CNBC @ Cboe: Live from Chicago 6/25/26

Summary

Podcast Summary: CNBC @ Cboe – Live from Chicago 6/25/26

Podcast: The Exchange (CNBC)
Date: June 25, 2026
Host: Kelly Evans (with Brian Sullivan)
Location: Cboe (Chicago Board Options Exchange) Floor, Chicago

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Overview

This special episode of "The Exchange" is broadcast live from the Cboe trading floor in Chicago, focusing on the state of U.S. markets, the evolving role of options and derivatives trading, the future of prediction markets, and Chicago’s unique economic landscape. The program features interviews with major financial figures, real-time market analysis, and in-depth conversations about investment strategies and regulatory changes shaping the market.

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Key Themes and Discussion Points

1. The Vibrant Cboe Trading Floor and Market Structure (00:44–05:18)

• Physical Trading Still Matters:
  Oliver Renick walks through the still-bustling Cboe floor, debunking the myth that everything is now handled by algorithms.

  • "This is the last standing bastion of physical trading in a world that generally people think has been taken over by algos. But as you can see, it’s not the case." (Oliver Renick, 02:58)
  • Analogy: Floor trading likened to a combination of a loud insurance market and a big poker room.

• Order Flow Primer:

  • Orders, especially large or complex ones, often require human interaction for speed and accuracy that computers can't always match.
  • Interactive Brokers, Citadel, and other major trading firms have boots on the ground at Cboe for this reason.
  • "There are certain trades, either too big of trades or too complex of trades, that it's faster and easier to talk to the guy who's right across from you to shout it across the room." (Oliver Renick, 04:54)

• Retail and 'Pro-tail' Investors:

  • Increasing participation by experienced non-institutional traders handling significant accounts.
  • Reference to retail using options as a kind of 'GoFundMe,’ referencing recent meme stock activity.

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2. Value Investing in a Speculative Era—Interview with Bill Nygren, Oakmark Funds (05:25–11:43, 13:15–13:45)

• Contrarian Approach:
  Bill Nygren emphasizes buying companies at discounts to intrinsic value, favoring less popular stocks with strong cash flows over hyped AI/tech names.

  • "What we've done for 50 years is buy companies when we think they're selling at large discounts to intrinsic value…what we're hearing from clients now, which is unusual for us, they want to know why we've decided to not own the things we don't own.” (05:55)

• Undervalued Stocks:

  • Names like Global Payments (trading at five times earnings, heavy buybacks) and Salesforce (double-digit free cash flow yield, substantial buybacks) are favored.
  • “There are lots of stocks in the market today that are under 10 times earnings that you don't even have to believe their average businesses to make a substantial increase in the price.” (Bill Nygren, 06:50)
  • Salesforce seen as both undervalued and a potential AI beneficiary.

• General Motors (GM):

  • Praises GM for adapting to changing EV demand and focusing on customer needs.
  • “GM has been very good at listening to the customer and not driving an agenda that they think is appropriate, but listening to the customer and providing what the customer wants. The stock trades at about 6 times earnings. If it goes to 8 times, it's a really good company to own.” (Bill Nygren, 09:20)

• Market Cycles and Speculation:

  • Parallels drawn to the dot-com era: "Investors think this is really easy and the stocks that are going up just keep going up…What's different is it's larger companies, they are creating more in earnings, their earnings are growing and the question becomes how sustainable is it?" (Bill Nygren, 10:47)

• Can You Do Well Without Tech?:

  • "Absolutely." (Bill Nygren, 11:36)

• Chicago Stock Stand-Outs:

  • Names like GE Healthcare and lessons about investor behavior and value flows.

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3. The Evolving Role of Options & The Rise of Prediction Markets—Interview with Craig Donohue, CEO of Cboe (16:06–24:47)

• Options Market Growth:

  • Record volumes, with nearly 70 million contracts daily and increasing retail sophistication.
  • Cboe floor remains integral for both large and complex trades.

• Risk Transfer & Insurance:

  • “These are insurance markets…We're allowing people to protect their investments, to hedge, to transfer risk. That's fundamentally what we do.” (Craig Donohue, 18:23)

• Speculation vs. Hedging:

  • Acknowledgement that speculation is a necessary part of healthy risk transfer.

• Prediction Markets Innovation:

  • Cboe introduces 'event contracts'—binary and vertical spreads on indexes (e.g., whether S&P hits a certain level).
  • Plans to file with the SEC to create contracts based on company KPIs, letting investors bet on specific performance indicators, not just price.

Notable quote:
"We're not interested in prediction and event stuff related to sports or what you think of as like gambling and gaming... What we're interested in are short-term event-driven things that relate to securities, economic events, financial events, things that people can express an intelligent opinion on."
— Craig Donohue (20:11)

• Synergy with CME:
  • Friendly competition/partnership with fellow Chicago-based CME; business models and products increasingly overlap.

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4. Market Reaction: Inflation, Interest Rates, and the Yield Curve (27:05–39:04)

A. Rick Santelli on Inflation and Rates (27:25–31:14)

• Bond market unimpressed by latest core inflation data; considers new data “old news.”
• "The bond market didn't shrug. Bond market's pretty smart. It didn't pay a whole lot of attention to these data points because they're old." (Rick Santelli, 27:36)
• Focus is on when the yield curve will steepen again, especially watching 10-year vs. 2-year yields (28:37).

B. Market Betting Segment—Fun with Cheeseburgers (29:03–31:20)

• Follows up on previous on-air bet about oil prices; Rick Santelli wins, prefers White Castle sliders, leading to a light-hearted real-time segment.

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5. Chicago's Financial Landscape—Interview with Mike O’Grady, CEO of Northern Trust (33:27–40:30)

• Chicago Advantage:

  • Northern Trust has nearly $2 trillion AUM, thriving due to market strength. CEO attributes success to Chicago’s rich talent pool, connectivity, and cultural vitality.
  • "Chicago is a magnet for the whole Midwest. Any kid that graduates from one of the schools in the Midwest wants to start their career in Chicago." (Mike O’Grady, 35:48)
  • “You need a yield curve and you have a yield curve right now. Banks struggle...when you have an inverted yield curve.” (37:17)

• Rates and Regulatory Outlook:

  • Discussion of how a steeper yield curve is healthy for banking.
  • Regulatory liquidity and capital are crucial; recent stress test results signal the system is robust.
  • O’Grady urges a 'growth mindset' for Chicago’s future: "We need to focus on growth. It has to be a growth mindset. Everything as it relates to how do you grow and then make sure that that growth and the benefit, that prosperity is shared." (39:48)

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6. Live Market Pulse and Trading Floor Insight (41:28–44:00)

• Micron Steals the Show:

  • Major focus on Micron’s 17% single-day gain after a huge earnings beat.
  • Options market positioned for a 10% move, actual was much larger—evidence of the unpredictable nature of earnings reactions (03:43–04:09).

• Trader View from the Pits:

  • Paul Aronson (Optiver) on the semis/AI trade, Micron positioning, and anticipation for the next big theme:
    • “The great thing about trading is there's always the next one, right?” (Paul Aronson, 43:36)

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7. China EVs vs. U.S. Market—Phil LeBeau (44:00–47:48)

• Polestar Shut Out:

  • Trump's administration bars Chinese auto imports for 2027, with Polestar specifically banned; the firm to focus on Europe.
  • "We are an island, increasingly we are an island when it comes to Chinese vehicles relative to the rest of the world." (Phil LeBeau, 46:12)

• Implications for U.S. Carmakers:

  • Competitive pressure relief for GM and Ford (praised earlier by Nygren); concern about long-term global competition if U.S. market remains isolated.
  • Chinese automakers’ state support is a decisive factor.

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Notable Quotes & Highlights (with Timestamps)

• On Floor Trading:

  • "This is the last standing bastion of physical trading...Best way to think about this floor is something between a giant and very loud insurance market and a big poker room." — Oliver Renick (02:58)

• On Value Investing in a Speculative Market:

  • "The companies that we own are cheap. They generate a lot of cash flow and they're taking things into their own hands by redirecting radically the cash flow they generate into share repurchase." — Bill Nygren (07:23)

• On the Options Market as Insurance:

  • "Basically what we're doing is we're allowing people to protect their investments, to hedge, to transfer risk. And that is fundamentally what we do." — Craig Donohue (18:23)

• On Prediction Markets' Utility:

  • “You can’t have hedging without speculation because if there’s no speculators, who’s going to hedge?” — Craig Donohue (19:15)

• On Chicago’s Business Mojo:

  • “Talent number one. Chicago is a magnet for the whole Midwest.” — Mike O’Grady (35:48)
  • “We need to focus on growth. It has to be a growth mindset...and make sure that growth and prosperity is shared.” — Mike O’Grady (39:48)

• On Trade Flow and Trader Behavior:

  • “The great thing about trading is there's always the next one, right?” — Paul Aronson (43:36)

• On Barriers to Chinese EVs:

  • “We are an island, increasingly we are an island when it comes to Chinese vehicles relative to the rest of the world.” — Phil LeBeau (46:12)

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Timestamps for Major Segments

• 00:44—05:18 | Market floor intro, how Cboe operates (Evans, Sullivan, Renick)
• 05:25—11:43 | Bill Nygren (Oakmark) on value investing, market psychology
• 13:15—13:45 | Follow-up: Chicago stock standouts, Nygren on GE Healthcare
• 16:06—24:47 | Craig Donohue (Cboe CEO) on options, prediction markets, industry trends
• 27:25—31:14 | Rick Santelli on inflation, rates, oil bet segment
• 33:27—40:30 | Mike O’Grady (Northern Trust CEO) on Chicago’s advantage, business climate
• 41:28—44:00 | Live options trading insight (Paul Aronson/Optiver), focus on Micron
• 44:00—47:48 | Phil LeBeau on Chinese EVs, Polestar, market impact

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Overall Tone and Dynamic

The episode blended technical insider knowledge about options and market dynamics with the lively banter and camaraderie of a live trading floor. The hosts kept the energy high, mixing humorous moments (White Castle burger bets) with serious, nuanced discussion about market structure, valuation, and policy. The broadcast showcased Chicago’s vital role in American finance and provided an inside look at both the people and processes driving the markets forward.

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For listeners seeking insight into the current state of the markets, the evolution of trading instruments, and the interplay between value investing and high-flying speculation, this episode delivers authoritative perspective—from the heart of America’s trading action.

Transcript

[Brian Sullivan]

I want to grow the game of

[Bill Nygren]

soccer and give every kid the chance to play. What would you like the power to do?

[Kyle Martino]

Bank of America champion street soccer advocate Kyle Martino and is proud to be the Official bank of U.S. soccer and FIFA World Cup 2026. Bank of America NA member FDIC trading

[Schwab/Ameritrade Announcer]

at Schwab is now powered by Ameritrade, bringing you an expanding library of education with even more ways to sharpen your trading skills. Access new online courses, insightful webcasts, articles, engaging videos and more, all curated just for traders. Plus guided learning paths with content designed to fit your unique interests and no sifting to find exactly what you need so you can spend your time learning to trade brilliantly. Learn [e-mail] trading you're listening to the Exchange.

[Kelly Evans]

Here's today's show. Thank you very much, Scott. And live from the iconic city of Chicago from the CBO trading floor, home of market makers and traders carrying on a tradition here. It has lasted for more than five decades and is now where we see some of the most innovative products in the market. I'm Kelly Evans along with Brian Sullivan. He's way behind me back there in the pits with the traders. Brian, we'll see you in a second. We're all glad to be here. What better welcome for cnbc, by the way, than this? Wrigley Field, home of the Cubs. Thank you for this incredible welcome to the city of Chicago. We'll talk more about their city's whole array of sports teams. Brian, later this hour.

[Brian Sullivan]

Yeah, it's amazing. And you know, Kelly, I'm married to a Chicago. And so that Wrigley Field sign, I love it very much. So look at all these people back here. This is still a massive part of the trading process. One of the most important exchanges in the entire world. A lot of the stuff you may buy or sell or want to buy or sell comes through here. And we have got a huge show coming up from Chicago over the next two hours. Look at this lineup. Chicago Fed President Austan Goolsbee, John Rogers, Ariel Investments. The CBO CEO, Craig Donahue. Hey, this is his house. So everybody back there, you better behave. Mike. Michael o', Grady, CEO of Northern Trust, Bill Nyeger of Oakmark Funds, and maybe a few surprises all along the way. It is going to be a fun and big two hours. All right, so we know this. The CBO formally welcomed CNBC to their trading floor earlier this year because we got this tall drink of water here from Virginia, Oliver Renick. He has been part of the action since day one. Here he is. And great to have you guys. Great to have. We got by the way, three high school Virginians here. That's right, Winchester, Warrenton and Lexington.

[Oliver Renick]

The 5:4:0 party. Another way to put it.

[Brian Sullivan]

So first, before we get into all the days action today we got Mike, Rob, we got a lot of stuff going on. What's it like being here? Because this is so critical, the men and women that are here, this is still so critical to the way the financial markets operate.

[Oliver Renick]

Yeah, it's amazing. The first thing that you realize is that there's no other place like it in the world. Literally. This is the last standing bastion of physical trading in a world that generally people think has been taken over by algos. But as you can see, it's not the case. The best way to think about this floor is something between a giant and very loud insurance market and a big poker room. Most of what's happening behind you is big institutional market makers generating income by selling options. Now as we know, the price of insurance though can change very quickly. Like today we talked about Wendy's. People know about what happened with GameStop.

[Brian Sullivan]

All the Reddit thing.

[Oliver Renick]

I mean, yeah, big part of it.

[Brian Sullivan]

Wendy's. Wendy's is now the Wall Street BET stock.

[Oliver Renick]

That's right. Save the spicy baby.

[Brian Sullivan]

Didn't get a frosty reception.

[Oliver Renick]

What's amazing about it is that people think some of that stuff sounds far fetched. But really what people have done, retail traders, they're using the options market as a big GoFundMe. Basically that's what they do with GameStop. And if you think it sounds wild, Micron this morning is right now up 15%. Yeah, the pricing of the options last night going into that report, we're looking for a 10% move. These are the smartest guys in the business and they were looking for a 10% move. Word, we went double that.

[Brian Sullivan]

If you want to know something about how the markets move, these the people that you talk to. And by the way, we got a lot to do very quickly. How does the order flow? So people at home, our viewers and listeners, they put an order in S and P options. What it comes in on the side, here's where it gets executed. Give us a little primer on how this actually works.

[Oliver Renick]

Great way actually to think about it is the guys right behind us from Interactive Brokers because a big part of the options community is what we call pro tail investors. These are people who have had other jobs but now they're permanently trading. They've got accounts that are hundreds of thousands to maybe up into the millions. And they're using platforms like interactive brokers. Order comes through a lot of the big money from New York. The institutional flow finds its way into here. We got Citadel here. You got Optiver, you got over there.

[Brian Sullivan]

James street firms in the world, 100%.

[Oliver Renick]

They've got offices in the building. But there are certain trades, either too big of trades or too complex of trades, that it's faster and easier. And to talk to the guy who's right across from you to shout it across the room to signal a bye. Earlier, somebody said it's the worst bid I've ever heard. It's a terrible bid. You can't tell that to a screen.

[Brian Sullivan]

By the way, Kelly, we're gonna send it back to you. I think we would have been great at this full time. You know why? It helps to. I'm not kidding. Helps to be tall.

[Kelly Evans]

Yes, it does.

[Brian Sullivan]

Loud and not afraid to make a scene. And that describes, I think, all of us. How you doing over there, Kelly? We see you.

[Kelly Evans]

Perfect. Yeah, look, I'll put up my hand so they can see where I am. And we'll get more on those little hand cues later. I'm working on my put in calls. Oliver and Brian, thanks. Our first guest today joins us from Harris Oakmark, a firm whose roots in Chicago go back 50 years. And he has been making some provocative and contrarian bets in the market this year. Bill Nygren is a Partner Co CIO at Harris Oakmark Funds, which manages tens of billions of dollars in assets. Bill, seriously, thank you for coming in the midst of this melee and meeting us here. We really appreciate it.

[Bill Nygren]

Thanks for having me.

[Kelly Evans]

You have some points that I think are so much of our audience would love to hear me say. Why are we worrying about colonizing Mars when we could be looking at whether a stock that trades at five times should go to seven times? And that's really where your bread and butter is. You're leaning against so much of what's happening. Micron up 16% and everything that's happening in the market today. And where are you placing your bets?

[Bill Nygren]

Well, at Harris Oakmark, what we've done for 50 years is buy companies when we think they're selling at large discounts to intrinsic value. Those tend to be companies that are out of favor that there isn't much interest in. And what we're hearing from clients now, which is unusual for us, they don't want to talk about the names that are in our portfolio. They want to know why we've decided to not own the things we don't own.

[Kelly Evans]

Right. And when I say names or the semis are 20% of the S and P right now, Micron's market cap was higher than, I mean it's hard to fathom.

[Bill Nygren]

And when I say, you know, Global Payments is selling at five times earnings, producing enough cash flow to buy back 30% of their stock in the next two years, the next question is about, you know, what we think of semiconductors. And there are lots of stocks in the market today that are under 10 times earnings that you don't even have to believe their average businesses to make a substantial increase in the price.

[Kelly Evans]

Are they going to re rate? Is the, does the market have to turn? I mean does, does the trade have to collapse for people to start looking at the things that you own and thinking they need to go up in value?

[Bill Nygren]

Well, I don't really think so. It's like it's two different worlds. The, the people who've invested in AI have made a lot more money than we have. But the companies that we own are cheap. They generate a lot of cash flow and they're taking things into their own hands by redirecting radically the cash flow they generate into share repurchase.

[Kelly Evans]

Let's talk about one of those companies on the screen right now, Salesforce, a hugely controversial stock. Why do you see so much promise in this name?

[Bill Nygren]

Well, like, like the other companies we own that are at low ps Salesforce is selling at a double digit free cash flow yield and they are radically redirecting that cash flow into share repurchase. They have an authorization outstanding now to buy back, I believe it's about 20% of the company. And we don't think they're done growing. When you talk to Salesforce Management, they believe there'll be an AI beneficiary.

[Kelly Evans]

Yeah. Another stock is. Brian joins us up here on set. He's, he's made his way through the pits. Brian, when's the last time someone came on and told us that General Motors was a hot name on there? I mean this is a name and Bill, you know that Bill says is it should be higher than it is.

[Brian Sullivan]

Well, you know, it's a great day I think first off to have Philip, I shouldn't say we have Philippe here because we're actually in his town. But he knows more about Mary Barra. But I think what Mary Barra and her team at GM are doing has been tremendous. You know, they realized that customer demand for EVs maybe wasn't what they thought it was going to be. They listened to the customer and they pivoted. They, I think gm, one of the biggest automakers in the world, I think exhibited the nimbleness. Bill, comment, yes or no, of a smaller company. And I mean that as a, as a complement to how their team has reacted. And I think investors and your clients have been rewarded.

[Bill Nygren]

Yeah. And based on Phil's earlier report, I hope GM is doing enough with their cup holders to keep, to keep customers

[Brian Sullivan]

we like, couple we got. You know what I mean?

[Bill Nygren]

Fellow Michigander.

[Brian Sullivan]

There you go.

[Bill Nygren]

But yes, I think GM has been very good at listening to the customer and not driving an agenda that they think is appropriate, but listening to the customer and providing what the customer wants. The stock trades at about 6 times earnings. If it goes to 8 times, it's, it's a really good company to own and they're buying back a lot of stuff.

[Brian Sullivan]

One thing Phil is going to talk a little bit about China and if Chinese EVs, and I think the White House today was kind of trying to put the kibosh on that, but if there was the threat of that in the United States, would that change your investing view on a gm?

[Bill Nygren]

I think the auto industry for a long time has benefited from somewhat of a protected environment. I think for national security. They view having a healthy auto industry as an important thing. But the auto industry would have to change its cost structure a lot in the US if it was going to compete with Chinese imports, if there weren't tariffs.

[Kelly Evans]

So when you look at the trade, if we could just call it that broadly, we could separate the Mag 7, which are struggling a little bit more from the chip names and the memory names. But you've seen many, many cycles like this. You've seen dot com, you've seen the housing bubble, all of these kinds of things. Just how are you, how would you describe what's happening in the markets? Because look at Micron's earnings, look at their earnings forecast for next year. It's tripled from where we thought. So there's real, this is, this isn't pets.com but how would you describe it?

[Bill Nygren]

I think behaviorally there are a lot of similarities to what was going on 25 years ago in that investors think this is really easy and the stocks that are going up just keep going up. I think what's different is it's larger companies, they are creating more in earnings, their earnings are growing and the question becomes how sustainable is it? Back in the dot com era, you had to believe these companies, companies that weren't profitable were going to become profitable today. You have to believe the companies that have had a very cyclical past and trouble maintaining earnings are going to continue earning 80% margins. We're not saying they're overpriced. We're just saying that's not an easy bet.

[Kelly Evans]

Do you think it's possible and probable that you can do well without being overinvested in tech right now?

[Bill Nygren]

Absolutely.

[Kelly Evans]

All right, Bill, thanks so much for making the time and joining us here to kick things off this afternoon. We really appreciate it.

[Bill Nygren]

Great, thanks for having me.

[Kelly Evans]

Bill Nygren, I might ask you to

[Brian Sullivan]

comment on what I'm going to do now. So can you sit tight for about two seconds?

[Bill Nygren]

Sure.

[Brian Sullivan]

Right. Where are you going anyway? We're not letting you out.

[Keith Landsford]

All right.

[Brian Sullivan]

One cool thing about being in Chicago is our exclusive ability to look at how Chicago area stocks are doing its other cities. We do that with our Power City index is equally weighted baskets of the 12 largest market cap stocks in 38 different city and metro areas. Now as a whole, Chicago, we love you, but you've not been hot. There have been some decent gains in shares of W.W. granger, Mondelez and all Allstate. But this year they have been negated by losses in Abbott, GE Healthcare and CME Group. Now on average the Chicago PCI is basically flat this year. But while the Chicago Power City index has not done so great in 2026, there are some red hot stocks in this city. A broad shoulders Here are the top five performing companies in the whole Chicagoland, not just downtown Chicagoland, Complex number one Method Electronics. They've been working on their data center strategy. Companies very old in the auto industry but they're pivoting. And that stock up 154% in a year. Those gains they're followed by Itasca based Knowles Little Fuels, which is by the way headquartered out by O' Hare Airport. Commercial aviation company Air, also based on next to O'. Hare. And the fifth best stock, CTS Corp. It is a 130-year-old company also based in the burbs. None of those five big enough to be in our Power City index. But Bill Nygren, you're still here. Do you own any of the names that we just mentioned?

[Bill Nygren]

GE Healthcare.

[Brian Sullivan]

Okay, well it hasn't done great this year. Are you adding to it though? It's weak. If you like it, maybe it's cheaper.

[Bill Nygren]

Now we would love to add to it but the behavioral problems I talked about before, people aren't anxious to add investments to their value investment managers. We think it's a great idea, but they tend to follow what's been working well most recently. So we aren't getting cash flow in to make those additions.

[Kelly Evans]

But if you were, this would, this

[Bill Nygren]

would be something we'd be very interested.

[Kelly Evans]

One of the many possibly on the list. Bill, thanks again. Good to see you. Bill Nygren, Our CNBC at the CBO special is just getting started. Coming up, Chicago Fed President Austan Goolsbee, the market eager to hear from Fed voices after Chairman Marsh cut the statement way short in his first policy meeting last week.

[Brian Sullivan]

But first, we are in his house. The CEO of the cbo, Craig Donahue is here. We'll talk stocks, we'll talk prediction markets. We'll talk more as CNBC at CBO continues live from Chicago.

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[Tyler Adams]

you never forget your first fan.

[Kelly Evans]

So how was practice, kiddo?

[Tyler Adams]

My mom inspired me to dream big and ask myself, what would you like the power to do? My answers helped me become the soccer player I am today, trusting my instincts and stepping onto the pitch without fear.

[Kyle Martino]

Bank of America champions U.S. men's national team member Tyler Adams and everyone who dares to ask what would you like the power to do? Bank of America proud to be the Official bank of U.S. soccer and FIFA World Cup 2026 bank of America NA

[Schwab/Ameritrade Announcer]

Member FDSE trading at Schwab is now powered by Ameritrade, bringing you an expanding library of education with even more ways to sharpen your trading skills. Access new online courses, insightful webcasts, articles, engaging videos and more, all curated just for traders. Plus guided learning paths with content designed to fit your unique interests. And no sifting to find exactly what you need so you can spend your time learning to trade brilliantly. Learn [e-mail] trading.

[Brian Sullivan]

That is a very, very cool shot. Literally, the building that we're in right now. Well, the options market has seen rapid growth, record trading volumes and the rise of both new and innovative ways to trade. Average daily US options volume hitting nearly 70 million contracts in the first quarter. That's a new record and putting the market on pace for more than 17 billion contracts traded by year end. In the meantime, the derivatives landscape also expanded. Investors like you out there watching or listening can now bet on almost anything as the prediction markets also continue to grow. So what else may be ahead as all of this continues to grow and evolve? Let's find out. With us now, CBO CEO Craig Donoghue. Craig, first off, thanks for having us in your house. Appreciate it.

[Craig Donohue]

My pleasure.

[Mike O'Grady]

Welcome.

[Craig Donohue]

We are so excited, excited to have CNBC on the trading floor.

[Brian Sullivan]

Yeah, and it is, we, we tried, I think, to tell the story. People think everything is computer. The women and men that are here so critical explain to our audience the importance of this, what they're seeing right now.

[Craig Donohue]

Well, this is a hugely important part of our business. And you're right, I mean the whole industry has transformed much more toward electronic trading. What you see here is sustainable. This continues to be a growth engine for our business. You know, and you can't just look at it just in terms of the activity on the floor. You have to look at it. You know, all the large institutional orders come here and that drives more business into other of our products. So there's knock on consequences. The floor is hugely vital. It's an important part of who we are and it'll continue to be as we continue to grow and expand.

[Kelly Evans]

As I was chatting with people down here, they were expecting, explaining, look, there might be mega institutional four part trades that need to be paired off and executed at the right price. This is not the same as it is at the New York Stock Exchange or something like that, where even though the equities here has gone electronic for the most part, that piece is harder to replicate. You know, there was a time after the financial crisis, the derivatives was much more of a dirty word. Now it seems that this area has grown even more as a vital part of the markets. This behind us, this S and P. I mean this is, this is one of the most liquid, probably the most liquid contract in the world. Can you talk about that? And do you expect that to continue in that direction? How much more can we go in this, continue in this way?

[Craig Donohue]

I love that question because it's so, so right. You know, these are insurance markets essentially. I mean, basically what we're doing is we're allowing people to protect their investments, to hedge, to transfer risk. And that is fundamentally what we do. And so, you know, right now we've had explosive growth for more than 50 years and it's continuing, I mean, the growth in the last six years. Has been hyperbolic and you step back from it and you look at it and you say, well where can it go from here after it's had all that growth? But the reality is, is that, you know, retail participation is on the ascension. People really understand these products. We have a lot of really sophisticated young retailers, traders. They're trading like institutions. We actually look at their trading strategies. Zero dte options for example.

[Kelly Evans]

Is that considered insurance though or is that just betting?

[Craig Donohue]

Well, it's. Look, there's in, in risk transfer markets you always have hedging and you have speculation and you can't have hedging without speculation because if there's no speculators, who's going to hedge?

[Kelly Evans]

Take them.

[Mike O'Grady]

Exactly, exactly.

[Craig Donohue]

So, so, so it's a little bit of both. But you know, we pride ourselves. We've been doing this for 50 years. Investor education, investor education. We teach people how to use these products prudentially.

[Brian Sullivan]

You know the rise the prediction markets has certainly been, I think the speed and rapidity and sort of size of these markets has taken a lot of people, including myself by surprise. This is not a market that you guys are ignoring. It is a market that you are exploring or even getting into. Where are you? I don't know what you're allowed to say, what you can say legally because you are a stock and you have rules yourself. Where are you in the prediction markets? Game or business?

[Schwab/Ameritrade Announcer]

Whatever you want.

[Craig Donohue]

I love that question. So first of all, just maybe at the highest level, we're not interested in prediction and event stuff related to sports or what you think of as like gambling and gaming, whether elections, things like that. Yeah, pop culture. What we're interested in are, you know, short term event driven things that relate to securities, the decomposition of an equity security, economic events, financial events, things that people can express an intelligent opinion on. And so we're really excited. We've launched event contracts style contracts that are a yes no on the S and P. We call it xsp. It's our mini SPX contract. And then we've done something super innovative which we've embedded a way to trade where you can basically we call it the plus contract. It's basically a vertical spread and allows you to be right even if you don't hit the numbers. So as an example, if The S&P 500 reaches 7,400 today, a binary option, it has to reach that level to pay. But if you trade this plus contract, as long as it's directionally correct, if it gets to 73.99, you're still going to get some payoff. So that's super innovative. And that's just the beginning. We're about to launch some new things I'm happy to talk about.

[Brian Sullivan]

Well, I'd like to go to a little bit more because I know some people that are developing these contracts and what they will say as a sophisticated investor, your clients, clients in New York, they'll say, well these, these contracts are still blunt instruments, Right? They're very blunt, they're very binary in some cases that if you're a Bill Nygren who's just on and you own a certain stock.

[Craig Donohue]

Exactly.

[Brian Sullivan]

Can you use the prediction markets to hedge out specific positions? If you can, these contracts have got to, they've got to get a lot more sophisticated than they are now.

[Craig Donohue]

So that's a great question. And that's actually the next phase of what we're going to do. We will file very shortly here with the securities and Exchange Commission for approval to trade KPI based event contracts. So this is basically looking at the key performance indicators that affect the financial statements of large companies. Intel, you know, Tesla. And so what we would do is we would say, well, how many cars is Tesla going to manufacture this quarter? And this is all data that they would disclose in their 10k, their, their, their public filings. And that gives you the ability, if you own stock to basically decompose an equity security and all the different ways that you can do it. So you know, earnings versus consensus estimates versus actual earnings, looking at the different KPIs that they identify as material to their financial statements. So you can express a point of view and say, you know, I think they're going to hit their numbers in terms of their material business KPIs. I think Tesla is going to manufacture that number of cars, but I think they're going to miss on earnings and I think they're going to miss on earnings because of other things. So I think that's great and I also think it's great for retail investors because there's a lot of people who are interested in these things. They may not understand the whole complexities that go into the actual earnings outcome, but they know a lot about these other KPIs. And the second thing we'll ask the FCC to do is to allow us to clear those through cbo. Clear us as a registered securities clearing agency. So these are two super novel things. It's all subject to regulatory approval, but this is a whole new chapter in

[Kelly Evans]

our growth and a different approach. I will just say as a code here to, you know, see me across town, Terry Duffy has said he's stepping down now, of course. I don't know if we call you guys crosstown rivals.

[Craig Donohue]

Good friend and colleague.

[Kelly Evans]

Don't know if you could be crosstown partners ever at some point. Point. Or if I'm pushing too far into this direction. But your lines of business are becoming more overlapping, I think it's fair to say.

[Craig Donohue]

Well, there's always been a tremendous sort of synergy and complementarity. They trade, you know, lots of products that are similar to ones that we trade. And obviously market participants move in between their products and our products in a way that's like super complementary and valuable. But, yeah, we wish Terry all the best here. He's had a remarkable great run and I just wished him well. And we're going to get together and have dinner. But he's, he's done a great job over there, so.

[Brian Sullivan]

Well, Craig Donahue, the CEO of cboe, and I think you're the former CEO of that other shop.

[Craig Donohue]

You know, I keep, I keep failing upwards into these different jobs. I'm not sure what's happening.

[Brian Sullivan]

It's not terrible.

[Kelly Evans]

That's probably not a bad place to be in politics.

[Brian Sullivan]

We're very happy to be here as well. Craig, thanks for having us.

[Craig Donohue]

Thank you very much. Welcome to Chicago.

[Brian Sullivan]

Thank you.

[Kelly Evans]

Coming up, Chicago Fed President Austan Goolsbee is here following last week's Fed decision on the heels of Chairman Warshaw beginning his new version of a new Fed. We'll hear what he has to say about.

[Brian Sullivan]

All right, and our friend and colleague, Mr. Rick Santelli is here in the house.

[Rick Santelli]

There he is.

[Brian Sullivan]

He's going to talk rates, he's going to talk the dollar. And yes, Rick, we're going to make good on our burger bet from back in March. It hurts, but we're gonna do it. We're live at the C boat and we're back right after this.

[Discover Announcer]

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[Keith Landsford]

This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Join host Keith Landsford for this information packed daily market Preview delivered in 10 minutes or less, including projected stock updates, monetary policy decisions and key results and statistics that may impact your trading data. Download the latest episode and [e-mail] MarketUpdatePodcast or find Schwab Market Update wherever you get your podcasts.

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[Kelly Evans]

Welcome back to Chicago. In the floor of the iconic C bow, we learned this morning that core inflation, the PC that's the Fed's preferred gauge, was at its highest since October of 2023. Now, if you're looking for reaction and bonds are shrugging it off to some extent, but the dollar does continue to rise. But why am I talking about this Rick Santelli? Isn't that. Do they let you in to this one? You're usually over there. Anyway, it's great.

[Rick Santelli]

Let me in. Are you kidding? I'm the sergeant at arms of this journey joint.

[Kelly Evans]

What do you. What do you think is going on? What's the quick 30 seconds on the inflation read?

[Rick Santelli]

I would take the word shrugged out.

[Kelly Evans]

Okay.

[Rick Santelli]

The bond market didn't shrug. Bond market's pretty smart. It didn't pay a whole lot of attention to these data points because they're old.

[Mike O'Grady]

Okay.

[Rick Santelli]

We now have crude oil visiting under $70 a barrel. And the whole notion of why the curves flattened because two year note yields were crazy trying to catch up with what they perceived to be a tightening Fed, in my opinion is just the no man's land between going from the conflict to going six months after. And already we're starting to see how that's aiming. So all this nervousness about the Fed tightening could do the same thing. It could disappear just like $107 oil.

[Brian Sullivan]

We can ask Austan Goolsbee about the data.

[Rick Santelli]

Why?

[Brian Sullivan]

Well, because we want. I'm going to ask him the same question I'm going to ask you right now, my friend. When will then be the next piece of data that really matters? Because to your point, oil is way lower than it was as of the data reporting points from all these reports. So what's the next piece of data that Rick Santelli will be watching very

[Rick Santelli]

closely when the curve re steepens in A bearish steepening meaning yields going up. So when yields start to go up, most likely it'll be the 10 year and then the two year starts to ease back. That steepening, in my opinion will signal that the market is now getting more comfortable with the data and most likely it's going to be at least two CPI down the road, maybe three.

[Brian Sullivan]

All right, Rick, I'm sure you remember this, but if you don't, we're going to. This hurts.

[Kelly Evans]

How could he not?

[Brian Sullivan]

This hurts. I have to be wrong. I don't want to be wrong.

[Kelly Evans]

I will say I made the bet.

[Brian Sullivan]

That's right.

[Stamps.com Announcer]

She made it.

[Kelly Evans]

I did.

[Brian Sullivan]

Back on March 12, Kelly and Rick made a bet on the direction of oil prices. So we bet a burger when we were here in Chicago or Rick was in New York. Well, here we are. And if viewers don't remember, this will jog their memory.

[Rick Santelli]

Ultimately inflation and energy. You said the road to 150 oil. I'll take you a cheeseburger. We are getting nowhere near that. Back to you.

[Brian Sullivan]

We're on. I didn't say we would, I didn't say we're going to hit it, but I'll bet you a cheeseburger anyway.

[Rick Santelli]

The road to it. I say it's the road to 70.

[Brian Sullivan]

Okay, well, I'll bet him a cheeseburger.

[Kelly Evans]

I, I, I'll take that bet, Rick. I always, I look back, I'll tell

[Rick Santelli]

you what, here's the bet. I'll bet you we see 70 before we see 125.

[Brian Sullivan]

I'll take that. 100%. I'll take it.

[Rick Santelli]

All right. Cheeseburgers all around.

[Kelly Evans]

We got so close to winning. I want for, we got to like 119. Rick, we were, I know, I know.

[Rick Santelli]

And I was, I was so disappointed. I was so, I'm so disappointed I wasn't a trader again because you know what I would have been doing? I would have flown to New York and been offer on crude oil because it's going to stop right there.

[Kelly Evans]

All right. I'm glad for everybody's sake that you won that bet.

[Brian Sullivan]

Yeah, we're glad for the crude.

[Kelly Evans]

They have to understand when we said, rick, tell us your favorite cheeseburger. Do you know what this man said? But the story behind it is so sweet. Rick wanted White Castle. Do you want to tell him why?

[Rick Santelli]

I love White Castle sliders.

[Kelly Evans]

And you with the kids and the family. I can tell, right?

[Oliver Renick]

Yeah, yeah, absolutely.

[Brian Sullivan]

This is not a sponsored segment, by the way. This is literally what I just want to make that clear. To everybody.

[Kelly Evans]

No one's box of burgers from White Castle. You won Rick's electricity.

[Mike O'Grady]

Thank you.

[Rick Santelli]

You know what? Santelli still liked to go to drive ins and cars that were popular when Kennedy was president. And we always grab three or four boxes of these on the way.

[Kelly Evans]

Well, now you.

[Rick Santelli]

Thank you.

[Schwab/Ameritrade Announcer]

Yep.

[Rick Santelli]

Hopefully they'll be showing that movie with the sheep in it because I'll be bringing these then tonight.

[Brian Sullivan]

You're not gonna share them now? I mean, we came all the way to Chicago to deliver you burgers.

[Kelly Evans]

I want nothing to do with.

[Rick Santelli]

You know what? I can't resist. I can't resist.

[Brian Sullivan]

All right, I'll eat them right now. There we go. We're gonna, we're gonna feed, we're gonna feed the beast here.

[Rick Santelli]

Literally.

[Brian Sullivan]

It's like Wrigley Field.

[Kelly Evans]

Come on. Here, you need a hand?

[Brian Sullivan]

We should have been paid for this. This should have been a sponsored safety. Yeah, here we go. Don't give them all away.

[Kelly Evans]

Billions of dollars trading on the brewing White Castle on the floor.

[Discover Announcer]

Yeah, here we go.

[Brian Sullivan]

Let me have one of those. Ready, Rick? Thank you.

[Kelly Evans]

Coming up, north of Northern Trust has called Chicago home for more than 135 years and the shares are hitting an all time high. Their CEO joins us for some White Castle after the break.

[Keith Landsford]

As our country celebrates its 250th anniversary, CNBC spotlights the leaders driving business and the nation forward.

[Rick Santelli]

I think American business really is about freedom when what this country is about and when I say freedom in business, what I mean is the freedom to pursue your ideas, freedom to be successful,

[Brian Sullivan]

the freedom to fail.

[Rick Santelli]

The founding fathers were almost all entrepreneurs and businessmen and it probably is that kind of mentality that let them build such a great system of governance. All the founding fathers and what they did like, it's just remarkable when the risk they took in going to war with the British, but then the thoughtfulness and how they all raised, wrote the Constitution and the Bill of Rights and you know, really came together in a way to set up the fabric that's existed for 250 years. I mean there's just been nothing so durable and important to the globe as what the founding fathers gave us 250 years ago. I think America's superpower is freedom. Freedom in a way that's never existed anywhere else in the world. And when you give people freedom, it unlocks all the human potential that's possible.

[Kelly Evans]

One.

[Brian Sullivan]

By the way, that's not AI generated. Thank you to the Cubs for putting up. Welcome to Chicago cnbc. Love it. All Right. Welcome back by the way, to the cbo. Your next guest has a great, great perspective on investor sentiment and where the money is flowing. He runs Northern Trust, one of the most storied and biggest financial firms in America. Actually started just a couple of blocks up in a one room office 136 years ago. But investors, no matter how old the company is, keep finding new reasons to love it. The stock hitting another all time high today and up nearly 30% this year. Mike O' Grady is the chairman and CEO of Northern Trust, which has nearly 2 trillion in assets under management. Mike, thanks for, thanks for coming on.

[Mike O'Grady]

Well, great to be here. You walked here. I walked three blocks down. So you're right. We started in the Rookie Building in 1889 and then just a few years later, 1906, Byron Laughlin Smith built the building that we're still in today as the headquarters.

[Brian Sullivan]

I mean, that is a classic Chicago story.

[Bill Nygren]

Yeah.

[Brian Sullivan]

And these buildings, you know, they look strong because as a, As a giant $2 trillion asset manager, Strength is important to your clients. How strong has this market been for your team? Because when I see these market gains we've had in the last year or two, I've got to imagine that your wealth management business is firing on all cylinders. And it's not my opinion your stock's at a record high today.

[Mike O'Grady]

Yeah, it's. The conditions have been terrific. Right. I mean, you almost couldn't ask for something better as far as when you look at where the equity markets have been, just the levels, if you look at the rate environment, it's very constructive and even volatility, because there's been volatility and I know that's good for this type of business as well. It's been manageable and so excellent conditions. And really from our perspective, we do well when our clients do well. So to your point, there's been a lot of wealth created creation and as a result that's just been more that we need to do for our clients. So yeah, great conditions. But I think combined with the strategy, that's why you're seeing the performance.

[Kelly Evans]

I am curious. You guys don't take it for granted that you're staying in Chicago. I mean, you've looked at moving the firm and even recently as I understand it, and decided to stay here. As we've seen firm shifting, maybe it's from California to Texas or things like that lately. What, why is it, what was your conclusion after looking at the benefits of staying and being in this area?

[Mike O'Grady]

So we're a global company that's headquartered in Chicago. So even that says we have 23,000 partners, as we call them, employees. About a third are here in Chicago, but we have a number of locations across the globe where we have employees. The reason why we think Chicago is such a great place to not only have a business, but to work and live. A number of factors. One, I would just start with talent. You know, it is about the people. Our business is people driven. When you have three of the tier one research universities, you know, right here, but also a number of other great universities and colleges and a terrific community college system as well, we get great talent. And Chicago is a magnet for the whole Midwest. Any kid that graduates from one of the schools in the Midwest wants to start their career in Chicago. So talent number one, two, from a transportation perspective, like, we're the hub. It's the most connected city, you know, frankly, in the, in the United States, you know, o' Hare airport at the middle of it. Most connected airport.

[Kelly Evans]

I don't know that traffic last night

[Brian Sullivan]

from o', Hare, we were on the same flight. I'm going here. It's 8:30pm Monsoon. Well, right as we land.

[Mike O'Grady]

We can't control the weather. No, you don't. But you could have taken the L and you would have gotten down more quickly on the L probably than.

[Kelly Evans]

Oh, I didn't even know there was an option. This is what happens when you're in our neck of the woods and you mass transit.

[Mike O'Grady]

You need a little lower local knowledge.

[Brian Sullivan]

So the rates. Okay, so we, I don't know, he might probably right over my shoulder. Austan Goolsbee is here in the house.

[Mike O'Grady]

Yeah.

[Brian Sullivan]

Okay. He's a pretty important member of the Fed.

[Mike O'Grady]

Very important.

[Brian Sullivan]

What's the best path of interest rates for Northern Trust?

[Mike O'Grady]

Yeah, so we have. The market environment right now is pretty close. And the reason why I say that, Brian, is because we need a yield curve and you have a yield curve right now. Banks struggle. We struggle when you have an inverted yield curve curve. So think back to kind of the 22 time period, 23 there, where the Fed had to increase rates to control inflation. The right thing to do, but that turns the bank upside down.

[Brian Sullivan]

The right thing to do. Now failures, they raise rates.

[Mike O'Grady]

Now, I'm not going to get into what the Fed should do per se, but I will say, like containing inflation is critical, you know, overall. And we know that that's where they're focused as well. But I would say as far as rate environment, if you look at the 10 year, even anywhere below, kind of 5%. So the neighborhood we're in right now, very constructive for long term cost of capital. And then again to make sure you have that yield curve on the shorter end.

[Rick Santelli]

Yeah.

[Mike O'Grady]

Being below by whether it's 100 basis points or whatever, that's a construction.

[Kelly Evans]

That's what I was talking about too. And Brian said to him what would be kind of the all clear message for you? And he said he wants to see us see a steeper yield curve. He said it might take a couple of CPI reports but thinks if we go in that direction. So that'd be a big. Do you think the Fed is also going to push on bank deregulation to unlock more buying of Treasuries? Could that also be one way to kind of keep long term rates contained but still keep the curve steep?

[Mike O'Grady]

So there's a lot of talk about capital with banks and that's critically important. But as you saw from the stress test results yesterday, the banking system is in great shape. You know, it's almost like a non event. You run through all the stress tests. Everybody does well. So capital strong. But the other part of it is liquidity. Liquidity to your point. And there are liquidity regulations or requirements there to make sure that there's plenty of liquidity in the system. We take that very seriously for our clients. But to your point, there's also the regulatory part of that. They're taking a look at that and that may affect it as they look at the size of the balance sheet as well.

[Kelly Evans]

Yeah, well Mike, we know there's so much going on but by the way, the Obama center opening down here, there's been. Everyone still is so excited about that and talking about how it's bringing, bringing so much interest to the area. So we really appreciate there's a look at it now actually it's massive and I know you've been so involved with that with some of the other Field Museum and all the different things going on in town.

[Mike O'Grady]

Chicago is a great cultural city. So everything from the Field Museum, the Museum of Contemporary Art, the Art Institute,

[Brian Sullivan]

it's one of the greatest cities in the world. Now I'm biased. My wife is from here. It's one of the greatest cities in the world.

[Kelly Evans]

It's cold though.

[Mike O'Grady]

Yeah, we're cold today. It's 73 and sunny. It's like this every day.

[Brian Sullivan]

What is that? Before we let you go, you got. Maybe the mayor's watching, the governor, whatever. What is your message to the politicians? Just to say about how to keep a northern trust. Kelly's point staying here for the long term.

[Mike O'Grady]

Absolutely. Which is we need to focus on growth. It has to be a growth mindset. Everything as it relates to how do you grow and then make sure that that growth and the benefit, that prosperity is shared. That's the key and that's where we're focused. We don't think as the business leaders that, you know, we're going to call the shots. To your point, we call it a one table approach. We want to be at the table along with the government officials, along with philanthropy, along with the cultural institutions to make sure that Chicago continues to grow and at an even higher rate.

[State Farm Announcer]

All right.

[Brian Sullivan]

Michael Brady, chairman and CEO of the 136-year-old Northern Trust.

[Mike O'Grady]

August 8th will turn 137.

[Brian Sullivan]

You don't look a day over 136. Got to say that. Michael, thank you.

[Mike O'Grady]

Really appreciate it. Thank you.

[Kelly Evans]

Coming up, I will head down into the pits. I think, I think I'm allowed to for a look. I'm tall enough. For a look at today's big moves and what they're telling us about the market's next direction. Our live show from the CBO in Chicago is back after this. Sam.

[Schwab/Ameritrade Announcer]

Foreign.

[Brian Sullivan]

Welcome back everybody. We are here at CNBC at the SIBO in Chicago. You can see the live look at the trading floor here. Obviously record trading volumes in the options market. But I want to give you a market check because today, the last few days have been a little bit weak, but today totally different story. And in part you could think, really, I don't want to say one stock, but maybe today you could thank one stock, that is Micron. Micron certainly has been the story. The NASDAQ composite right now is down 610 of 1%. The Dow is up just a touch. Oil actually rose a little bit. If we could throw up oil, by the way, guys, oil was down a little bit. Micron, look at that, a 17% gain. But oil up just a touch. Some new threats around the straight of four moves from a rogue or a faction of the Iranian machine, for lack of a better term, the irgc. Kelly has the price of oil up just a bit. We'll get more on that in just a minute.

[Kelly Evans]

Thank you. Brian. I'm down here on the floor. It's very eerily quiet right now, I promise you. As we mentioned, there's been record trading volumes in the options market with the daily average volume reaching what, 70 million contracts in Q1. I'm here getting an up close look at the action in the spx. But this, this whole thing is the expert. Right. Paul Aronson is a trader and optiver. Paul, I appreciate you just jumping out here to make the time. I know this is the broad kind of S and P action, but where are you seeing the most action in the markets right now?

[Paul Aronson]

Well, we've seen this week especially we've noticed a lot of positioning for the macro AI semis.

[Kelly Evans]

You mentioned Micron in particular.

[Paul Aronson]

Micron.

[Kelly Evans]

You saw positioning going into the print.

[Paul Aronson]

Saw the positioning all week.

[Kelly Evans]

Yeah.

[Paul Aronson]

And then you know, for us good as traders because then after the earnings come out, we get to to trade the unwind also.

[Kelly Evans]

What was it like last night? That must have been something, you know, for us.

[Paul Aronson]

We close at 315. So a lot of the big move for Microns obviously overnight.

[Kelly Evans]

Right.

[Paul Aronson]

And market definitely was taking some time to digest it. We had the move overnight and then the reversal in the morning.

[Kelly Evans]

But look, as we heard from the options indication that 15% will move either way, it's up 16% today. What, what now? I mean where are the flows happening and where are people laying their bets?

[Paul Aronson]

Well, I think now we're going to Mark is going to be searching for the next thing to key on. That was definitely the focus this week. And the great thing about trading is there's always the next one, right?

[Kelly Evans]

Exactly. If we knew I guess that would be different story. Paul, thanks. Appreciate what you get back to it. Paul Aronson of Optima over to you, Brian.

[Brian Sullivan]

All right, Kelly, we'll get you back up here on the riser. All right, coming up, Polestar, it's an EV maker from Sweden owned by the Chinese. That stock is down again. It's owned by Geely. And the Trump administration is now hitting China where it hurts. Any of these. We'll talk more about what that means the news and more with Mr. Chicago, Phil LeBeau, who's right here. And we're right back after this.

[Phil LeBeau]

All right.

[Brian Sullivan]

Welcome back to everybody here to the CMO in Chicago. We got some big news in the auto world today. Philibo recently went up to Canada to report on the arrival of Chinese electric cars to that market and whether those cars could ultimately land on American shores in the not too distant future. Well, today we got a pretty loud answer with the White House slamming the door on any China EV ambitions, at least here in America. Phil joining us now on set in person here at the CBO with more on what is a big hit for a company that had big ambition.

[Phil LeBeau]

Right. We're talking about Polestar. In fact, one of its vehicles is now going to be manufactured. I don't know if they've started production in South Carolina at the Volvo plant there. They're both owned, Volvo and Polestar owned by the Chinese automaker Geely. And, and we know what the Trump administration has said. Look, starting in 27, we do not want to have Chinese manufactured vehicles in the United States. Volvo was given an exemption, not Polestar. Today Polestar said, we've been told we can't start selling 27 models in the U.S. we won't sell them in the U.S. we'll still service the vehicles that have been sold so far. And I think they sold about 5,000, 5,300 last year, something like that. And we're going to concentrate on Europe. So that's, that's the near term when it comes to Chinese vehicles in the United States.

[Brian Sullivan]

Well, is there any talk that maybe Polestar and Volvo would go back to Swedish ownership because Polestar had huge ambitions in the United.

[Phil LeBeau]

No, I don't get any sense that that's going to happen. They're growing in Europe and I think, I think Geely looks at, look, you

[Brian Sullivan]

can service the car here, Phil, but now with this news, they're, they're, they're

[Phil LeBeau]

shut out like everybody else from the United States. We are an island, increasingly we are an island when it comes to Chinese vehicles relative to the rest of the world. And soon it'll be in Canada. It won't be long before you have a small number, not a large number,

[Kelly Evans]

small numbers, ambitions of our automakers even. You know, we were talking to our guest Bill Nygritt earlier this hour, who loves the shares of General Motors. You don't, you don't hear that a lot. I mean, what does it mean if we are an island?

[Phil LeBeau]

If it changes, it has huge implications as Bill was indicating, because obviously the whole economics of selling an automobile changes. If the Chinese are allowed to sell in the United States. Look, they are fundamentally supporting those automakers. They are state owned. So it's a different dynamic than just competing against another automaker, which is what they're doing the US the big three are doing and not the of part

[Brian Sullivan]

Polestar, because to your point, they're made, you know, large, large part in South Carolina will be. But I gotta imagine like a BYD or whatever it might be. Their cost of labor is so low.

[Phil LeBeau]

Correct. So low they are subsidizing them. So, and, and Mary Barra, Jim Farley, every automaker has said the same thing. It's not a level playing field. And because of that, you can't keep them. You can't allow them here into the United States.

[Kelly Evans]

Well, that may be helpful for the US Carmakers for now, but you do wonder about, you know, their. Their global.

[Phil LeBeau]

So somewhere down the road, it'll. It'll come to a head.

[Kelly Evans]

But not for today.

[Brian Sullivan]

And we didn't bring you any white cast.

[Phil LeBeau]

No. Where's the beef sandwiches?

[Brian Sullivan]

Take it easy. Bring the beef sandwich. Got another half.

[Phil LeBeau]

All right, send over the Portillo's. We'll be ready.

[Kelly Evans]

Yes, I wanted that, Phil.

[Mike O'Grady]

Thank you.

[Kelly Evans]

Coming up, Chicago Fed President Austan Goolsbee here right on set, speaking after the first Fed meeting with new chair Kevin Warren. That's coming up in moments as cnbc the SIBO continues. You've been listening to the Exchange. Make sure you're subscribed to get each episode every day, same time, same place.

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