Apple Climbs, AWS Outage and Rare Earths Refocus 10/20/25

Summary

The Exchange (CNBC) - Episode Summary

Date: October 20, 2025
Episode Title: Apple Climbs, AWS Outage and Rare Earths Refocus
Host: Morgan Brennan (in for Kelly Evans)

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Main Theme

Today’s episode of The Exchange centers on the tech sector’s dominance in the markets, led by Apple’s surge toward a $4 trillion market cap, the ramifications of a major AWS outage, and the resurgent strategic importance of rare earth elements in global supply chains. Additional coverage includes shifts in healthcare stocks and ongoing economic and geopolitical storylines with China.

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Episode Breakdown

1. Market Overview & Tech’s Outperformance

[00:07 – 02:25]

• Stock Market Performance:
  • Equities are up broadly, with Apple driving the rally (+4%) after bullish analyst actions and nearing $4T in market cap.
  • Regional banks rebounding; Bitcoin recovering to around $110,000 (seen as broader market liquidity barometer).
• Guest: Stephen Whiting (CIO Group’s Chief Investment Strategist)
  • Bullish on Tech:
    • Tech sector earnings have risen double digits in recent years, with continued (if moderating) growth forecast.
    • Draws an analogy to the late 1990s: “There were all sorts of warnings. This is over, the collapse is in. And we hear a lot of that. Again, I do think that we need to look at all these asset classes as a mature bull market.” (Stephen Whiting, [01:44])
  • Macro Notes:
    • Infrastructure is growing rapidly (42% growth rate, fastest since the PC’s invention).
    • Other sectors, especially manufacturing and industrials, are lagging.
    • Consumer spending remains relatively strong (+3.5%).

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2. Credit Conditions & Federal Reserve Policy

[03:25 – 05:52]

• Credit Markets:
  • Whiting warns against overreacting to cracks in credit (e.g., regional bank issues, auto sector).
  • Fraud headlines overstate the broader economic picture; sentiment is more nervous than fundamentals suggest.
• Fed Watch:
  • With a rate cut expected, Whiting cautions: “When the Fed has cut more than 100 basis points, it’s usually not good for the economy… Now, there have been exceptions.” (Stephen Whiting, [04:40])
  • He downplays the dependency on rate cuts, highlighting profit growth expectations instead.
  • Fed’s balance sheet runoff is mentioned as more disciplined compared to 2019.

“I don’t think it really depends on Federal Reserve cutting. If they had strong reason to...it would be a negative regardless of the cuts.” (Stephen Whiting, [05:15])

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3. Sector Spotlight: Healthcare

[05:52 – 06:46]

• Whiting favors health care for its secular growth and deeply lagging performance, suggesting mean reversion potential:

  “If you wanted to find a sector you could slowly add to and expect mean reversion…the next 12 months, we would be adding more to health care.” (Stephen Whiting, [06:40])

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4. Apple’s Record-Breaking iPhone Cycle

[07:01 – 09:05]

• Reporter: Steve Kovac
  • Apple shares soar on upbeat iPhone 17 sales.
  • Multiple analysts, including Evercore and Loop Capital, cite exceptional demand—especially in China due to government subsidies.
  • iPhone Air sells out globally; longer wait times are interpreted as robust demand.
  • Anticipation builds for December quarter earnings, with a guidance beat expected.

“New hardware designs and new hardware features are way better sellers than AI and software. Those are the big sales drivers…” (Steve Kovac, [08:18])

• AI Factor:
  • Apple’s lack of new AI features in the latest cycle hasn’t hampered hardware-driven growth:

    “Apple can take the year off of developing AI and putting out new AI features and still have a great iPhone year. We’re not going to see their vision for AI until next spring at the earliest…” (Steve Kovac, [08:44])

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5. Microsoft & AI Market Dynamics

[09:05 – 10:19]

• Kovac notes Microsoft’s persistent supply constraints for AI compute—“They literally don’t have enough compute supply to meet all the demand they’re seeing”—and forecasts no sign of AI investment cooling.
• Microsoft expected to spend over $100B on CapEx this fiscal year.

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6. Major AWS Outage: Impact and Implications

[11:04 – 19:40]

• Reporter: Mackenzie Sigalos
  • AWS’s main Virginia region experiences a 10+ hour outage, impacting over 8 million users and major brands globally (Amazon, Disney, Lyft, McDonald’s, United Airlines).
  • Not a cyber attack, but exposes the “fragility” of cloud infrastructure.

“A single regional failure can still knock critical services offline worldwide.” (Mackenzie Sigalos, [11:45])

• Expert Panel:
  • David Kennedy (TrustedSec):
    • Stresses the need for redundant/switch-over systems. The shift from on-premise to cloud heightens the systemic impact of outages.
    • “Small changes can cause these types of massive interruptions… goes to show you how fragile this infrastructure really can be.” ([13:57])
  • Rohit Kulkarni (Roth MKM):
    • Outages raise “a mild yellow flag”—enterprises may diversify across clouds.
    • Google seen as well-positioned to gain share in AI cloud infrastructure.
    • “The big, big question…is Amazon positioned to succeed or are they losing share in the cloud? And such an event gives a pause…” ([15:23])

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7. China’s 5-Year Plan: Tech, Security, and Consumption

[22:55 – 31:43]

• Reporter: Eunice Yoon (Beijing)

  • China’s Fourth Plenum sets economic policy for 2026-2030, focusing heavily on advanced manufacturing, semiconductors, and AI.
  • There’s been little prioritization of broader reforms to spur consumer consumption, despite weak economic data.

• Guest: Derek Scissors (AEI)

  • Rare earths remain a strategic flashpoint—not just reserves, but refinement capabilities matter.
  • U.S.-China trade frictions could lead to deals but not to long-term resolution, as China continues to build control over key supply chains.

“The problem is refining. And the Australians own the largest refiner outside of China. That’s where we need to work with them on.” (Derek Scissors, [26:59])

• China’s long-term tech buildup serves strategic (Taiwan) and economic leverage goals, not consumer prosperity.
• “There is a long-term Chinese strategy to build up their production capability. It harms their economy in a lot of ways… but it is working.” ([31:13])

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8. US Rare Earths Industry: Investment Perspective

[32:58 – 36:14]

• Guest: Neil Dingman (William Blair)
  • Even pre-revenue companies like USA Rare Earth are deemed compelling due to the urgent need for domestic, government-backed supply chains (“wartime effort” analogy).
  • Magnet production is a key bottleneck; initial focus is on refining over mining to avoid cost overruns.

“I just don’t think the type of method, valuation methods we’re accustomed to today is applicable.” (Neil Dingman, [33:36])

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9. Healthcare Costs & Public Opinion

[36:55 – 40:28]

• Mark Cuban:

  • “There’s nobody in the history of everybody in this country who likes the way the cost of health care is and the cost of medication.” ([36:55])

• Survey Takeaways: Steve Liesman

  • While most are satisfied with personal healthcare access, costs force 1/3 of Americans to forgo treatment, with especially high rates among women aged 18-49.
  • 57% believe the government should provide insurance, but there’s deep partisan division and the upcoming insurance enrollment and shutdown debate loom.

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10. Boeing Receives FAA Approval to Boost Output

[41:03 – 43:40]

• Reporter: Phil LeBeau
  • FAA allows Boeing to ramp 737 Max production to 42 jets/month.
  • Backlogs remain substantial; key certifications (Max 7, Max 10, 777X) pending.
  • Air traffic control staffing also flagged as a near-term travel bottleneck.

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Notable Quotes

• “There were all sorts of warnings. This is over, the collapse is in. And we hear a lot of that. Again, I do think that we need to look at all these asset classes as a mature bull market.”
  – Stephen Whiting ([01:44])

• “A single regional failure can still knock critical services offline worldwide.”
  – Mackenzie Sigalos ([11:45])

• “Apple can take the year off of developing AI and putting out new AI features and still have a great iPhone year.”
  – Steve Kovac ([08:44])

• “The problem is refining…That’s where we need to work with [Australia] on.”
  – Derek Scissors ([26:59])

• "If you wanted to find a sector that you could slowly add to and expect mean reversion... we would be adding more to health care."
  – Stephen Whiting ([06:40])

• "There’s nobody in the history of everybody in this country who likes the way the cost of health care is and the cost of medication."
  – Mark Cuban ([36:55])

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Key Timestamps

• Tech/Markets with Stephen Whiting: [00:07 – 06:46]
• Apple iPhone 17 Surge (Steve Kovac): [07:01 – 09:05]
• AWS Outage: [11:04 – 19:40]
• China’s 5-Year Plan/Rare Earths (Eunice Yoon & Derek Scissors): [22:55 – 31:43]
• USA Rare Earth Investment (Neil Dingman): [32:58 – 36:14]
• Healthcare Cost Survey (Steve Liesman): [36:55 – 40:28]
• Boeing Production Update (Phil LeBeau): [41:03 – 43:40]

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Conclusion

Today’s Exchange episode provided a rich, on-the-minute look at market leadership from tech (notably Apple), the systemic risks and resiliency issues in cloud computing, the high-stakes race for rare earth supply chain independence, and ongoing pressures in healthcare and aerospace. The guest interviews were insight-driven and candid about the opportunities and risks for investors and the broader economy in 2025.

Transcript

[A]

You're listening to the Exchange. Here's today's show.

[B]

Scott, thanks. Welcome to the Exchange. I'm Morgan Brennan. And for Kelly Evans, stocks are higher across the board this Monday as investors gear up for a big earnings week, a big inflation report. Apple's the largest driver of those gains right now. It's up 4%, hitting a fresh all time high on an upgrade to buy from hold over at Luke Capital. More on why they're so bullish ahead. And today's gains pushing Apple closer to that $4 trillion. Regional banks continuing to bounce back. The CAR Regional Bank ETF is up one and a half percent more than that right now after coming under pressure last week amid credit concerns at some of the regional banks. Zions was at the center of it. The bank is on deck to report after the bell on closing bell overtime and bitcoin bouncing back as well. That's after dropping to $103,000 last week. It's up one and a half percent now, hovering around $110,000 seen as a barometer of liquidity in the broader market. So one to watch. But let's kick things off with tech. It's outperforming today thanks to Apple, outperforming this year thanks to the AI trade. And that's where our next guest still sees a lot of opportunity from here he's Long Tech for that and the rest of the playbook. Let's bring in Stephen Whiting, CIO Group's chief investment strategist, joining me here on set. It's good to have you. Welcome.

[A]

Thank you for having me.

[B]

All right. Why are you still long Tech?

[A]

Well, how about earnings up double digits? It's been for the last few years. And when you take a look at next year's estimates, you can see expectations for revenue growth to continue, but to slow down. And I think the best analogy we have for this period and there are none of them are perfect. The late 1990s period, remembering that 96, 97, 98, there were all sorts of warnings. This is over, the collapse is in. And we hear a lot of that. Again, I do think that we need to look at all these asset classes as a mature bull market. The S and P is trading at 27 times trailing earnings. But I think that the economy is actually poised to improve in the coming year. That's not going to get us necessarily the same types of returns that we have. Again, next year's earnings really will matter in the year after that. But these parts of the economy are growing now at a Very rapid pace. And I think the rest of the economy has got some room to improve and to catch up.

[B]

Yeah, and that's exactly where I want to go with you. What do you think drives that improvement in the economy? How much of this is AI infrastructure? How much of this is something else?

[A]

Well, a lot of the strength in infrastructure sort of out on its own. 42% growth, the most rapid growth rate since the personal computer was invented. But the rest of the economy has been held back. Construction has contracted, industrial production in the United states has grown only 1%. You haven't seen manufacturing employment increase since March. So but you take a look at that and you see consumer spending has grown three and a half percent as of mid quarter three. Q when the data were turned off. So there's been a lot of business caution. You can see it in a 9 out of 10 industries and the ISM report are really concerned about tariffs. So we've taken a lot of hits across the world economy this year. If we stabilize in terms of macro policies, including trade, we'll see in the coming year producers will raise output a little bit faster to the demand pace.

[B]

Cracks in the credit market scenario right now you see that as an early indicator of something bigger, broader here.

[A]

Well, the longer we get into a recovery, the issues of easing credit standards will matter. As we just wrote in our CIO Group outlook for 2026, we would not be investors in regional banks, we wouldn't be investors in the auto industry. Right. Where you're seeing all of these, these issues. But you know, let's bear in mind that a couple billion dollars of fraud is not exactly indicative of what's happened across the entire economy. I think that the worry that we've had about all of this, again very much tells you something about sentiment, that there are a lot of people who are still worried on and on the sidelines and thinking that it's all over. And that goes right back to repeating the pattern that we saw in the late 1990s before it became really excessive.

[B]

We have the Fed in a blackout period right now. There is a large, we'll say as close to certain as you can get in the market right now, pricing in an expectation of another Fed cut here in the coming days, coming weeks. How much of this hinges on that actually happening? And perhaps just as importantly, because I don't know that we've been talking about as much as we should, the slowdown in the runoff of the balance sheet for the Fed as well.

[A]

Sure. Well, a couple of points on that. When the Fed has cut more than 100 basis points. It's usually not good for the economy, markets, the conditions that drive it. Now, there have been some exceptions. Again, the mid-1990s is a pretty good example. Again, didn't Quite get to 100 basis points, you know, but the bottom line of just recalibrating a bit, focusing in on the labor market, which has slowed gains to a crawl and looking at that very differently from corporate profits, where we're going to get a lot of beats and we're expecting in the coming year we're more than 10% EPS growth. So I don't think it really depends on the Federal Reserve cutting. If they had strong reason to, if, you know, all of the AI spending and the rest of the economy were going south, it would be a negative regardless of the cuts. Now, in terms of the balance sheet and that other question, I would just bear in mind that, you know, the Federal Reserve has done a better job than it did in 2019. It was borrowing and lending at the same time. It's cut its securities holdings by over $2 trillion. And it's again, I think can really be a little bit lucky here that the economy is normalizing a lot of the noise. We've got higher inflation rate than we otherwise would, but it's going to come down some in the coming year.

[B]

Yeah, we'll have to see what we get in terms of a CPI report later this week on Friday. And we know that's been delayed by the government shutdown. You say you're intrigued by health care here. It's been one of the best performers sector wise this month, as we have seen. I would say a more defensive market.

[A]

Well, think about this. At the recent low point, about a month and a half ago, the S and P health care sector had underperformed by 30 percentage points. Right. So if you want to find a place where there is fear, there's concern about U.S. economic policy, about tariffs, patents, everything in the world has been thrown against it. But that relative performance is the worst since the early 1990s. And health care is a secular grower. It's an area again, that always gets more spending in the economy and gradually more profit. So if you wanted to find a sector that you could slowly add to and expect mean reversion the next 12 months, we would be adding more to health care.

[B]

Okay. Stephen Whiting, thank you for joining me here on set. And we'll be talking more about health care later in this hour. But in the meantime, let's dig into one of the Big movers of the day. Apple set more than 4% bullish analyst commentary stock Steve Kovac has a story for us. Hi Steve.

[A]

Yeah, Morgan, there's just been a surge of optimism this morning around these iPhone 17 sales today. Let me give you a quick roundup of everything we're looking at. Evercore analysts today they added Apple to their tactical outperform list. The folks over at Loop capital saying the iPhone17 quote blows past all expectations. Financial Times saying it's the best iPhone cycle since COVID Bloomberg saying the iPhone 17 outselling the 16 by double digit percentage points. Put all of that together and you have Apple shares now at all time highs. We haven't seen this level since the day after Christmas last year. It's also closing in on that $4 trillion market cap and driving the action. First of all, that base model of the iPhone 17 is selling quite well in China according to some early data. A lot of that is due to the Chinese government giving subsidies. Plus the iPhone air sold out when it went on sale first last week on Friday and it's showing some popularity there and then just generally around the world. Lead times for iPhone 17 orders, they are longer than they were a year ago. That might sound bad if you're eager to get your new phone, but for Apple investors that's a good sign of strong demand now. We get earnings in 10 days. Morgan and Evercore saying today in their note guidance for the December quarter could surprise to the upside. And all of this is just showing that as opposed to what we saw last year with the Apple intelligence debut. New hardware designs and new hardware features are way better sellers than AI and software. Those are the big sales drivers there. Morgan.

[B]

It's like you took my question right out of my mouth, Steve, and that was where does AI factor into all this? It's still not working very well.

[A]

It's not working very well, but it just proves Apple can take the year off of developing AI and putting out new AI features and still have a great iPhone year. We're not going to see their vision for AI until next spring and at the earliest, Morgan. So that'll be something to layer on top. That is of course the next catalyst that everyone's watching for and it's also potentially going to enable some new products that they couldn't get out the door this year because of that delay. Morgan Hmm.

[B]

I want to shift gears with you, Stephen, and maybe put you on the spot a little bit here. I don't know if you saw this information article about Microsoft and concerns about overbuilding with open air and all of its spending right now. But obviously you cover that company very closely too. And I just wonder what your thoughts are given the fact that we will be getting those earnings results from Microsoft in coming days as well. And there has been this concern about Bubbliches ness in the AI market.

[A]

I'll tell you what the people I talked by the way, those earnings are coming Wednesday next week. Morgan, I'll tell you what the people I talk at Microsoft, the story is still the same even as recently as that last information report that said they're turning away customers. They literally don't have enough compute supply to to meet all the demand they're seeing. That's why you've seen OpenAI kind of let loose and able to make partnerships with so many other companies. And by the way, that picture is not going to change this year. The CFO Amy Hood said on the last earnings call that to expect the demand and supply to kind of meet an equilibrium by the end of this year. Now they're saying that's not going to happen until next year. So I would be absolutely shocked if we saw any signal of a pullback. Microsoft, by the way, Morgan is on Track to spend $100 billion on a CapEx for this fiscal year. Probably more than that.

[B]

All right, Steve Kovac, thank you. I think bank of America made Microsoft a top pick today as well. So another stock to watch. Well, still ahead and US Outage taking down major companies around the world. Amazon, Disney, Lyft, Mike McDonald's and United Airlines are just a few of the many that have been impacted. We have the latest whether there could be any future fallout. That's next. And William Blair says the ST could be the next company the government takes a stake in. We're going to reveal that. It's coming up on that mystery chart right there. The exchange will be right back.

[A]

This is the exchange on cnbc.

[B]

Welcome back. Amazon's AWS still seeing reports of outages after more than six hour disruption. This morning it looked like it had been resolved. Mackenzie Segalos is following the story for today's tech check and brings us more. Hi Mac back. Hey Morgan. So US is still struggling to contain the major outage from this morning. We're now 10 hours in and reports of disruption are rising again with persistent issues. And Amazon's main cloud region in Northern Virginia, that's its oldest and busiest hub. And so far more than 8 million users have flagged problems including AI platform perplexity. Anthropic is another big customer no word yet on whether they're suffering downtime, but they've long had this multi cloud strategy that to hedge against situations exactly like this. Now the outage began around 3am with network failures and DNS issues tied to its core database system that underpins many of US applications. DNS or domain name system, acts like the Internet's address book. When it breaks, services can't load. Amazon saying 10 minutes ago that it is in the process of rolling out fixes and that some of its cloud services are recovering. But outage reports are surging. You can see that on this down detector chart. Cyber experts say this is not a hack, but it is a reminder of how fragile the Internet gets when a few companies run its core infrastructure controls 37% of the global cloud market and brought in $107 billion last year. Yet a single regional failure can still knock critical services offline worldwide. One expert compared it to last year's crowdstrike meltdown, only this time isn't breaking machines, it is cutting off access to to the services that they rely on. Shareholders though, they seem to be shrugging it off. Amazon stock trading 1% higher so far today. Morgan Mack when we see outages like this, does it ever result or is there a way to check and track whether it results in some of those customers going to other hyperscalers and other cloud providers? That's a great question and we've started to see that kind of diverse multi cloud strategy. Open Air notably as Steve just pointed out in the last block has moved beyond just using Microsoft Microsoft Azure services. They're now a Google cloud customer and in tandem with that they're working with Oracle and they have all of these build out plans to hedge against exactly this. And so that's something that we're looking for, especially with earnings coming up from Google and from Amazon next quarter. Are they going to build out and up their capex commitment so that they can serve more of these generative AI customers? All right, Mackenzie Segallos, thank you. So is this outage just a one off glitch or something investors should actually be concerned about? Let's bring in Rohit Kulkarni, senior analyst at Roth mkm and David Kennedy, founder and security consultant company Trusted sec. It's great to have you both on. David, I'm going to start with you because Mac just referenced the fact that experts say this, this doesn't look like it was a hack. What do you, what are your takeaways? What do you think this looks like?

[A]

Yeah, it doesn't look Like a hack. Amazon has come out and said it's not a hack, but it just shows you how fragile our infrastructure is. When people think of cloud computing, whether you're using Google, Twitter, you know, Facebook or other online services, banking, a lot of that sits in other people's infrastructure. And, and small changes can cause these types of massive interruptions. And we had a massive outage two years ago at Amazon as well. So Amazon is kind of accustomed to this and they're supposed to be super high reliable, super high efficiencies. But something like a small DNS change causing these massive outages goes to show you how fragile this infrastructure really can be and the vulnerabilities that we actually have to our actual online presence for things that we use every day for services.

[B]

Rahit, just if history is any indicator, the massive outage two years ago, what was the fallout for both customers of Amazon and for investors?

[A]

Hey, thanks. I think the most direct fallout of the next question that most of the enterprises will start to think is do we need to hedge our bets, do we need to diversify our IT eggs across multiple baskets? That's the first question that comes to mind. And then the next steps become is it possible, is it feasible, is it economic viable, so on and so forth. I think that's, that's the mild yellow flag from, from this outage. Of course Amazon has reduced the number of outages over the years. The, the duration, the severity of those outages is smaller. On the other hand, I would say that outages at Microsoft have been slightly longer in duration. But still I think at the end of the day all these companies learn and self learn so quickly that the next outage is much smaller, less severe, and so on and so forth. But not to digress, but I think when it comes to AI cloud versus Internet cloud, the big, big question in investors mind is is Amazon positioned to succeed or are they losing share in the cloud? And such an event gives a pause in investors mind as to where is the, is the company positioned in the next 12, 24, 36 months on the air cloud as such.

[B]

And David, to go back to the point you just made, I mean this sort of gets at the heart of securing critical infrastructure. And when Amazon claims more than a third of the cloud market, it's certainly critical infrastructure. As that infrastructure does become more sophisticated, particularly in the age of AI, what needs to continue to happen to secure it?

[A]

More reliability in these infrastructures for fallback. You know, normally when you look at outages, they have load balancers and other operational Systems that can kick over in case there are outages like this. In this case specifically, you know, you saw the massive data center, one of its largest, you know, have a massive shortfall where that didn't happen. So hopefully Amazon's looking at this and saying, hey, can we roll over to another location, another data center so that we don't see these massive items. I mean, everything from Coinbase for crypto transactions to financial institutions to government installations, all down during these periods of time. And what we've actually seen over the past 10 years is that, you know, most companies had what was considered on premise, so they had their own infrastructure, their own web applications that they housed in their own internal infrastructure. So if one of them went down, it wouldn't be as massive as you see here. But with the cloud movement, you know, everybody's leveraging these large data centers, like you know, Azure, for example, aws, gcp, Google, to run their infrastructures and when they have one outage causes this massive effect that you see with all of these different companies being impacted. So to the previously commented statement around diversity around applications being able to move from, you know, if AWS has an issue, can you fail over to Microsoft or can you fill over to Google? So you're not seeing these massive outages. These are things that companies need to weigh out to ensure that they don't have a massive impact to their business and organization.

[B]

So Rohit, along those lines, what would you be investing in right now if you are talking about a diversification of cloud infrastructure and beneficiaries?

[A]

Look, I think when it comes to transition from Internet cloud to air cloud, I think Google is doing probably one of the best executions in the last 12 to 24 months. They are verticalizing their cloud infrastructure with their own in house silicon, the TPUs. And I think as companies compared to Amazon and Microsoft, I think Google is very well positioned to gain share from being a number three player to possibly being a very close number two player in this very fast growing market.

[B]

David, overall, your outlook for this cybersecurity and critical infrastructure security market right now, especially as it does seem that it's not just hacks that can take infrastructure down and maybe people need to be thinking about it a little bit more holistically.

[A]

Yeah, if you look at the Cybersecurity Infrastructure Security Agency or CISA, they're tasked with protecting critical infrastructure, but over 85% of our critical infrastructure is private sector owned, so owned by private corporations. And a lot of times these are, you know, antiquated systems. So think of you know, our power grid, our water treatment facilities and everything from that to our financial infrastructure using very, very legacy type systems. And so, you know, we're seeing a big movement where they're trying to converge, what's called IT and ot, they're, they're critical infrastructure, you know, into more technologically advanced areas. And that does come with its pose of risks. You know, obviously with AWS, you know, having a massive outage with the CrowdStrike one from last year, AWS two years ago, we've seen a ton with Microsoft as well. These are things that need to have redundant systems so that we can ensure, you know, appropriate, you know, energy through the United States, appropriate water, you know, throughout the United States and other areas, utilities that are really important. These have to be baked into what these energy folks or what the critical infrastructure folks are leveraging every single day and with their plans.

[B]

Yeah. And of course, with so much money going into so many of these areas now, it becomes a bigger and bigger topic. David Kennedy and Raheet Kulkarni, thank you for joining me.

[A]

Thank you. Thank you.

[B]

Coming up, Boeing shares, they're down 6% over the past three months. But good news from the FAA. Kickstart the stock. Stock we're going to discuss. And as we head to break, check out shares of cooper companies. It's up 5% as activist investor Jana Partners announces a new stake in the medical device maker. We'll highlight some more big movers on the exchange returns. Welcome back to the exchange. Markets right now are higher across the board. Everything, all the major averages are up greater than 1% right now. The big outperformers, the Russell 2000, the small caps up 1.8%. Every sector in the S&P 500 is in the green except for utilities and consumer staples. Perhaps speaking to the risk on sentiment we're seeing in trading to kick off this new week. As you see bond yields under pressure here. Crude is lower, but bitcoin and gold continue their marches higher. Well, here are some of the movers this hour individually as well. The VanEck Semiconductor ETF hitting a new all time high on pace for its third positive session in the past four. It's six straight monthly gain. It just keeps going higher. It's part of this. Tech and AI trade leaders include semi, kla, core, amd. It's a different story though for App Lovin. That's one of the worst performers in the NASDAQ 100 today reports that multiple state attorneys general are investigating the company's data collection practices. Those shares are down another 3% right now. Applovin is down nearly 20% so far this month. That's after gaining 50% though, in September. Now let's turn to Julia Borson for a CNBC News news update. Hi, Julia. Hi, Morgan. Iran's supreme leader today rejected President Trump's offer to renew nuclear talks. He also said the president's claim that the US Destroyed Iran's nuclear capabilities in a June bomb strike is not true. Tehran and Washington have held indirect nuclear negotiations this year, but those were abruptly ended when Israel and the US Bombed Iranian nuclear site. Department of Justice's lawyers will be in federal court today arguing over whether Alina Haba, President Trump's pick as the top federal prosecutor in New Jersey, is serving lawfully. A lower court judge ruled she wasn't because of a, quote, novel series of legal and personnel moves, but allowed her to continue serving while the Justice Department appealed.

[A]

A new study published today in the.

[B]

Journal of Pediatrics may hold the key to reducing peanut allergies. The research found that a decade after a landmark study proved feeding peanut products to babies as young as four months could prevent the development of life threatening allergies. The study's authors found about 60,000 children have avoided peanut allergies by following that guidance. Back over to you. All right. Julie Boorstin, thank you. Well, coming up, President Xi is readying China for its next five years, but could those plans come to a or come at a cost to the U.S. u.S. We're going to discuss what to expect when the exchange returns. Stay with us. Welcome back to the exchange. China's President Xi sitting down with policymakers to map out the country's five year plan. The multi day fourth plenum also kicks off amid a key trade shakeup. So let's get to Eunice Yun in Beijing for the details. Hi, Eunice. Hey, Morgan. Well, as you said, this is called the fourth plenum. And over the next four days, the Chinese Communist Party is going to lay out its economic priorities from 2026 to 2030. And it probably comes as no surprise to investors that the focus of this event is likely going to be greater support, financial support for new technologies as well as advanced manufacturing such as semiconductors, AI, robotics, as well as new energy. Now, this is just a reassertion of what we already know and that is that the Xi Jinping administration wants China to become dominant in some of these new technologies globally and also believes that the these types of technologies will help propel the economy here go forward. But what we've also also seen over.

[A]

The past couple of years is that.

[B]

The Xi Jinping administration hasn't really been prioritizing certain policies that encourage the pretty much everything else, including consumption. And for that reason, we saw that reflected in the economic data that was out today. FAI contracted private investment is down. Consumption met very low expectations. There's an expectation now, though, that there.

[A]

Will be a policy platform included in.

[B]

The five year plan to try to encourage more household consumption. And the speculation is that the way this is going to be manifested is that the, that the government might set targets at a local level to try to boost consumption growth. Morgan? Yeah, Eunice. And you're sort of getting right at what my curiosity is in all of this because you are talking about an economy, China, that is deflationary right now and where we have seen some weakness among consumers. How much of this speaks to what's being prioritized by President Xi here from, I guess a national security standpoint, a technological standpoint, versus health of economic health of the populace? Yeah, well, there's been a lot of discussion over the past couple of years as to what President Xi Jinping's administration's priorities are. And I think it's become clearer and clearer that technology as well as security are more of his priorities instead of growth. So there's been a lot of discussion about the problems that, that you had just mentioned, such as deflation as well as overcapacity issues. We have seen the authorities here try to make some efforts to tackle some of that overcapacity, something that they call their involution campaign, and that is trying to, to stop what they see as these cutthroat price wars to turn things around. But we haven't seen the administration really make some broader, more comprehensive reforms that would address some of the consumption issues that would potentially help lift consumer confidence. And those are the kind of bigger, broader reforms that a lot of economists are looking for, that that we haven't quite seen yet. Okay, Eunice Yoon, thank you. While China is trying to jumpstart its economy, President Trump is trying to reduce US Dependence on China rare earths. He's meeting with the Australian Prime Minister at the White House today. And Australia's critical minerals reserves are in focus. My next guest says in order to win against China, the US has to move beyond rare earths. Joining me now is Derek Scissors, Asia economist at the American Enterprise Institute. Derek, it's great to have you back on and to be speaking with you. And I think we need to start right there because Australia is what, the fourth largest country in terms of rare earth and critical mineral deposits. They struck some sort of deal or announced that they were striking a deal just a little bit earlier this afternoon. But why does it need to be more than that?

[A]

The response on rare earths has to be comprehensive because it's not. We're focusing on reserves and that's not the problem. The US Actually exports rare earths to China. The problem is refining. And the Australians own the largest refiner outside of China. It's actually based in Malaysia, but it's owned by an Australian company. They've put money into it. They have experience in it. That's where we need to work with them on. And of course, we also have to do work on our side. So the rare earths problem is broader than just mining. And then unfortunately, there are also problems beyond rare earths.

[B]

So let's talk a little bit about those problems, especially given the fact that trade is very much in focus here. And we had reports over the weekend that China's rare earth exports fell in September versus August, but also that China has not been importing any Soybeans from the U.S. at least last month, the first time in seven years that we saw that number fall to zero.

[A]

Right. There are a lot of issues in U. S. China trade and it's a lot to sort out. In the short term, I think things are a little bit more optimistic perhaps than people think. I don't think the Chinese are ready to impose their controls on products that use Chinese rare earths or Chinese refined rare earths. So I think they'd be willing to delay. You could probably strike a deal where the US has to give China something, which is something President Trump doesn't seem to want to do. But you could get a rare earth delay and you could get a resumption of soybean exports from the US To China. He has to give up something. This doesn't change the longer term problem. The Chinese are not. Even if they delay implementation of their controls on rare earth products, they're not going to stop building up that mechanism. They're not going to stop at rare earths. They could move on to find chemicals that are used in drugs that are demanded all over the world. There are plenty of supply chains China can mess with. The short term, I think you can make a deal. The long term, the US Has a really serious challenge across a broad range of supply chains.

[B]

Okay. How quickly can the US Actually counter with some of these different supply chains?

[A]

Well, this is where I think working with our allies is really important. We can certainly Act. We're already acting on rare earths. We can take other actions. We're very rich. We have a lot of mineral reserves in the United States and in North America. That's all great. But to move quickly, as you said, we friends are going to help. The Australians can already help us on rare earth. So let's use their help, maybe move on to another product. There's Japanese technology. The Japanese have been faced with the rare earths embargo from China before. There are resources in Canada. There are resources around the world. So this is a challenge to the Trump administration. I don't think so much in the short term, but their long term policy where they've really been thinking about trade balances and tariffs rather than supply chains. The Chinese have reminded them the US has the advantage on tariffs, but China has the advantage on supply chains.

[B]

What do you make of this abrupt dismissal of the trade official in China that Treasury Secretary Bessant called out?

[A]

Yeah, I mean it's, sorry, I find it a little bit amusing which is not fair to this official or his family. But the Chinese dismissed so many officials for so many reasons. There seems to be an ongoing 14 year purge that it's hard to tell. Maybe he'll be reinstated soon. It's just an unnecessary irritant. I think the Chinese also think, hey, we can get a short term deal with the US if this is a problem, why not get rid of it? We can always bring him back next year.

[B]

A number of years ago the Data had leaked 2027 as a year that China was working towards to be able to be self sufficient in such a way that it could retake Taiwan if it wanted to. That number has continued to stay out there and flow out there. I don't know whether whether there's credibility to it at this point or not, but given the fact that China is having this five year plenum strategy session or I guess four years to lay out what, what the end of the decade looks like. Is that a number or is that a strategy that folks should be taking into account here? Especially as we do see defenses and militaries building up on both sides.

[A]

I absolutely think people should be taking this into account. It has been a long term, Eunice, and you talked about it earlier. Long term strategy for China has been to build up their production capacity, especially in advanced technology. It hasn't been to build up consumption. Why do you want that production capacity? So that you can tell other countries, hey, do you need China to make things well, you better cooperate. What's the number one goal, cooperate on Taiwan. Do I think 2027 is some crucial pivotal year? Not necessarily. Could be 2029, could be 2030. But there is a long term Chinese strategy to build up their production capability. It harms their economy in a lot of ways, as you two discussed, but it is working. They are becoming more important in the world globally, which means that they can exert more coercive pressure on the United States and other countries when their interests are challenged, such as over Taiwan.

[B]

And this is part of the reason we hear about this arms race and how this is a geopolitical issue as well. Derek Scissors of aei, thank you for joining me. Still ahead, we're going to turn back to rare earths. We're not done there. William Blair initiating this name at outperform. Shares already up nearly 84% over the past month. But analysts see more room to run. We've got that next. And we're watching Cleveland Cliffs if we stick with the miners here. Shares jumping as much as 20% after the CEO said on the earnings call that they're considering building a rare earths mining business after surveys found those minerals at two of their sites. Those shares are up 17 and a half percent right now. They also had earnings this morning. Exchange will be right back. Welcome back. Shares of USA Rare Earth, that was our mystery chart. It's popping today after William Blair initiated coverage, it outperformed. While the company has not yet generated any revenue, like other rare earth players, analysts see long term growth indicators. The shares are up 9% right now. Here to discuss is William Blair's Neil Dingman. Neil, it's great to have you on and let's start right there. Why are you so bullish on this name if they're not even generating revenue yet?

[A]

Thanks for having me. What I would say is like when you look at now, what gives us the confidence in the trade is that no matter what scenario we run, unless kind of like your previous guest was talking about, unless the US And China go back to the way things were, the government is going to have to nationalize what I think is a wartime effort in these industries. And US Financial institutions are also likely going to help. So I think what people are missing, if you're looking at these rare earth names like USA are and taking the traditional methods of value, it doesn't, doesn't make any sense right now because we've never been here before and I guess if we had, you'd have to go back all the way to 1940. So I just don't think the type of method, valuation methods we're accustomed to today is applicable.

[B]

Got it. Arsenal of democracy. We're going back to the 1940s and standing up these supply chains with a wartime effort. Certainly hearing that word, that term used quite a bit in defense circles these days. Ok, so if traditional valuations don't work here, what does? How do you get to the numbers?

[A]

You get to think you have to look at the long term DCF on these. Again, as you said, they're very pre revenue. When you look at a company like USA are, I've been out through their facility now a couple of times in, in Oklahoma and you can tell they are going to start producing potentially before the end of the year. They can bring on one, two, maybe even three or four lines. They have potential to expand that. So that's number one, it's as your prior guest said, the big bottleneck is in the magnet production here in the US and so fortunately this company is going to start cranking that up potentially before the end of the year. And then secondly they've got a big mine, the Round Top Mine in Texas. Again that's probably a bit further off again than the magnet factory. But again when you look at both of these and start looking a year or two down the line, there's going to be some sizable, not only revenue but cash flow associated with these.

[B]

Thing about mining is you have to have a good operating team in place. You need to be able to get, get those materials out of the ground in a cost effective way to then be able to refine and produce them. Right. So how are you thinking about the economics whether it's USA Rare Earth or whether it's some of the other names that are forging ahead into this space when historically it's been very hard to compete against the likes of China.

[A]

That's right. I mean they've, they've brought in a new team to do that. So again your point is right, it's going to all be about the cost to bring out of the ground. That's something they're studying. Again, that's why they're taking kind of a wait and see. I mean I think if they would jump in just immediately, I think their cost would be too high. And so again a company like USA are, that's why the focus initially is going to be on producing the magnets. They'll outsource, you know, the raw materials and you can do that right now from, as you mentioned, Australia. There's a company in Australia they're looking at, there's other sources that they can bring that raw material. And so at least for the time being, I think they're going to step back, bring in the raw materials from other places just so they don't run into the issue that you're referring to, that the mining side is certainly the potential to have the most cost overrun. So I think companies like USAR or another one like this US Antimony that we initiated as well, both are taking a bit of a wait and see on the mining side and really focusing on that refining side.

[B]

Okay. Neil Dingman of William Blair, thanks for joining me.

[A]

Thank you.

[B]

Well, coming up, Wall street cheering, cheaper drugs farmer stocks are higher because Pfizer became the first company to agree to lower the cost costs of some medications with health care, a key sticking point amid the government shutdown. We're going to hear from Main street next. And as we had to break, stocks are at session highs across the board. As you can see right there on your screen with it looks like the s and P500 up 1.4%. We'll be right back.

[A]

I'm not going anywhere, right. I got all the money I need. The idea of me, I mean, screwing up the healthcare industry, that's better than putting your name on a building. That's better than anything else because there's nobody in the history of everybody in this country who likes the way the cost of health care is and the cost of medication.

[B]

Well, that was billionaire investor and entrepreneur Mark Cuban talking about disrupting health care in a CNBC exclusive from the Health 2025 conference in Las Vegas. Cuban also says he is working with the Trump administration to help lower drug prices. And CNBC's latest survey shows the high cost of health care is a key issue for Americans. Steve Wiesman joins me now to dig into those survey findings. Steve.

[A]

Cuban's not exactly right. Our survey finds 62% of the public says they are satisfied with their ability to obtain quality health care, including majorities of those who are private and government government health insurance, but especially Those Medicare recipients, 81% of seniors and 78% of Medicare recipients say they're satisfied with their access to health care. That compares. It goes down 60% of those on private insurance, 55% for working class Americans and 46% that's the low there for women 18 to 49. Key in that childbearing years, one third of the sample of 1,000Americans we surveyed nationwide report that they or a family member put off health care because they could not afford it. Cuban's right in that regard. That includes 59% of women 18 to 49, compared with 22% for women 50 and over. It's 34% for Democrats and even 25% for Republicans. A big gap here with 42% for the working class say they have skipped a medical treatment, compared with just 15% for the wealthy Democrats. Leading Republicans 45 to 27 on which party would do a better job reducing health care costs. 19% say neither. Republicans. They hold a 39 to 24 advantage on which party is best to control overall government spending. 29% say neither is any good at the job. 57% of the public say it's the responsibility of the government to provide health insurance to all Americans, with 41% saying it's not. The majority includes 90% of Democrats, 58% of Republicans, of independents and 24% of Republicans. And Morgan, that's why we have a shutdown.

[B]

Gosh, is exactly where I was going with you. November 1st you got the start of open enrollment for health insurance. And so that data is sort of circled in the calendars. Maybe, maybe we start to see an off ramp to the shutdown and the gridlock around it because of that. In light of that, how much are health care costs continuing to factor into what we see in CPI every month?

[A]

It's a big factor, especially when you have the inflation going up and insurance, Medicare inflation going up and insurance going up. So, so I'm not exactly sure what the weighting is, but it's a part of the pressure that families feel as these prices go up, as insurance goes up. What's interesting is our survey shows it and other surveys as well show people think the health care system is a mess, but they're okay with the actual coverage and quality of care that they're getting with their individual doctor. People look like they answered this question individually, not necessarily for the system as a whole. So it's very interesting to kind of see this issue. What's clear is politically you can't mess with Medicare because the seniors are relatively happy and people 60% are relatively secure with their or happy with their current situation. So it's the 40% that are the swing here.

[B]

Super interesting. Steve Liesman, thank you. Coming up, Boeing down about 12% since the Alaska Air door plug blowout back in January of 2024. Well, a recent vote of confidence from the FAA though be the boost that the planemaker needs. That's next. Welcome back to the Exchange. Boeing shares are higher after the, after the FAA gave it the green light to increase 737 max production after being capped for nearly two years. Phil LeBeau joins me now with the details.

[A]

Phil Morgan, this is an approval from the FAA that's been expected for some time, but the official announcement on Friday afternoon. Well, this is welcome news for Boeing investors And here's why. 42 per month is the new rate for 737 Max production, up from 38 per month. It's the highest rate since late in 23, right before the Alaska Airlines plug blowout. The backlog now of Max orders, it stands at almost 4,350 aircraft. And that should come down in time as they do further increases in the future. That's the expectation. Whether they go to 47 and 26 or shortly after that and then ultimately to 52 per month. That's the goal for Boeing. What will happen with MAX deliveries? Well, Cerium has an estimate that this year deliveries will top 449 maxs delivered and then steadily increase over the next three years, provided that max production increases over the next couple of years. And while this is certainly good news for Boeing, keep in mind they got three big question marks out there that are crucial to the future of increasing earnings as well as free cash flow. You've got the 737 Max 10 and Max 7 certifications which are expected to happen next year, but they've been bedeviled by this engine anti ice system that they have not been able to get certified by the FAA. And then you've got the 777X which is long overdue. So as you take a look at shares of Boeing, yes, this is welcome news for investors. Keep in mind that getting the free cash flow positive in the fourth quarter, which Kelly Ortberg says they will do, or that's his expectation was the last time we talked with him. They will be reporting their financials next week. And at that time we'll get an update from Kelly in terms of free cash flow expectations as well as the Max 7, Max 10 and the Triple 7X. Those are three big question marks that are out there.

[B]

Yeah, and of course, in the meantime, tomorrow we start getting aerospace and defense earnings, including GE Aerospace. So maybe some, some previews ahead of that as well. Quickly, Phil, because we have less than 45 seconds left here. FAA reporting that air traffic control staffing issues are delaying travel. I experienced it firsthand late last week. How acute could this become?

[A]

Depends. I mean, you could see if you get a number of controllers who call out sick at certain areas, Washington, D.C. new York. I mean, that's they're already understaffed. It won't take much to really make a huge issue out there. You've run into issues, I've run into issues. I don't know anybody who's flying who hasn't run into issues. Oh.

[B]

Makes me feel warm and fuzzy inside. Phil LeBeau. Thank you.

[A]

You bet.

[B]

Well, we have major averages here. At session highs, the S and P is up 1.1%. 6739 is your level there. That does it for us here. Thanks for watching the Exchange. Power Lunch start. You've been listening to the Exchange.

[A]

Make sure you're subscribed to get each.

[B]

Episode every day, same time, same place.