SOTS 2nd Hour: AMD Sinks on Results, Treasury Secretary Bessent Testifies on Capitol 2/4/26

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I'm Sara Eisen with Carl Quintanilla and David Faber. We are live as always at Post 9 of the New York Stock Exchange. Coming up this hour, Treasury Secretary Scott Bessent takes the Hill. We'll take you live to the hearing of the House Financial Services Committee in just a bit. Plus, the latest on AMD's results, what it says about the AI trade as that stock pulls back despite solid earnings. And speaking of AI, the sell-off in software intensifies this morning as AI disruption fears grow. What that dislocation means for the broader market straight ahead. Let's begin this morning with breaking news and the opening statements from the Treasury Secretary on Capitol Hill this morning. Leslie Picker has that. Morning, Leslie. Good morning, Carl. Treasury Secretary Scott Bessent, focusing in his opening remarks on this idea of regulation by reflex, as he calls it. He is expected to say that rather than preempting crises, regulators have frequently reacted to them after the fact. He calls that, quote, hazmat cleanup, instead of preventing dangerous spillovers in the first place. Secretary Bessent, who will be speaking with the House Financial Services Committee shortly, is saying this regulation by reflex has undermined safety and soundness and driven excessive regulation that could lead to economic stagnation. He's expected to say, quote, under President Biden, the bank regulators preoccupied themselves with reputation risk, climate related financial risks and other risks with no clear nexus to safety and soundness. He is expected to say federal agencies should avoid the temptation to create a zero risk financial system. So we will be zoning in on those statements as well as the Q&A to follow with Congress, which should focus on more specific surrounding the deregulatory priorities as well as perhaps Fed independence and other key topics that is front and center across Congress and beyond, guys. Okay, Leslie, thank you. Leslie Picker, I will take you to the testimony in the Q&A as soon as it begins. In the meantime, guys, the big economic report that we got is the ADP, Private Sector Read on Jobs, because it doesn't look like we're going to get the official jobs report. Even though the government is open, we're waiting to see for when they reschedule that presumably next week. So we look to ADP, even though it's not exactly correlated with the government report, it does tell us some things, which is not so hot momentum on the job hiring front for the month of January. Total payroll is coming in at 22,000. Expectation was more than double for that. And if you look at where the jobs were added, a lot of them in services and not so much in the cyclical areas of the economy. It was in healthcare and education. That continues to be the job growers. We did see leisure and hospitality add, which is good. The goods producing sectors only added 1,000 jobs. So kind of a week showing. If you smooth it out, three-month average moving average is now 10,000 jobs from 18,000 prior. So loss of momentum on the hiring front. And because I know you guys have been focused on this issue, manufacturing was a job loser again. And we've seen that now several months in a row. We haven't seen manufacturing add jobs in the ADP report since 2024, despite all the tariffs and the investment announcements from companies that they were going to build in America. Yeah, page one of the journal today, US manufacturing in retreat, is how they put it. And they have charts of manufacturing construction, manufacturing employment, manufacturing job openings. David asked, has it the other day on this show, what's taking so long? And has its answer was essentially they haven't turned the machines on yet. Yeah, right. They're still breaking ground, so to speak. And so it's going to be a while. Does that sound right to you, Sara? I mean, it could come. Look, the the the it's not just tariff policy. It's that it's it's the tax policy. It's the easier regulatory policy and it's monetary policy. And all of that should set up a good environment and a better environment for manufacturing as a whole. So I don't think it's wrong to expect that that would come. I also think it's, you know, people say, oh, the tariffs are adding uncertainty and making it harder. Obviously, international trade is tied to manufacturing in this country. A lot of what we make here is shipped overseas. So there's been disruption on that. And, you know, part of it is the way that the tariffs were done. A lot has changed. It's not like there was one big change and then manufacturers could plan. It was it wasn't a permanent change. I think the changes in the tariff code, there were 50 of them in the last year or so. So that's a lot of on again, off again, trying to figure out what the tariff. Once things settle, I think it's right to expect that maybe there might be some stability there once there's certainty. But isn't that the key? I mean, you're on the right point, which is you don't know if there's going to be stability because the president, as we all well know, could post something on True Social Right Now that sort of upsets the balance in one country that there had been an anticipation things were sort of settled. Yeah, I know. And it's hard to allocate capital for something that's not going to get a return for years if you just feel like, well, I don't know, I don't have a line of sight. We're still waiting on Supreme Court decisions. We're getting closer to midterms. And every day you get closer to a potential new administration is the idea that, well, maybe I'll just wait. I can wait and see if policy does change. Look, I think that tariffs are here. And the administration has made clear that tariffs are going to stay, at least while they're in power, right, as much as they can. Even with the Supreme Court decision, I think they have backup plans and they've made that pretty clear that that's happening. So plan on tariffs. The question is how much and where? You know, I know the parallel industry has been really eager for this India trade deal to go through. And the hope was that once these trade deals go through, then the business would have a better idea of where the tariffs... And it's largely true. I mean, let's put the word deal in quotes, because the EU thought they had a deal. And then he threatened more tariffs over Greenland. That's to the uncertainty that David's referring to. Yeah, absolutely. Or even South Korea, where it's taken a long time apparently for their legislative process to work in terms of a deal. So it may change there. That said, there's a lot of money that at least has been promised as part of these trade deals that's supposed to come over here, that is supposed to be deployed, again, for building plants and things of that nature. I mean, one of the main reasons for the tariffs, right, is to create and bring manufacturing back. So it has created revenue. Look, I think it's happening. But you see the build of the data centers that is happening in this country. You can't deny that there's build happening. But it's not with as many workers as it used to be also. And the data centers is not related to tariffs. It's related to obviously what we're talking about every minute here. There's construction and there's manufacturing happening in this country. It's probably with fewer workers than it used to be in automation, right? Yes, in data centers, of course, once they are built, as we point out, it does not take many people to actually run a data center. The construction is a significant employer, but after that it's not. I don't know what will be in all these factories of the future as well, to your point. A lot of them may be run by robots. Right. It's a question. Look, we have Novartis on next hour. All these drug manufacturers have announced billions of dollars in manufacturing in this country, and they're on board with the idea that we're going to become more self-sufficient when it comes to the supply chain of drugs. There's a national security over... Certainly, that's an important part of national security. The question is, how many people do they hire and over what time period? When is it going to start to show up? And that's, I think, what the administration is going to have to do. And how does it comp with what their plans would have been with anyway? Right. That's the other question, is what's incremental? Sure. We don't know. Yeah. I mean, look, there have been a lot more announcements since President Trump has been in office than when President Biden was in office about companies investing in the United States. I think you have to acknowledge that. The only other piece that I wanted to point out in the ADP data was the wage numbers, because remarkably stable even with the slower job growth, which tells you maybe the slower job growth is related to things like lower supply and immigration. So for those that stayed in their jobs, 4.5% increase, that was actually a little higher than the previous month. For those that changed jobs, 6.4, a tiny bit lower. But the stability is what stands out to me. It's not like we're seeing a big decrease in wages that are getting paid because companies are pulling back from hiring or anything like that. That's why there's this big debate about just how worrisome the lack of job growth really is in the economy right now. All right. Let's turn now to AMD. The stock is down dramatically, actually, as you see it there. 14%, is that dramatic? It's pretty not good. Solid results and guidance, though. CEO Lisa Su joined us last hour. She talked about the quarter and, of course, one key part of the business.