Squawk on the Street 2ND Hour 1/26/26

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Sara Eisen (0:59)

Good Monday morning. Welcome to Squawk on the Street. I'm Sara Eisen with Carl Quintanilla and David Faber, live from Post 9 as always of the New York Stock Exchange. Huge week of catalysts on the way, including earnings reports from the four of the Mag 7 companies, a Fed decision, and a potential government shutdown. We'll talk about what it all means for your money after two negative weeks in a row. Plus, we've got a big interview coming your way, Morgan Stanley's global co-head of M&A, Tom Miles with a look at whether strong deal activity from the second half of 2025 will actually carry on into this year. Then shares of CoreWeave jumping this morning after NVIDIA announces a $2 billion stake in the company. We'll hear what Jensen Huang and CoreWeave CEO just told us about the deal. But guys, you know where I'm going to start today. The Japanese yen, the center of the market action. It is surging against the US dollar, which is a big change from where it's been. Why? Well, there's speculation in the market that either the US and Japan are about to intervene, actually step into the currency market to strengthen it, or have been doing so. Why? Well, there were some reports that on Friday, the New York Fed, so that would be the US Central Bank at the behest of the Treasury Department, reached out to several trading counterparties basically for so-called rate checks. Again, according to reports, and it would be something, they're looking for pricing, inquiries about pricing if they were to step in. It's pretty unusual for Japan and the US together to step into the currency market. We haven't really seen it since 2011, during the time of the tsunami. Japan has intervened multiple times, but the two of them together, I think is a signal that the US is a little concerned about these one-way movements toward a weaker yen, also the Japanese bond market. I know you guys were talking a lot about that last week when we were in Davos, this big sell-off in Japanese bonds. There's some angst around this snap election that's happening February 8th and more fiscal stimulus in Japan. As a result of all of this, we see the dollar weakening to multi-month lows again. I have to say, there's the daily FX movements that we're watching around this. Will they intervene? Will we have to fight the central banks? That sort of thing. The bigger picture here is questions around the dollar and ultimately whether it's peaked and whether more and more central banks are diversifying, and not just the dollar on all currencies, like the yen as well.

It's no surprise gold is up another few percent today to a new high.

Carl Quintanilla (3:24)

Yeah, hard to separate it from what it's doing to precious metals as we continue to talk about the so-called debasement trade. I mentioned with Jim in the last hour, Sock Gen's fresh target for year-end gold at 6K, which is remarkable given what it's already done year to date.

Sara Eisen (3:39)

I mean, it got to 5100 so fast, silver at 105 So here's what Wall Street's saying about the move in gold, the why, if you're scratching your head about why it just keeps going up every day. Deutsche Bank, the long run story is really about monetary regimes, inflation shocks, and investor fear cycles. Morgan Stanley, we don't think prices have peaked with geopolitical risks, positive signals from central banks and ETF buying. David Rosenberg, I thought, put it well, gold is after all the only true malleable metal out there, and it's what central banks are buying en masse, and that diversification process is in the middle innings of the ballgame from our perspective. Guys, this was a big conversation at Davos. If you look at the takeaway, for instance, from Ray Dalio, who's long been a believer that you should have a good chunk of gold in your portfolio as a diversifier, he calls it the capital wars. We focus a lot on the trade wars here and the tensions, and over the weekend, the US threatened Canada with 100% tariffs if they make a trade deal with China. It's the capital wars that we need to pay attention to, which is big countries diversifying some of their reserve holdings. They all hold a lot of money, and they've all held it traditionally high amounts in dollars, just away from dollars. They're not necessarily dumping dollars, but just diversifying as the global world order kind of resets, and we wonder where it's going, and countries need to hedge.