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A Divided Fed, Bitcoin’s Breakdown & AI Anxiety 11/14/25
00:43:52
A December rate cut is looking less likely, but does the market need it for support? Plus, Bitcoin is now off more than 20% from its record high, is the bottom in or are more crypto declines coming? And our tech watcher says AI anxiety is overdone and he’s going shopping. He tells us where he’s seeing the biggest opportunities in the trade.
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Hey friends, this is Audie Cornish, host of CNN this Morning. And the assignment. And guess what? Every story you care about, every angle you want unpacked is now streaming on cnn. That means you can catch my show or other CNN programming whenever you want on your favorite device. And a subscription also gets you access to exclusive video series and unlimited articles. So subscribe to CNN@CNN.com/subscription. You're listening to the Exchange. Here's today's show. Thank you, Scott. And thank you for joining us for the Exchange today. I'm Contessa Brewer in for Kelly Evans. Stocks staging a turnaround with the dow down nearly 600 points at this point. At the low now down just a little more than 100 points, we're seeing the biggest reversal in the tech heavy Nasdaq down nearly 2%. Earlier now up half a percent. Oracle, Palantir, Tesla, some of the biggest losers this week, all higher. Now Tesla back above the $400 level after dipping below it for the first time since September. With today's move higher, Tesla joins its MAG7 peers in the green year to date. And our traders, a buyer from here and it's not the only name on his shopping list. We have that ahead. A quick check here on Bitcoin, down 2%. It has dipped below $95,000 today and hit the lowest level since May earlier now it's just above 96,000 but nearly 7% for the week. We start with a divided Fed and the rising uncertainty over whether there's a rate cut coming next month. Now the odds of a December cut went from a near certainty to now about 50%. Joining me is KPMG chief economist Diane Swonk and CNBC's Steve Leesman. Steve, let me begin with you. Is this a big departure from what we had seen after the last Fed meeting?
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Yeah. And by the way, Contessa, unfortunately you blinked and it's an even bigger departure because those probabilities are now down to 41%. And I get that because it's only just been in a little bit that we've had that move. As you saw, the 10 year yield rise higher to around 414. And now the Probabilities have now fallen off even more. Back before the meeting contested, we were almost at 100% probability of, of there being two successive cuts, October and then December. But now, largely as a result of a lot of Fed speak and a lot of concern that's out there right now among Fed officials, not only that inflation is high, but among the hawks, you get this concern that inflation is high not just because of tariffs, that there's other things going on that are pushing up prices. Looking at a range of prices that were out there, we did get that September inflation report and other data that they're looking at suggests that there is continued price pressure in the economy and they're concerned that it will be will have been too long if the Fed has remained above target, its 2% target with inflation running around 3%.
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All right, given the signals that we're getting here, Diane, what metrics could move those probabilities even further? Well, unfortunately, the Fed's not going to get as much data as it like. And speaking to what Steve was talking about, we saw the dispersion of price indices in the CPI pick up. And that's really important because it means more things were going up than we'd like. And it is outside of just tariff induced inflation. It's also inflation related to pockets of labor market shortages that we're seeing in things like in home elder care, daycare, the child care crisis. These are all affordability issues that are starting to creep up. And they're areas that you have pockets of labor market tightness, where immigrants play an outsized role in that part of the economy at the same time that the labor market itself data we have, is that it continues to be very, very soft. And that's despite an economy that adds up on paper to look very good because the gains are so narrowly focused on the AI boom and infrastructure build and the wealth effects tied to that. And so the Fed is looking at this and saying, listen, we're losing some credibility here. We're starting to normalize inflation. And then even the tariffs, now that they're lower than what they could have been, that's good news. But the problem is the way they've been seque is it mimics inflation and it's just another factor of normalizing inflation. And that's something, inflation is something that you and I talk about. Most people just look at the level of prices and the bottom line is the level of prices is out of reach given their incomes. That's very important. And it's something that is clearly resonating with the administration as well. In fact, where you started the conversation, you're looking at in home elder care going up at its fastest rate on record in September. In cpi, we had daycare up at its third fastest pace on record. I mean, those are real costs that people have to pay. And then when they go to Walmart to try to buy groceries, they're thinking, well, which do I pay for? Do I pay for daycare or do I pay for groceries? And maybe this is why we're seeing a lack of participation in the labor market in certain areas in the meantime. Absolutely. Steve, back to you for a second here. We don't know what the PC index is for October. There are gaps in what the Fed is working with in making that decision. Does that matter?
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I think it does. We will get, I suspect in the next couple of days the jobs report for September. And I think that the inflation reports and the jobs reports for the month of November should be pretty much on track or on time, maybe delayed by a couple of days. So the Fed will have, I think they're going to get that inflation report on day two of their meeting December 10th. So they won't have that. They'll have to compare it with the month of September. October is going to remain a black hole. But I do think it's really interesting that Diane is linking some of this inflation to what's happening in the labor force. It's a very interesting phenomenon. You hear Fed officials talking about the idea that the US Is headed with the current immigration policy to zero labor force growth, maybe even negative after a fashion, after maybe a decade. And Jeff Schmidt this morning from the Kansas City Fed said his bank staff has looked at the numbers and they think that the right break even rate, that is the payroll growth rate required to keep the unemployment rate from rising, could be as low as 50,000. I've heard numbers as low as 30,000. So the idea that if we're just going to do 20, 30, 40k a month and that's going to keep the unemployment rate stable, the thinking at the Fed, at least among the hawks, is that's not something for policy to react to. That's just a structural change given from either fiscal policy or on things that you can't do anything about demographic statistics. And that's just the rate. It doesn't require weak monetary policy, stimulus.
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One more note here to Diane. I know that you're pointing out you're already looking ahead to tax season next year and the way that that might influence inflation, something that the Fed has got to think about exactly what we do know is that the tax and spending package that was passed in July that did have expansions to tax cuts to a lot of lower and middle income households that will show up as record tax refunds in the beginning of next year and an adjustment to withholding. So that's a tax, a fiscal stimulus. We're also hearing talk about rebates due to the funding that we got from the revenues of the tariffs. We know that fiscal stimulus at a time when you've already got inflation that's been above target for over four years. The Fed's credibility is on the line here. That could add to the inflationary impulse and the Fed knows that that's out there. So any weakness we see in the fourth quarter or even benign inflation figures that we see, although they've already moved up any of that is likely to be added onto with a stimulus in the beginning of 2026. And that's something that coming out of the pandemic, that was one of the biggest mistakes the Fed made was thinking that that inflation would be transitory or one and done. Diane, thank you so much for sharing your expertise with us. Steve, same thank you. We have some breaking news right now on JP Morgan. Amen. Javers joins us now. Eamon, what do you have?
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Contessa that's right, JP Morgan now responding to that social media post earlier in the day from remember President Trump posted that he wanted his Department of Justice to investigate JP Morgan, former President Bill Clinton and a host of others for their connections to Jeffrey Epstein, the disgraced and now deceased sexual predator. The President's been under a lot of political pressure here for his own connections with Jeffrey Epstein due to these emails that were released earlier in the week. This morning he called for an investigation into other people's relationships with Jeffrey Epstein. And now JP Morgan responding to that. Here's their statement. They say the government had damning information about his crimes and failed to share it with us or other banks. We regret any association we had with the man but did not help him commit his heinous acts. We ended our relationship with him years before his arrest on sex trafficking charges. Now remember Contesta, that JP Morgan was Jeffrey Epstein's bank for a number of years. We at CNBC detailed that relationship as it came out in court filings about two years years ago. So this is well known information about the relationship between JP Morgan and Jeffrey Epstein. Still the president suggesting that he wants more detail on that relationship and JP Morgan responding the way they just did.
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Back over to you all right, Eamon, thank you for that update. We'll continue to follow the fallout here. Let's go back to the markets now and whether that Fed rate cut is going to happen in December. If it's not a guarantee and the trade is being questioned, where does that leave investors? Our next guest says it's time to position your portfolio for the Fed not to cut. And he's worried about the risky business of going on under the market surface. Richard Bernstein, CEO and Chief Investment Officer of Richard Bernstein Advisors, joins me. Okay, so basically you're positioning for a pause. Why is that so, Contessa, I think.
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People have forgotten what the Fed's role actually is in the economy and that the Fed does not directly touch the economy. If the Fed is cutting rates, they do so explicitly to lower the cost of funding for banks, which the Fed hopes, keyword hopes, will spur more lending.
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Which they hope, again, that word will.
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Will spur more economic growth. So the Fed lowers rates, hoping to get more lending, which they hope will get more economic growth. So the question we should all be asking right now is where's to hiccup in the financial sector, that is prohibiting lending, that is slowing GDP growth? And the answer to that is it doesn't exist. Financial conditions are remarkably easy. We know credit spreads are very tight. We're seeing that in the equity market with sparks and meme stocks and all.
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This kind of stuff.
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We're seeing it in crypto currencies. You can see the financial conditions are very, very easy. And GDP prior to the shutdown was tracking about three and a half to 4%. So our attitude was that the Fed was cutting rates. But the question is, did they need to cut rates? The answer to that's probably no. And I think that's why you're seeing the volatility right now, is that that's coming around.
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You're looking at the speculative nature of investments this year, for instance, that people who are participating in options are at a record high. People who are participating in levered ETFs record high and in very low stock prices, record high. There's been a lot of risk taking. Does that give you an opportunity right now, going into the end of the year?
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Oh, so, Contessa, I think it presents tremendous opportunities because basically the way I would look at it right now is boring is good that if you look at things like basic dividends and the compounding of dividends. How boring is that? Right. How often do you guys talk about boring dividends and the compounding of dividends? Right. Nobody wants to hear that. And, or if you think about quality outside the tech sector, like especially non US quality is growing faster than the.
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Max 7 and like nobody cares.
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So you've got these great opportunities outside this speculative sphere that everybody's in. So I think, Contessa, I think the volatility in the market, if it continues, is just going to show people these other opportunities.
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Okay, so are you looking at, I mean the European markets have been on fire. Are you looking at Europe in particular? Are you looking at emerging markets? Where specifically do you think that your money could really gather some steam and show some return?
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Right. So Contessa, I don't think you have.
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To be overly sexy on this one.
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I think you just want to increase. For most investors it's just a matter of increasing non U S exposure. We're particularly focused on quality large cap, high quality stocks in Europe and in Asia, ex Japan or ex China rather, I'm sorry, quality stocks in Asia, ex China. We think there's a lot of opportunity in those kind of stocks. Big dividend yields or bigger, I should say, than what you get in the United States. Faster growth, very cheap valuations. And I think importantly in what I.
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Just said, the difference between people Talking.
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About non US over the past year, 2 years, 5 years based on valuation, is that now there's actually a growth story to go along with it.
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And are you pulling back on say crypto or AI?
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Well, we were never in crypto to begin with, much to the dismay of crypto fans that we've been critics of crypto for quite some time. But, but I think in terms of a. Yes, I think, I think that investors should be diversifying their portfolios. Look, you know, everybody wants to bet these days, so let me use the correct, the correct phrase here. If you should play with the house's money, if you've made big gains, take some off the table, play with the house's money and go diversify your portfolio. I think that would be the really.
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Prudent thing to do. And that's basically what we've been doing.
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For quite some time.
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And on that gambling metaphor, which is right up my alley. Richard, thank you. Coming up so much, shares have circled down nearly 20% in a week. And Mizuho sees even more downside ahead. The analyst behind that call joins us to make his case. With Bitcoin back below 100,000 plus, Wall Street's facing a depreciation dilemma. Billionaire Jim Chanos warning investors about some companies massive chip investments will tell you whose margins are most at risk. And what it means for them on the AI trade. That's ahead. The Exchange back right after this.
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This is the Exchange on cnbc.
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Hey friends, this is Audie Cornish, host of CNN this Morning. And the assignment. And guess what? Every story you care about, every angle you want unpacked is now streaming on cnn. That means you can catch my show or other CNN programming whenever you want on your favorite device. And a subscription also gets you access to exclusive video series and unlimited articles. So subscribe to CNN@CNN.com subscription Our state has changed a lot in the last 140 years. We know because Multicare has been here guided by a single making our communities healthier. That comes from making courageous decisions, partnering with local communities to grow programs and services, and expanding healthcare access to those who need it most. Together, we're building a healthier future. Learn more@ multicare.org the heaviest metal credit.
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Card of all time, rumored to be one of only 18 in existence, plated with the very same tungsten that forged the International Space Station and wielded at.
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Business dinners like a samurai sword.
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It's a classic corporate power move. But the real power move having end to end visibility on your most critical shipments.
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FedEx. The new power move. Alibaba shares have taken a dip in the last several minutes and now down 2% on an FT report that a White House memo claims Alibaba provided tech support for Chinese military operations against targets in the United States. Those shares are off by two and almost two and a half. We're reaching out to the White House. We will follow up when we get a response there with more information. Meantime, Bitcoin is back below 100,000 and now more than 20% off its record high. That weakness is dragging down the entire fintech space with names like Coinbase, Etoro, Strategy, Bullish and Circle, well off their recent highs. In fact, Circle is down nearly 20% this week and Mizuho expects that weakness to continue. They've slashed their price target on the stock to 70 bucks from 84. That implies a 15% downside. Dan Dolev is a senior analyst covering the space for Mizuho. It's great to see you today. But you see more downside. But generally, is it a bottom?
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No, there's more downside to this. And by the way, we initiated the Stock was at 207. We had an $84 price target. Everyone thought we were crazy and now we're right there, basically.
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Well, what's your thesis behind it then? What's the problem with Circle? And then more broadly for the space.
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So there's two things happening here. First, on the distribution of the stablecoin like if you look at USDC it is up year over year but there was a step function in April after the genius act and it's basically been flattish since so. So we're looking at year over year comps, they look really strong but wait a year, it's probably not going to be as well distributed as people hope.
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Okay, so bitcoin, you've got down almost 9% week to date here. You've got all of these newcomers trying to get in to the stablecoin space, into the payment space and are they looking at the same sort of challenges that say circle is?
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And that's exactly the point. You know, our view is it's going to be raining stablecoins, everyone's going to have a stablecoin and that's what makes USDC much more commoditized than people think. There's really nothing special about it. It's just another stablecoin amongst many, many, many stablecoins that are going to come.
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Do you think MasterCard and Visa and PayPal, are they just, are they late to the party? Are they not able to be in a first mover status space and then face a bigger uphill hurdle?
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It's actually they are the winners. So the Networks, I consider PayPal a network. The networks are the winners of stablecoin because you want to, you want to have sort of a centralized poll which is the on ramp off ramp of all these stablecoins. You want to have like a, you want to have them as a middleman. They're better, you're better off having them as a middleman than just someone that you don't know of.
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So they're winners so far just made news on its new coin policy Affirm. How do you see the lenders in this space?
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We're in a K shaped economy right now and we really like the lenders like Sofi and Affirm which can actually lend to people that are not necessarily the poorest. Right. And those, those lenders are actually doing better right now.
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We would consider them high quality lenders, very high quality.
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750 FICO who's not there is like lower quality lenders out there. But the stocks have already reacted. Right. So if you think about we really like upstarts, the stock has traded down a lot, they're in the lower 600 FICO. The reason to like them is because the stock already, it already happened, the event already happened. And we think that from now on, the chances of the stock going up are higher than going down.
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Another trend that we have seen in this fintech space is cards for consumers. So Robinhood is issued one, Coin has issued one. And Gemini, which I think is just out of this world. You see what I did there? Gemini, yeah. Because it's a space company.
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Of course. Of course. Oh, I get it again, I mean.
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It'S really bad if you have to explain it.
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Why cards, Cards in Gemini is a great example. Cards is an amazing top of the funnel vehicle to get people into the ecosystem and then start spending on other things. So cards is like the. Because think about it, you're going to go to like Starbucks, you're going to pay with your card. So that's the best mousetrap, so to say of them all.
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Where's the best opportunity right now, the best chance that investors have to see.
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A return on any stock on I really, really like figure they just reported today, stocks up 20% to zero. It's an amazing, it's an IPO, recent IPO, an amazing HELOC marketplace founded by the same person that founded Sofi. And I think he figure figure is literally one of the highest, if not the highest quality company in our coverage.
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Thank you for coming in and sharing your expertise. Dan.
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Thank you.
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Coming up, it's the end of an era at wal Mart. Longtime CEO Doug McMillan is retiring early next year after more than a decade at the helm of the retail giant. Now shares have soared 300% under his tenure. We'll tell you who's replacing him and we'll look at the next chapter for the great American retailer. Save over $200 when you book weekly stays with VRBO this winter. If you haven't seen your college besties since, well, college, you need a week to catch up in a snowy cabin. Take a week long vacation and save over $200. Book now@vrbo.com hey friends, this is Audie Cornish, host of CNN this Morning. And the assignment. And guess what, Every story you care about, every angle you want unpacked is now streaming on cnn. That means you can catch my show or other CNN programming whenever you want on your favorite device. And a subscription also gets you access to exclusive video series and unlimited articles. So subscribe to CNN@CNN.com Subscription welcome back to the Exchange. Stocks are moving higher than they have been earlier today. You've got the S&P 500 and the NASDAQ. Now in the green, Dom2 has a closer look at the day's biggest movers. Dom.
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All right. So it's been a roller coaster ride.
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So far for the markets, as you point out. So that's where we're going to start. These stocks here have gone from deeper losses to some pretty decent gains back.
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And forth, back and forth.
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So check out these names like sandisk, like Micron, like Robinhood, like Solaredge, like Doordash, amongst others.
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They are among some of the names.
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That have swung by anywhere from 7 to 14% intraday from their lows to their highs. So as markets churn into the closing.
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Bell, they are some of the ones worth watching. Highly volatile during the session today.
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One of the other names that's on this list has actually some headline news attached to it. Shares of Topgolf Callaway brands, they're up.
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Nearly 7% right now after being down.
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2% at one point.
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Today. The golf equipment and entertainment venue operator.
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Is in talks with private equity firm Leonard Green to sell its Topgolf venue business at a valuation of around $1 billion.
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That's according to people familiar.
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Now those reported talks are the next chapter after topgolf Callaway told investors last year it planned to split itself back up into two separate companies.
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And we'll end with a check on.
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The Spider Healthcare etf, the Ticker xlv. We showed you this trade yesterday. Now that positive close that we got got it to a nine day winning streak.
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The fund has climbed back and is.
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Now moving between gains and losses so far today. But a positive close today, if it.
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Were to happen, would be the longest.
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Ever winning streak for this ETF at 10 days. The last time that happened was the period that ended back in January of 2004.
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So it's been a heck of a.
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Run just in the last week and certainly in the last month.
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Contessa, I'll send things back over to you guys.
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10 days is the longest streak in a long, long time. All right, Don, thank you for that. Let's get to Bertha Coombs now for a CNBC news update. Contessa. The White House announced a trade framework with Switzerland and Liechtenstein to slash tariffs on goods. The new rate will now be 15%. That's down from a prior 37% for Liechtenstein and 39 for Switzerland. Companies from the nations will also invest at least $200 billion into the U.S. with at least 67 billion of that occurring in 2026. Airlines are urging the FAA to drop that mandatory 6% domestic Fed flight cut imposed at 40 airports in the wake of the record setting government shutdown. According to aviation analytics firm Citrium the carriers are not canceling that many flights. Just 2% of flights were canceled today, down from about 3 1/2% yesterday. And the 2025 Latin Grammys were all about Bad Bunny. The Puerto Rican superstar won album of the year for his his landmark release De Vitiran Mas. Photos or I should have taken more pictures that paid homage to his native island. It marked the first time he won any of the show's three major categories. Bad Bunny also won four additional awards in the urban and reggaeton categories. Felicidades to him. Contessa. Gracias, Bertha. Coming up, Wall street is getting worried about big tech firms playing the depreciation game. We'll explain what that means and which companies could be the most exposed next. Welcome back to the Exchange. Investors have latched onto a burning new question in the trade. How to estimate depreciation of all this advanced computing equipment that requires massive investment. And the answer could determine who wins this stock market. Sima Modi has more for us. Hi, Sima. Hey, Contessa. Let's be clear. High performance AI chips are not like cars that lose value the minute they leave the dealership. Hyperscalers like Oracle, Microsoft, Amazon are buying these AI chips as quickly as companies like Nvidia can make them. They think these chips will hold their value for roughly six years. But acclaimed big short investor Michael Burry thinks it's closer to two to three years. Fueling this debate amongst investors this week, short seller Jim Chanos also voicing his concerns. And analysts have been weighing in as well. Bank of America sees Oracle's Capex investments remaining high even after 2030 as its cost tied to GPUs with quote, short useful lies. So the depreciation or not contest that these cloud competitors that are working with OpenAI, they face this big question now, right? Does it make sense to space out the purchases of GPUs and hedge their bets or do they then risk falling behind? And what's the biggest concern right now when all of this news, the concerns about depreciation have certainly become front and center. Like what's the big concern for the hyperscalers at this point? Talking about depreciation, the big debate this week has really been around whether these big tech companies are spending too little, too little or too much on artificial intelligence. I mean, it's not apples to apples, but think about running a fast factory. How often are you upgrading the the industrial equipment inside? Is it five, ten years or more? The challenge with data centers is that we're still in the early innings of this whole phenomenon. So the street does not have a definite answer, but that's still raising some concerns around these high costs. Well, I'm going on 20 years with my washer and dryer, so I don't know. I think if you take care of it, it can last a long time. Seema, thank you. Our next guest is taking a contrarian stance. Despite the markets having this anxiety, he says there's a great buying opportunity in some AI infrastructure names. Paul Meeks heads up technology research at Freedom Capital Markets. Paul, great to see you today.
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You too.
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B
All right, so can we just get through the big angst inducing headaches that AI is having right now? One there's and you heard Jim Cramer talk about it this week and what the Wall Street Journal calls Frankenstein financing. What's the deal with the debt? Is it a problem?
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I don't think the debt in this case is a problem like it was with the companies that were borrowing in the late 90s, early 2000 when they're building the Internet infrastructure, because back then there were a lot of really crappy companies with weak balance sheets borrowing. And the fact is they were borrowing. In this case, we do have a lot of interwoven relationships on an equity basis, not necessarily a debt basis, with companies building out infrastructure. So first of all, more equity than debt, so you don't have to worry about not making interest expense payments. And the other thing that's distinct this time is that 90%, at least thus far, of the infrastructure is being built by the five hyperscalers who all have very big balance sheets, very strong cash flows. And if they wanted to borrow, they could. Most of them haven't yet and it would be very easy for them to do that now over time, we have to see some ROI from all these investments, no doubt. But I don't think we need to get there for a couple of years yet.
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There's a lot of drama following Michael Burry's post about underestimating the depreciation of all of this expensive infrastructure. If this were Shakespeare, Shakespeare, would it be the Tempest or would it be Much Ado about Nothing?
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Maybe somewhere in between. You know, the obviously when you lengthen the life of your asset, you are going to, at least in the early years, low your depreciation expense, which is going to boost your earnings. But the interesting thing is I don't want to be an analyst because I've been around for decades and say I don't care about earnings, I don't care about cash flow. But in these cases, I think I want to see my company spend heavily in 25, 26, 27. So I'm looking at revenue growth not necessarily over that period as they build the infrastructure in earnings growth. So I don't want to say it's not germane over the long term. Sure it is. But in the short term I'm not worried about that metric.
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How long do you think the AI infrastructure trade is still an opportunity?
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I think at least for another year. What I see happening is, and we know this from the vows from all of the CEOs of the people that are spending the money that they are going to spend even more in 26 off a very high 25 base. And so I think that's locked in. The interesting thing is what happens in 27, I think that growth will slow and maybe see overall expenditures even plateau, but I don't expect them to collapse. And so I think this trade goes for at least another 12 months.
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B
I'm looking at a couple of names on your highlight list. You've got Nvidia which doesn't get any attention from us ever and and Core Weave and Nevius Group which has a technology assets. Why do you.
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A
Particularly in the neo clouds such as Core Weave and Nebbys and even Applied Digital. And of course next week on the 19th we have Nvidia. So they'll have a lot to say because everybody is interwoven with them. But coreweave took a huge face plant last week when it reported its results and they reported a guidance revenue miss of only 3% and their stock went down 20%. I am not necessarily worried that this company is going to be in any sort of a fundamental freefall. I actually think the things that they can control, they do very well at that company and I think it's a hell of a buying opportunity.
- [33:14]
B
What are you worried about? Because you're telling me all the things you're not worried about. What are you worried about?
- [33:19]
A
I am worried about over the long term that at the end of this pipeline we build all this infrastructure and yes, it'll be monetized to a certain extent, but will it be monetized enough to make everybody feel good about all these investments? But contest, I don't see that for a couple of years out. So I'm sticking with the infrastructure building trade which I think will be a hell of a trade. Even after this scare, I'm not stepping into the apps companies because I don't have to. I think that's a play way down the road.
- [33:52]
B
Paul Meeks, I appreciate it. Thank you. Have A Good Friday coming up. Oracle stock may be suffering because it's become the poster child for questions about how AI chips depreciate. But that pain actually provides the perfect opportunity to pounce. And our next trader sees value in more than just Oracle. Up next, the other beaten up stocks he's snapping up as we head to break. Here's a check on some of the names hitting all time highs today, including Assurant, Ventus, Cardinal Health, HCA holdings and Hartford Insurance. The exchange is back right after this. Welcome back to the Exchange. Wal Mart is down just fractionally but a little more than half a percent as we are learning that longtime CEO Doug McMillan will retire in January. He's been at the helm for 12 years and in that time, the stock is up more than 300%. So let's talk about his impact. Let's talk about who might fill his shoes. And joined by Courtney Reagan here. I mean, you've, you have had the opportunity to sit down with him and talk about his strategy for this juggernaut. How much does it mean to Walmart that he's stepping aside? I mean, it is a big deal. He has been a CEO that has gotten an awful lot done sometimes with doubters. I mean, he looked right in the face of difficult decisions and said, you know what, I'm going to ignore what Wall street may want me to do and I'm going to double down. I'm going to invest now for payoff later. He did that with digital, he did that with employee wages. The stock took a hit. He said, look, earnings are going to be compressed as a result. But he did it. I think Oliver Chin from Cowan describes him as a servant leader. He really pays attention to the people. He is one of them. He started at Walmart as an hourly employee, but so too did John Furnor, the man that is going to be taking over. He's also been at Walmart for three decades. And so I think most analysts feel really good about the transition. When it comes to orderly transitions, Walmart does it best. This is not really a surprise. Maybe everyone says, oh, but McMillan's doing so great. He's only 59, but to your point, he's been there for almost 12 years. He's accomplished a lot. And Furner is on board with this playbook. So make the transition at a time where Furner does maybe want to sit in this seat for longer. He wants to see it play out and then build on it from here. This is a time period, though, of great turmoil or change because of AI, because of the geopolitical uncertainty and supply chain impact and tariffs. There's, there are opportunities to come in and to pivot in ways that Maybe didn't exist six years ago, eight years ago, 10 years ago. How do you think that his legacy, McMillan's legacy applies to the new Furnor era? I think McMillan has learned a lot, truly from the inside out, more than anyone could ever know. I mean, as I mentioned, he started as an hourly associate. So too did John Furner. McMillan ran international for quite a period of time. He had a really big hand in merchandising. And then he came and of course took over the whole organization. Furner has run Sam's Club, he's run Walmart us And so they know the ins and outs. He understands supply chain, he understands the global consumer. McMillan, he lived abroad, he ran those divisions. And obviously the size and the scale of Walmart does help it in a lot of these ways. When it comes to continuing to deliver everyday low price and everyday low cost, what's the biggest challenge right now that you see for the company? I mean, I think that's really just maintaining their momentum because the, I think they've had something like 39 straight quarters of consecutive same store sales growth. I don't think any other retailer has come anywhere close to that, not right now, and certainly maybe not even in the past. So how can they continue to build on that? When you're looking at an annual revenue base of $710 billion estimated, how do you continue to grow that? So I think that could be a challenge. But I got to tell you, I'm, I'm not a big habitual Wal Mart shopper. And the last time I went in, I noticed a real shift in the items that were offered in the quality and the selection, say in, in clothing, which, you know, was, it was noticeable to me as an occasional Walmart visitor. And so that comes off to the consumers. Yeah, I think it's really interesting as part of McMillan's time, he bought a lot of these E commerce companies and in a lot of cases, we looked at them as aqua hires. Do you really need bonobos or do you need the expertise of the people that built bonobos? And so they learned so much about how to build these strong brands, particularly in a high margin area like clothing. And so then they've applied those learnings going forward, even after they've sold a number of those businesses, including bonobos. All right, Courtney, thank you. I know you have much more ahead on Power Lunch. Thank you. Coming up, the trade in the Public market may be showing some signs of slowing, but it's a very different picture in the private markets. Valuations there are booming. Does that add fuel that to this fire? Maybe it's going to pop the bubble? Or is it a healthy sign? Tech stocks rebounding after three straight days of losses. But there are concerns of course, about this AI bubble. Deirdre Bosa is taking a look at whether the source of concern might actually be in private markets. D Explain please. Yeah, so Contessa, if you're worried about the AI trade, you just can't ignore what's happening in private markets. Because startup burn that feeds into big tech's bottom line decline their losses from those startups. It's revenue that keeps the public AI trade alive. Now look at yesterday alone. Headlines around AI startups raising billions of dollars more. You had headlines around Cursor EX OpenAI, CTO, Miram Radi's thinking machine, and of course Elon Musk's AI. Now Cursor is at a nearly $30 billion valuation, yet just $1 billion in annualized revenue. This is a good example of how startup burn flows upstream. Cursor spends millions of dollars on models like Anthropic's Claude for AI first coding for its customers, which in turn pays for big tech Compute or compute from Big Tech. Now these startups and dozens more like them, they're spending heavily on that compute. And that money flows back to big tech, feeding the same earnings that keep that public trade afloat. Earlier this week, Softbank even cashed out entirely of its investment in Nvidia, the biggest public winner of the AI boom, to put that money in open air, one of the biggest private loss engines. So here's what it comes down to. If the startups and the money that is fueling them pull back, the mega cap earnings story goes with them. And that earnings story, Contessa, is one of the key arguments that you hear from the bulls right now. And what if the spending continues? Then I guess the bubble keeps getting bigger and bigger and we're all okay. But eventually, I mean, and you've heard these worries, you look at the biggest players in the private space, like an open air and an anthropic. They're raising billions and billions of dollars, they're spending billions and billions of dollars on spending. Revenue is just a fraction of that and profitability is nowhere. So just depends on how long the market is willing to see that. Be patient with that. I mean, something from a Bank of America note over the last few weeks was really interesting. It said that you had to be careful of certain red flags that we don't yet see. And that would be rising yields or rising interest rates. You're not seeing that yet. So maybe there's more to go. They're saying, they're saying here's the warning signs and we're not seeing them yet. Yeah, but keep a lookout for them cautious signs. So lots and lots of yellow flags is what they're saying. But those red flags we're not seeing yet. So to your question, what if it keeps going? Maybe it will keep going till we see those bigger macro red flags. Deirdre, thank you. Coming up, our trader says don't run from the sell off, use it. He's breaking down four washed out names that he's buying, including one that is down 25% over one month. We'll be right back. Welcome back to the Exchange. Stocks may be trying to stage a comeback today, but look, the damage has been done in this momentum in tech names. My next guest says he's using the weakness in the past few days to buy a few big names on his wish list. For more, let's bring in Jeff Kilberg, KKM Financial founder and CEO, a CNBC contributor. It's almost like having this shopping list and thinking, oh, I can't afford that. I can't afford it. And waiting for it to go on sale.
- [42:31]
A
You're absolutely right. I wouldn't say the damage is done necessarily in some of these themed big tech names. I think just some profit taking has occurred. We've seen two consecutive weeks of profit taking. The jitters really were spurred by the uncertainty. What the Fed is going to do, in my opinion, if the Fed cuts in December or January, it's immaterial. But I look at Oracle, Oracle is a great example. I'm looking at Palo Alto Network, looking at intel and Tesla. I'm going to put Tesla off to the side because it just did negative. But Oracle, for example, has seen just a sensational move higher. A 52 week range contestant of $118 up to $345. It almost hit $1 trillion in market cap after this 40% pullback. Technically it just kissed the two day moving average this morning. Now it's bouncing up there. 227 was the high today. Oracle is a name with their backlog of revenue. That's a name I think you can own on a discount if you haven't been along for the ride thus far.
- [43:21]
B
All right, you're also looking at Tesla. We were just showing that Stock. Can we put that Tesla back up up Palo Alto Networks and Intel as well in this group. Why?
- [43:30]
A
Yeah, and I think Palo Alto Network is only up about 12% year to date. But this is kind of a sleepy tech name. Cybersecurity is going to go nothing but up moving forward. Intel, it said essential US chip maker. We've seen a lot of support and partnership with the US government. I'm still kind of unclear on how I feel about the US government owning 10% of Intel. But nonetheless, I think as we see more and more partnerships, Intel's going to move higher. But Tesla is a name I believe in longer term. But I love trading this name. The volatility is sensational. You have to have the stomach for it. We saw it go up and I was selling calls at $500 just about three weeks ago and here we are dipping under $400. But I believe in Tesla, the robotics theme. I think it's actually one of the purest AI plays out there. But Tesla has to have a stomach. I put all the politics as a side contest. I'm just looking for a pure play. I think Tesla has the ability to back and fill and break out back above that 480 level.
- [44:21]
B
You know, it seems like if there was a theme to this particular hour, boring might be it. I hate to say that, but one of my previous guests said, look, let's talk about some of the boring names, those that pay dividends. We're seeing the blue chips with increased inflows right now as we're seeing the rotation. So you've got Boeing, you've got Waste Management, you've got Lockheed Martin and those are all names that you're looking at closely.
- [44:45]
A
Those are all names that we call essential. If you look at the ticker on my sleeve here, this is what we have in the Essential 40 ETF. So these are boring blue chip names. But you think about CME Group, think about Boeing, Lockheed Martin as well as Waste Management. Those don't have a lot of sizzle to them, but those are workhorses. And when you see markets like we saw from the Liberation Day Low, people sell the Palantirs, they sell the Nvidias, but they tend to hoard these essential names. It's kind of like a Peter Lynch 2.0, if you will. Contessa. These names are really important because it's by what you need buy what we believe is central to U.S. economy. So these boring blue chip names, they will continue to see rotation. We are not seeing it today, but you have seen this de risking, this deleveraging from the market vulnerability of the MAG7 into some of these blue chip names. That's why you're going to see a little bit more of a value run up towards the end of the year.
- [45:33]
B
Speaking of rotation, the Vix is like a tornado. We saw 20% intraday move higher yesterday. Top three move this year alone. You've got that and you're putting a 7100 target on the S&P 500 this year. That would be 5% higher. Explain the volatility and your target.
- [45:51]
A
Well, you're really smart to bring up yesterday's move. It's not getting a lot of attention because the VIX is only at 20 contested. But we have seen the third largest move intraday. It was up over 20%. I think it caught a lot of people off guard. People are continuing to think that the AI theme is just going to move the market market higher. But as you know, markets don't move in a straight line. So this back end fill, if you think about the QQQ, the NASDAQ 100 ETF, it was up 50% over 50% from that Liberation Day low of April 8th. So to see a little bit of a back and fill, it almost was down 5% since it's rebounded, but it was almost down 5% in the last two days. That's an entry opportunity. So I see the S&P 500 being led by tech again, but also seeing some broadening going back up to 7,100. I think it's going to be a Santa Claus rally and it's happening soon.
- [46:34]
B
Give me this, yes or no? The health care stocks have seen a big run up. Is it too late to get in?
- [46:39]
A
Kind of.
- [46:41]
B
That wasn't even a yes or no. I like that.
- [46:43]
A
Some of the big boys.
- [46:45]
B
All right, Jeff Kilberg, it's great to see you today. Thank you so much for joining us with your expertise. I love it when you say yes or no and they're like I'm going to give you what I want to give you.
- [46:53]
A
Thanks for having me.
- [46:54]
B
Okay, that does it for us. We're going to keep an eye on these markets and the big rebound that we've seen off the lows. Thank you for watching the Exchange. Here's Power Lunch. You've been listening to the Exchange. Make sure you're subscribed to get each episode every day, same time, same place.
- [47:09]
A
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