Money Movers 2/11/26

What made you confident that you could do something that hadn't been done before? I have no fear of failure. Trailblazing women changing the game. One of my favorite pieces of advice. Think about what your boss's boss needs. Leadership can look in many, many different forms. It really does come down to just trusting yourself, like the short, and you just gotta think big to accomplish big things. Julia Borscht and hosts CMBC Changemakers and Powerplayers. New episodes every Tuesday, wherever you get your podcasts. Good Wednesday morning again. Welcome to Money Movers. I'm Sarah Eisen with Carl Kintinia, live from post-9 of the New York Stock Exchange. Big show ahead for you today. Greenlight Capitals, David Einhorn, joins us for a rare and exclusive interview. We'll get his thoughts on the AI trade valuations and his latest market positioning. Plus, Toma Brava's Orlando Brava will join us. Great day to have him, founder of the world's largest software-focused investment firm. We'll get his take on the most recent AI field market volatility, which continues today. Congress hones in on housing affordability, advancing a build this week that would enact some new policies to boost supply. We're joined by the CEO of Home Builder Taylor Morrison, talk about the state of the housing market and the company's results. Meantime as for the markets, lost kind of the bounce that we got after the jobs number this morning. Dowsgone Red, S&P essentially flat, Nasdeck Red, things like communication services, financials. We're green and leading now lagging, and instead we got healthcare and staples on the run. Let's begin with this morning's jobs number. Steve Leasman has details on that. Morning, Steve. Good morning, Carla. Big beat on the payroll report, holding out hope that the job market could be turning around. But raising questions, how much faith you put into this one strong numbers? Let me give you the upside. At 130,000, it was more than double the expectation. Unemployment rate falling by a tick, again, better than expected. Producent patient rate rose, labor slack declined, and the private sector was stronger than the overall number, suggested because it declines in federal employment. On the question side, you have to wonder, you know, it was triple the prior two months. So it's out of trend. Big season of adjustments, helping retail. And by the way, possibly some positive weather effects with, believe it or not, above normal temps in the first half of January, helping construction, I just confirmed those temperatures with our friend, Bernie Raynow, from AccuWeather. Also concentrated job growth in healthcare and social assistance. But that also helped with some manufacturing gains as well. Also, you had the big downward revisions that raised questions. One and a half million job growth in 2024, we thought there was a third of that in 2025. It was even worse, just 181,000. Here's the calculation by month from 120,000 in 2024. We thought it was 50, now revised down to just 15,000 per month. Future prices, continued to price in two rate cuts from the Fed, one in June and another by October or in December. It had been flirting with some higher probabilities based for earlier cuts, but that's been washed out by this stronger jobs. At the very least, this job number confirms the Fed take that the job market is stabilized. But confirmation that we're off to a new spurred of strong payroll games just have to wait for less noisy month for confirmation, guys. >> Yeah, we talked to Joe LeVornia from the Treasury last hour about this. He was really encouraged, another data point, Steve, is that labor force participation increased. More people came into the labor market from the sidelines, which is a good sign. And I think administration gets credit. I also think the Fed gets credit. It vindicates their first of all three job, three rate cuts that they did last year, setting up for easier policy because they wanted to address some of the weakness in the job market. >> I think that's a good observation, but it has a limitation, Sarah. And I'm interested in your thought on this. The prior, the revision downward, vindicates the Fed's prior rate cuts. And it says, yeah, they should have been cutting here. What it doesn't vindicate is, hey, should the Fed be on hold here or not? Is this 130, a new number that suggests we're off to this new start? I can't get my brain around whether or not this January number. You know, Sarah, they are subtracting 1.9 million jobs from the unadjusted number to get down to the seasonly adjusted number. So in all of that noise, I would just relax here. I had a guy call me up and say, should I lock in my funding now? I don't know. I think next month is going to be a little bit more in trend because we keep coming back to these demographic ideas, right? The demography is destiny. And if that's the case, then this 50,000 run rate still seems to be right, unless I can see better or different demographic numbers. >> Or unless we get something way out of expectations on inflation this week. >> There are. >> You know, yes. >> Because that's kind of been also steady and not pointing into one direction, whether the holder cut either way as well. Thank you, Steve. >> Pleasure. >> Steve Lee spend the FAA abruptly lifting its order halting El Paso Airport flights for 10 days. Philoboe has the details. So now what, Phil? >> Interesting day, Sarah. It started early this morning when the FAA instituted the flight ban on the airspace over El Paso, including the El Paso Airport, which meant that you had no commercial flights. That has been lifted. They lifted it shortly before 8 AM, central time. I think El Paso is central or 7 AM mountain time. Early, relatively early in the day, here's what the FAA said, in announcing the lift on the ban of flights for El Paso, saying the temporary closure of airspace over El Paso has been lifted. There is no threat to commercial aviation. All flights will resume as normal. Here's what it looks like at the El Paso Airport this morning. Business as usual, people in line waiting to go on their flights. Not a whole lot of flights out of El Paso at this time of year. Daily departures today, 43 flights. So not a huge number of flights. Nonetheless, it is a significant airport. And if it was shut down for 10 days, it would be significant. So what exactly caused this? Well, according to the Department of Transportation, there was a security threat. In fact, Sean Duffy, the Secretary of Transportation, put out a tweet this morning saying the FAA and the DOW, the Department of War, acted swiftly to address a cartel drone incursion. The threat has been neutralized and there is no danger to commercial travel in the region. He goes on to say the restrictions have been lifted. And normal flights are resuming. Not a whole lot of impact on the airline stocks. While they are trading lower today, I don't think they're trading lower because of the situation in El Paso. Keep in mind a number of the airline stocks have had a nice run over the last six months. So they've been moving around at this level up and down just a little bit over the last month or so. Guys, I'll send it back to you. The bottom line is this. A lot of questions about why this was put into place so quickly, but you hear the Secretary of Transportation saying, "Look, there was a drone incursion. And we felt it was a threat and that's why they acted so quickly." Yeah, the President of Mexico, Sean Bams on the tape this morning, Phil, saying she has no information on the use of drones on the border when she was asked about the suspension. So we're definitely still craving some clarity on it. While we have you, I mean, have you had a chance to look at Ford kind of a story today in this tariff hit from last night? Well, the interesting thing about the tariff hit is that they were expecting to have some offsets for auto parts that were being taxed as they were coming across the border. The Trump administration said, "Look, we're going to give you some offsets on that. Those did not come in as expected in the fourth quarter, but they will be happening in 2026. So there's a bit of a tailwind, if you will." In other words, it's a wash. Even while they did have an impact on the Q4 results that many analysts were not expecting, it's not going to have a lasting effect. So that is the situation there, which is why you saw the stock drop initially after the results came out, and then they came back as people said, "Okay, let's focus on the underlying business." And with the underlying business, it comes down to this. They do well when it comes to internal combustion engine vehicles. They do really well when it comes to commercial vehicles and that division of Ford. They continue to lose money when it comes to electric vehicles, though they believe they can still get to a path to profitability when it comes to electric vehicles and their next generation of electric vehicles on an architecture that will be rolled out next year. They believe they can be profitable by 29. "Okay, Phil, thank you." Ford's up 1% to your point. Coming up, Greenlight Capital is David Einhorn here for an exclusive. We'll discuss his latest investment ideas, market outlook, and much more. Later on, John McGrath-Ozor, Landau Grath-Ozor, join us. We'll get his take on this continuing software sell-off and where he thinks there might be some opportunities as money movers continue. Julia Boursten hosts CMBC Changemakers and Powerplayers. Welcome back to Money Movers. He has been a famed value investor for decades, known for his Lehman Brothers short and the run-up to the 2008 financial crisis. His firm announcing just last month that it would close its hedge fund to new investments, starting in July, while reiterating a bearish stance on U.S. equities. Joining us here for a rare exclusive interview is Greenlight Capital Founder and President David Einhorn. Welcome. Thanks, sir. So the stock exchange is going to have it. What is light to be here? It's great to have you. You know, as we watch the market, the AI trade has really been dominant. And today's another day where software's selling off, and everyone's wondering who's going to be disrupted. Where do you stand right now on the whole AI trade? Yeah, I just think it's. It's probably too hard for us, so we're mostly just to the side of it. I look at it that AI is going to be a really, really big thing. The internet, if you went back to 1999 and said, "How big is the internet going to be?" It's probably turned out to be bigger than the biggest bulls. Yet, for the stockholders back then, things didn't work out for a while. It took a long time for that to grow through. I think if you think about AI, you know, 30 years from now, this is probably going to be an enormous impact on society, probably in ways that none of us can even fathom right now. But then when you compare that to the opportunity and the stocks, it's a little bit more confusing to me. These companies are spending hundreds and hundreds of billions of dollars. I don't think they're sitting around saying, "If I spend another hundred billion dollars, I'm going to get another 20 billion dollars a profit, so I'm going to have a great result." I think it's more like, "If I don't do this, somebody else is going to do it, so I'm forced to compete and I don't want to miss out." I'd rather lose a couple hundred billion dollars than let my competitor have this market. I think it's going to be a very competitive market, and it's just very unclear to me where the returns are going to come. We're just mostly focusing on other areas. It sounds like you don't think the math adds up for some of this spending. Well, it depends on what happens, right? If you have these large language model models, they're probably going to be commoditized. There's a lot of them, and it's very, very hard to see how you're going to get an actual return. But the hope that the people who are sponsoring, which is above my pay grade to figure out, is for artificial general intelligence, which will take everything to a completely different level where the computers are solving things and they're smarter than all of the people and can do all kinds of things that we can't even imagine. If somebody gets that and nobody else does, that's probably a really great opportunity for that company. The problem is, is they don't really know if they're going to succeed, and if they don't know if they're going to succeed, I certainly can't figure out if they're going to succeed. But I don't know, I think as a deep value guy, maybe you're looking at some of the car age, for instance, in the software space, wondering if any of that has been overdone or if there are opportunities. Yeah, we don't really know. A lot of the software companies were trading at, you know, 40 or 50 times earnings, and now they're trading at 20 or 25 times earnings. It's still too much for us. Still too much for you. Overall market, too much for you. You said in your last letter that you haven't seen the market this expensive since you went ahead. Yeah, well, I think this is the most expensive market we've been in. I think that most investors aren't paying any attention to valuation. Maybe they care about the next data point. Maybe they have a view about price. But nobody has a real view about value. I think a lot of the people who professionally invest money and used to think about value have been fired, been redeemed, they've been turned into index funds, or replaced by like pod shops, which they don't know what anything is worth, but they know what the next piece of news is going to be, and they kind of want to invest ahead of that. And so the valuation discipline that the market used to have, it's kind of gone. Those people have been fired, and I don't really think they're coming back. We have a market that is kind of disconnected from traditional valuation measures. When you look at it, market cap to compare to the economy size, or compared to profits and stuff like that, these are just at record levels, which doesn't mean you have to be bearish or you should sell all your stocks. It just means that from my perspective, from a long-term point of view, this probably isn't the greatest time to have a ton of equity. I mean, the push back on that, which I know you hear about all the time, is that the economic setup is pretty good. Fed policy has been easy. They've been cutting rates, and they might cut further this year. Margin's are high and could go higher because of all these productivity gains with AI. Those are all the reasons why we're looking at higher models. And I wouldn't argue at any of that. And all of that may be true, and all of those things could come to be. In fact, I actually think the Fed is going to cut rates a lot more than what's priced in the market. This year? Oh, yes. How many times? A whole bunch of times. It's not just like maybe. The market's pricing into it's going to, I think it's going to be a lot more. You know, President Trump believes that the US should have the lowest interest rate in the world because he thinks we're the best credit. And he's been mad at the Fed share since he took office, screaming at him to lower rates. So he's picked his new guy and his new guy is going to come in and he's going to lower the rate. Yes, it convinced the rest of the committee to. I know that's the story on Wall Street, right? Which is, oh, there's 12 people they have to be convinced. The thing is, has the Fed share ever had a dissenting vote in his own decision? I don't think that's ever happened before. And I think that Kevin Warsh, who I've met and I think is very articulate, he's going to come up with arguments that are going to persuade people. He's going to say if the economy is running hot, like say the jobs report this morning, that's not a reason not to cut. The only thing that's going to be to. The market's telling us it's a reason not to cut. Yeah, I think the market's wrong today. I think one of the best trades out there right now is betting on war cuts this year than expected. What you did last year successfully too. Yeah, we've had this on for a bit, but I really think that, you know, he's not being brought on to hold the rates at a steady rate. We have four or five percent inflation, sure, then he won't be able to persuade people, but otherwise he's going to argue productivity. He's going to argue, we don't have to cut just because the economy is running hot. We don't have, we can't cut even if the economy is running hot. And so I think by the time we get to the end of the year, it's going to be substantially more than two cuts. Substantially more than two cuts. So that would be good for the equity market, wouldn't it? It very well could be. But you're not betting on the equity market. Well, the way I'm playing it is by betting on war cuts. So I own a lot of social features. It's just for futures. You've also owned a lot of gold, which has been a very successful trade. I mean, do you have as much conviction in gold right now at 5100 announced as you have previously? Well, gold's been very interesting. It's gone up a lot over the last couple of years, and not for a reason that I would have foreseen when we started investing in gold 15 years ago or something like that. What's happened right now is the Chinese have decided that they want to sort of compete on a currency basis. The central banks around the world are buying gold. Gold is becoming the reserve asset as opposed to treasuries, or it's almost even at this point, whereas a few years ago it was mostly treasuries. I think that US trade policy is very unstable, and it's causing other countries to say, we want to settle our trade in something other than US dollars. So I think that that is what has been driving the cause for gold. Arthesis, on gold over the longer term, has been that our fiscal policy and our monetary policies don't make any sense. We're running almost a 5-6% deficit to GDP here with nearly full employment. On a cyclical basis, that's some kind of a record or very near a record and certainly isn't sustainable. If you look at the other major developed currencies in the world, they're as bad or worse than the United States. Japan is well over a couple hundred percent deficit to GDP, and they've gotten away with it a long time by paying themselves no interest, but now they have to pay themselves some interest. I think there are some issues that sometime over the next number of years could play out with some of the major currencies, and that's the real core reason to own gold. I don't even think that that is at all the explanation for why gold has been going up now. It hasn't even played. I mean, it was due week last year. It started this year week. It's been moderately weak, but you don't have a panic in the dollar. You'd see the bond market yielding much different higher rates on distant than it is right now, or you'd see the tips market pricing in long-term inflation at much higher levels than it is. I think right now the market still has a lot of confidence in the dollar and the treasuries and the long-term inflation outlook. But you still love gold. Yeah, because that could change at some point. And what about treasuries? Where does that put you on treasuries? If you think we're going to get a lot easier monetary policy, but are worried about our. Yeah, we don't have any view on treasuries, but we are along the sofa future, spedding on more interest rate cuts this year. Do you characterize that as irresponsible policy as you just referenced monetary policy? Look, we're at 6% deficit to GDP right now. And we have nearly full employment. I think the monetary policy to the extent that the balance sheet is there to print. And if we have a recession, the balance sheet will be there to print much, much more. Unless that framework is sort of removed, I think the monetary policy is a facilitator of the fiscal policy. Yeah, I mean, Trump himself has said he wants lower interest rates in order for us to pay lower interest on our debt. And I. And I think he'll get that. We think he'll get that. But the question is, ultimately, I think at what cost. People still want treasuries. Ten year yield? Hasn't. I don't have a view about the ten year yield. Yeah, I know. But clearly, the long-term fiscal path is something that bothers you. Related housing. I know you. People always want to know your views on housing. You've been in out of positions on home builders. Where do you stand right now? Because that has been a tough part of the economy. Yeah, I think housing is very challenged. Housing went through a multi-year best environment one could imagine. You know, COVID came and everybody wanted to get a house. They wanted out of their apartment and into the house. And so, house prices went up a lot, right? And then there was a material shortage. And the home builders couldn't build enough houses fast enough in maybe 2022 and stuff like that. And so, there was a further shortage and prices went up more. And then rates started going up. And it turned out that people who just bought with low mortgages then didn't want to move. And so, there was less competition for selling. And so, home builders were able to raise prices more and margins went up. And I think all of that is kind of now-com full circle. And we've reached a point now where it's not a shortage of supplies. people are thinking there's just not enough housing supply. I think the problem is demand. I think people who've wanted to buy a house have now all bought houses. And what you have is the house prices is high. And so for younger people, it's really, really hard to afford to pay these prices. Home builders are giving big subsidies on mortgages to get people into houses. So even if rates come down, I don't see that it helps that much because you're already benefiting from the lower rates that the home builders are providing as subsidies. And so what you really have is a big demographic issue. People, the average first time home buyer right now is 37 years old. That didn't used to be the case. Young people, a lot of them are renting. You can rent a house that didn't used to be a thing 10 or 15 years ago. So if you're moving into a neighborhood and you only want to be there for a couple of years, you're uncertain in your job or it's new city for you, you might just rent a house. And those houses then get resold or re-rented to the next guy a couple of years later. So the turnover in terms of like new housing and existing home sales gets diminished. And I just think we had in a post peak period where we're sort of in a structural decline for housing. And the solution of course is lower prices, but nobody wants to see that. Well, the administration wants to see that. They're trying to get Wall Street out of the home buying business, potentially looking at an antitrust case against the home builders and all sorts of things. But it sounds like you think this is structural. Yeah, I don't think this is the home builders fault. I think this is the demographic fault. It's the economic fault. It's the fact that young people aren't forming families and aren't buying houses at the same pace that they used to. So what do you do? Are you short the home builders? We have a negative view on housing. I'll just say that. Right. You don't want to talk about specific. No, we're not going to talk about specific short. Unfortunately on home builders, what about some of the some of the names that you have been positive on? I was looking at your recent letter. One of them that's been in the news a lot and we've been covering a lot is Warner Brothers discovery, which you got into. I think before the whole bidding war broke out. Yes. What is your expectation of what happens? I don't have any further expectation. We've we've exited that. You've exited. Yes, the bidding war we thought hit sort of a peak and we moved on. But you did you did well off. We did it was good. We bought it in November, December and got to sell it in January. What else are you excited about right now in the portfolio? The thing we've been buying lately is a Katie of healthcare, AC, HC. It's a company that's been a a bear or a bad news. The stock over the last couple years has gone from 80 to 13 and maybe 80 wasn't the right price and they've run into all kinds of trouble. But the CEO I thought wasn't doing a very good job and they've recently replaced the CEO and brought in a former CEO who was much more successful with the company. I think that she's going to stabilize the operations. They have a lot of real estate, they have a division which is about a third of the profits that could be sold probably for almost the current market cap of the company if they chose to do that. My sense is sometime over if 80 was the wrong price, 13 is also the wrong price and maybe over the next couple of years it wouldn't surprise me at all if it made it halfway back. And you see this as a management kind of fixed? Yeah, they needed to change the management and they did so a few weeks ago and I think they built a lot of high-cost facilities and then they didn't figure out how to fill them up. So I think they just have a big blocking and tackling exercise as well as some very interesting strategic opportunities. Is that how you when you go out and you look for the most undervalued stocks or dislocated stocks? How often is it a management issue? What sort of criteria are you looking at? Generally we're looking for just where we don't agree with the market where we think one thing in the market thinks another. In this case we started with a small position at a higher price so we're in the hole on our initial purchases but as now they've come in and changed the management we've made this now much larger position. Also notice some of your recent consumer buys. I don't know if you're still in them but but Decker's was an interesting one that had come way down from the highs. Hocus still seems popular is that still one that you like? Yeah we still like Decker's. What is that a management story as well? No it's not it's that the market just I think got way too negative on they had a bad quarter or something like that a couple quarters ago and the market decided that maybe it was a fad and so on and so forth and we did a bunch of work. We actually think the brand isn't a pretty good stable spot. We actually think Uggs which is the lesser exciting part of it is probably going to benefit from like all the bad weather we've had lately and stuff like that so we think we think we're going to do okay here. On Decker's what about Peloton? Where are you on that one? You've had a history? Yeah Peloton we bought and then we sold and now we just bought it back after the last after this last result that they announced last week it was a disappointing result to the street. They raised prices on people and then a few people canceled their subscription and I think that's kind of an overreaction. I don't think Peloton is in secular decline. I think the new management has come in they're cutting costs. There's quite a lot of cash flow. They'll refinance their debt in a few months and I think it should be okay. Well I think the question with Peloton is just how big can it get you know ultimately in this world where we're all we're all going to the gym again. We're going to classes. Pilates classes. Well that's great. I think everybody should be healthy. I support that. Yeah but you like the stock. I do. It looks like you had a nice turn around in the stock. You're known for some of your more I know you don't want to get into shorts but you're known for some of your more bearish positions the shorts on Lehman Brothers on Allied financial. I mean it's got to have been a tough market to be short seller. It's been very tough to be short and so that's why we're also long. Are you more long than short? Always. Always. Yes. Yes. But do you have any high conviction shorts right now? Yes. The home buildings. I'm not going to tell you. What about the influx of retail trading? I mean that that has to have made it hard what we've seen in some of these memeification stocks. And the fact that you know they're still out there in force. Sure look it's changed the way we've had to think about the right tail risk relating to certain short positions. It used to be like the worst thing that could happen to a short is like a takeover and you lose 30% or 40% whatever the premium was and but that was it. And now with some of these meme stocks you know you lose 30% that's just the first day and then it can and then it can double and triple from there and you can go up four or five times or something in just a few weeks. And so if you are going to short things that are subject to that possibility you have to have much smaller positions so that you can risk management. So is that changed the game? It is. It used to we used to put the biggest short positions in our highest conviction ideas which were often things that we thought would go to zero. But in this environment the things that are most likely to go to zero are also the things that are most likely to attract this kind of attention. And so you can't make that your biggest position. So our bigger shorts right now they're much more established companies they're much more boring and we're looking for probably smaller percentage gains in them. I still in the sort of industrials area as well. Is that still chemicals I feel like you've been in? We're long we're long some European chemicals. Yeah. European chemicals. Why? European chemicals. Well first of all. About that. Well not much lately. It's been just a disastrous couple of years for the European chemicals. They've had trade. They've had China. They've had energy prices. They've had the Ukraine war. But I think things are turning around a little bit in Europe right now. There's a fiscal stimulus going on in Germany which I think is going to cause some demand. There's been some some protection that's been put in to raise tariffs on the Chinese to protect the domestic industry. There was a recent announcement a little while ago that they're reconsidering some of their carbon goals which makes a lot of sense because if the idea was to reduce carbon and just bankrupt your entire sector and then import it all from China where they don't care about the carbon. I'm not really sure whether the Europeans are benefiting from all of that happening. And so maybe they're beginning to rethink that. And then there's obviously the possibility that eventually the Ukraine-Russia war comes to an end. And I think that would cause a pretty good rebuilding opportunity in Ukraine which would which would help these companies. Okay, long in your pan. And just why David are you are you shutting the fund for outside investors? You know when we started Greenlight a long time ago we never really wanted it to be that big. In 2000 we closed the fund and we kept it closed until like 2020. But we had a very tough period between 2015 and 2018. We did a really bad job and a lot of our investors fired us and I totally get that. I would have fired us too. In fact some of the times I wanted to fire me while all of this was going on. And we lost a big percentage of our assets. And it got to the point that by 2019 or 2020 we were effectively losing money as a business and so forth. So we decided to reopen the fund. And now we've had five years of really good performance. The cumulative has been better than the S&P with almost no correlation to the market. And we've been able to grow assets by having these nice returns. And we've had some investors come back and some new ones and some previous ones come back. And so we're now we're at a decent size to manage the business appropriately. So I think it's it's time to bring it back to to close so we can just concentrate on trying to make good returns. Well we certainly appreciate you coming in and talking about some of the areas you're interested in most. Thank you David. Thank you. Always good to hear from you. David Einhorn of Green Light Capital. Carl back over to you. Alright sir thanks. Still ahead this morning. Toma Bravo is Orlando Bravo. We'll talk about how AI is disrupting software and whether the sector is looking over sold right now. Plus the CEO Taylor Morrison's with us on the back of earnings. We'll take a look at that quarter and the Trevor administration's expected anitrust probe into some home builders when money movers comes back. trailblazing women, changing the game. It really does come down to just trusting yourself. Like the short and you just gotta think big to accomplish big things. Julia Boursten hosts CNBC Changemakers and Powerplayers. Brokwriges are the latest victims of AI destruction fears underperforming along with software names. But this new warning going viral on X suggests that some still may be under estimating the scale of the upheaval that's come in our way. Our dear Dribose is talking about that and today's tech check. Hey, Dee. Hey, Carl. So that post was viral and we should add it was divisive. It comes from Matt Schumer and AI Startup CEO. It's his honest version of what's happening in AI. He says he just describes what he wants built, walks away for hours, and comes back to find it done, concluding that he's no longer needed for the technical work of his own job. And we should be thinking about the same. So investors like Sequoia's Pat Grady, they're sharing it while critics are calling it a 5,000 word ad from a guy who's startup hyper-right depends on you believing the hype. But Love It Or Hate It, it sums up the thesis that has been driving the software sell off. The market is essentially backing this guy up saying, if AI can do the work, you don't need the software or the people who run it. Now, as you guys mentioned, startup altruist launched an AI tax planning tool yesterday and it took billions off wealth management stocks. That's how Love continues today. This is evidence of exactly what that post is arguing. The gap between possible and here is collapsing faster than anyone outside of AI understands and the market isn't waiting to find out who's right. Now, the tools themselves are backing up the thesis too. We have gone from chat bots to autonomous agents that write code, test it, fix it, even ship it without a single human in the loop. And the race among top AI companies that is only accelerating, opening in Anthropic, they drop models on the same day in China. It's owned to hottest AI labs, G-Poo and Deepseek. They're battling for breakthroughs ahead of Lunar New Year, which, by the way, are benchmarking directly against the American top models. So, beyond stock moves, guys, the job's story is what this post gets at and it may be next. Sales force just cut 1000 jobs, workday cut, 2% of its workforce. These are software companies being disrupted and they're already shrinking headcount. While the AI companies that are replacing them, they run with just a fraction of the people. Anthropic has about 4,000 employees and they have caused billions and billions in disruption in the public stock markets over the last few weeks. Yeah, Jan Hatsi, Chief Economist of Goldman told us he saw some of the weakness in the tech sectors in today's report. Thank you, dear Drabosa. After the break, Toma Bravo's Orlando Bravo here to talk about the software sell-off. Here's what he said to us just last month in Davos. The narrative that AI is going to eat software is really taking over. Is that wrong? It is absolutely wrong. In every one of these software spaces, there's two to three software companies that really, really know that they're going to be able to sell software. They really, really know that domain. And they have the employees on the leadership that know that domain. That will not go away. That cannot be copied. Just wanted to clarify something, David Einhorn noted investor from Greenlight Capital on with us just a few moments ago on the show. And he was talking about his views on the Fed, which he thinks are going to be cutting a lot more than the market things. And thinks the market is wrong today to assume fewer interest rate cuts off the jobs number. He said that he is expressing this in buying software futures. We had a little banner up at the bottom of the screen saying silver futures. So that was incorrect. He didn't say anything about buying silver futures. He said, "Sofer futures, sofers are basically financial contracts that are a benchmark interest rate." And based on, they help determine short-term rates overnight rates for the U.S. So that is the way he is expressing this bet on the fact that the Fed will be cutting. He said under, you know, new Kevin Worsh, he thinks he was brought in to cut rates and he's going to cut rates substantially. Does like gold though. Did say he has still high conviction in gold as well. Meantime, software names under pressure this morning as investors wrestle with fears around AI disruption, names like Microsoft, Palantir, Oracle, Salesforce, all lower, IGV down 20% just in the past month. Our next guest oversees one of the world's biggest software focus investment firms. Join us now with his outlook in a CNBC exclusive. Let's bring into him a Bravo founder and managing partner Orlando Bravo Orlando. We had to talk to you because the software sell off gets uglier by the day. What do you think is happening here? Sarah, it's great to see you. I wish we were doing this in Miami. Me too. I understand the weather is a little nicer here, but it's great to see you after Davos look. Software is oversold. We're getting a lot of calls from LPs and big institutions saying do you still have room? Are you open? And we're not, but there's some very big large investors that have a lot of experience that are looking to deploy capital, especially in the private market and software. But more interesting than it being oversold. And I saw the clip that you showed and I want to go back to the domain expertise. If you look at a software company from a technical aspect and that's usually how Silicon Valley looks at it, those companies, many of those companies that have that franchise, that technical franchise, they are at risk from AI. I absolutely validate that. However, the value moves to the domain expert and there's some jewels in the public markets right now that are worth so much that have 30 years of domain expertise built into their product. And those companies are really, really cheaper right now and we're very active in looking at a lot of them. Can you be more specific about which ones you think will ultimately be good values here? I wish I could and I knew you were going to ask me, but maybe we'll go ahead and buy them and that would not be good if I gave anything like that to you or let it own a stock recommendation, which I'm not allowed to do. So actively looking to buy some of these beaten down public software names. Big time, look, my day job, I still have a day job unlike what I just heard in another report because I'm not writing code every day. So I still have a day job and my job really is a third spending time with our big partners, a third helping the operations of our companies, and a third finding deals and helping our team win those deals and make good investment decisions. Now in the last month, about 80% of my job is new deals. You see, software has always been misunderstood by many of the smartest public investors because there's not enough transparency. If you look at a software company by its degree of domain expertise, you will find that in every industry or in every function or in every process, there's usually two to three companies that dominate the way things are done in that industry, that become the language of that industry. And those companies are worth a lot more than buying the underlying players in that industry. They produce it for everybody. They have better economics. They get paid upfront. Those companies as well, and we're seeing that in our portfolio, are enormous beneficiaries from AI because those domain experts are the ones that are going to put AI use cases. In front of their customers, the ones that have big ROI and that's when you're really going to get enterprise adoption of this new infrastructure that's being built. >> Oh, now you joke about writing code. Interesting, there's a Cisco executive on the tape today saying that 70% now, the AI products at Cisco are using code that's generated by AI. They will have this year at least close to half a dozen products that will have 100% of the code written by AI. And I just wonder whether or not you're willing to acknowledge that the innovation is running faster than some thought. >> The innovation is definitely running faster than some thought. I acknowledge that now. Let's talk about code writing for a second if you want to get into those technical aspects. For the last 40 years, okay, more and more of the code has been automated. This has been an ongoing trend. Now with AI, we get this enormous step function move towards autonomous code. Our companies are doing the same. A lot of the code that we're producing and a lot of the updates on our software, a lot of our major releases are heavily produced by AI. But see our development teams when you look at the R&D function of an organization, which is about 15% of the people, one five, about 80% of what those people do have nothing to do with writing code. Architecting, fitting the product to the technical requirements of the customer, fitting the product to the workflow, an organizational requirements of the customer, wrapping it with cybersecurity, governance, and a bunch of functions that these enterprises really, really need to do their business. So it's not unfortunately for our companies. We would love to take that 15% of our in-day spend and bring it to 2%. But we're not seeing that because there's a lot more that goes into delivering these solutions for enterprises. But this is, I'm talking about the real world, not selling to a small tech company, not vibe coding. I'm talking about selling a production, application, or cybersecurity solution to GM, to JP Morgan. That is a massive, massive undertaking. It has to be right, it has to be implemented right, it has to be used right, and it needs to fit the incredible requirements. of those global organizations. - Yeah, so I mean, that's what we hear from CEOs, especially in the text space where they say, we're gonna grow jobs. It's gonna be different kinds of jobs in different places when we have this discussion. So Orlando, can you just lay out the both thesis for some part of how software adapts to the AI world? Because it sounds like what you're saying is that AI will enhance software, not replace it, which I think runs counter to the narrative in the market right now. So how does that work? How does that look? And either your portfolio companies or some of the places you see value? - Let me give you a great example. And using examples is the best. You take an airplane. You remember we took that company private and you reported on it. That company now is doing about 600 million of earnings accelerating growth. The company provides a core calculation engine that allows large enterprises to plan their very complicated interconnected business. Now the company came out with a product called co-modeler, AI product. Because to use an airplane, you need to write applications at the enterprise level for the specific use case that the customer needs. And that application timeline of writing that is usually nine months. With using AI with co-modeler, we can spin up those applications in six weeks. Three weeks. Now the backlog that we have of customer orders is being eaten up very quickly. Because now you can deploy these applications in enterprises in a matter of weeks, not months. And they have limited resources to be able to do that. Not only does that increase the ROI of our sale, once again, it speeds up. But we're selling and that's one of the places we're seeing acceleration. Now I tell you something really, really big that these domain specific software companies are moving to. Their new use case is replacing the labor that works with their system. Since they know that so well, they give an area like planning in the case of Anna Plan, we have mapped the 88 functions in the office of a CFO. Because that's who we serve, the CFO, the CFOs of companies. And in those functions, we can now using AI start automating how they work, one by one. Now where the domain expert in that, there's a few companies that compete in that market and are domain experts. But that's one of the ways these groups of businesses that have their franchise in the domain will develop AI. I mean, just all of them, though, say that. Service now, sales force. We've talked to these CEOs. We've seen the results they say. Results have never been better. But the market is saying that's not going to last. Look, that happens from time to time. Right? I mentioned that in our view globally, software is oversold. Right? Look how negative people are now. Some companies will do unbelievably great. Some companies face a lot of risk. I think people know that as well. But what we don't know is we can't predict the market. Maybe it'll go lower. You never know. We haven't seen real capitulation. Remember, we started doing software investing 28 years ago. So we saw one times revenue. And the challenge that software has is most of these 300 publicly-treated software companies they don't have enough profits. They trade as a multiple revenue. And that's very, very dangerous. I saw your colleague talking about how people are cutting costs. What they have to, private equity operates these companies at 40% margins. Maybe we'll move them to 60% in the next couple of years. The public market is way behind in terms of that curve. All right. Well, that's where you come in. Orlando is great to have you, especially on a day like today, where we're seeing another shellacking in these stocks. And also a really good color to hear what you're hearing in the LP community as well. Orlando Bravo from Tomo Bravo. Thank you. Keep us posted. We will. Meantime, overall, take pretty steady here. When we come back, the CEO of Taylor Morrison on the back of earnings will break down those numbers. And the administration's expected anitrust probe into some of the home builders. Welcome back. Take a look at shares of Taylor Morrison today, the home builder with an earnings beat in Q4, total closing, revenue totaling $7.8 billion for the full year 25, joining us this morning in AC and BC exclusive as Taylor Morrison CEO. Cheryl Palmer. Cheryl, always great to have you. Welcome back. Thanks, Carl. Good to see you. Thanks for having me. I'm sure you'd love to talk about the quarter. Revenue up 11. I think closings were a beat. The backlog value is a beat. But there's so much policy going on. I just wonder where your head is right now and how many headwinds are coming out of that. Well, it was a nice way to finish the year. As you said, we had just a great quarter wrapped up. What was a difficult year, but I'm just so proud of our teams and the work they did to deliver the year and finish off the way we did. Yeah, there's a lot of headlines out there, Carl. You're right. There's a lot going on. I think it's important that we separate the headlines from some of the real conversations, though. And what would those be? Well, as I think's been reported, there's been a number of meetings with home building CEOs. And it's been very productive. It's been great to see the administration so focused on some of the affordability challenges we have, how do we overcome some of the shortages on housing in our country? And most critically, how do we make it more affordable? As you know, we do have some excess inventory in the system that the builders are trying to work through. And we need to be very thoughtful, how. But I think we can all agree we do have some affordability issues. And I think the administration is very focused on just a number of different strategies on how we can impact this, everything from interest rates to policy to land approvals, regulation. There's a number of buckets that are going to have to be impacted to really make home ownership attainable for all Americans. Right. Would a probe into industry trade groups and discussions of pricing on an antitrust basis? Would that help lower prices? You know, it's so difficult for me to comment, Carl, on unsubstantiated rumors. What I would tell you is that we haven't been contacted by any government agencies. I did see the same media that you're referring to. And as we discussed this morning on our earnings call, and really talked about how we differentiate ourselves and the focus of the organization and providing housing, it's just hard for me to know where all this is coming from. Show, we have like 30 seconds left. We just heard from David Einhorn, noted investor. He's negative on home builders. And he thinks that there's a structural problem with American owning homes. That it's too old. They can rent like that these problems aren't just sort of cyclical, that they're not going away anytime soon. How do you push back on that very quickly? No, I don't see that to be the case at all. In fact, I do think that when you look at the resale inventory in the country today, I think the average age Sarah is some 40 years on average. And I think the consumer is struggling on what would be required to bring that up to today's standard. But when we look at master plan committees and what the consumer is really looking at and wellness and sense of melancholy and quality of housing and new and innovative-- We have a very big dream. Yeah, it's truly the American dream. And we're seeing it with millennials buying their second houses and we're seeing it with Z. So it's for me to relate to that. Cheryl, appreciate it as always. Thanks so much. It really does come down to just trusting yourself, like the short. And you just got to think big to accomplish big things. Julia Borsden hosts CNBC Changemakers and Powerplayers. New episodes every Tuesday, wherever you get your podcasts.