0:01 spk_0
Welcome to Catalyst. I’m Shawna Smith alongside Madison Mill 30 minutes into the US trading day. Let’s get to the three biggest catalysts that we’re watching this hour.
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First up, we’ll break down the macro headwinds facing investors and what it means for Wall Street’s favorite trades.
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Plus we’ll have the latest on the trade negotiations and the impact that it’s having on some companies.
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And sticking with Washington, we’ll break down what to expect from the White House crypto summit and President Trump’s planned meeting with big tech leaders.
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30 minutes into the trading day. Let’s take a look at the three major averages. This market check sponsored by Tasty Trade. You are looking at selling across the board. That has been the case since well before the open here. You, you have the NASDAQ, the worst performer at least of today’s session, off just about 1.7%, just off the lows here of this morning. The S&P is off about 1.5%. The Dow falling just about 1%. We’re seeing tech driving some of those losses, obviously jitters here throughout the markets when you take into account some of those macro concerns, of course.Ahead of that very important labor data that we’re getting this morning, tomorrow’s jobs print that will be released at 8:30 a.m. Eastern time could have a big impact on the equity moves that we’re seeing here over the next 24 hours, flipping over to the bond market there, the 10 year yield, moving slightly to the upside, up just 2 basis points, still just below that 43 level and flipping over to Bitcoin. We did see some risk on action here this morning. It’s a bit of a continuation there but still below 90,000. Jared telling us earlier this morning that he’s not going to be convinced until that breaks above 100,000.And once again, but again, you’re looking at Bitcoin right above $89,600 there. All right,
1:41 spk_1
well, taking a look at the macro headwinds facing markets, the widening trade war and weakening economic data weighing on sentiment, wiping trillions from the market. Next catalyst for investors coming tomorrow with that key February payrolls print. Joining us now with more, we’ve got Stuart Kaiser in studio. He is the head of US equity trading strategy at Citi. Stuart, always great to speak with you. We’re obviously on shaky ground at the moment.So very key jobs print coming in tomorrow. How much risk does that hold for the market just in terms of any potential surprise from that data and how much selling we could see? Yeah,
2:13 spk_2
you know, we do see it as a pretty significant risk to the markets. Options are pricing it that way. It’s priced as the biggest sort of payroll event since March of 2023. So basically the biggest payrolls printed in about 2 years. You know, from our perspective, if you got a consensus print, which is about 160,000 jobs, that might stabilize the market, but we don’t think that’s enough to really get the market moving significantly higher just because of the.You know, the negative economic data we’ve really had over the last 4+ weeks. So I think, you know, a good jobs print helps, but it’s probably not enough to sort things out. And if you got a weak print, let’s say below 125,000 jobs, or in particular if the unemployment rate rose, I think you would have, you know, a pretty big pullback in US equities in response to that. How big of a drop.On the day I think you’re, you know, if you let’s say the unemployment rate went back up to 4.2%, I think you’re down 1 to 2% at least on the S&P 500 and then you know obviously also weekends are back in play these days. So I think even if you got a strong print, how much do you really want to own equity markets ahead of another Trump weekend, which is something to keep in mind too that could kind of limit the positive response.
3:12 spk_1
And whatdo you make of the sector.Action that we’ve been seeing, particularly the sell off in financials this week, does that tell you that investors, institutional investors are thinking we’re heading towards something sinister?
3:23 spk_2
Yeah, you know, the sell off in banks in particular the other day definitely caught our attention. That sector has kind of been Teflon to some degree, you know, to start the year. Anytime that that part of the market sold off, there was always a bid below. People wanted to sponsor that, so I agree. I think.Downside pressure on banks in particular I think does speak to institutional investor risk sentiment kind of under a little bit of pressure. Obviously that stuff still performed pretty well over a multi-month period, but yeah, I think.That is an area of the market in particular that if it comes under pressure, you kind of worry about institutional investors getting a little concerned aboutthings.
3:53 spk_0
And is it a sign that that recession trade is kind of back and is going to maybe pick up steam a little bit?
3:58 spk_2
It could be, you know, the recession trade’s tricky because we’ve been, the markets have been threatened with a recession for 3 years now. So I think, I think there is a little bit of a calloused kind of behavior to that. But yeah, look, I think what you’ve seen over the last call it 4 to 6 weeks is.All of the tariff headlines, those are tradable in and of themselves, but now they’re impacting consumer confidence. They’re impacting ETF flows, and we’re starting to see it translate into the economic data. So what was once a sort of trade in the pocket of the market has now become, to your point, actually a really big headwind for growth. So you know we do think that’s an issue. We think this is a different game we’re playing here. Like talking about tariff risks is not the same as talking about, you know, a slowing economy.So I don’t think we’re quite there yet, but we’re kind of moving in thatdirection.
4:40 spk_1
Do you think that that means we could risk talking ourselves into a recession by looking at all the headlines coming out on tariffs and potentially the asset price impact that that could have? Yeah,
4:51 spk_2
that’s the concern, I think typically consumer sentiment would be kind of a tier two economic data point, but in this case it was also coincident to ETF flows and other things backing off. So yes, if you hadA pull back in consumer sentiment. The, the, the consumer spending data a week and a half ago was also weak. So it does seem like that sort of sentiment momentum is starting to bleed its way into real economic data.You know, the White House themselves, you know, Scott Besson, I think basically told people that we’re willing to suffer some short term pain to solve what they view as long-term structural imbalances, and I think if you, if you take that at face value, it tells you that they’re willing, you know, to see some weaker economic data if it fixes what they view as legacy issues that need to be dealt with.
5:31 spk_0
So what should investors then do at this point?
5:34 spk_2
I, I think, I think you have to keep, keep owning what’s kind of worked year to date, which is larger cap, higher quality, you know, kind of safer stocks, um, you know, banks we still like, um, things like M&A targets which are so dependent on, um, consumer and investor sentiment we’d we’d sort of stay away from, um, I think that the big, you know, thing in play right now is what do you do with large cap tech because it’s.Those are large safe companies with great balance sheets and strong earnings, but the positioning is very, very long, those stocks. So I think what you’re seeing is people not to step in to buy the dip on those stocks right now because they’re worried there’s more supply coming in. We like things like NASDAQ equal weight, to be honest with you. It gives you exposure to that large cap tech space but reduces your concentration risk.In the like the mag 7 effectively,
6:16 spk_0
so you’re notbuying the mag 7then
6:18 spk_2
not yet. We’re not, we’re frankly not aggressive dip buyers to begin with. I think I think the last couple of weeks has told us if you’re, if you’re in US equities being in large, safe, high quality stocks, this is actually a period, I think, as we said, to hedge and be patient. You know, if you’re in the, if you’re in stocks, hedge them a bit. If you’re not.You don’t want to rush in to buy this dip because you want to see how this economic data plays out
6:39 spk_1
first. I’m fascinated in the idea of the Nasdaq equal weight as this great hedge to big tech. Is there a more defensive corner of the market than that if you are concerned about those tech names?
6:49 spk_2
I mean, if you’re concerned about the tech names, I think what you saw earlier in the week was just a true risk off trade happen, right? Low volatility.Save stocks, stocks working, staples, utilities, healthcare, REITs, you had a traditional kind of risk off trade earlier this week. So if you do think we’re going into a recession, then yeah, you want to be hiding in those defensive kind of safer sectors. If you want to be in tech, our view is do that but just avoid the concentration risk that you get with being in NASDAQ directly.
7:16 spk_0
Sir, what’s the Fed factor in all this in terms of how likely the Fed is to act if in fact we do continue to get more of that deteriorating economic data and then how that of course factors into some of those opportunities that you’ve been talking about. Look,
7:28 spk_2
I think if if the Fed comes out and acts like they need to support the market, obviously that is kind of a short term positive, but our view here is to get them to do that, the data would have to be really bad in the interim. So that’s not.Something you pre-trade and that’s why we’re saying be patient. I mean, you know, additional Fed kites cuts being priced is helpful, but again, that’s coming in response to bad data. It’s the same as our logic on the 10 year bond yield. People say, Oh well, you know, lower yields is good for equities. Our view is not really, because to get lower yields you need bad growth data. So yes, the Fed can help, but that is sort of step two, and step one would be weakening economic data, which is not a step.You want to own from ourperspective
8:06 spk_1
and in this backdrop of so much uncertainty, I’m just curious how your models have changed over the last couple of months when there was so much optimism and now we’ve swung so quickly in what feels to me like the quickest swing to pessimism that I’ve seen. How have you adjusted for that?
8:20 spk_2
It’s been incredibly strong. I mean what we had highlighted in January is basically had momentum leadership was at almost 5 year highs and risk sentiment was at almost 5 year strongs and that.Risk sentiment spent about one week in what we would call a risk on breakout. The Deep Sea news came out and since then it’s just gotten like unceremoniously pushed back into kind of risk off territory. So what looked like very strong positioning and very strong sentiment is kind of kind of quickly reversed. That said, we spent 2 or 3 years buying these large cap tech stocks. You have not rebalanced positioning in 2 to 3 weeks, so.We do think people are still on those stocks. If you were to have continued pressure on markets, there is still kind of risk in there, so it’s it’s kind of a mixed bag now. We’re sort of in this transition process of going from you know ultimate bullishness toYou know, skepticism, and I don’t think we’re quite in the full pessimism yet. We’re still in that sort of skepticism place, and skepticism is hard to trade because it can kind of resolve itself in two ways. And
9:16 spk_1
what doyou think gets us there from skepticism topessimism
9:19 spk_2
labor market data. I think if you’re if you’re going to get a recession or a real risk off, it has to come from the labor market in our view.And the unemployment rate, I would say is probably the number one key. That’s what the Fed is most focused on. And historically speaking, that kind of has the tightest relationship to equity volatility and equity returns. So again, all of this other stuff is is important whether it’s consumer sentiment, whether it’s the ISM services, PC, all that, but until we actually see it in the labor market, I think you can, you know, you’re not a pessimism yet.
9:47 spk_0
We’ll see what tomorrow’s print brings. All right, Stuart, thanks so much.Let’s send it over to Jared Blier for today’s stocks in translation, Jared.
9:56 spk_3
Nervous investors, well, they are going to be watching closely at Friday’s unemployment unemployment report. So let’s get to how some of this data, the econ data, is impacting stocks because it’s not just payrolls data, it’s CPI and the Fed, and I’ve gone ahead and I’ve shown the last 5 years of price action in the S&P 500 along with the reactions on the jobs report. So once per month this is going to go up or down and over time you canSee how the trends evolved and for the most part in this bull market that began in the late 2022 as price has been rising here, for the most part the reaction days on these non-farm payroll days when we got the jobs numbers, those have been to the upside. However, that has actually changed over the last quarter or two and you’re seeing this downward pressure and it’s been this kind of perverse situation where you have good news is bad news and you also have bad news is.is bad news for stocks. So sometimes the payroll’s data will come in very, very strong, and investors won’t like that because they’ll say, well, the Fed doesn’t have to support the market anymore. And then when the bad data comes in when it’s a disappointment, well that’s also bad for the market. And so that’s a shift in character that I think is very important. And the reason I’m focused on non-farm payrolls in particular, and I’ll show you CPI and Fed days in a minute, is because it has tend to lead has tended to lead the market.We saw it turn here south before we saw the market peak in that ultimate bull market that we had from the pandemic lows there and that could be what’s happening again. Now we’ve had some false positives there. You’ll note that it turned down here early on in the pandemic bull market, and we did not have that turn in stock prices until much later. So it could be a false signal here, but I’m looking at this as a potential leading indicator. Now let’s add.Fed reports to it. Fed days have been kind of fickle for the most part. They have been positive over you got to go back to the beginning of the century century, but since the pandemic it’s been both up and down and basically since 2019 there’s been a 10% net percentage gain on Fed days, but nothing too reliable. I would also note that the trend over the last two Fed reports has been to the downside, so something to keep in mind as we.Another one in just another week or two. Also CPI, this has been a major driver of prices since the, since the October 20th bottom in prices in this bull market. It hasn’t always been the case, and you can see it was trending down for most of the bull market that we had not only the bull market, but the bear market that we had in 2021 and 2022. So CPI is still going strong and supporting prices.But I get back to uh non-farm payrolls. There hasn’t been a lot of good news that has excited investors about to the point where they want to buy stocks, and I think that’s the bottom line here is that it’s been risk off on these payroll days. So if we see an up movement into tomorrow’s clothes, it’ll be kind of a bucking of the trend situation. Tune into stocks and translation for more market deco and deep dives, new episodes on Tuesday, Thursdays on Yahoo Finance’s website or wherever you find your podcast.
13:04 spk_0
All right, thanks Sharon. Looking forward to it. Keep it right here on Yahoo Finance, much more of your market action ahead. Again, you’re seeing some selling pressure across the board today. All three of the major averages off over just about 1% actually. Well, at the lows of the session, seeing some I get back here today, now the Dow just off less than 300%. We’ll be right back.Now time for some of today’s trending tickers. You can 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, let’s take a look at JD.com. Shares trading to the upside up just about 4%, posting its fastest sales growth that we’ve seen since 2022, citing a rebounding consumption.In China, now this comes amid increasing optimism for Chinese tech stocks. Shares of JD.com up over 100% from a year ago. We have seen more of buying uh activity here in many of these stocks, especially since the start of the year. When you take a look at some of ultimately what this is telling us about maybe more broadly the Chinese economy, obviously a bit of good news here when they talk a little bit more about the improvement maybe that they are seeing in the consumer. It’s also important to point out some of that euphoria and some of that optimism that is playing out more broadly.Speaking across Chinese stocks here this morning. So again I think that’s playing into maybe some of the uptick that we are seeing at least in the share movement here this morning. But again, the fastest revenue growth that we’ve seen in almost 3 years, the fact that some of the policies coming out of China’s government is helping to boost consumer spending across the country. Clearly it’s benefiting a name like
14:42 spk_1
JD.com. Yes, certainly, especially posting that fastest revenue growth in almost 3 years, and it’s interesting in the context of what we’ve seen from Beijing, which is going to apply to a lot of the stocks.To talk about this morning, but that increased stimulus shoring up consumer spending in a nation that has been racked with challenges economically following the pandemic in terms of real estate in terms of consumer spending as we finally start to see the government capitulating a bit and giving that stimulus to consumers that is benefiting a slew of these stocks. JD.com is among them, but it’ll be interesting to see if that consumer spending continues to benefit these Chinese names in particular, or if we start to see that spread out to some of those other.Consumer names in the US stock market as well if we see that return to consumer spending from Beijing of course that’s certainly leading to a lift in these JD stocks up about 3.5% right now. Next up, Alibaba sharing the first look at its AI model that it says can rival Deep Seek’s R1 and claiming it outperformed OpenAI’s cost efficient model. Alibaba touted the new model’s performance on math and coding tasks. Now it’s interesting to see the outperformance compared to the likes of OpenAI, of course, when theseCompanies say that their models are outperforming. We are not conducting those studies ourselves, so that is just some important context to keep in mind here, but interesting to see Alibaba continuing to soar to the upside here, especially given some of the competition in the space. But also we know that they have been investing in deep seek, so maybe that partnership also continues to be beneficial for Baba moving forward, especially after this new AI model coming out. I’m curious to see what that kind of relationship starts to look like if they start to get a little bit more competitive.
16:21 spk_0
Yeah, that, that, that certainly will be interesting and then you have to call into question maybe some of that optimism that’s being priced into Alibaba right now might be overdone, maybe to the upside. It is interesting that we’re only up just about 0.1% right now because the degree of that optimism that was playing out, uh, pre-market was a little bit more dramatic, but I think the question in terms of what this means ultimately for US companies, many investors here, the exposure that they have to some of these US tech giants, I think some of the developments coming out of China has very much called that into question, of course that could that is.One of the contributing factors to some of the selling pressure that we are seeing more broadly today on some of these US large cap tech giants here in the country, but we talked to Dan Ives earlier this morning about what ultimately this means, and he was very much in the mindset that this is beneficial across the board, reminded me of some of the rhetoric and some of the commentary, the narrative coming up following Deep Seek maybe a day or two later, just the fact that what this is ultimately going to do for widespread adoption, what this is going to do for me, what this is going to do.Uh, for some of that longer term growth here over the next several quarters and many, many years to come. So again, it, it is interesting, obviously something to watch, especially when it calls into question the dominance, but I think there is a lot to be encouragedabout
17:34 spk_1
here. Yeah, it’s, it’s such a fascinating take, especially given some of the beneficiaries.In terms of the hyper scales as well from that when it comes to
17:41 spk_0
AI. Let’s take a look at MongoDB. It’s sinking after the software company issued an Outlook that miss the street’s expectations. MongoDB is anticipating its lowest sales growth since going public in 2017, saying that Outlet’s cloud-based application is seeing slower than expected growth. Now that comes despite MongoDB’s acquisition.Of AI startup of Voyage you are looking at losses here of just about 20%, I believe at least two analysts have downgraded the stock on the heels of this report here. So lots to lots calling into question just in terms of what that growth rate is going to be, the fact that their fiscal year 2026 guide coming in just a bit weak. A number of analysts also lowering their price targets on the stock this morning, so it certainly is overshadowing the results that they just posted here, the most recent.
18:27 spk_1
Yeah, Wells Fargo, key bank among the banks that have downgraded from sector weight to from overweight rather to sector weight or equal weight this morning here and it’s interesting even Keyank admitting that the results were fairly strong, but the execution challenges in the past several quarters being lower is impacting their outlook for re-acceleration beyond full year 2026 here. It’s also interesting just in the context of this mess. I believe it’s the.drop on shares since April of 2023, so just a huge amount of movement to the downside when it comes to MongoDB. And lastly, I would obviously have to crunch the numbers on this, but I do feel like this quarter we are seeing tech names in particular get really punished if they miss on earnings just because I, I mean the stock being down 20% and you have KeyBank admitting the results were strong, but it just wasn’t enough and I know we’re here and we talked about this time and time again, the record high expectations.For big tech names, but I feel like the degree of selling is so severe when you think about Broadcom, or you think about Marvel rather from this morning, MongoDB, all these tech names that you’re seeing such a huge sell off on if they don’t surprise the street to the upside on earnings just points to the high expectations in the tech space right now. All right, well, coming up we are taking a closer look at what to expect from President Trump’s trade negotiations with the former Department of State adviser Shawna overto you.
19:46 spk_0
All right, let’s also check in on shares of Kroger because that’s on the move. The company pushing to the upside today. It’s the best performing stock in the S&P 500, the boost coming after the company’s forecasted higher than expected guidance for the full year, easing some of the concerns surrounding the departure of its CEO, which was announced earlier this week. You are looking at gains of just about 2.5% have been up at about.Just about 5% here in earlier trading, but again, maybe leading some of those concerns following the ouster of its longtime CEO Rodney McMullen. Questions though just about inflation, the impact that it’s going to have on names like Kroger and clearly it’s not just Kroger and many of its competitors within the space, but again strong results here, and that’s enough to lift the stock. You’re looking at shares up just about 2%. We’ll be right back.Commerce Secretary Howard Lutt telling CNBC that President Trump is likely to defer tariffs on all USMCA complying goods from his latest round of tariffs that could come as soon as today. That happening just moments ago. He for more on Trump’s trade negotiations and how this is going to play out. We want to bring in Nelson Cunningham. He’s a former adviser to the Clinton and Biden administrations. Nelson, it’s great to have you here on Yahoo Finance. We are getting some headlines here from.Commerce Secretary Lutnick as we speak, saying that Trump may make this decision on the USMCA tariff delay as soon as today. He also went on to say USMCA goods related tariff delay likely until April 2nd. I’m curious what your thoughts are, your assessment of the headlines that have been coming out of the Trump administration here over the last several days, and what that signals just in terms of US trade relations here under this new administration.
21:32 spk_4
Well, thank you for having me on. You know, I look at this from two perspectives, not just as a former government official who played a role in implementing NAFTA way back in the day and more recently.I was involved in dealing with the, the modern NAFTA, the USMCA, but also I spent 25 years advising US companies on how to do business in Mexico and Canada and the rest of the world, and how to conduct their businesses overseas.How is any businessman today?Who deals with Canada or Mexico? How are they supposed to plan their business?Mexico is our largest trading partner. Canada is our 2nd largest trading partner, China is our 3rd.These tariffs that the president is imposing and then maybe exempting and maybe pulling back.They’re impacting vast quantities of the American economy.How can you plan if you’re making automobiles or light bulbs, or air conditioners?And you have goods that are flowing across the borders every day.
22:44 spk_1
So talk to me about that given what you mentioned about advising companies. I’m curious, especially with these headlines from Lutnick reiterating the idea that USMCA compliant companies might be eligible for exemptions. What other companies outside of the auto space might be able to make that argument that they are USMCA compliant and therefore be exempt from tariffs? Could agriculture firms be exempt, for example?
23:09 spk_4
Um, yes, um, I think that probably the largest sector that would be impacted in addition to autos, would be oil and gas. We import something like $200 billion a year of oil and gas from Canada.Uh, and tariffs on that are huge, have a huge impact on oil and gas prices all across the northern border.Of the United States.Um, we made a promise, the United States made a promise to Mexico and Canada, nearly 30 years ago.That we would keep our tariffs on each other low, we would put stability into the relationship, so thatPeople and businesses and governments on both sides of our borders.could build their futures, secure the knowledge that they would have access to the largest market in the world, the North American market.What Donald Trump is doing is upending 30 years of promises, including his own USMCA agreement, which he negotiated in his first term.Um, he, he is abruptly andWithoutAny principal view.Uh, imposing these tariffs in violation, I would argue, of US law.
24:37 spk_0
Nelson, is there anything that’s effective about President Trump’s approach in your view?
24:42 spk_4
Is there anything
24:44 spk_0
that is effective, that that is going to help that that is going to better position the US on the world stage at all just in terms of getting some sort of more not leveling the playing field a little bit, but better positioning the US when it comes to some of its trading partners.
25:02 spk_4
Look, the president argues that the reason he wants to impose these tariffs is because of fentanyl and illegal immigration.Uh, both are way down over the last two years, way down.And they do not impose Canada, they do not affect Canada and Mexico equally. 98% of the fentanyl comes across the southern border from Mexico. 98% of the illegal immigrants come across the southern border from Mexico. Less than 2% come from Canada.I think Canadians are umare quite, uh, are, are, are quite justified in being, in being frustrated and angry at the way that they are being treated by President Trump. They create none of the illegal migration and none of the fentanyl problem, and yet they’re being equally blamed along with other countries. Um, Trump may get some lip service paid on both fentanyl and immigration, but frankly, there’s very little that Canada can do.And there are limits to what a country like Mexico can do. After all, fentanyl comes into this country because of the enormous demand that American consumers have for fentanyl.This is not something that the Mexicans are shoving down our throats. This is something that American citizens are doing to themselves every day, and Mexico, yes, is feeding that.But it’s the American citizens that are creating the problem there. It’s not the foreigners.
26:42 spk_1
That’s an interesting take, Nelson. We’re gonna leave it there. Thank you so much for joining us. Appreciate it. Let’s go to check in on the markets one hour into the trading day here. We’re still seeing more selling across the board. You got the S&P 500 down about 0%. Your tech heavy Nasdaq down nearly 1%. Again, we’re still seeing that selling coming off on the markets here, especially as we continue to see that volatility.And markets continuing to digest the impact of that tariff policy from earlier this week. We’ve been talking to analysts this morning just about the recession trade potentially coming in, with even some of the safe haven corners of the market see selling. We’ll continue to monitor that in our coverage here at Yahoo Finance. More ahead on Catalysts.Z Scalar reporting strong results for its fiscal 2nd quarter with revenue up 23% from a year earlier. The cybersecurity company says AI is driving strong demand for the platform. Joining us now, we’ve got Jay Choudhary, C Scaler’s CEO. Jay, thank you so much for joining us this morning. Just curious about if you can give a little bit more color to that demand picture for those Gen AI chatbots coming up here. Talk to me about that demand and how much that is driving revenue growth for the business.
28:03 spk_5
So first of all, thank you for the opportunity.The world is powered by digital technologies. Uh, we are seeing an increase in a number of threats, but AI is making figuring out the threats and attacking customers a lot more easy. You can have a simple question to GPT and say show me all the firewalls and VPNs that have vulnerabilities, and I can attack them.What Z killer does is to bring the zero to architecture where we’re hiding all the attack surface. So the need for cyber protection is #1 reason. #2, AI is also becoming a big source of loss of data.You can simply submit some of your source codes from the programs to these AI applications. The customers can lose data. We provide protection against data loss. We provide protection against some of the cyber threats that are made easy by AI. That’s what’s driving demand for our customers. Jay, you
29:04 spk_0
know, it’s so interesting, especially when youTake a look at a report like yours showing that robust demand right now and and comparing that maybe to the more macro story that’s out right now, the fact that companies are pulling back on their capE spending, are you seeing any evidence of that just, just the, just the amount of capex allocated towards your industry or just something that is very immune even to this macro environment right now?
29:26 spk_5
So what we’re seeing is market is tight. IT budgets are under pressure, cyber budgets are under less pressure. But when I talked to the CIOs, they would say cyber protection is number one priority, but all cyber is not created equal. Zero trust architecture that’s.Get a pioneered and we’re rolling out zero trust everywhere becomes very important, but on top of that, if I can show the CIO and CISO that we can reduce costs significantly by reducing a lot of legacy products, firewalls, VPNs, uh, SDA and all those things.Then it becomes easier to do the deal, so better cyber with zero trust and cost savings is what’s driving ourbusiness.
30:12 spk_1
And to dig into this just a little bit more, when you talk to clients, have you heard any increase in their hesitance and maybe theirHesitant to spend and their willingness to kind of want to hold on to their IT budgets as much as they can just amid the rising uncertainty, particularly under the Trump administration given the policy uncertainty right now. Have you seen an increase in that skepticism and desire to kind of hold on to Capex?
30:38 spk_5
It is certainly uncertainty. Uh, it’s more so in the federal world than the public sector, but there is some uncertainty. That’s why the point I made was, um, if we can show cost savings, and there is a significant savings to be made because over the last dozens of years there’s a lot of technical debt, old technologies that are costly to operate and manage and upgrade. If you can show cost savings like Z Skier does.And you can do better cybersecurity and better user experience, this willingness to spend. We are one of the unique companies that not only do better security but actually do cost savings. If you can’t reduce cost for the customer, it gets hard to get deals done.
31:26 spk_0
Jay, give us a better sense just of the pipeline, your visibility into that pipeline, and how that’s adding to some of that bullish outlook that you shared on the call.
31:34 spk_5
Yeah, ourpipeline has been growing, and the reason it’s growing is for two reasons. One, we have better protection and CIOs, CEOs, and the boards worry about cyber these days. And number 2, if we can tell them that we can save costs, they deal with us that grows the pipeline now.To close the deal, they want to see that we can actually do business value CF4 already case study that we can take out this cost in 1st quarter, 2nd, and 3rd quarter, and that’s what we do and that’s what’s helping us grow our pipeline and close business.
32:11 spk_1
And I’m curious too how you’re thinking about the Department of Government Efficiency cutting jobs obviously, but also uh cutting spending that some have said might lead to concerns about cybersecurity. How does that federal decision impact your business?
32:26 spk_5
You know, every day the world is getting more dangerous. The administration will do what it does.What we do is to provide solutions to make our country safe. There’s a lot of old security tech technology sitting in our federal government, lots of firewalls, lots of VPNs, lots of old networks. We go with zero trust everywhere approach where we take a lot of that cost out, so we are helping with some of the cost efficiency on the technology side, on the operation side because.There’s a, there’s a bunch of old spent. Efficiency and effectiveness is what these killer zero trust architecture is about. We were not built on old architecture. We’re built on the new architecture with zero trust. We connect only to the right party based on access rights. You’re never allowed to be on the corporate network. You’re never an insider. That’s what makes the Z scalar solution much, much safer.
33:27 spk_0
So you benefit then Jay from these efficiency from the efficiency focus of the government right now?Sorry, say that again. So Z scalar is in a position here where you’re benefiting from some of these efficiency initiatives right now under the Trump administration.
33:44 spk_5
If I put it this way, we are helping reduce some of the costs on technology front that should be eliminated. Yes.
33:53 spk_0
All right, Jay, thanks so much for taking the time to join us here again. Zeca out with results. You’re looking at share gains just shy of 7% this morning. Coming up, a look at how big tech is trying to win over President Trump. We’ve got that next on Catalysts.
34:15 spk_1
Alphabet’s Google met with Trump administration officials last week urging the Justice Department to slow efforts to break up the search engine giant. That’s according to reports. Google has been pushing back on the Biden era ruling for some time. A changing of the guard in Washington comes at a crucial time for the antitrust case, the trial scheduled for April. Adam Kakovich is the founder and CEO of Chamber of Progress.Trade group representing tech companies in DC. He also previously led Google’s US policy strategy and external affairs team. So Adam, you’re the perfect person to chat with about this here. How likely is Google to be successful in your view, especially given the fact that there was so much optimism about regulation under the Trump administration, but then they came out and said they were actually going to mirror Biden era regulatory policies.
35:02 spk_6
Well, I think it depends on which branch of the Trump world kind of prevails in this case, right? So this is a case that was brought under the Justice Department under Trump’s first term. The the Biden Justice Department then prosecuted the case and won the case. And now it’s, it’s in the remedy stage. So the, the question is what remedies will the judge impose. The Biden Justice Department proposed what I would call like remedy spaghetti.Against the wall, they proposed nearly 30 different remedies, and some of these were very wide ranging, including potentially requiring Google to spin off things like Chrome. These were very disconnected from the actual case. The problem is that if the Justice Department pursues these pretty wide ranging remedies, the odds of losing uh increase, and this is exactly what happened with the Microsoft antitrust case in the late 90.So the other thing that’s a big tension here is you’ve got the Trump administration coming in and saying, look, you know, we are in an existential fight against China on things like AI competition. Vice President Vance gave a big speech about this in Paris two weeks ago, and you know, here’s one of our major competitors in Google, right? So what are we gonna do, hobble one of our main US runners in that race by breaking that company? It seems ill timed to do that.
36:11 spk_0
Adam, I’m, I’m curious just what you’ve made over the last several weeks just in terms of if we take a step back from all of this right and talk about what is factoring into maybe some of the decisions that could come under the Trump administration, we obviously have seen and I know you’ve written about it, I know you’ve talked about a number of times, obviously more of a cozying up or more of a friendly sort of relationship between these tech leaders and the Trump administration. Is that something that you think is going to prove to be effective or beneficial? How beneficial here for the industry?
36:40 spk_6
Well, I think there’s a couple of things going on. One, you’ve got these different branches of Trump world, right? So on the one hand you’ve got a contingent that really doesn’t like big tech, wants to punish big tech, particularly over things like speech and censorship. On the other hand, you’ve got a contingent that says, look, we need to, uh, nurture these companies. These are, these are basically our best hope for beating China and AI. We also need to unlock mergers and merger and acquisition activities. Startups, you know, there there are not many startups going public, not.Starts getting fired, we need to unlock all of those things. But I think the other thing, frankly, is that tech industry learned from the first term that Trump doesn’t respond to vinegar as much as he does to honey, right? That it’s better to have a relationship with the administration. And so that’s why I think you’ve seen all the CEOs try to build a relationship with him. I don’t know if that has a carryover to the antitrust cases. These, these are, these are years long cases. It’s not clear to me whether that translates into cases being settled or dropped.
37:36 spk_1
And what would you say to voters who are concerned about this kind of tech oligarchy and the closeness of these tech billionaires with the Trump administration? What have these CEOs told you about what their end goal is?
37:49 spk_6
Well, first of all, I think you got to put Elon Musk in his own category because I don’t think that’s where most of the companies are. What I think most of the companies want is kind of not to be punished, um, to be able to operate and you know, frankly, uh, there were, there’s a, there was a lot of understandable exasperation that the Biden administration went after tech, right? I’m a pro tech democrat. I didn’t like.What the Biden administration did, and I think there’s a hope, an optimism that you could have an administration that champions and nurtures this industry, uh, as America’s frankly leading export, but you know, I think the jury is still out on what exactly happens. There’s a lot of uncertainty being, you know, that that Trump is, uh, uh, provoking as a result of tariffs and things like that.So I think most, most of all companies, you know, kind of just want an end to kind of an antagonistic posture and and that’s really what it’s about. I think that it’s also possible to say, look, you know, we want to have progressive taxation, we want to scrutinize companies, we want to s.moguls, but we don’t want to break the services that Americans love, and I think that’s a, that’s a little bit of a nuance there.
38:49 spk_0
Adam, let’s switch gears here a little bit sticking with the theme of the Trump administration inside the White House, but we’re going to talk crypto. We have the summit set to take place tomorrow. Reporter Jennifer Schomberger was just on.Earlier today, just laying out who was going to be there, what to expect potentially from this. I know you have several partners within the crypto space. I’m curious what you’re hearing from them and how optimistic they are about some of that clarity that we could gain.Well,
39:15 spk_6
look, I’m a pro crypto democrat. I found the Biden administration’s approach to crypto to be unnecessarily hostile. I think the administration has made some positive moves here, right, naming David Sachs as crypto czar, holding the summit tomorrow. Most importantly, the SEC dropping some of its lawsuits against companies like Coinbase and Uniswap. That’s all really positive. I think at the same time there’s been news, you know, like a focus on the Trump family focus issuing meme coins. That’s a bit of a distraction.It’s nowhere close to the most vital application of crypto, and I think, you know, that’s a concern. Frankly, the most important thing that needs to happen in crypto is that Congress needs to pass clear rules. There’s bills that are bipartisan around stablecoins and market structure, putting clear consumer protection rules, and we should pass those. And so I think that like that’s really what we, you know, I hope we focus on. We’ll see what comes out of the summit tomorrow. There’s some questions about what this reserve fund might look like. We’ll see.
40:09 spk_0
We will see. All right, Adam, great to talk to you. Thanks so much.
40:13 spk_6
Thank you.
40:13 spk_0
So check of the markets here pairing some of those earlier losses that we have been talking about taking a look at the three major averages if we could pull that up on the screen here. You now only have the Dow off about 0.5%, the S&P well off its lows of the session, as well as the Nasdaq. We are still seeing though those jitters that have been creeping in, have been in the market now for quite some time still remain, but again off the lows of the session. Wealth is coming up next.