struggle, may be an overstatement, but they certainly have not been going up. The NASDAQ 100, though, pointed to its first back-to-back weekly loss since last October. Plus, TikTok's owner, ByteDance, on track to surpass Meta's Facebook at the world's largest social media company by sales. And the Chamber of Commerce, suing the SEC over new climate disclosure rules, a lot to unpack there. And we're going to begin with the road ahead in particular for what has been driving this market for quite some time. And that is, namely, what we call the megacap technology companies, AI, particularly generative AI. And Mike, I'll turn to you. We just mentioned, of course, NVIDIA shares, which yesterday we discussed. I mean, Jim and I, years ago, developed this thing called the key to this market. And it does feel like most days, in some ways, it could be considered that. Certainly the key to what kind of market day we're going to have. NVIDIA is at a 10% correction. It doesn't look like anything on the chart. It's down 9.7% from its high. It's obviously just had this wild run. We have the whole confab next week. I don't know that anybody wants to get too negative into it. Others are saying, you know, there were parts of this market mostly exemplified by NVIDIA Broadcom AMD that just needed to cool down. No matter what else was going on, no matter how great the story was. And that's been the case for a couple of weeks. And honestly, it's sort of happened on some level. The S&P 500 is down six of the last nine days, but is up over that period. So there's been just a little more chop yesterday. The market was barely down. The S&P was like down 2/3 of a percent, or something like that, maybe even less. And the equal weight was down 1%, right? So you had when yields up, the broader mass of stocks goes down lately, and you can have this defensive move in some of the big tech stocks. Yesterday, Microsoft made an all-time high. And it's because that's what people want when things are a little bit less certain about-- - So updates are bigger than down there. I mean, the-- - This week on the NASDAQ composite, we're up on the S&P 1/2 of percent. NASDAQ 100 is flat. You're key to the market. I made a chart for it, actually, without talking-- - Oh, thanks, Sarah, for the top of the nine, thank you. - Goldman Sachs and a trading note this morning, I thought really visualized just how important and how much these stocks have outperformed. If you look at, and they did the six, right? Excluding Tesla. And they go from January of 2023. Until now, that's the blue line, and it just shows you what's been the key and how much they've outperformed. The middle line is the S&P, and the 494 remaining S&P 500 companies are below, which are still up, I will say, from that period. - And that is part of the bigger story, is that even though you've had this massive outperformance and added trillions of dollars in market value and six stocks, you haven't been to the complete disadvantage of the rest of the market. Actually, though, the big six there was also flattened out over the last few weeks. So there's just been a little more churn in this market. Today is a big rebalancing of all these index products. - It's quantumics, right? - Yes, well, there's no more quad 'cause they don't have single stock futures anymore. Triple. It's quarterly expiration. But they do have the XLK, the big technology sector spider. They just re-weight the stocks, and Nvidia and Broadcom are being brought down and weight, Microsoft and Alphabet being brought up and weight. And the market seems to just have anticipated that. I think it's silly that we think that this is driving the action. It's a $64 billion ETF, and the tech sector is $12 trillion in market value. Why should it matter? But it seems to matter in people's head. - I'd just like to come back to Microsoft for a moment. Because there is an argument to be made that it is certainly a stronger reflection of enthusiasm around generative AIs, anything else, and it diverged yesterday from Nvidia, for example. - Yeah. - So, I don't know. I mean, I'm just curious what may be behind that. If it's not, if we're not seeing that enthusiasm reflected in some of the other typical names. - I think it's a matter of, there's this kind of push me pull you, right? So, Microsoft did nothing for weeks. It kind of just went sideways for a little bit, and it's not been one of the leaders. And as I said, with a defensive tape, Microsoft is a net beneficiary. So, I think we've done a lot of this, taking money from one pocket and putting it into the other when the macro has been quiet. But of course, Sarah, the macro hasn't been entirely quiet this week because of what's going on in yields because you got like a third straight, higher than anticipated inflation number, and we're rethinking the Fed path. So, I think that's also what has, investors hesitating and the average stock hesitating, even if tech is driving the overall market. - Well, tech, tech can only go up so much if yields are-- - Well, that is not exactly what I'm getting at. It's much more about-- - I'm not even admitting that. - No, because it's happened true for a long time. - We're actually, but it's not a coincidence that this week yields have run up on the back of two hotter inflation reports, and we're now at two month highs. - Yes, no, that's absolutely true. I just don't think it unusually, yeah, affects tech. It actually affects small caps a lot more, it affects secreles a lot more, and consumer stuff. - By the way, Barclays wrote on this, more room to run, they say, fundamentally here, but the caution is that big tech is not a safe haven from Mac Rack Road de-risking. Major jumps in big tech as some key correlation occur around markets a lot. - Yeah, and this is the idea that we've had this very, very helpful divergence, not only among sectors, but among stocks within sectors, and so the dispersion has been high. What that means is the overall index has a gentler ride, it doesn't cause a lot of volatility at the index level. When it's a macro shock, when it's really risk off, when people want a liquid date, when they want to reduce exposure across the board, then everything gets correlated, and tech is not exempt. And I think that's the point, Barclays' name. - Well, today, Adobe share is not exempt from a down draft as well, this after earnings, and worth hitting at this point, 'cause I'm looking, this stock could be out, it's much as $67 from what had been $570. - You know, we're talking about a $260 billion company. You can see it there, it was the guidance, perhaps, that missed some of the street estimates, or maybe even more so, some of the buy side estimates. And then there's been this overriding fear, I guess you'd have to call it, of AI in general, and the threat that it represents to Adobe's business. You remember the stock sold off pretty dramatically after the introduction of Sora, this new OpenAI program essentially lets you create full motion video kind of things. And the like. At the same time, you know, the bulls would say, listen, there's no sign as of yet that the lower cost competitors, such as a can, or even a Figma, are really hurting overall growth, even though they may be taking business away, there is also a thought that perhaps they're actually increasing the total addressable market by having people get in to sort of this artistic side of things, were cheaply, and then move up in terms of what they're willing to use, and pay the subscription fees of Adobe, for example, to use them. And it trades at what you might call about 23 times, 23 free cash flow, which again, those who own the stock have said, I think that's pretty cheap, it's below a roughly in line with Oracle, you're talking about 40% plus margins, and there is, I hope that there's gonna be an acceleration in the second half, and that is what Chantuna Ray and the company CEO discussed on the call last land as well. >> For sure, I just think the burden of proof is a little higher now for them to prove that AI is an enhancement, not a real challenge, they're gonna have to fight that battle for a while, the pricing issues maybe were more fleeting, but does seem that right now, it does have that premium valuation. Now, it had used to trade it well above this, in terms of free cash flow, multiples and things like that, because it just seems such an autopilot grower, and it's just a huge addressable market, massive subscription revenue growth, and I think it's just a little bit of a rethink of exactly how immune they're gonna be to somebody else. >> They also addressed Sora, by the way, yesterday, on the call, the president saying they're actually, they work with OpenAI, and he said, "We're obviously gonna see us develop our own model, "but it's all a tailwind," he said, because the more people that generate video clips, the more they need to edit that content, so that's how they address that. >> Should mention as well, $25 billion buyback over some period of time, but that's 11% or so of the current market cap, or 10% of the current market cap. So, not insignificant. All right, guys, I've been following, Sarah, you've been all over the place this week, but I know you watch, we've been following this TikTok story very closely, 'cause it is fascinating to say the least, in terms of where things stand, and where they're going right now, of course, and I'm sure we'll hear over the course perhaps of the day from Emily Wilkins in DC, in terms of where things stand in the Senate, how quickly a bill to ban TikTok in the United States, there will be created, will it be part of the appropriations bill? You look for Maria Cantwell and Mark Warner from Virginia, Maria Cantwell from Washington to play a key role here, as well as Lisa Monaco from the DOJ, I'm told, but again, I'll defer to my colleagues in DC for the latest there. What I can tell you, though, is that the journal reporting today, and I've been bringing up any number of times, the likelihood that the Chinese are not going to say, okay, by tense, you can sell this. And you can sell it along with, by the way, the algorithm and the source code. Now, you can make your own algorithm, but you need at least some time to be able to copy the source code. And I went back three and a half years, I found my notes finally after a bit of a search from three and a half years ago when we were going through all this. Back then, it was about 10 million lines of code. Now I'm told it could be as much as 40 million lines of code. It could take a long time to conceivably to copy that code. That said, large language models apparently make it a bit easier and more possible. But the problem here is that while Stephen Mnuchin may be interested in buying it, or perhaps there'll be some others out there that certainly might be, you're not gonna get a chance at this point to actually do so. And so we are left with a real possibility that if the Senate acts and passes the bill and President Biden, as he said, he would signs it, and then there's some time period and there are potentially these litigation nonetheless that this actually could disappear in the United States as hard as it seems to imagine. Because what you're buying without the source code or access to the source code is virtually impossible, obviously you'd like the algorithm as well. Stephen Mnuchin addressed this on SquawkBox yesterday when he was asked about, well, what do you do if you don't actually get the technology? Take a listen. - Hostiles, they've blocked because they were not happy about the technology transfer. And I would have to convince them in the US government that there was a way to do this. - And that continues to be a key question. You know, there's been some talk about Bobby Kodak as well, the former, of course, CEO of Activision being involved. You know, I think the sense, frankly, that I'm hearing is, sure, if there was something to do, he was involved the last time three and a half years ago, along with Oracle, along with Walmart, along with Microsoft, when they all sort of were thinking about what they could do here as a ban seemed potentially possible when we got that executive order from then President Trump to ban it, not right now. I mean, there's nothing seemingly, you know, you should maybe out there and maybe be able to raise some money around it, but you gotta actually have a deal that you can do. And so we'll keep a close eye on the Senate and how quickly this bill moves. - For sure, and you know, it's so interesting because I can't get away from the idea that this is all happening at a moment, arguably, when TikTok's financial growth rate and kind of cultural sway might be peaking. - You know, and this is the way these things tend to go. - Of course, you know, 170 million users here in the US, still not profitable. Again, I've talked to any number of people now who say, because they're spending so much money on Project Texas, which has been all about moving all the data to the Oracle servers in Texas. That costs a lot of money. That said, there's a belief that if you were, the Chinese were to allow the technology transfer, but they could be worth $100 billion. I mean, you're talking about something that could be generating just from the ad business, at least five billion in operating income, let's call it over five years from now, put a multiple on that and figure it out. Bike dance itself, though, extremely valuable, regardless. And there doesn't seem to be quite as much pushback this time from some of the owners of bike dance around all this because they have such dominance, not dominance, but such a significant position in the Chinese market that's added so much value overall. And by the way, remember last time there was a ban, there was a talk, it was Australia, US, New Zealand, UK, it was all the English sort of speaking TikTok that would have been involved. That doesn't appear to be the case so far. There's also the users and the influencers who make a lot of money and the celebrities, and TikTok is waging a pretty active campaign getting them to call their senators right now and lobby against this. And I do wonder if we're gonna continue to hear political opposition on things like First Amendment, really heat up. - And of course, finally, big beneficiary of this word to happen would have to be meta. - Oh yeah, that's what President Trump says. That's what President Trump says and that seems to be-- - I mean vertical short video, that's they created reals just for that. - I know. You know, the chief of staff of the President, Jeff Science was a board member of Metis. He's just saying. All right, coming up, the broader market versus mega caps, count of course, Tony Dwyer is going to share. His strategy has reached the, as we've reached the midpoint, it's the Idza March, right? Let's walk on the streets, right? - Your teenager's behavior might not just be a face, many teenagers suffer from undiagnosed depression, due to missing signs like changes in mood, loss of interest in activities, and difficulty concentrating. I Matter offers free, confidential youth therapy. They can choose the therapist they feel comfortable with and whether they want to speak in person or online. Visit iMatterColorado.org to learn more. - Now is the time to bring new ideas to your industry. And T-Mobile for Business has the advanced 5G solutions to make that happen. We're helping rethink patient doctor interactions with real-time data sharing. We're tracking carbon with 5G sensors to help fight climate change. We're partnering with cities to connect roadways, cars and drivers to minimize injuries. Disruptive thinking deserves a disruptive partner. So let's get started on what's next for your business. Step up your innovation at teammobile.com/now. (upbeat music) - Some new data just out moments ago on a hit February Industrial Production, rising 0.1%. That was a little better than economists were expecting. They expected it to be unchanged. Capacity utilization 78.3 compared to forecast of 78.5%. All in all, I think we have seen better indications for manufacturing, which has been one of the harder parts of the economy lately. Things are looking up. - Things are looking up. How about on manufacturing at least? - Okay. - Not as much on the consumer after retail sales. - Let's get back to the market, see if that's looking up. We're about halfway through a month in which the S&P 500 had an asset that could both hit record highs. Kind of core genuities, chief market strategist, Tony Dwyer joins us now. Give us his take on the road ahead. All right, so do that, Tony. We just, I don't know if you heard the data as well, but where do you stand in terms of how you see things unfolding from here over the next few months? - David, I think it's been choppy, it's gonna get choppy underneath the surface. I think one of the most important things that's not talked enough about so much of the, I ask myself when I get up and wait all the time, where's the recession? I've been on a recession call for a while. You had an inversion of the yield curve that's been historic in terms of duration and extent, and bank lending last year shut down over the last 15 months. So how have we not gone into a recession? Most people would think that, well, you have excess savings from pandemic, you had fiscal stimulus, but I really think it's the private credit market that has held up companies that would have ordinarily not had access to capital. So the question becomes, does that just push out of recession, or does that eliminate one or avert one? And I think it pushes it out. So I think as we get some weak economic data, especially in the employment front over the course of the next few months, that may put a little bit of pressure on stocks, but ultimately, it should turn out to be a pretty good year when the Fed starts to really ease. You know, Tony, we've had this conversation with you a bit in the past as well. Sarah put a chart up at the beginning of the show, just showing the outperformance of those six mega cap stocks versus the rest of the market. We've talked so often over these first two and a half months of the year about a broadening. What are your expectations in terms of that, whether it continues and what it means for the overall performance of the S&P as the year moves ahead? Why aren't we famous for coming out and talking about the broadening and how it's great, right at the peak of the broadening? So ultimately, David is now, how is, what differentiates a trade versus a longer duration sustainable advance in that relative performance of small and the equal weighted S&P? And ultimately, like everything else, it comes down to earnings. I think what most people don't realize is that if you exclude the MAG7 from 2023 earnings, they were actually down 1.2%, according to TJ Dillon at LSEG IBS. So when you actually look at why the mega cap stocks have gotten such a big percentage of the gain over the last 15 months, it's because that's where all the earnings growth has been. Even in the current quarter, if you exclude, meaning Q1, if you exclude the MAG7, you're still in a negative earnings growth environment. So what creates that sustainable advance versus a trade, I call it an owner versus a rental of stocks, what creates that relative performance sustainability is gonna be evening out of earnings growth. And that comes to us starting really in Q4. So that's what I think that earlier this year, maybe the market was sniffing out that that's gonna happen. I think it's generational. I don't think it's gonna be one of those quick trades when you get that earnings performance coming in. Anytime you've had the top 10 stocks is such a big percentage of the market cap, the S&P 500, you've gone into a year as a relative decline of the MAG7. >> Tony, just because you just threw out the recession word and expect one, where do you say, first of all, it's not in the market. So I think you have to defend it a little bit. It's not in the economic data as well. Certainly not consensus. So where do you see signs of recession? >> Well, it's been wrong. Again, sir, that's why I brought in the idea of why hasn't it happened when it's happened every other time. The capital markets shut down the bank, lending shutdown, money supply went negative for the first time in history. There had to be a source of capital for companies to have access to money when you couldn't get it anywhere else. And for the first time in history, we have private credit, bigger than the high yield market, bigger than the levered loan market at 1.7 to 1.8 trillion. So why do I think we're gonna get it now? Number one, we've been in a recession in the manufacturing sector. What most people don't know, sir, is that there's something called the initiation survey rate. We had 176,000 job reduction in the estimate in the last two months at the latest payroll data. Prior to the pandemic, if I reached out to CNBC and said, how many people are you hiring? How many people are you firing? Historically, 70% of companies would respond quickly enough to put it in the initial number. It's called the initiation survey rate. Post pandemic, that's dropped to 40. In January of this year, according to the BLS, it was 27%. So we have widely incomplete data. The vast majority of the time in the last year, it's been negatively revised. I mean, how many people like me came on TV a month ago and said the Fed may not even cut rates because employment was up 335,000 jobs, only to be revised significantly lower. So I think it's gonna come from a weaker employment picture. The longer that the Fed stays higher, the higher for longer, the steeper the debt cliff comes when it's time to roll it over. All right, Tony, we gotta leave it there. Have a great weekend. Thanks for joining us this morning. - You too, thanks guys. - When we come back, here what? Palantir CEO Alex Carp told me about short sellers this week. He's not pulling punches. More squawk on the street when we come right back. (upbeat music) - Now is the time to bring new ideas to your industry. And T-Mobile for Business has the advanced 5G solutions to make that happen. We're helping rethink patient doctor interactions with real-time data sharing. We're tracking carbon with 5G sensors to help fight climate change. We're partnering with cities to connect roadways, cars, and drivers to minimize injuries. Disruptive thinking deserves a disruptive partner. So let's get started on what's next for your business. Step up your innovation at tmodl.com/now. (upbeat music) - There's your team out here. (indistinct chattering) Real-time is standing back there. Here's a big boardmaster for a guardian entertainment celebrating NCAA men's basketball tournament. Biggie's tournament begins at the NASDAQ for no record, North America celebrating what else St. Patrick's Day, which is this Sunday. - It is. - Very celebratory. We saw big inflows actually this week. - Yeah. - Like to equity funds and crypto funds. - We did. - Almost everything actually. - America called it a little bubbly. - It was a buy-it-all, yeah. And it does contribute to this idea that we have had sentiment get a little bit elevated and that you can see that kind of across the board. And this somewhat explains this little break-in stride we've had in the momentum leaders, the momentum basket is underperforming this week. NVIDIA indicated lower and now it is lower at the open. And 10-year treasury yield crossed about 4.3. It's at 4.31 right now. So sell-off in bonds, how do they expect an inflation? Bracing for what the Fed might say next week and really an occasion for a reset a little bit in the market, which has had an incredible run. And it's been mostly based on soft landing, earnings growing higher, and the Fed looking for a chance to ease all at once. - It's been hard to fight the rally. The short tellers are like in hibernation, right, on this? And this week I got to speak with Alex Carp, the CEO of Palantir about short tellers. His stock is up 200% in the last 12 months. He feels very good about the fact that they are not doing well betting on his stock. Here's what he said. - I love burning the short tellers. Like almost nothing makes a human happier than taking the lines of cocaine and away from these short tellers who are going short on a truly great American company, not just ours, but it just love pulling down great American companies so that they can pay for their coke. And the best thing that could happen to them is we will provide, we will lead their coke dealers to their homes after they can't pay their bills. And that's like one of my-- - Surely all short tellers. - Yeah, well, we can go ahead and do your thing. We'll do our thing. - Tell us how you really feel. - I must have watched the Wolf of Wall Street a lot of times or something, I don't know, man. Coke sniffing short tellers, really? - I think he was part, maybe part serious, part joking, but the truth is that had a lot of pent up anger there for short tellers, we will lead them, we will lead them to their homes. - Yeah, I think, I mean, you know, listen, there are short tellers who do an enormous amount of work that is not done oftentimes by others that have very strong cases to be made sometimes, whether it's underlying fundamentals or unearthing things that we're unaware of. That said, there also are times when, of course, they do engage in perhaps behavior that is, seems to be somewhat unethical. But for some reason short tellers get a lot of grief when they are out there talking their book and when we don't actually apply the same thing to people saying, we love this stock, it's going higher, it's gonna be great in five years. I kind of don't understand why he's so focused on it. It's 5% of the shares are short of talent here right now. It's not as if this is a massively crowded short. History says that companies that scapegoat shorts and spend a lot of time thinking and talking about them underperform over the long term. You're better off ignoring it and showing it with the results. Combative this is great, you want your company to do well, you want them to lose money if you're sure. >> I think he's a founder, first of all. >> Yeah, of course. >> And I think there were a lot of doubters when Palantir went public. >> Absolutely. >> What do they do? It's so secretive, how is this going to work? >> And they have a commercial business as opposed to just DoD. >> And when he's sitting on, first of all, he's proven that they can. Their last quarter commercial accounts rose 55% and it's been a big road story for them. What they're doing on the battlefield and changing warfare through AI. And so he's sitting on this kind of game changing technology wondering what the heck are these people doing, shorting my stock early. >> Oh, true, but I kind of agree with Mike in the sense that they're in his head, which is weird. 'Cause the company's performing from nine to 35 in the first two months, it was public. And people say, what is this? There's not a lot there. And so it did have its crash, along with all the other class of 2020 tech startups and it went down to six. >> And now it's back up into 23. >> I guess he bears the scars. >> I think he probably just says what a lot of CEOs think, which is we don't want you betting against our company. >> Sure, it's fair. >> We're a great American company. >> Yeah, yeah. Distraction more than anything else. Just deliver, unless, you know, unless lies are being spread, in which case you need to combat it. You want to talk ulta at all? >> Yeah, let's talk ulta. >> You know, we talked to Dobi at the top of the hour. Of course, that stock is down sharply. Ulta shares herring losses, but still down some 7% Sara after reporting numbers. It was a pretty good beat, at least on the bottom and top line, driven by better comps and better margins. It's the guidance like Adobe that came in. Love it short of what Wall Street was expecting, and there were our high hopes for this stock. It was already outperforming about 16% year to date. So far, look, they are warning of slower growth ahead from the CEO, Dave Kimball, he said. In 2024, the category will remain healthy, but the growth will moderate to the mid-single digit range, barring any major economic event. So, investors are really used to strong growth from this company, and the analysts are stepping out and defending it this morning. Assembly and Seagull, for instance, BMO says that he thinks that guidance will prove conservative, and that they will continue to outperform. One thing to look at, everyone looks out on this one, is the ticket versus the average selling price. Tickets were down, the average ticket was down for the fourth quarter in a row. But, average selling prices did partially offset that. The price increases are still happening, they're still benefiting, they're contributing less than they have been in previous quarters. And the only other thing I would say is that if TikTok does get banned in the U.S., it's companies like this that will feel an impact as well. They went to great lengths to highlight that they reached a million followers on TikTok. Beauty is a major driver of trends, activity, and buying. The amount of economic activity that takes places as a result of TikTok is not insubstantial. I mean, just think about the influencers, and how marketing has changed, Sarah, as you well know. Advertising agencies now, they're actually finding the right influencer for the brand, that's kind of one of their key, their key value ads that they do now. >> And also, you know, generative AI, they're all experimenting with AI. One of the things they're doing is they're able to scrape, you know, TikTok, and all of these social media platforms that very quickly come up with the trend. What's trending? Lit oil, for instance, really big right now. I learned that from TikTok. >> You did, yeah. Well, listen, it's eight-- >> Well, didn't we all? I mean, I was gonna say that the other interesting thing about Ulta is it seems like for every specialty retail category, there's like the one anointed great growth story that keeps delivering Ulta in beauty, obviously. William Sonoma for home furnishings and Dick Sporty goods, obviously in the athletic area. And all the massively outperformed, the retail index, over the last couple of years in a very similar way. So this is a little bit of a give back. Ulta's not a super expensive stock. So kind of an interesting moment. You wonder if the little bit of the TikTok stuff and the higher potential marketing costs isn't investors' heads for the moment. >> We got the mega cap got names all down at the very beginning here of Mike. Tesla shares showing a little signs of life after what's been a rough, another rough week. >> Yes, and that's been the question as to not only well the kind of downgrades and bad news and lower earnings estimates start to abate, but will the stock kind of rise on some bad news at some point? So it is perking up. It is super oversold. It is a massive laggard. And I do think one of the effects that you have seen recently is when Nvidia's down the laggard members of the mega cap basket have gotten a bid. So obviously a long road up from here. So it's almost as if the less fundamental and research news on Tesla, the better. Just let the things settle out. >> Wells Fargo with the note yesterday saying it's a growth story without power. >> Yeah, that was the other day. >> You know, there's a lot of negative research this week on Tesla. >> Yeah, it's been a drum beat. I mean, I think it's been hard to avoid having to cut your estimates to give them what's going on with pricing and volumes recently. But you know, it's an interesting sort of test case. People say what would happen if Nvidia really cracked and it gave up a huge amount of things. Well, I mean, Tesla is down $700 billion from its peak market cap. I mean, it's over a year or whatever, but it didn't exactly upend the entire market. So I mean, there are ways to kind of bleed away some of the premium without necessarily, it's spreading to other parts of the market. >> Yeah, as we pointed out a number of times, it's just a bit above a half a trillion dollar market value. Nothing significant, but below that of JP Morgan, for example, now and certainly, and I believe Broadcom as well, I believe has also exceeded it. >> Yes. >> Yeah, 576 billion. So it just gives a sense. >> U.S. deal? >> Yeah, sure. Let's do a little something on U.S. deal, shall we? 'Cause it's been a rough week. >> Yeah, it was been a rough week for shares in U.S. deal. Of course, this was a company that I followed from some time from an eight perspective, as our viewers may remember, as there were any number of bidders for the company, culminating in what was a $55 all cash deal with Japan's The Pond Steel. And that was a number that was even far above the hopes of many shareholders, but it has not been a good week. And that was let off by a number of stories that indicated that the administration would essentially come out against the deal, if you want to call it that. And President Biden did more or less that with comments about saying that he wants U.S. deal to remain in domestic hands. What does that kind of mean for the future of the deal? Of course, it's been a key question for many, and that continues to be a question. You still have the contract with Nippon Steel. How you would block the deal? Well, perhaps on Siphius Brown's, even though many pointed out, it's not clear that it really represents a national security risk in any real way. And what really did play an important role here, of course, was the union. And the union later of the United Steel Workers, David McCall, who has some sways, you might expect, with this administration, particularly with Joe Biden, a man from Pennsylvania, who's already walked a picket line over his last number of months, when he did so with the UAW when they were on strike. And he got a good audience, right? So what now contains to be sort of the question? There's a shareholder vote in April. You were still shareholders' expected to approve the deal. It's a $560 million break fee. Do you try to get Siphius? Do you see what happens? Do you wait and see whether there's a change in administration? Come later this year or into next year? Those are any number of questions. And then there's the role that Cleveland Clips has played here. And it's outspoken CEO Lorenzo Gonzalez. I had a chance to speak to him. As many people seemed to be lately, this morning, he did go on the record with me. And listen, he points strictly to the deal that he signed with the unions and the fact that the importance of the unions was undersold, he, as he often does, was happy to name names saying that the two bankers, who sort of led the process for U.S. deal, were really at fault here as well. Talking about Raybose and Hoffrecht, of course. Dan Raybose at Barclays and Brian Hoffrecht, Goldman Sachs, saying they just didn't get it. They believe the workers need to eat. And so you're going to figure out a deal with Nippon. Well, that has not been the case. Now, for its part, Nippon says that it is open to and wants to negotiate what would be a very attractive deal for the unions. Lorenzo said to me, no, they're never going to get that done. Hell, we'll freeze over before, in fact, anything like that happens given all the different assets that will come from the unions. And so the question then, all right, does Cleveland clips come back in some fashion in bid? Do they simply wait for the deal to fall apart under its own weight and then try to come back at a far lower price than the 54 cash in stock that they previously offered? We'll see. He did tell me, and I thought this was interesting, guys, that they had tried in previous weeks through city, which is Nippon Steel's advisor, to get Nippon Steel to talk to Cleveland clips, because Nippon Steel began this with Wanting Big River. That is the plant in Arkansas that's the key. They were willing to pay as much as $9.3 billion just for that. And so, Gonzave's was like, listen, we'll buy a lot of the other assets. Let's have a conversation about that. Once you close the deal, no such conversation took place. And hence, Dave McCall got involved, President Biden got involved. And here we are, wondering what really is going to happen here. By the way, the Japanese Prime Minister do in the US in early April, could be a somewhat difficult conversation between Biden and the Japanese Prime Minister. - There's just a slight bit of irony in the sense that there's a subjection to a Japanese owner. Maybe the union wouldn't be happy with it when you consider that Japanese companies just agreed to the biggest wage increases for Japanese workers, above 5%, biggest one in 33 years. So it's sort of this moment when there's an acknowledgement that workers kind of can demand and deserve a higher share. It's not automatic that it's going to be hostile to giving the workers their share. - Yeah, the underlying assumption that perhaps was wrong was that the union didn't really have much of a say here. Clearly, that is different because they had a very important call to make, and they made it. - Also, unlikely, that Cleveland Cliffs would team up with the steelworkers union to lobby against the steel, which is what happened. - Absolutely. - In this case. - They obviously hadn't had been a union shop and have a good relationship does he with his unions as well. So, you know, you could end up though, where US Steel just remains a public company and is that good for the unions or not? Unclear. - Can I do a Sarah report now? - Please. - That's what you want to call it. - Is that what you want to call it? - Eyes and report. - No, I just thought it was interesting this story about the Chamber of Commerce today, now suing the SEC over these new climate disclosure rules. So, this has been a long saga. These, it went from proposal to rule. It got watered down a little bit in the process, but it did just get finalized recently, and that is that big companies, according to the SEC rules now, are gonna have to disclose emissions and other climate-related metrics. While the Chamber of Commerce, which is the biggest business lobby, is suing, they've joined with 10 other Republican attorney generals across states against this rule. It has proved a very contentious rule, and you know who's someone who's not a fan of this rule is Ken Griffin, who I got to speak with this week, in Florida at the FIA Summit. We specifically discussed, first of all, we talked about Gary Gensler, who he made a joke with his bestie on Snapchat. And then I asked about this climate rule, and what he had to say about it, listen. - How well do you think the average company in the United States can actually measure that? - Not too well. - Okay, so are we doing this for the plaintiff's lawyers? Or are we doing this for investors? I'm just kinda curious. - Investor, the environment. - But shouldn't they be able to measure it? Wouldn't that be responsible? - How about this? If you're gonna go on a strategy to reduce carbon, how about thinking about addressing that at the source, which would be, for example, a carbon tax? There you'll actually get changes in behavior. Here, what you're gonna get is a multi-billion dollar bill that corporate America's gonna have to pay. You're gonna see fewer companies go public, which means less investment opportunities for American households and American retirees. With fewer companies going public, you're gonna see less venture capital formation. Well, with that, you're gonna see less R&D in America. VC back firms that are public account for about two thirds of all America's research and development budget. - So you see this as political? - This is 150% political. - Ken Griffin really connecting the dots there in terms of what it could mean for Americans, what it could mean for companies going, the unintended consequences, which he has been railing against on this SEC and its bevy of proposals. By the way, he also went after, for the first time really, the Biden administration's new rule to ban exports of natural gas, cause exports of natural gas, on the similar theme. Okay, they're trying to do something good for the environment, but in fact, in reality, what they're telling according to Griffin, allies is, okay, I just continue with coal, 'cause natural gas is a lot cleaner. - So listening, what you will hear oftentimes is, price on carbon is really the most effective way to actually mitigate. And until we get that, we're going to be dealing with a lot of different things that don't necessarily get to the source of the problem. - I mean, hasn't Powell resisted this idea that the Fed should somehow also be a little bit of a carbon cop, you know, when it comes to banks and what they're doing and lending? So I think there is a little bit of a soft backlash. - It's not in his mandate. - What's that? - Good luck putting climate into any of that stuff. Every time he's asked, he's like, "No, thank you." I know. All right, I'm going to do the bond report unless you want to do it, Sarah. - I'll, I'll, let's tag team. - Okay, good. Well, let's check that out. - High yields. - Howard Treasury's doing this morning. You asked, "Well, we'll show you." There they are, Sarah said it. - We got one two hotter inflation reports this week into a Fed meeting. Next week, will they change the dots? That's the big question. They predicted three this year last time could they take it down to two. All right, we'll be right back. - Amazon has been expanding into a new corner of e-commerce, social media shopping. The company may stand to benefit if TikTok does indeed get banned. Our Kate Rooney joins us to explain. What are they doing here, Kate? - Hey, Sarah, yeah. So Amazon might not be the first name that comes to mind around social media shopping, but after a partnership blitz last year, Amazon is now embedded in the biggest social apps. A lot of this happened within six months last year. Amazon teamed up with Pinterest in April of 2023, then Facebook, Instagram, and Snapchat all in November. The agreements put Amazon products into social feeds and then lets users link Amazon accounts to then make purchases. This is for both core Amazon products and some of the third party sellers out there. And then amid those deals last year, the e-commerce giant was also taking a page from Instagram and TikTok for its own mobile app. It launched Inspire in 2023. So this lives within the Amazon app. It looks a lot like Reels. And these are actually Amazon products. So they're being promoted by influencers. They've been partnering with content creators since 2017. And part of this guy is defensive. So scrolling and shopping, as you guys were talking about with Ulta and TikTok, it's a bigger slice of e-commerce that Amazon does not want to miss out on. Insider intelligence estimates social e-commerce will grow into $100 billion market next year, up from 67 billion last year. Younger generations are driving it a quarter of social shoppers are between 25 and 34 that's according to e-marketer. Instagram tends to bring the most purchasing power. TikTok though, not far behind. It's pretty much tied with YouTube. I talked to Mark Mahaney over at Evercore about the potential impact on Amazon. If TikTok does get banned, he told me, quote, to the extent TikTok is taken off the table, it could be an incremental positive and means more opportunity for Amazon because of some of these shopping partnerships. Mahaney points out that the social strategy is driving both sales and advertising for Amazon, guys, back over to you. - Well, that's what I was wondering about is the sales piece, Kate, because I feel like we've been hearing about social shopping for at least a decade. And while influencers have made a lot of money, obviously, and you spot the trends, I feel like the shopping has been less successful. Nobody has fully nailed it. What does the trends look like on the sales? - So it's interesting, Sarah. It's still sort of that impulse purchase, right? That you're seeing, you're getting inspired to buy something that you might not need. It's not the core toilet paper and things that you're trying to get immediately delivered from Amazon. So it's still incremental. It's still kind of the impulse side of things and that discretionary spending. And Amazon, this is defensive. They don't want to miss out on that incremental sales, but right now it is sort of in that category versus being your core shopping where you're looking for diapers or toilet paper. So it hasn't quite gotten there, but in terms of the growth potential, it's really the younger consumer behavior that they're going after you. - Kate, thank you. Kate Rooney. Well, coming up right here, an EV Winter. Is it one for Tesla, Lucid, Rivian, other automakers? We're gonna discuss that with a Ford CEO or former CEO, Mark Fields. 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