Welcome to Market Catalyst. I'm Julie Hyman. We are 30 minutes into the US trading day. So, let's get to the three market catalysts we're watching this hour. First off, we'll bring you the latest read on the economy as the Fed's preferred inflation gauge crosses the wire. Then, we'll have a little crypto corner. We're going to sit down with the CEO of Strategy following that firm's latest Bitcoin purchase. And we'll go live to the stock exchange for a conversation with BitGo CEO Mike Belshe as that company goes public. Then we'll hone in on the state of the consumer as Procter and Gamble sees US spending weakening. Let's take a check on the major averages. Right now, we are seeing a rally underway, although it's a relatively modest one and we're not really seeing any clear leader today in terms of the three major averages. That is the Dow is up about 240 points, about a half a percent. The S&P 500 up about a third and the Nasdaq up about a half of 1% as well. Sort of continuing on to some degree the relief rally from yesterday's sort of bring down intentions from President Trump regarding Greenland and then also we've got some earnings flow beginning today or kicking off today. So, taking a look at the sectors within the S&P 500, you've got utilities and industrials lagging, communication services and financials leading. Not a huge narrative there. The NASDAQ 100 showing that there's some relative strength within technology today. Meta shares in particular strong up by nearly 3%. And then since we're going to be talking a lot about crypto later, just wanted to get a check on what we're seeing there and not gains is in short. So, Bitcoin prices are pulling back a little bit today after we had earlier seen some gains. So, back below 90,000 as we continue to see turbulence in that cryptocurrency. Elsewhere, you're not really seeing many gains either. And if you look at the crypto-related stocks here, they too are mostly falling. Galaxy leading the declines right now, Bullish also down two and a quarter percent. Speaking of two companies that came public in the last year, and as I mentioned, we're going to speak to another one later in the show. Let's get to that economic data now because we've got PCE data for November crossing the wire. Let's send it over to Yahoo Finance's Fed correspondent Jennifer Schonberger to break down the Fed's preferred inflation gauge. Jen.
Hey there, Julie. Yep. Crossing the wires right now. Personal consumption expenditures index on a core basis clocking in year-over-year at 2.8%, month over month up two-tenths of a percent. That is right in line with expectations. Now recall that this is a number that is delayed because of the government shutdown. And so the Bureau of Economic Analysis also had to do a bit of gymnastics to back into this number because it is combined for October and November. And for portions of October, they had to use the average of September and November figures. So, we should probably take this with a little bit of a grain of salt as we did for other data measures for October and November previously. Having said that, 2.8% it's closer to 3% than the Fed's 2% inflation goal and sitting right where it was at the beginning of the fall in September. So, this certainly doesn't change the course for the Fed's meeting next Wednesday. And if anything, I think it solidifies it because you had the unemployment rate drop in December to 4.4%. There's really no reason for the Fed to cut at this point, especially given the three rate cuts that they did at the tail end of last year.
Okay, Jen. So, no drama on the actual data front today, but there is never-ending drama maybe on the question of who's going to be the next chair of the Federal Reserve. You know, we heard President Trump allude to it in his speech yesterday. Didn't really give any hints except for saying he, which some people have pointed to. I don't think that's a huge surprise. But you know, as you know, you've been covering this very closely. In recent days, it seems like it's not going to be Kevin Hassett. Sort of depending on what the president is saying, and I'm looking at the odds on Polymarket. Kevin Warsh is back in the number one position with a 45% chance being priced in.
Yeah. Now the horse race continues and you know Secretary Bessent said that we could get an announcement from the president post Davos. So this is his last day in Davos today. So you know let's keep watching closely. To your point the president made some comments yesterday on CNBC essentially saying that he's narrowed it down to really three but no he think he has the person in mind. Of course, not saying who that person is. And like you said, it doesn't seem like Kevin Hassett is in the running anymore. Because the president basically said last week, I like you where you are right now in your current position. And I think a lot of that has to do with what was going on with the criminal investigation into Chair Powell and the red flag that that raised for many market participants over independence of the central bank and who the president would pick and whether that person would be loyal to the president over the economy. And so for that reason I think he recognizes that maybe Hassett isn't the best choice. Now of course that leaves Kevin Warsh who is favored by Senate Republicans. And then of course there's Rick Rieder from BlackRock and Chris Waller, current governor at the Fed. So I think it remains the horse race between those three at this point. Look, it's difficult to get inside the president's head. So we'll have to see.
You said it. Thanks, Jen. Appreciate it. Well, there are many questions about the future of the Federal Reserve from leadership to independence, not to mention the path for rates. Joining us now to talk more about that and sort of look at the Davos situation. Tobin Marcus is joining us, Wolf Research head of US policy and politics. Tobin, I do want to start with the Fed. We just got the PCE data. We just talked to Jen about the president's latest thinking. I thought one of the most interesting things he talked about in the speech that he gave in Davos were not one of the most interesting things about the Fed specifically he said you know the problem is you interview these guys they say what you want to hear and then you appoint them to the position and they do what they want and I don't know what we take away from that in terms of giving us any clues what did you think?
Yeah, he clearly has expressed this kind of sentiment repeatedly about Powell that he got, you know, advice from his then economic team to pick Powell and everything went great. And then as soon as he got in there, he started making decisions that the president was not so fond of. And given that that's still his mindset, it makes it a little hard for me to picture Rieder being a pick. Respected guy. But if you're worried about this notion that like just like in the first term, you're going to rely on the endorsement of your senior economic staff to pick this respected person that you don't have a very deep relationship with and then have to count on them kind of doing what you want them to do. That doesn't paint a very reassuring picture from Trump's perspective in my mind for picking Rieder and for precisely the same reason. I don't think that Hassett is out of the running. I mean, the comment he made about wanting Hassett at NEC rather than the Fed seemed off-handed. It was a little bit of a quip in my mind about how much he values him where he is, a statement of appreciation more than like a firm public pronouncement that he's definitely not still in consideration.
Yeah. So, it sounds like though Warsh also in your mind might still be in the running too.
Yeah, absolutely. I think either Kevin's very easy to imagine, but you know, beyond that set, I do still have a hard time picturing Rieder or Waller for similar reasons. Warsh, you know, the hawkishness remains a little bit of a curiosity in terms of like why it is that he's gotten such consideration from the president, but the president sure does seem to like him despite his career-long hawkishness on balance sheet issues in particular. I think that the positions that Warsh has articulated don't really line up with President Trump's goals perfectly in terms of what he wants to see from the Fed, but he's been clearly in consideration the entire time despite that.
Tobin, switching gears, let's talk about what's been occurring in Davos elsewhere. Obviously, we heard the president talk about Greenland as well, but also getting a lot of attention was a speech by Canadian Prime Minister Mark Carney where he talked about the rupture of the international rules-based order and he talked about the implications for what he called a middle power like Canada. I'm curious putting that together with the president's speech, kind of what the implications are and what investors need to pay attention to.
Yeah, I think a lot of countries are looking at the kinds of moves that have been made recently and figuring it seems like we're in a bit of a might makes right world where they can't really rely on predictability based on the old rules that used to apply from the United States. And so I think that clearly was a consideration in Canada striking this deal with China trying to find alternative export markets if they're not going to be able to rely on the US. They don't know how the USMCA negotiations are going to go this year. Which is, you know, I think an unfortunate consequence of the policy that we've been pursuing here in the US. There's been lots of talk at various points about how really the purpose of a lot of what's being done is to create a united front against China. There's been a lot of talk about a fortress North America where you know we get Canada and Mexico to erect shared walls against Chinese investment and imports to make a more deeply sort of interwoven economic zone here in North America and this of course is not that. So you know from an investment perspective I don't you know a lot of the geopolitical stuff as always is sort of noise that's going on that markets you know like to look through when they can. We of course saw a big sell-off on Tuesday on the Greenland news, but we're largely reversed that now that we've sort of ruled out the really really bad downside consequences. But you know, the main event from a US Canada perspective will be the USMCA renegotiation with a what's understood to be a deadline this year, although it's not a particularly binding deadline. And you know, if something goes sideways, then the auto industry most of all I think has exposure to potential risks there. But we do think that that'll get extended in some form. I mean, last year to some extent was the story of diminishing impacts on the market from Trump risks, right? Sort of from liberation day on forward. And this year it felt like we sort of forgot for a second and then we were reminded.
But do you think it'll be a similar pattern where you get these sort of little shocks but there's maybe diminishing market impact as the year goes on?
Yeah, I think that's probably right. But you know honestly even more so in some of the single name shocks than in the kind of big picture macro geopolitical shocks we are still seeing people not looking through this in terms of actual pricing. So the 10% credit card rate cap that President Trump announced. You know he had initially said he was doing it unilaterally. He said banks were going to be in violation of an unspecified law if they were not in compliance by January 20th. We're now past January 20th. Nothing has happened. And in his Davos remarks yesterday he called on Congress to take action there. Basically admitting that he can't do it himself. And yet some of the companies with the most obvious exposure to that, companies like Capital One, are still substantially off. They have not rebounded fully from the selloff that we saw in that news in the first place. So, it's possible that that needs to be sort of relearned in new contexts by market participants that we sort of saw what the tariff, you know, taco playbook looks like. People need to get their head around what the playbook looks like on some of these more sector specific and company specific threats.
Tobin, as somebody who tracks DC still closely, is there any chance that the president will get buy-in from Congress and be able to pass a credit card cap or the ban on institutions buying single family homes, for example?
Yeah, the credit card rate cap, I think, is essentially 0% chance that that is not happening. There's been a lot of very very overt skepticism about that from Republicans in Congress. And it's a you know the concerns about unintended consequences are very real would be would genuinely be a very bad outcome if they did that in terms of consumer access to credit. Some of the other things he's called for the restrictions on institutional investor ownership of single family rentals or the credit card competition act which goes after Visa and Mastercard essentially forcing competition in terms of payment networks. Those are I think still not odds on but they could happen. I personally am fairly skeptical that either those will get done, but it's not inconceivable the same way that the 10% credit card rate cap is.
Tobin, thanks a lot. Appreciate it.
Coming up, Strategy is continuing to aggressively buy Bitcoin. We'll talk to Phong Le, Strategy CEO and president next. You're watching Market Catalysts.
Strategy continuing its Bitcoin buying spree, acquiring $2.1 billion worth of the cryptocurrency last week. This as the company's shares have fallen by nearly 60% in the last year. Joining me now, Phong Le, Strategy CEO and President. Phong, it's great to talk to you again. Thanks for joining us.
Thanks for having me. Appreciate it.
So why did you guys keep buying and why buy in a larger amount than you had been recently especially as effectively your currency that is your shares have been going down.
Yeah. Look 2026 is going to be a big year for Bitcoin. It's going to be a big year for MSTR and as a result the best thing you can do as you go into a big year is to start to build a strong capital base. And that's what we've done really over the course of the last few years. But we accelerated the last two weeks. The other big thing about 2026 is it's going to be the coming out party for Stretch which is our preferred equity. We launched it in the middle of last year. It's grown up to be over $3 billion this year. And we think building a strong capital base with Bitcoin, a strong US dollar base, all those things are going to bode well for what's going to happen with Stretch over the course of 2026.
So, Stretch and your other preferred share products that are yield producing instruments, they pay out cash dividends. In order to pay out those dividends, Bitcoin price would be more helpful if it was going in an upward direction than in a downward. So, how do you sustainably pay those dividends without either selling Bitcoin or continuing to issue new shares?
Yeah, so a few things that we've done, right? We've built up a Bitcoin balance of about $65 billion. Now, we built up a US dollar reserve at $2.25 billion and that allows us to pay the dividends out over the course of the next 60 to 100 years. So, we have now duration in terms of Stretch. In the short term, what needs to happen is Bitcoin needs to go up about 1.5% a year for us to continue to pay our Stretch dividends. So it's not so much a concern about whether we can pay the Stretch dividends. The question we have is how quickly can we grow Stretch? And here we have to your point a product that is backed by Bitcoin that is short duration money that is low to very low volatility. Right? Right now we're at about 7% vol. Over the last couple weeks we've seen it go below 5% vol. And it pays 11% tax deferred dividends. So my concern is less paying the dividends and how do we grow Stretch over the course of the next year? How do we market? How do we make sure everyone's aware that there's an option out there that gives people whether you be low income, high income, low net worth, high net worth, you can get 11% on your money and I think that's a unique feature that everyone is excited about.
Phong, have you guys turned so much towards Stretch because people aren't buying your actual equity at this point? I mean, as I mentioned, we've seen the big pullback. You're not trading at a premium to Bitcoin at this point. And there are more options than ever for people to invest in cryptocurrencies.
Now, the reason we turn towards Stretch is we've been a levered Bitcoin company, right? And so if you think about leverage, what we've done over the last course of the last four years is we've raised capital primarily through convertible debt, right? Convertible debt is an illiquid over-the-counter market that has large spreads and isn't perfectly priced. And so we said instead of something that is an inferior product, let's go to a better form of leverage. We called amplification. So our equity MSTR is primarily there to build a capital base but really it's our preferred product Stretch which is there to create leverage and amplification on the company and so that's why we've been focusing on Stretch not as an alternative to our equity but as an alternative to debt instruments like convertible bonds which are inferior.
Phong, you know, I've been talking to you. I've been talking to Michael for a while now. And I have to admit, I still have problems sometimes wrapping my head around the business model because, setting aside the business software business that you guys have and focusing more on the digital asset treasury, none of this produces any cash flow, right? The either the selling of preferred shares or the convertible debt. You're buying Bitcoin like so I guess I still struggle at times to understand the long-term sustainability.
Yeah, we're a company that's built on the digital transformation of capital, right? If you think of capital and original sort of great store of value capital might be gold, we're a company that's built on digital gold which is Bitcoin. So I'll start with that. And so when you find an asset that is both a technological revolution and a capital store value revolution, you buy and hold it, right? Not much different than real estate in the 1900s or oil in the 1900s. Somebody finds an asset that they think is going to that is truly revolutionary. And they buy and hold it. And so an analogy...
But if you're going to use those analogies in the case of oil eventually you sell it at a profit right and in the case of real estate it is a yield producing asset you rent it out and you get cash flow while you own it that's not the case with Bitcoin.
What we provide to our shareholders is Bitcoin yield right you get more Bitcoin per share of MSTR right and so that is the yield and I know it's a bit of a mental exercise to understand what's the Bitcoin yield versus earnings per share versus yield on your real estate, but I don't think that that's much different, right? And can we get cash flow by selling the Bitcoin? We can, but that's not in the near-term future. Right now, it's an accumulation play. And so, how our shareholders think about our equity is are we providing more Bitcoin per share? And we do that by raising capital.
I want to ask you about some of the pending debt obligations as well. Because I know in because of the structure of the company you guys the convertible bond holders are expecting stock that is worth a certain amount. There is a rather large gap between what the stock is worth now and what they have been promised. So is Strategy once that comes due next year going to have to come up with that cash to close that gap and do you have that cash on hand? Do you have to raise that cash in some way? What's the plan?
Yeah, so we have convertible bonds that come due at the end of next year that have a strike price I believe in the low 200s and then we have convertible bonds that come due in 2028 that have a strike price that are north of that. You see in our stock has been fairly far north of the $200 amount. So, the likely thing that'll happen is as Bitcoin appreciates, we'll see our stock rise above that strike price next year and we'll equitize. If that doesn't happen, we have a couple options. We could refinance the convertible and push forward the maturity at future point in time. Or we can just pay down the debt, right? And we could pay down the debt in one of multiple ways. We could issue equity. We could issue additional preferred or we could sell our Bitcoin. So, I'm not too worried about the convertible bonds and their maturity that come due in 2027, 2028. These were long duration when we got into them. And Bitcoin price over time goes up. It's gone up 40% a year for the last 5 years. So...
Well, but there's a lot it's gone 40% up a year, but there's a lot of volatility within that range, right? And so there's no way of knowing when that comes due if we're going to be at 90,000 or we're going to be at 40,000 or we're going to be at 150,000. There is literally no way of knowing. And you have to do sort of balance sheet planning based on an underlying asset that is extraordinarily volatile.
We do, which is why we have the convertibles paced out over time, right? They're laddered out. And if first of all I'm not sure that Bitcoin will go to 40,000 but if it does go down we have a lot of options still right like we have big picture perspective here we have about $8 billion of convertible with a $65 billion asset base called Bitcoin and $2.25 billion of cash. Right? So this isn't like we're two or 3x levered and we have no way to be able to satisfy the debt obligation. This is we're in fact 10% leverage, you know, if you look at our convertible debt or 15%. And so, it's not really something that is going to break the company. It's something that, let's say Bitcoin was trading down at $40,000. It's something that will either push out the debt or we'll just pay it down.
And Phong, finally, you started out the conversation by saying this is going to be a big year for the company and for Bitcoin. I'm curious what you see as the next catalyst for Bitcoin prices, right? Because we've not seen them do much of anything so far this year.
Yeah, I think there's two major catalysts that I look forward to. I think greater government clarity, right, through our market structure act, which will hopefully pass in the next few months, and there's a lot of discussion, a lot of great work happening on Capitol Hill related to that. And two which is linked to it the traditional banking system large banks who are sitting on the sidelines who are working on technical projects really ramping on either through the issuance of stable coins the issuance of Bitcoin backed lending the issuance of or the creation of Bitcoin custody and exchange services I think all of those will really open up and I think we'll sit here a year from now seeing that not just the US government but governments around the world and the traditional banking system fully embrace Bitcoin and digital assets.
All right. Well, we'll catch up a year from now and probably before then also. Phong, thanks a lot. Appreciate it.
Coming up, we're sticking with crypto. BitGo is making its stock market debut as the first digital asset company to go public this year. We'll talk to Mike Belshe, BitGo's co-founder and CEO, next on Market Catalyst.
Welcome back to Yahoo Finance. I'm Brooke. We're live at the NASDAQ here in Times Square. Let's turn now to some of today's top analyst calls on Wall Street. Today, we're watching shares of Micron, Datadog, and Capri Holdings. First up, let's take a look at Micron because the chipmaker got a vote of confidence from the street. William Blair initiated its coverage on the stock with an outperform rating. Now, the analyst said it believes shares can continue to work on the back of a multi-year AI-driven product cycle as supply remains limited near term. Wall Street's quite bullish on the stock with 45 buys, four holds, and two sell ratings on the street right now. Next up, Datadog. Steep will...
Upgrade its rating on the stock to buy from hold. The analyst said recent checks lead him to believe the company will post another strong beat on its quarterly results. He also believes that new products and more customers using Gen AI will supplement existing revenue for the cloud-based monitoring platform. The stock is also well-liked on the street. It has 43 buys, four holds, and one sell.
Lastly, Capri Holdings. It's the company behind Michael Kors and Jimmy Choo. TD Cowen upgraded the stock to buy, pointing to a sharper price point strategy, the potential for substantial operating margin expansion, and said it's making progress when it comes to the transformation of Michael Kors. The street's kind of mixed on this one. It has nine buys, eight holds, and one sell. Keep it right here on Yahoo Finance. We'll be tracking all the latest market moves and top calls throughout the session.
Crypto firm BitGo set to begin trading on the New York Stock Exchange after raising $212 million in its initial public offering. BitGo is the first digital asset company to go public this year. And joining me now is Mike Belshe, BitGo. Thanks for being here, Mike.
Hey, thanks for having me.
So, talk to me about the timing of this IPO. You guys first out of the gate this year at a time when crypto prices are not doing a heck of a lot. The record of the companies that went public in your space last year kind of mixed here. So, how did you guys think about when you wanted to come public?
