Power Lunch - Tech's Influence on the Market 01/31/25

Episode Date: January 31, 2025

CNBC’s Tyler Mathisen and Kelly Evans take you through the heart of the business day bringing you the latest developments and instant analysis on the stocks and stories driving the day’s agenda. ���Power Lunch” delves into the economy, markets, politics, real estate, media, technology and more. The show sits at the intersection of power and money. “Power Lunch” gives viewers a full plate of CNBC’s award-winning business news coverage, plus a healthy dose of personality from the show’s anchors and the network’s top-notch roster of reporters and digital journalists. 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 alongside Kelly Evans. I am Brian Sullivan. All right, InVidia, in the spotlight and in the hot seat. Shares crushed this week. The U.S. government, getting involved, maybe, and the CEO is at the White House today. And more questions about where exactly all of its sales may be going. We're going to dig into it all. Plus, Trump wants to hit Canada and Mexico with big lead tariffs. Will it happen? And if so, when? Well, the new headline is Monday. We'll talk about the impact and what it may really be. and Kelly, just as we're halfway through earnings, what lessons, if any, can we really learn so far? The great Tom Lee is here to lay out his investing case. Looking forward to that.

Let's check stock. So we're well off session highs. We've had some pressure in the past hour because of tariffs. The NASDAQ is still leading the way up half a percent. The S&P is up just a couple points and was within eight points of its record high earlier. The Dow is down about half of a percent. Despite Monday's big drop, remember that it feels like longer ago. The NASDAQ is down only.

about 1% on the week still, so not terrible. Apple also roughly flat after earnings. It beat expectations. Services revenue outweighed the fact that they did have lower iPhone sales. It's down a little less than 1%. It's been pretty impressive for a company that's not really growing revenues, growing earnings, especially earnings per share because of buybacks really meaningfully the past couple of years, Brian. All more on Apple in a bit, but we are going to start with NVIDIA. It's an important story on maybe the world's most important stock. Invidia stock, moving a lot right now, but it's down about 12% on the week. Invita stock, back to levels not seen since June of last year, and Jensen Wong, the CEO, is now visiting Donald Trump in the

White House. What they will talk about, anybody's guess. But we would guess it is something to do with this. Reports, the U.S. government may be looking into whether or not Nvidia products are ending up, maybe illegally, in China. Here's the concern. It's a little bit big, but bear with us. The China-based company Deep Seek shocking everybody and the markets last week, implying it can do AI for far less money and computing power than U.S. companies, which, of course, are spending tens or hundreds of billions of dollars on NVIDIA semiconductors to do that. And there is growing concern that some of NVIDIA sales to Singapore may actually be ending up in China, potentially violating U.S. export rules.

because remember, the then-Biden White House banned some of the best Nvidia chips from being sold to China or its companies. Now, Nvidia's own accounting shows that Tiny Singapore accounted for 22% of its global sales last quarter. Yes, well below the United States, but Singapore is above Hong Kong and Taiwan. Think about that. One fifth of Nvidia sales to a city state that has far fewer data centers than the U.S., than some U.S. states, by the way, or other countries. I want to be crystal clear here. There's no allegation of any wrongdoing by anybody. InVitya's own quarterly reports clearly state that where a sale, like Singapore, may be recorded,

may not be the final destination of the product sold. You can go look at the 10 Q's yourself. So chips sold to Singapore could end up in the United States or elsewhere. The concern of some is, and reportedly now the U.S. government, is that some of those chips may end up in China. Regardless of what the story is or may be, there is that concern. And if Nvidia's sales start to fall for any reason, it could bring down the stock and thus maybe bring down much of the stock market.

InViti, remember, in more than 500 big market ATMs. Let's talk about it all. Joining us now to discuss is Mehabib, CEO of Full Stack Generative AI Platform and a writer. And also here is Jordan Schneider, creator of the China Talk podcast and newsletter. and a former China tech analyst at the Rhodium Group. Jordan, I want to begin with you. I laid out there a lot. It's a complicated story.

Let me just ask it very clearly. Do you believe that some Nvidia semiconductors that are being sold to Singapore are actually ending up in China? Your own opinion? Sure. I mean, I don't want to accuse anyone of breaking the law, but I think it's maybe we can start with another part of that pie chart, which is the 15% of sales that are still going into China.

who's buying that? Tencent, bite dance, Alibaba, Deep Seek. And these companies aren't dumb. And they know they're not being sold potatoes. Potato chips. The Biden administration over the course of its tenure from October 2022 up until the last week of the administration slowly but surely increased the or lowered the ability for Nvidia to sell chips. But Nvidia kept making chips that were right on the line. And I think what you saw with Deepseek, regardless of whether they're using literally banned chips, is the fact that they have been able to do some really incredible engineering with what the U.S. government is allowing to get into China. Okay, I want to be caught. Hold on. Wait. Hold on, because you said it pretty clearly.

So you're not accusing anybody, but you think some of these chips are ending up with Chinese companies, which is why we care because not all Nvidia chips are banned, but the best ones are. Let me reiterate. I have been to Singapore, but not in a while. It is a small city state. The room for data centers, listen, they're growing. They're still big and fast growing into data centers. But your thought, Jordan, is that it seems weird that one-fifth of their sales is going to a relatively small city state that while growing the data centers is hardly Loudoun County, Virginia. It's definitely weird. And I think another trend that you're seeing is this reselling and this enormous buildout we've seen in Malaysia over the past 18 months, where a lot of neoclouds,

so not necessarily, you know, Azure or AWS, are popping up that have some sort of Chinese connection. So another way that Chinese firms can get access to this sort of compute is not by directly importing it into the mainland, but setting up subsidiaries or signing partnerships with new cloud companies that have the access, have access to Nvidia's best and, you know, Nvidia's top and class chips, but just happened to be in Johor Malaysia as opposed to Shenjah. I'm glad you made that point, Jordan. It was exactly the same point that I heard from a friend source who lives in Singapore, which is, look, everybody knows Singapore is a leading re-export hub, but there's also Malaysia right across

the border. Singapore may not have the space, but Malaysia has it. So that might be one area to look at in terms of where and who's leasing those facilities. So, May, we talked to take him last hour who said, look, even if you could smuggle the old leading edge chips in a suitcase, you won't be able to do that with Blackwell. These things are like tanks. So you're not going to be carrying them into China that way. You're going to have to rely if you're trying to get around export controls on setting them up and basically releasing them from other nations.

What we have been saying, Kelly, for two years, is this big breakthrough, right, that you don't need billions to train state-of-the-art models. We have proven that. We've built state-of-the-art models for less than a million GPUs, right? I don't think it is a reason to be bearish because we are on the cusp of an enormous agentic AI explosion that is going to require more inference than folks can even fathom. Whether or not Trump-Titans restrictions coming out of his meeting with Jensen today, the only way for the U.S. to stay ahead of in generative AI is to continue to achieve revolutionary breakthroughs in training and model architecture.

The brute force method for training models is dead. So, May, what do you think might come out of this meeting? I mean, to Jordan's point, the U.S. has gradually cracked down more and more on what NVIDIA can export. What's at stake here? So in the enterprise, right, in the U.S., the trustworthiness of these models, the transparency of these models is of utmost importance. If you're talking to an Uber or a Mars, you know, they're not going to use models where

they can't audit the training data. They don't understand the proven. there might be IP issues with, you know, now claims that DeepSeek used Open AI to create synthetic data they used to train the models. So, you know, I think what is at stake from an export controls perspective is much broader than Deepseek. I think it was Jordan that had said that it's not representative of where their startup ecosystem is, where their generative AI innovation ecosystem is. But really, like, we are. on the cusp of the most incredible explosion of abundance in humanity. And we need every country's

most smart people working on this. So wherever they end up, you know, we need the kind of innovation that's coming out of the U.S. and coming out of China. Yeah. And nobody's, Jordan, I want to be very, very crystal clear. Nobody's saying in video is doing anything wrong. I want to make that very, very clear. But I think what happened last week is deep sea comes out and they're like, listen, we did this basically thing and, you know, with six hamsters and a wheel and who needs all that AI money and everybody panicked and the market panicked and stock fell. And I, it's kind of the equivalent of somebody coming out and saying, we built a GM Tahoe, but for $15,000 and it caught, you know, whatever, people are just confused. They don't know what happened. And there's a lot of people

that are out there, including some on this, on the air of this very fine network that have suggested that there's no way DeepSeek is doing what it's doing without using some of these high-end chips and just pretending it's not. I don't know what's true or not. What's your take on that angle? So I think the Biden administration allowed China to buy good enough chips to do really incredible AI.

And what the Trump administration is going to have to think really hard about is whether we should keep selling stuff that, you know, is maybe only just six months or a year off the frontier. Lutnik, at his confirmation hearing yesterday, said, I'm thrilled to oversee BIS, and I'm thrilled to coordinate and empower BIS. When we say no, the answer's got to be no. And the truth is that the Biden administration, the answer was, oh, maybe there's a loophole and a year later we'll fix it,

and, you know, Huawei is going to find another loophole, and then maybe we'll change it six months or a year later. And the sort of ODA loop of the Biden administration, in closing down these loopholes, allowing Chinese firms to bring into China, much less Malaysia, really excellent chips to train models that can compete with Americas is something that the Trump administration to really think about hard if they're trying to envision what an America First AI policy would really look like.

Yeah, and I think the fact that the Deep Seek founder is a guy that runs a big hedge fund. A lot of people like Bill Ackman online have sort of questioned it. We have to go. I have a feeling we have not heard the last of this very important story. May Habib, Jordan Schneider, thank you both very much. Have a great weekend. Thanks. Thank you so much. And China's AI Challenge is wreaking havoc on the tech space this week. But listen to this, on the global market front, U.S. tech stocks are still worth more than all European equities combined.

And our next guest says the volatility around tech and tariffs is a test that market bulls have passed. Power lunch will be right back. Welcome back. The Dow is at session lows down 262 points, as we've had a lot of conflicting headlines. but some confirmation from the White House last hour. Tariffs are going into effect tomorrow, U.S., Mexico, and China. We're also approaching the end of a week that turned out to be a stress test, but for the bulls instead of the banks.

Uncertainty around DeepSeek rocking Nvidia. Microsoft warning about a weak outlook. Apple missed on iPhone sales expectations. With the exception of Nvidia, broader tech isn't much worse to the wear, though. And listen to this data from BCA research. For the first time, in 50 years, U.S. tech stocks comprise more of global stock market cap than the entirety of European ones. Here now to discuss is Tom Lane, head of research at Fundstraat and CIO of FundStrat Capital. He's also a CNBC contributor. Daniel Newman is also with us.

He's the CEO of the Futurum Group. Tom, let's kind of start with the earnings piece of this. What did we learn this week? Well, we've learned that a lot of stocks have moved post earnings, not because of whether they missed or beat expectations, but really what was sort of priced in. I don't think it was just Apple, but it was also Tesla. These are two companies that have really strong moats. I think there was a lot of fears that they disappoint. But these results were actually even below expectations, but the stocks rallied. I actually just think this is a sign of a healthy market as well.

Are there any individual names you'd worry about, like a Microsoft, which, to our earlier guest point, hasn't gone, you know, had a strong January a year ago, and it's only up 5% since then? For the MAG7, when you look at the long-term price histories and you take stocks even like Amazon, there are many years where they are range-bound, and then they break above a range. I think in the case of Microsoft, if the stock has been range-bound for 12 months, I don't think it's actually marking a big rounded top. I think to me it's probably an example of where markets maybe have been too enthusiastic

a year ago, but that does give investors an opportunity because the business continues to do well. Tom, Tom. Daniel, what did you think we learned from earnings this week? Yeah, I think there was two big factors, Kelly. It's good to see you. The Deep Seek situation changed the entire trajectory and showed a fragility around this moat and training and how strong the invidia narrative is, but it also was actually incredibly bullish. The understanding of how the diffusion and basically the efficiencies that could come with inference and with scaling laws showed that these companies like Microsoft, you know, Amazon, they have huge upsides. And then, of course, the sales forces and service now is because training isn't the workload.

We think inference is 20 times or more a larger opportunity than training. And we actually saw this week that if we could bring those costs down, there's a ton of upside. So the earnings, everyone was looking, is where's the AI ROI? Why, that will be the focus of 2025. Tom, I don't know if you heard our segment on Nvidia. You don't need to comment on Nvidia necessarily, but how just can you tell us how important is Nvidia to the macro stock market? Well, Nvidia is the leading company in the story of AI.

So it is a very important franchise. It's a company that the actual lead in terms of developing the best chips continues to be far ahead of anyone else. If there is a change and a fork in the way AI moves forward or the focus becomes more on applications, I don't think it makes Nvidia any less important, but it does create more upside. AI is sort of a multi-decade story, and I'm sure there's going to be many story threads throughout that. So I think that the sell-off on Monday was a panic for Nvidia, but we had highlighted to our clients

that it was the ninth worst single-day decline, but the three times Nvidia declined worse when we were not in a broad market, bare market, that was a bottom tick for Nvidia, and I think that was probably the case Monday. Yeah, because, Daniel, I mean, listen, again, with Nvidia, who knows where the stock goes, who knows where all these stories go? Maybe they go nowhere, maybe Nvidia doubles from here.

But if it goes down, as it's back to June levels, where will that market leadership come from? Do we need a quote, and I'm doing air quotes from the radio, new invidia, or can the 490 other stocks that we've ignored for five years finally carry the load? Yeah, Brian, I see a broadening out here. I see these greater efficiencies drive better models. They drive more innovation, better models, and that drives more consumption. A lot of people aren't talking about this, but if these co-pilots or agent forces start to be utilized by

enterprises, you're talking about what could be trillions of concurrent inferences of these assistants and agents working alongside humans. If they can bring the cost of doing this down and then they can charge dollars out to these industries, the actual flow of revenue becomes much broader. And I think that's what we all want. It's been a very, very small subset of companies that have benefited from AI in a really meaningful way. What we've seen now is I think there's demand and desire to see that growth. And I think that's why everyone bought the story. There's a There's a lot of flaws in the story, but the truth is, is AI will drive trillions in productivity, but it can't be just with four, five, six, seven companies.

A quick note on that, Daniel, I thought it was very interesting that Broadcom was down more than Nvidia on Monday when the narrative is, if we're shifting from training to inferencing, shouldn't the custom silicon players, again, I don't know how much about the science here, benefit more, the broadcoms, the marvels, and so forth. Is that thesis correct? Is it intact? I put a note out immediately on that that we've been talking a long time about the fact that we've seen certain parts of the Nvidia moat moving to Broadcom or you can even say augmented by Broadcom Marvell. All the hyperscalers are looking to create efficiencies with their own custom silicon.

And we're all looking for ways to train for less, deliver inference for less and create less expensive tokens. And this goes all the way out to the edge with Falcom and Apple and other companies that could be big beneficiaries if we can bring AI two devices and two applications at a lower cost and get the consumption and the adoption of Kelly. Maybe that is exactly the last question, Tom, I would ask of you, which is, is this week then a shift from the kind of provider ecosystem, which is Nvidia and all the utility plays, the power plays, to the user ecosystem, Apple, meta, the software names? Well, I think one of the big lessons for me this week, Kelly, is the market. broadened on Monday. So if Nvidia and AI was so central and the moats were so important to the

overall U.S. economy, there should have been a bigger takedown for the S&P. But financials and Bitcoin and small caps actually did have a very good week. So I would say that as important as AI is, I do think we're probably overly fixated on AI being the only thing driving equities. we have gotten some pretty good data point, even today on inflation. So to me, I think there's a lot of things that are keeping U.S. exceptionalism alive. That's not purely AI. Tom and Daniel, really appreciate your views, guys. As always, Tom Lee, not the drummer.

Great to have you on Power Lunch. Daniel, thank you very much as well. Do appreciate it, guys. Appreciate it. All right. Coming up, we're going to take a look at the bond market. If that's not enough to hold your attention, I don't know what it is. We're back right after you.

Welcome back to Power Lunch. We've got some breaking news on META. Julia Borson with the details. Julia? Well, Kelly, the Wall Street Journal is reporting that META is considering reincorporating in Texas or another state in exiting Delaware. Now, I've reached out to META for comment and they say that this is not true. META telling me there are no plans to move the company's corporate headquarters from California,

but we have no additional comment. Now, corporate headquarters is different from reincorporating because right now, META's headquarters are in California, but the company is incorporated like many companies in Delaware. Now, this move would be similar to the move that Elon Musk made, who moved to reincorporate his companies in Texas and Nevada. So certainly something we're watching, but META saying that they are not moving their headquarters outside of California. Back over to you. A couple of thoughts, Julie, on this. Number one, when Zuckerberg made that big announcement a few weeks ago about content moderation, all the changes, he did mention they were going to move the, it's not a longer fact-checking team,

the moderators, whatever's left of it, out of California to Texas. So there is one-to- Texas. Yes, one aspect of that already underway. The Delaware issue, I wonder about because it kind of stems more from the fight that Musk has had with that Delaware judge over his pay package, which, you know, so many in corporate America watching that maybe aren't going to face the same problems he has, but have considered whether to stay in that kind of default jurisdiction or not. Yeah, certainly.

There's so many different factors at play here. Yes, you're absolutely right. META did move its content moderation team to Texas of those fact checkers. And the question is whether the legal residence moves to another state as well. Now, in terms of the headquarters, that is going to stay in California. When it comes to a headquarters, you always have to think not just about where Mark Zuckerberg's primary residence is, but also all of those engineers that are based in the area. But the majority of Fortune 500 companies incorporate in Delaware,

and it'll be interesting to see how this all plays out, and we'll, of course, be pushing meta for more. All right. Thanks, Julia. Julia Borsden. Basically, the idea is that they just want to get away from certain judges, I think, right? Kathleen McCormick, who is the judge that you referenced in Delaware, where they're talking about the pay package.

By shifting jurisdiction, you simply shift your possible selection of judges because they have a rotating cast of judges. You're basically saying, I don't like the Delaware judges. I want to go over here. But again, for Delaware, which a lot of its special sauce has been, this is where companies are incorporated, right? This is kind of the default headquarters for corporate America. So it began with this fight between Musk and the judge you mentioned,

but it could turn into something a little bit bigger. And it could be more of a problem for them, some of the institutions there. Maybe the judges have changed. There's a lot to consider. We shall see. But by the way, we have got a CNBC News update. For that, let's get to Leslie Picker. Thank you, Brian.

I'm Leslie Picker with the CNBC News Update. the White House confirmed today that Special Envoy Richard Grinnell is in Venezuela to speak with President Nicola Maduro's government about taking back deported migrants who have committed crimes and to release a number of Americans imprisoned there. The White House says Grinnell's visit does not mean the U.S. recognizes Maduro as president after the recently disputed election there. Federal prosecutors today said a man agreed to plead guilty to unsafely operating a drone that collided with firefighting aircraft during the district. deadly palisades fire in Los Angeles. The incident grounded those aircraft for several days. In the plea agreement, the suspect will avoid prison time by paying full restitution and do 150 hours of wildfire-related community service. And NASA today became the latest federal agency to ban the use of Chinese AI startup deep seek over security and privacy concerns. The Navy made a

similar move last week, and Axios reported Thursday that congressional offices were being told that DeepSeek is, quote, unauthorized for official house use. I would expect this is not the last of the groups and the agencies that we hear banning Deep Seek. Brian. Whatever Deep Seek may be, but we should ask Deep Seek. We'll see. Leslie Picker, thank you very much. All right, let's get a quick check on the market, especially for our listeners of the car. The NASDAQ is up right now, but it's up about one quarter of 1% and on its way down. It was up more than 1% earlier, Kelly. Now up 0.27%.

The S&P 500 down a little but earlier today was above 6,100. That is a new record. You got the cruise lines, which have done pretty well this week. Let's go down to the bond market with our friend, Rick Centelli, because what happens with bond yields impact stocks. Yeah, Brian, it's very interesting. You're talking about equities, losing a little bit of their mojo into the late session on a Friday. Same is true with treasuries.

We're seeing some selling coming in. The 30-year and the 10-year, the 10-year especially is ready to make new high yields on a day. But to be fair, yields are up slightly in the short end. They're up a little more. We're up about two or three basis points in the 10-year. But on the week, all maturities are lower. Two years down about five basis points. A 10-year is down about eight basis points.

But today, it was all about the data. I think the viewers, viewers, make sure you have your good glasses on because I want you to look at a few charts and think about what you're looking at. Today the notion was that the news is good. Austin Gooseby said, we're making progress. Let's look at the progress we're making. These are all one-year charts of all the data points that we had today on inflation. First chart, PCE month over month. It came in today up three-tenths.

Our last look was up one-tenth. That's a one-year chart. Now, let's move to the core. And we could debate whether it makes any sense nowadays to remove food and energy. You consider those the important charts, but nonetheless, this is a month-over-month core. Last look it was, well, it was .1. New look, two-tenths. Now, granted, there might be some decimal places here, but are we really going to go there?

All right, now let's go year-over-year. This is year-over-year headline. 2.6. Last look, 2.4. Finally, year-over-year core. Now this one gets a little dicey. Technically it's 2.8 last look, 2.8 this look. But technically, if you really want to get down to it,

last month was 2.8-1. This month is 2.79. I say that's sideways. But as I look at all these charts, in a very agnostic way, looks to me like they're hunkering down. Looks to me like a consolidation trade. Doesn't look like we're making progress.

Doesn't look like we're losing any ground. But to think that we should have our happy faces on, it doesn't look like any of these charts portray 2%. Then we play the game, we analyze. We take the monthly rates for a month or two, and we annualize them to three and six months. We've done that a lot. And as you see just on these one-year charts, every one of those charts has a point that was lower in the past than it is now. So when you analyze those numbers, you prove to be wrong. Draw your own conclusions.

All I'm saying is, is no matter what tariffs do, standalone data. warrants a pause. Kelly, back to you. Thank you very much for the dissection, Rick. Up next, President Trump's tariffs are likely to kick in tomorrow. If he does go through with it, what exactly will they look like? We'll talk about that next. All right, welcome back to Power Lunch. Despite what you might hear, 25% tariffs are set to hit goods from Mexico and Canada tomorrow. There were reports to the contrary, but the White House this afternoon reiterating its intentions to go through with those tariffs. Let's bring in Steve Leesman for more on this because there were some questions.

Those questions apparently have been answered, at least for now. I hope so here. President Trump, as soon as this weekend, could levy those 25 percent tariffs. What's what he was saying he's going to do on both Canada and Mexico? Last week, he said the U.S. has been treated unfairly by Canada, saying it had a trade deficit of $250 billion with the U.S. But according to U.S. trade data, the U.S. Canada deficit is actually. 41 billion or multiples lower than the president has said. A modest U.S. rate surplus, you can see there

from 2016 to 2020 turned into a deficit in part because the U.S. economy did better than Canada's. That's what happens when we do well. We import a lot of stuff, but also because of the increased importation of cheaper Canadian oil. We'll talk about that in a second now. White House official telling CNBC the president was talking more broadly, including greater U.S. spending on defense for NATO and NORAD in the imbalance. But the $41 billion trade deficit, it is a rounding error. on a $922 billion trade relationship that is the world's biggest partnership. Canada, the largest buyer of U.S. exports, just as the U.S. does, they do have some barriers and limits on U.S. goods. Increasing imports of Canadian oil is a big reason for that surplus, but more importantly, a trade surplus or deficit is not something most economists think matters at all.

If we get cheaper oil or widgets or gizmos from Canada and make it to something more profitable, and we give them our funny green paper in return, the U.S. economy wins. The president seems to reject that basic trade. And who better to talk about the sludgy truth of Canadian oil than Brian heavy crude Sullivan himself. That's actually what they call me. There's heavy crude. The boys and there's heavy crude. That was my rap name and then they moved it on.

All right. So let's talk about oil because you're going to moderate here. We're going right at it here. I'm ready. So here's the thing. So we're talking about this oil story from Canada. The big part of the story, right? Now, outside of hockey and good cheer, our number one import from Canada is actually oil.

It's a couple hundred thousand barrels per day. But that's actually a pretty small amount. So we use, we consume 20 million barrels of oil. That's MVP, million barrel per day in the United States. We make about 13, 13.2 million. So there you go. The rest, the gap, 7 million or so, is imported. Some of that does come from Canada, which to your point tends to produce more sludgy, heavier oil.

Who might get hit with higher gasoline prices if the tariff is levied? Well, for those of our viewers who live and work close to Canada, it's you. Almost all that imported Canadian oil, Steve, ends up in refineries. Most of the big ones are in Illinois. One's in Lima, not Lima, Lima, Ohio, and a few, there you go, a small one's in Montana. So if you live in the Upper Midwest, right, if you're a friend in Fondulac, Wisconsin, you're probably going to pay, or maybe even like a Seattle,

area, but here's the rub. The Biden White House canceled. Remember the Keystone XL pipeline? So there's a lot of confusion. Everybody you hear on the radio, the keystone's been canceled. No, it's not. Keystone's been running for a decade. The XL, which stands for export lead, not extra large by the way. The kids in, what do I would know about XS? It's in the Husky section of the store. The Keystone XL was canceled. That's more barrels of oil per day than would the tariff be levied on? And so if you're worried about inflation, I don't know. Do they just bring back the ex-all? I am not so dumb as to argue heavy crude with you or oil or anything. My point is that Canadian oil is similar to other issues that are out there. It's something we bring in. We had an

economist in Canada calculate for us, Brian, that if we were to pay, if we were to replace the Canadian oil with West Texas oil, it would cost us an additional $20 billion a year. Not only that, as you know, we refined some of that oil. You know where we send it back to? Canada. They buy some of the refining stuff from us. Like Quebec. Right, exactly. They buy some. It's as if they're the 51st state already. No, but it doesn't matter. We don't have to pay their health care or the Social Security. They give us stuff. We give them stuff. Look at the chart. 922 billion dollars. My only point is that the $40 billion is a, you It's a rounding error.

More so than that, it's caused by this recent increase in Canadian oil for which we get a good deal. There's all kinds of products across the spectrum. Now, he may be doing this because of fentanyl. He may be immigration. More likely, I think he's doing it because he wants a revenue source to pay for his tax cuts. Fairly said, I will say this. And you're right on everything. A lot with oil, though, you wonder, why do we import so much if we make so much or we don't make it?

We drill it. Because it's about where it is, right? It's like, you know, we don't want to getting the oil from the middle in Texas to the middle of Ohio. See what I did there is a hard thing to do. So a lot of it's where it is. Here's the thing I would say that Trump administration. I think Michigan and Wisconsin are pretty important states politically. I'm just told that.

Right. Do you want to jack up any costs on those people right now? I think that's an interesting point whether or not he's going to deal with that because you're going to have a price level. You may not have an inflation increase in the rate. No, but you could have a price level. Because you could argue that Michigan is the 12 province. Rather than Canada is the 51st state. Any way you want to cut it.

25 to 75 cents is what Patrick DeHan said. We could see gas prices go up by if it passed. Big hit if you live, especially in the most likely affected area. But again, he might... Yesterday he was saying oil might not be part of it. Right. Well, yeah, but the Canadians could also tariff it too. But the point is that we import the Canadian oil because they're a captured seller.

They're trying to send stuff out through Alberta, if I'm not mistaken. Yes, almost all. Pipelines there, but they sell to us at a lower price, in part because it's heavier, but also because they're captured. They have to sell to us. You know, Alberta told me I was feeling lost, lacking in some direction. That's Althea, but Althea, yeah, you're right. Sorry about that. Alberta is the Eric Clapton song. Yes, I think this is a big deal. The market doesn't like this all of a sudden. We were puzzling in the newsroom there. Was the market going to react to this? And I mean, it's, it looks like it's off the lows now. Where are we now? You look just to your left there. To my left. Down about half a percent.

Down's down two. Keep going to be. We were down as much as 300. It's interesting. I don't know that this is right now a stock story. I think what it is. It's a business story. It's an economic story.

I believe, I don't know what you guys think, that the market is. The stocks have reacted to this. Well, yes. And also because the categories most affected would be basically lumber, housing, autos. That's another one, fruit, vegetables, oil. I mean, we're talking about essentials and some pretty important cats.

It's a very, big deal to be thinking about 25% tariffs on our two biggest trading partners, and the chips are going to fall someplace. And I don't know that everybody's sure where they're going to fall. We'll ask our next guest. Steve, thanks. Our next guest is skeptical. The tariffs will actually go into place. A lot of people were until, I don't know, maybe an hour ago. Joining us now is Evercore ISI senior managing director, Sarah Bianchi. Wanted to give you that disclaimer, Sarah, because what do you think now post-press conference? Well, I think we're trying to make a distinction between whether he announced the tariffs tomorrow, which I actually do think is likely, and whether he actually

then later implements that. So what we expect tomorrow, if there's no deal on the border or on fentanyl, is that he will do some kind of executive order that says we are going to, in the next month, 30 days by March 1, whatever, put in place, implement these tariffs. It does take time for these get to get into the systems at customs and other places. Right. So he is going to buy a little bit of time for implementation. And that's really where we believe the negotiation, if the Canadians and Mexicans aren't serious in the White House's view at this point about the kind of demands they

want an immigration and fentanyl, they will be by March 1st. And so I do think he's going to make an announcement, an executive order tomorrow, but by the time they're actually implemented in a few. weeks. Yeah. That's where we're much more skeptical. Sarah, big, got a billion dollar question here. Do you think it's going to be universal? Do you think it includes or excludes oil? Do you think it ends up just being steel and aluminum? Well, it's interesting. Normally, President Trump, when we looked at it in Trump 45 or Trump 1.0, he didn't really do universal tariffs. And we did see, as you mentioned, him making comments about perhaps oil should be out of it.

And then later, there's stories that perhaps there will be some exclusions. I do think ultimately, again, I don't think these will be implemented, but I can see him moving oil out of it. The other big area, and this is on the Mexico side, is auto imports. That would be an enormous impact on GM and other United States automakers. I think perhaps he does a blanket with maybe only the oil exception coming out the door. But again, by the time we get to implementation, if there's anything at all, it will be on a very narrow set of products.

Okay. So you think we get a splashy announcement tomorrow, but one that isn't, you know, hey, this takes effect immediately, you know, duck and cover and so forth. Yeah, they'll still have time to implement. And again, even to get these through the kind of tariff system, if you will, customs, all of that takes a week to 10 days. And I think he'll give a little bit more time, again, because. Because here the goal is not, on this issue, I don't think it's revenue or any other really,

even about the trade imbalance, although he is concerned about what that with Mexico and partner. In this case, I think it is about leverage for these other policy priorities. For sure. We've seen Mexican-Canadian stocks turn lower. Their currencies are lower in the sense that maybe this is in fact coming. For now, Sarah, thanks. Appreciate it. Sarah Bianchi with Evercore ISI. All right on deck. Exxon Mobil shares down. We're going to give you details on why and three stock lunch. Welcome back. We're tracking some potentially tariff-related stocks because the White House is saying that tariffs will kick in tomorrow and they're referring to tariffs on Canada and

Mexico. Yes. Also on China. Check out some of these intraday moves. Canada Goose, the high-end jacket maker. Most of its production is in Canada. You can see that dip lower midday. It's down around 4% right now. Chipotle, the concern about the impact of potentially higher avocado prices from Mexico if this goes through. That stock down about 1%. Mission Produce is the leading supplier of avocados from Mexico to the U.S. Constellation Brand's another one. They make Medello, Corona, those last two, and the shares are down about 2%. The stocks are down about 20% for both Constellation and for avocado maker Mission Produce in January.

So some of this is already priced into the market, and we'll find out, I guess, tomorrow and next week, what's not? More power lunch after this. Welcome back. It's time for three stock lunch. And we're going to hit three different names today that reported our. earnings and are on the move this afternoon. Here with our trades is Jessica Inskeep, Director of Investor Research at Stockbrokers.com. All right, Jessica, let's start with Exxon because the shares are down around 2%. They BDPS fell short on revenue. And we were just talking about so many things

that could be in play here with tariffs. What do you do with the stock? Yeah, with Exxon, I actually have a bearish view on this. I think it's finding neutrality. So it's really important for it to actually find support at around 10684, which is the June and September lows. If we do not find support there and it breaks, we would no longer be in that neutral view. And then I would turn extremely bearish. And it's important to note with my charts, I love to use the 13, 26, and 40 weekly moving averages. Those are rolling quarterly because we look at it from an earnings basis, especially with this segment here. And relative to oil, we have the same view.

So very important to note that support is key. You're close to turning very bearish on Exxon. I am. Okay. I am. If it breaks, 10684. Got to bring inflation down. Drill baby drill. I'm not an expert. More of some commodity tends to bring prices down. You know what's not a commodity? Apparently Uggs shoes or Hoka shoes, Jessica. I don't know what you're wearing right now.

I don't have to show us. But deckers outdoors, the stock, they make both those brands, stock tumbling, fully your revenue guidance. What's your take on deck? Yeah, absolutely. I'm wearing slippers. And you know what? Those actually overtook and were a big trend on social So I was surprised with the earnings results here. Nonetheless, it broke its bullish trading cycle, and that's also turned neutral. I'm watching the support around 185 for this one. If that's braked, then we're going to have a cell signal on the MACD, because we broke that first line of defense at the 13-weekly moving average. If we have any more negative view, it's going to immediately just add to that calculation,

which is EMA, so it puts a lot more weight on forward-looking or recent prices, and that is a very strong sell- signal. So I'm not bullish on this one either. Neutral, conditionally bearish if it breaks that support line around 185, we'll call it. I wonder what they do if their competitive edge is eroding. All right. Let's move along to Atlassian. Atlassian. Why, the shares are at a new 52-week high. They posted better than expected results in the quarter. The stock is up 14 percent. You jump in here? I actually would. I think this is a beautiful, beautiful chart. I love pulling this up today brought me so much joy. This is in a bullish trading cycle. And you can see I have a longer view here. I'm looking at over a five-year period. And again, those 13, 26, and 40-weekly moving

averages. You can see the difference. Now those are acting as support. The slope, the line is sloping upwards. That's giving me an indication that quarter over quarter prices increasing. So from a technical view that lines up with what we want to see from a fundamental view. Now, my resistance right now is around 318, which is testing today. And then from there, there it's 352. And if that breaks, that confirms a big trend. But even more so, we've got a big base breakout, which tells me that this is on its way. Big base breakouts, says slippers in skip. Thank you very much. Appreciate it in step. Thanks for watching Power Lunch. It's going to be a busy weekend. Closing bell starts now.