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Welcome to Catalyst. I'm Madison Mills. We are 30 minutes into the US trading day. Let's get to those three catalysts we're watching this hour. First up, we'll break down the mountain wall of worry for investors and whether it's time to begin looking outside of the US to invest. Plus what this week's CPI print means for the Fed and how the central bank is assessing inflation risks in Washington, and big tech CEOs head to the White House to meet with the president. We look at what to expect for the meeting and what it means for the tech trade.to check in on the markets to start the hour sponsored by ChaseD Trade still see selling across those major averages here. The Nasdaq continuing its moves to the downside following its entrance into correction territory, down 10% from its all-time highs on Friday. You can see that movement continuing today. The Nasdaq down 2.5%, S&P 500 down nearly 1.6%. But it's also interesting to see what we're seeing when it comes to the bond market, particularly in the front end of your yield curve here.travel at that front end of the curve potentially showing us a view that the market is pricing and even further risks of that economic slowdown and you've also got that 10 year yield continuing to come down about 7 basis points. But finally, let's get a look at Bitcoin, our last of several indicators that the economy and the risk of trade is continuing off those concerns about economic slowing. You've got your Bitcoin now down below that 82,000 level that we previously.Cited and if we see this selling continuing, it would be its 6th day of losses for Bitcoin. I want to welcome in now Anne Barry, the founder of Thread Needle Ventures, a 15 year veteran of private equity deal making, and she's going to join me for the hour and it's great to have you on. I can't wait to get your insights because there's a lot of volatility, a lot of uncertainty, so we have plenty to talk about today. I just want to start by getting your take on all of the selling that we are seeing, in particular with risk.Of sentiment and risk off trade, sort of cementing itself in the market this morning. What's standing out to you? Well,

I think it'soverdue, and if we take a look at what's been going on, Madison, the equity risk premium has literally been in negative territory, right? And, and we've looked at the macro news and we've looked even at some of the comments we've seen from folks in the administration saying the market feels like, you know, the economy feels like it's starting to roll a bit. It feels like the market's catching up markets catching up. So I think looking for places right now, you hear a lot of talk on the.Where should investors put their money to work at a time when the appetite for risk isn't there, dividend yields getting increasing focus, consumer staples getting increasing focus. So with all this news coming out, I think there's a lot of turmoil coming still as we see rollovers in the market.

A lot of turmoiland a lot of those sort of trades unwinding that were signature Trump trades, right, like we saw this sell off in financials over the last week, in particular, perhaps some risk there of a potential slowdown in the economy.One thing I wanted to talk to you about, of course, is the tech trade, and something that stood out to me this morning in particular was this 5 year valuation average for the tech stocks coming in way lower now that we've seen so much selling in the tech trade, and I wonder if that valuation question starts to go away ever so slightly if this selling continues here. What are you thinking about

tech? So the question is, do you buy the dip right when you really get through it, it is this the moment when you go back in and I think.There are two schools of thought in this. You've got some folks go saying absolutely by the dip. This is the moment, this is the time to get in. You've got others, and I've been in the camp of others on this one, which is we need to start seeing the money. We need to see all these investments in AI the capE that's been plowed into really, you know, something's got huge potential and a lot of the use cases, folks are saying, well, where is the evidence that it's working? It's early days, but we need to see, I think.More communication coming out from these big tech companies saying look this is really where it's translating into profit enhancement, enhance revenue growth, and I think this is the year where people are saying look we need to see the hard data and

we're going to talk about some of the deal making that we are starting to see in that space as well. And so you're going to stick with us. We've got a lot more to get through, but first I want to transition over to Washington. President Trump over the weekend recognized the stress his tariff action has put on the US, but said the economy may be headed for more pain in the near term.In an interview with Fox News, Trump said the US was undergoing a period of transition that would take a little time. Here to discuss, we've got Heather Boushey, former member of the White House Council of Economic Advisers under President Biden, and Heather, it's great to have you on this morning. I just want to get your take on what the end goal is of the Trump administration when it comes to our economy. Do you think there is potentially a desire to slow the economy to get the Fed to cut rates? What is your outlook?

Well, at this point it is there are a few things that are clear and lots that is unclear. First of all, I think it cannot be said enough that it seems to me that the end policy goal that this administration has along with the Republicans in Congress is for these massive tax cuts that will go to the richest Americans and America's biggest businesses.And all of the steps that he's taking here, the president and Elon Musk are teeing that up in many ways. But you did hear the president say over the weekend that, you know, there may be a little bit of pain that, you know, he wasn't ruling that out, you know, and it was unclear to me, you know, is he referring to all of the pain that is being caused by these chainsaw cuts across the government that are creating a high degree of uncertainty for all sorts of, you know, folks.Across the economy and communities all across this country and really important benefits that people receive like, you know, the challenges that people are facing with veterans benefits or Social Security and on the other hand, of course, these tariffs or the, the talk of tariffs, we have to remember that he threatens tariffs, takes them back, threatens them, takes them back. I mean, this is what's so unnerving is that it's not clear what the direction is. And let me end this by noting that, you know,If the president actually wanted to increase investment all across the country in US manufacturing, there's a playbook for that, and that is what happened over the previous 4 years. We doubled the investment in manufacturing structures across this country, ramped up the employing of the employment of construction workers to make those investments, and did it by prioritizing creating good jobs in communities all across the country, not through this kind of chaos that this president is doing right now.

Heather, talk to us about the uh different takes on tariffs. On the one hand, you've seen Treasury Secretary Scott Besant saying cheap goods alone aren't the anchor of the American dream, and in the private sector we saw Jamie Dimon, CEO of JPMorgan say at Davos, that tariffs perhaps were a price worth paying for national security. Tariffs have created turmoil, but national security has been at the heart of this. What's your take on on their positions there?

Listen, you know, policymakers have, they have to set clear goals, and then they have to use the tools that are available in front of them. So it's unclear as you started this conversation, it's unclear what the president's goals are, but if you actually wanted to see investment in this country, tariffs are one tool, of course, but there's a whole bunch of other things.Creating chaos across the federal government with state with, you know, grants and loans that are going out to businesses and state and local governments and individuals all across the country, that is not going to create the kind of investment climate, nor is it going to create those good jobs that I think we all want to see all across the country.So they are one tool. They are not the only tool, and I think what the president seems to be thinking is that just by raising the cost of goods, all of these other things are going to happen as though that were magic, and that is just completely not the case.

Heather, I want to talk to you about the CHPS Act as well because obviously you were a key architect behind that and President Trump is looking to scrap it. He's arguing that tariffs are better tool than subsidies to increase domestic production of chips. Why are subsidies the right tool in your view?

It was really important, particularly in the case of semiconductors, but also, of course, clean energy. These are industries that we needed to make sure that we had access to. Of course, the semiconductor lack of the lack of availability of those during the pandemic led to higher prices all across our economy. We could see how our lack of ability to produce those cutting edge technologies left us vulnerable not only in terms of economic security and rising prices during a crisis, but also, of course, national security.Because these high technology uh chips are in in in not just consumer goods, but of course they're in military goods as well. So thinking through, well, how are we going to create that vibrant here in this vibrant industry here in this country? What do we need? The chips and Science Act, which by the way, was a bipartisan piece of legislation, um, provides subsidies to make those investments and to make sure those investments are happening in a way that will benefit communities. This is so important because what's the end goal here? The end goal.national security, but it's also economic security and equitable growth, good jobs in communities across the country. So encouraging those those businesses as they are investing to create good jobs, to provide, um, to do the work with the folks on the ground, with the community colleges, with the folks that are going to make sure that there's enough housing and schools and, and access to healthcare for all the new workers in those communities. We really did the hard work and that's what the CIPS office did to make sure that those investments could be successful.Heather, yeah, it's really just a problem. I can't say how big of a problem it is, you know, it's so enormous to say we're going to cut back on those investments just when this country needs it most and just when those communities are just starting to see the jobs show up because of these investments.

Heather, President Trump seems to have drawn into his circle for this administration, a lot of startup.Uh, ex CEO's a lot of founders, whether that's Elon Musk, who's perhaps the most famous founder that we have in the US right now, or whether it's Jeff Bezos, whether it's Sam Altman. What do you think is going to happen in the startup community? I know that NATA was something that came about, um, under your tenure. Do you see a move away perhaps from subsidies to big companies towards greater focus on energy going into the startup community?

Well, that's unclear because I think if you want to do a startup, what do you need? You need, you know, you often need, yes, you need venture capital, but we've seen clearly in many of these industries that federal grants and loans and basic R&D and the support for that across, um, you know, across, across the country in a variety of ways, support for universities, supports for individuals to make those investments makes that start.Culture possible. And so if you're cutting off that funding or you're cutting off that ability for folks to tap into those kinds of resources, that is not going to help startups over time. I also worry that what we're seeing is that those that have already won the game are out there saying, yeah, we're gonna, we're going to pull up the ladder behind us and make sure that nobody else gets that kind of support. I mean, you certainly see that with theElon Musk, who's been the recipient of so much billions and billions of dollars in subsidies so that we could see the vibrancy of these industries that he has created, you know, the investments that the that the US government made in Tesla early on, which is a real success case of American industrial strategy, but to see him now thumbing his nose at the very government that helped make hisUh, his growth possible is just really startling, and I worry for all of the kids in college and the early entrepreneurs that are not going to be able to access those same kinds of community investments um that earlier uh startups were able todo.

All right, Heather, we got to leave it there. Thanks so much for joining us appreciate it.

Thank you.

President Donald Trump is set to meet with tech CEOs at the White House today at 2 p.m. Eastern. HP, Intel, IBM, and Qualcomm are among the companies that are expected to be represented, according to Bloomberg News. Conversations coming as tariffs are expected to roil the industry, and Trump is likely to roll back the chips Act, which he called a horrible, horrible thing just last week in his congressional address. You can see there are all the CEOs who are set to attend this meeting, and Anne, this could potentially be a very lucrative opportunity for these CEOs we know.For example, that TSMC after their meeting with the president did receive that $100 billion investment into US plants in particular and obviously this comes off the back of the Stargate project as well, that $500 billion plan in AI investment into the US in terms of dominance moving forward. I know that you look at so many of these tech companies and have been in so many meetings with these tech executives. What do you think the conversation might look like?

Well, I think they're all dying to know what the executive orders are going to look like. I think Madison, that there are supposed to be more.Presidential executive orders coming out of these meetings, and I think if it's if not the chips Act, I think the question they're going to ask is, well, what is going to be there in terms of whether it's subsidies, whether it's making sure that there's investment in the education system, you know, one of the things a lot of these executives say over and over and over again they worry about is not just finding the physical capacity to build in the US, it's finding the talent. It's making sure there's enough STEM education and I think, you know, we saw Apple come out right and suddenly announce big investments in the US. I'm sure that.There are going to be big announcements of capital expend and development, but I think the question these execs are going to be asking is if not subsidies, what is going to be put in place to make sure that the US continues to thrive and be at the cutting edge and it all comes down to talent, and we don't hear a ton of conversation about that.

And it's such a great point because we talk so much and we've been spending our last hour and 15 minutes you're talking about the impact of tariffs, but it's not the only policy position. There's also obviously immigration which can impact that talent pipeline like you mentioned, Anne, before we wrap up, I do just want to ask you about.The tariff conversation, do you think that any of these executives will be able to walk away from today with an exemption, with a carve out so that they are not negatively impacted by these tariffs by export controls from the administration?

I think it's absolutely a possibility. I mean, if you know if that's been the case for the auto sector, for example, why can't it be the case for something as important, critically vital for supply chains as with chips? So I think it's, I think it's entirely possible. I think Madison with all of this is how is it going to be messaged by the White House.Right, I think as long as the White House can indicate there's been a win here for the president, as long as they feel that there's an ability to go out and claim victory, if these tech executives are smart and they really are, they will try to find a way to make a win come about and hopefully try and get exemptions for themselves as aresult,

and they're with someone who loves to make deals, so we will see if they get that deal done and they got the cards. Exactly, exactly. Well, thank you so much for breaking that down. I know you're going to stick with us here. We're going to have all of your markets action ahead right here on Yahoo Finance, so stick around.

US inflation data is in focus this week as traders react to a barrage of tariff headlines. We're taking a look at how the consumer price index, CPI, how it has historically impacted the major indices. I'm Jared Blickery, host of Stocks in Translation. So let's get to our first chart here, and this is actually a carryover from last week when we are looking at the reaction to non-farm payrolls, those monthly job reports. And so I have 3 lines here because there are 3 major market movers that I've been tracking. WeAlso have the S&P 500 in white and this goes all the way back to 2019. So the jobs report from last week, that is in green here and this is more or less tracked the white, which is the general market movement. That's the S&P 500. Now we also have the Fed, and by the way, it's also a Fed week that's in blue. But going back to the beginning of this bull market, and that would be right about here, the Fed really hasn't had that much of a net effect on the market. But today we really want to concentrate on.API and that is the orange line here and you can see that it got to really depressed levels. This was in part due to the bear market and then it has rebounded. So I'm going to show you this is the same thing in green right now by itself so you can see it a little bit better. I think this is interesting because it takes us through a few different market cycles going all the way back to 2018. This was the Vmageddon postalmageddon rise that we had there. Here is the pandemic drop. It was pretty severe then.We had this bull market in the early pandemic, but CPI really didn't do that much, wasn't really helping or detracting from the market too much. Then it became a big factor as the market was approaching its highs. Inflation was getting out of control. We heard the word transitory a lot, misused, by the way, but then we saw this steep plunge into the bottom of this bear market. That was October of 2022, and you can see we got some big reactions initially, one in particular thatOf launched this entire bull market, so CPI arguably is leading a little bit. It's not perfect, but I think it's going to be really interesting to gauge the market's reaction because good news for CPI has been good news for the market and sometimes bad news for CPI has been good news for the market. So this is kind of a market reversal of what we are seeing. Bad news is bad news for NFP results and then also good news is bad news for NFP results. That was what we were looking at last week.Bottom line here, let me show you what's happening with some of the other major indices. This is the Russell 2000. Now the Russell 2000 hasn't done much in this bull market where we saw the S&P 500 really climbing higher and the Russell 2000 itself is only up about 15% from these lows here and it's basically done nothing on a net basis over the last few.Years now we can also take a look at the Nasdaq and that has had the most bullish reaction. That is actually up 25% points from the lows that we saw in October of 2022 and that has had the most outsized reaction here and it's another case where even bad news, the CPI prints that have been too high, arguably for the market, that really just hasn't phased.The Nasdaq recently, so we'll see what comes this week. I should also mention that CPI is coming on Fed day, so it's going to be a double whammy there. And make sure you tune into Stocks in Translation for more jargon busting deep dives, new episodes every Tuesday and Thursday on Yahoo Finance's website or wherever you find your podcast.

All right, Jared, thank you so much. We appreciate it as always.It's now time for some of today's trending tickers scan the QR code below to track the best and worst performing stocks of the session with Yahoo Finance's trending tickers page. First up, Tesla shares falling as its China shipments hit their lowest monthly figures since July of 2022, down 49% from a year ago. That's according to China's Passengers.Shipments in the country sliding for five consecutive months while Chinese rival BYD gains share. BYD sales are up 161% year over year. While Tesla's sales in other parts of the world may be driven by Elon Musk's politics. In China, the disappointing shipments are driven by a narrow lineup compared with their competitors.And also we want to look at Rocket set to buy digital real estate brokerage Redfin in an all stock transaction for $1250 a share. The deal will value Redfinn at $1.75 billion and is set to close in the second or third quarter of 2025. We're seeing Redfin shares moving to the upside off the back of this news, and Rockets edging lower.And finally, ServiceNow is close to buying AI firm Move Works at a $3 billion valuation, according to Bloomberg. It's the biggest deal ever for ServiceNow and one of the biggest venture-backed acquisitions in several years. Still with me is Anne Barry of Thread Needle to discuss, and Anne, one of the things that investors were really bullish about in Trump 2.0 was this idea of dealmaking. It was going to be an easier backdrop for deal making. We haven't necessarily seen that kind of bridge cracking open yet since Trump took office again.Is this service now deal potentially a sign of more deal making to come, or is it specific to the company?

I think it'smaybe specific to tax, so let's take a step back. Why was there all this optimism in the dealmaking community that this new administration would would bring more M&A? Well, it was supposed to be a lower interest rate environment, perspectives on that are now more conservative. It was supposed to be an era of deregulation. We're not quite sure exactly what that looks like yet. It was supposed to be an era of lower taxes.Taxes, which was conducive to businesses being more confident doing M&A. Instead we've had a bit more volatility than I think dealmakers expected, so I think the outlook for deal making isn't necessarily as robust or as near term as people thought coming into 2025. That said, Service now to me is interesting and I think is more indicative of what's going on in the tech space. So this deal, as you said at the at the top Madison, one of the biggest acquisitions of a venture backed company in recent years, uh, if you take a look.Um, at the acquisition target Moveworks backed by Kloner Perkins, backed by Sequoia, this is a really good exit. I think peak valuation, uh, for this target was about $2.1 billion. It's been acquired, so the rumors are for $3 billion. We don't know yet whether it's a cash deal or whether it's a stock deal. So I want to talk a little bit about the rocket acquisition of Redfin that you touched on. That is an all stock deal. Now if you look at Rocket, the share price is up about 300%.Over the last year, if you're a tech company, now's a really good time to be doing acquisitions. Your stock's probably great currency relative to the past couple of years. If interest rates are going to come down, then that's a little bit more favorable too, and now's the time people want to jump on the AI gravy train before things get away from them. So I, I don't think necessarily Service now is indicative of deal making, period, but I do think it's a sign that and some of the, you know, the.Sycamore acquisition um that we're seeing of Walgreens as a sign that private equity deal making is perhaps coming back. So these feel like green shoots for sort of M&A new chapter.

It was so well explained, so I appreciate you breaking that down. One thing that I'm wondering about is whether or not we might see some pushback from investors in particular if these big tech firms who are already getting dinged for their AIAE are starting to spend irresponsibly before the Fed even cuts interest rates, to your point. Is there any risk of that, or is theDeal making a sign of company health and effective use of cash on the balance sheet.

That's a really great question, and I guess if I'm an investor, which I am in many of these, I would be asking myself, when I look at a service now, do I prefer that they take their cash balance, which is healthy, they've got, they had just under $6 billion of cash in their balance sheet as of December. Would I rather Service now invest in building these AI capabilities? Would I rather they take their cash and pay up to go buy something that's been around and venture backed and proven that it can actually deliver and execute.And I think at this point, because of that pressure to see visibility into how AI works, I think on the margin there's probably more confidence in buying something that's been around and proven it can get through proof of concept, it proven it can build itself and sell its product than perhaps developing in-house.

It's a really great breakdown, and thank you so much for that, and I know you're going to stay with us as well. We're going to head to break, but let's check in on the major averages because we're continuing to see that selling here. You've got the Nasdaq now down 2.8% again still firmly in correction territory. S&P 500 down 1.7%, avoiding closing below its 200 day moving average.On Friday, a big question as to whether or not it will close below that 200 day moving average today if we do see that, that could trigger even more selling, so a very key technical level to be monitoring as we continue stocks sliding after that worst week since September and on track again for another 5th week of declines. Much more on Catalyst when we come back.Global investors are going risk off in the wake of escalating trade tensions and weak economic data. US stocks taking the brunt of the pain as the shift threatens 16 years of US stock dominance. So far this year, international stocks outperforming the S&P 500. So how can investors take advantage? For more we got Omar Aguilar, Schwab, asset management CEO and chief investment officer, and.It's great to speak with you. Obviously this comes in the context of over a decade of the US outperforming all these other indices. I consistently have people say we're finally going to see a year where there is opportunity abroad when it comes to stock performance. Should investors be repositioning now to take advantage of potential gains to come, specifically in Europe?

Yes, uh, good morning. Thanks for having me. Uh, you know, we, we have been discussing this, you know, for the last, I would probably say 6 to 8 months, um, as we're going in through the dominance of the US for more than a decade and the need for diversification and particularly because the concentration that we have seen in the US in the Mach 7 for the last, you know, 2 years.You know, started to rotate, you know, at the end of last year. Uh, what is interesting when you look at today, you know, the, the Mach 7, you know, that we discussed, you know, a lot last year is now focused concentration on the new Mach 7, as our strategies call it, which is the defense companies in Europe. When you look at the performance of those companies relative to the rest.To the market that has significant, you know, changed the dynamics, you know, to answer specific your question, yes, you know, valuations is still in favor of international stocks. We still see the possibility for a weakness in the dollar as we actually see changes in monetary policy, and that usually provides a significant amount of tailwind for investing internationally.

Omar, let's talk about the uh treasury market. You know, yields have been falling. 10 year yields hit their lowest level since December recently. How does that impact your thoughts on portfolio allocation?

Well, you know, uh, the, the situation with fixed income, you know, this year is, has been one of those where every week is a new week and the volatility we have seen in bond yields is something that it probably doesn't have the level of precedent. If you, if you remember not too long ago, you know, the 10 year yield was approaching 5%, you know, now it's getting close to 4%.That range and changes in volatility just provides a lot of the outcome because you know the the sources and the drivers of yields is is being very different, you know, from the beginning of the year the the changes in yields and the the the rising in yields at the beginning of the year was mostly as a result of of of expectations on inflation.And then when you actually see the the drop in yields now it is really more as a concern about growth. So when you think about the why is driving and what is pulling these yields in the fixed income market, you know, clearly you have to put into context that the concern of investors right now.It's really more about you know what the current tariff, you know, potential could have in long term economic growth and that is what pushing the yields down as opposed to what it was at the beginning of the year which was more, you know, the sustained sticky inflation that people expected.

And I wonder too how that plays into how investors can play the volatility of this moment. We were speaking with Mohammed El-Erian in Queens' College, Cambridge president last hour about the two biggest concerns that he has for markets right now off the back of all of this policy uncertainty from the Trump administration. Let's take a listen.

There are two concerns in the marketplace. One is that this unpredictability is not short term, it's not a bug, but it's a feature.And 2, that the tariffs are not cyclical, but they are secular.Um, those are the two main concerns, and if they were to play out, then the outlook for 2026 would be less um cheerful, if you like.

So Omar, if the volatility that we're seeing right now and the policy uncertainty from the Trump administration is a feature and not a bug, what is the single best way for investors to play that volatility?

Yeah, the, the big, there, there's two pieces that we continue to talk to our clients, you know, at this moment, you know, number one is uncertainty will stay with us for the foreseeable future. There's still gonna be significant amount levels of volatility because of the uncertainty that we are experiencing already and what we expect this, you know, to play out, and I think a big part of the discussion is, you know, how much of this volatility is short term versus long term and when.You think about the short term, it is really more concerned about, you know, how you position your portfolio and it's more about de-risking and reduce risk in your positions as opposed to what will change in your long term expectations of economic growth and potentially of the the expectations you have on asset class performance and I think when you combine those two, the short term, you know, where you actually have, you know, there's no reason to take additional risk at the moment, you know, but at the same.take the opportunity as we discussed if you didn't have enough international stocks, this is an opportunity for you to rebalance your strategy and go and invest internationally if you think about, you know, short term versus, you know, medium term, you know, maturities and duration in your fixed income portfolio, this is the right time to just rebalance those pieces to make sure that you're prepared for the next wave of uncertainty, you know, volatility usually provides uh opportunity for.Investors to rebalance their strategy and stay within their risk profile. What I think is more important is to understand that you know the biggest, you know, uncertainty right now it is, you know, what would be the long lasting economic impact of potential changes in this uncertainty in other words, you know, consumer spending, consumer, um, drivers of GDP as well as the potential earnings, you know, impact may drive a lot of what these volatility may be in the next few months.

Omar, you pointed to European defense stocks being one of the major beneficiaries of capital flowing back into international stocks. How much do you think we can expect to see more capital flowing into the Ukraine reconstruction thesis if we do see peace coming about in Ukraine? How do we see perhaps construction firms and other kinds of European builders benefiting perhaps from a change in the geopolitical stability of the region?

Well, you know, historically, you know, geopolitical events, you know, have, uh, uh, a short term increasing uncertainty and volatility that obviously needs to navigate, but in the medium to longer term usually provides, you know, economic incentives because of government spending and because of capital flow. So usually when you put all those things in perspective, whether it's reconstruction, whether it's industrial companies, whether is, you know, defense, you know, companies, they usually tend to.You know, benefit when you have, you know, that path towards a change in geopolitical landscape, you know, it's not very clear, you know, what the timing is and how does that work, but as investors prepare for what may come ahead, you know, it is very clear that with the changes in the landscape and what we may expect, you know, over the next few years, you know, precision, you know, portfolios to take advantage of economic recovery in areas that have been most affected by geopolitical events is usually a strategy that has worked, you know, historically.

All right, Omar, we gotta leave it there thank you so much for joining us we appreciate it. Thank you.Let's take a look now at chip stocks Nvidia leading those names lower today, extending those losses fueled by tariff and AI spending fears. The chip giant has already shed $1 trillion in value since hitting a fresh record high earlier this year. And when it comes to the Nvidia story, obviously a huge run, right, up 800% in two years, but several factors colliding at once that make the sell-off that we're seeing sort of make sense when it comes to tariff uncertainty, export controls from the Trump administration. Then you've got Deep Sea pointing to.Questions about whether or not the amount of money that these hyper scalers are spending on AI is actually necessary. Could that be a downswing for Nvidia sales? And then you've got the overall question of economic growth moving forward. All of that creates a scary soup when it comes to the Nvidia story. What is standing out to you when it comes to what's driving the sell off here and any potential for recovery?

I'm much more focused on the deep sea issue than I am on the tariff issue, and the reason for that is we've seen this, the way in which the tariffs have started to be rolled down.There have been in fits and starts already, right, and there's been a lot of posturing and then a pullback of negotiation, and tariffs can be changed, you know, on a not quite on a policy whim, but pretty close. The emergence of deep seek waking up the market and saying, hey, guess what, perhaps there's a way to get uh more of these big models, more of this groundbreaking AI work done more cheaply, I think has really forced analysts to go back to the drawing board and say, are our assumptions around cost efficiency correct? Now, on the flip side.And this is where I think CEO of Nvidia Jensen Huang is just such a fantastic communicator. He did come out, do you remember, on earnings day and say, no, look, this was actually proof that for every dollar, um, the hyper scales invest, the productivity is going to be greater, which makes it even more attractive. Yes, of course, from a return on investment in a perspective that makes a ton ton of sense. But we don't really know which way it's going to land quite yet, and I do think sometimes we talk about what's the catalyst for a market move. Sometimes it's just something that forces folks to go back to their assumptions and question is what we thought.Was the case really the case anymore and to me deep seek was that moment and

I wonder how you're thinking about OK, let's say AI is cheaper right? and that means that you know you don't need the best GPUs in the world from Nvidia and that weighs on their margins. What about the fact that Jensen Juan, you just think he's a good CEO and maybe there's growth when it comes to robotics, maybe there's growth in self-driving cars and other forms of automation is that enough of a bull case for investors in Nvidia,

the physical AI, right? That's what he's come out and cooled it.I think right now people are saying maybe it is, but I don't know, and I'm re-underwriting and I'm taking the new data and I'm starting to look for new facts, right? It's, I think it's only now that the market has said, OK, well, we better go check out that thing that Jensen Huang talked about, which is things like robotics, and you're starting to see more of that narrative come into play. But if you look at what's happened, TSMC, as you said, Madison had pretty good news out today, up nearly 40% revenue for the last for the two months so far this year, but the share price is down, right? So I think if you look at the share prices.Down here to date. I just think that, you know, there's a real re-underwriting going on right now and suddenly other parts of the economy are looking more attractive, like defense, for example, as Omar, our guest just said, um, other parts of consumer staples, so I think we have to wait and see. Yeah,

seeing a lot of momentum unwinding happening under the hood of the market and it's really uh important to take a look at those semi-stocks. You can see Marvel too really tough over the last 5 days down over 20%. All right, well, coming up we're taking a look at the financial sector 2 years since the Silicon Valley bank collapse, but you need to know next.Financial stocks seen their worst week since the collapse of Silicon Valley Bank last week. Two years on from that crisis. How is the financial sector poised to handle any potential growth slowdown to come? For more, I want to bring in Chris Whalen, Whalan Global Advisors chairman to discuss, and Chris, it's great to speak with you March 4th again, that worst day for financials since the collapse of Silicon Valley banks. What thesis are you driving from that?

Well, I think Scott Benson said it very well. It was a supervisory lapse, but also a lapse by management. Many people were, I think, by the Fed during this period. We kept hearing about transient inflation, but the market risk created by the Fed's open market operations was enormous. And even today, you see the effect we just published a list of banks looking at their yield on their mortgage books andlike Charles Schwab, Bank of America, PNC, Truest, they all have very low yields, and you ask yourself why haven't they restructured because it hurts earnings. It's not the mark the market that's really the concern. It's that you have a lot of securities with 2% coupons that are a point underwater. And so in the case of Bank of America.It's going to hurt them a lot over time because they're not really restructuring. There are other banks like T, Texas Capital, Pinnacle Financial. They've all restructured. They bit the bullet, sold the low coupon paper, sometimes at a 10 or 15% discount, and then they reinvest at a yield that's twice as high.And over time it it very quickly uh makes up for the difference. So, um, that's really, you know, the takeaway and there the industry still hasn't dealt with that, sir, they're still waiting to be rescued with lower interest rates and as you know, now we're waiting and you may not see any big cuts in the first half of this year.

Chris, let's, you you you've focused a lot on the balance sheet and the way in which different banks have, uh, looked at managing risk on their balance sheet. Talk to us about operating models. In the wake of Silicon Valley Bank, I remember there was a lot of discourse around our regional banks on secular decline, and we're going to see the rise and the rise of the big banks, and it's going to be scale wins the big get bigger. Talk to us about that dichotomy and if there really is one.

I think there is to this degree. You have to be bigger. 10 years ago you could have a $5 billion community bank and be quite viable. I think you've got to be $20 today. So there is a lot of forced consolidation at the bottom of the scale, and you see a lot of 5 and $10 billion dollar banks merging because they realize that in order to compete, even just to maintain their market share, they have to get bigger.So that is definitely a concern. The model of Silicon Valley was not typical. It was a very atypical business model with a large chunk of mortgage-backed securities on the balance sheet, almost half. So I would say that was a red flag. I, my attitude is that most banks shouldn't own mortgage backed securities. They're just too complicated. The.Straight hedging, the volatility, the convexity of the security often it gets people in trouble, and you can see what it's done to the Fed. The Fed is deeply insolvent because of their own investment in mortgage backed securities. So I think, you know, the takeaway here is be careful of complex securities that you may or may not understand.

And Chris, I wonder too, when you mentioned the merging of some of those smaller banks, what is that telling you about the health of our economy, the health of the consumer? Do you think there are any flashing warning signs right now in the activity we're seeing among the banks and also again I mentioned the stock performance of financials over the last week. Is there any economic risk that that is painting for you?

Well, look, the financials have had an amazing run over the past year. JPMorgan, I think at the peak was 2.5 times book value, around 2 today. The the consolidation you're going to see among smaller banks, as I said, it's just driven by size issues and by the ability to compete with the 10 or 15 banks that represent 70% of the assets in the industry. They have a big advantage.in terms of funding, look at JPMorgan. I mean, they have an enormous advantage even over the other top 10 banks in terms of their performance. So they have set the bar very high. I think the real issue going forward is going to be the different business models. You'd have the asset gatherers like the Morgans and the Schwabs and the rest of them. The Main Street bank, I think, is going to have to evolve rather significantly.In the Trump administration, you may see them get back in the mortgages more. Many of these banks have run away from government lending. So there are some changes that are going to occur, but I think mostly on the margins it's about size. You want to be at least $20 maybe $50 billion to survive on a marketplace that's, you know, $15 trillion in total assets. Yeah.

All right, Chris, thanks so much for breaking that down for us. We appreciate your time this morning.

My pleasure. Have a great

day. Me too. Coming up, a weakening dollar amid a slowing labor market. We'll dive into the risks next on Catalysts.Let's get a check in on the major averages selling off sharply today. You've got your S&P 500 down nearly 2%, hovering below that key 200 day moving average level. If we do see it close below that, we can see that triggering even more selling here. But we've got to focus on the tech heavy Nasdaq because this is critical. We're seeing it down 3%. It's already been in correction territory. Now it's off about 12% from the peak that it hit last month, and a lot of it being driven by some of those big.Names in the Magnificent Seven, you've got a board here showing you Apple, Nvidia, Tesla and Meta among the biggest laggards on the Nasdaq right now. You've got Meta off 5%. Tesla, the biggest laggard here when it comes to the percentage drop that we're seeing down 8%. But of course you've got your market cap heavyweight Nvidia down 5%, that being a significant contributor to the losses that we're seeing in the Nasdaq again firmly now into correction territory.Another asset that we are looking at here, the dollar extending decline, see its longest losing streak in a year as it falls for a 6th consecutive day. This follows February's weaker than expected jobs print, showing a slowing in the labor market. Joining us now, we've got Jane Foley Jane Foley, Rabobank head of FX.Strategy. Jane, it's great to talk to you. Talk to me about the selling that we're seeing in terms of the impact on the US dollar, moving to the downside because there was this anticipation that some of the policies from the Trump administration were aimed at having a stronger dollar. What do you think is driving some of this weakness that we're seeing?

Well, thanks for having me, first of all, but of course, what we're seeing in the in the dollar is a reflection of all of those growth concerns that we heard about over the weekend and indeed for the last few weeks, the market is concerned that that growth could be slowing. We've seen a lot of the, the recession were being mixed up in various different commentaries over the last few days in particular. And of course, that the dollar is purely reacting to that. Now, if you go back, perhaps just a month or so, just a few weeks.So the market was talking about the possibility of perhaps the Fed not being able to cut interest rates again this cycle. And now, of course, the market is expecting that the Fed can come to the economies that rescue and and and cut interest rates more through the course of this year. But whilst the Fed does have a dual mandate for growth and inflation, it won't be able to cut interest rates if inflation is looking quite sticky. And of course, that is one side effect of tariffs. SoThere is going to be volatility. It is possible that even though the outlook for the dollar has certainly soured this year, that there is a possibility that we may have been or we may be getting into overextended territory right now.

Jane, we had a guest on earlier in the show talking about how investor interest in international stocks picking in Europe has picked up. What does this decline in the dollar right now mean for investors' appetite to invest more overseas?

Well, first of all, we've got to, you know, step back and and see a bit of perspective. We've got to remember that in the last quarter of last year into early down this year that the dollar index gained by 10%. So we need to put that into perspective. The dollar is not sort of weak in a long term perspective, but you're quite right. If we look at the performance of European stocks this year, well, they've done pretty well. If you look at the the DAX, for instance, in Germany. Yeah, OK, maybe it's it'sSo today, but the performance in the year today has been good. And of course, investors are now rebalancing that the possibility that if if Germany pushes through the change to its debt break, we could be seeing a much more, much more vibrancy into the Eurozone economy and that, of course, would make a lot of assets in in Europe, the euro and as well as stocks, a lot more interesting. So this is certainly a part of what is going on right now.

And I wonder how you're thinking about that in comparison with what we're seeing in the US, particularly when it comes to stimulus from countries like Germany, for example. Meantime, the US is very concerned about spending and the Trump administration really taking an ax to government spending. What do you think that does to the dollar dominance narrative and is that potentially at risk under this administration?

I think the whole question about dollar dominance. I mean, we've been talking about it for a number of years and I think we'll be talking about it for a number of years to come. I, I think what is perhaps more interesting and as part of that argument is, is, you know, what does the, the more nationalistic policies do really to um to the dollar. We got to remember that that the reason that that the dollar is is such an important currency for the rest of the world is that it's, it's used in about 50% of all invoices that are.printed all trade invoices that are printed around the world are in US dollars. So there is this need, the safe haven need this demand for dollars around the world, and that is of course, reflected in the fact that it's still a very strong currency in FX reserves within central banks. Now, the reason that dollars got out to the rest of the world in the first place is partly because the US has been running a trade deficit for a long time in paying for those goods in US dollars. But if we, if we sort of imagine that that Trump hassome success and that that trade balance changes if the US becomes even more of a closed economy than it is already, then then that automatically will change the dynamic of the dollar. People will be forced, perhaps to rely more on other currencies other than the dollar for their trade invoices, and that will reflect the standing of the of the US dollar in the wider global economy.

All right, Jane, thank you so much for breaking that down for us. We appreciate having you on as always.I also want to thank Ann for joining us this hour. Ann, thank you so much for providing your insights both in terms of what we're seeing at the macro level and also what we're seeing when it comes to the tech trade. Really appreciate you coming on and hope to have you back with us soon. Thank you so much. Before we head to break, I just want to quickly do a quick market check because we're continuing to see that selling coming in here. You've got your NASDAQ down about 3% right now, over 3% firmly in that correction territory. You've also got your.S&P 500 down nearly 2%. If this selling continues, we could see the S&P closing below that key 200 day moving average level. That's something that you are all going to want to monitor today, and as a reminder, this of course being driven by a lot of those big tech heavyweights as you can see those stocks also weighing on the Nasdaq today. Coming up, we've got wealth that's dedicated to all of your personal finance needs. Brad Smith, he's going to have you for the next hour, so stay tuned for more.