Power Lunch - Dow falls to session low as Trump confirms Mexico and Canada tariffs 3/3/25

Episode Date: March 3, 2025

Stocks are losing steam today, extending February’s rout after President Trump confirmed of forthcoming tariffs ratcheted up economic concerns. We’ll cover all of the angles for you. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

And welcome to Power Lunch. I'm Brian. She's Kelly. Here's what's happening right now. A big event on chips coming up at the White House shortly. Plus is China illegally buying critical technology from American companies. We'll look at Nvidia and the semiconductor makers and why some of these chips may end up in places they should not. Plus with tariffs, tariffs on Canada and Mexico set to launch. Why isn't the market and your money even more negative than we already are right now? That's an interesting question because stocks are starting to weaken this afternoon. giving back some of that late-day surge on Friday. The Dow's down 352. The S&P, both the Dow and the S&P, about 8 tenths of a percent. The NASDAQ down 1.2%. Crypto, giving back some of its pop this weekend after that big rally as the president has pushed the idea of a crypto reserve again, including for some of these other coins,

not just Bitcoin. Bitcoin still off Friday's lows when it briefly went below 80,000. We're about 87 right now, down 7% from the highs. All right, so let's check in on the chip names. Invidia. It's down today. on partly scrutiny over its sales and export controls. Invidia is higher, or Intel rather, is higher as NVIDIA and Broadcom test for technology to make AI chips.

And Taiwan's semiconductor is down on a deal to increase its investment in the U.S. If none of that makes sense, you're not alone. But let's make sense of all of it. Megan Kassell is at the White House awaiting a presidential event on these semiconductors, Megan. And what are we expecting from, let's call it an eventful White House lately? A very busy one, Brian. There's always something to talk about. Today, a couple of things.

But the first is that we're waiting on that CHIP's announcement. This is what the White House is billing as an investment announcement. And we know it's going to be with Taiwan Semiconductor. TSM is set to invest $100 billion in the U.S. over the next four years. The Wall Street Journal is reporting that. White House officials now confirming it. And we do expect that TSM will be a part of this event starting in the next hour. And we'll hear from the president then as well.

Some questions about whether any of that money had been announced beforehand, what fabs and factories that money will go towards. But we'll hear all of that in the next hour. The other thing, of course, that we're waiting for today, which you guys alluded to as well, is the president's decision on how to proceed on those tariffs against Canada, Mexico, and China, all set to take effect at midnight tonight. I was told by White House officials earlier today, guys, that the president did not have any calls on his case.

with any of those leaders of those countries, making this a different environment than it was a month ago. It means that this is an internal conversation now, and the president is set to huddle with his advisors later today as he decides how to move forward on that, guys. All right, Megan, thank you very much. So while we wait for the president and this press conference, let's talk about a real question that investors are asking around semiconductors. Are critical semiconductors from companies like Nvidia, getting to China-based buyers, even with all the export controls. Right now, under American rules, many of the best and newest chips cannot be

sold to China legally for national security reasons. But with China's growing AI abilities, some believe that China may actually be getting more of, say, NVIDIA's products, because with about 18% of NVIDIA's sales going to Singapore, some are growing worried that NVIDIA's semiconductors are being rerouted from the area in countries like Malaysia and more illegally to China. If so, it could could put some of Nvidia's sales at risk. Let's talk about it all. Joining us out of kick things off, China Talk podcast, the newsletter founder, Jordan Schneider, MCC Global Enterprise and CNBC contributor Michelle Kruskebara,

semi-conductor reporter Christina Parts de Nevelas with all this. Christina, it is a complicated story. You got like 45 seconds. Wrap it up in a way that only you can about exactly what the concerns are here. Singapore arrested three people. there's been raids over there about an underground network selling Nvidia chips to China. Singapore's minister said they are unsure if the chips are going to Malaysia and continuing on to China. So that is the root, the concern that they are being rerouted there.

Right now, Singapore says that some of these servers, which are made from Dell and Super Micro, could contain Nvidia chips. That's the concerning part, that there's an underground network going to China. You bring up 18% of total revenues for fiscal 20, 25, InVIDIA, in 2024, it was 11%. So that's climbing and that's raising concerns. Today, Mazuho's analyst, Jordan Klein, said, should the United States go ahead and block Nvidia chips to China, that could be anywhere between a $4 and $5 billion hit to Nvidia's revenue line.

This isn't necessarily new news because the sanctions and tariffs are an overhang on the stock, but the arrest in Singapore kind of bring it to light, which is why you're seeing the stock down about 6%. I think I did in 40 seconds. That's super interesting. Michelle, what would you say about the significance of it? Well, no, I wouldn't be surprised if it's happening because we see whenever sanctions are imposed on any country for items that they need.

There are workarounds. What I'm interested to see really is what the TSM executives have to say at the White House. I was just with TMC executives last week in Arizona, touring the facility of which they've invested $65 billion and they're obviously going to commit a lot more, they made clear that a lot of the reasons why they are, one of the key reasons why they are building in the United States is that their customers want them to build in the United States for resiliency when it comes to making sure that if, God forbid, we go to war over Taiwan where the most advanced semiconductors are produced, that we have some supply here, even though they are not producing the most

advanced chips here. And the other thing they made clear was that the subsidies under the Chips Act under Biden help a lot. They've gotten more than $6 billion. And if the president who's made clear he hates the Chips Act and would rather put tariffs on chips coming in, that they're going to need their customers to help them subsidize production here in the United States because it is much, much more expensive to produce here, even though there is a national security rationale for doing so. So Jordan, do you think Nvidia shares are down, you know, call it 6% today, because these arrests and this crackdown have people wondering if they'll be able to sell at the same pace going forward, if the U.S. kind of gets more restrictive on this front? Or do you think

there's something else going on here? Yeah, I mean, let's focus on what's happening. You had a Wall Street Journal article this morning where a source who felt fine going on the record, meaning Mr. James Law, which goes to show that he thinks so little of commerce's enforcement strategy that he thinks this supplier that it's better for his business to advertise in the Wall Street Journal that he has chips than whatever risk this exposes. So I think this is a great illustration of just how many chips are getting into China. And Singapore bringing this case over a few weeks ago, they see what's happening. They see the Trump administration viewing this as a respect issue that, you know, Singaporeia,

Malaysia is playing them, China's playing them. And to a certain extent, Nvidia and the semiconductor equipment manufacturer. have been playing the U.S. government over the past few years, tipping right up to the line, not necessarily really taking it all too seriously the enforcement of these expert controls because obviously they make more money when Chinese firms or Chinese firms through intermediaries

are able to buy chips. So I would expect the Trump administration to come really hard down on this, not only the illegal smuggling, but also the sales of Nvidia chips, which are basically frontier technology, like the H20 chip, which is a truly excellent,

piece of hardware and makes you really question what we're doing in trying to restrict China's access to AI if we're stealing allowed allowing them to import the best stuff. Okay, I got it, Michelle, listen. I mean, the journal does great work, and I'm not knocking the journal, but I pitched this story on January 30th internally here, working with our Singapore team to try to figure out where these chips were going to, because with all due respect to Singapore, it's a great place, great country, whatever, they're growing in their data center business, but if I'm looking at Nvidia sales, 7.8 billion per quarter to Singapore, that seems like a lot. Now, here's the problem, Michelle, and you tell me if I'm right or wrong.

Singapore is one of those countries where sometimes buyers are just based there. It doesn't mean the product ends up there, but the sale could be reported to Singapore, but not actually going to Singapore. Do you think we're ever going to be able to peel back the mask and figure out who's really, if anybody, is doing any of this nefarious stuff? It's pretty difficult. It's been done before, for example, when supplying products and parts to North Korea, for example, where investigators have been able to determine that Chinese companies have been doing things that were sanctionable. So it can be done. It's going to take a lot of work and it's going to take a lot of investigative practice. But it could be done. I mean, it's the same way that we know what's happening with Chinese production in Mexico, where in order to avoid tariffs on. products from China, they're just either shipping it through doing trans shipments, which was a great concern under the previous Trump administration, was still a concern under the Biden administration.

So, yeah, they can get to the bottom of it, but it's going to take a lot of work. Christina, also, if you could kind of bring it back to the market today, you know, the uranium stocks, it's sort of like everything in the AI complex is under some pressure, which understandably happens anytime Nvidia sells off, but, you know, is it all because of this concern about its future sales and where they go to? Are there other factors going on here? Well, you've seen the stock range bound for over eight months. I know we used that figure a lot.

A lot of concern just with the blowout earnings, which InVedia had strong earnings. Their gross margins came in a little bit weaker, but it's just harder and harder to keep beating at that rate. To just your point about Singaporean sales, Nvidia will argue that chips go and they get shipped to Singapore at a very, very small portion, less than 2% of total revenues,

which is about, you know, a little bit less than $500 million versus the actual sales to. So there's a difference between both. People use Singapore as a sales hub, but not necessarily where they use the chips locally. So there's the difference there. And one point that I know there's a lot of questions online, people asking right now, in regards to TSM, that $100 billion investment, we still don't know if that $100 billion is going to be net new, or it will include the money that was previously promised by TSMC. Well, I mean, that's a big question.

It is a big question, Jordan. It's kind of what I brought up, which is, and we're not, no one, I want to be very, very clear. Nobody's saying that Nvidia is doing anything wrong. I want to make that very, very clear. The simply idea is that they're selling to some place, and maybe those places, those people, those companies, whatever, are then selling on to somebody else. We don't know, but we do know this. 18% of Nvidia sales are going to Singapore.

Singapore has fewer data centers than a state, I think, like Maryland does, Jordan. Do you believe that all the chips sold to Singapore are staying in Singapore? And if you're based in Singapore, I realize you will not want to answer that question. I'm here in New York City with you guys. You're fine then. You're good. I think there's an analogy to be drawn here. U.S. financial sanctions, particularly on the oil market in the 2000s and 2010s and into the 2020s on both Iran and Russia, people thought were impossible. This is a liquid asset. How could you ever trace it? But what ended up happening was the Treasury Department in the Bush administration, in the Obama administration, and then in the Trump administration, started to get really serious

about fines, about putting the onus on the companies to enforce what their policies are. And you know, you saw a billion dollar bites taken out of the likes of standard charter and BMP Powerbaugh. And when you really put the onus on the companies, you make them take this seriously, like, look, it is not rocket science to track where your product goes around the world. And I have full faith that with all the technology that Nvidia has been able to invent over the life of this existence, even at a stock price of $117 a share, they can afford to, you know, put tracking devices on their chips or do more diligence in their supply chain tracking. But the government hasn't really tightened the strews from an enforcement and a financial

penalty perspective such that semiconductor equipment manufacturers and Nvidia itself haven't really had to take this as seriously as they need to. Michelle, because I know you're like, you know, you like to keep it real neutral. You don't let your opinions get out there at all. But in this case, if you were to have a hot take, do you believe that Deepseek is using Nvidia chips? You know, I don't have enough information about that. My guess is likely yes.

What I think you're getting at, though, here is a very core issue, Brian, which is, should we and can we produce more here? And the question of how to achieve that is what the Trump administration is facing right now. We passed a huge bill in this country under Joe Biden, the Chips Act, where we are, as taxpayers, subsidizing production in this country. Is that the right way to go? This is a major policy question that involves a lot of our money and involves also the bottom lines of all the companies that we're talking about that trade right now. The president made a speech in late January that he hates the CHIP Act. He thinks it's a terrible idea to give, quote, rich companies subsidies. He wants to, what's his favorite tool?

You only get one guess. He wants to impose tariffs on all foreign ships. He thinks that's a much better way to incentivize production here. Can we do it? Those are hard questions. You know, you need, for the TSMC facility that I saw last week, you need huge tracts of land because they are multiple football fields. You need lots of dependable power. You need so you've got to improve the grid. You need lots of dependable water. You need a lot of dependable water, something that Phoenix worked very hard to solve for TSMC. And you need high quality and consistent supplies of labor, which, which is why a lot of these new production facilities are located near universities that can produce both, you know, the manufacturing component, the people who are doing the scientific work, etc. Very quickly.

Christina, I heard you, you said yes, when I asked that question earlier, you kind of- Yeah, it's, they have said that they use the H-800s. The big question is, did they get a hold of these chips before they were banned in October 2023? They are also said to be using the H-20s, which are currently great chips. as you guys talked about, but are still allowed to go to China. So that would be the big thing. The age 20s would be the next on the chopping block under the Trump administration.

But yes, Deep Seek did use Nvidia chips to train. Yeah. Well, there you see it. All of this adds up to a tough day, both for those stocks and for the whole market. We really appreciate it, guys. Thank you. Jordan Schneider of China Talk, Michelle Crusoe Cabrera and Christina Parts in Avelace. Coming up, chips are just one piece in the global trade chessboard.

The White House's tariff deadline for Canada and Mexico is set to explain. fire tonight? Another delay? Or do they go forward this time? We'll speak with former Commerce Secretary Carlos Gutierrez next. Welcome back to Power Lunch. The U.S. is set to impose 25% tariffs on Canada and Mexico tomorrow after President Trump said last week his proposed tariffs will roll out as scheduled following that month-long delay that we got the first time around. But our next guest believes there is a scenario where Trump may at least partially delay the tariffs that are set to be imposed. Joining us now is Carlos Gutierrez, the former U.S. Commerce Secretary and a CNBC contributor. It's great to see you again, Mr. Secretary. I mean, look, the market seems to a

great, look, I like to look at a stock like active, right? 40% or whatever supply exposure to Mexico. It's still up, it's higher now than it was on election day. So they seem to think that we're not, this is not really going to happen the way that it could in a couple of hours. What do you say? You know, what I think we're saying is kind of the hyper-acceleration of a trend that started 20 years ago, which is expanding the scope of trade agreements. What's really driving the decision tomorrow is fentanyl and immigration. And Mexico has done a pretty good job on both. Border crossings are dropping. Just recently, Mexico, what they call expelled, a prisoner who's a notorious drug dealer who's been in jail for a long time. the U.S. is going, trying to get him for 30 years, and that's something that President Trump

and President Scheinbaum just achieved. So it's a big win. And if the president is looking for a way to stall or to delay, that is an excellent opportunity. You know, another option is to apply tariffs, but perhaps more surgically and not as broad. So I think there's a way out on Mexico. It doesn't have to be the full 25 percent. Canada's tricky because we're talking. about the relationship of the two leaders, and that's not very good. And that could influence. But it'll be interesting to see. I think there's a chance that with Mexico, it's either a partial tariff or maybe a delay. Carlis, what do you think happened with the border? You are right, border encounters are the lowest level in 20 years. They've collapsed in the last month. To be

fair, they were on the decline in the last few months. What really changed? Was it just the White House? Was it something else? Well, the momentum established by the administration on immigration, I think, is sent a big message to people that don't try to cross. The environment is not friendly. So fewer people are crossing. There could have been other trends that influence crossings, but border security is better. And the word is out that, you know, refugees are going to have a hard time. So that's helped.

So now, if you think this is a nothing burger, then what is the U.S. strategy? So as other analysts have said, look, Mexico and Canada can probably come up with concessions to give the president one time, a couple times. But is this going to go on every month? I mean, it's kind of, I guess, one strategy for him to just say, you know what? Thank you for the latest round of concessions. We'll kick it down another month. And a month later go, great. Thank you for the next round of concessions and we'll do this.

And I mean, how many times are we going to do this? That's the risk, is that this just it's a tactic. keeps going and the uncertainty increases. But I think as time goes by, there may be less skepticism about future tariffs. The thing we have to worry about is it's tomorrow, but then it's also steel and aluminum on March 12. So that means it's 25% on steel and aluminum on top of tomorrow. So if tomorrow goes ahead, we're going to have a heck of a time if we're going to put 50% on steel and aluminum. So I think those two things are going to be put together. The reality is that the president, a deal maker, he's got the best situation because there's so many balls up in the air,

right? There's Mexico and Canada. There's steel and aluminum. So there are things that he can do to get his message across, demonstrate that tariffs can work as a negotiating tool, but not have such an impact on the economy. Can they work? Carlos, I don't know if you're on Twitter, but everybody is either a tariff expert or an expert in Ukraine minerals now. I mean, it's unbelievable. People are thrown around like the 1890 William McKinley tariffs, which they think led to the 1893 panic and then subsequent recession. What's your view as a former Secretary of Commerce, a member of a cabinet? What's your view overall on what tariffs may or may not do? to an economy? Look, if the president were going to apply tariffs and leave them there, you know,

strategically, this is going to be a part of our infrastructure, our part of our trade infrastructure. Tariffs are going in and they're going to stay permanently, or at least for a long time, that would be a concern. That would spark all the, you know, the talk about the smooth holly and things like that. I don't think we're at that stage. I think he's using the, them for political bargaining for, using tactically. That means they can go in and they can go out. And because of that, if things start getting really bad and we start seeing either the economy slow down, we start seeing inflation, the stock market took a dive this afternoon, I think

then he could react. So I wouldn't worry that we're going into a new smooth hauling era. I think these are tactics and therefore they're flexing. All right. Market, it seems to agree. Carlos, thanks so much. We appreciate it. Thank you.

Thank you. Appreciate it today. All right. Up next, how President Trump may have completely flipped the script on Bitcoin. Welcome back to Power Lodge. What happens in the break? Let's get a check on crypto after a huge weekend with many of these, what do you call it, protocols soaring, but now giving back.

back some of their gains, Bitcoin and Ether, way up from their Friday lows after President Trump again backed the idea of a National Crypto Reserve. But he didn't just mention these two. In fact, he originally didn't mention them at all. Riple, Solana, and Cardano were part of the original post on Truth. Social sending those tokens higher as well, but you're looking now of the declines from those recent highs. Today was the first day investors had the chance to get into some of those Bitcoin ETF, so those are still a little bit higher. So are the stocks in the Bitcoin universe like Michael Saylor's strategy. But it's currently trying to stay positive. of only about a tenth of a point.

Meantime, the hottest group of stocks in the entire global stock market right now are the European defense companies. Names you have probably never thought about or never heard of are soaring. It's all in the thinking that Europe will have to ramp up its own defense spending to help Ukraine defense and defense-related companies.

They are soaring overseas. Names like Italy's Leonardo, Paras-Palas Group, the salt aviation, BAA systems, Germany's Rhein Metal and more. They're not just higher today, Kelly, but they're up huge this year, anywhere from 23 to 80%. I will post the full name to my ex-account at Sully, CNBC.

Look at those gains here to date. Just incredible that run is. Lots more to come. But first, a massive shift over at Woffed. The regional bank ending a 100-year-old business segment. We'll ask the CEO what led to that decision and what it means for the housing market. Next.

Welcome back to today. Power lunch on Pippa Stevens with your CNBC News Update. Pope Francis suffered what the Vatican is calling two episodes of acute respiratory failure today. Officials say he was given an oxygen mask this afternoon to help with his breathing and that the respiratory crisis is now over. The pontiff has been in a Rome hospital receiving treatment now for more than two weeks. Vice President Vance is headed to the southern border. A spokesperson announced today that Hill tore an immigrant processing facility Wednesday in Eagle Pass, Texas, making him the highest ranking Trump administration official to visit the border so far. And tennis legend Serena Williams is getting into basketball. The Toronto Tempo, a new WNBA expansion team, announced today that Williams is joining the ownership group.

Williams called it a, quote, incredible investment opportunity, and the team says she will play an active role in the team's branding, including the design of its future jerseys. Her investment still needs final approval from the league. Kelly, back to you. Very active on that front these days. Women's sports in the WNBA. PIPA thanks. Let's get a check on the regional banks.

Good read on the health of the economy, kind of the pulse of things. This is credit. This is the lifeblood, the KBW regional banking index, up slightly so far this year. A strong 2024, of course, we're up 25% or so in that period.

Our next guest runs the largest bank in Washington state, Wathed. Undergoing a shift in its business, making the decision to exit the single-family mortgage lending market after 107 years. Brent Beardall, is the president and CEO. It's great to see you again. Welcome back. Great to be here, Kelly. So many different macro trends we've discussed over the years from the commercial real estate crisis.

Are we still in it or no? Commercial real estate crisis, knock on wood, we've been right. There is no crisis. You were right. You were at the time also leaning into a lot of multifamily, which still, I think, has been a stalwart. No? It's been a juggernaut. It's been fantastic for us, and we'll lean in more to that. You will. Okay. So that, of course, is happening. Now people are saying we need more apartments again because we've had the glut and then the short. Anyway, on the home equity front, is that what this is about, no longer extending home equity lines of credit? No, it's more than just home equity. It's first mortgages on single family houses. So this is not a decision we took lightly. We've been doing it for over 100 years.

And it used to be right, the Bailey construction and loan. It's a wonderful life. You went in and you sat down with your banker and said, okay, here are my finances. Do I qualify for a loan? Potter's not selling. He's buying. That's right. Potter's buying. But the world changes. And if we don't change, then we risk becoming a dinosaur, becoming extinct. And what has changed is when you get a mortgage, do you move your primary depository relationship to where you have the mortgage? The answer is no, right? Mortgages have become a commodity.

And they hop around. We all get those documents right. Now it's owned by this servicer. Now it's owned by this servicer. You have to make a new account all over here. There's zero loyalty from the bank that made the mortgage, and there's zero loyalty from the customer. So we had to ask ourselves, why are we doing it? And then the other fact is 70% of the mortgages made in the United States today are made by the U.S. government in one way, shape, or form.

And we said, we're part of the 30% why. And if you look at it from a banking perspective, what are we doing? We're obviously trying to meet a need of the customer, but we're taking credit risk and we're taking interest rate risk. I just want to squeeze this in because we might have to go to the White House shortly. But this is also what blew up a lot of banks during the banking crisis a couple of years ago. When you lend long at two whatever percent and all the sudden rates go way up, your bank can be under water. Is that partly what's going on here? That is the interest rate, right?

This little device is exacerbated interest rate risk. How? How is the, and he's hope, by the way, if you're on the radio, you were holding up your phone. How has the phone exacerbated interest rate risk? Because it is so easy to refinance your mortgage away. So a mortgage has something called negative convexity. Sorry for geeking out, meaning the mortgage is. never more valuable than the day you make it, right? If rates go up, the bank's underwater,

and you're going to extend how long you hold that. Everybody today, they're not leaving their mortgage because they have such great rates. And the opposite is true. If rates go down, the bank's like, yes, we have a rate that's above market. So it's great for the consumer, in part because the government makes it that way, but it's bad business. It's bad business. And as a business, I say, we want to do what's right for the consumer. And if we can't deliver the best product for the consumer. If they can get it at a lower cost elsewhere, let's get out of the business. Is it good that the government is now basically running the mortgage show? That's a really good question. I don't think so, but it's reality. I try to ask good questions. Sometimes I do.

My candid feedback is no. But it's a political choice, because especially in a day and age like this, they're talking about 40-year mortgages. How else are people supposed, you know, we keep this game going, because it gives homeowners the clarity to kind of own this. This is the biggest investment decision that they made. It is, but we're an outlier in the United States compared to everywhere else in the world. Who else has 30-year mortgages? And we couldn't have 30-year mortgages unless the government was willing to backstop them. I mean, what would be the ideal mortgage product then? Well, the- Don't ask the banker. Well, no, they're getting out. They're getting so all current customers will continue to be wonderful customers. We'll continue to be wonderful customers.

But new mortgages, you're not going to underwrite it. We're not going to underwrite. We're going to Tell them we have relationships in each of our nine Western states. Here are five different sources. You can go to get a mortgage from the government. You'll be able to get a lower rate than you could have gotten between us and bring us your deposits because we're going to be able to serve you very good. If the government is buying 80% of the mortgages, Fannie and Freddie. Or backing them.

Why don't we just all just go get mortgages from the government from now on? Well, you essentially are. Right? You have a front-end broker. Because the government's really good at running stuff. So we should just go to their website, U.S.government.gov. U.S. government.

dot go. I'm completely making this up, but you get my point. Will there be a day where we just go directly to the federal government to borrow money? Why do we need anybody? Right. Why not do an app right with the government and to refinance, if rates go down, refinance again?

But the government doesn't value their balance sheet the way a bank has to value our balance sheet. Nobody talks about the unrealized losses in the government's mortgages. If we had those, everybody would be talking about those. So you're comparing apples to oranges. And there are servicing companies who are able to make a living out of that specific kind of niche of this business. But it's a really important sign of the times what you're saying and what's happening to the industry.

What do you think about the economy more broadly right now? As more and more people are coming on and saying, we're not so sure how things look at the back half of the year. You know, it's really, it's a tale of two stories, right? There's an inherent optimism that things are going to change. Crypto Watch is sponsored by crypto.com. But then on the other side of the spectrum, you have the uncertainty. Okay. Brent, sorry to interrupt. President Trump is now speaking at the White House on semiconductors. This gentleman is a very unique man.

It's, I think I could say in the world of CHIP, certainly, but in the world pretty much a business, nobody's done what he's done. For those of you that are into that world, you would say, wow, he's a legend, but he is a legend. And it's an honor to be with you. Very great honor. Thank you very much. Thank you very much. Welcoming from TSM, which is the biggest there is at a level that you can't even calculate, frankly. C.C. Way to the White House for a very historic announcement.

This is a tremendous thing for our country and hopefully for his company. We're also pleased to be joined by Commerce Secretary Howard, Lutnik and White House AI and SIP, the crypto czar, David Sacks, another two very highly respected people. It's great to have you guys involved. And David, thank you very much for coming on. David is sort of the king of intellect in that world. We have some good people.

Today, Taiwan Semiconductor is announcing that they will be investing at least $100 billion in new cap. in the United States over the next short period of time to build state-of-the-art semiconductor manufacturing facilities. I think mostly it's going to be in Arizona, which is what I understand, which is a great state. I like it because I want it. But I won most of them, actually.

But I did, we want it, and we want it big. The most powerful AI chips in the world will be made right here in America and it'll be a big percentage of the chips made by his company. But as you know, they're based mostly in Taiwan, and they're far and away the biggest. There's nobody even close. This $100 billion in new investment will go into building five cutting-edge fabrication facilities in the great state that we just discussed, Arizona, and will create thousands of jobs, many thousands of jobs, and a high-paying jobs. In total, today's announcement brings Taiwan semiconductor investments to about $160,000,000,000.

billion they've started already. Among the largest new foreign direct investments in the United States, Apple, as you know, I made a big announcement last week, a 500 billion, and we have some others that have announced. We have many that want to announce, but I don't have time to do all of these announcements, I tell you, but for you, I'm doing the announcement. Thank you. This will create hundreds of billions of dollars in economic activity and boost America's dominance and artificial intelligence and beyond.

semiconductors are the backbone of the 21st century economy, and really, without the semiconductors, there is no economy, powering everything from AI to automobiles to advanced manufacturing. And we must be able to build the chips and semiconductors that we need right here in American factories with American skill and American labor. And that's exactly what we're doing. As you know, Taiwan pretty much has a monopoly on that market, And I think pretty much is not a term that's even appropriate. They do have a monopoly.

And this is a tremendous move by the most powerful company in the world. It's a matter of economic security. It's also a matter of national security for us. And at the same time, Mr. Wei will be able to diversify and have his tremendous presence in another place and a very safe place. And I want to thank Taiwan Semi-Conductor for, doing the announcement and I'd like to ask Mr. Wade to say a few words if you might and I'd also like to ask Howard and David you can say a couple of words but maybe you should go first because right now he's the most important man in the room I'm sorry fellas please thank you very much thank you great honor thank you I'm a little nervous so I have to pull out of my piece of paper mr. president

Secretary Larnie, and David, I didn't know that your title. Okay. First, I want to say thank you to Mr. President to give me this opportunity to announce our big project in the U.S. TSM is the world's largest chip manufacturing. chip manufacturing funded by Dr. Morris Chen in 1987. It's now at the forefront of semiconductor technology, supporting AI advancement and industry growth.

In fact, I would like to wind back the time that in 2020, we have to thank President Trump's vision and his support. So TSM started the journey of establishing the advanced chip manufacturing in Arizona. And now, let me proudly say now the vision becomes reality. In Phoenix, Arizona, with 3,000 employees, we are producing the most advanced chip made on U.S. with the success of our first FAPE so we are now very happy to announce we are going to invest additional 100 billion US dollars in addition to our current 65 billion US dollars investment in Arizona we are going to build three more new FAC after we promised three FAPS already and another

two very advanced packaging fact and most important R&D Center also in Arizona. For this, all the investment, $165 billion, it's going to create thousands of high-paid job as a president just announced. And we are most important actually, we are going to produce many AI chips. going to produce many chiefs to support AI progress and to support the smartphones progress. And again, with that, I want to thank President Trump again for his support. In addition, I also want to send my customers in the U.S., such as Apple, Nvidia, AMD, quark and broadcom, they all support TSM's manufacturing in the U.S.

Without their support, we probably cannot make it true. So again, I want to thank them. Also, I'd like to thank the TSM's employee without their effort. We just cannot make it today. That's all I want to say, and thank you. Thank you. Sure. Thank you. All right. That was the TSM CEO, C.C. C.C. way speaking there at the White House, alongside the president and the Commerce Secretary Lutnik, who's speaking right now, announcing this $100 billion investment from Taiwan semi.

Amon Javers is standing by to recap the key details. And, Amon, you know, we look at the announcements. We've seen, which it almost seems like the president is really trying to say the dollar amount's going to total up to what we might have seen in the Biden administration. But the sources are all private sector up to this point. Again, this plant was already in the works. the significance of the $100 billion announcement today? Well, we're going to have to wait, Kelly, to see in writing exactly what the commitment here is, but what you're seeing is TSM announcing $100 billion in what they're calling new investment. You also saw the CEO there talking about building three new fabs in Arizona. So it seems like there is some significant construction envisioned here and some significant investment. How much of that is new? How much of that is a change of plans from what we've seen before?

We're going to have to wait for some of the additional details here. but this is a significant commitment, no matter how you look at it, to building in the United States. And it's significant also in terms of the geostrategic relationship between the United States and Taiwan. Obviously, the Chinese government is a threat to Taiwan militarily. And there's been some question about how much support the U.S. has for Taiwan if it comes to it in terms of a military confrontation there. This helps diversify TSM offshore from Taiwan into Arizona. production in case of any kind of military issue that might arise in Taiwan. So for that reason alone, it's significant.

But also for the voters and taxpayers in Arizona, this could be a significant investment. You know, Kelly, Kelly Evans said that exact thing in the commercial break game. And she said, this looks and sounds like a hedge against China's hegemony, I guess, in Taiwan. Talk to us more about that. And also, the name Foxcon comes up here. And I remember back in the day, a couple years ago, there was an announcement by the then-President Trump about Foxcon in Washington.

To this day, nothing has really happened. Is this more along or more real than that? Well, this isn't shovels in the ground yet. I mean, this is a promise of action to come and money to flow in the future. So you just have to watch it over time to see if all the promises materialize into something real. This is an indication, though, for the Trump administration that they are doing what they said they wanted to do, which is onshore a lot of this industrial development from offshore. But in terms of Taiwan, you know, it's fascinating because I've talked to sort of geostrategic thinkers

who say that it might be the case that one of the reasons that the Chinese have not gone into Taiwan militarily yet is that semiconductor industry in Taiwan and fear of destroying it, because their industry is as dependent on semis from Taiwan as ours is. And so you might have a situation where you go into Taiwan if you're Beijing and you cause a huge, problem for your own industry in addition to the military, political, and economic disaster that that invasion would be. So to the extent that they offshore that is that making Taiwan more of attempting target for Beijing, all those calculations are being run in capitals around the world right now. And I'll be watching, Eamon, for the moment when we're making, you know, the most cutting-edge chips here. We need all of them, as the pandemic showed, even the ones that

don't, they're not cutting edge, but they're still important. So they're making those. here. They're going to try to help Intel when we can make, you know, the creme de la creme. Also, I think that will be a significant day. For now, Amon, thanks. We appreciate it. Amon Jebors at the, I'm going to say at the White House, at our bureau as we hear from the White House. You can almost see the wall. You can definitely see the Capitol. The White House is down the road. Power lunch. We'll be right back. All right. Stocks of the markets are down, Dow, down about 1.2%. Some of the selling that we saw earlier in the day is getting worse. We talked about the top of the show, Kelly. Nasdaq is out.

on 355 points, 1.9%. And moments ago, we dove out of that press conference, but shortly after we jumped out, the president confirming that those additional tariffs on Mexico and Canada are set to go into effect tomorrow morning. There could still be some 11th hour fix, but as of now, those tariffs on Mexico and Canada, things like lumber and maybe energy, will go into effect. let's talk about it all and what it might mean for you and your money with our friend Lindsay Bell. She is chief market strategist at Cleeronomics. Lindsay, I'm kind of putting you on the spot here. I know it.

Tariffs. I got to imagine it's probably what your clients are asking you all about. What's our take on tariffs? Yeah, I mean, tariffs are clearly weighing on the minds of all investors these days. And I think you're seeing that reaction in the market today is a bit of a reflection that there was some hope in the market that potentially Trump would. back off of these potential tariffs with Canada and Mexico and China, and we're not getting such luck. So I think for the markets to stabilize or even turn course, it's going to be the tariff narrative that really needs to turn here. What would be the best possible narrative for

our viewer, your clients and our viewers and listeners money, meaning the stock market. If Trump just said, you know what, all tariffs are off for a few months or forever, what's the best possible change in narrative? Yeah, I think one of the most likely potential changes is a kicking of the can down the road, and that's not the best possible change. The best possible change is that, you know, that we come together and we reduce tariffs across the board for everybody in free trade is the answer, and it's all about fairness, right? But that's also probably a little bit too rosy of an outcome. I think that the market can and will accept some level of tariffs, like we saw on 2018, 2017, 2018.

But we are really at a different point in time now than we were back then. We have a consumer that is much more price sensitive than they were back then, but we also have corporations that have much higher margins, operating margins, than they did back then as well too. So I think there's gonna be some give and take on both sides, but ultimately we need a resolution

so that both consumers and businesses can make spending plans going forward. And the options, Lindsay, so again, we've seen stocks now move to session loads. as the president reiterated both the tariffs on Canada and Mexico and the reciprocal tariffs April 2nd. The same thing happened on the eve of tariffs last month. And then on that day, which we're already hearing reports about,

Mexico, Canada, they tried to come up with ways to get the president to stand down. He delayed it a month. What should investors do? So we had the market weakening and then it came back. Of course, it still created this overlay. Now we're weakening again. We don't know what tomorrow is going to bring. So should they take this at its word?

and fade everything that would be directly affected by it. Do they look at it as a buying opportunity? What happens if it's delayed another month and then here we go again? I think this is a moment in time for people to look at their portfolio as more broadly, right? We've seen this pullback. We've actually seen February has been a very, I guess, chaotic month you could call it in the market. You've seen ups and downs. Don't forget the S&P 500 hit new highs.

The bond market to the 10-year yield reached 4.6% before falling off to where we're at today. So it's been a very erratic movement in the market. And I think that for investors, for advisors, and for clients, they need to be looking at their portfolio and really looking at the balance that they have in that portfolio. Because over the last six years, we've seen the S&P 500 outperform four of the six years. We've seen technology play a significant role in that. So those areas may have become overweight inside of many different portfolios. If you look at the last month, we've seen the bond. the aggregate bond index up 2.2% helping to offset some of the declines in stocks.

But you've also seen international markets do well on a year-to-day basis, whether that's emerging markets or developed markets. So I think it's really a point in time where you don't exit the market. You look at your portfolio and make sure that you're prepared to achieve your financial goals through any economic or market conditions. Is Europe a better bet than the U.S.? Right now? Well, Europe is cheaper right now.

You look at the stock's 600. It's trading it 15 times. You got the S&P 500 at 22 times. So there is a divergent there. And I know you spent a lot of time today talking about the opportunities that do exist there. And so I think that it's just each investor has to look at their portfolio. Look at their timelines, goals, and risk tolerances. But again, you know, when the traders will say like, you know, here we go again, it won't last.

You know, another tariff Tuesday is almost as if the smart money is just going to ignore this. completely. So I can't figure out whether this is an ignore event, whether it's something that should be treated seriously because we don't know how long it will last as an overhang. Yeah, I don't think it's an ignore event. I think there's potential for opportunity, but there's also potential for more downside. I mean, just look back to 2022. We're in this new growth scare, just like we were in 2022, right? And if you look at the MAG 7 back then, those stocks on average fell 46%. Now they're in correction territory. today, but that doesn't mean they can't continue to fall.

Even with fundamentals right now, remaining quite reliable for the information technology sector, even when you look at the semiconductor sector. But that can change always all very quickly depending what happens with tariffs. And so that's why investors are in this wait and see period. Absolutely. Lindsay, thanks. Lindsay Bell from Clearnomics markets at Fresh Session Lowe's.