Power Lunch - Major stock averages sell off 1/20/26

Episode Date: January 20, 2026

Stocks dip across the major averages. Melius Research's James West joins to give his energy outlook.  And what does the threat of new tariffs from President Trump mean for the European Union?  Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Stock selling off, yield spiking gold rallies, and President Trump actually speaking right now at the White House. We'll monitor that and bring you any relevant headlines to you, the CNBC audience, walking to power lunch. Kelly's walking in here any moment. The Dow and S&SFP, they're on track for their worst days since November, but gold and silver keeps shining, hitting new highs. Natural gas, also on fire. Best day in nearly four years because America, it's about to get cold, really cold. minus 25 in Chicago, possible later this week, and Nashville. Yeah, you Nashville, you can get a foot or more of snow,

and there's an energy trade here as well. And we've got real world advice for you. City Group's chief U.S. equity strategist, Scott Croner, will join us momentarily with his playbook and how you should be positioned right now. All right, we have got a lot to do. Welcome, everybody. Let's kick off the hour with a pretty hot take on the markets.

Because while Greenland and Europe and tariffs getting most of the headlines, much of the smart money is talking about something different, different reasons for the market's big move. That may be the bond markets and Japan. Here's why. Japan facing up many crisis. There is a need to raise cash on many trading desks. That means traders there are selling. They're selling what they can, including both Japanese and U.S. government debt. Selling a bond means yields tend to go up, and that's exactly what we are seeing right now.

The Japanese 10-year yield, it continues to soar, trading in its highest level since 1999. And as those yields rise, so do ours here, which is hitting the super cap tech stocks that you care about and that really drive the market. Don't believe us? Look at this. This is the relationship between the Mag 7 stocks and the 10-year bond yield over the last month. As one goes up, the other tends to go down, in part because of the tens or hundreds of billions of dollars in debt that is tied to some of these companies and the AI trade either directly or indirectly. That is far, far larger than the amount of American goods that may be tariffed a little bit higher in Europe. That is your idea anyway, so let us kick off this hour with a man who's been talking about Japan and this four months.

and the bond report, did I set it up appropriate? Did I get the relationship right, Rick, between Japan, bond yields, and our markets? You absolutely did. And believe me, the Greenland story is fun for the press, but the real story. You're absolutely right is what's going on with that six standard deviation move and 10 year Japanese yields in two trading sessions. I'm going to go really quickly here. All right, let's look at an August chart of our two year. And notice, we're still in the trading range.

Short, maturities hardly have had a move. They're unchanged. Now, look at the tenure from the same date. It's breaking out. But even though it is breaking out, it's not breaking out in a huge way. It's basically breaking out, well, the highest yield closer to stay here since the second, third week in August. Now, there's the February 99 chart that Sully was referring to on the general. Japanese government bond. It has been going up, up, up, and away. And if you look at the foreign

exchange side, here's the euro yen. It continues to go up almost on a daily basis as well. The euro is at the highest level since 1991. If you look at the dollar yen, we're not at fresh highs, but we are hovering right around the highest level on the yen since July of 24. And it's been kind of hovering at that level. And when everybody talks about the dollar index in Europe and pulling their hair out, we're still up on the year on the dollar index, even though it's a little bit. And where we open the year is still up from the lows of 2025. And I'll give you the final statistic. Anyone who thinks that this is all about Greenland, I'll give you an example. Treasury International Capital Flows tick data. We received it on the 15th

last week. And you know what it showed? It showed foreign investors aggressively buying. into the Japanese-era U.S. debt markets to the tune of $212 billion, a very aggressive November for purchases. So in the end, the dollar not on fresh lows. Tick data showing that we have sizable contributions by other countries. And my final thought is, after watching these things for years and years and years, is that countries don't make their decisions based on emotions maybe other than Denmark today, they based their decisions on where to invest their money to make money.

And if that wasn't the case, why would China be so invested in our treasuries? Back to you. So you think Greenland, I mean, paraphrasing Rick Santelli, more of a distraction than a real market event, Rick? Yes. I'm not saying it's not something important to pay attention to.

I'm not saying it doesn't have political consequences. I'm not saying that it doesn't reshuffle the deck in some way to form policy. But I'm saying is if you want to protect your money where you need to pay attention is how Japanese rates are going to and continue to affect all rates around the globe and how aggressively or non-aggressively that may continue. There's already a bias in the globe for debt on the long term to keep rates higher. Add this in and it becomes a way. a double boge for higher rates.

All right. It's a great way to kind of contextualize all of this. Rick, we appreciate it. Some of the biggest names on Wall Street are also weighing in on this pressure today. In an interview on Squatbox this morning, the CEO of UBS, Sergio Armani, he's recommending people stay in cash, citing geopolitical headwinds. I don't see any path of normalization in the near future. When you say path of normalization, path of normalization?

I mean path of normalization of. lower volatility and more stability. So, you know, we need to resolve some issues. Meantime, Bank of America, CEO Brian Moynihan said today's sell-off doesn't look like the market reaction we saw after Trump announced those tariffs last year. Take a listen. That was a bigger shock to the system. Remember, the market went down with 30-40 percent and people froze because they couldn't figure out that quick change, but as it went through the summer and basically ended up with the regime, it was sort of 15 percent like for most

the countries that agreed to invest in the U.S. and fulfill the policy. purpose of administration. So what's the right move for investors here? Is it a buy the dip moment? Is it a time to play defense? Let's ask Scott Croner. He's a U.S. equity strategist at City. Chillion dollar question. Scott, what are you doing? Hey, Kelly. Well, I think we have to respect that we're getting hit with the number of these issues, whether it be the Japanese bond market, read through the U.S. Treasuries, or whether it be the European situation, courtesy of Greenland, they're sparking about a volatility right now. I mean, our preference is to let this play out a little bit longer, but ultimately we think we're going to get a buying opportunity in here. I would say that

in our view, we continue to use the fundamental setup for U.S. equities as our guiding light. And at that point, at this point, we don't see any reason to back off of a fairly constructive view, although we are going to have to continue to monitor and navigate a lot of these growing macro influences. I know you heard the top of the show, Scott. Obviously, you're the U.S. Equity Strategists. We're talking about Greenland. We're talking about Japan. What are you in your team focused on right now? Earnings? Well, we're focused on earnings. We're just getting going on the Q4 reporting period. Our whole argument in supporting a 7,700 target for the SPP has been a high in the street estimate for index level earnings at 320. So I need to continue to see a beat and raise dynamic.

And I will say, though, going into this year, part of our view have been a lower 10-year yields, which is the house view to end the year sub-4%. and we'd have expected that a lot of the policy distractions of last year would be lessened. Well, two weeks into this year, I would say that we're probably navigating a couple of issues that weren't expected to start the year, but we still have 11 months to go. I think there's a lot to play out here that I think will end up being quite constructive for U.S. equities. Yeah, that said, what do you make of the kind of larger backdrop, right?

And why do people keep selling treasuries at moments like this? Well, you know, the Japanese have been a source of demand for U.S. Treasuries for some time. The yield differentials have always come into place. So when you back up Japanese bonds as they have, then you begin to change that yield differential math. I think we just have to be sensitive to this, that there's still a lot of pieces that work to this puzzle, particularly as we look at what's happening in Japan, but also in the context of a lot of the policy initiatives and inertia that we're seeing right now, potentially what that does to our deficit math. So we've got our eye on the bond market vigilante thing as well.

I think it's a little bit premature to draw strong conclusions, but I think the news flow over the past week or two has a lot of us on edge in terms of where some of the specific dynamics are going to take us. Yes, Japan, but also looking at the European relationships. A lot of your clients, you've been right on this small cap, mid-cap, pivot that we have seen the last few months. They finally look like they got something going. Now we've got higher yields.

Higher yields are seen as kind of the kneecapper of smaller and mid-cap stocks. Are they? And do you have to change your views if the tenure yield keeps going up? Well, if it goes up materially from here, we have to rethink, Brian. But what I would say on this, though, is that part of the narrative in terms of small caps, yes, has been soft landing and an ongoing accommodative Fed, which hasn't changed at this point. terms of that narrative. But we've also been of this view that you're looking at a setup here over the next several months where various forms of fiscal stimulus are going to come into play

and be a tailwind to that economic sensitive part of U.S. equities, which really is part of the U.S. Smith play. So we're not backing off on this. I think it's actually very early innings in terms of what we think should be a fundamental pivot in some of the growth expectations as you go down the market cap spectrum. All right. And then I guess the only kind of remaining question is whether you think any of this leads to, I mean, even in the defense space, any other kinds of rotations, are you just literally just say, you know what, it's going to blow over. It's a tempest and a teapot. I just think, you know, and this is a lesson learned from last year. And you have to be a little bit careful on how quickly into what degree you anticipate and a model in a lot of the policy

discussions going on. And I think, you know, a storyline from last year is that, yeah, They can get fairly scary at times. Ultimately, ultimately, the play through is a little bit less owners from a fundamental perspective than one might have thought. So again, to make a notable change in terms of a view towards U.S. equities with what we've seen so far, two weeks in the year, a bit premature. We have to let this play out a little bit longer, Kelly. All right. That makes sense. Scott, appreciate it today.

Thank you. City, Scott Cronert. Before we go, let's take a quick look at the latest Fed Chair odds, which have been shared. shifting around. According to Kalsh, Kevin Warsh is now the favorite to replace Powell at 56%. And look at Rick Reeder in second place at 20 percent. Now, Waller at 10 percent has it way down at single digits, just 7 percent odds now after the president last week said he may well keep him in his spot and he liked the way he was talking to the press. Treasury Secretary Besson said Trump may make a decision as soon as next week. All right, we are just getting started

here on Power Lunch and coming up, how much does Greenland and the three, threat of higher tariffs in Europe really matter to you, the markets, and your money. It's getting all the headlines, but should you care? We'll talk about it. Coming up. Welcome back. Of course, we're still awaiting the Supreme Court's decision on the legality of the president's tariffs didn't come today. The president, though, is vowing to follow through on his threat to impose tariffs on European countries who oppose his demand to take control of Greenland. Our next guest says, if he follows through on that, it could be highly disruptive. Seems to be with the markets gaming out as well. Andy La Perrier is head of U.S. policy at Piper Sandler.

Good to see you, Andy. And game this out for us. How do you think it would actually work in practice? Well, I mean, I think that the, you know, it's funny how a lot of people say that, you know, Trump chickened out. But really, the rest of the world chickened out except for China. But I think that in this case, Europe can't, right? You can't have, be strong armed into giving up part of your territory. So I think that Europeans would have to respond vigorously if the president went through

10% if you raised it to 25. You know, you have Macron saying that they'd be looking at this anti-coercion measures. You know, you've had the Danish fund going to relinquish its treasury holdings. I mean, I think you're, I think you have to consider a really broad array of possibilities. In the U.S. and Europe are pretty economically integrated. So I think there'd be a lot of disruption. Do you think even if you back, I don't want to quite use a phrase back down, But if there's some other way that an outcome pleasing to him is achieved, that this all blows over? Or do you think that the Europeans now go, wait a minute? You know, we've kind of just taken it for granted that we'd never have to rethink this relationship, this economic relationship, these investment decisions.

And now they think, well, who comes after Trump? Is it Vance? Is it Rubio? Is it somebody who would be of a similar mind either immediately after him or maybe down the road? And this now becomes something that could be a chronic issue. and therefore we have to make different investment decisions. Well, I think you're seeing that, right? I mean, Canada just inked a deal with China, right?

That's a big shift. And so I think that you're looking at, you're seeing other countries kind of derisking away from the U.S. Can't be too dependent on the U.S. I mean, I should say, I mean, I think the base case is that they're, you know, the president will, will accept an arrangement that basically has already been offered, which is an increased troop presence, access to minerals in Greenland. So this probably doesn't go over the cliff, but, you know,

if you just listen to what the president's saying, you know, very well could. But I think that, I think that in the sense of our trading partners, the dye is cast in the sense that they are going to be diversifying their risk and their exposure. Yeah, it's a little weird part of history, but I want to remind our audience not the first time the U.S. has looked at Greenland 1910. There was a letter suggesting we buy Greenland, FDR looked at it, Harry Truman actually offered to buy it. Eisenhower thought about taking it. It's kind of a continuation of a hundred-year sort of eyeballing Greenland. It feels a little more serious this time. Of course, when you're living through history, it tends to. Andy, from a market perspective,

though, is there a chance that one, I hate to use the term weapon, but one tactic Europe could use is to force European fund managers that own American stocks to sell those stocks, effectively drive down our market to cause us economic pain? I mean, that is kind of what the anti-coercion measure that they have in Europe is. That law has never been used. That's right. Ever been used? Correct. I'm not sure. And it probably won't be. You know, but we are looking at, you know, I think a real chance of that. And that's something that, you know, I think a year or two ago would have kind of been unimaginable that they'd be thinking about using it against the United States. And in that case, I mean, even, you know, all the unimaginable is now kind of more quickly becoming commonplace.

So I think for investors, they go, okay, well, wait a minute. We're talking about these unimaginable tools and a break in a previously solid relationship, although at times a very contentious one to be clear. European markets are going higher except for today. U.S. markets have done fine. Is the fragmentation actually positive for corporations who now basically get double the customer set, double the clientele than they might have previously had? No. I don't think so.

I think, you know, it's always good to try to, you know, put the happy face on things. But look, I think, you know, protectionism reduces potential GDP. It contracts the economy in the long run. You know, it's not the end of the world, but it's a negative, I think. You know, the United States built this, you know, free trade world that we used to live in for two reasons. One, we thought bipartisan Democrat Republican for a couple generations that free trades, good for, you know, real purchasing power. People will be better off. And second, it promotes democracy and peace around the world.

I think both of those things were true are still true. And so I think what we're looking at is a headwind. And I think we're looking at a lot of risks that, you know, and the stocks keep going up. But there's a lot of policy risk up there. We got to go. But let me just ask a direct question, Andy. Are any of your clients asking you a very simple question?

Is my money, not mine, but your client's money, Are the U.S. markets going to go down because there's some economic war or war war over Greenland? I think people are asking that question, but I think that overwhelming investor consensus is it's not going to happen. And the economy is going to be good this year. And people are bullish. I like it. Short answer, direct question. Greenland. Again, not as big as it appears on maps, but clearly big strategically.

and Andy LaPereereer. Thank you. Thank you. All right. We're going to do a quick check on crypto. How's that for a pivot? Bitcoin has fallen below $90,000, along with the markets, a lot of stuff selling off. But the important point about this is it's behaving like a risk asset and not like a flight to safety. So the best case for Bitcoin is it's digital gold, right? It's the best sort of store of value other than gold, maybe even superior to it. So why is your Burr-Lives trade going up silver and gold when digital gold is going down? It's not digital gold. It's actually just another risk asset. Maybe not a strongly performing one. We'll see. Are you allowed to say that?

I don't know. You just did. All right. Coming up, the deep freeze, natural gas, heating oil prices higher, temperatures dropping around America. We'll tell you how low they may go and talk more about energy, batteries, and the trade ahead. All right, programming note, you may have seen the news that beginning soon. I'm going to launch an energy-specific focus here on CNBC. It's going to be segments on this show, written pieces and longer-form interviews, the biggest stories.

Very excited, and it's the perfect time to do so. More details coming soon. So right now, let's focus on energy because there's been a lot of big news lately. And one of those is last week's pushed by the White House to have a big new electricity auction to help fund data center power costs. The big question is, will the mid-Atlantic grid operator PJM actually listen to the White House and do it. Well, investors have been listening to the broader story because if you have not been paying attention, look at the huge recent run in battery and storage stocks. Fluence Energy,

it's up 196% in six months. Eos, gaining over 200% doubled, by the way, since we had their CEO on this show in October, and Bloom Energy trouncing them both up over 500% in just 180 days. Let's talk more about that, energy demand, and also what this insane cold weather may mean for energy. Joining us now, Melius Research's Head of Energy and Power Research. James West, James, a lot to talk about the battery stocks have been red hot. Do you still like any of them or have they run too

far too fast? No, Brian, I think thanks for having me on. I think the battery stocks still have more room to go. Batteries in general are the fastest growing subset of energy and energy storage out there. And with Eos, announcing

a new product recently, with long-duration, storage being necessary for grid reliability. We're only getting started with batteries in the United States. Okay, only getting started. I mean, 500% run for Bloom Energy. I know these are not all the same companies. Some are more batteries. Some are more are traditional storage. I am sort of unfairly lumping them together, James. Any part of that group that you like more than the others? So certainly Bloom has an interesting product portfolio. And because they have a solution for AI data centers in highly populated areas because they're quieter than turbines,

and they consume natural gas. They've obviously seen a big run, but I think that run will probably continue. I think with the other ones, Fluence as a packager of batteries, and EOS as a developer of batteries, they're still in the early stages of what is going to be this build-out of battery infrastructure to support the grid. So, you know, they're different businesses. You're right. They're be a little bit unfairly lumped, but both, I think, in terms of a business standpoint, have more room to go, but also I think from an equity standpoint, we're still early days in this whole grid infrastructure, AI data center built out in the United States. I mean, we're, I'm not even sure we're first any.

We're at batting practice. Yeah, and I think that James, natural gas traders and investors are still, they look at today's pop, which is historic, don't get me wrong, but we were at $5 like a month ago. now we're at four. And this is with this crazy cold coming, like historic cold. So once again, it's proving to be the Widowmaker trade. Where do you think it settles from here? I mean, even with all of the demand, it's remarkable that this commodity is not really budging in price. Yeah, that's right, Kelly. I think that we're going to see massive volatility over the next several years as we sort out the natural gas markets in the U.S. We need to build pipeline

infrastructure. We need to get the pipelines into the data center. areas, whether that's PJAM, whether that's ERCOT, you know, it doesn't really matter. But right now we're in a little bit of distorted pipeline infrastructure situation, if you will, Kelly. So I think that volatility is going to be there. We always have volatility in winter. It's cold in the Northeast as you and I both well know right now. It's going to be very, very cold for the next week or so.

And so I think that we've got a run that could take us back up well over $4 here for natural gas. But springtime does come, you know, in the next few months. So we will go back down. I think you need $4 roughly to incentivize most natural gas and activity in the United States. Yeah, I mean, some of these. I know it's short term. James, negative 25 in Chicago, a foot of snow in Nashville.

We know how well they do with ice and snow down south. They're going to be out of work for like six weeks. I'm kidding. Sort of. What is on your research list, coverage list, what is the one or two best energy plays right now? for anything? Well, EQT, by far, the biggest natural gas producer in the United States. They have a vertically integrated strategy, so they have the infrastructure, they have the drilling capabilities,

they have the, certainly the production capabilities. And so with this PJM, by frankly, this emergency auction that's coming up, that's going to just add more to the upstream part of their business, more gas to sell into that market. And so by far, EQT is the best position natural gas play right now. On top of that, I would argue that some of the infrastructure equipment manufacturers like Baker Hughes who sells a lot of equipment into natural gas, also the LNG, which is part of the natural gas, sorry, very well positioned too. If I may, pivot. I mean, I was really struck by what Harold Ham said about how, what was it exactly, Brian? He said, we're no longer drilling in the Permian or something to that effect. So, James, is that the case?

And the government itself seems to be trying to make this case. No, no, no, there's more resources than the Permian, and we're going to be fine. lot more to tap. But what does it mean for the producers and for the oil price? Well, I think right now what Howard Hamm is saying is in the Bakken, which is basically his home area. Harold is telling us that we're not profitable at these levels. And so this you know, drill baby drill mantra that the Trump administration has been pushing has pushed oil prices down too low. And we've actually incentivized drilling in the Middle East. We're incentivizing drilling in deep water. Those areas,

is we don't have issues with inventories of wells to drill. We don't have issues with rising costs. They're actually competitive, very competitive, versus U.S. shale. And so we're kind of in the early stages of the twilight of U.S. shale. It'll be a long goodbye. But Harold's being pragmatic. He doesn't have shareholders. He is the only shareholder.

So he's not talking to the market overall. He's doing what a businessman would do that controls the entire company. Yeah, he's rich enough. And to your point, doesn't owe anything to anybody can say what he wants. One reason I like talking to Harold, he just lays it out there because he doesn't owe anything to anybody. Does that color your view very quickly on U.S. oil output in Venezuela? I mean, Exxon called it, quote, uninvestable that didn't make the White House super happy. Sure. So I think within Venezuela, I think Chevron's there, Slaugin's there, Slambrose there is there. And so both companies benefit almost immediately. They'll likely have new concessions here.

shortly and we'll work with PEDA BASA to get that organization turned around. But Venezuela is a decade-long play to get back to any serious type of production level. So it's one area, but it's not going to be an overwhelming area for oil prices. I think what we need to watch is kind of OPEC policy. What we need to watch is what happens with the Permian especially. And I think the outages in Kazakhstan right now are pretty significant. And I'm not surprised that oil prices are not higher on this. It may be just the chaos of what's going on, but the Greenland conversation and the EU. But oil prices should be reacting higher. Oil prices need to move higher to incentivize production and to advantageize drilling. And in fact, you know, we're still looking for

$70 oil this year, $80 oil in 27. That's Brent, not WTI. But we think that those numbers should be pretty easy to get to. James West, Mellius Research, James, you've blasted through all of it. That's why we love you. Great job. Thank you very much. Appreciate it. Take care. Thanks, Brian. Thanks, good. Yeah, I really appreciate it. In the day when the markets are falling, this stock is shining and it's up almost 50% in the past two months.

Our guest sees more upside ahead, that mystery chart after the break. All right, welcome back now. Time for our market navigator segment. President Trump is ramping up his stance over plans for the U.S. to purchase Greenland. He's threatening to impose tariffs on European nations who try to stand in his way. So that's leading to red arrows across the screen as you're seeing. But our next guest says there are a few things. stocks that could be relatively insulated from all the geopolitical and economic tensions.

Joining us now for that case is Jay Hatfield. He's the CEO and CIO at Infrastructure Capital Advisors. Jay, thank you very much. This day today, not one, not good to look at your 401K, but it could be a relative opportunity. Take us through the reasons why you're looking at certain types of stocks in this environment. Thanks, Tom. It's great to be back. But we think this year, We're bullish on the market this year. We have an 8,000 target. I think inflation is going to come down rapidly. But more importantly, relevant to this conversation,

we think value and income stocks will do well. And today is a great example where having low or even negative beta stocks can diversify your portfolio, but we still think you'll get good stock price appreciation. So companies like Philip Morris, they actually have negative beta, but they also have a secular growth story in that they are growing their smoke-free products quite quickly, unlike regular cigarettes who are dropping over time.

So there's a growth story. There's a strong dividend at three and a half percent. We think dividends will do well this year. And like I said, actually negative correlation to the stock market. We have a $200 target on Philip Morris. Now, Jay, it's not just about those defensive-oriented names. This is also an environment where you can go on offense, so to speak, with defense stocks, not the defensive kind, but ones that actually make armaments. Take us through what your top pick in that sector is.

So we like Lockheed Martin. It trades at a very reasonable, multiple. It is on a little bit of a run, so it was more reasonable. It's a stock that we just recently added to an I-cap, our large-cap dividend fund. I'm sure you saw that the president's proposing a gigantic increase in defense. spending. And if we don't get that large an increase, we do think we'll get a significant increase. And they're very likely to participate for those are well diversified in really all sectors of defense. And so same thing, low beta stock, only 0.22% correlation in the market,

great dividend yield at 2.5% reasonable multiple. And we think earnings estimates are too low. All right. And one quick question to bat button things up. Dividends are also a big part of your investment thesis, just how important do you think dividend-paying stocks will be in the coming year? Well, we think that that's going to be very critical in that not only just the dividends, but those companies are quite undervalued, whereas our models of the MAG, what we call the MAG aid with Brockham, show that most tech stocks are fully valued. So we think you can find more bargains and great yields in the value, income, and small-cap sectors this year. Jay Hatfield, Infrastructure Capital.

Thank you very much for the case on defensive names. We'll see you soon. Thanks, Tom. All right, coming up, the Arctic blast is gripping the U.S., and it's only going to get worse, but it's also an economic story. Talk about how these freezing temperatures could hit the economy. Next. It's cold, really cold around much of America, bitterly cold.

Here, not just the northeast, the Midwest, saying it's downright warm here. Significant snowfall, expect. as far south as Texas and Georgia this weekend. 43 million people under a cold weather alert, even in central Florida. But it's not a weather story only. It's also economic story as well. Steve Leesman's coming in because, Steve,

we know this. A lot of our dear friends in the South, they don't do great with a little frost, and now we're talking about a potential foot of snow. Yeah, I mean, that's the big story here, I think, Brian, because, well, let me play meteorologist on TV for a second. There's a big debate among the meteorologist that I'm reading about how far north this storm goes.

And the first thing you look for, Brian, when you look for economic impact, is the number of people affected. And so if it doesn't hit the big cities in the northeast, the effect is less, not on your individual life and your business, but overall for the macro economy. And you get these big hits.

And when you look at the big storm, So, for example, you look at that map right now. It doesn't at the moment. There are some runs of the models that show it going further north. But one of the big impacts, Brian, comes from places that are hit by weather where it's unusual to have that weather. For example, a lot of snow in Idaho, Maine, New York, Minnesota, not a big deal. That snow and ice down there, that can be very debilitating to those economies. Typically, Brian, they show up as blips to GDP in a single quarter.

Typically, you get them back, although, of course, certain individual areas can struggle for longer. Is there any economic benefit to this? So here's how we know things work, right? For like, let's say a week, they get a foot of snow in Nashville. You get the videos, the kid's sledding. Then it gets annoying. People are out of work for a week. But then there's like a lot of economic activity related to that, cleaning up stuff.

rebuilding stuff. Is there an economic benefit to this kind of thing? Brian, you're going way down deep into the Keynes Playbook here, which is, remember what they said in the Depression, we just needed people to dig holes. Just pay them to dig holes. There's this idea that there is a positive rebound on the rebuilding. Net, net, however, it's a negative drag on both the value of assets as well as the total economy. It comes back. So we don't lose every dollar that we lose during the storm. But you are correct.

There's a rebuilding point of view. But the trouble is if you carry that equation to its very illogical conclusion, you say, well, just tear it down and build it again. That doesn't work. That's a net loss. But there is a rebound when it comes to the recovery process. People will lose work. they'll lose, you know, certain infrastructure can be heard.

And there are some big storms, but ultimately, Brian, they don't total up. The U.S. economy is so big and, of course, very dynamic. And the ability of the government, and I do think there's a question right now, Brian, which is maybe on the side right now, but might come to the fore, which is what's going on with FEMA and what is its ability now to respond to these issues. So you're saying that in Steve Leasman look at the economy, You look at you, you dig down deeper than Keynes did. Or the snow and Camchatka, Siberia, where by the way, Kelly, 13 feet.

Yeah, saw that. 13. A fourth-story window, right? People are jumping out of fourth floor windows for fun. There's no line on them for industrial road salt. Hey, Brian, can I make one point, make one point, which is one way that these storms are mitigated is by preparation. And that preparation happens at the individual level. of people getting ready for these storms and at the local level and of course at the federal level.

So that can mitigate things if people get prepared for them. And one other thing I want to say, which is in the social media age, there's a lot of hysteria in the social media about some of these weather systems. This one does look real, but they can get it wrong. You could be off by 50 or 100 miles. You can dump a couple feet on New York City, or you could be 50 miles south and it never gets there. Are you like hashtag snowpocalypse and we get a half an inch of snow?

That kind of thing, Steve? Exactly, exactly. We get all these headlines out there. The hurricanes, I've covered them for decades now. They come up and they'll make a left turn. And everybody says, oh, they were wrong. Well, you know what? We have better models than we've ever had.

The weather forecasting is better than it's ever been. It saves lives. Thank you, local meteorologist. Don't curse him. Yes. Or be mindful of this one. It is a big storm. Scary.

Get groceries now. Right now? Wait till the shows. Door dash. Here's our mystery chart. Up almost 1,000% in six months. Answer after the break. Investors will keep a close eye on Netflix's results after the bell.

Stocks below 88 today. They expect streaming giants quarterly revenue to be up 30% year on year, but they're also watching those talks, of course, with Warner Brothers Discovery, which has been weighing on the shares. According to an SEC filing, Netflix did adjust its offer for WBD from a mix of cash in stock now to an all-cash bid. Still, WBD, by the way, is down half a percent today.

Quick take on Netflix. A lot of people don't realize this. Netflix investing a billion dollars in New Jersey. They're going to build one of the biggest TV studios in the world right here in New Jersey. Huge deal, because you know what's happening. That win is coming at the expense of California to some extent. New York had more a bigger billion, like a billion dollars

or so they invested in movies compared with California. So huge problem for Los Angeles area, and it is going to be a big boon for this state. New Jersey is the new Hollywood. By the way, New Jersey governor last night, final act, basically outlawed e-bikes. Big story there. Quickly, Sandus, that stock won't stop going down. Can't Stop, won't stop. It's up again today.

Sandus, now, 200% in like a month. It's just insane. Best performing stock over the last six months. Sandisk up again today. If you own it, buy yourself an e-bike, just not in New Jersey. recent spinout. This is also one reason all these memory stocks. This is a Korean name. Some of them S.K. Heenix and the others are partly why the Korean stock market has been doing so well and the international markets, Japan and so forth as we continue to watch what may be a rotate

out of the U.S. trade. Big interview tomorrow morning on that note. Joe Kernan will sit down with President Trump at Davos and we'll see that interview at 1 p.m. Eastern Time. A lot of headlines there potentially as well. Good luck, Joe. Good luck to the Squawk Box gang in Davos. We're done. Thanks for watching, PowerLone. Closing Val starts right now. Thank you.