CC-Transcript

• 00:00″THIS IS THE CLOSE.” ALIX: EQUITIES GOING NOWHERE FAST. LIFE FROM STUDIO TO HEADQUARTERS, I’M ALIX STEEL. SCARLET: I’M SCARLET FU. WE WILL FIND SOMETHING INTERESTING IN THE MARKET ACTION. ALIX: MAYBE IT IS META. THE MARKET GOING NOWHERE. NOWHERE FAST. FLAT FOR THE S & P. WE HAVE RECOUPED LOSSES, SINCE DEEPSEEK MONDAY. WE RECOUPED IT TODAY. I DO WANT TO HIGHLIGHT META. . UP FOR 17 STRAIGHT DAYS. A RECORD WINNING STREAK. ALSO ANOTHER RECORD HIGH. 10 YEAR YIELD NOT DOING MUCH. YIELD ON THE BACKEND MOVING A TOUCH HIGHER OFF OF POWELL. ALIX: MR. POWELL GAVE LAWMAKERS THE SAME MESSAGE HE TOLD INVESTORS LAST WEEK. IT IS AND WAIT AND SEE MODE. DAY TWO OF HIS TESTIMONY WEDNESDAY WILL BE COLORED BY THE CONSUMER INFLATION REPORT DUE OUT TOMORROW MORNING BEFORE THE OPENING BELL. LOOK FOR HIM TO SOUND THE SAME NOTES AS HE TOLD THE SENATE BANKING COMMITTEE TODAY. > > WITH OUR POLICY STANCE SIGNIFICANTLY LESS RESTRICTIVE THAN IT HAD BEEN, AND THE ECONOMY REMAINING STRONG, WE DO NOT NEED TO BE IN A HURRY TO ADJUST OUR POLICY STANCE. WE KNOW THAT REDUCING POLICY RESTRAINT TOO FAST OR TOO MUCH COULD HINDER PROGRESS ON INFLATION. SCARLET: MARKET REACTION MUTED. STOCKS ARE MIXED AND TREASURY YIELDS ARE HIGHER ACROSS THE CURVE, MUCH TO THE CHAGRIN OF THE TREASURY SECRETARY. THE 10 YEAR HOLDING ABOVE FOUR POINT 5% AS THE TREASURY DEPARTMENT CUT THE SIZE OF SOME BENCHMARK BILL OPTIONS. IT IS A SIGN OF THE TIMES HAS A GOVERNMENT TAKES STEPS TO AVOID BREACHING THE DEBT CEILING, WHICH WILL BE A FIGHT FOR ANOTHER DAY. SAM ALTMAN ACCUSES ELON MUSK OF TRYING TO SLOW HIS COMPANY DOWN AND GAIN A COMPETITIVE ADVANTAGE. SAM ALTMAN REJECTING ELON MUSK’S HOSTILE TAKEOVER OFFER FOR CONTROL OF THE AI STARTUP THEY BOTH COFOUNDED BEFORE MUSK LATER ON, WE WILL DIG INTO THE VALUATIONS OF BIG TECH COMPANIES AND STOCKS WITH ASWATH DAM ODARAN. IT COMES BACK TO INFLATION. WE DID NOT GET ANYTHING NEW. I’M SURE JAY POWELL IS HAPPY WE ARE SAYING THAT. THE HOUSE FINANCIAL SERVICES COMMITTEE AND THE CPI. HE TALKED ABOUT HOW INFLATION EXPECTATIONS ARE WELL ANCHORED. I WANTED TO BRING BACK THIS CHART, THE TWO-YEAR INFLATION BREAK. THE ORANGE LINE AND THE FIVE-YEAR INFLATION BREAKEVEN. THAT IS WHAT INVESTORS EXPECT INFLATION TO BE IN TWO AND FIVE YEARS TIME. SHORT-TERM AS THE TWO-YEAR INFLATION BREAKEVEN THAT HAS REALLY SOARED EVER SINCE PRESIDENT TRUMP TOOK OFFICE AND TALKED A LOT ABOUT TARIFFS. NOW EVEN THE FIVE-YEAR CATCHING UP A LITTLE BIT. AND WE SAW THAT IN THE SENTIMENT SURVEY, THE ONE INFLATION EXPECTATION RISING 100 BASIS POINTS, TO 4.3%. IF TARIFFS CONTINUE AND THE EXPECTATION IS THINGS WILL GET MORE EXPENSIVE AND PEOPLE BUY STUFF NOW AND THAT IGNITES THE INFLATION CYCLE, IS IT GOING TO BE THE HEADWIND FOR THE FED? SCARLET: SOMETHING WE KNOW JAY POWELL DOES NOT WANT TO ANSWER UNTIL WE SEE EVIDENCE OF THAT. LET’S KICK IT OFF WITH REBECCA PATTERSON. SENIOR FELLOW AT THE COUNCIL ON FOREIGN RELATIONS AND CHIEF INVESTMENT STRATEGIST OVER AT BRIDGEWATER. GREAT TO SEE YOU IN STUDIO. THIS IS A FED THAT IS CLEARLY ON THE SIDELINES IN SPECTATOR MODE. EVEN THOUGH PRESIDENT TRUMP MADE IT CLEAR HE WANTS LOWER INTEREST RATES. WE HEARD FROM THE TREASURY SECRETARY THAT THEY WANT LOWER TREASURY YIELDS. IS IT SOMETHING WE HAVE EVER HEARD FROM A TREASURY SECRETARY? > > I CAN’T REMEMBER IN MY CAREER A TREASURY SECRETARY TRYING TO TALK DOWN TO 10 YEAR YIELD. I UNDERSTAND WHY THEY ARE DOING IT. A LARGE DEBT, RISING DEBT, AND WE ARE ABOUT TO PASS A FISCAL BILL THAT WILL PROBABLY INCREASE IT FURTHER. THEY ARE TRYING TO WORK AGAINST THAT. WHAT CAN THEY DO? IT IS A $27 TRILLION TREASURY MARKET. NOT EASY TO MANIPULATE. THERE ARE THINGS THEY COULD DO. YOU COULD ISSUE MORE AT THE SHORT END. THAT IS WHAT JANET YELLEN DID. BUT SHE WAS CRITICIZED FOR THAT. SCARLET: BUT THIS — THE SAME THING SHE’S DONE. > > HE DOES NOT WANT TO DO WHAT SHE DID AFTER CRITICIZING IT. THAT IS ONE STEP. I DON’T THINK IT IS LIKELY. THEY CAN TRY NOT TO HAVE A HUGE INCREASE IN THE DEFICIT. WE WILL SEE WHAT HAPPENS, HOW MUCH SPENDING THEY CAN CUT. I’M NOT HOLDING MY BREATH. ONE THING THAT IS NOT GETTING TALKED ABOUT THAT WAS WORTH KEEPING AN EYE ON IS STABLECOIN. IN TRUMP’S EXECUTIVE ORDER ON JANUARY 23, HE’S PUSHING FORWARD TO HAVE A CRYPTO AMERICA. I WROTE ABOUT THIS TODAY, IT IS ONLINE. ONE THING THEY ARE TRYING TO DO IS PUSH STABLECOINS PER THEY ARE BACKED BY TREASURY AND CASH LIKE SECURITIES. TETHER ALONE HAS SOMETHING LIKE $113 BILLION OF INDIRECT AND DIRECT TREASURY HOLDINGS. IF THAT MARKET GROWS LIKE A DIGITAL DOLLAR, THEY WILL HAVE MORE DEMAND FOR TREASURIES. THAT BY ITSELF WILL NOT BE NEARLY ENOUGH, BUT IT IS ANOTHER PIECE OF THE PUZZLE I WOULD KEEP AN EYE ON. ALIX: I DID NOT HEAR THAT BEFORE, THAT IS INTERESTING. FOR THE SHORT TERM, ARE INFLATION EXPECTATIONS ANCHORED? THAT WILL CLEARLY BE THE WHIPSAW ON THE BACKEND? > > THEY ARE STILL ANCHORED, BUT YOU WILL SEE INCREMENT ON NUDGES HIGHER. IF WE LOOK AT THE LATEST UNIVERSITY OF MICHIGAN, THE NEW YORK FED LATEST CONSUMER SENTIMENT SURVEY, EVEN THE SMALL BUSINESS SENTIMENT SURVEY THAT CAME OUT, ALL ARE SUGGESTING A BIAS TOWARDS HIGHER EXPECTATIONS AND HIGHER INFLATION UNCERTAINTY. LORI LOGAN JUST GAVE A SPEECH ABOUT A WEEK AGO. SHE’S HAD HIGHER INFLATION EXPECTATIONS AND UNCERTAINTY CAN BE SELF-FULFILLING IN THE FED IS FOCUSED ON THIS. WE WANT TO WATCH THOSE SURVEYS. SCARLET: THE FEAR OF TARIFFS IS SENDING YIELDS HIGHER THAT IS FUELING THE INFLATION CONCERNS. THERE IS SOMETHING TO BE SAID ABOUT THE TARIFFS THREATS AND HOW THEY PLAY INTO THE OPTIONS TO KEEP TREASURY YIELDS CAPPED. > > IF THE NEW ADMINISTRATION MAKES GREAT PROGRESS ON DEREGULATION AND THEY CAN HELP THE SUPPLY SIDE OF THE ECONOMY, MORE GROWTH WITH LESS FRICTION, THAT AT THE MARGIN CAN BE DEFLATIONARY. GOOD FOR THE ECONOMY, BRINGING DOWN INFLATION WOULD BE A DREAM. THE THING TO WORRY ABOUT IS THE RHETORIC WE ARE GETTING. YOU HAVE TARIFFS, WE ARE GOING TO PAUSE IT, YES, WHERE, WHO, WHEN? SO MUCH CHAOS AROUND IT. A TRUMP SUPPORTER SAYING IT IS CHAOTIC. THE UNCERTAINTY MAKES BUSINESSES MORE CAUTION, CONSUMERS MORE CAUTION. IF YOU HAVE RISING EXPECTATIONS AND CAUTION OVER SPENDING, THAT IS THE NIGHTMARE FOR THE TREASURY AND THE FED. I DON’T KNOW IF WE ARE GOING TO GO THERE. BUT IT IS THE BIGGEST RISK FOR THE MARKET. > > BUT EVEN AND CAME OFF OF THE BOYLE A LITTLE BIT, BUT IT WAS SUPER SOLID. > > WHAT WE ARE SEEING SO FAR IS INCREMENTAL. THE BANK OF AMERICA DOES A GREAT MONTHLY SURVEY, THEY SAY THE CONSUMER IS STILL SPENDING. INCREMENTALLY MORE MODERATE, BUT STILL SPENDING. RIGHT NOW WE ARE FINE. BUT YOU ARE SEEING A FEW CRACKS. DO THEY STAY LITTLE CRACKS, PEOPLE NERVOUS BECAUSE WE ARE NOT USED TO A GOVERNMENT GOING FAST AND BREAKING THINGS? THAT IS USUALLY TECH, NOT THE GOVERNMENT. DO PEOPLE GET USED TO THAT AND WE SETTLED DOWN OR KEEP SPENDING, OR DOES THE CAUTION BUILD? I THINK THE NEXT SEVERAL MONTHS WILL TELL US A LOT. SCARLET: CAUTION IS THE WORD WHEN IT COMES TO THE BOND MARKET. IS IT THE SAME IN THE EQUITY MARKET? WE ARE NEAR RECORD HIGHS. > > AS LONG AS THE CONSUMER’S SPENDING, EVEN IF THE RATE IS NOT CUT AS MUCH, 30 BASIS POINTS PRICED IN THIS YEAR. IT HAS COME BACK A LOT. BUT YOU HAVE ENOUGH SPENDING SUPPORTING EARNINGS AND CONFIDENCE. IT IS KEEPING THE STOCK MARKET SUPPORTED. BUT THAT CAN TURN QUICKLY. IF WE LOSE THE WEALTH EFFECT AND CONFIDENCE FOR THE CONSUMER, IT WILL BE HARDER FOR STOCKS TO KEEP GOING. THE OTHER THING WITH THE TARIFFS, SO FAR IT IS VERY TARGETED AND NARROW. FOCUSING ON THE TECH SECTOR, GIVEN THE VALUATIONS AND OWNERSHIP OF THE LARGE-CAP CAP TECH STOCKS, IF PEOPLE DECIDE TO RETALIATE BY GOING AFTER TECH STOCKS, NOT NECESSARILY WITH TARIFFS, IT CAN BE NON-TARIFF TO SLOW SPENDING, MAKE IT HARD TO BUY WHATEVER TECH PRODUCT OR SERVICE OVERSEAS. THAT COULD BE ANOTHER THING THAT COULD CAUSE A BIT OF AN UNWIND OF THOSE TRADES. IT WOULD CAUSE THE U.S. TO UNDERPERFORM. RIGHT NOW, THE CONSUMER IS GOOD AND THAT IS ALL THAT MATTERS. ALIX: U.S. EXCEPTIONALISM IS STILL THE THING? > > INTERESTING. THE U.S. IS UNDERPERFORMING MOST OF THE REST OF THE WORLD. BUT I THINK THAT IS A TRADE. I DON’T THINK IT WILL BE EXTENDED. PEOPLE ARE RELIEVED WE HAVE NOT HAD BIGGER TARIFFS YET. THEY ARE LOOKING FOR CHEAPER VALUATIONS, SOMEWHERE TO DIVERSIFY. FOR THAT TO CONTINUE, WE WOULD NEED TO SEE A BENIGN TARIFFS ENVIRONMENT PERSIST. I DON’T THINK IT IS LIKELY. WE NEED TO SEE MORE CHINA STIMULUS THAT HELPS THE REST OF THE WORLD. WE MIGHT, BUT I FEAR IT MIGHT CONTINUE TO BE INCREMENTAL. I WOULD NOT BE LEANING INTO THE REST OF THE WORLD TRADE. I THINK WE WILL BE IN A U.S. LEADS THE WAY FOR THE YEAR OVERALL. BUT HOW MUCH THE U.S. CAN GO UP WILL DEPEND ON THE UNCERTAINTY AND WHERE WE STARTED ON THE INFLATION. SCARLET: AMERICAN EXCEPTIONALISM WITH A BIG ASTERIX NEXT TO IT. REBECCA PATTERSON, ALWAYS A PLEASURE. SENIOR FELLOW AT THE COUNCIL ON FOREIGN RELATIONS AND FORMER CHIEF INVESTMENT STEP — STRATEGIST AT BRIDGEWATER. MORE COMING UP ON THE CLOSE. AS DONALD TRUMP’S POLICY PRIORITIES COME TO FRUITION, WE DISCUSSED HOW THE ADMINISTRATION TACKLES ENERGY WITH THE NEWLY CONFIRMED ENERGY SECRETARY. ALIX: WE WILL BREAK DOWN THE LATEST MOVES FROM THE TRUMP ADMINISTRATION INCLUDING TARIFFS AND THE TAX BILL WITH HENRIETTA TREYZ. SCARLET: AND WE ARE WAITING FOR RESULTS FROM BIG NAMES AFTER THE BELL INCLUDING ZILLOW, LIFT, AND DOORDASH. WE WILL BREAK THEM FOR YOU COMING UP. THIS IS THE CLOSE ON BLOOMBERG. ALIX: LET’S TRANSITION NOW TO WASHINGTON. THE U.S. DEPARTMENT OF ENERGY HAS OUTLINED THEIR ENERGY ROADMAP FOCUSED ON UNLEASHING AMERICAN ENERGY INNOVATION AND STRENGTHENING A POWER GRID RELIABILITY AND SECURITY. I’M PLEASED TO SAY U.S. ENERGY SECRETARY CHRIS WRIGHT, WAS CONFIRMED LAST WEEK, JOINS US FOR UNEXPOSED OF INTERVIEW. SUCH A PLEASURE TO HAVE YOU, MR. SECRETARY. THANK YOU FOR JOINING US. > > THANK YOU FOR HAVING ME. GREAT TO BE HERE. > > LAST TIME WE TALK, YOU WERE CEO OF AN OIL COMPANY, NOW YOU RUN ENERGY POLICY FOR THE U.S. A BIG CHANGE. WHAT DO YOU SAY WHEN I ASK WHAT OIL PRICE YOU GUYS WANT NOW? > > I DON’T WANT ANY OIL PRICE. LOWER IS BETTER. THE PRESIDENT GOT ELECTED TO BRING DOWN ENERGY PRICES AND BROADER PRICES ACROSS THE ECONOMY AND GROWING OPPORTUNITIES FOR AMERICAN. RIGHT NOW MY GOAL IS MORE ENERGY OF ALL KINDS, MORE AFFORDABLE, RELIABLE, SECURE ENERGY TO EXPAND AMERICAN OPPORTUNITIES. > > THE EASY PICKINGS ARE OIL. WHAT IS THE PRICE? I SAY THIS WITH YOUR DUAL HAT. WHEN YOU ARE AN OIL PRODUCER, YOU DON’T WANT $60 OIL, YOU ARE MORE MONEY FOR THE OIL. YOU WANT $60 OIL. > > ALL WE CAN DO, SUPPLY AND DEMAND WILL BE’S DECIDED BY CONSUMERS IN THE MARKETPLACE AND PRODUCERS. WHAT WE CAN DO AND WHAT WE ARE FOCUSED ON IS REDUCING THE COST TO PRODUCE A BARREL OF OIL. PRODUCERS CAN HAVE LOWER OIL PRICES AND THE SAME PROFITABILITY IF THE COSTS WERE REDUCED. THE LAST ADMINISTRATION SPENT FOUR YEARS TRYING TO PUT ALL SORTS OF BARRIERS, MAKE IT HARDER AND RISKIER TO PRODUCE OIL IN THE U.S., WE WILL DO THE OPPOSITE, TRY AND ENABLE PRODUCERS TO BRING ON SUPPLY AT LOWER COSTS AND GREATER CERTAINTY. > > I’M GOING TO FOLLOW-UP AND ASK HOW YOU CAN LOWER THE COST FOR COMPANIES TO INVEST IN DEVELOPMENT AND NOT JUST USE MONEY TO OFFSET REGULAR DECLINES? > > ONE OF THE BIGGEST CHALLENGES INVESTING IN OIL AND GAS INFRASTRUCTURE OVER THE LAST BUNCH OF YEARS HAS BEEN UNCERTAINTY. IF YOU DO — PRODUCE MORE MARKETS, CAN YOU GET IT TO MARKET? WE’VE HAD WITHOUT A RELIABLE SUPPLY OF NATURAL GAS. THAT IS BAD FOR PRODUCERS, BAD FOR CONSUMERS. THAT THERE IS A NUMBER OF BARRIERS LIKE THAT. LNG EXPORT PAUSE FOR EXAMPLE. EVERYBODY IN INDIA IS ALARMED THEY MIGHT NOT GET AN INCREASING SUPPLY OF NATURAL GAS. AND HOW OUR AMERICAN PRODUCERS OF NATURAL GAS GOING TO INVEST MORE IN GAS PRODUCTION INFRASTRUCTURE IF THEY ARE NOT SURE THEY CAN GET IT TO MARKET? WE CAN HELP THE CONSUMERS OF INDIA, THE POPULATIONS OF THE UNITED STATES AND PRODUCERS OF NATURAL GAS BY REMOVING THE UNCERTAINTIES AND GOING BACK TO REGULAR COMMON SENSE BUSINESS. SCARLET: REMOVING UNCERTAINTY IS ONE THING. I’M CURIOUS WHETHER THERE IS A CEILING ON U.S. CRUDE PRODUCTION. RIGHT NOW THE EIA PROJECTS A 2.3% INCREASE IN U.S. CRUDE PRODUCTION. HOW MUCH HIGHER DO YOU THINK THAT COULD GO? > > AGAIN, THAT WILL BE THE ABILITY TO BUILD INFRASTRUCTURE AND ACCESS MORE CONSUMERS. BUT I THINK IT COULD GROW MEANINGFULLY. PROBABLY NOT IN THE SHORT RUN. THOUGH THE NATURAL GAS PRODUCTION WILL GROW DRAMATICALLY IN THE NEXT TWO OR THREE YEARS. WHAT YOU LOOK AT FIVE OR 10 YEARS, AND AMERICAN GROW OUR OIL PRODUCTION SIGNIFICANTLY? ABSOLUTELY. ALIX: TO THAT POINT IN TERMS OF BUILDING OUT INFRASTRUCTURE, THAT HAS BEEN DIFFICULT IN TERMS OF PERMITTING, GETTING SOMETHING IN THE GROUND. THAT HAS BEEN VERY HARD. DO TARIFFS AND HIGHER PRICES FOR ALUMINUM AND STEEL AND THINGS LIKE THAT MAKE IT HARDER FOR YOU? > > TARIFFS, WHAT HAS BEEN THE BIG ISSUES FOR THIS PRESIDENT THAT HE RAN ON? THE ECONOMIC WELL-BEING OF AMERICANS AND THE NATIONAL SECURITY OF OUR COUNTRY AND CITIZENS. WE’VE HAD 20 PLUS YEARS OF SORT OF DE INDUSTRIALIZING THE U.S., AND HAVING THE HEAVY FLOW OVERSEAS. THIS PRESIDENT IS PASSIONATE ABOUT INCREASING NATIONAL SECURITY. THAT MEANS WE HAVE TO HAVE THE ABILITY TO BUILD A HEAVY STEEL INTENSIVE, ALUMINUM INTENSIVE, MATERIAL INTENSIVE SYSTEMS IN OUR COUNTRY AGAIN. THIS IS AN ATTEMPT I BELIEVE BY OUR PRESIDENT TO INCENTIVIZE THE RE-INDUSTRIALIZATION OF AMERICA. ALIX: TALKING ABOUT DIFFERENT FORMS OF ENERGY. IT IS NOT JUST OIL. ALL FORMS OF ENERGY. ENERGY SECURITY. WHAT ROLE DO YOU THINK COLDPLAY IN THAT. > > COAL HAS BEEN ESSENTIAL TO THE U.S. ENERGY SYSTEM FOR 100 YEARS. THE LARGEST SOURCE OF GLOBAL ELECTRICITY FOR NEARLY 100 YEARS. AND IT WILL BE FOR DECADES TO COME. WE NEED TO BE REALISTIC ABOUT THAT. WITH COAL, ARE WE GOING TO SEE A RENAISSANCE AND SURGING COAL PRODUCTION IN THE U.S.? NOT LIKELY. BUT WE ARE ON A PATH TO CONTINUALLY SHRINK THE ELECTRICITY WE GENERATE FROM COAL. THAT HAS MADE ELECTRICITY MORE EXPENSIVE AND OUR GRID LESS STABLE. THE BEST WE CAN HOPE FOR IN THE SHORT-TERM IS TO STOP THE CLOSURE OF COAL POWER PLANTS. NO ONE HAS WON BY THAT ACTION. SCARLET: I WAS LOOKING AT THE ENERGY ROADMAP THE DEPARTMENT PUBLISHED, THE WORD SECURITY COMES UP SO MANY TIMES. I’M WONDERING WHY, OR DOES ENERGY SECURITY INCLUDE SOLAR AND WIND? IF NOT, WHY NOT? > > THE GOAL — WE ARE NOT SPECIFIC TO ANY PARTICULAR ENERGY PRODUCTION TECHNOLOGY. THE GOAL IS JUST AFFORDABLE, RELIABLE, SECURE ENERGY FROM WHEREVER THAT COMES FROM. OBVIOUSLY THERE IS GOING TO BE ROLES IN THE LONG RUN FOR SOLAR ENERGY. PLACES WHERE IT MAKES TONS OF SENSE, WHERE THE NATURAL RESOURCES ARE THERE AND THE INFRASTRUCTURE IS BENEFITED BY ADDING MORE SOLAR TO THE GRID. I WILL SAY ONE THING FOR SURE, WE WILL NOT GO DOWN THE ROAD OF GERMANY. THEY SPENT HALF $1 TRILLION, MORE THAN DOUBLED THEIR PRICE OF ELECTRICITY. THEY SHRUNK THE TOTAL AMOUNT OF ELECTRICITY THE COUNTRY PRODUCES BY ABOUT 20% AND THEIR INDUSTRY IS FLEEING THE COUNTRY. THAT IS THE PATH THE U.S. WAS STARTING TO GO DOWN, BUT THE WRONG PATH. SCARLET: IF I HEAR CORRECTLY, THERE IS A ROLE FOR THINGS LIKE SOLAR AND WIND, BUT SOME OF THE PRESIDENTS EXECUTIVE ORDERS CAN BE SEEN AS CLEAR MOVES TO STIFLE THOSE INDUSTRIES? > > STIFLE MIGHT BE THE WRONG WORD. BUT WE SHOULD NOT SUBSIDIZE TECHNOLOGIES THAT ULTIMATELY JUST MAKE OUR ENERGY MORE EXPENSIVE AND LESS RELIABLE. I DON’T THINK YOU WILL SEE POLICIES THAT CONTINUE TO GO DOWN THAT ROAD. ALIX: ONE OTHER POLICY IS NUCLEAR. WE HAVE SEEN A REAL RESURGENCE AND RESTARTING SOME NEW YOUR FACILITIES. THE PREVIOUS ADMINISTRATION WAS LOOKING TOWARDS DOMESTIC URANIUM PRODUCTION. I WONDER IF YOU CONTINUE DOWN THAT ROAD BECAUSE WE NEED THAT, IF NUCLEAR IS A BIG PART OF THAT SOLUTION? > > ABSOLUTELY. ONE OF THE INDUSTRIES WE HAVE LOST IN THIS COUNTRY OR IN LARGE PART IS THE ABILITY TO PRODUCE NUCLEAR MATERIALS, GENERATE NUCLEAR POWER. ULTIMATELY WE NEED THAT INFRASTRUCTURE HERE, WE NEED THE MINING, THE URANIUM ENRICHMENT. WE NEED THAT TO BE BUILDING AND GROWING OUR PRODUCTION OF NUCLEAR ENERGY. ABSOLUTELY. OUR HOPE IS TO REALLY START THE AMERICAN NUCLEAR RENAISSANCE AS FAST AS WE CAN. > > LET’S TALK ABOUT THE LEGISLATIVE WAYS THAT THIS CAN BE MANAGED. DEMOCRATS CAME OUT WITH THE IRA. WHAT CAN THE REPUBLICANS COME OUT WITH THAT CAN PREVENT SOMETHING MORE DRAMATIC BEING DONE DOWN THE ROAD UNDER A DIFFERENT ADMINISTRATION? WHAT SPECIFICALLY CAN YOU GUYS GET DONE? > > I THINK THERE’S A LOT OF THINGS. SOME OF THESE WE HAVE HEARD TALKED ABOUT FOR YEARS BUT NO ACTION. JUST COMMON SENSE PERMITTING REFORM. AMERICA BECAME THIS PHENOMENAL INDUSTRIAL POWERHOUSE BY PEOPLE BUILDING THINGS IN AMERICA, TAKING MONEY, TAKING RISKS. WE BUILT A HIGHWAY SYSTEM, PIPELINE SYSTEM, ELECTRICITY GRID. WE HAVE COME TO A POINT IN AMERICA WHERE IT IS VERY EASY TO STOP SOMETHING FROM BEING BUILT AND VERY HARD TO BUILD SOMETHING. WE NEED TO REVERSE THAT. A LOT OF IT WILL BE THROUGH LEGISLATION. ALIX: THAT IS A PART OF IT. I WONDER IN TERMS OF FEDERAL LANDS, LIKE SELLING FEDERAL ACREAGE TO ALASKA SO IT CAN DO WHAT TEXAS DOES COME A MORE CONCRETE, SMALLER THINGS LIKE THIS. > > ALL IDEAS ARE ON THE TABLE AND ALL IDEAS ARE BEING DISCUSSED. AT A MINIMUM, WE WILL SEE COMMON SENSE PERMITTING ON FEDERAL LANDS. OF COURSE THIS PRESIDENT AND ADMINISTRATION LOVES THE WILDERNESS, WILDLIFE, AND EVER CLEANER AIR AND WATERS I HAVE ENJOYED THROUGH MY LIFETIME. THERE IS NO CHANGE IN ANY OF THAT. BUT WE HAVE SO MANY OBSTRUCTIONS THAT DON’T ALLOW ROADS TO BE BUILT ON FEDERAL LAND, ROADS CAN BE USED FOR LOGGING AND WILDFIRE CONTROL, THAT CAN ACCESS MINING AND MINERALS PRODUCTION. I THINK WE WILL SEE A RETURN OF COMMON SENSE TO USE THE FEDERAL LANDS WHAT THEY WERE INTENDED TO BE USED FOR. ALIX: LET’S SWITCH TO A DIFFERENT PART OF THE ADMINISTRATION, IN TERMS OF MONEY BEING DOLED OUT, THE DEPARTMENT OF LOANS. IT WAS VERY CONTENTIOUS WITH THE BIDEN ADMINISTRATION WITH THE MONEY GOING OUT THE DOOR IN RELATION TO THE IRA. ARE YOU WENT TO DIVERT THE MONEY TO PROJECTS YOU LIKE, ROLL THE FUNDING BACK? > > I’M INHERITING A PORTFOLIO. THE FIRST THING I’M DOING FROM THE DAY ONE I WALKED IN THE OFFICE IS TO UNDERSTAND OUR EXISTING LOAN PORTFOLIO. WHO WE HAVE LOANS OUTCOME OF THE TERMS UNDER WHICH THEY ARE, WHICH PROJECTS ARE MIDWAY, WHICH PROJECT — PROJECTS HAVE NOT LAUNCHED. I HAVE TO FOLLOW THE LAW AND MANAGE WHAT I INHERITED, AND THERE IS A LOT OF MONEY UNCOMMITTED OR EARLY ON, AND THOSE WILL DEEP — BE DEPLOYED TO ADVANCE THE PRESIDENT’S AGENDA OF AFFORDABLE, RELIABLE, SECURE ENERGY. WE JUST ALL RECENTLY THE IVAN PAUL NUCLEAR POWER PLANT. — I MEAN SOLAR POWER PLANT. CONCENTRATED SOLAR OUT IN THE CALIFORNIA/NEVADA DESERT, NEAR THE STATE LINE. CERTAINLY NORTH OF A $1 BILLION LOSS IN TAXPAYER FUNDS FOR SOMETHING NOT PRODUCING A SINGLE WATT OF POWER TODAY. DURING HIS BRIEF LIFETIME, PRODUCED UNRELIABLE, EXPENSIVE POWER. WE DON’T WANT THINGS LIKE THAT, WE WANT TO FOCUS ON AMERICAN CONSUMERS AND NOT SUBSIDIZING THIS OR THAT INDUSTRY. WE WANT THE MARKETPLACE AND CONSUMERS TO PULL WHAT ENERGY — ENERGY IS IN DEMAND. SCARLET: YOU ALSO HAVE YOUR OWN PRIORITIES. WOULD YOU CANCEL LOANS THAT HAVE ALREADY BEEN DOLED? > > WE WILL FOLLOW THE LAW. THAT IS WHAT I’M DOING NOW, RIGOROUSLY LOOKING AT THE STATUS OF THE LOANS, THE STATUS OF THOSE PROJECTS. THINGS WE INHERIT THAT ARE HALF PREGNANT, THAT ARE GOING ON, WE WILL CONTINUE TO HONOR THE LAW. SCARLET: I WANT TO ASK ABOUT THE STRATEGIC PETROLEUM RESERVE. PRESIDENT TRUMP VOWED TO REFILL THAT TO THE TOP. WHAT IS THE APPROPRIATE VOLUME FOR THE 700 MILLION BARREL RESERVE? > > I’M NOT GOING TO TALK SPECIFICS. BUT AS YOU HEARD IN THE NAME, THE STRATEGIC TRILLION RESERVE. THAT IS NOT THE ELECTORAL ADVANTAGE STRATEGIC PETROLEUM RESERVE WE USED TO DRIVE DOWN ENERGY PRICES AROUND ELECTION TIMES. THAT IS NOT WHAT IT IS FOR. THE STRATEGIC PETROLEUM RESERVE IS THINGS CAN GO WRONG. WE CAN HAVE A STRATEGIC CRISIS. WE DON’T WANT AMERICA’S CONSUMERS AND AMERICA’S MILITARY AT RISK OF AN ENERGY SHORTAGE. SO WE NEED A ROBUST STRATEGIC RESERVE THAT MAKES AMERICA READY FOR WHATEVER MAY COME. ALIX: DO YOU KNOW HOW MUCH YOU WILL ASK CONGRESS FOR AND HOW MUCH TO REFILL IT? > > THAT IS BEING EVALUATED AND DISCUSSED. I HAVE NO SCOOP OR NO NEWS TO LEAK ON THAT RIGHT NOW. BUT IT IS A GOOD QUESTION YOU’RE ASKING. ALIX: BREAK SOME NEWS WITH ME. NEXT TIME YOU WILL COME BACK AND TELL US. WHAT IS A CONVERSATION YOU’RE HAVING NOW WITH BIG OIL COMPANIES ON THAT? HAVE YOU BEEN ABLE TO START THIS CONVERSATION? > > KNOW. RIGHT NOW I’M LOOKING INTERNALLY AT WHAT IS IN OUR DEPARTMENT RIGHT NOW, WHAT IS IN OUR TECHNOLOGY PORTFOLIO. AND THE BARRIERS THE GOVERNMENT HAS IN PLACE THAT WE CAN DO SOMETHING ABOUT. I’VE NOT HAD ANY DIALOGUES WITH BIG OIL OR THE INDUSTRY PLAYERS SINCE I’VE ASSUMED MY ROLE. NOT THAT I WON’T GOING FORWARD. RIGHT NOW I’M TRYING TO UNDERSTAND THE BIGGEST PROBLEMS, HOW WE CAN GET THE SHORTEST TERM, BIGGEST WINS. SCARLET: SEEMS LIKE EVERYONE IN GOVERNMENT IS DOING THAT TO ASSESS THE SITUATION. I’M CURIOUS WHETHER THE MEMBERS OF DOGE, THE SQUAD EMBEDDED AT THE DEPARTMENT OF ENERGY, HAVE ACCESS TO ANY CLASSIFIED INFORMATION? > > THEY HAVE NOT. AND I MET THE TEAM THAT IS AT THE DEPARTMENT OF ENERGY AND LIKED THEM A LOT. THESE ARE PASSIONATE PEOPLE COMING IN, LOOKING RIGHT NOW AT THE FLOW OF FUNDS GOING OUT IN THE SYSTEMS WE USE TO CARRY OUT OUR BASIC BUSINESS FUNCTIONS. HOW CAN WE BE SMARTER AND MORE EFFICIENT DOING WHAT WE DO, AND VERY CAREFUL TO KNOW WHERE FUNDS ARE FLOWING AND WHERE THEY ARE NOT FLOWING. IT IS MUCH LESS INTRUSIVE THAN A TYPICAL CORPORATE AUDIT, BUT GIVING QUICK UP-TO-DATE INFORMATION TO HELP ME AND THE REST OF THE DEPARTMENT RUN MORE EFFICIENTLY AND BE BETTER STEWARDS OF THE TAXPAYER FUNDS. ALIX: THE DOE WAS QUICK TO SAY THERE IS NO NUCLEAR SECRETS BEING GIVEN AWAY OR ANYTHING ALONG THOSE LINES. BUT IS THERE A CIRCUMSTANCE YOU WOULD HAVE TO TURN THAT OVER? DOES IT HAVE TO BE AWARE OF THIS AT ANY POINT? > > I HEARD NOTHING ABOUT THAT AT ALL. WE DID SECURITY VETTING ON THE SMALL TEAM WE HAVE. THEY READ ONLY ACCESS TO LIMITED PARTS OF OUR SYSTEMS. NO ONE HAS ASKED OR EXPRESSED ANY INTEREST. WE WOULD DEFINITELY NOT SHARE THE SECRETS OF OUR NUCLEAR WEAPONS PROGRAM AND NONPROLIFERATION AND ALL OF THOSE EFFORTS. THAT IS NOT PART OF DOES. THIS IS NOT A RECKLESS EFFORT. IT IS A VERY FOCUSED AND THOUGHTFUL EFFORT TO LOOK FOR WAYS TO IMPROVE HOW WE RUN THE BUSINESS. > > TO STREAMLINE THINGS, MAKE THEM MORE EFFICIENT. I GUESS THE QUESTION IS HOW LEAN CAN THE D.O.E. GET? > > WE DON’T KNOW YET. BUT IF YOU TAKE AN ORGANIZATION THAT HAS NOT BEEN CAREFULLY LOOKED AT, ARE WE FINDING LOW HANGING FOOD — FRUIT TO REDUCE OUR EXPENDITURES AND DELIVER THE SAME OUTPUT? IT IS AN UNQUALIFIED YES, WE ARE. HOW BIG SAVINGS ARE GOING TO BE HIS EARLY. BUT THEY WILL BE MEANINGFUL. WE WILL FIND MEANINGFUL SAVINGS AND EFFICIENCIES WITHOUT ANY DEGRADATION OF OUR OUT. IN FACT, I THINK WE WILL SEE DRAMATICALLY DIFFERENT OUTPUT OR AGENDA ENERGY EDITION. AND I’M TAKING OVER FOR ADMINISTRATION, THE GOAL WAS ENERGY ATTRACTION. I THINK WE WILL SEE FAR MORE OUTPUT AND PRODUCTIVITY AT REDUCED COST. > > THAT IS WHAT OIL COMPANIES DO. YOU’RE FAMILIAR WITH THAT WAY OF OPERATING. BEFORE WE LET YOU GO, YOU MENTIONED THE STOPPING CLOSURE OF COAL PLANTS, TALKING ABOUT NUCLEAR, THE GROWTH OF LNG EXPORTS, WHAT DO YOU THINK IN THE U.S. HAS THE MOST POTENTIAL TO BE THE NEXT BIG THING, THE NEXT U.S. SHALE? > > I THINK IN THE SHORT TERM, THE NEXT EXCITING THING IS CONTINUED EVOLUTION OF SHALE. TODAY, OVER 70% OF THE ENERGY CONSUMED IN THE U.S. COMES FROM TWO THINGS, OIL AND NATURAL GAS. ONE OF THE THINGS I WANT TO DO IS GROW THE PIE OF SIGNIFICANT CONTRIBUTORS. PROBABLY THE TECHNOLOGY WE KNOW OF TODAY THAT CAN MOST MEANINGFULLY GROW IS NUCLEAR. THESE NEXT-GENERATION SMALL MODULAR REACTORS, BUT KEEP AN EYE ON FUSION. I WENT TO COLLEGE, M.I.T. TO WORK ON FUSION ENERGY. WE WILL SEE POSITIVE ENERGY LIBERATED FROM FUSION MACHINES IN MY TENURE AT THE D.O.E. AND COMMERCIAL FUSION MAY NOT BE THAT FAR BEHIND. THESE AREN’T 1, 2 YEARS FROM NOW, BUT TECHNOLOGY IS MOVING FAST. AS YOU LOOK OUT SEVERAL YEARS INTO THE FUTURE, NUCLEAR WILL BE ON THE RISE AND AT A LOT OF AFFORDABLE, RELIABLE, SECURE ENERGY TO AMERICA. IT HAS WAYS TO GO FROM WHERE WE ARE TODAY. BUT THERE IS A GREAT ROADMAP I’M EXCITED ABOUT. ALIX: THANK YOU SO MUCH. A GREAT WAY TO END. WE APPRECIATE THE TIME YOU GAVE US. LET’S CHECK IN ABOUT FUSION. THANK YOU SO MUCH. CHRIS WRIGHT, U.S. SECRETARY OF ENERGY. SCARLET: WE ARE ABOUT 30 MINUTES AGO, JUST OVER 30 MINUTES TO GO BEFORE THE U.S. MARKET CLOSE. IT IS PRETTY MUCH A MIXED DAY INEQUITIES. S & P 500 NOW IN THE GREEN COME UP I FOUR POINTS, 6070. 10 YEAR YIELD INCHING HIGHER BY THREE BASIS POINTS. BASIS POINTS BUT STILL VERY MUCH IN THE 4.5% RANGE IT HAS BEEN OUT. JAY POWELL DID MAKE CLEAR TODAY THE FED IS IN NO RUSH TO RESUME CUTTING INTEREST RATES. DOLLAR SOMEWHAT WEAKER BY A QUARTER OF A PERCENT AND GOLD RETREATING FROM ITS RECORD HIGH. WHILE GOVERNMENT OFFICIALS TRY AND NAVIGATE ECONOMIC UNCERTAINTY, TECH LEADERS ARE FACING THEIR OWN CHALLENGES. ELON MUSK SAYING HE MADE A 97.4 BILLION DOLLAR BID TO BUY GPT CREATOR OPENAI. THAT COMPANY’S CEO SAM ALTMAN PUSHED BACK AGAINST ELON MUSK AND THAT OFFER. TAKE A LISTEN. SAM: I THINK HE IS PROBABLY JUST TRYING TO SLOW US DOWN. HE OBVIOUSLY IS A COMPETITOR. HE IS WORKING HARD AND THEY ARE TRYING TO COMPETE WITH US FROM A TECHNOLOGICAL PERSPECTIVE, FROM GETTING THE PRODUCT INTO THE MARKET. I WISH HE WOULD JUST COMPETE BY BUILDING A BETTER PRODUCT. SCARLET: OUR NEXT GUEST IS STILL CAUTIOUS ABOUT WHAT AI REALLY BRINGS. JOINING US FOR MORE IS PROFESSOR OF FINANCE AT THE LEONARD STERN SCHOOL OF BUSINESS AT NYU. THANK YOU SO MUCH FOR JOINING US. WE HAVE TO START WITH AI, WITH ALTMAN, MUSK, AND THE CHINESE RACING EACH OTHER TO BUILD OUT A MODEL’S. YOU SEE THE TENS OF BILLIONS OF DOLLARS BEING SPENT AS OVERKILL. IT IS MORE FUNDAMENTAL THAN SIMPLY STOCK VALUATIONS OF SOME OF THE MAG-7 NAMES. CAN YOU START BY EXPLAINING WHY YOU ARE SO SKEPTICAL? > > TO BEGIN WITH, THE END MARKET IS NOT THE ARCHITECTURE. RIGHT NOW ALL THE MONEY IS BEING SPENT ON BUILDING THE ARCHITECTURE WITH CHIPS, THE COOLING COMPANIES, AND ECOSYSTEM COMPANIES MAKING MONEY AND BUILDING THE ARCHITECTURE. AND COMPANIES ARE PAYING TENS OF BILLIONS. TAKE A LOOK AT META AND MICROSOFT AND HOW MUCH THEY HAVE SPENT ON BUILDING ARCHITECTURE UP IT BUT NOBODY IS MAKING MONEY ON SELLING AI PRODUCTS AND SERVICES. PEOPLE ARE TRYING, THEY ARE FRAMING IT AS SOMETHING YOU CAN DO. BUT I HAD A FEELING WE ARE VASTLY OVERESTIMATING A MUCH MONEY CAN BE MADE. I THINK THE END MARKET WILL BE HUGE IN TERMS OF PRODUCTS AND SERVICES. I AM NOT JUST SURE YOU CAN MAKE MUCH MONEY ON THOSE FOR THE MOST PART. SCARLET: ARE YOU LOOKING AT THAT FROM A CONSUMER POINT OF VIEW OR IN TERMS OF HOW COMPANIES MIGHT USE THIS TECHNOLOGY? ASWATH: ON BOTH FRONTS. I AM SURE YOU LIKE I ARE SEEING AI BUTTONS ON PRETTY MUCH EVERYTHING YOU USE. ON MICROSOFT OFFICE, ON ZOOM. MY REACTION TO ALMOST EVERYTHING I HAVE SEEN IN AI SO FAR HAS BEEN, THAT’S CUTE, BUT I AM NOT PAYING MONEY FOR THIS. I HAVE A FEELING A LOT OF THE CONSUMER AI STUFF WILL BE STUFF YOU ARE GOING TO PUT ON YOUR PHONE OR YOUR COMPUTER, BUT IT IS REALLY SOMETHING YOU CAN LIVE WITHOUT. IT MIGHT BE INTERESTING FOR A WHILE BUT IT IS NOT GOING TO BE SOMETHING YOU WILL PAY ENOUGH MONEY FOR TO MAKE A DIFFERENCE. THERE IS A MARKET FOR PREMIUM AI PRODUCTS WHICH ARE BUSINESS-TO-BUSINESS MARKETS. THE QUESTION IS HOW BIG DOES THAT MARKET HAVE TO BE TO JUSTIFY THIS UPFRONT INVESTMENT. I AM NOT SURE THE NUMBERS MATCH UP. UNLESS THAT MARKET IS ABOUT $3 TRILLION TO $4 TRILLION WE ARE OVER INVESTING IN THE ARCHITECTURE OF PRODUCING PRODUCTS FOR THAT MARKET. SCARLET: I GUESS MAYBE THE LUDDITE QUESTION IS HOW OVERVALUED IS THE MARKET? ASWATH: THE MARKET ITSELF FOR THE MOST PART, THE COMPANIES THAT HAVE BEEN IN THE AI BUZZ, OBVIOUSLY NVIDIA AND CONSTELLATION ENERGY HAVE CLEARLY BENEFITED. AMONG THE MAG-7 IF YOU LOOK ACROSS THE COMPANIES, IT IS NOT LIKE ALL THE OTHER SIX COMPANIES HAVE GONE UP BECAUSE OF AI. MICROSOFT AND META FITTED. IF YOU LOOK AT THE TOTAL MARKET CAP, THE EFFECT AI HAS HAD IS MAYBE A 5% INCREASE IN VALUE. I THINK WE MIGHT BE OVERESTIMATING HOW MUCH AI HAS CONTRIBUTED TO THE MARKET. IT HAS BEEN AN EASY THING TO POINT TO. WHY IS THE MARKET UP? AI DID IT. THAT HAS BEEN A LAZY ANSWER. I AM NOW LOOKING FOR COMPANIES WHERE AI IS RESPONSIBLE FOR THE JUMP IN A COMPANY AND I AM NOT FINDING MANY COMPANIES WHERE I CAN MAKE THAT JUDGMENT. ALIX: IT IS THE EASY EXCUSE WE ARE GIVING THE MARKET. YOU ARE CALLING US OUT. WHEN YOU SAY THE OTHER 493 STOCKS, OR THE OTHER STOCKS NOT ASSOCIATED WITH AI, HOW IS THAT VALUATION LOOKING FOR YOU? ASWATH: THERE IS NO WAY AROUND IT, WE ARE PAYING PRICES I COULD DESCRIBE AS RICHLY PRICED. THE QUESTION IS WHETHER IT IS PRICED SO HIGH YOU CAN CALL IT A BUBBLE OR A CORRECTION. I DO NOT THINK WE ARE IN THAT TERRITORY YET. BUT WE ARE BUILDING IN AN EXPECTATION THAT NOTHING BAD WILL HAPPEN. SO WE ARE SEEING THE BRIGHT SIDE OF WHAT IS COMING. LOWER TAXES, MAYBE LESS REGULATION, THAT WILL HELP COMPANIES. THERE IS ALSO CHAOS COMING WITH IT WHICH WE HAVE NOT SEEN. MAYBE THAT CHAOS WILL NEVER MANIFEST BUT THAT IS WHAT THE MARKET SEEMS TO BE BUILDING IN IF IT DOESN’T MANIFEST. IF IT DOES? I THINK WE HAVE’S CLEANING UP TO DO IF THAT HAPPENS. SCARLET: LET’S TALK MORE ABOUT THAT. YOU ARE REFLECTING ON THE YEAR WE HAD IN 2024 AND IT COMES ON THE HEELS OF A VERY STRONG 2023. 20%-PLUS RETURNS FOR TWO STRAIGHT YEARS. FOR COMPANIES THERE IS A TAKEAWAY HERE FOR YOU. COMPANIES THAT HAVE MEASURED THEIR SUCCESS THROUGH STOCK MARKET RETURNS MAY FIND THE MARKET PRICE HAS BECOME A NOISIER JUDGE OF THEIR ACTIONS. EXPLAIN WHAT YOU MEAN BY THAT. BECAUSE A LOT OF COMPANIES HAVE LEANED INTO THE IDEA OF AI. A LOT OF OLD LEGACY TECH COMPANIES ARE TAKING — TALKING ABOUT AI POSSIBILITIES, EVERYONE IS TRYING TO FIND AN ANGLE. SOME COMPANIES RENAMED THEMSELVES AND INCORPORATED AI INTO THEIR MISSION. ASWATH: WHEN THE MARKET MAKES A GOOD JUDGMENT ON FUNDAMENTALS, CASH FLOW, AND RISK, PRICES IS A GOOD REFLECTOR OF WHAT THEIR ACTIONS ARE DELIVERING. WHEN YOU HAVE A BUZZ WORD TAKEOVER, AND THIS IS NOT THE FIRST ONE. WE SAW THIS WITH SOCIAL MEDIA, WITH DOTCOM. I AM OLD ENOUGH TO REMEMBER PC IS COMING ONTO THE MARKETPLACE. PEOPLE USE IT OFTEN AS A WAY OF PUSHING UP PRICES COLLECTIVELY. THIS IS GOING TO BE GOOD FOR THE ECONOMY. THEN YOU LOOK BACK 10, 15, 20 YEARS LATER AND YOU REALIZE THE NET PLUS OF EACH OF THESE MAJOR CHANGES HAS BEEN FAR SMALLER. THERE HAVE BEEN WINNERS AND LOSERS IN THE NET EFFECT HAS BEEN’S FOR — HAS BEEN FAR SMALLER. I THINK A DECADE FROM NOW WHEN YOU LOOK BACK AT AI THERE WILL BE WINNERS. WE MIGHT NOT EVEN KNOW WHO THE WINNERS ARE UNTIL YEARS FROM NOW. BUT THERE WILL BE LOSERS, AND I THINK THE NET EFFECT WILL BE A LOT SMALLER THAN THE MARKET IS BUILDING IN. ALIX: SO WHAT DOES THAT MEAN FOR DAY TRADERS WHO HAVE BEEN CHASING THE MOMENTUM WHO DOUBLED DOWN ON THE THINGS THAT WORK AND AVOID THE THINGS THAT HAVE NOT WORKED AND HAVE DONE VERY WELL BECAUSE OF THAT? ASWATH: I’M GLAD YOU SAID TRADERS, NOT INVESTORS. TRADERS CARE ABOUT MOOD AND MOMENTUM. TO ME, IF YOU ARE A TRADER, DON’T DISTRACT YOURSELF WITH LONG-TERM STORIES. DON’T DISTRACT YOURSELF WITH EARNINGS AND CASH FLOW NUMBERS. IT IS ALL ABOUT MOOD AND MOMENTUM. IF YOU CAN DETECT MOOD AND MOMENTUM, GO FOR IT. IF YOU ARE AN INVESTOR, THEN MY SLOWDOWN QUESTION WOULD BE IF SOMEBODY IS TALKING ABOUT AI, A COMPANY CLAIMS AI IS GOING TO HELP THEM, PUT THEM ON THE SPOT. ASK THEM WHAT KIND OF QUESTIONS — ASK THEM HOW THEY PLAN TO MAKE MONEY. RATHER THAN GIVING THEM A PASS AND ADDING A PREMIUM TO THEIR PRICE JUST BECAUSE THEY ARE AI. ALIX: AREN’T REGULATORS RIGHT DOWN THE ROAD AT THE END OF THE DAY? AS WE GET MORE VOLATILITY, WHAT DO YOU THINK HAPPENS ON THE REGULATORY FRONT? ASWATH: I DON’T SEE WHY REGULATORS NEED TO PROTECT INVESTORS FROM THEIR OWN GREED. I KNOW THAT SOUNDS RUDE, BUT IT IS NOT THE REGULATOR’S JOB TO STEP IN AND SAY WE ARE GOING TO PROTECT YOU FROM YOURSELF. THE NATURE OF MARKETS IS CHAOS AND VOLATILITY. IT IS A FEATURE, NOT A BUG. YOU WANT A MARKET WITHOUT CHAOS, YOU CAN SURE I THE SAUDI ARABIAN MARKET, THE SINGAPORE MARKET. VERY ORGANIZED TH — NOBODY IS THERE. PRICES ARE GOING TO MOVE A LOT. SCARLET: SELECT OTHERS ARE GOING TO LOSE. PEOPLE WHO LOSE ARE GOING TO LOOK TO THE S.E.C. AND SAY YOU NEEDED TO PROTECT ME. THAT SHOULD NOT BE THE SEC’S RESPONSIBILITY. ANOTHER WAY OF SAYING BUYER BOW ECHO. ASWATH DAMODARAN, THANK YOU FOR YOUR TIME. WE’VE A LOT MORE COMING UP. SHARES OF COCA-COLA HIGHER BY MORE THAN 4% AFTER A PROFIT BEAT ESTIMATES WITH SHOPPERS PAYING HIGHER PRICES. DID YOU KNOW THEY MAKE MILK? THERE IS NO LACTOSE IN IT AND IT IS HIGH PROTEIN. ALIX: WE WILL TALK ABOUT ALL OF THAT. THIS IS BLOOMBERG. ALIX: ONE STOCK ON THE MOVE TODAY IS COCA-COLA GETTING A POP FROM EARNINGS. AFTER THEY BEAT ANALYST ESTIMATES DESPITE HIGHER PRICES. CONSUMERS CONTINUE TO BUY COKE PRODUCTS INCLUDING SPRITE AND MINUTE MAID JEWS AMONG OTHERS — MINUTE MAID JUICE. > > ADJUSTED EPS WAS $.55 AND THE COMPANY HAS BEEN RAISING PRICES FOR SEVERAL QUARTERS BUT VOLUME WAS UP 2%. IT SHOWS CONSUMERS STILL LIKE COKE AND IT COMES WHEN IT’S RIVAL PEPSI MISSED ESTIMATES. SO COKE IS REALLY IN AMERICA’S DNA. SCARLET: THEY ALSO HAVE BEEN EXPANDING THEIR DRINK PORTFOLIO. IT IS NOT JUST SUGARY SODA. THEY MADE A RECENT SHIFT INTO A NEW STRATEGY. > > IT WAS A 2020 ACQUISITION. THE REASON I KNOW ABOUT IT IS BECAUSE ALL THE BLOGGERS BLOG IT BECAUSE NOW EVERYTHING IS ABOUT PROTEIN. IT IS HIGH IN PROTEIN BUT LOWER IN CALORIES BUT MORE EXPENSIVE BUT I GUESS PEOPLE ARE WILLING TO PAY PREMIUM IF YOU GET PROTEIN IN A BOTTLE. SCARLET: HOW ABOUT ALLMAN THE MILK? ALIX: THE WHOLE POINT ABOUT PAYING — ISABELLE: THEY SAID LOWER INCOME SEGMENTS ARE EXPERIENCING PRESSURE. HALF A GALLON OF THIS MILK IS SIX DOLLARS. A FULL GALLON OF NORMAL MILK IN GROCERY STORES IS AROUND FOUR DOLLARS. IT IS ALMOST DOUBLE. I BOUGHT IT AND I LIKE IT AND I THINK YOUNGER FOLKS LIKE IT. PC A LOT OF BRANDS MOVING AWAY AS AMERICANS BECOME MORE HEALTH CONSCIOUS. THIS COMES AT A TIME WHEN THERE IS A RISE IN WEGOVY IN OZEMPIC. SCARLET: WE HEARD THAT MCDONALD’S CUSTOMERS ARE VERY PRICE-SENSITIVE AND WEARY OF THE COST OF EVERYTHING. TO WHAT EXTENT DID THE CEO OF COCA-COLA ALSO ADDRESS THIS? ISABELLE: HE SAID FOR THE LOWER INCOME IT IS TOUGH RIGHT NOW BUT HE ALSO TALKED ABOUT TARIFFS. HE SAID THAT THEY ARE MORE OF A LOCAL COMPANY AND THEY DON’T HAVE A WIDE RANGE OF ITEMS THAT ARE IMPORTED. I THINK THAT IS WHAT IS OFFSETTING POTENTIALLY INFLATION. BUT WHAT IS INFLATION IF CONSUMERS ARE WILLING TO PAY? ALIX: THAT IS A DEEP QUESTION. PRESIDENT TRUMP IS SPEAKING WITH ELON MUSK AT THE WHITE HOUSE. MUSK SAYING IT IS ESSENTIAL TO REDUCE FEDERAL EXPENSES. WE WILL CONTINUE TO MONITOR THESE HEADLINES AS THEY CROSS. THIS IS BLOOMBERG. > > I WOULDN’T BE LEANING INTO THE REST OF THE WORLD TRADE. I DO THINK WE WILL STILL BE IN A U.S. LEADS THE WAY FOR THE YEAR OVERALL BUT HOW MUCH THE WEST CAN GO UP WILL DEPEND ON THE UNCERTAINTY AND WHERE WE STARTED ON INFLATION. SCARLET: TALKING ABOUT HOW THE AMERICAN EXCEPTIONALISM TRADE IS STILL INTACT WITH A BIG ASTERIX. ALIX: THE NEW YORK FED PRESIDENT WAS GIVING A SPEECH SAYING ECONOMIC POLICY REMAINS HIGHLY UNCERTAIN AND EXPECTS GDP GROWTH 2% THIS YEAR AND NEXT AND POLICY STANDS AT MODESTLY RESTRICTIVE. THAT IS WHY YOU ARE SEEING THE MARKET WAFFLING. THERE IS NO REAL INDICATION OF ANYTHING GOING ANYWHERE FAST. INTEL AND META ARE DOING PRETTY WELL BUT INTEL IS POTENTIALLY A U.S. POLICY STORY. GLOBAL FOUNDRIES AND INTEL DID REALLY WELL AS YOU HAD THE ADMINISTRATION TALK ABOUT PRODUCING CHIPS AND ALL THE AI NEEDS IN THE U.S. SCARLET: META IS NOW ON ITS LONGEST STREAK EVER. INCREDIBLE MOVES FOR A COUPLE OF THESE MAG-7 NAMES. LET’S WELCOME RICHARD WEISS, CIO OF AMERICAN CENTURY INVESTMENTS. I FEEL LIKE TALKING ABOUT THE FED IS KIND OF POINTLESS BECAUSE THEY ARE NOT REALLY DOING ANYTHING OF THE MARKET IS LEFT TO DO ITS THING. WHAT IS THAT THING RIGHT NOW? RICHARD: THE MARKET IS LOOKING AT THE FUNDAMENTALS. OBVIOUSLY THE POLICY AGENDA IS TAKING CENTER STAGE THE FUNDAMENTALS ARE GOOD. THIS ADMINISTRATION COMES IN WITH TAILWINDS. THE ECONOMY GOING STRONG, EARNINGS DOUBLE DIGITS. FLYING LIKE AN EAGLE. FLY EAGLES, FLY. SORRY, I HAD TO JAM THAT IN THERE. BUT THE ECONOMY IS GOING STRONG SO THERE IS A LOT TO BE SAID FOR THE U.S. EQUITY MARKET PARTICULAR. TO THE EXTENT PRESIDENT TRUMP WANTS TO LOWER TAXES AND MAKE OTHER POLICY MOVES, HE OBVIOUSLY HAS TO BALANCE THE BUDGET AND SO THEY ARE LOOKING TO CUT GOVERNMENT EXPENDITURES. THIS IS A TIGHT ROPE THEY ARE WALKING AND IT WILL BE VERY TRICKY. I DON’T THINK ANYBODY WOULD ARE THE THAT THE GOVERNMENT HAS SOME EXCESS AND NEEDS TO LOSE SOME WEIGHT. BUT WHEN YOU LOOK TO LOSE WEIGHT, YOU DON’T HACK OFF YOUR LEFT LEG. YOU LOSE WEIGHT BUT YOU HAVE A LOT OF OTHER PROBLEMS. THERE IS PROBABLY A SAFER WAY TO DO IT. BUT THIS IS THE ROUTE THEY ARE TAKING RIGHT NOW. SCARLET: JUST TO CHIME IN WITH SOME HEADLINES FROM THE WHITE HOUSE. ELON MUSK SAYING IT IS ESSENTIAL TO REDUCE FEDERAL EXPENSES. HE SAID THEY ARE TRYING TO BE AS TRANSPARENT AS POSSIBLE ON ACTIONS. AND THE PRESIDENT SAYING HE WOULD NOT LET ELON MUSK BE INVOLVED IF THERE WERE CONFLICTS. THESE ARE HEADLINES COMING FROM THEIR CONVERSATION AT THE WHITE HOUSE. WE WILL BRING YOU THE FULL PLAYBACK COMES AVAILABLE. ALIX: SO WHAT IS HE PLAYBACK FOR U.S. EXCEPTIONALISM? RICHARD: U.S. EXCEPTIONALISM, WHAT GOT US HERE WAS BEING A WORLD LEADER IN GLOBAL TRADE PROTECTIONISM AND NATIONALISM IS DISTINCTLY NOT WHAT GOT US THESE SUPERIOR, EXCEPTIONAL RETURNS IN THE STOCK MARKET OVER THE LAST 20 YEARS VIS-A-VIS BONDS, EMERGING MARKETS. THIS IS ONCE IN 100 YEAR TYPES OF OUTPERFORMANCE WE’VE EXPERIENCED WITH THIS STOCK MARKET. I WOULD SAY IT IS BECAUSE WE ARE A GLOBAL LEADER. TO THE EXTENT WE ARE GOING TO BUILD WALLS PHYSICALLY OR VIRTUALLY VIA TRADE BARRIERS, YOU HAVE TO QUESTION WHETHER THAT IS JUST A GOOD NEGOTIATING PLOY. BECAUSE IF THOSE TARIFFS STAY IN PLACE AND IT EVOKES MORE RETALIATORY TARIFFS AND TRADE WARS, THAT IS NOT GOOD FOR ECONOMIC GROWTH HERE OR ELSEWHERE AND IT IS INFLATIONARY. SO I AM CONCERNED ABOUT THAT. I WAS TRYING TO THINK ABOUT THIS. WHAT IS THE SAYING, NO MAN IS AN ISLAND? GLOBAL TRADE RELATIONS AND POLITICS IS NOT UNLIKE PRISON POLITICS THE BEST ANALOGY I CAN COME UP WITH. SO I’VE HEARD. AND THAT IS YOU CAN’T GO IT ALONE. YOU KIND OF HAVE TO GANG UP. EVEN IF YOU ARE THE BIGGEST GUY IN THE YARD, YOU HAVE TO GANG UP. BECAUSE IF YOU DON’T THE OTHERS WILL GANG UP AGAINST YOU. SO EVENTUALLY WE ARE GOING TO HAVE TO WORK WITH THESE OTHER NATIONS AND I AM SURE THE PRESIDENT WILL COME TO THAT REALIZATION. SCARLET: BUT WE ARE STILL IN THE EARLY STAGES OF THEM FIGURING OUT THE DIFFERENT SIDES AND WHO OUR ALLIANCES ARE OR ARE NOT WITH. SO HOW DO YOU POSITION? HOW SHOULD INVESTORS BE EXPOSED TO U.S. STOCKS VERSUS THE REST OF THE WORLD AND OTHER ASSET CLASSES? RICHARD: I KNOW SOME HAVE BEEN RUNNING TO PRECIOUS METALS, GOLD AND SILVER, BECAUSE THEY ARE WORRIED ABOUT INFLATION AND THAT HAS BEEN A GREAT PLACE TO BE. ALONG WITH BITCOIN, WHICH I GUESS YOU COULD ARGUE IS A PSEUDO INFLATION EDGE. BUT WE WOULD NOT RECOMMEND THAT. YOUR BEST DEFENSE WHEN THERE IS VOLATILITY IS DIVERSIFICATION. AND YOU HAVE A GOOD ARGUMENT TO MAKE HERE, EVALUATION ARGUMENT IF NOTHING ELSE TO MOVE OUTSIDE THE U.S. INTO SOME OF THE DEVELOPED AND EMERGING EQUITY MARKETS, POSSIBLY COMMODITIES, HEDGE FUNDS, PRIVATE MARKETS. BUT DIVERSIFICATION IS YOUR ONLY SAFE HAVEN WHEN THERE IS UNCERTAINTY FROM THE POLICY AGENDA. ALIX: THAT IS WHAT CONFUSES ME ABOUT THE VIX BECAUSE USUALLY BY THE VIX FOR PROTECTION WHEN YOU ARE NERVOUS BUT THAT DOESN’T NECESSARILY SEEM CORRELATED WITH REALIZED VERSUS IMPLIED. DO YOU USE THE VIX AS A HEDGE? RICHARD: YOU COULD VERY WELL DO THAT AND THERE ARE A LOT OF VEHICLES TO DO SO. THE VIX IS A BEAUTIFUL HEDGE TO STOCKMARKET CALAMITIES. BUT TO YOUR POINT THE VIX IS HOVERING AROUND ITS HISTORICAL NORMS. 15 OR SO WHICH IS A RELATIVELY CALM LEVEL FOR THE FEAR INDEX. AS WE ALL KNOW, THE MARKET HATES UNCERTAINTY MORE THAN ANYTHING. BUT WHAT IS GOING ON TODAY IS NOT UNCERTAIN. PRESIDENT TRUMP CAMPAIGNED ON MANY OF THE THINGS HE IS DOING TODAY. PROJECT 2025, THE HERITAGE FOUNDATION REPORT, PLAYS OUT ALMOST VERBATIM WHAT THE NEW ADMINISTRATION IS PUTTING INTO PLACE. SO THIS SHOULD NOT BE A SURPRISE TO ANYBODY. THAT IS NOT TO SAY THERE WILL NOT BE VOLATILITY WHEN CERTAIN THINGS ARE ENACTED. BUT I WOULD SAY THE VIX IS CORRECTLY STAYING CALM, BECAUSE NONE OF THIS SHOULD BE STAYING — COMING AS A MAJOR SURPRISE. ALIX: THANK YOU VERY MUCH. CONGRATS ON YOUR EAGLES WINNING. RICHARD WEISS WITH AMERICAN CENTURY INVESTMENTS. AS WE HEAD INTO THE CLOSED THERE IS NOT MUCH HAPPENING ON A BROAD INDEX LEVEL. INDIVIDUALLY WE ARE SEEING A LOT OF MOVERS THAT TENDS TO GO AROUND EARNINGS. META NOW UP FOR A RECORD RUN. RICH IS NOT THE ONLY ONE TALKING ABOUT EQUITIES OUTSIDE THE U.S. CITI WAS ALSO SAYING RECENT CHANGES INFLOWS AND POSITION IS SHOWING THE U.S. VERSUS THE REST OF THE WORLD IS CHANGING A LITTLE BIT. SCARLET: THEY SAY THE NET POSITIONING FOR THE S & P AND NASDAQ 100 IS NO MOTIVE EARLY — RELATIVELY BULLISH. EUROPE HAS BEEN A BENEFICIARY. ALIX: EXACTLY. OF COURSE EVALUATION. THE UNDERPERFORMER HERE. ♪ > > THE CLOSING BELL, BLOOMBERG’S COMPREHENSIVE CROSS-PLATFORM COVERAGE OF THE U.S. MARKET CLOSE STARTS RIGHT NOW. ALIX: ABOUT TWO MINUTES AWAY FROM THE END OF THE TRADING DAY. I AM ALIX STEEL ALONGSIDE SCARLET FU. WE ARE JOINED BY CAROL MASSAR AND TIM STENOVEC IN THE RADIO STUDIO. AUDIENCES WORLDWIDE, WE ARE GOING TO PARSE THROUGH THESE MOMENTS. HEADLINE LEVEL, NADA. CAROL: META UP 17 IN A ROW. A GAIN OF 18%. WE TALKED ABOUT IT YESTERDAY. A STOCK THAT HAS HAD THE MOST CONSECUTIVE GAINS. WHAT A RUN. UP ABOUT .3% BUT 17 IN A ROW. TIM: COULD HAVE BEEN ONE A YEAR GAINERS. CAROL: COULD HAVE BEEN BUT IT WAS DOWN. TIM: YOU DON’T WANT TO RISK IT EQUITY INDICES ARE NOT DOING MUCH. BITCOIN DOWN 2.2%. SCARLET: I WONDER IF THE CPI REPORT WILL BE MORE OF A CATALYST FOR SOMETHING TOMORROW. VOLATILITY AROUND THE CPI REPORT MIGHT BE KIND OF LIMITED BECAUSE THE FED IS NOT GOING TO COUNT ON THIS ONE CPI REPORT TO MAKE HIS NEXT DECISION. IT WILL BE A COUPLE OF REPORTS. THE STAKES ARE NOT AS HIGH FOR THIS CPI REPORT IT WILL BE SUPER INTERESTING GIVEN IT MIGHT COVER JAY POWELL’S TESTIMONY. ALIX: HE WILL DEFINITELY GET QUESTIONS ON THAT BUT IT IS THE DIRECTION OF TRAVEL. WE WERE TALKING EARLIER ABOUT INFLATION BREAKEVENS. THEY CONTINUE TO RISE. WE TALKED ABOUT JAY POWELL NOT HAVING ENTRENCHED INFLATION EXPECTATIONS. THE EXPECTATIONS CONTINUE TO MOVE HIGHER. HEADLINE LEVEL REAL UNEVENTFUL. S & P ENDING PRETTY MUCH FLAT. THE NASDAQ IS THE BIGGEST LOSER OF THE DAY. THE DOW JONES INDUSTRIAL AVERAGE OFF ABOUT .3%. I WANT TO TAKE INTO ACCOUNT WHAT IS HAPPENING WAS SMALL AND MID-CAPS. ALSO A LITTLE SOFTER BUT NOTHING TO WRITE HOME ABOUT. CAROL: KIND OF AN EVEN SPLIT SCARLET: LET’S LOOK AT THE IMAP WHICH SPLITS THE S & P 500 INTO ITS 11 MAIN SET HIS. THERE IS MORE GREEN THAN THERE IS READ AND IT IS LED BY CONSUMER STAPLES. ENERGY STOCKS AND MATERIAL STOCKS GAINING. THE LAGGARDS INCLUDE CONSUMER DISCRETIONARY. YOU’RE TALKING ABOUT AUTOMAKERS WHICH AS A GROUP ARE DOWN ABOUT 5%. COMMUNICATION SERVICES JUST EARLY IN THE RED. CAROL: INTEL IS A TOP GAINER. THIS IS COMING AFTER J.D. VANCE AT THE AI SUMMIT IN FRANCE SAID THE TRUMP ADMINISTRATION WILL MAKE SURE THE MOST — INTEL IS UP ABOUT 6% AT THE CLOSE. CO-FOUNDER IS UP 6% AS WELL. THEY ARE THE LARGEST U.S.-BASED OPERATORS OF SEMI FOUNDRIES THAT MAKE CHIPS FOR OUTSIDE CUSTOMERS. NO SURPRISE TO SEE THEM GAINING. COCA-COLA UP 4.7% AT THE CLOSE. FOURTH QUARTER ORGANIC SALES GROWTH AND PROFIT TOPPING WALL STREET EXPECTATIONS. ANALYSTS CONTEE COMPANY’S ANNUAL OUTLOOK PRETTY SOLID. TIM: SCARLET MENTIONED THAT AUTOMAKERS WERE LOWER. TESLA HELPING TO PULL THEM DOWN. DOWN FOR A FIFTH DAY IN A ROW ALL BECAUSE OF BYD OVER IN CHINA. THE COMPANY ADDED ADVANCED DRIVER ASSISTANCE FEATURES FOR NO EXTRA COST. IT’S SHARES HIT A RECORD AND TESLA MOVED LOWER. IT IS CALLED THE GODS I DRIVERS ASSISTANCE PROGRAM. CAN YOU BELIEVE THAT PRICE POINT? IT IS ALSO INCLUDED IN SEVERAL LOW-COST MODELS. TESLA DOWN ABOUT 32%. SCARLET: GILEAD JUST REPORTED RESULTS. FOURTH QUARTER EPS OF ONE DOLLAR 90 BEATING THE AVERAGE ANALYST ESTIMATE. REVENUE 7.7 $5 BILLION HIGHER THAN ANTICIPATED. THEY ALSO RAISE QUARTERLY DIVIDEND TO $.79 A SHARE. THE PROFIT FORECAST TOPPING ANALYST ESTIMATES. ANALYSTS WERE LOOKING FOR 754. STOCK HIGHER. CAROL: LET’S GET TO A THIS. $2.12 BILLION. PRETTY MUCH 20 ESTIMATE WAS. INTERNATIONAL REVENUE WE ARE TALKING $593 MILLION, A LITTLE LIGHT. WE ARE LOOKING AT OVERALL REVENUE. SMACK ON WHAT THE STREET WAS EXPECTING. WE ARE SEEING THIS STOCK DOWN IN THE AFTERMARKET. IT HAS BEEN UP ABOUT 11% YEAR TO DATE BUT WE ARE SEEING SOME DISAPPOINTMENT HERE IN THE TRADE. TIM: ONE HEADLINE IS THEY HAVE NAMED A SUCCESSOR FOR CEO. SHARES DOWN 5.2%. CODY SHARES DOWN MORE THAN 9% TODAY, HITTING THEIR LOWEST LEVEL SINCE 2022. THEY LOWERED PROJECTIONS AND MISSED WALL STREET EXPECTATIONS. FLUENCE ENERGY SHARES TAKING A DIVE TODAY. THE COMPANY REPORTED IT HAS SLASHED GUIDANCE. SHOUT OUT TO CAROL MASSAR FOR DIRECTING ME TO THIS ONE. ALIX: WHAT AN UGLY CHART. TAKING A LOOK AT THE BOND MARKET. YIELDS UP THREE TO FOUR BASIS POINTS. THAT CAME IN PRETTY STRONG. WE GET THE 10 YEAR AND THE 30 YEAR LATER ON IN THIS WEEK. LOOKING FOR SUPPLY DIGESTION. DO WE PROPEL HIGHER AND GET TO 5%? THAT IS THE LINE IN THE SAND A LITTLE BIT. INTERESTING TO SEE HOW WE TRADE TOMORROW. CAROL: WE WERE TALKING ABOUT THE CPI REPORT TOMORROW FOLLOWED BY PPI. WE WERE TALKING WITH MIKE MCKEE EARLIER OUT OF WASHINGTON WHO BROKE DOWN JAY POWELL AND SAID WE ARE WATCHING THIS. THERE IS SO MUCH COMING OUT FROM INVESTORS. CERTAINLY SOMETHING LIKE INFLATION IS IMPORTANT. SCARLET: IF YOU LISTEN TO EARNINGS CALLS THEY ARE NOT TALKING AS MUCH ABOUT INFLATION ANYMORE. TARIFFS HAS TAKEN THE PLACE BECAUSE THAT IS A BIG QUESTION MARK AND THE IMPACT FOR WHAT IT MEANS ON INFLATION IS STILL VERY UNCERTAIN. TIM: DOORDASH AND LYFT CROSSING. LYFT SEES ADJUSTED EBITDA $95 MILLION TO $90 MILLION. FOURTH-QUARTER GROSS BOOKINGS CAME IN JUST SHY OF ESTIMATES. LYFT BUYING BACK UP TO $500 MILLION OF SHARES. SHARES OF LYFT IN THE AFTER HOURS HIGHER BY ABOUT 6.7%. FOURTH-QUARTER RIDES COMING IN LINE WITH ESTIMATES. FOURTH-QUARTER ADJUSTED NET COMING IN ABOVE ESTIMATES AT $114.5 MILLION. ALIX: FOURTH-QUARTER LOOKS TO BE A BEAT ON REVENUE AND ORDERS IN TERMS OF EARNINGS IT MIGHT HAVE COME IN A LITTLE LIGHT. THE BIG HEADLINE IS GROSS ORDER VALUE THEY NOW SEE AT THE HIGH-END OF THAT $23 BILLION. THE ESTIMATE WAS FOR UNDER $23 BILLION. ADJUSTED EBITA ON THE HIGH-END. PRETTY STRONG RESULTS FROM DOORDASH EVEN KNOW THAT STOCK IS DOWN 2%. CAROL: WATCHING LIFT IT IS BOUNCING AROUND A LOT. UP ABOUT THREE QUARTERS OF A PERCENT. THAT BUYBACK DEFINITELY A BIT OF AN EYE-POPPING NUMBER. IT IS INTERESTING THAT IT IS ITS FIRST BUYBACK PROGRAM. INVESTORS BOUNCING AROUND IN TERMS OF THESE RESULTS. SCARLET: IT SUGGESTS A CONSISTENT RETURN OF CAPITAL TO SHAREHOLDERS THAT WE ARE GOING TO WAIT TO HEAR HOW THEY ADDRESS THAT AND TO WHAT EXTENT THEY FEEL CONFIDENT ENOUGH TO BUY BACK THEIR OWN SHARES. I LOOK AT THE DOORDASH RESULTS AND I AM SORRY, I CAN’T HELP BUT BE COLORED. MY SON ORDERS WAY TOO MUCH OF IT. AS A GEN XER, THIS IDEA THAT YOU PAY X PERCENT OF A FINAL BILL ON SERVICE COST AND DELIVERY FEES, IT IS BANANAS. TIM: I TALK TO THESE YOUNG PEOPLE BEFORE, AND THEY HAVE TO DELETE THE APP FROM THEIR PHONE BECAUSE THEY ARE SPENDING TOO MUCH MONEY. SCARLET: THEY DON’T HAVE ANY BASIS FOR COMPARISON. THE FACT A BIG CHUNK OF YOUR FINAL BILL IS ON DELIVERY IS JUST, UGH. ALIX: THEY WERE TALKING IN THE EARNINGS RELEASE ABOUT NEW INITIATIVES THEY ARE HOPING TO INTRODUCE TO GIVE VALUABLE SERVICES. THEY SAID THE EXITED 2024 WITH SOME GOOD MOMENTUM. STILL TRYING TO FIND OUT THE REASON WHY THAT STOCK IS STILL GETTING HIT. INTERESTING THOUGH WHEN THEY TALK ABOUT REALLY STRONG ORDER DEMAND. CAROL: WE WILL SEE HOW THEY SETTLE IN IN THE AFTERMARKET. THAT IS A WRAP. YOU AGAIN TOMORROW. SCARLET: WE ARE KEEPING AN EYE ON ZILLOW BECAUSE THAT COMPANY WILL BE REPORTING AS WELL AFTER THE MARKET CLOSE. WE ARE GOING TO CHECK IN ON WHAT IS HAPPENING IN THE HOUSING MARKET AS WELL AND BREAK DOWN ALL THE RESULTS COMING UP. SCARLET: WELCOME BACK. ALIX: LET’S TAKE A LOOK AT WHERE MARKETS CLOSED OUT TODAY. STEADY AS SHE GOES. THE 10 YEAR YIELD MOVED A LITTLE HIGHER BY ABOUT THREE BASIS POINTS. THE DOLLAR INDEX A LITTLE SOFTER AND GOLD SOFTER AS WELL. COMPARED TO THE MOVES WE HAVE BEEN USED TO THIS FEELS VERY MUTED AND CALM. SCARLET: I AM SURE JAY POWELL LIKED IT JUST A WAY IT IS. HE WAS SPEAKING TO THE SENATE BANKING COMMITTEE AND OF COURSE WILL BE SPEAKING BEFORE THE HOUSE FINANCIAL SERVICES COMMITTEE TOMORROW. I DID NOT INCLUDE THIS ON THE CHART BUT MET UP FOR A 17TH STRAIGHT DAY A RECORD RUN. THE BIG GAINER IS DUPONT. IT WAS THE BEST PERFORMER IN THE S & P 500 GETTING ALMOST 7%. THEY REPORTED A FOURTH-QUARTER EARNINGS BEAT. MARRIOTT GAINING A FULL YEAR OUTLOOK FOR ROOMS GROWTH BELOW SOME ANALYST ESTIMATES. ALIX: ANOTHER STOCK WE ARE WATCHING IS ALLOWED JUST REPORTING. THE BIG NEWS AS THE COMPANY EXPECTS 2025 TO BE THERE FIRST PROFITABLE YEAR SINCE 2012. THE COMPANY SAYS IT WILL GENERATE POSITIVE NET INCOME ON A GAP BASIS THIS YEAR AND POSTED A NET LOSS OF $112 MILLION. GIVES US AN EXCUSE TO TALK ABOUT THE HOUSING MARKET. AMY NIXON JOINS US NOW. WE TAKE A LOOK AT ZILLOW LOOKING AT HIS FIRST REAL PROFITABLE YEAR IN QUITE A LONG TIME BUT THE EARLY INDICATION SHOWS THE HOUSING MARKET COULD REMAIN MUTED. WHAT IS YOUR TAKE? AMY: IT HAS BEEN A ROUGH HOUSING MARKET. THE MAC TURO BACKDROP HAS BEEN REALLY TOUGH BUT ZILLOW HAS BEEN A GOLD STAR OUTLIER AMONGST THIS BECAUSE THEY ARE NOT NECESSARILY BEHOLDEN TO THE MACRO ENVIRONMENT. THEIR REASON FOR THIS IS BECAUSE THEY HAVE MULTIPLE REVENUE STREAMS. WHERE YOU SEE HEADWINDS IN HOMEBUYING TRANSACTION, MORTGAGE LOAN ORIGINATIONS, THOSE ARE AT 30 YEAR LOWS. THAT HAS ACTUALLY BEEN A TAILWIND FOR THE RENTAL MARKET AND ZILLOW HAS TAKEN ADVANTAGE OF THAT. I KNOW 1/5 OF THEIR REVENUE IS NOW COMING FROM THE RENTAL PLATFORM. THEY JUST HAVE A LOT OF GROWTH POTENTIAL AHEAD FOR THAT. SO I WOULD NOT BE SURPRISED TO SEE THEM BE PROFITABLE IN THE NEAR-TERM FUTURE. IF YOU LOOK BACK TO 2009 DURING THE FINANCIAL CRISIS, THE FIRST YEAR OF BREAKING PROFITABILITY WAS IN 2011. THEY HAVE SHOWN THEY CAN PERFORM WELL IN BAD MACRO ENVIRONMENTS AND BAD HOUSING MARKETS. SCARLET: WE HAVE HEADLINES FROM REDFIN WHICH COULD BE SEEN AS A COMPETITOR TO ZILLOW. REDFIN EXPECTS TO INCUR $21 MILLION IN TOTAL CHARGES BECAUSE IT WILL BE CUTTING 450 RENTALS JOBS. REDFIN SAYING IT WILL BE CUTTING 450 RENTALS JOBS AND IT WILL INCUR ANYWHERE FROM $18 MILLION TO $21 MILLION IN TOTAL CHARGES. TALKED ABOUT THE COMPETITION FOR ZILLOW. BECAUSE THE WAY IT HAS BEEN DESCRIBED, IT COULD ALMOST BE SEEN AS EVERYTHING REAL ESTATE COMPANY, REAL ESTATE SERVICES COMPANY. AMY: IN MY OPINION, ZILLOW IS WORSE COMPETITOR IS THEMSELVES. THE ONLY PERSON WHO CAN BEAT THEM IS THEMSELVES RIGHT NOW. WE SAW THAT IN 2021 WITH THEIR BUNGLED HOMEBUYING BUSINESS WAS A DISASTER. IN TERMS OF THESE OTHER COMPANIES, REDFIN, OPEN-DOOR, THEY ARE LIGHT COMPETITORS BUT THEY DO NOT HAVE THE INFRASTRUCTURE ZILLOW HAS. MORE IMPORTANTLY THEY DON’T HAVE THE BRAND NAME RECOGNITION. ZILLOW THE TERM IS SEARCHED MORE THAN THE TERM REAL ESTATE. AND ZILLOW AS A PLATFORM GUESS 230 MILLION UNIQUE VIEWS A MONTH. THAT IS MORE THAN NETFLIX OR THE NEW YORK TIMES. THERE IS NOT ANOTHER COMPETITOR OUT THERE THAT IS POSITIONED TO BE WHAT I WOULD CONSIDER THE AMAZON OF REAL ESTATE OR WHAT ZILLOW CALLS THE SUPER ACT OF REAL ESTATE. ALL OF YOUR REAL ESTATE CAN BE DONE ON ONE PLATFORM START TO FINISH. ALIX: POOR LIKE WATCHING NETFLIX WHILE ON THE ZILLOW LAP. ABOUT 2.1 — THE HOUSING MARKET IS BEING DEFINED AS SLUGGISH. WHAT MAKES IT ON SLUGGISH? AMY: GOSH, THIS HAS BEEN TALKED ABOUT FOR YEARS. THIS IS A TOUGH HOUSING MARKET. LOWER MORTGAGE RATES HAS BEEN DIFFICULT TO GET BECAUSE THE FED CUTTING RATES HAS NOT PRODUCED THOSE RESULTS. I THINK HONESTLY THE INTERNET IS ANNOYING IS TIME. WE NEED MORE TIME. WE NEED TIME FOR NEW INVENTORY TO HIT THE MARKET AND TIME FOR BUILDERS TO FINISH NEW BUILDS. AND WE NEED TIME FOR BUYERS TO ACCEPT THAT YOU ARE NOT GOING TO GET A 3% MORTGAGE RATE AGAIN. MAYBE YOU DON’T LIKE 7% BUT MAYBE WE CAN GET TO A 5.5% OR 6%. I THINK THAT WOULD BE ENOUGH TO BRING TRAFFIC BACK. A LOT OF ANALYSTS ARE EXPECTING THAT IN 2025 WE SEE A MARGINAL IMPROVEMENT IN TRANSACTION AND SALES VOLUME. WE MIGHT HAVE SEEN THE WORST OF THE WORST IN TERMS OF THE BOTTOM OF THE RECESSIONARY TRANSACTION ACTIVITY. HOPEFULLY THIS WILL BE A BETTER YEAR BUT IT WILL BE ANOTHER TOUGH YEAR. SCARLET: I WONDER FOR PEOPLE WHO ARE ACCUSTOMED TO THE CALENDAR OF THERE IS A LOT OF PROPERTY AVAILABLE IN THE SPRING AND THAT IS WHEN YOU DO YOUR TRANSACTIONS SO YOU CAN GET YOUR KIDS SET UP FOR THE NEW SCHOOL YEAR. IS THERE A SENATE — IS THERE A SPRING SELLING SEASON ANYMORE OR HAS NOT GONE BY THE WAYSIDE? AMY: IT IS WEAKER NOW. I AM SEEING MORE INVENTORY COME ONLINE. THE HIGHEST INVENTORY WE HAVE HAD SINCE 2019 AND THAT IS OBVIOUSLY CONCENTRATED IN CERTAIN REGIONS MORE THAN OTHERS, PARTICULARLY REGIONS WHERE WE HAVE BEEN BUILDING. BUT THE BUYING SEASON IS MUTED. THE LAST TWO YEARS WE HAVE SEEN THE NEW BUYING SEASON IS WHEN MORTGAGE RATES DROP A LITTLE BIT. ALIX: FAIR ENOUGH. YOU TALKED ABOUT THE 5.5% IS THE NEW 6%. WHAT ABOUT THE ACTUAL RENTAL MARKET? THAT HAS NOTHING TO DO WITH THE MORTGAGE RATES BUT THINGS LIKE REDFIN CAN BE DIFFICULT TO MANAGE. ACTUALLY I AM GOING TO INTERRUPT YOU, WE HAVE TO GO TO PRESIDENT TRUMP. PRESIDENT TRUMP AND ELON MUSK WERE TALKING AT THE WHITE HOUSE EARLIER DOUG — DIGGING INTO DOGE. > > CONCERNING GAZA AND EVERYTHING ELSE. WE HAD DISCUSSIONS ABOUT SATURDAY AT 12:00. GOING TO BE A BIG MOMENT. I DON’T EXPECT MUCH HAPPENING WITH THESE PEOPLE BUT WE WILL SEE WHAT HAPPENS. WE’RE GONNA BE SIGNING A VERY IMPORTANT DEAL TODAY. IT IS DOGE. I’M GOING TO ASK ELON TO TELL YOU ABOUT IT AND SOME OF THE THINGS WE FOUND WHICH ARE SHOCKING. BILLIONS AND BILLIONS OF DOLLARS IN WASTE FRAUD AND ABUSE. I THINK IT IS VERY IMPORTANT. THAT IS ONE OF THE REASONS I GOT ELECTED. NOBODY HAD ANY IDEA IT WAS THAT BAD AND THAT CORRUPT. IT SEEMS HARD TO BELIEVE THAT JUDGES WANT TO TRY AND STOP US FROM LOOKING FOR CORRUPTION ESPECIALLY WHEN WE FOUND HUNDREDS OF MILLIONS OF DOLLARS WORTH, MUCH MORE THAN THAT. WE WANT TO WEED OUT THE CORRUPTION. IT SEEMS HARD TO BELIEVE THAT A JUDGE CAN SAY WE DON’T WANT YOU TO DO THAT. MAYBE WE HAVE TO LOOK AT THE JUDGES BECAUSE THAT IS VERY SERIOUS. THAT IS A VERY SERIOUS VIOLATION. I WILL ASK ELON MUSK TO SAY A FEW WORDS AND WE WILL TAKE SOME QUESTIONS. GO AHEAD. > > SURE. AT A HIGH LEVEL YOU SAY WHAT IS THE GOAL OF DOGE, OR A SIGNIFICANT PART OF THE PRESIDENCY, IS TO RESTORE DEMOCRACY. AREN’T WE IN A DEMOCRACY? > > [KID BABBLING] > > IF THERE IS NOT A GOOD FEEDBACK LOOP FROM THE PEOPLE TO THE GOVERNMENT AND IF YOU — IF THE BUREAUCRACY IS IN CHARGE, WHAT MEANING DOES DEMOCRACY HAVE? IF THE PEOPLE CAN’T VOTE, HAVE THERE WILL DECIDED BY THEIR ELECTRIC — WE DON’T LIVE IN A DEMOCRACY. WE LIVE IN A BUREAUCRACY. IT IS INCREDIBLY IMPORTANT WE FIX THAT FEEDBACK LOOP IN THE PUBLIC’S ELECTED REPRESENTATIVES DECIDE WHAT HAPPENS AS OPPOSED TO A LARGE UNELECTED BUREAUCRACY. YOU CANNOT HAVE AN AUTONOMOUS FEDERAL BUREAUCRACY. YOU HAVE TO HAVE ONE — WE HAVEN’T UNELECTED PERSON WHO HAS MORE POWER THAN ANY ELECTED REPRESENTATIVE. THIS IS NOT SOMETHING PEOPLE WANT. IT DOES NOT MATCH THE WILL OF PEOPLE. WE ALSO HAVE TO ADDRESS THE DEFICIT. IF WE DON’T DO SOMETHING ABOUT THIS DEFICIT THE COUNTRY IS GOING BANKRUPT. IT IS ASTOUNDING THAT THE INTEREST PAYMENTS ALONE ON THE NATIONAL DEBT EXCEED THE DEFENSE DEPARTMENT BUDGET WHICH IS SHOCKING. WE SPEND A LOT OF MONEY ON DEFENSE. IF THAT KEEPS GOING WE ARE GOING TO BANKRUPT THE COUNTRY. IT IS NOT OPTIONAL FOR US TO REDUCE THE GOVERNMENT EXPENSES. IT IS ESSENTIAL. IT IS ESSENTIAL FOR AMERICA TO REMAIN SOLVENT AS A COUNTRY AND FOR AMERICA TO HAVE THE RESOURCES TO PROVIDE THINGS TO ITS CITIZENS AND NOT SIMPLY BE SERVICING VAST AMOUNTS OF DEBT. > > COULD YOU MENTION SOME OF THE THINGS WERE TEAM HAS FOUND? SOME OF THE CRAZY NUMBERS INCLUDING THE WOMAN THAT WALKED AWAY WITH ABOUT $30 MILLION? > > WE FIND IT RATHER ODD THAT THERE ARE QUITE A FEW PEOPLE IN THE BUREAUCRACY HERE WHO ESSENTIALLY HAVE A SALARY OF A FEW HUNDRED THOUSAND DOLLARS WOULD HAVE SOMEHOW ACCRUED TENS OF MILLIONS OF DOLLARS IN NET WORTH. WHICH IS WHAT HAPPENED AT USAID. WE ARE JUST CURIOUS WHERE IT CAME FROM. MYSTERIOUSLY THEY SEEM TO GET WEALTHY. WE DON’T KNOW WHY. THE REALITY IS THEY ARE GETTING WEALTHIER AT THE TAXPAYER’S EXPENSE. THAT IS THE HONEST TRUTH OF IT. IF YOU LOOK AT TREASURY, BASIC CONTROLS THAT SHOULD BE IN PLACE IN ANY COMPANY SUCH AS MAKING SURE ANY GIVEN PAYMENT HAS A PAYMENT CATEGORIZATION CODE THERE IS A COMMON FIELD THAT DESCRIBES THE PAYMENT AND IF A PAYMENT IS ON THE DO NOT PAY LIST THAT YOU DO NOT PAY IT. NONE OF THOSE THINGS ARE TRUE CURRENTLY. THE REASON DEPARTMENTS CANNOT PASS ORDERS IS BECAUSE THE PAYMENTS DO NOT HAVE A POSITION CODE. YOU CANNOT RECONCILE BLANK CHECKS. YOU HAVE COMMENT FIELDS THAT ARE ALSO BLANK. THEN YOU HAVE THIS TRULY ABSURD DO NOT PAY LIST WHICH CAN TAKE UP TO A YEAR FOR AN ORGANIZATION TO GET ON THE DO NOT A LIST. WE ARE TALKING ABOUT TERRORIST ORGANIZATIONS, ABOUT KNOWN FRAUDSTERS, THINGS THAT DO NOT MATCH CONGRESSIONAL APPROPRIATION. IT IS MIND BLOWING. WE ARE TALKING ABOUT ADDING COMMON SENSE CONTROLS THAT SHOULD BE PRESENT THAT HAVE NOT BEEN PRESENT. HOW COULD SUCH A THING ARISE? THAT SEEMS CRAZY. EVERYTHING IS GEARED TOWARDS COMPLAINTS AND MINIMIZATION. THEN YOU UNDERSTAND THE MOTIVATIONS. IF PEOPLE RECEIVE MONEY THAT DON’T COMPLAIN, BUT IF PEOPLE DON’T RECEIVE MONEY THEY DO COMPLAIN. THE FRAUDSTERS COMPLAIN THE LOUDEST AND THE FASTEST. WHEN YOU UNDERSTAND THAT THAT IT MAKES SENSE. THAT IS WHY THEY APPROVE ALL THE PAYMENTS AT TREASURY BECAUSE IF YOU APPROVE ALL THE PAYMENTS YOU DON’T GET COMPLAINTS. NOW WE ARE SAYING NO, WE ARE GOING TO COMPLAIN. IF YOU ARE TAXPAYER DOLLARS ARE NOT SPENT IN A SENSIBLE MANNER THAN THAT IS NOT OK. YOUR TAX DOLLARS NEED TO BE SPENT WISELY ON THINGS THAT MATTER TO THE PEOPLE. IT IS JUST COMMON SENSE. IT IS NOT DRACONIAN OR RADICAL I THINK. IT IS JUST SAYING LET’S LOOK AT EXPENDITURES AND SAY IS THIS IN THE BEST INTEREST OF PEOPLE. A CURSORY EXAMINATION OF SOCIAL SECURITY. WE HAVE PEOPLE IN THERE WHO ARE 150 YEARS OLD. DO YOU KNOW ANYONE WHO IS 150? THEY SHOULD BE IN THE GUINNESS BOOK OF WORLD RECORDS. THAT IS A CASE WHERE I THINK THEY ARE PROBABLY DEAD. OR THEY SHOULD BE VERY FAMOUS. THEN A WHOLE BUNCH OF SOCIAL SECURITY PAYMENTS WHERE THERE IS NO IDENTIFYING INFORMATION. WHY NOT? OBVIOUSLY WANT TO MAKE SURE PEOPLE DESERVE TO RECEIVE SOCIAL SECURITY DO RECEIVE IT AND THEY RECEIVE IT QUICKLY AND ACCURATELY. ANOTHER CRAZY THING. WE ARE TRYING TO RIGHT SIZE THE FEDERAL BUREAUCRACY. THEIR NEW TO BE A LOT OF PEOPLE WORKING FOR THE GOVERNMENT BUT NOT AS MANY AS CURRENTLY. IF PEOPLE CAN RETIRE WITH BENEFITS, THAT WOULD BE GOOD. I THINK THIS IS A GREAT ANECDOTE. THE MOST NUMBER OF PEOPLE WHO COULD RETIRE POSSIBLY IN A MONTH IS 10,000. WHY IS THAT? ALL THE RETIREMENT PAPERWORK IS MANUAL ON PAPER. IT IS MANUALLY CALCULATED AND THEN WRITTEN DOWN ON A PIECE OF PAPER AND THEN IT GOES DOWN A MINE. WHAT YOU MEAN A MINE? THERE IS A LIMESTONE MINE WHERE WE STORE ALL THE RETIREMENT PAPERWORK. YOU LOOK AT A PICTURE OF THIS MINE, WE WILL POST SOME AFTERWARDS. IT LOOKS LIKE SOMETHING OUT OF THE 1950’S BECAUSE IT WAS STARTED IN 1955. IT IS LIKE A TIME WARP. THE LIMITING FACTOR IS THE SPEED AT WHICH THE MINESHAFT ELEVATOR CAN MOVE DETERMINES HOW MANY PEOPLE CAN RETIRE FROM THE FEDERAL GOVERNMENT. THE ELEVATOR BREAKS DOWN SOMETIMES AND THEN NOBODY CAN RETIRE. DOESN’T THAT SOUND CRAZY? THERE WERE LIKE A THOUSAND PEOPLE WHO WORKED ON THIS. IF WE TAKE THESE PEOPLE AND SAY INSTEAD OF WORKING IN A MINE SHAFT AND CARRYING MANILA ENVELOPES TO A MINESHAFT, YOU CAN DO PRACTICALLY ANYTHING ELSE AND YOU WOULD ADD TO THE GOODS AND SERVICES OF THE UNITED STATES IN A MORE USEFUL WAY. ANYWAY. AT A HIGH LEVEL YOU SAY HOW DO YOU INCREASE PROSPERITY. YOU GET PEOPLE SHIFT FROM ROLES. INCREASE THE TOTAL OUTPUT OF GOODS AND SERVICES WHICH MEANS THERE IS A HIGHER STANDARD OF LIVING AVAILABLE TO EVERYONE. THAT IS THE ACTUAL GOAL. EVERYBODY IS QUIET. > > YOUR DETRACTORS INCLUDING A LOT OF DEMOCRATS — > > I HAVE DETRACTORS? > > SAY YOU ARE ORCHESTRATING A HOSTILE TAKEOVER OF GOVERNMENT IN A NON-SPRINT — IN A NONTRANSPARENT WAY. WHAT IS YOUR RESPONSE TO THAT CRITICISM? > > [INDISCERNIBLE] THE PEOPLE VOTED FOR MAJOR GOVERNMENT REFORM. THERE SHOULD BE NO DOUBT ABOUT THAT. THE CAMPAIGN SPOKE ABOUT THAT AT EVERY RALLY. PEOPLE ARE GOING TO GET WHAT THEY VOTED FOR. PEOPLE WHO DON’T GET WHAT THEY VOTED FOR. > > THE WHITE HOUSE SAYS YOU EXCUSED YOURSELF FROM ANY CONFLICT OF INTEREST. DOES THAT MEAN YOU ARE POLICING YOURSELF? WHAT ARE THE CHECKS AND BALANCES IN PLACE TO ENSURE THERE IS ACCOUNTABILITY AND TRANSPARENCY? > > WE ARE TRYING TO BE AS TRANSPARENT AS POSSIBLE. WE POSTED OUR ACTIONS TO THE DOGE HANDLE ON TWITTER. ALL OF OUR ACTIONS ARE MAXIMALLY TRANSPARENT. I DON’T KNOW THE CASE WHERE AN ORGANIZATION HAS BEEN MORE TRANSPARENT. THE KIND OF THINGS WE ARE DOING OUR VERY SIMPLE AND BASIC. WHEN I MENTIONED ABOUT TREASURY, MAKING SURE THAT TAXPAYER MONEY THAT GOES OUT IS CATEGORIZED CORRECTLY. THAT THE PAYMENT IS EXPLAINED. THAT ORGANIZATIONS ON THE DO NOT PLAYLIST, IT TAKES A LOT TO GET THERE. THEY ARE CURRENTLY PAID. THESE ARE NOT INDIVIDUAL JUDGMENT DECISIONS. THESE ARE ABOUT HAVING SENSIBLE CHECKS AND BALANCES TO ENSURE TAXPAYER MONEY IS SPENT WELL. IT IS NOTHING TO DO WITH A CONTRACT OF MINE. > > BUT THERE IS A CONFLICT OF INTEREST FOR YOU. YOU HAVE RECEIVED BILLIONS OF DOLLARS IN FEDERAL CONTRACTS WHEN IT COMES TO THE PENTAGON, WHICH I KNOW THE PRESIDENT HAS DIRECTED YOU TO LOOK INTO. ARE YOU POLICING YOURSELF? IS THERE ANY ACCOUNTABILITY, CHECKS AND BALANCES IN PLACE THAT WOULD PROVIDE TRANSPARENCY TO THE AMERICAN PEOPLE? > > ALL OF OUR ACTIONS ARE PUBLIC. IF YOU SEE ANYTHING SAY, HEY E LON, THAT SEEMS LIKE THERE IS A CONFLICT THERE. IT IS NOT LIKE PEOPLE WILL BE SHY ABOUT DOING THAT. > > TELL YOU YOURSELF? > > YES. TRANSPARENCY BUILDS TRUST. NOT SOMEBODY SAYING THEY ARE TRUSTWORTHY BUT TRANSPARENCY. IT IS TOTALLY OBVIOUS. > > IF WE THOUGHT THAT, WE WOULD NOT LET HIM DO THAT IF WE THOUGHT THERE WAS A LACK OF TRANSPARENCY OR A CONFLICT OF INTEREST. HE IS A SUCCESSFUL GUY. THAT IS WHY WE WANT HIM DOING THIS. WE DON’T WANT AN UNSUCCESSFUL GUY DOING THIS. ONE THING THAT ELON HAS NOT MENTIONED OF THE GROUPS OF PEOPLE GETTING SOME OF THESE PAYMENTS. THEY ARE RIDICULOUS AND WE ARE TALKING BILLIONS OF DOLLARS WE HAVE ALREADY FOUND. WE FOUND FRAUD AND ABUSE. I WOULD SAY THOSE TWO WORDS AS OPPOSED TO THE THIRD WORD USUALLY IS. IN THIS CASE FRAUD AND ABUSE. IT IS ABUSIVE BECAUSE MOST OF THESE THINGS ARE VIRTUALLY MADE UP OR CERTAINLY MONEY SHOULD NOT BE SENT TO THEM. YOU KNOW WHAT I AM TALKING ABOUT. IT IS CRAZY. WE ARE TALKING TENS OF BILLIONS OF DOLLARS WE HAVE ALREADY FOUND. NOW A JUDGE IS AN ACTIVIST JUDGE AND WANTS TO TRY AND STOP US FROM DOING THIS. I CAMPAIGNED ON THIS. I CAMPAIGNED ON THE FACT I SAID GOVERNMENT IS CORRUPT. AND IT IS VERY CORRUPT. IT IS ALSO FOOLISH. A MAN HAD A CONTRACT FOR THREE MONTHS IN THE CONTRACT ENDS BUT THEY KEEP PAYING HIM FOR 20 YEARS. YOU HAVE A LOT OF THAT. YOU HAVE A THREE MONTH CONTRACT. IN ALL FAIRNESS, THE SIZE OF THIS THING IS SO BIG. BUT IF YOU HAVE A CONTRACT AND YOU ARE A REGULAR BUSINESS YOU WHEN THE CONTRACT IN THREE MONTHS. HERE’S A CONTRACT FOR THREE MONTHS THAT GOES ON FOR 20 YEARS AND THE GUY DOESN’T SAY HE GOT MONEY FOR 20 YEARS. JUST KEEP GETTING CHECKS MONTH AFTER MONTH AND YOU HAVE VARIOUS THINGS LIKE THAT AND MUCH WORSE THAN THAT. I GUESS YOU CALL THAT INCOMPETENCE MAY BE. IT COULD BE CORRUPTION. IT COULD BE DEALS MADE ON BOTH SIDES. I THINK THERE IS A LOT OF KICKBACK HERE. > > A LOT OF KICKBACK. > > TREMENDOUS KICKBACK. NOBODY COULD BE SO STUPID. YOU HAVE TO GET A KICKBACK. THAT IS WHAT I GOT ELECTED FOR. THAT AND BORDERS AND MILITARY AND A LOT OF THINGS BUT THIS IS A BIG PART OF IT. AND I HOPE THE COURT SYSTEM IS GOING TO ALLOW US TO DO WHAT WE HAVE TO DO. WE GOT ELECTED TO, AMONG OTHER THINGS, FIND ALL OF THIS FRAUD AND ABUSE AND HORRIBLE STUFF GOING ON. WE HAVE ALREADY FOUND BILLIONS OF DOLLARS. NOT A LITTLE BIT, MANY BILLIONS OF DOLLARS. WHEN YOU GET DOWN TO IT IT IS GOING TO BE PROBABLY CLOSE TO $1 TRILLION WE ARE GOING TO FIND. THAT WILL HAVE QUITE AN IMPACT ON THE BUDGET. AND YOU WILL GO TO A JUDGE WHERE THEY HANDPICK A JUDGE AND HE HAS CERTAIN LEANINGS. I AM NOT KNOCKING ANYBODY FOR THAT BUT HE HAS CERTAINLY KNEW AND HE WANTS US TO STOP LOOKING. HOW DO YOU STOP LOOKING? WE HAVE ALREADY FOUND IT. WE HAVE A CASE IN NEW YORK WHERE A HOTEL HAS PAID $59 BILLION BECAUSE IT IS HOUSING MIGRANTS, ILLEGAL MIGRANTS. PAULA LEGAL. > > AND THEY ARE BEING PAID TWICE THE RATE AT A NORMAL OCCUPANCY. IF I MAY. AT A HIGH LEVEL — [STAMMERING] WHAT ARE THE TWO THINGS NECESSARY TO CUT THE BUDGET IN HALF? COMPETENCE AND CARING. IF YOU ADD COMPETENCE AND CARING, YOU WILL CUT THE BUDGET DEFICIT IN HALF. I FULLY EXPECT TO BE SCRUTINIZED AND GET A DAILY PROCTOLOGY EXAM. I MIGHT AS WELL JUST CAMP OUT THERE. IT’S NOT LIKE I THINK I WILL GET AWAY WITH SOMETHING. I WILL BE SCRUTINIZED NONSTOP. WITH THE SUPPORT OF THE PRESIDENT WE CAN CUT THE BUDGET DEFICIT IN HALF. AND WITH DE-REGULATION, BECAUSE THERE ARE A LOT OF REGULATIONS THAT DON’T ULTIMATELY SERVE THE PUBLIC GOOD. WE NEED TO FREE THE BOULDERS — BUILDERS OF AMERICA TO BUILD. WHEN YOU DO THAT YOU GET ECONOMIC GROWTH TO MAYBE 5%. IF YOU CAN CUT THE BUDGET DEFICIT BY A TRILLION DOLLARS, BETWEEN NOW AND NEXT YEAR THERE IS NO INFLATION. THERE IS NO INFLATION IN 2026. IF THE GOVERNMENT IS NOT BORROWING AS MUCH AS MEANS INTEREST COSTS DECLINE. EVERYONE’S MORTGAGE, PAYMENT, STUDENT DEBT, THAT IS A FANTASTIC SCENARIO. FOR THE AVERAGE AMERICAN. IMAGINE GOING DOWN THE GROCERY AISLE IN THE PRICES FROM ONE YEAR TO THE NEXT ARE THE SAME. IN THEIR MORTGAGE AND ALL THEIR DEBT PAYMENTS DROPPED. HOW GREAT IS THAT FOR THE AVERAGE AMERICAN? > > WE HAD NO IDEA WE WERE GOING TO FIND THIS MUCH. AND IT IS OPEN. IT IS NOT COMPLICATED. CAN’T BELIEVE IT. A LOT OF WORK, A LOT OF SMART PEOPLE INVOLVED. YOU ARE TALKING MAYBE 500 BILLION. IT IS CRAZY THE KIND OF NUMBERS. NORMALLY WHEN YOU ARE LOOKING AT SOMETHING YOU’RE LOOKING FOR ONE OUT OF A HUNDRED. HERE YOU ARE ALMOST REVERSING IT. YOU LOOK FOR ONE THAT IS GOOD. YOU CAN LOOK AT THE TITLE AND SAY WHY ARE WE DOING THIS? THE PUBLIC YET SAID. YOU HAVE SEEN THE POLLS. THE PUBLIC IS SAYING WHY ARE WE PAYING ALL THIS MONEY? FOR YEARS THIS HAS GONE ON. GO AHEAD. > > SENATOR RAND PAUL TODAY SAID DOGE CUTS WILL ULTIMATELY NEED A VOTE IN CONGRESS. DO YOU AGREE WITH THAT? > > I DON’T KNOW. I KNOW WE ARE FINDING TREMENDOUS FRAUD AND ABUSE. IF I NEED A VOTE OF CONGRESS TO FIND FRAUD AND ABUSE, IT IS FINE WITH ME. I THINK WE WILL GET THE VOTE ALTHOUGH THERE WILL BE SOME PEOPLE WHO WOULDN’T VOTE. HOW COULD A JUDGE WANT TO HOLD US BACK FROM FINDING ALL OF THIS FRAUD AND ALL OF THIS INCOMPETENCE? WHY WOULD THAT HAPPEN? WHY WOULD EVEN CONGRESS WANT TO DO THAT? IF WE DO NEED A VOTE I THINK WE WOULD GET A VERY EASY VOTE BECAUSE WE HAVE A TRACK RECORD. WE HAVE ALREADY FOUND BILLIONS OF DOLLARS OF ABUSE, INCOMPETENCE AND CORRUPTION. > > IF A JUDGE DOES BLOCK ONE OF YOUR POLICIES, WILL YOU ABIDE BY THAT RULING? > > I ALWAYS ABIDE BY THE COURTS AND THEN I WILL HAVE TO APPEAL IT. HE HAS SLOWED DOWN THE MOMENTUM. IT GIVES CROOKED PEOPLE MORE TIME TO COVER UP THE BOOKS. IF A PERSON IS CROOKED AND THEY GET CAUGHT, OTHER PEOPLE SEE THAT AND ALL OF A SUDDEN IT BECOMES HARDER LATER ON. SO THE ANSWER IS I ALWAYS ABIDE BY THE COURTS. I ALWAYS ABIDE BY THEM. AND I WILL APPEAL. BUT APPEALS TAKE A LONG TIME AND I WOULD HOPE IF YOU GO TO A JUDGE AND YOU SHOW THEM HERE IS A CORRUPT SITUATION, WE HAVE A CHECK TO BE SENT BUT WE FOUND IT TO BE CORRUPT, DO YOU WANT US TO SEND THIS CORRUPT CHECK TO A PERSON OR DO YOU WANT US TO GIVE IT BACK TO THE TAXPAYER? I WOULD HOPE A JUDGE WOULD SAY DON’T SEND IT, GIVE IT BACK TO THE TAXPAYER. > > WHAT WE ARE FINDING IS A BUNCH OF THE FRAUD IS NOT EVEN GOING TO AMERICANS. WE CAN ALL AGREE IF THERE IS GOING TO BE FRAUD, IT SHOULD AT LEAST GO TO AMERICANS. THERE ARE FOREIGN FRAUDSTERS EXPORTING MONEY TO OTHER COUNTRIES. WE SHOULD STOP THERE. THESE ARE BIG NUMBERS. > > YOU SAID ON TWITTER THAT AN EXAMPLE OF THE FRAUD YOU HAVE CITED WAS $50 MILLION OFCOM DEMS SENT TO GAZA — OF CONDOMS. BUT THIS IS NOT TRUE. IT WAS TO PROTECT THEM FROM HIV AND SENT TO MOZAMBIQUE. HOW CAN WE MAKE SURE THAT THE STATEMENTS YOU SAY ARE CORRECT SO WE CAN TRUST YOU? > > SOME OF THE THINGS I SAY WILL BE INCORRECT AND SHOULD BE CORRECTED. NOBODY IS GOING TO BAT 1000. WE ALL MAKE MISTAKES. I AM NOT SURE WE SHOULD BE SENDING $50 MILLION WORTH OF CONDOMS ANYWHERE. THAT IS AN ENORMOUS NUMBER OF CONDOMS. IF IT WENT TO MOZAMBIQUE INSTEAD OF GAZA, THAT IS NOT AS BAD, BUT STILL, WHY ARE WE DOING THAT? > > CAN YOU TALK ABOUT HOW CLOSELY YOU ARE WORKING WITH AGENCY HEADS AS THEY ARE DIRECTING THESE CUTS? HOW MUCH INPUT? > > WEWORK CLOSELY WITH AGENCY HEADS. YEAH. THERE ARE CHECKS IN PLACE SO IT IS NOT JUST US DOING THINGS WILLY-NILLY. I CHECK WITH THE PRESIDENT TO MAKE SURE THIS IS WHAT THE PRESIDENT WANTS TO HAVE HAPPEN. WE TALKED ALMOST EVERY DAY. I DOUBLE CHECKED THINGS TO MAKE SURE IS THIS SOMETHING YOU WANT US TO DO AND THEN WE WOULD DO IT. > > USAID HAS BEEN ONE OF YOUR MAIN TARGET. ARE YOU CONCERNED THAT SOME OF THE CUTS OR SHUTTING THE AGENCY ALTOGETHER MAY LEAD TO DISEASES OR OTHER BIGGER PROBLEMS STARTING IN OTHER COUNTRIES THAT THEN COME TO THE U.S.? > > THAT IS AN INTERESTING EXAMPLE. THAT IS SOMETHING WHERE WE WORK CLOSELY WITH THE STATE DEPARTMENT AND WE HAVE TURNED ON FUNDING FOR EBOLA PREVENTION AND HIV PREVENTION. WE ARE MOVING FAST. WE ALL MAKE MISTAKES WE WILL FIX THE MISTAKES VERY QUICKLY. > > YOU THINK THAT IS A WORTHY CAUSE? > > THERE ARE SOME WORTHY THINGS BUT IT WAS NOT VERY GOOD. FAR TOO MUCH OF WHAT USAID WAS DOING WAS INFLUENCING ELECTIONS IN WAYS I THINK WERE DUBIOUS AND DO NOT STAND UP TO THE LIGHT OF DAY. > > IF YOU HAVE RECEIVED BILLIONS OF DOLLARS IN CONTRACTS FROM THE PENTAGON AND THE PRESIDENT IS DIRECTING YOU TO LOOK INTO THE DEPARTMENT OF DEFENSE — DOES THAT PRESENT A CONFLICT OF INTEREST TO YOU? > > NOW. — NO. I AM NOT THE ONE FILING THE CONTRACT. IT IS PEOPLE AT SPACEX. IF YOU SEE ANY CONTRACT WHERE IT WAS AWARDED TO SPACEX AND WAS NOT THE BEST VALUE, NOW YOU KNOW. EVERY ONE OF THEM WAS. > > THE PRESIDENT SAID YOU MIGHT LOOK AT TREASURIES. COULD YOU EXPLAIN THAT? THAT QUESTION GOES TO BOTH OF YOU. WHAT KIND OF FRAUD DO YOU SEE RIGHT NOW IN U.S. TREASURIES? > > I THINK YOU MEAN THE TREASURY DEPARTMENT. > > YOU ALSO REFERENCED TREASURIES ON AIR FORCE ONE THE OTHER NIGHT. > > AS I MENTIONED EARLIER, THE FIRST ORDER OF BUSINESS IS TO MAKE SURE — HE’S TAKING MY EARS. IT HAS BEEN HARD TO HEAR SOMETIMES. STOP THAT. THE STUFF WE ARE DOING WITH TREASURY DEPARTMENT IS SO BASIC YOU CANNOT BELIEVE IT DOESN’T EXIST ALREADY. LIKE I MENTIONED, JUST MAKING SURE WHEN A PAYMENT WAS OUT, IT HAS TO HAVE A PAYMENT CATEGORIZATION CODE. WHAT TYPE OF PAYMENT IS THIS? YOU CANNOT JUST LEAVE THE FIELD BLANK. YOU HAVE TO DESCRIBE WHAT IS THE PAYMENT FOR. THAT IS ALSO LEFT A BLANK. WHEN IS THE LAST TIME THE PENTAGON PASSED IN ORDER? EVER? IN ORDER TO PASS AUDITS YOU HAVE TO HAVE FINANCIAL INFORMATION THAT ALLOWS YOU TO TRACE THE PAYMENTS. ONCE IN A WHILE THE TREASURY HAS TO PAUSE PAYMENTS IF IT THINKS THE PAYMENT IS GOING TO A FRAUDULENT ORGANIZATION. IF A COMPANY OR AN ORGANIZATION IS ON A DO NOT PAY LIST, WE SHOULD NOT PAY IT. IT IS QUITE HARD TO GET ON THAT PAYMENT. THIS MEANS IT IS SOMEONE — DEAD PEOPLE, TERRORISTS, KNOWN FRAUDSTERS, THAT KIND OF THING, WE SHOULD NOT PAY THEM. CURRENTLY WE DO WHICH IS CRAZY. WE SHOULD STOP THAT. > > BY THE WAY, HUNDREDS, THOUSANDS OF TRANSACTIONS LIKE THAT. WE HAVE A BIG TEAM. FOR THE SAKE OF THE COUNTRY, I HOPE THAT THE PERSON THAT IS IN CHARGE AND THE OTHER PEOPLE THAT REPORT TO ME THAT ARE IN CHARGE ARE ALLOWED TO DO THE RIGHT THING. NAMELY, MAKE SURE EVERYTHING IS HONEST, LEGITIMATE AND COMPETENT. BUT WHEN YOU LOOK AT USAID, THAT IS ONE. WE ARE GOING TO LOOK AT THE MILITARY, CAP EDUCATION. THERE ARE MUCH BIGGER AREAS. BUT THE USAID IS REALLY CORRUPT. IT’S CORRUPT. IT’S INCOMPETENT AND REALLY CORRUPT. I CAN’T IMAGINE A JUDGE SAYING IT MAY BE CORRUPT YOU GOT ELECTED TO LOOK OVER THE COUNTRY AND TO MAKE AMERICA GREAT AGAIN BUT YOU DON’T HAVE THE RIGHT TO LOOK AND SEE WHETHER OR NOT THINGS ARE RIGHT THAT THEY ARE PAYING MORE THAT THINGS ARE HONEST AT THAT AIR PAYING. NOBODY CAN EVEN BELIEVE THIS. OTHER PEOPLE, LAW PROFESSORS HAVE BEEN SAYING HOW CAN YOU TAKE THAT PERSON RIGHT AWAY. YOU’RE SUPPOSED TO BE RUN IN THE COUNTRY BUT WE ARE NOT ALLOWED TO LOOK WHAT THEY ARE PAYING AND WHO THEY ARE PAYING. WE HAVE MASSIVE AMOUNTS OF FRAUD WE HAVE CAUGHT. WE PROBABLY CAUGHT WAY OVER A LOT OF BILLIONS OF DOLLARS ALREADY. IN WHAT, TWO WEEKS? AND IS GOING TO GOING TO GO TO NUMBERS YOU CANNOT BELIEVE. MUCH IS INCOMPETENCE AND MUCH IS DISHONESTY. WE HAVE TO CATCH IT. THE ONLY WAY WE ARE GOING TO CATCH IT IS A LOOK FOR IT. IF A JUDGE IS GOING TO SAY YOU’RE NOT ALLOWED TO LOOK FOR IT THAT IS PRETTY SAD FOR OUR COUNTRY. I DON’T UNDERSTAND HOW CAN EVEN WORK. > > CAN YOU PERSONALLY GUARANTEE THAT THE BUYOUT PROGRAM, THE OFFER TO FEDERAL WORKERS, CAN YOU GUARANTEE THE WORKERS WHO OPT IN WILL BE PAID? > > THEY WILL GET THEIR MONEY BUT THEY ARE GETTING A BIG BUYOUT. WHAT WE ARE TRYING TO DO IS REDUCE GOVERNMENT. WE HAVE TOO MANY PEOPLE. WE HAVE OFFICE SPACE OCCUPIED BY 4%. NOBODY IS SHOWING UP FOR WORK BECAUSE THEY WERE TOLD NOT TO. BIDEN GAVE THEM A FIVE YEAR PASS, 40,000 OF THEM. FOR FIVE YEARS YOU DON’T HAVE TO SHOW UP TO WORK. LET ME TELL YA, LARGE OF THIS IS BECAUSE OF BIDEN. IT IS HIS FAULT. WHAT HE DID ON OUR BORDER, WHAT HE DID ON OUR BORDER IS ALMOST NOT AS BAD AS WHAT HE DID WITH ALL OF THESE CONTRACTS THAT HAVE COME OUT. IT’S A VERY SAD DAY. I CAN’T EVEN BELIEVE IT. MANY CONTRACTS EXTEND AND KEEP EXTENDING AND THERE WAS NOBODY THERE TO CORRECT IT. I CAN’T IMAGINE THAT COULD BE HELD UP BY THE COURT. ANY COURT THAT WOULD SAY THE PRESIDENT OR HIS REPRESENTATIVES LIKE SECRETARY OF THE TREASURY, SECRETARY OF STATE, DOESN’T HAVE THE RIGHT TO GO OVER THEIR BOOKS AND MAKE SURE EVERYTHING IS HONEST, YOU CAN’T HAVE ANYTHING THAT WAY. YOU CAN’T HAVE A BUSINESS THAT WAY. THANK, EVERYBODY. SCARLET: THAT WAS PRESIDENT TRUMP ALONGSIDE ELON MUSK AFTER PRESIDENT TRUMP SIGNED AN EXECUTIVE ORDER ORDERING FEDERAL AGENCIES TO LAY THE GROUNDWORK FOR WIDESPREAD FIRINGS OF GOVERNMENT WORKERS. THIS EXECUTIVE ORDER COMPELS THE AGENCIES TO WORK WITH ELON MUSK’S DOGE TO IDENTIFY LARGE-SCALE REDUCTIONS IN THE FEDERAL WORKFORCE AND DETERMINE WHICH AGENCY COMPONENTS MAY BE ELIMINATED OUTRIGHT. THERE ARE A COUPLE HEADLINES FROM THE PLAYBACK. WE HEARD ELON MUSK SAY IT IS ESSENTIAL TO REDUCE FEDERAL EXPENSES. HE SAID WE ARE MAKING MISTAKES THAT WE WILL CORRECT THEM AND THEY ARE TRYING TO BE AS TRANSPARENT AS POSSIBLE ON ALL ACTIONS. PRESIDENT TRUMP SAID HE WOULD NOT LET ELON MUSK BE INVOLVED IF THERE WERE CONFLICTS IN RESPONSE TO QUESTIONS ABOUT CONFLICTS OF INTEREST. HE SAID IF NECESSARY HE WOULD SEEK CONGRESS’S VOTE ON DOGE’S CUTS IF IT CAME TO THAT. HE WOULD LOOK AT SPENDING RELATED TO THE MILITARY AS WELL AS EDUCATION AND FEDERAL WORKERS TAKING BUYOUTS WILL GET THEIR MONEY. SOME HEADLINES FROM THAT NEWS CONFERENCE, THAT IMPROMPTU NEWS CONFERENCE PRESIDENT TRUMP JUST HELD WITH ELON MUSK. I DID WANT TO BRING IN NOW HENRIETTA TREYZ. I KNOW WE BOOK YOU TO TALK ABOUT SOMETHING ENTIRELY DIFFERENT BUT I WANT TO BRIDGE THE LINK BETWEEN WHAT JUST HAPPENED ANY WHITE HOUSE AND WHAT WE WERE INTENDING TO TALK ABOUT. REMIND US OF THE MATH. WHEN WE LOOK AT WHAT THE DEPARTMENT OF GOVERNMENT EFFICIENCY IS TASKED WITH DOING, LOOKING TO OFFER BUYOUTS TO FEDERAL EMPLOYEES, MAY BE GET RID OF CERTAIN GOVERNMENT AGENCIES COMPLETELY. DO THESE EFFORTS MOVE THE NEEDLE AT ALL IN REDUCING OR MITIGATING OUR DEFICIT AS WELL AS OUR DEBT BURDEN? HENRIETTA: THAT IS EXACTLY THE QUESTION. WHILE THIS PRESS CONFERENCE WENT OUT TO THE WORLD HAD A VERY TARGETED AUDIENCE AND THAT IS THE HOUSE BUDGET COMMITTEE AND THE MEMBERS OF THAT COMMITTEE. THREE OF THEM ARE REALLY AGGRESSIVE DEFICIT HAWKS HAVING A VERY DIFFICULT TIME GETTING TO YES ON THE HOUSE BUDGET RESOLUTION FOR ONE BIG BEAUTIFUL BILL THAT WOULD COVER ALL OF THE $4.6 TRILLION COST OF EXTENDING THE TAX CUTS. THE MATH IS WHAT IS MOST IMPORTANT TO TAKE AWAY FROM THAT PRESS CONFERENCE. THE NOTE — THE PRESIDENT PURPOSEFULLY DID NOT USE SPECIFIC NUMBERS. THEY ARE TALKING ABOUT GENERALITIES OF MAYBE GETTING TO $1 TRILLION BUT HE STOPPED HIMSELF WHEN HE TRIED TO LIST SPECIFIC FIGURES THEY FOUND. INSTEAD SAYING BILLIONS AND BILLIONS. WHICH IS ALL FINE AND GREAT TO FIND THAT KIND OF FRAUD AND WASTE, BUT WE NEED OVER $5 TRILLION TO COVER THE COST OF THIS BILL AND THEY DO NOT HAVE THAT MONEY. THE PURPOSE OF THIS PRESS CONFERENCE IS TO MAKE IT LOOK LIKE THEY DO. SCARLET: PART OF IT IS TO BRING IN REVENUE FROM THE TARIFFS. THE TARIFFS THE PRESIDENT SAYS WILL BE IMPOSED AT SOME POINT. FOR INSTANCE THERE IS TALK ABOUT TARIFFS ON EUROPE. NONE OF THESE HAVE BEEN PUT IN PLACE — NOT ALL OF THEM. HOW MUCH MONEY CAN BE RAISED THROUGH TARIFFS ASSUMING THEY GO OUT AS INTENDED? HENRIETTA: THERE ARE SO MANY LEGS TO THIS STOOL BUT DOGE SAVINGS IS ONE PIECE FOR A TRILLION DOLLARS. THE TARIFF REVENUE HAS TO BE A BILLION DOLLARS. THAT IS WHAT THE PRESIDENT PROMISED PEOPLE. THAT IS WHEN HE ANNOUNCED THE TARIFFS INCLUDING THE 25% TARIFFS ON STEEL AND ALUMINUM AGAINST ALL OF OUR GLOBAL ALLIES AND FOES. THAT IS TO DEMONSTRATE SIMILARLY WE ARE BRINGING IN THIS REVENUE. WE ARE GETTING THE MONEY NEEDED TO COVER WHAT WILL SURELY BE MASSIVE DEFICIT INCREASES FROM THIS TAX BILL LATER IN THE YEAR. THEY NEED MONEY FROM ALL THE PLACES WHICH IS WHY WE SAY TAKE TARIFFS LITERALLY AND SERIOUSLY. HE NEEDS THE MONEY. SCARLET: WALL STREET LIKES WHAT THEY HAVE HEARD SO FAR FROM THE PRESIDENT WHEN IT COMES TO REDUCING GOVERNMENT WASTE. KEN GRIFFIN OF CITADEL PRAISING THESE EFFORTS. AT THE SAME TIME HE SAID THE THREATENED TARIFFS DULL THE U.S.’S COMPETITIVE EDGE. WE HAVE — IS THIS SOMETHING THAT HAS MORE OF A CHANCE GOING THROUGH THIS TIME AROUND SINCE HE IS NOT UP FOR REELECTION? HENRIETTA: FIRST OF ALL, IT IS $14 BILLION IN REVENUE. THIS IS TINY. IT HAS VERY STRONG CONSTITUENCIES MOST NOTABLY IN THE TRI-STATE AREA. WHAT THIS HAS HISTORICALLY DONE IS IT HAS CREATED AN OPPORTUNITY FOR ONE MEMBER WHO IS USUALLY AT RISK OF LOSING REELECTION TO KILL THE PROPOSAL. PRESIDENT TRUMP WENT AFTER THIS POTENTIAL BASKET OF REVENUE IN 2017. BOTH PARTIES WARNED ABOUT THIS. IT IS ONE OF THOSE WEIRD INSTANCES WHERE YOU GET A LOT OF PRESS AND IT GETS A LOT OF ATTENTION FROM THE FINANCIAL MARKETS BUT IT IS A DROP IN THE BUCKET. SCARLET: HENRIETTA TREYZ, THANK YOU SO MUCH. EARLIER TODAY IN WASHINGTON JAY POWELL TOLD CONGRESS THE FED IS IN NO RUSH TO LOWER RATES. > > WITH OUR POLICY STANCE NOW SIGNIFICANTLY LESS RESTRICTIVE THAN IT HAD BEEN AND THE ECONOMY REMAINING STRONG, WE DO NOT NEED TO BE IN A HURRY TO ADJUST OUR POLICY STANCE. WE KNOW THAT REDUCING POLICY RESTRAINT TOO FAST OR TOO MUCH COULD HINDER PROGRESS ON INFLATION. SCARLET: NANCY LAZAR IS WITH US. JAY POWELL WILL BE TESTIFYING AGAIN TOMORROW. WHAT KIND OF BACKDROP WILL HE HAVE? THE CPI REPORT FOR JANUARY COMES OUT 8:30 A.M. NANCY: IT WILL PROBABLY INCREASE ABOUT 0.3%. WE HAVE ONE MONTH OF A GOOD NUMBER BUT THE BOTTOM LINE IS INFLATION IS STICKY AND I WAS PLEASED TO HEAR THAT POWELL WILL BE RESTRAINED. I WOULD ARGUE THE ECONOMY IS FINE. SCARLET: WE ARE ALWAYS PAYING A LOT OF ATTENTION TO SHELTER AND THAT HAS BEEN STICKIER THAN WHAT A LOT OF PEOPLE HAD ANTICIPATED. HOW BIG OF AN OVERHANG WITH THAT BE? NANCY: SHELTER WILL PROBABLY MELT DOWN AS THE MARKET INDICATORS POINT I THINK THAT IS A MISCUE. IF ONE PRICE COMES DOWN ANOTHER PRICE GOES UP WHICH IS WHAT YOU ARE SEEING. USED CAR PRICES ARE NOW GOING BACK UP. WE ARE STILL IN AN INFLATIONARY ENVIRONMENT. THE FEDERAL OUTLAY SURGE WE HAVE SEEN OVER THE PAST FIVE YEARS, WALL STREET HAS NEVER SEEN THAT. IT HAS BEEN 60 YEARS SINCE YOU HAVE SEEN A SURGE IN FEDERAL OUTLAYS. THAT IS THE MAIN REASON FOR THE INFLATION AND THE FED MONETIZED IT. I WAS VERY PLEASED TO HEAR THE FED TODAY SUGGEST THEY ARE IN NO HURRY TO CUT RATES. SCARLET: OF COURSE WE HAVE PPI THE FOLLOWING DAY IN RETAIL SALES AS WELL. HOW IS THE MARKET SET UP FOR REPORTS THAT SHOW THE MARKET AND THE ECONOMY AND CONSUMER DOING WELL? NANCY: WHY DO WE NEED LOWER INTEREST RATES GIVEN WE HAVE A HEALTHY CONSUMER? THE UNDERLYING TREND FOR THE CONSUMER IS VERY SOLID PPI IS GOING TO GO UP NOT JUST WITH THE TARIFFS BUT WITH OTHER AREAS WHERE PRICES ARE GOING UP. AND COMPANIES ARE RAISING PRICES IN PART BECAUSE INPUT PRICES ARE GOING UP. EVERYONE IS RAISING PRICES AND DON’T WANT TO CUT PRICES. SCARLET: APPRECIATE YOUR JOINING US. NANCY LAZAR IS PIPER SANDLER CHIEF GLOBAL ECONOMIST. THAT DOES IT FOR US ON THE CLOSE. HAVE A GREAT EVENING. THIS IS BLOOMBERG.