Power Lunch - S&P 500 approaches 7,000 1/27/26

Episode Date: January 27, 2026

UnitedHealth Group drags the Dow. Jury selection begins for a key social media trial. And Target gets upgraded at Wolfe Research.  Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

A new record high for the S&P 500 and the path to 7,000. A big week for your money. Big tech on deck. The Fed's decision on rates tomorrow. Welcome to Power Lunch, everybody alongside Kelly. I am Brian leading your money and your market higher today. Technology. Seeing its best day since the middle of December, all as we await earnings from four of the so-called magnificent seven.

Oh, exciting. And it's not just tech that's working today. money is also powering the cyclical trade higher. You don't hear about it as much, but energy and materials, new record highs. That's another area to keep an eye on. And that's where we start in the markets, with big gains in big tech helping to power the S&P to a new record as we close in just 18 points shy of that 7,000 milestone. Chips and memory names are leading today. Lamb Research, Seagate, Western Digital. All of these are new all-time highs with moves of 5 to 6%. Investors are also closely watching the rate decision tomorrow out of the Fed, of course,

and the mega-cap tech results, Brian reference, as fourth quarter earning season moves along. Joining us to discuss it is Stephanie Gild, the CIO at Robin Hood. Stephanie, welcome. Hi. I see you. So I guess the question is kind of, it is a little bit ironic on the five-year anniversary of kind of,

you know, us being reminded of what a forced retail investors are in the market. What do you think is the biggest deal? You know me. My sympathies lie with it's the Fed. Even if they do nothing, maybe it's the Fed chair, Maybe it's what they say, but maybe it is big tech earnings this week. What do you say? I do think it's anticipation of big tech earnings.

I also think that there's been a lot of, like last week we had some tumult in the market because of, you know, potential trade issues. And I think all that kind of stuff is starting to go away. I think you're also seeing some recovery in some of the software names, for example, that fell underwater because of thinking that AI was just going to completely take it over. So I think there's just some bouncing back. And the max seven hasn't actually been leading this year. And so it makes kind of sense that people might be looking for maybe a little better value relative to other things. And that obviously helps the broad market.

Where do you think you're kind of, you have the most conviction and you might be most out of consensus? And maybe those are not two of the same things. Probably on a single name basis. we've been a little early, like we were a little early in the Lulu Lemon, like some of the consumer names that we like that we think are kind of have recovery value, even if the consumer doesn't necessarily stay strong, although we have a positive view on that. And so we, in Robin Hood Strategies, we started adding to it a couple of months ago. So in names like Lulu and even VF Corp is something more recently, because we think there's, they're just down a lot, And there's definitely execution risk, but we think there's value in these brand names.

We've got Starbucks, right, this week? I mean, a lot of these are kind of turnaround stories. It's better. What do you make that? If the consumer is an area, and by the way, is this all, is this like an actively managed Robin Hood vehicle that's, okay, I see. So if you have, if you have, like, consumer confidence come out this morning and you're looking for a turnaround there, and then you see this number sync to 11-year lows, do you shake it off, or is that a relevant data point for you? It's, I guess it's relevant because you, always want to care about how the consumer is feeling, but historically speaking, and I don't have

the exact numbers, but I know for a fact that consumer confidence doesn't necessarily lead into lower stock values. And some of these names that we're investing in have micro stories, which is why I like it, because you, obviously there's always going to be a macro element that you can't control. But on a micro basis, if you're investing in a company that is, let's say, trying to just change the operations, make them more efficient, maybe in expand margins, pay down debt. And we've seen some of that in some of these names. So I feel like there's just a little, that is to me going to be a little more rewarded this year.

Yeah, you look at you mentioned a name like a Cognex, which gets no love in the AI space, but all these barcodes. We probably have something we're going to scan with a QR code on our screen during the show. We're scanning everything. CognX is not only. learning from that information. It's helping companies get smarter. But yet, I don't, Kelly, I don't think it's the name. We've never heard of it. We've talked about ever, maybe. It has a really solid

business. It's been very consistent. As you say, it gets used in a lot of things. The reason why I like it is because you have, to me, like the ballast of that business. But then it also is learning for the future of robotics. Like, it can become the eyes and maybe even the ears. of, and, you know, the sensors of, you know, future robots. And so that, this was just, to me, kind of like a nice, solid way to play that potential future. Well, I literally as you said that, or as we said that, and we give ourselves credit, the stock was down a touch. It's now moving higher. On your word, Stephanie, that's real time. And by the way, the power of CNBC and Robin Hood. And I think this goes to investor interest, okay, because I gave a talk

yesterday in Las Vegas, about 1,100 people, and they were all, you know, interested in the market. And the level of interest is at a level I'm not sure I've seen in 20-something years. I love it. It makes me a little nervous as sort of a natural contrarian. But I know that you guys on Robin Hood, your platform is seeing incredible volume and attention. What are you seeing and hearing from your own data? Yeah, we have seen, we definitely saw a little bit of a lull, I'd say, in the fourth quarter in terms of net buying. But we have seen that pick back up pretty strongly in the last few weeks.

And we have, I've seen like our customers continue to do what they do in the single name basis, which is sell some of the things that are doing well or at least trim them around those core positions and then enter things that may. down a little bit. So we saw our customers starting to make some moves in across the software space that had been, you know, underwater. A lot of those names are down 30, 40 percent over the last three months. The other thing that we've seen is them picking up on this metals trade, right? So silver, ETF, gold ETF, that's been there for a little while for the last few weeks. And it's been really interesting because last year, gold was on fire. And we didn't see that as

strongly as I've been seeing the silver trade this year. Right. I was actually going to ask, Stephanie, as much as we're trying to make the case for Cognics, I mean, how many people on your platform are just, you know, leveraging into go, what is happening here? I know anecdotally that this has captured the retail investors mind and heart, because if you even approach this topic on social media, you get a firestorm. It's all about the dollars crashing and metals are flying.

And, you know, so is that kind of stealing some, you know, traffic for? from those core stock areas of the platform? I'm not sure if it's stealing it necessarily is that it's just like part of the evolution of how we see our customers trade. We've been seeing them use ETFs to get invested this way. And so I think it's just part of the trend. I also think there's like a play here where under the hood,

when you look at like the most, you know, 100 most active and most owned, there is a play on robotics. There's a play on, you know, quant computing. And I think silver is kind of like in there. If we're going to build things, you need metals. And I think so I think there's like a third leg to it too, which is like they kind of see this long term secular aspect to it. Yeah. For now. It's fascinating. Until it implodes. Until is so are you making a call, Kelly? Until it implodes? But that was a big reversal in silver yesterday, Stephanie. Yes, absolutely. I mean, it's it's going to be a, it's momentum traded. So

it's absolutely going to be something that's going to have, you know, higher hires and maybe even lower lows. But I think there's one thing I always say in this market is that I think the volatility is going to be higher and you definitely want to trim some winners. Well said. Stephanie, Gilda Robin and Stephanie, thank you very much. Two quick things on that. I want to add, number one, part of the talk I gave yesterday was at in a midterm election year, which is this year. We tend to get a 17% move in the market. So it's more volatile than normal. And did you see your, I know, You see Dario Amadei of Anthropics white paper yesterday, basically warning that AI may not be what we thought it was. That was from a market perspective, that's scary. It was a scary paper to read. I can't say I've dived in yet. I observed that he published it.

TLDR? Too long. Let me ask AI. I was on a plane so I had nothing else to do. A very long flight back from the West Coast. He's positioning himself as a skeptic of a. Look, Claude has really. taken a lot of the market momentum lately. And I think that is the most significant thing that's

happened. And I've said this on, I'll be on the record. I think the biggest market risk is some kind of crack in AI. If there's any slowdown, we could be in for a big drop. All right, let's talk Federal Reserve because some, I don't know, fascinating, crazy stuff coming from our mock Fed panel. What is the mock Fed? Well, it's a group of pretty smart market types who vote, doing air quotes, for their own Fed funds rates. And listen to this. Our panel is split. Three of our members, Kelly,

voting for a half-percentage point rate cut for members are opting to leave rates unchanged. There's nobody at one quarter of one percent. How do we have a mock fed where three people want a 50-bases point rate cut? This is a motley crew. And I think who we're going to talk to tomorrow? We talked to Julia earlier today.

She said she'd be sympathetic to a cut or two, just not at this meeting. Yeah, just not at this meeting. So four of our mock fed, the more traditional economics types, they're on hold. David Zervos, William, Bill Lee, a real estate guy, and Don Peebles also real estate guy. So two of the real estate-ish guys are looking for the cuts. And you know what Zervos would love that? Because he just had a piece this week where he was saying, again, reminiscent of the first Trump administration, that this is a lot about empowering kind of the people on the street over the academics,

remains to be seen whether that will fully infiltrate the thinking of the FOMC. Speaking of the FOMC, we've got the Fed's actual decision tomorrow right here on Power Lunch. As always, 2 p.m. Eastern Time will be joined. You'll be joined. Not us. You'll be joined by our all-star lineup, but guests, Jim Karen, David Kelly, Francis Donald, and Jeff Kilberg. They're all going to break down that decision from a very smart investor, economic, and even sort of trading take. We'll be watching Silver. The S&P may be up. but the Dow is down almost a percent today, largely due to this mystery component.

If you can't guess it, just turn off your TVs. We'll have a lot more on this incredible story after the break. All right, some major news rocking both health care and health care stocks. And a surprise move, the Trump administration proposing basically no change for most Medicare advantage payments. The plan calls for a net average payment increase of just 0.09% next year, basically nothing and well below Wall Street expectations. That means the major insurers they get paid back by Medicare Advantage are getting absolutely pummeled right now. United Health, down 20%. Humana, down 19% worst day in over a decade. CVS, Centine, and Elevance Health all down between 10 and 14%. So on this rather shock Trump

proposal, and it is a proposal, has the health insurance space become uninvestable, at least for now, or maybe a big opportunity to buy the dip. Let's ask Mizzouho, healthcare equity strategist, Jared Holes. Jared, proposal doesn't necessarily mean it will happen. There are negotiations. How do you see this from an investing perspective? Well, thanks for having me. I mean, it's certainly been a precarious place to invest over the past couple of years.

Yes, I think, as you said, Brian, it's a proposal. there could be a final ruling, which is supposed to take place in April, so a couple months from now. And maybe that, you know, that edited or revised ruling is a little bit better. I think this is just a shock to the system. I think investors have been positioning long, thinking this was going to be a turnaround year. And I think the headlines last night and some of the earnings that we got today, obviously, delay that dream for a little bit. delay or end the dream? Like, how do you see this ultimately playing out?

I mean, ending seems pretty severe. I think we're just going to be in a pocket now for a year, maybe two, in which earnings don't expand or grow as much as investors or the street had thought. So ending seems a little bit draconian, but obviously in a world in which so many other stocks and sub-sectors are working incredibly well, this is going to be a tough one for a bit. I also, here's what I don't follow, Jared, and both Stephanie Lincoln, our guest last hour made this point. If the economics don't work for the business, what are the company's going to do?

You know, the analyst last hour suggested they might reduce their footprints, that it won't necessarily be great for those relying on Medicare Advantage and so forth. But, I mean, so what's going to happen now? Yeah, Kelly, that's right. I think no one knows exactly what the, what the blueprints is going to be for the industry. I think we've already seen a little bit of this take place. We've seen cost cutting take place at some of the larger insurers. We've seen benefits being reduced.

We've seen a very active shift away from some of these Medicare markets because of the volatility around the rate environment and also what's becoming or would become increasingly difficult to predict as far as patient trends. So either way, you slice it, I think we're setting up for, you know, several steps that have to take place. I think benefit cuts is probably the biggest impact on a societal standpoint. And then, but on the other hand, that's what's probably going to help earnings a little bit, too. Yeah, I guess you know the percentages of these companies that get their payments back from Medicare Advantage. And I want to be clear because this is a very, is it fair?

to say nebulous world. I've got a friend of mine who's probably watching right now. Hello, John, that is sort of an expert in this, but there's about 10 people in the country that seem to know what they're talking about this around this issue. How much of a payments issue is this for your coverage universe? In other words, does it mean a little bit for some companies and a whole lot for others? I assume the market knows, and that's why we're seeing some stocks down 19 percent and others down 10? Yeah, I mean, nebulous is one way to put it. I agree. Confusing, scary. Sure, all of the above. All those synonyms make sense to me. I think I probably used some in the past. I'm certainly not enough of an actuarial expert by any means as someone who looks at all the

stocks within this sector to really have an incredible sense of to the dollar what it means for every company. I think when you when you showed the, when you showed the list of stocks, um, sort of proceeding the segment, that's kind of the, you know, the way the street is viewing the impact. So I think Humana and United are, are impacted the most. Then it's CVS and then it sort of cascades down from there. But yes, I think what investors are trying to do is look at the net impact and the stocks are following suit there today. It's going to be a big impact. It's one of those days where you watch the market action, you go, we're going to be hearing so much more about this and even six or nine months from now than we even are today. Jared, thanks. As investors try to price that

in, Jared Holtz, let's get over to the bond markets now for a quick check. The two-year yield under a little pressure after that weak consumer confidence report came in at the lowest since 2014, and that's around 357. 10-year, a little more steady today around 423, but the slide of the U.S. dollar continues. It's down 10 percent or so in the past year, and today it touched its lowest level in nearly four years. just a hair above 96. Rick Santelli in Chicago with more. Hi, Rick.

Hi, and everything you said is exactly correct. I would take exception with one thing. Yeah, we're down a little bit at 357 in a two-year. We've seen 357 over and over and over. In the low 420s and tens over and over. We are in a very, very tight range. Now, let's look at that 10-year, actually 11-year low in consumer confidence, It's going back to 2014, 84.5.

Look at that chart. Okay, now let's look at the S&P 500 for the same 10-year period on a monthly chart. They don't look very similar, do they? And therein lies a big problem, in my opinion. Now, let's look at twos and tens. Kelly was exactly right. You see the low yield there? Right around 10 o'clock.

Yep, right when the data hit, the markets understand. They made the low. Then they moved beyond it, and now we're right back in that range. And the dollar index? Well, let's look at a one-week chart of the dollar index. You could see it sliding there. Now before I show you what that other line is, you could probably see. It's the dollar yen and you're probably thinking, why would he put the dollar index and the dollar yen on one chart and think they're going to look different? I'll give you a reason, because the yen is only 13.6% of the dollar index. It's having a very outsized effect on the dollar index, as are Japanese interest rates,

having an outside effect on global sovereign interest rates. Let's keep our eye on the ball because if you're watching the Japanese markets, you're pretty much getting a lot of answers to our markets. Brian, back to you. All right, good stuff. Back to Japan. I love it. Rick Santelli, thank you very much.

All right, folks, you know this. Metals, they are hot. They have been hot. But is now the time to really be selective about the metals you own? Jim Kramer yesterday making a good call saying maybe it's time to sell the family silver and silver turned around. We'll talk more about it. And Market Navigator coming up. Welcome back to Power Lunch. Dom Choo is standing by with a look at Market Navigator on a bifurcated market day, Dom. Absolutely bifurcated. But one place that we're looking at, of course,

is the metals, right? Silver and gold get most of the attention. But should you be chasing after the typical stars of that area of the market, or are there better ways to play that entire metals complex? So joining us now with that is Matt Rowe. He's the managing director of solutions over at man group, which is, by the way, the world's biggest publicly traded hedge fund. So, Matt, we talk about that parabolic move in silver. We're watching that gold trade continue to move higher, but you think that there are better ways to play the metals complex. Take us through why and whether or not you are going to stay completely away from gold and silver. Well, thanks. Just to avoid any confusion, I was on about a month ago with one of your

colleagues, Joe Kernan, and my answer was different then than it is now. And I, I can explain a bit why, but I think the main thing to focus on is relative value. And you look at what is driving the move up in metals broadly. Over the last 4,000 years or so, a small dataset, the gold-to-silver ratio has been somewhere in the range of 3-1 and 10-to-1. Since 2008, it's been somewhere in the 40-1 to 100-to-1, trading a little over 100-to-1 just at the end of last year. So when I was on with Joe about a month ago, the ratio was close to 80.

to one, gold to silver, since then it has collapsed to 47 to 1, driven by an outperformance in silver. What all of that says to me is that you can't ignore commodities. They are a absolute player in the market right now, as far as a diversified portfolio goes, I think you'd be remiss to omit it. But I think where you play has to have a lot of relative value situational awareness to it. And a month ago, my contention was that you should be long a basket of silver and and platinum as opposed to owning gold. At this point, now that that spread has collapsed and reverted to the degree that it has, you know, I think I agree with your colleague on maybe it's time to sell the family silver. And if you need to be long commodities to any degree, revert back

to gold. I think playing the spread is going to be a smart trade. All right. What about other parts of the metals complex? Are you looking at other places like, say, the platinum group metals or or even the base metals? Yeah, absolutely. I think platinum, molybdenum, cobalt, even down into the more obscure areas, I think those are important places, especially where you see industrial utilization, having a sort of an anchoring effect to the valuation. You know, obviously a lot of the push into gold primarily, but precious metals broadly have

to do with the fact that they trade on a basket of currencies. They're not dollar-centric. so I do think that there's some de-dollarization aspects to this trade. There's a historically significant attachment to value, particularly with gold, but silver as well. And I think the market kind of woke up to that over the last year. And you also see it as an inflation hedge, right? It's debatable how impactful it is or how useful it is as an inflation hedge, but certainly that's part of the narrative. All right. So the interesting part about diversifying to a basket of metals versus just gold or silver. Matt, thank you very much. We appreciate it.

man group and Brian, I'll send things back over to you. All right, Dominic Chu, thank you very much. Malibdinum with the atomic number 42. Coming up, jury selection beginning for a huge lawsuit against social media. Are they the new cigarettes when it comes to addiction? That story ahead. Alert on AI startup, Anthropic. Company we talked about at the top of the show, Kate Rooney has more.

Kate, what's going on? Hi, Brian. And so I'm hearing that Anthropic has closed an initial funding round above its original target of $10 billion. This is according to sources familiar with that ongoing deal. So the valuation, $350 billion from what I'm hearing, that is pre-money. So before this investment, sources now telling me there is expected to be a second add-on as part of this financing, which could actually lift the total closer to $20 billion. All of this is ongoing, though.

That second part would be an investment from Microsoft and Invidia. They had previously said they'd commit up to $15 billion, so unclear of how much of that is actually going to come through in this round. Have confirmed from sources. It's being led by GIC that Singapore's sovereign wealth fund, KOTU as well. And Sequoia, interestingly, is participating, according to a source. They are also an open AI investor as well. But at these levels, it would be double the amount of money, anthropic initially set out to raise. And a sign of all-out investor demand we are seeing for this AI startup.

It has been getting a lot of buzz for Claude Cod Code and its enterprise business. the deal, I'm told, could be finalized in the next few weeks. No comment from Anthropic guys. Sorry, Kate. You know, I don't want to put you on the spot. At the top of the show, we kind of off-the-cuff referenced this, like, white paper that Dario, Amade, the head of Anthropic had come out with. Is it getting any buzz out where you are? Because it's a pretty scary document, basically kind of admitting that AI may not be what we thought it might be in two years. Pretty telling from a company with a valuation of $350 billion. Yeah. A hundred percent. getting so much buzz, and it is sort of the other side. I would say almost the underbelly of this AI

race. We talk so much about the financing, the hype from investors, but there are real world impact. I thought his comments on the economy, what could this do to jobs and unemployment are fascinating. Something to watch is obviously an expert here. They have really sort of tried to highlight the safety side of this and the risks. And, you know, there are just two sides of this. There's the all-out race to compete. They're competing with Open AI and others, but also trying to make sure this is safe on a global level. I think there's a lot of fear around this, too, that people are saying, yeah, on one hand, a lot of money here. But guys, here's the real world impact that people are starting to pay more attention to.

And I think almost more or as significantly, the shares are a lot in value. I mean, this is a huge fundraise round. And they're doing this on the back of momentum with Claude Code and, you know, hats off to them because it's really garnered a lot of adoption. Kate, thank you. Kate Rooney. Let's get to some other tech news. Meantime, a landmark social media trial kicking off in Los Angeles. It involves the addictive and negative impacts of social media on teens and kids.

And some power players are in the spotlight. Let's bring in Julia Borson with more on today's developments. Hi, Julia. Hi, Kelly. That's right. I'm here at the Los Angeles Superior Courthouse where jury selection is underway in this trial about the addictive negative impact of social media. The co-defendants now are meta and Google's YouTube. After just this morning, TikTok settled after Snap settled last. week. The plaintiffs in this first trial and a series of many trials are a 19-year-old woman and

her mother claiming social media companies knowingly designed addictive features, including auto play and Infinite Scroll. Meta's CEO Mark Zuckerberg and Instagram chief Adam Mosseri could testify in this trial which is expected to last six to eight weeks. Google and meta both denying the claims of the plaintiff. Meta shooting back saying, quote, for more than a decade, we've listened to parents, research the issues that matter most. and made concrete changes to help protect teens online. YouTube saying, quote, in collaboration with youth mental health and parenting experts,

we build services and policies to provide young people with age-appropriate experiences and parents with robust controls. After years of Section 230 shielding these companies from legal liability for the content shared on the platforms, this and some following cases focus on the issues with the apps themselves. Kelly? Julia, thanks. We appreciate it. Julia Borson. Let's talk a little bit more about what's at stake for the social media giants.

Get some insight now from Andrew Selyapak, social media professor at the University of Florida. Andrew, what are you going to be watching for? Well, I mean, we kind of just covered that and discussed it, the fact that there's a difference in this case because they're not necessarily looking at the content specifically, which again covered by Section 230, but the design of the apps and sort of the infinite scrolling and the fact that it allows users to kind of get constant content. So it is a different type of lawsuit in terms of what they're looking at and then not focusing on the content side. Right. How significant is it going to be for the stocks, you know, for the big companies in this space, you know, for future, you know, additional regulation that may be that may come to pass?

Well, I mean, the stocks are probably one of the reasons why these lawsuits are happening. I mean, they're looking at it sort of as the next big tobacco. And we know the social media companies have a ton of money. and this makes the potential lawsuits that could come from this, you know, very kind of interesting for a lot of lawyers in particular. So I think the stocks will probably have a little bit of a hit, but in terms of there being significant regulation from Congress, we haven't seen anything since the 90s. And I don't suspect we'll see anything moving forward. But lawsuits will have the biggest impact on potentially the value of the companies and sort of their profit margins. And it's amazing how, Andrew, this fall,

on a law originally written in 1934. And I actually did a paper on Section 230 when I was in law school in the late 90s around early internet providers. And it comes down to a very sort of weird phrase today, which says no, and I'm going to paraphrase, something about no users being treated as publishers. From 1934.

So in your view, is somebody who posts something on TikTok, whether there's a lot of violent stuff happening in America, right now. There's a lot of misinformation, disinformation, selectively edited videos everywhere. Is somebody who posts something like that, a, quote, publisher protected by the law? Well, this is the difference between whether or not the platform is and being treated like a newspaper where any reporter who writes a story for the newspaper and any degree of defamation is in there, the newspaper and those involved with the newspaper as well as the reporter can be sued, or if this is just entirely different thing, not like a newspaper, and instead, sort of like you mentioned, it's the actual poster, the content creator who could be liable for any form of defamation.

I think if we were to change it and treat them like newspapers, the impact that it would have on not just social media, but the internet in general, if we were to eliminate Section 230 tomorrow, would be absolutely devastating and completely change our entire way that we see the internet and the implications. So I'm going to back up. It goes to liability, right? So let's just, on that case, let's use this bad example. You go into Walmart and you buy some, you know, over-the-counter headache medication from a multi-billion dollar pharmaceutical company. You take the headache medication and you die. Okay, I hate to be, that's how law school works.

You take it, you die. There's a billion, you're not going to sue Walmart. You're going to sue the company that made the pill, right? They're a multi-billion dollar corporation, so your family, your heirs, they sue that company. Social media is different, right? And those companies, the metas, they will argue, we're not Walmart. We're not putting this stuff, quote, in the store.

We are just the store. We are not responsible. But they have to have some responsibility for the content on the platform. What is that level to you, Andrew, of responsibility they should have given that you can now use AI to monitor a lot of this stuff? Well, there's two things. One, AI still not perfect. And we've got to admit that AI still is going to have a lot of issues.

you would still need to have human moderators, which costs money, and there's all sorts of issues with that. The other side to that is for the companies themselves, this is a PR mess. I mean, it has the hit in their stock prices. You potentially have somebody like Mark Zuckerberg having to testify in front of court. He's done this multiple times in front of Congress. It leads to people maybe not spending as much time on the platform, which impacts how much advertising they're seeing. So for the platforms, if no new regulation is passed, it's basically bad PR can kind of hurt the amount of time people spend on the platform or even maybe stop using the platform altogether. But that's really the extent of it because, again, it's the blanket protection of Section 230. Or as you use sort of the Walmart and medication example, Walmart can't be liable for what the medication did.

Walmart could then have a negative PR from the fact that they sold it. But that would be the extent. And Walmart can do a Mea Culpah and come out and say, hey, we're not going to do this, that, and what have you in the future, to make sure their customers stay. But that, again, is going to be the extent of it here for the platforms as well. Andrew, really appreciate it. Clearly, I don't know if it's the size and scale of big tobacco.

Maybe it's bigger. We're going to find out. This is multi-hundreds of billions or trillions on the line. Andrew Sellepack, thank you very much. Get now about a Leslie Picker for a C&BC news update. Hi, Brian, thank you. House Democratic leader Hakeem Jeffrey says Homeland Security Director, Christine Nome must resign or face impeachment proceedings. She is facing criticism following the deadly shooting of an ICE U nurse by ICE agents in Minneapolis over the weekend. President Trump told reporters

today, Nome is not intending to step down despite the pressure. Officials say construction on the $16 billion Hudson River Tunnel will be forced to stop next week unless the Trump administration reinstate's federal funding. The president said in October he was terminating the project, which is designed to replace and expand aging rail tunnels connecting New Jersey to New York City that were damaged by Hurricane Sandy. And the Trump administration is reportedly escalating a warning to South Korea

to not single out U.S.-based tech companies with regulations and investigations or face economic consequences. That's according to the Wall Street Journal. It comes as the country's legislature has failed to approve a preliminary trade agreement that includes committing to invest $350 billion in the U.S. Kelly, I'll send it back to you. All right. Thank you very much.

Here's something we haven't said in a while. Some good news for Target. The analyst behind an upgrade on the stock will join us after the break with the shares subfractionally today. We'll tell you more in a moment. Let's turn to one of the big calls on Wall Street today. Wolf Research upgrading Target to peer perform ahead of their upcoming Investor Day on March 3rd. They say there's a wide margin of safety for the country.

despite falling estimates. Let's bring in the author behind the note, Spencer Hannes, a senior research analyst at Wolf Research. We love trying to call the comeback, Spencer. Are they experiencing one yet? Yeah, we think things are starting to get better at Target. We're starting to see green shoots and operations in stores. We think that's going to roll out across the rest of the fleet. There's still a lot of work to do at Target. We think they need to reinvest, and they're going to announce a reinvestment at their upcoming analyst day. But we think there is definitely signs of things, things starting to get better. target the data looks better traffic looks better and then they could be set up for for for an

improvement here but they just have a lot of work to go right so how so give us a sense of how far they fall in and what green shoots you're seeing yeah i mean i mean this year they're going to come down low single digits and they're losing a significant amount of share to walmart but we are definitely seeing in stocks improve in stores they're taking they're taking steps to improve the pricing in a lot of their in a lot of their products and so both those things should help to drive drive the market chair. We think this investor is also going to provide some more insights into how they're planning to really increase remodels, reinvest back into wages, to help to try to improve the morale of some of the workforce, which has been a drag on the performance in the business. You actually wrote,

we believe, quote, that if Target makes appropriate investments, a fair multiple would be in the high teens. What would be an appropriate investment? You mentioned a little bit about labor costs, stores, where should Target be putting its money? Because to your point about valuations earlier or later in the note, clearly where they've been spending money has not been working. Yeah, we think the challenge has been there. There's just been too much boom and bust in terms of their reinvestment in the business. And so a more consistent investment through a cycle is what we think Target really needs to see to be able to sustainably grow both comps and margins. And that's what we're looking for them to do. We think $1.50 to $2 of earnings is what they're

going to need to reinvest. back into the business to really get back to growth. And then they're also going to reinvest in CAPX too. There's been underinvesting in remodels. They've only been remodeling less than 100 stores over the last few years, which is way below what a normal remodel cycle is for Target. And so we think getting those investments back up,

you'll be able to sustainably grow because Walmart continues to reinvest in remodels. Amazon's reinvesting as well. And if they're not able to do that, they just continue to fall behind. Do we see that? And you've seen that over the last couple years. So we think the change in leadership

was fidelity taking over. should be a pretty big positive for the stock tip. Yeah, still, I never like a note that starts talking about the real estate value. You're like, oh, no, here we go, Macy's, Sears, you know, what were all the companies value? So you think 70 to 75 percent of the enterprise value is the owned real estate at this point? Yeah, I mean, it speaks to a floor evaluation though, right? And real estate is a huge asset for Target.

They own more than 77 percent of their stores today. And so we think that provides some backstop for them if the business doesn't turn around. But it also gives them a potential if they want to monetize some of these stores. We think the stores are still a really important part of the business. But if they need to monetize some of them to fund the investments, we think they can do that. And so it provides some downside protection for investors, too, if this takes a little bit longer than some investors expect. We don't think they should monetize the stores. We think they're really important going forward.

All right. Spencer, thanks so much. We appreciate it. Yeah. See if Tarje. Thank you so much, guys. Spencer Hanna. All right, coming up after the break here on Power Lunch, who are the players of the market that are actually buying stocks right now? Well, we're going to take a look at what's called market structure with our friend Tim Kwasse, who's got a unique and different way to look at stocks.

And he's up next. All right, time now for one of our favorite guests. And that is looking at market structure with Tim Kwas. Market structure, this idea of money flows in, money flows out, where options positioning in using the, data and analytics to figure out where that money may be going. Tim Koss, the founder of Modern IR, market structure analytics firm, too smart for his own good. So let's keep this, Tim, for the general audience out there. I love what you say here. You're talking about inflows, huge inflows of money, by the way, into ETF so far in January. You said today, it's better to be the herd, like the cattle herd, than the outlier, Black Rock, the herd. What does that mean? Well, Brian, it's good to see you. And I'm honored to be considered one of your

favorites. Thank you. Of course, that means that you only see me periodically. The meaning of that is if you're thinking about the market from the perspective of a public company, and I'm an old IR guy, investor relations guy, you know, quantitative data now, but that's how I started. And the market ostensibly is for public companies to raise capital and for risk-taking investors to be able to deploy it. And you wanted to differentiate yourself when I started. You wanted a clear investment thesis and value in growth drivers that you would articulate to the kinds of money that would park itself for the long-term in your equity and if you executed on the business plan by differentiating. By being the outlier, you created shareholder value. Well, that was when 90% of assets

under management, we're actively managed. Today, it's 60, close to 64% are passive. And BlackRock gathered $700 billion last year. It does not want outliers. It does not want alpha. It wants beta. It wants companies that offer the volatility of the herd, meaning large cap land equities in particular. And so public companies have to think about how do we join the herd, not depart from it and become the thing that the hyena is set upon during earnings. Well, then how do we make money from that? What's the data showing right now from a macro perspective or even micro? Well, and if you're from an investor standpoint, we say don't buy price by demand-supply

divergences like applied materials, sand disk, Western Digital. You can measure economically and mathematically where the money is going. And when there is excess demand and insufficient supply, all markets have those measures. The stock market does too. Demand, we use an algorithm that meters trade executions. Supply is short volume, right? SHO short volume, not short interest. And half the market is short.

51% of the S&P 500 is short. So as investors, you want to put your money where there is excess demand and insufficient supply, because what happens when demand exceeds supply price rises? And when those things change, you want to be out of those kinds of equities. And surprisingly, since it's earnings season, big tech, reporting this week, four of them. And the demand supply equation in Apple, Microsoft, Meta, and Tesla are all not great. They don't look at all like Sandisk or Micron. And so investors, you should avoid those things that have weak demand and excess supply.

Well, certainly Sandisk has been hot. It's one of the hottest stocks in the world. Tim Quast, always hot with the hot take. Tim, we appreciate your view. We will see you again relatively soon. Thank you very much. Good to see you, my friend. All right, thank you.

And be sure to tune in tomorrow for our wire-to-wire Fed coverage. We have a huge panel lined up to cover the big decision before and after. We'll see you there. So, again, 2 p.m., the decision crosses 230 the Fed chair will be at the podium. So, yes, and our mock Fed panel, seven smart. people. I love the seven, so there's no ties. Three calling, or say they would call for a half a percent cut, four with no cut. Nobody's at a quarter percent. Yeah, and I think the market expects nothing tomorrow, but we'll see. But there's always going to be heat, right? Of course.

You've got to tune into Power Lunch. The slightest utterance about whether they think the labor market is that week could send the entire rally. I'm going to utter this. Thanks for watching Power Lunch. Closing Bell starts right now.