Closing Bell - Closing Bell Overtime: Stocks rally, Tariff Fallout & The DOJ is getting this wrong 2/10/25

Episode Date: February 10, 2025

Investors shrugging off more tariff threats from President Trump. The S&P 500 and Nasdaq higher for a 4th straight day while the Dow snapped a 2-day losing streak. Morgan Stanley Chief Global Economist Seth Carpenter discusses whether tariffs on all imported steel and aluminum as well as reciprocal tariffs could threaten the U.S. economy. PIMCO’s Head of Emerging Markets reveals where he sees opportunities around the globe because of the ongoing trade war.  The CEO of Juniper Networks defends his company’s merger with HPE and says the Justice Department is getting it wrong by trying to block the deal. And the incoming CEO of Nokia reveals how he plans to increase competition in the networking space and take on companies like Juniper & HPE.

That bell marks the end of regulation. J.P. Morgan ringing the closing bell with the New York Stock Exchange. ProShares doing the honors at the Nasdaq. Stocks ring the green across the board with tech stocks leading the way higher as investors shrug off the threat of new tariffs. That is the scorecard on Wall Street, but winners stay late. Welcome to Closing Bell Overtime. I'm John Fort with Morgan Brennan. Well, the S&P 500 and Nasdaq are higher for the fourth straight day, while the Dow snapping a two-day losing streak. The energy and tech sectors are the big winners today. Now, investors turn their attention to after-the-bell earnings from Lattice Semi,

Astero Labs, Vertix, and Cody. We will have instant analysis of all of those numbers. Plus, President Trump is expected to announce steel and aluminum import tariffs later today. We're going to discuss the potential impact on the economy with Morgan Stanley chief global economist Seth Carpenter. But now investors are waiting to hear from President Trump. And the CEO of Juniper Networks is here exclusively to fight back against the Justice Department's lawsuit to block his company's proposed merger with Hewlett-Packard Enterprise. Let's bring in Scott Wren of Wells Fargo Investment Institute and Dan Suzuki of Richard Bernstein. Guys, welcome.

Hey, John, how are you? Well, Dan, the S&P is back near all-time highs. So at this point, investors are perhaps wondering what to do. What does diversification look like in this market? Yeah, well, obviously, John, everyone that's watching your show is very aware that the market is historically expensive and historically concentrated in those expensive investments. So really today, diversification is quite simple. It's owning anything but the U.S. mega caps. And so that I think that's what's critical right now is, you know, you're talking about earnings this earnings season. You know, there's a lot of stuff

that's, you know, in that diversification basket that's actually starting to finally show improvements in earnings trends. And I think that's the opportunity is you can own diversification and that diversification is seeing improving fundamentals, unlike some of the other concentrated areas of the market that are kind of coming off of their highs. Well, speaking of anything but the mega caps, lattice semiconductor earnings are out. I believe the stock is reacting positively initially. Our Christina Partsenevelis has the numbers. Christina. Yeah, they're delivering adjusted EPS of 15 cents with gross margins reaching 62%. I'm not going to compare EPS with street estimates because the company also announced a new $7 million charge

related to material purchased when foundry capacity was in tight supply. That's according to the company. They posted revenues of $117.4 million, which were in line. They make low-power programmable chips and they have over 50% exposure to the auto and industrial markets, but they provided Q1 guidance slightly above street estimates, which is why you're seeing the stock jump 14%. And the CEO of Ford, Tamer, struck an optimistic tone, citing, quote, signs of improvement in the broader market environment based on stronger backlogs and improved book-to-bill ratios.

The company also announcing the immediate appointment of Lorenzo Flores as its new CFO. There's a few other changes within the chief people officer as well as the chief accounting officer, but shares jumping 13% on this guidance. Back over to you guys. All right, Christina Parts-Nevelis, thank you. We've got Vertex earnings out as well. Angelica Peebles has those numbers. Angelica.

Hey, Morgan. It's a mixed quarter for Vertex. The company's adjusted EPS missing $3.98 a share adjusted versus 4.03 that we were expecting. Revenue coming ahead at $2.91 billion versus $2.78 billion. And the guidance is coming in line, that 2025 revenue guidance of $11.75 billion to $12 billion. They're also saying that their new painkiller, Gernavix, will start shipping to pharmacies by the end of this month. And then they're also saying that their COO, Stuart Arbuckle, is stepping down.

He's retiring July 1st. And their CFO, Charlie Wagner, will assume the additional responsibility of COO. And they're also promoting one of their current SVPs to assume the role of chief commercial officer. Back over to you guys. All right, Angelica, thank you. Scott Wren, going back to you now, you're not worried, it looks like, about the AI trade. But put that into context for me, because NVIDIA is now 12% off of its 52-week high, Dell 37 percent, Supermicro 65 percent. I mean, there's some valuations here that appear to be perhaps trying to reset, perhaps not done. Yeah, I think, John, they're probably trying to reset a little bit. And, you know, it's probably been six or seven

months since we've been overweight technology. We've been more interested from an AI standpoint, really, let's say for something like industrials, because, you know, clearly for electrical grid upgrades and data center building, I mean, somebody's got to build these things and, you know, they're all in the industrial sector. So we like industrials. We've liked financials, communication services. We like energy when, you know, oil's anywhere in the 65% to 70% zone. So I think AI is out there. You have to have some exposure. If you carry an even weight in technology, it's 30%, 32% of the S&P 500. So that's a load. So you've got the exposure there. But as we look down the road here this year, I mean, we're expecting some

broadening earnings beyond just the MAG-7. And their growth rates are going to slow this year, while some of these other companies are going to improve. So I think those are the sectors that we like right now. You know, we're still large cap over small. We're looking for an opportunity to maybe do something with small caps, but I think it's too early. The international economies, while they might be a little bit better in the second half of the year, they don't look all that great now. So, you know, our strategy hasn't changed a whole heck of a lot in the last four or six months. You know, we're still looking for rates to trade a little higher, and I think there's going to be opportunities in rates and stocks.

Okay. Dan, I'm looking at these notes from you and something catches my eye here. And it is this idea that the myth of cash on the sidelines is how you phrase it. What do you mean by that? Well, I mean, for a long time, especially when the headlines were saying that money market accounts had hit seven trillion dollars, you know, there was all this talk about the cash was sitting there, you're ready to pile in to drive stocks higher. And I think that there's other reasons to think that stocks can be propelled higher, but it's probably not this idea of cash on the sidelines. First of all, true cash out there, household cash is like three times that $7 trillion amount. So we got to put it in perspective.

But the level of cash at households is actually below historical averages. So while cash levels have gone up, stock allocations have obviously gone up way more. And so while stock allocations are at an all-time high, cash allocations are below the historical average. And I think it's become more of a substitute for bonds than for stocks. And so this idea that all this cash is going to plunge and push into the stock market i think is a little bit misplaced okay scott you just said something i want to dig a little deeper on and that's the fact that you think rates are actually going higher from here and we've seen this back up in the 10 year we're at four or five basically on the nose again

right now what do you think drives rates higher and ultimately what brings them lower and i ask this knowing that the Treasury Secretary, Bassant, last week made some very telling comments about the fact that the Trump administration is not focused on the federal funds rate and is not paying such close attention to what Powell and the others at the Fed are doing right now. They're focused on bringing that 10-year yields down. Yeah, I mean, Morgan, if the 10-year yield touched 5% this year, that wouldn't surprise us at all. I think, you know, five, five and a quarter, we'd be pounding the table to extend duration here. I mean, we're even weight long term.

We're looking for opportunities to lock in some longer rates. And you're right. You know, the administration, the Treasury Secretary told us this. We know the report card for Donald Trump is the stock market. The Treasury Secretary told us they're watching the 10-year yield Donald Trump is the stock market. The Treasury Secretary told us they're watching the 10-year yield. I mean, those are two critically important things. And, you know, we think we're going to be able to lock in some longer-term rates. You know, if there's any hint of some sort of global improvement in the second half of this year,

plus you've got some normalization going on. You know, a 3% 10-year yield is not normal. You know, 5-plus is normal, but we're doing a little normalization here. You're probably going to see a little better synchronized, that's a strong word, but synchronized global activity here. And still, this fear of inflation, what the Fed's going to do about it, are they going to raise rates? I mean, that could give us an opportunity in equities, and it wouldn't take much, given the run we've had, to say you're 10% lower. I mean, that could give us an opportunity in equities, and it wouldn't take much given the run we've had to say, you know, you're 10% lower. I mean, that's an opportunity to buy stocks here.

So you need to be on your toes. You're going to have some opportunities this year, and you need to be able to move when those opportunities present themselves. All right. Scott Wren of Wells Fargo Investment Institute and Dan Suzuki of Richard Bernstein. Thank you. Now, Estera Labs earnings are out. Christina Partsenevel is back with those. Christina. Yeah, Estera Labs beating on the top and bottom line. This is a chip name.

EPS of 37 cents on revenues of $141 million, much stronger than anticipated. The company makes connectivity chips for AI and cloud infrastructure. They're guiding for Q1 revenue of 151 to 155 million versus the 134.2 million expected. Q1 EPS also coming in between 28 and 29 cents. One quick line here, they expect 2025 to be a breakout year as we enter a new phase of growth driven by revenue from all four of our product families.

But yet shares are plunging about 5 percent on this news. So I still need to go through it and figure out despite all the beats. OK, Morgan. Christina, thank you. We have a news alert on OpenAI. Kate Rooney has the details. Hi, Kate. Hi there, Morgan. So an Elon Musk led group of investors is reportedly making a ninety seven point four billion dollar bid for control of the nonprofit arm of OpenAI. This is according to the Wall Street Journal. This is, appears to be an unsolicited offer filed by Musk's attorney and then submitted to the OpenAI board of directors. OpenAI did not immediately respond to requests for comments. So the Journal saying the bid is being backed by Musk's own AI company,

XAI, which they say could eventually merge with OpenAI if this deal goes through. He also has several venture investors backing him, according to the journal. This could throw a wrench in OpenAI CEO Sam Altman's plans to convert to a for-profit. The nonprofit arm, as the plan is right now, would still exist as part of that and then be spun out as part of OpenAI's current plan. It would still own equity in the new public benefit corporation. But this is getting messy, guys. In a statement provided by Musk's lawyer, he says, quote, it's time for OpenAI to return to the open source safety focused force for good it once

was. Quote, we will make sure that happens. And it comes as sources separately telling me OpenAI right now is in the middle of raising money from SoftBank at a $300 billion post-money valuation. It's raising about $40 billion. But Musk was a co-founder of OpenAI, guys. But this is the latest in the back and forth between these two major AI companies and major players at this point. Back over to you. Yeah, thank you. And Brett Taylor, who is the chair over at OpenAI, is accustomed to unsolicited bids from Elon Musk, given he was once chair at Twitter, now ex-owned by Elon Musk. Well, the major averages may have closed higher today, but senior markets commentator Mike Santoli is looking at some waning momentum in the average stock. Mike? Yeah, John, kind of indecisive, indifferent. If you look at the equal weight

at S&P 500, now certainly not breaking down and we're hovering not too far from the record highs. But you see it here over six months with the 50-day moving average. It's now kind of tilted just modestly to the downside. That doesn't necessarily mean awful things to come. Back in the middle part of last year in June, the 50-day average also did go on the decline, and the market kind of consolidated for a bit. And eventually the equal weight did make new highs. But it shows you where we're at here. It's just a selective and uneven leadership group. It's not been in all boats being kind of risen by the same tide here.

So we're going back to October levels on the equal weight. Now, talk about the kind of divergent leadership. Some of the real favorite trades in the latter part of last year, industrials and financials, have now kind of gone separate ways. Financials, by far, the clearest and strongest kind of economically cyclical part of this market. It continues to perform well, though was backing off a little bit today. And then industrials have a really good two- to three-year uptrend going, but they have flagged as well. Could be some tariffs, could be valuation concerns.

Again, I don't think any of it is decisive in saying that, you know, this market's in trouble. But it does show you that it's sort of relying on more selective parts of the market to keep afloat. All right. That's an interesting chart right there. Mike Santolio, see you later this hour. We've got more earnings to bring you. Cody results are out and Steve Kovac has the numbers. Steve. Hey there, Morgan.

Yeah, it's a miss on the top and bottom lines here for Cody. We're seeing EPS coming in at 11 cents adjusted. Street wanted 21 cents. Revenue is also a slight miss, 1.67 billion. Street wanted 1.72 billion. And an interesting note in here about FX headwinds and the strengthening dollar that we've heard so much throughout this earnings season. They're now expecting the second half of 2025 will have a hit of 3% to sales because of this strengthening dollar that we're seeing.

Shares are off. It doesn't look like they're moving too much off about a third of a percent or so, Morgan. Of course, we've seen some weaker than expected numbers from Cody now, as well as Estee Lauder, Shishido overnight, Elf here on this show last week. So definitely a trend that's been very strong among consumers that now perhaps is softening. We'll keep an eye on it. Up next, Morgan Stanley, chief global economist, Seth Carpenter on whether President Trump's plans to impose tariffs on steel and aluminum imports, as well as reciprocal tariffs, could threaten the economy. And later, PIMCO's head of emerging markets on where in the world he sees opportunities

to cash in on tariff tensions. Overtime's back in two. Welcome back. President Trump is expected to announce tariffs on all steel and aluminum imports today. He's also expected to announce reciprocal tariffs on countries that tax U.S. imports later this week. But for the impact on the U.S. and the global economy, let's bring Morgan Stanley Chief Global Economist Seth Carpenter. Seth, it's great to have you on. Let's start right there, because in a week where we've got Powell on the hill with Humphrey Hawkins testimony, we get fresh inflation data, and we know that matters to the Fed. We get retail sales. We get earnings. We also get, and it would seem this is really driving the narrative, more perhaps tariffs and

trade-related news from President Trump. How are you gaming this out, and how are you modeling for your economic forecast this year, given the fiscal piece of the equation? No, absolutely. There's a lot of moving parts, to say the very least. Look, what we've tried to do is try to look through a little bit all the noise to find the signal here, and we've made some baseline assumptions. President Trump, when he was president before, put tariffs on China in particular, spent a lot of time talking

about tariffs on other countries, but eventually primarily put tariffs on China. And we think he's following through there. We saw the 10 percent additional tariffs recently. We think that keeps going. For the rest of it, take what happened with Canada and Mexico. It seemed to be part of a broader negotiating package. I don't think anyone but the president himself can say for sure what's likely to happen. But our assumption has been that a lot of the tariffs are going to be part of a broader negotiation. It's mostly the China tariffs that are going to stick. I want to just take a step back and ask what is perhaps a very basic question. But when you look at all of our major trading partners and in many cases, allies, the

U.S., trade deficits, all of them, China, the obvious one, but also Mexico, Canada, the European Union. I could just go down the list here. Why do we have such large deficits with all of our major trading partners? How much of this is really just the fact that this is a services-based economy and we're not making enough things to export to other countries versus the possibility that those countries aren't taking many of our goods because they have tariffs, duties, and in some cases outright bans on those goods from the U.S.? So it's a great set of questions.

And I think on a real fundamental level, what most macro economists would tell you is that a country ends up having a trade deficit like we do with so many other, because on average, the government is spending a lot more, borrowing a lot more than what the country is able to produce. The country is just buying and we're importing a lot of that. That's nothing new. That's been going on in the United States for a very, very long time now. I don't think you can look at a trade deficit, particularly a bilateral trade deficit, and infer that somehow there's something nefarious going on on the other side. Seth, zooming back out again at you're trying to find signal in the noise, I'm wondering in particular about how you read this particular dynamic with the Trump administration. We've seen a president thus far determined to fully flex the geopolitical powers that he has. Rather than threaten, he's just going out there

and doing it. And that's on the international side. And he's impinging the domestic powers of other branches of government, daring them to respond as he has effectively shuttered programs that Congress has funded. Now, often we hear this sort of adage, cliche, whatever you want to say, that gridlock in Congress is good for the market in the federal government. Right now, we arguably have the opposite of that. We've got a very muscular executive branch just pushing through and doing things. Is that good for the market? I don't think it's going to prove to be good in the long run. I think one of the key issues that I've been talking to our clients about, I've been talking to our sales and trading desk, is

the market does seem to have focused a fair amount, for example, on tariffs, but mostly on the inflationary side of things and much less on what tariffs mean for economic growth. So when you think about imports from China, a third or so of those imported goods are finished consumer goods. So the tariffs there about imports from China, a third or so of those imported goods are finished consumer goods. So the tariffs there are a tax on domestic consumption. But a good chunk, more than half of what we import from China are capital goods. They are intermediate goods that go into manufacturing in the U.S. And so tariffs are a tax on domestic capex spending and a tax on domestic manufacturing. And we saw this, right, in 2018

and 2019 when industrial production fell in the second half of 2018 and fell further in 2019. I don't think the market in general has focused a great deal on how much of a hit to growth tariffs could be. And I think they will have to do that over time if and when tariffs ramp up like we're expecting. So I think in that regard, it's big. On the fiscal side of things, though, there really is a need for Congress for a lot of it. The appropriations process necessarily involves the Congress. And so we'll see what happens. President Trump has said, Scott Besson has said that their primary objective for fiscal policy is extending the tax cuts into the Tax Cut and Jobs Act.

And then maybe there'll be some additional work there. But we really do, for those sorts of things, have to look at the appropriations process and this budget reconciliation process. Yeah, the other thing that's going on in D.C. right now where there's a lot of uncertainty. Seth Carpenter, thank you so much for joining us. Thank you. We're getting more on Musk's reported bid for OpenAI, and Kate Rooney has those details. Kate. Hi there, Morgan.

So Sam Altman, the CEO of OpenAI, responding to Musk's apparent takeover offer of a part of OpenAI, the nonprofit. They're writing on Musk's social media platform X, no thank you, but we will buy Twitter for nine point seven four billion dollars if you want a sarcastic nod there to the forty four billion dollar Twitter takeover by Musk. That is now valued, according to some, around nine point four billion dollars. Twitter now known as X Open AI spokespeople also pointed us to Sam Altman's tweet that appears to be their official statement. And the context here, guys, is that report from the Wall Street Journal that an Elon Musk group of investors is reportedly making a $97.4 billion bid, which is unsolicited for control of the nonprofit arm of OpenAI, guys. But the latest in the battle between Sam Altman and Elon Musk. Back over to you. All right.

We had Kendrick versus Drake. Now we have Elon versus Sam. Thank you. Well, up next, the CEO of Juniper Networks. We'll see. Joins us exclusively to explain why the Justice Department's lawsuit to block its merger with Hewlett Packard Enterprise is fundamentally flawed. And later, Nokia's incoming CEO on how he plans to increase competition in the networking space and take on companies like Juniper and HPE. Stay with us. Welcome back to Overtime. Hewlett Packard Enterprises' planned acquisition of Juniper Networks is on shaky ground after the Department of Justice sued to block the deal, claiming the transaction could eliminate competition and reduce innovation. But both companies are calling the lawsuit's claims fundamentally flawed. Joining us now exclusively is Juniper Networks CEO Rami Rahim. Rahim, good to see you. So, I mean, the way the Justice Department framed this, it's about wireless local area networks claiming that, hey, these two companies are really big in the U.S.

in that market. It's a pretty big market. It's a pretty global market. How do you think competition should be framed? First, John, thanks for having me on the show. Look, I think that the DOJ has got this one wrong. They're taking a look at a very narrow part of our business, of the transaction, the wireless LAN segment, as you said. It's ultimately a small part of our business and of HPE's business. It's an ultra-competitive segment, even if you look at the wireless LAN space with up to nine different players. Ultimately, I think this transaction is going to be very pro-competitive, good for our customers, our partners. It results in two great

American companies coming together and creating a real strong player that can compete on an international stage. Well, I mean, also, you know, theoretically, 5G fundamentally changes the nature of wireless corporate networks and broadens the competitive landscape at the same time. So how do emerging technologies that we see entering, gearing up on the scene, open up this space that even traditionally was WLAN, to more big players? Well, John, ultimately, I think you are pointing out that this transaction is about far more than just wireless LAN. The sky's the limit. I mean, today, the big trends are around 5G, they're around AI. The big opportunities are in AI for networks, basically providing the AI operations to simplify the operations of networks, and networks for AI, the infrastructure that ultimately enables these large-scale data centers. This combination between Juniper and HP has the potential of creating a really strong solution across all the fundamental building blocks, compute, storage, and networking, to basically create these new data centers of the future to, again, compete on an international scale. Rami, it's Morgan. I know you're focused

on challenging U.S. regulators around what they've said about this deal right now, but I am curious how you're gaming out rising tensions between the U.S. and China and what that could mean, assuming that you are successful in that challenge here in the U.S. at a time where we see the Chinese starting to set their sights on tech companies, American tech companies, and starting to slow walk other U.S. tech deals like the Synopsys-Ansys merger? It's a great question. Ultimately, again, I think the combination makes a lot of sense for many different reasons. One really important reason, as I mentioned, is that these are two great American companies coming together, creating all the different critical building blocks of modern AI solutions and giving us the ability to compete on a global scale with international players, including large Chinese players, which I think is very much aligned with the America First agenda of the Trump administration. There's a dynamic in the news today that I wonder for your take on, and that is Nokia

has a new CEO who came there from Intel, a chip maker, but he was only there for a year before that. He was at Hewlett Packard Enterprise as an EVP dealing with data center, AI, things like that. Back a generation ago, it would have been kind of weird to move from a server maker to a chip maker to a network equipment maker. How are all of these different areas perhaps converging, and what does that say about the IT market that we now face? Well, if you look at the different buyers and builders of data centers, there are the large cloud providers that tend to buy best of breed, the best of breed networking, compute, storage. But increasingly, the future opportunity is going to be in sovereign clouds and also in the enterprise. There, the opportunity is to provide solutions, end-to-end solutions that include compute, storage, networking, the software that ties it all together. A combination of HPE and Juniper can create these solutions and provide the ease of deployment, the ease of running these data centers in the future.

All right. CEO of Juniper Networks, Rami Rahim, thanks for being with us. Thanks so much. Well, it's time now for a CNBC News Update with Bertha Coombs. Hi, Bertha. Hey, Morgan. Authorities in Nevada confirmed the state's first human case of bird flu in a farm worker exposed to infected dairy cattle. The case comes as the USDA for the first

time confirmed a second strain of the virus, which could be more easily transmitted to humans. Health officials say the Nevada patient is recovering. Steve Bannon will reportedly plead guilty Tuesday to charges he duped donors who gave him money to build a wall along the U.S. southern border. Law 360 reports the political strategist and longtime Trump ally is expected to avoid any jail time with the plea deal. He was scheduled to go to trial next month in a New York state court. And an Alabama man has pleaded guilty in federal court to conspiring with others to hack the Securities and Exchange Commission's X account last January in order to falsely claim that the SEC had approved Bitcoin ETFs. The SEC would actually approve the crypto ETFs the following day. The defendant, Eric Council Jr., faces a maximum of five years in prison

when he's sentenced in May. Morgan. All right. I remember when that happened right here on Overtime in real time. Bertha Coombs, thank you. Up next, Mike Santoli looks at the resilient earnings power of the Mag 7 and what that could mean for the rest of the market. And we are awaiting President Trump's expected announcement of new tariffs on steel and aluminum imports. Coming up, PIMCO's head of emerging markets on how that could impact China's market and your investments. We'll be right back. Welcome back to Overtime. Mike Santoli returns with a look at how the earnings power is still coming from the MAG-7.

Mike. Yeah, that's where the earnings momentum is, Morgan. Take a look here at the MAG-7's right on top here. And this is how much 2025 forecast earnings have changed in the last year plus. Morgan Stanley put this together. So, obviously, massive gains in expected earnings over that period of time for the current year. Similarly, if you take out NVIDIA, which, of course, is kind of the one that the standout, the rest of the MAG7 is also close to a 10 percent increase in expected earnings versus what was expected about a year ago.

Flattish on the S&P and then all other stocks besides the MAG7 slightly down. Now, there's not too alarming simply because the normal pattern is for earnings estimates to be ratcheted down as we approach the year of those forecasts. And then usually companies beat and still expected that those companies as a group are going to have earnings growth. But it shows it's just tough for this broadening of the market to really take hold until you have a little more convergence of earnings momentum in the market. Now, take a look at what the market's willing to pay for some of those MAG7 earnings. It's kind of remarkable how much of a shift there's been.

Meta has kind of surged in its forward PE up to above 28, and it's basically met Microsoft. It's really clear here the market preference for saying Meta has kind of the sweet spot in terms of earnings power, in terms of vibes, in terms of what they're willing to pay. And Alphabet actually trades at a discount to the market, even after a long period of time when it was mostly in sync with Meta, John. All right. Mostly bigger and stronger. Mike Santoli, thank you. Well, President Trump's trade war sparking a flight to safety in China. Up next, find out why that could also have a big impact on your investments. Plus, PIMCO's head of emerging markets on where trade turmoil is creating opportunities for investors.

Stay with us. Welcome back to Overtime. When the U.S. market gets volatile, we'll sometimes talk about a flight to safety, investors backing away from risky stocks, looking elsewhere for stability. In this week's China Lens, our Eunice Yun gives us a look at what a flight to safety looks like in Beijing. And it's very different. Something new in Beijing are the crowds around certain banks, so we got curious about what people are up to with their money. I found this bank branch packed with people opening U.S. dollar accounts.

The rate? 4.5 percent. Most are chasing the yield. Others fear a brewing trade war with President Trump could hurt the Chinese currency. The yuan will weaken because Trump is imposing tariffs on China, this customer says. And our central bank has said there's room for the yuan to go down further. She switched 20 percent of her life savings into U.S. dollars. We're hearing the same concerns over and over. People are looking for ways to protect their wealth in extremely uncertain times, with a troubled economy at home and rising trade tensions with the U.S. I met gold dealer Li Tongtong. She told

me gold bars are selling out, mini ingots now a favorite with younger Chinese. Trump has increased tariffs on China, she says. When things are less stable, gold demand goes up. For Chinese, it's always safer to own gold. Unlike investors in other parts of the world, Li Shanshan isn't buying gold fearing inflation. There's too much risk in stocks and funds, she says. I don't plan to invest in property either. The property market here is in a slump, the stock market unstable. And because of government controls, Chinese can't easily invest outside of the country. So investment options are limited.

I checked in on another local alternative. Just like fine wine, here people see China's national liquor, maotai, as an investment asset. But these bottles have been falling out of favor. Prices are off about a third from their peak a few years ago. Maotai seller Yan Xue says investors thirst for safety. I wouldn't suggest investing big in maotai right now, she says. The price could go down any time.

The economic environment is bad. Eunice joins us now. Eunice, that's a fascinating snapshot at how the Chinese consumer and investor is digesting the current moment. It seemed very pragmatic. And I wonder what you see kind of subjectively on the streets there. On the one hand, you have some consumers who are saying, I'm buying Chinese smartphone brands because it's nationalistic. But on the other, you've got consumers saying, I'm going to buy U.S. dollars. Yeah, that's right. I know there's quite a bit of irony, I think, in the fact that we found so many Chinese interested in opening those U.S. dollar accounts because the government here has been trying to get the economy here to become less

dependent on the U.S. dollar. But in fact, we saw the opposite. In terms of the economy, in terms of the consumer, I think this really is a window onto the mindset of the Chinese consumer. Traditional people are savers. And despite the government's efforts to try to get more people to open up their pocketbooks, people are really much more worried about preserving their wealth because they see all those headlines and now the latest, the trade war with the U.S. Yunus Yun, great reporting. Thank you. For more on the impact of tariffs on China and other emerging markets, let's bring in PIMCO head of emerging markets, Pramil Dhawan. Pramil, it's great to have you back on the show. Let's

start right there with China, because just earlier today we heard that David Tepper's Appaloosa is, you know, going full throttle even more so into Chinese stocks or stocks tied to China. And we have seen signs that the K-Web is breaking out here. Is China is China investable right now as you see tensions rise with the U.S. and tariffs being slapped on the economy? Yeah, we would worry very much about a long-term strategy that favored Chinese equities or Chinese debt. Short-term, sure, these are equities that could rally. But when you take a step back and you take a look at what this administration is doing, this is an administration that has deep ideology around sanctions and

tariffs with regards to China. We've really learned two things. There's two types of tariffs. There are transactional tariffs, which is what we saw with Mexico and Colombia and Canada, where there's a defined outcome. Tariffs are used to sort of accelerate a conclusion and then those countries can sort of move on and move forth. And then there's the more structural tariffs, which are revenue raising tariffs. And the administration is conducting a very deep and thorough review around those types of structural tariffs, which is expected to be concluded on April the 1st, after which we'd expect Europe and China to suffer from deeper,

more significant tariff imposition so in light of that if we're talking about structural tariffs on China what does that do in terms of impact on the Chinese economy and those trade flows who benefits if some of that manufacturing continues to go elsewhere yeah we really think about the Chinese economy as having three separate parts, and two of those parts are really struggling right now. You mentioned the property sector before. The property sector continues to remain very anemic. The second part, the domestic demand and consumption and investment is also very, very weak. The third part, which has been working in

China, has been the export engine, and that's the part which is most at risk for tariff imposition. I think that you will see a continuing of dollarization for domestic Chinese to move assets into dollars and away from RMB. And ultimately, we feel very concerned about the long-term value proposition of Chinese equities. In fact, when you look at the MSCI World Index, the greater China exposure is almost 50 percent of that particular index when you factor Hong

Kong and Taiwan. And a China with its back to the walls, with the imposition of aggressive sanctions, which is what we expect, aggressive tariffs, which is what we expect from the U.S. administration, is one where you have to factor a rising tail risk for geopolitical risks with Taiwan and Hong Kong as well. And finally, Pramil, I wonder how you think about the relationship between China and India. You talk about some rotation out of China into India, but I look at the INDA ETF. It's really been kind of in the doghouse for the past several weeks, down near 50, even as some Chinese-related ETFs tracking the broader market there are up a little bit. Is it as simple as a rotation one way versus the other? Or what do you see

happening if people are looking at the potential of a pair trade? Yeah, we continue to think that India will outperform China structurally, despite some sort of cyclical volatility that you may see. In fact, you're already starting to see concessions from India with regards to tariff. They've already looked at reducing tariffs on 30 different U.S. goods that are currently under a tariff regime. They're looking to increase their procurement of defense and energies. And when we break down structural versus transactional tariffs, India sits into that transactional element where they have the ability to be able to get deals

and to be able to move on from them. And then you sort of think about the resulting impact of that is it allows the economy to release its capex spend. It allows investors, both domestic and international, to invest with a lot more confidence. So we think structurally be more overweight India than you are versus China. OK. Pramod Dhawan, thank you.

Up next, an exclusive interview with Nokia's incoming CEO and why he sees a big growth opportunity for his company in the hyperscalers, the cloud. We'll be right back. Welcome back to Overtime. Nokia this morning announcing a CEO transition playing out over the next few weeks. Pekka Lundmark will step down at the end of March. And Justin Hotard, recently Intel's EVP of data center and AI, will take the reins on April 1st. I spoke with Hotard this morning about how his experience working with the biggest cloud providers, hyperscalers in industry parlance, plays into this new role.

In addition to that, it's going to be continuing to deepen those relationships and spend time with those customers. And having spent a lot of time with those customers, I'm optimistic about the opportunity. But AI is just one. There's also opportunities in private wireless and intelligent edge, really building on some of the enterprise business where I've also had experience previously at both at Intel and at HPE. And then there's also opportunities in defense in federal government, both here in Europe and also in the U.S. Now, traditionally, Nokia has had stronger relationships with telecommunications companies, not the cloud providers who are reshaping the competitive landscape in data and communication. Hotard, who was at Hewlett Packard Enterprise

before he joined Intel a year ago, predicts that can change as cloud providers mature. Our core customer base has always been our telco customers. And what's key here is they remain a critical customer base for us across all of our business lines. But there is an opportunity to grow. And I think some of the assets that our telco customer base values are going to be increasingly valued by some of the hyp that our telco customer base values are going to be increasingly valued by some of the hyperscalers and the new players in data centers. And, you know,

obviously, as you probably know, John, Nokia had some big wins recently with Microsoft in data center and also CoreWeave, one of the up and coming GPU as a service players. And part of it is that high availability, the automation, the quality that our telco customer base demands is now going to be necessary to support the AI data centers. Speaking of competition in the networking space, it sounds like HPE with or without Juniper will increasingly see Nokia coming to the table. We'll be watching. Well, T-Mobile paying big bucks during the Super Bowl to announce a new satellite to cell service with Elon Musk's Starlink. We've got those details when Overtime returns.

Welcome back. T-Mobile, a big S&P winner today, trading at a record high, finishing up almost 4%. The wireless carrier using its Super Bowl commercial last night to announce its satellite to cell service through SpaceX's Starlink and that that will launch in July for $15 per month. The two first partnered back in 2022 to bring connectivity via the SpaceX broadband constellation to supplement the terrestrial network with service in remote and offline areas. Now, T-Mobile even announcing the service's beta testing will be free for now to all, even AT&T and Verizon customers. This really speaks, though, to this new era emerging of more connectivity, more consistently from more places that is being enabled by space-based

infrastructure. It's a confluence of new capability coupled with lower costs and skyrocketing demand. And T-Mobile and SpaceX are not alone in this endeavor either. AST Space Mobile is partnered with Verizon and AT&T, as you can see right there, jumped almost 17 and a half percent today. And Global Star, which supports Apple's emergency satellite service, is building a new Apple-backed offering as well that goes beyond that. Just today, global star announced MDA space will build those next gen satellites in a contract worth about $765 million. We've got more on all of this on manifest space because connectivity

continues and we've been covering it here on overtime. Yeah. Leave that QR code up for another second. So people have a minute. All right. Well, the earnings parade marches on tomorrow morning when Coca-Cola, Humana, DuPont, AutoNation, and Marriott report results. And in Overtime, we'll break down numbers from Supermicro, Gilead, Zillow, Lyft, and DoorDash. And DoorDash's CFO, Ravu Enukonda, will discuss

those results with us in a first-time CNBC interview before he dials into the call with analysts. Plus, investors will also be focused on Fed Chair Jay Powell's semiannual monetary policy testimony before the Senate Banking Committee, hoping to get more clues about the Fed's interest rate strategy. Here's something else to look forward to tomorrow right here on Overtime. We have an exclusive interview with Anderle founder Palmer Luckey on his latest funding rounds that I reported on last week. We're going to see whether he confirms those details and an outlook for defense spending under President Trump. We'll talk to him about DT and lots of other things as well. A lot of different reactions to the Trump administration's foreign policy, whether it's the muscular defense or dismantling USAID.

Yeah, and I imagine Doge obviously continues to be front and center as well. How all this ultimately affects the bond market is one of the big questions. And of course, we're on tariff lookout as well. That does it for us here at Overtime. Fast Money starts now.