← The Exchange
The Exchange
Coal Revival, Discounted Medications and AI in Banking 9/30/25
00:43:56
U.S. Secretary of Energy Chris Wright talks coal and nuclear power. Pfizer strikes a deal with the White House to lower drug prices. Plus, an exclusive look into JPMorgan's big AI plans.
Loading summary
Transcript150 lines
- [00:00]
Melissa Lee
Morning Zoe. Got donuts.
- [00:02]
Mike Santoli
Jeff Bridges why are you still living above our garage?
- [00:05]
Seema Mody
Well I dig the mattress and I.
- [00:08]
Melissa Lee
Want to be in a T Mobile.
- [00:09]
Seema Mody
Commercial like you teach me.
- [00:11]
Mike Santoli
So Dana oh no, I'm not really prepared. I couldn't possibly at T Mobile get the new iPhone 17 Pro on them. It's designed to be the most powerful iPhone yet and has the ultimate pro camera system.
- [00:24]
Melissa Lee
Wow, impressive.
- [00:25]
Seema Mody
Let me try.
- [00:26]
Melissa Lee
T Mobile is the best place to get iPhone 17 Pro because they've got the best network. Nice.
- [00:32]
Mike Santoli
Je free.
- [00:32]
Seema Mody
You heard them.
- [00:33]
Melissa Lee
T Mobile is the best place to.
- [00:35]
Seema Mody
Get the new iPhone 17 Pro on us with eligible traded in any condition.
- [00:40]
Melissa Lee
So what are we having for lunch? Dude, my work here is done.
- [00:44]
Seema Mody
The 24 month bill credits on experience beyond for well qualified customers + tax.
- [00:47]
Morgan Brennan
And 35 device connection charge credit send.
- [00:48]
Seema Mody
And balance due if you pay off.
- [00:49]
Morgan Brennan
Earlier Cancel Finance agreement. IPhone 17 Pro 256 gigs 1099.99 A.
- [00:53]
Seema Mody
New line minimum 100 plus a month plan with auto pay plus taxes and.
- [00:55]
Morgan Brennan
Fees required Best mobile network in the.
- [00:56]
Seema Mody
US based on analysis by Oklahoma Speed Test Intelligence Data 182025 Visit T mobile.com.
- [01:00]
Melissa Lee
Hey Fidelity, what's it cost to invest with the Fidelity app?
- [01:05]
Mike Santoli
Start with as little as $1 with no account fees or trade commissions on.
- [01:10]
Melissa Lee
US stocks and ETFs. Hmm, that's music to my ears. I can only talk.
- [01:17]
Seema Mody
Investing involves risk, including risk of loss. Zero account fees apply to retail brokerage accounts.
- [01:20]
Amit Darianani
Only $0 commission applies to online US equity trades and ETFs and retail fidelity.
- [01:23]
Seema Mody
Accounts sell order assessment fee not included. Some account types and securities excluded. Details of fidelity.com commissions Fidelity Brokerage Services LLC Member NYSE, SIPC.
- [01:31]
Melissa Lee
You'Re listening to the Exchange. Here's today's show. Thank you, Scott. Welcome to the Exchange. I'm Melissa Lee, along with Mike Santoli. Stocks marginally lower right now on track for unusually strong September in a strong quarter, the NASDAQ leading the gains about 10% since the start of July. The S and P up 7%, the Dow up 5%. This is the government will all but certainly shut down at midnight tonight.
- [01:57]
Seema Mody
Well, Treasuries are firmer after rallying to start the week. Yields down a few basis points at the short end of the curve as that October Fed rate cut gets fully priced in oil down again. Amid headlines, OPEC plus is considering an increase in oil output. And speaking of energy, we're keeping an eye on oklo, one of the companies the Department of Energy just selected for a new Nuclear project. Energy Secretary Chris Wright joins us live on the heels of that announcement and on continued questions about energy constraints.
- [02:27]
Melissa Lee
Yeah, but let's talk about this market. I mean we've talking about the shutdown and the impact on the markets for so long. You talk to market participants generally they are willing to look through. So this sort of pause in markets right now, I don't know if you can attribute that directly to a shutdown or.
- [02:40]
Seema Mody
Unlikely. Unlikely. The outright concern about it. The longer it lasts, the more it becomes relevant. Working with less to government data flow could become an issue. You know, looking below the surface, it's a little heavy to be honest. You have more stocks down than up. A lot of the consumer cycles are taking a break. The jolts data not great. A little bit of a downside on some of the pmi. So I don't think it's really a growth scare but it definitely shows maybe some of the horns being pulled in.
- [03:06]
Melissa Lee
Yeah, and we were chatting before the show and you're mentioning the consumer finance stocks in particular the affirms the sofa's Cap One Financial and you got to wonder if there, you know there's been the concerns about the bankruptcies of first brands as well as tricolor. You also had the CarMax last week, the commentary about the lower end consumer.
- [03:23]
Morgan Brennan
Exactly.
- [03:24]
Melissa Lee
Being more inclined to be delinquent at this point point. And so you have to wonder if these pieces are sort of falling together to paint this sort of mosaic of a troubled consumer. Some trouble under the surface and credit.
- [03:34]
Seema Mody
It feels like a soft patch in terms of general consumer enthusiasm. Consumer confidence numbers today, the jobs hard to get versus jobs plentiful. Survey response was like pre recessionary. I mean it's pretty negative. So you know, again we have this soft patch in the labor market. Everyone thinks the economy is going to pick up from here because of the Fed rate cuts. So a little bit of a stutter step if nothing else.
- [03:55]
Melissa Lee
Meantime, we are watching shares of Core Weave. They are surging today after signing a $14 billion infrastructure deal with Metta. The announcement comes just days after Core. We've expanded an agreement with OpenAI. Our next guest is bullish on the company initiating coverage of Core Weave with a buy rating a $175 price target earlier today. Joining us now, Amit Darianani, senior managing director at Evercore isi. Amit, great to have you with us. It sounds like you started your initiation prior to this deal being announced today with matter but in the context of Core we've one of the bearish Sort of pillars of the bear argument had been customer concentration. And this along with the open air deal last week, that seems to sort of answer that to some degree.
- [04:36]
Amit Darianani
It actually does. Right. I mean, at this point you have the complete M and M, you have Microsoft and Matter over here and hopefully now other customers as well. Certainly sweetens the story a lot more, if you may. I do think fundamentally what's happening with them right now is demand for infrastructure is far in excess of what supply is. And you know, Corby is positioned to benefit really, really well from having, you know, one of the largest independent GPU clusters, 250,000 plus GPUs that a lot of customers beyond just Microsoft and Matter, I would argue customers like Google and others could look at this as well to get incremental demand because that's really what the shortage is for right now is there's not enough supply to go.
- [05:15]
Melissa Lee
Around all these companies within your note, I mean, one line stood out to me and that is while we can see there are a wide range of outcomes and the stock will be volatile near term, there's a higher probability that Coral will be able to sustain scale, their differentiation, etc. I'm wondering if there are many notes where you actually think about things in a probability or if that's just the nature of this sort of business.
- [05:39]
Amit Darianani
You know, most of it, it's really the nature of this business. And you know, I will concede that there are a range of outcomes. Near term it all looks good and certainly the stock is reflecting that, but eventually, right. I mean the two things I think people will have to wrestle with longer term on Corby, one is Corby makes, it makes a fundamental assumption in their entire business that the useful life of a GPU is five to six years. Is that truly going to hold up or is it going to be much lower? Right. And depending on how you end up there, it has a huge implication to the business model. The second will be, you know, is this business going to keep doing well in a time when supply is limited? Demand is great and the minute supply for GPUs for example, improves. Is there still a value proposition, a differentiation for Corby? Right. And so I think those are two things that could trigger a wider range of outcomes at Corby more than what we typically see in companies.
- [06:29]
Seema Mody
Yeah, the useful life of a GPU is a pretty key variable, it would seem, because one of the criticisms of the the general business model is look, these are very fast appreciating assets and you obviously have to keep kind of refreshing the capital spend to keep up. So obviously if they can prolong the life, it's, it's very positive. I guess my bigger picture question, I mean, is, is this the part of the food chain in the ecosystem that they're going to preserve returns for? In other words, are they going to continue to get the benefit of the economics when their customers on one side, you know, in video and then some of the cloud platforms and all the rest of it, it's capital intensive and they're kind of a middleman.
- [07:11]
Amit Darianani
Today. Yes, absolutely, a middleman. And you know, middlemen in fairness make a lot of money when you have supply demand imbalances, which presumably you have right now. Over time though, the differentiation has to be less about. I have GPUs and no one else does. It has to be more about. I can either help you run these GPUs more efficiently than anyone else can. I would argue that some data that says the mfu, the model FLOP utilization, is better than the legacy hyperscalers. The second part will be can you add more software, more services to differentiate your portfolio and perhaps customer build? Customers will pay you two bucks an hour for your gpu, but they might pay you extra money, extra pot of dollars for the software you can provide on top of it. That perhaps make it up, makes it a much more sticky platform. Eventually. That's what you need to end up is a software driven platform versus just a hardware differentiation that they are right now.
- [07:58]
Melissa Lee
And in terms of the competition, I mean, how much of a moat does core weave have versus the other Neo clouds out there like an nscale or neb? And at what point, if any, at any point does price competition start to come in? I mean, Mike had mentioned the notion of middlemen. Middlemen don't usually have the upper hand when it comes to setting price.
- [08:17]
Amit Darianani
They absolutely do not have an upper hand in a normal scenario unless supply is limited, demands high, and they do have some pricing power. You know, the differentiation for Corey, trading fairness would be, you know, against legacy hyperscalers, this is built from the ground up to be a deployment tool versus others that were perhaps built for general purpose deployment. So there's a hardware differentiation here against legacy hyperscalers. Now against the new clouds, I would say the big thing that differentiates them is scale. They are running a 250,000 GPU cluster today. I believe that's the fourth or fifth largest GPU cluster out there in the world. Now the new clouds really come up close to that scale or size and another part is they do have this almost preferred nation status with Nvidia right now. And one of the interesting parts is Nvidia signed the MSA with Corby, essentially saying we will buy any unused capacity you have up until 2032. That almost gives them more ability to go up and ramp up capacity more than perhaps other new clouds can.
- [09:13]
Melissa Lee
All right, Amit, great to speak with you. Thanks me Darionani.
- [09:17]
Seema Mody
All right, our next guest says the trade remains on solid footing and hyperscalers are generating enough cash flow to invest in AI with one hand and return cash to shareholders with the other. Joining us now is Venu Krishna, head of US Equity Strategy at Barclays Vino. Great to to catch up with you. So I guess there's no real doubt that the Microsoft's and Amazons and everybody else certainly have the free cash flow. The matters to do all this at this point, does that speak to whether they're going to be getting a proper return on all the investment and whether investors will continue to reward them for it?
- [09:53]
Venu Krishna
What I would say is that they are already monetizing it. So in their core businesses, which ranges from E commerce to cloud services to a whole bunch of advertising and things like that, they're already deploying and monetizing it. For example, the software stack itself, where their core businesses reside in a productivity improvement over there is about 30, 40%. Right. That's the reason why I think if you look at big tech, which is obviously bigger than just the hyperscalers but a small group, you know, you saw their net margins actually improve almost 200 basis points, you know, last in the last quarter compared to now at this.
- [10:32]
Seema Mody
Point in time, to what degree is your call on the way the overall market is going to go and how earnings are going to track dependent on this one dynamic? It just feels like a very corporate capex heavy moment in the cycle as other parts of the economy maybe take a breather.
- [10:51]
Venu Krishna
Yeah, that's a good point. That's something we've been pointing out for a while that this is a highly bifurcated market and what's working right now is the bigger, not just big tech, but tech in general and financials outside of that. To your point, a majority of sectors are facing various degrees of sort of pressure on operating leverage and hence pressure on margins on the core businesses, as you saw in 2Q. But as far as you know, tech is concerned that broadly the economy to large extent, because it's been so important even in contributing to economic growth, is that for the foreseeable future, which means call it 12 to 18 months. It does look to us that the capital spending cycle remains intact. They generating a lot of operating cash flow. Like you said, they have a lot of flexibility because almost 50% is being used for, for buybacks. But down the line, I think eventually is when one has to think about the potential for what if things slow down. And that's what we did in our, in our recent research and in one.
- [11:57]
Melissa Lee
Of the scenarios, you know, I thought it was very interesting. You actually said, you know, what if Datacenter CAPEX declines by 20% over the next two years, what would the impact be on EPS and earnings? For the S&P 500 valuations, you came to conclusion that it would be a bigger hit to earnings as opposed to valuations. Can you walk through what you found and what that differentiation would be? Because it did seem like the hit to earnings would be very small. But I would think from a market psychology standpoint, as you say, you know, that would really hit valuations much harder.
- [12:29]
Venu Krishna
Right. I think to understand this cycle, what's interesting is that the AI narrative or the team has spread way beyond hyperscalers. In fact, our view is that hyperscalers are somewhat de risk. Their valuation multiples have been coming down, in other words, they've been earning into their multiples. But the trade has spread to parts of energy, parts of industrials, utilities and other parts of tech, the component supply, like networking gear. So I think that is where we certainly see a risk. And to your point, when we, you know, when we did the bottoms of work with our analysts to look at the impacted areas, call it about roughly 80 stocks, you know, the earnings impact is about 3 to 4%. But like you noted, what we felt is the risk is much higher on the valuation front. Call it 10 to 13% because that is where, if you have a pullback in CapEx, it's not just the defected company, but also the hyperscalers to some extent, which can see some moderation in multiples. So when you put those two things together, you're looking at roughly a 15 plus percent plus, you know, hit to returns for equities should there be a slowdown. And by the way, the 20% number on one metric, it looks quite draconian because the consensus view right now is for a 30% compounded growth in capex over the next two to three years. So 20% is a pretty sharp pullback over the next two years. On the other hand, we did find at least two precedents. If you saw how Amazon overbuilt its warehouse capacity after Covid and then pulled back, that decline was roughly 80, 19%. Similarly, as you know, when Facebook went towards the Metaverse for a bunch of years and then pulled back eventually in turn course that also was accompanied by a roughly, you know, call it 19% pullback in capex. So that's why in a bear case, which we thought is prudent to look at in this market where everything seems to be so hunky dory, we picked with a number of 20% and we concluded that there is, there is some risk. The one one point I would note on that is this scenario doesn't take into consideration what if there is broad macro pullback.
- [14:42]
Seema Mody
Yeah, obviously that would, would be another layer to it all. Vino, thank you so much.
- [14:50]
Melissa Lee
We're less than 11 hours away from a federal government shutdown after congressional leaders were unable to strike a deal to pass a stopgap funding bill. Eamon Javors at the White House is the latest on whether we could see an 11th hour solution looking less and less likely. Eamonn?
- [15:04]
Seema Mody
Yeah, Melissa, that's right. There's a real sense of resignation settling in here in Washington, D.C. president Trump was just asked a short time ago in the Oval Office if it's inevitable that there's going to be a government shutdown. He said, you know, nothing's inevitable, but it's starting to look more and more likely. Senate Majority Leader John Thune was on CNBC earlier today and he was talking about this idea of maybe some wiggle room in negotiating with Democrats over an issue on tax credits. But he said he doesn't want to negotiate with Democrats on the terms that they're demanding. Here's what he said. There's a place there, there are reforms that we can make, and we're not averse to that.
- [15:41]
Morgan Brennan
And we have some ideas about that.
- [15:43]
Seema Mody
We're not going to discuss and negotiate it while they're holding the hostage of the federal government. Release the hostage. So Thune there blaming the Democrats. Hakeem Jeffries also, for his part, the leader of the Democrats in the House, blaming Republicans. Here's what he said. We don't want to shut the government down.
- [16:02]
Morgan Brennan
That's not our approach.
- [16:04]
Seema Mody
But Republicans control the House, the Senate and the presidency. If the government shuts down, it's their decision to do it. So, Melissa, there you see the finger pointing on both sides as each party tries to pin the political blame on the other. And the question is going to be, you know, what does the American public think about this? If we do get to a shutdown, where will that political blame game play out? And that is, of course, tbd. Melissa, back over to you. Yeah. Where the the pain be felt, if any, and who gets to blame for Eamon? Thank you very much. All right, let's stay on Washington with the Department of Energy naming OKLO as one of the four companies that will be a part of the DOE's new pilot program program to build advanced nuclear fuel lines. This comes just one day after the administration said it would open 13 million acres of federal lands for coal mining, which moved those stocks. Our Morgan Brennan joins us now with Energy Secretary Chris Wright for a CNBC exclusive interview. Morgan?
- [17:00]
Mackenzie Segalis
All right, Mike, thank you. And Secretary Wright, it's great to speak with you today. Welcome.
- [17:06]
Morgan Brennan
Thanks for having me, Morgan. I'm here at Brookhaven National Lab on Long Island.
- [17:12]
Mackenzie Segalis
So let's start right there because you are at Brookhaven National Laboratory. You just put out some news a little while ago about plans to work with and partner with more companies around nuclear fuel. What does that entail?
- [17:26]
Morgan Brennan
Yes, we've got to stand up the whole supply chain for nuclear in the United States. We really want to get nuclear going again. We've got to have reactor technologies here. We've got to have uranium enrichment and we've got to have the ability to fabricate fuel that's going to be used in these next generation reactors. So four partner companies were picked that have technologies and interest to invest capital in nuclear fuel. And we're going to, we're going to give them grants and work with them to stand up the nuclear fuel cycle right here in the United States.
- [17:57]
Mackenzie Segalis
I think a lot of Americans would be surprised to realize just how reliant the US Is on foreign sources of nuclear fuel, including, including Russia. So how quickly can you bring all of this capacity online?
- [18:08]
Morgan Brennan
Nothing in nuclear moves super fast. So we are going as aggressively as we can. It's going to be two or three years, not two or three months. I wish it was two or three months, but we have just stagnated our nuclear industry for decades. I am highly convinced the Trump administration and our Department of Energy is making a rapid pivot. We're going to have shovels in the ground and things under construction. But unfortunately, we and Western Europe and East Asia are going to be depended upon enriched uranium from Russia for two or three more years. I wish it was tomorrow that we didn't need a drop of it.
- [18:46]
Mackenzie Segalis
I mean, there's some reports circulating here in the last couple of days that the administration is considering A proposal to divert plutonium, which plays such a central role in US nuclear weapons stockpile, which the Department of Energy also oversees to private sector applications as well. Is there any veracity to that? How to think about it.
- [19:07]
Morgan Brennan
There is. You can use plutonium as a fuel in these, particularly these next generation reactors that use Hailu, a more highly enriched uranium. Of course it's critical for our stockpile, but we have surplus plutonium, so that's a very real possibility. We're looking at anything we can do to accelerate the construction of nuclear reactors and to put new power on our grid. Nuclear is the second largest source of US electricity and it works 247 whether the wind is blowing or the sun is shining. So this is electricity that can drive down electricity prices and help us lead the air race and re industrialize our country.
- [19:45]
Mackenzie Segalis
It's interesting. We've seen a lot of investor appetite both in public and private markets around nuclear and other types of new technologies. I'm actually at the UP summit here in Bentonville, Arkansas. And you have startups that are focused on fusion energy here as well. Billions of dollars in venture capital going into that possibility for the future too. How to think about the mix, especially when it comes to working with states like New York, where you are right now and where legislators are actually mapping out their own nuclear strategy today.
- [20:14]
Morgan Brennan
Yes, and we'll do everything we can to help New York and any other state that wants to develop new nuclear capacity. There's great interest in that, including in here in New York. But even moving as fast as we can with nuclear, it's still several years away before these reactors come online. But in New York and in New England in general, more natural gas in the energy system can drive down electricity prices now and lower home fuel, home heating costs. So there's huge upsides to do in the short run and there's great ideas with nuclear in the medium term. We're for both of them. We're for anything that lowers electricity costs for Americans.
- [20:54]
Mackenzie Segalis
Of course, when we talk about the mix for electricity generation, we have to talk about coal and this strategy and investment plan that was issued by yourself and your colleague Secretary Burgum over at Department of Interior. Yesterday we saw the coal stocks move on this news too. What does it mean in terms of coal as a generator of electricity? I think there are a lot of folks out there that think maybe that that's going to backward instead of forward. How would you react to them?
- [21:26]
Morgan Brennan
Yeah, I think they've got the directions backward. We've seen that that political motivation Coal's out of fashion. We're going to get rid of coal plants. Governors across our country have been forcing the closure of coal plants. What's been the result? 25% price rise in electricity prices. When President Biden was president in just four years and we didn't grow our production of electricity, we didn't do anything to bring data centers or drive prices down or re industrialize our country. In fact, President Trump got elected to stop the blackouts, stop the rise in electricity prices. Coal is the third leg of that triad that's the backbone of our electricity system. Natural gas is our biggest supplier of electricity. Nuclear is number two. Coal's number three. Those are what make our lights stay on. Those are what set our electricity electricity prices. If we don't, if we don't cannibalize them, force them to close and make them turn on and off all the time with subsidized wind and solar, we're okay with wind and solar on the grid, but we got to stop the subsidies and we got to stop killing the reliable sources of electricity. Coal is not just electricity, of course. It's also used in steel making, cement making and other industrial activity. So absolutely we're going to stop the penalization of coal. Coal, let it compete in the marketplace. 16% of US electricity today, we need it.
- [22:47]
Mackenzie Segalis
And of course, critical minerals come out of the ground when you mine coal as well. And some of the best quality coal in the world is actually here in the US and goes into some of these advanced manufacturing capabilities as well. Perhaps doesn't get talked about enough. So how do you see this mix, this energy mix, continuing to evolve then? Especially as there's this focus on both bringing energy prices down for consumers and businesses and then of course, making sure there is enough energy to meet the growing demand of the soaring compute capacity of the AI players as well.
- [23:21]
Morgan Brennan
No? So, great question. So by our math, to have the US lead in AI and start the re industrialization of our country, we need to add about 100 gigawatts of firm capacity in the next five years. When I arrived and President Trump arrived in office, there was a plan over the next five years to shut 100 gigawatts of firm electric generating capacity and only build 22 gigawatts of new. So a net reduction of almost 80 gigawatts. We want a net addition of 100. So obviously it is a dramatic pivot in electricity policy in this country. We're going to stop closing power plants that are still viable and critical to our economy today. And we're moving as quickly as we can to permit, build and enable the rapid construction of as much new capacity as possible. Of course, we're going to run the grid smarter to use backup generators that are sitting there, get rid of silly air pollution laws that don't allow us to run reliable capacity that's sitting there today, sitting there idle while we have blackouts and brownouts and spiking electricity prices. So fortunately, with how wrong things were done, there's just massive room for improvement. But electricity grid is big and it's complicated, so it does take some time to make major changes.
- [24:36]
Mackenzie Segalis
How does the fact that the federal government is poised for a shutdown come midnight tonight affect this entire conversation and what you do at the Energy Department?
- [24:47]
Morgan Brennan
Oh, it's tricky. The president is keen and I think working as hard as he can to keep, keep the government open, keep everyone busily working on everything they're doing. That is absolutely our objective. What the Energy Department does is essential for people across the country. But look, the Democrats, I have 20 Senate appointed people on my team. They only approved two of them until about a week ago. And in fact, they weren't going to approve anymore. The Republicans in the Senate had to change the rules just to get my teammates with me to help energize America. So this obstructive behavior from the Democrats is not good for America, not good for Americans, and it's certainly not good for energy prices. So hopefully saner heads prevail, the government stays open and we can all keep working seven days a week to lower electricity prices.
- [25:35]
Mackenzie Segalis
Okay, Chris Wright, Secretary of the Department of Energy, thank you for joining me here on the Exchange, guys. I'll send it back to you.
- [25:44]
Morgan Brennan
Thanks for having me, Corey.
- [25:46]
Melissa Lee
Thanks very much. Morgan Brennan along with Energy Secretary Wright. Coming up, Pfizer, one of the few big pharma companies that didn't announce a multibillion dollar capital commitment in President Trump's push for domestic drug manufacturing. But Pfizer is now the first company to agree to voluntarily lower drug prices. We got the details. And who could be next.
- [26:03]
Seema Mody
Plus, Nike set to report results after the bell. Shares on track to snap a four month win streak. We'll look at what the Street's expecting and the status of the company's channel turnaround plan just ahead. The Exchange is back after this. This is the Exchange on cnbc. Morning, Zoe.
- [26:26]
Melissa Lee
Got donuts.
- [26:27]
Mike Santoli
Jeff Bridges, why are you still living above our garage?
- [26:30]
Seema Mody
Well, I dig the mattress and I.
- [26:32]
Melissa Lee
Want to be in a T Mobile.
- [26:34]
Seema Mody
Commercial like you teach me.
- [26:35]
Mike Santoli
So Dana oh no, I'm not really prepared. I couldn't possibly at t mobile get the new iPhone 17 Pro on them. It's designed to be the most powerful iPhone yet and has the ultimate Pro camera system.
- [26:48]
Melissa Lee
Wow. Impressive. Let me try. T Mobile is the best place to get iPhone 17 Pro because they've got the best network. Nice.
- [26:56]
Mike Santoli
Jeffrey, you heard them.
- [26:57]
Melissa Lee
T Mobile is the best place to.
- [26:59]
Seema Mody
Get the new iPhone 17 Pro on.
- [27:01]
Amit Darianani
Us with eligible traded in any Canadian condition.
- [27:04]
Melissa Lee
So what are we having for lunch?
- [27:06]
Mike Santoli
Dude, my work here is done.
- [27:08]
Seema Mody
The 24 month bill credit is on experience beyond for well qualified customers +.
- [27:11]
Morgan Brennan
Tax and 35 device connection charge credits.
- [27:12]
Seema Mody
Ended balance due if you pay off.
- [27:13]
Morgan Brennan
Earlier Cancel Finance Agreement. IPhone 17 Pro 256 gigs 1099.99 A.
- [27:17]
Seema Mody
New line minimum 100 plus a month plan without a pay plus taxes and.
- [27:19]
Morgan Brennan
Fees required Best mobile network in the.
- [27:21]
Seema Mody
US based on analysis by Oaklove Speed Test Intelligence Data 1H 2025 Visit T mobile.com I'm no tech genius, but I knew if I wanted my business to crush it, I needed a website. Now thankfully Bluehost made it easy. I customized, optimized and monetized everything exactly how I wanted with AI. In minutes my site was up. I couldn't believe it. The search engine tools even helped me get more site visitors. Whatever your passion project is, you can set it up with Bluehost with their 30 day money back guarantee. What have you got to lose? Head to bluehost.com to start now. Big game today and no way to watch it. Sling lets you do that with day pass. Get instant access to live college football starting at just $4.99. One day pass gives you 24 hours.
- [28:07]
Amit Darianani
Of non stop action on ESPN and ESPN too. Want SEC or ACC network too?
- [28:13]
Seema Mody
Just add sports extra for a buck. No contracts, no hassle, just pure unfiltered game day. Sling lets you do that.
- [28:22]
Morgan Brennan
Visit sling.com to learn.
- [28:38]
Venu Krishna
Today Pfizer is committing to offer all of their prescription medications to Medicaid and it will be at the most favored nation's prices. It's going to have a huge impact on bringing Medicaid costs down.
- [28:50]
Melissa Lee
That was President Trump announcing a drug pricing deal with Pfizer, which will voluntarily sell its medications for less, including discounted drug prices for Medicaid. Pfizer is up 5% on the news. Angelica Peebles joins us now with more. There was a teaser too that other drug companies would have announcements to come also.
- [29:06]
Angelica Peebles
That's what the President said. We haven't heard anything yet. I've been checking in. Nothing to announce there. But you know, this is interesting, right? Of course, we've been hearing from all these companies. Just yesterday we talked about it. Everyone's been saying they've been in negotiations. But today, Pfizer, the first company to actually strike a deal with the administration. So what's happening? They're committing to a few things. They're going to lower prices in Medicaid and then they are going, they're getting a three year exemption from tariffs on the condition that they invest more in the US they're also agreeing to sell some of the drugs through this new website called Trump Rx, which is a DTC direct to consumer platform. And they're also promising to launch new drugs at parity. So the same price here in the US as other countries. Now, it sounds like a big deal, but I do want to take a little bit of a measured approach here because some of these drugs, right, the drugs that they're selling directly to consumers, you know, only one of them is actually broken out in the earnings report. So these are older drugs, they don't make a lot of money. These are not the huge blockbusters that you might be familiar with. And so even though it sounds like, yes, these prices are coming down, these are significant discounts. Pfizer is not really giving up a whole lot here. And also Medicaid already gets the lowest prices around. So, you know, clearly this is working out for Pfizer and it gives uncertainty. You can see the stock move today, but not giving up a ton here.
- [30:21]
Melissa Lee
I was going to say Pfizer's playing this perfectly, then if it doesn't have to give up too much. And Borla, the CEO of Pfizer, Albert Borla, is saying this satisfies all of Trump's requests. He has also had some very favorable comments about Trump in the past, saying perhaps he should win the Nobel Prize for his role in searching for a COVID vaccine. So it's masterful administration playing, so to speak, on the part of Pfizer, which has been just a dog in the pharma sector.
- [30:47]
Angelica Peebles
And it was interesting listening today to this press conference. First of all, Bourla commenting, complimenting the president on having the coolest office out there and saying though, that, you know, two things that have weighed on their stock and really the whole sector have been the uncertainty around most favored nations, drug pricing and tariffs. And this deal gives them a way to clear that uncertainty. They've removed the overhang. This gives investors certainty and Again, you can see that reflected in the moves today.
- [31:13]
Seema Mody
Yeah. And all the other names as well. And, and presumably most of these companies are doing some kind of investment in the US already. Right. So it's not necessarily huge commitments in terms of the direct to consumer portal or whatever this is going to be. So you get your prescription and then just shop there and see if these products are available.
- [31:32]
Angelica Peebles
Exactly. And Pfizer is saying that they're going to offer most of the drugs in their primary care portfolio. These are some drugs you're probably not familiar with, some, you know, for eczema, postmenopause, bladder, rheumatoid arthritis. So these are, you know, these again aren't the big drugs. And you know, if you have insurance, right. Then theoretically you can go and get them at a lower price using your insurance. This, you know, there of course are people who have to pay high co pays or don't have coverage, but really how many people are going to pay out of pocket if they, you know, if they have coverage? And so, you know, this dtc, we've really seen all of this momentum where companies are saying, yes, we'll do it, we will sell these directly to consumers. But then the question becomes, you know, how many people actually do that?
- [32:13]
Seema Mody
Yeah. With all the rebates and coverage things and yeah, it's, it's so complicated. Angelica, thank you. All right, coming up, the emerging markets ETF hitting its highest level since summer of 2021. Also on track for a record nine month win streak. We'll look at what's driving the action and how it stacks up against the rest of the market. The exchange is back after this.
- [32:40]
Melissa Lee
For years everyone thought Verizon had the best network because they did. But now the best mobile network in the US is T Mobile. T Mobile's network has the most advanced 5G with more towers and their signal reaches further than ever. So you can text an insta talk and say, you won't believe where I am.
- [33:01]
Seema Mody
T Mobile has the best mobile network in the US based on analysis by Uber glove speedtest intelligence data 1h2025ct mobile.com.
- [33:08]
Melissa Lee
Network is it time to reimagine your future? The right business skills may make a difference in your career. At Capella University we offer a relevant education that's designed to focus on what you need to know in the business world. We'll teach professional skills to help you pursue your goals like business management, strategic planning and effective communication. And you can apply these skills right away. A different future is closer than you think with Capella University. Learn more at capella. Edu welcome back. And Mike is taking a look at the emerging markets trade which has been a hot one compared to the S and P. Exactly.
- [33:45]
Seema Mody
Take a look at the EEM, that's the emerging markets ETF. It's doubled the S&P 500 performance year to date. You got dollar down a lot. Obviously the Fed is moving toward rate cutting and then it's something of a catch up trade. But it is important to understand what's in the EM and why it's moving the way it is. This orange line is the emerging markets ETF excluding China. So you take China out, it cost you, you know, 6 percentage points on a year to date basis. The EM is like 20% Taiwan, semi Tencent and Alibaba I believe. So it's really kind of a tech and AI type trade along with regular pure emerging markets. Now look at a five year version of the same chart and you'll see how this is basically just kind of mean reversion. S&P 500 still dominating. So we'll see how much more catch up there is. Obviously we have more rate cuts to come. We'll see if we get rebalancing of World Growth or one of those other storylines.
- [34:35]
Melissa Lee
Yeah, I mean the valuations too are notable in terms of, you know, if you're going to invest in the trade, where do you put that dollar? Do you put in the US Tech or you put in Chinese tech which has, you know, 10 turns, way cheaper. Absolutely.
- [34:47]
Seema Mody
There's no, no doubt about it. If, if it becomes a value centric type of environment, it's going to be all right.
- [34:53]
Melissa Lee
Now to Bertha Coombs for CNBC News Update. Bertha. Hey, Melissa. The FCC today voted to move forward with a plan to consider allowing mergers between the nation's largest four broadcast networks, which includes NBC, owned by our parent company Comcast. The FCC is also considering whether to end or revise a rule that keeps a company from owning more than two of the four biggest TV stations in any local market. A federal judge today ruled the Trump administration violated the Constitution when it adopted a policy targeting pro Palestinian campus activists for deportation, writing that the administration was suppressing free speech on college campuses in violation of the First Amendment. The judge's decision today considers only whether the administration used an unlawful policy. A planeload of about 100 Iranians being deported back to their home country is headed back after a deal with the US government, according to the New York Times, which says the identities of those on the plane and their reasons for trying to immigrate to the US Were not immediately clear. Melissa. Bertha, thank you. Bertha Coombs, Coming up, Nike reports first quarter results after the bell today. The stock has moved double digits, falling three of its past 10 reports. And the options market is pricing in an 8% move today. We'll take a look at what the street is watching for next.
- [36:23]
Seema Mody
Welcome back to the Exchange. Nike shares slightly lower ahead of its results after the bell today. Courtney Reagan joins us now with the key numbers to watch ahead of that report. Hey, Court.
- [36:32]
Mike Santoli
Hi. My guest, there's a lot of focus on Nike results after the bell. Investors really are wondering if this athletic retailer can show signs of acceleration after saying last quarter that most of the expense related to the turnaround is now behind it. So sales are expected to fall about 5% year over year to $11 billion on earnings of $0.27 per share. Now, smaller competitors like ON and Hoka, they've seen their quarterly sales grow 32% at 20% respectively in each of the last quarters. They reported on October 14th. That'll be one year for CEO Elliot Hill as CEO of Nike. Shares down about 16% since then, down about two and a half percent in the last three months. But analysts have gotten more bullish in the last six months with more than half now recommending shares as a buy or an overweight. But that transformation, it's ongoing, old inventory still being cleared through to make way for new innovative product as some of those wholesale relationships are being rebuilt. Now, there have been some job cuts, but also some restructuring by sport within the company rather than by men, women and kids. Investors are interested, too, in the initial traction from that newly launched Nike Skims partnership from just last week. So don't have a lot of data yet, but it's working to regain ground with women. And this could be an interesting look into how maybe that's going with the new product line. Now, tariffs continue to weigh on the business, of course, along with weakness in China, the trade deal that was in place between the United States and Vietnam now for imports is 20%, 20% tariff rate. That is actually less than the proposed in April, which was 46%, but more than the 10% tariff rate when Nike last reported a result. So investors are going to want to know about the higher cost. Is that impacting business and its forecast? Previously, Nike talked about $1 billion in costs from tariffs. We'll see if that number stays where it is or moves higher. A lot of questions about mitigation.
- [38:29]
Seema Mody
Yeah, Court, you know, a lot of folks also pointing you Know the search for catalysts out there. We got World cup next year, maybe that's going to be a bit of a boost. I guess the, the test is going to be whether there's been any longer term impairment to the brand as the company tries to get itself in order operationally.
- [38:46]
Mike Santoli
Yeah, exactly.
- [38:47]
Melissa Lee
Right.
- [38:47]
Mike Santoli
It's the qualitative stuff that's a little hard to get your, your hands around. Right. Like what, what does the brand image look like, particularly with people that are looking for performance? Because Nike moved a little bit more into the life style in the athleisure area and you also then have competition from the likes of an upstart like Vori, which has really gained traction. So I definitely think something like a World cup to your point, that really brings sport back to the forefront. And performance is a good test for Nike's new innovative product to see if that gains some traction. But of course, Nike has to hope they haven't lost some of their consumers to some of these other brands. If indeed they were giving them what Nike wasn't for a while, like on with its new running shoe for example, or if it was lifestyle they were looking for and they weren't loving Nike and they moved to Vuori for an example.
- [39:36]
Seema Mody
For sure. I could. Thank you.
- [39:38]
Mackenzie Segalis
Thanks.
- [39:39]
Melissa Lee
Let's take a look at two other big brands that have been beaten down so far this year. Starbucks and Chipotle, among some of the worst performers. And discretionary Chipotle shares down about 35%. I mean, it's worth noting Nike, for its part, it's trading at levels 2018 ish levels or so. And when it comes to Starbucks, you know, Starbucks is first in mind when it came to comparison because it has this big global brand and for some time there had been some difficulties in China and that really hurt these businesses. And you wonder whether or not those franchises need to be marked down in terms of valuation because of the China exposure as opposed to it being a benefit.
- [40:11]
Seema Mody
Starbucks and Nike ran to enormous premiums during the pandemic. There was a sense out there that it was just going to be these kind of, kind of bulletproof American brands that travel globally that was going to retain their value that's not been compromised to a fair degree. Also have kind of put Disney in there with that because they also did have a pandemic bump and some China dependency as well. When it comes to Chipotle, it seems a lot more about just a little bit of a stall in terms of market share and mind share and price sensitivity to their offering, which is similar to Starbucks too.
- [40:44]
Melissa Lee
$6 for a coffee, right? A lot of dough coming up. Amazon now the only Mag 7 stock in the red this year as it seemingly falls behind in AI. But the company just announcing a slate of new gen AI gadgets at its annual hardware event. Can Amazon catch up? We got the details next and we're watching shares of Spotify down just about 6% right now after the company announced founder and CEO Daniel F will step down and move to the role of chairman on January January 1st. Echo be replaced by Spotify's current co presidents. The exchange. Be right back. Amazon unveiling long awaited updates to its Echo Ring, Fire TV and Alexa Plus Digital Assistant at its Devices and Services event today. Mackenzie Segalis is More on today's Tech Check. Hey Mac.
- [41:32]
Mackenzie Segalis
Hey Mel. So Amazon is out with a refresh slate of devices, including those new smart speakers and voice activated displays. And what is key here is that they're all being turbocharged with Alexa plus its generative AI assistant. Now today is also very much a test for Amazon's device chief, Panos Panay, the former Microsoft hardware exec now overseeing Amazon's biggest push yet to bake Gen AI across its devices. Now he said this morning that customers are shopping more with the upgraded Alexa plus assistant, a sign that Gen AI powered commerce may be gaining traction. It also comes as OpenAI and Google roll out new shopping tools this week, which is seen as an easy first step toward AI monetization. Amazon also saying today that the rate of smart home adoption with Alexa plus has doubled. Now it was only earlier this year that the company unveiled Alexa Plus. Its limited release model has capped adoption, something the company is looking to fix as all new Echo devices will have Alexa plus going forward. But early customers of Amazon's Gen AI tool have given it mixed reviews, and critics would also argue that these Alexa upgrades lag far behind what OpenAI, Google and even Metta are offering. Shares of Amazon are in the red so far this year, making it the worst performer of the Mag 7. And today's big unveil isn't doing much to change minds. You've got shares down 1 and change so far today lagging the NASDAQ guys.
- [42:54]
Melissa Lee
When are these devices available for sale? Mackenzie, does this coincide with the prime fall days that are coming up?
- [43:01]
Mackenzie Segalis
They're going on sale today and so this is also a key part of their prime strategy because a lot of the Alexa plus subscription model is baked into prime if you have that, and it's also baked into a lot of these new Products which is really key because part of the bottleneck, bottleneck for adoption has been its has been this rollout strategy geared toward early release and that's why we're talking the range of single millions versus the 600 million Alexa devices that are out there.
- [43:29]
Melissa Lee
All right Mackenzie. Thank you. Mackenzie Seagalas.
- [43:33]
Seema Mody
Coming up we'll bring you an exclusive look at JP Morgan's long term AI plans and sticking with the banks earnings kick off in just about two weeks. Deutsche bank raising price targets on the big banks and some larger regionals including Citizens and Truest remaining bullish thanks to solid fundamental outlook and mostly reasonable valuations despite the recent bank outperformance. You see those stocks down actually kind of appreciably today. We mentioned the consumer credit weakness earlier. All right, the exchange will be right back. Welcome back. CNBC getting exclusive access to JPMorgan Chase's AI plans and how the bank is being quote fundamentally rewired for the era. Banking reporter Hugh Son, the first outsider to see a demonstration of JPM platform which is called LLM Suite, a portal created by the bank to harness large language models from OpenAI and Anthropic LM Suite was able to create an investment banking deck in about 30 seconds. Something that would normally take a team of junior bankers hours to complete. Obviously some taking some cost out there, maybe also revealing that you know, investment banking presentations are kind of a cut and paste job. I mean it's sort of and it's known to be, you know, kind of busy work that needs to be done to prepare the senior bankers to go and pitch clients.
- [44:55]
Melissa Lee
There is something to be said. I don't want to sound like man shouting out the cloud from the lawn but you know that those junior bankers later on become senior bankers and they learned a lot by spending hours putting together that deck. So there's sort of that notion of, you know, how do you develop the next crop of future leaders, people who are in the banks at senior level.
- [45:14]
Seema Mody
This is something that the banks themselves have pointed out. When people sort of look at their culture and say look, isn't this just too intense? So much of this kind of all nighters for the junior bankers and stuff. So it is, it is an issue. Although I guess the industry always kind of migrates toward higher value add and complexity. And you know I much I remember Talking to the CEO of Morgan Stanley way back in the 90s, say how do you stay ahead of the commoditization curve? He said, well 10 years ago most of our bond salesmen were calling up clients and telling them where the 30 year was trading, you know, so I guess in theory we can do it. But I don't know where those, those Excel Olympiad winners are going to go because you know those things.
- [45:50]
Melissa Lee
Yeah, they'll figure out some other competition.
- [45:52]
Seema Mody
I would say something important.
- [45:54]
Melissa Lee
But this does show the monetization. And so we've been sort of struggling about the spend. Companies are spending, spending, spending. What is a payoff? Here's a tangible example.
- [46:03]
Seema Mody
Productivity is the payoff, it looks like. Yeah.
- [46:05]
Melissa Lee
Coming up, burnout betting and bulls. That's next in rapid fire, the Exchange. Be right back. Welcome back to the Exchange. Let's catch you up on a few more stock stories on our radar. Time for rapid fire. First up, the Financial Times reporting Elon Musk's quote. Relentless demands and political activism have accelerated executive turnover across as businesses with XI among the hardest hit after its CFO and general counsel left within a week of each other. And while Tesla has also seen turnover, Canaccord is bullish, upping its price target by 157 to $490 a share and raising delivery estimates. It seems like the consensus on the street these days, at least for Tesla, is increasingly bullish. As we head into the third quarter numbers. We're getting delivery numbers on Thursday and they're expected to just knock the estimates.
- [46:59]
Seema Mody
And the sell side just won't fight it anymore.
- [47:01]
Melissa Lee
Right.
- [47:01]
Seema Mody
Just the wave of buying. And just on the upgrade, he says Mag 7 trades at 21 times 2028 earnings. So Tesla should trade at twice that, 42 times 2028 earnings because.
- [47:14]
Melissa Lee
Right. He also says we struggled with a downgrade back in January. Left. And so we sort of had that same economic exercise with this note with the price target raise. So ultimately stuck with it. Next up, we touched on Amazon's hardware announcements earlier today, but the company is also teaming up with FanDuel, allowing users to link their accounts to their prime video profiles for real time betting updates. This comes on the heels of Amazon's recent partnership with rental car company Hertz, which will offer car buying online, used car buying online across the country with Amazon. So Amazon sort of going into all these countries, these areas.
- [47:48]
Seema Mody
Yeah.
- [47:49]
Melissa Lee
What won't it do?
- [47:50]
Seema Mody
They have the interface, they have all the customers, all the information. Why not exploit it?
- [47:54]
Melissa Lee
Right. And finally, Jefferies writing that the pullback in Kava presents a buying opportunity. Shares about 65% off their 52 week high hit back in November. Jefferies attributes the dip to disappointing same store sales, but expects those to improve through next year. And says other fundamentals remain active. The whole sector has been terrible sector.
- [48:11]
Seema Mody
Has been tough experience, super expensive stock. And it's sort of paying the price for that as well.
- [48:16]
Melissa Lee
And super expensive bowls.
- [48:17]
Seema Mody
Exactly. All of it. All right, that's it for us. Thank you for watching the Exchange. Power Lunch starts now.
- [48:22]
Melissa Lee
You've been listening to the Exchange. Make sure you're subscribed to get each episode every day, same time, same place. At Capella University, learning the right skills could make a difference. That's why our business programs teach you relevant skills you can take from the course room to the workplace. A different future is closer than you think with Capella University. Learn more at Capella. Eduardo.