Layoffs Soar, Musk's $1T Pay Package & Retail Tariff Reversal? 11/6/25

Summary

Podcast Summary: The Exchange (CNBC)

Episode Title: Layoffs Soar, Musk's $1T Pay Package & Retail Tariff Reversal?
Date: November 6, 2025
Host: Dominic Chu
Key Topics: Soaring layoffs, Musk’s $1T potential pay package, government shutdown impact, AI’s effect on jobs and markets, Supreme Court tariff case, consumer retail trends

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Overview

This episode of The Exchange dives into a volatile market landscape shaped by surging layoffs, tech stock sell-offs, a landmark shareholder vote on Elon Musk’s potential $1 trillion Tesla pay package, and the looming effects of U.S. tariffs under Supreme Court scrutiny. Dominic Chu hosts a roundtable on the labor market with data experts, explores the role of AI in both hiring and firing, debates the sustainability of the bull market, and gets on-the-ground perspectives on key market movers including Tesla, Google, Nvidia, and retail leaders. There’s also deep analysis of shifting consumer spending, especially in spirits and clothing, and what current trade headlines mean for shoppers this holiday season.

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Key Discussion Points & Insights

1. Record-High Layoffs: Labor Market Cooling

(00:47–11:42)

• Headline: October saw layoffs jump by 150,000 (nearly doubling month-on-month, tripling year-over-year), the highest in over 20 years (Challenger, Gray & Christmas).

• Analysis by Andy Challenger (Challenger, Gray & Christmas):

  • “There is going to be continued layoff activity, that the labor market continues to cool and weaken.” (02:31)
  • Tech sector leads in layoffs—three years running—due to pandemic-era overhiring and rapid AI adoption.
  • Warehousing and retail follow with significant job cuts.
  • High-paying white collar roles are disproportionately affected.

• Steve Liesman (CNBC) on alternative data:

  • “It’s ironic that in the absence of official government data, economic reporting is harder than it was.” (03:26)
  • Wall Street often rewards companies for layoffs, creating a momentum for more announcements.
  • “Every technology has this pattern—job losses and job gains. You may not hear the gains but you may hear a lot more about the layoffs.” (06:39)
  • Absence of government data underscores its value: “It’s not perfect, but it allows us to have a conversation that isn’t all over the place about what’s happening in the job market.” (09:55)

• Evan Sohn (Aura Intelligence):

  • 13% of tracked job postings now include AI skills, not just traditional software, but also logistics and marketing. (05:30)
  • Trend toward “loud layoffs” but “very precise hiring” in tech roles, especially with AI adoption.

• Nuances:

  • ADP’s private payroll data showed decent job growth, but more granular (weekly) data indicates deterioration late in October, especially in restaurants. (08:53)

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2. Market Outlook: Are Bullish Fundamentals Intact?

(11:42–16:27)

• Drew Pettit (Citigroup) on the disconnect:

  • “The market is not the economy.” (12:41)
  • AI and productivity drive half the S&P 500; the rest is cyclically tied to traditional macroeconomic trends.
  • “As long as we don’t get to recession, we should actually see inflecting earnings growth for small cap and cyclicals into 2026.” (12:41)
  • Fair value for S&P seen at ~6600, with continued long-term upward trajectory so long as earnings rise.
  • “The reason the pullbacks keep getting shallower is those base earnings keep going up. That’s supportive of the market.” (13:49)

• Portfolio strategy: Maintain “growth beta” (e.g., AI, mega-cap tech) and add “cyclical beta” (small caps, financials, health care) on pullbacks.

  • Stock mentions: Nvidia, Amazon (AI enablers), Boston Scientific, Capital One, Equifax (cyclical productivity).

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3. Government Shutdown Hits Air Travel

(18:49–21:25)

• Phil LeBeau (CNBC):
  • FAA cutting flights by 10% at 40 major and regional airports due to shutdown (now in 37th day).
  • Main impact: big hubs—Chicago, New York, Dallas, Los Angeles—but regional airports lose connectivity.
  • Frontier’s CEO advises passengers to “buy a backup ticket.”
  • Airlines preparing for rolling disruptions, with critical timing around Thanksgiving.

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4. Tesla’s $1 Trillion Pay Package for Elon Musk

(21:25–26:56)

• Phil LeBeau:

  • Pay package is performance-based, contingent over next 10 years, could net Musk “just under $900 billion”—not a blank check. (21:55)
  • Requires Tesla to hit milestones: $8.5T market cap, 20M vehicle deliveries, 1M robo-taxis, 1M humanoid robots, plus $400B 12-month EBITDA.
  • “Some of these metrics, like delivering 20 million Teslas, that’s a relatively easy one to hit … There are others that are a legitimate question.” (21:55)
  • Shareholders saw 1800% returns under Musk’s last incentive package.

• Dan Levy (Barclays, Tesla analyst):

  • “If Tesla can achieve an $8 trillion valuation … Elon deserves that type of compensation.” (23:58)
  • Growth ahead is AI-driven: “Future growth ... is not automotive. ... It’s an AI push.”
  • Maintains Hold rating: Stock’s current fundamentals “quite full,” earnings flat, but AI-driven growth potential remains the wild card.

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5. Market Movers & Breaking News

(27:37–30:47)

• Stocks in broad decline: S&P, Dow, Nasdaq all down >1%.
• Big headlines:
  • Eli Lilly & Novo Nordisk: GLP1 pricing deals (“TrumpRx.gov” rollout for affordable weight-loss drugs).
  • Snap: Beat estimates, announced Perplexity AI partnership, $500M buyback.
  • Duolingo: -26% after conservative bookings forecast, shift to user growth & more AI in teaching.
• News update:
  • Suicide of NFL player Marshawn Nyland.
  • $10M verdict for teacher shot by 6-year-old in Virginia.
  • Chicago judge restricts federal agent use of force on protestors.

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6. Technical Analysis: Bitcoin, Semis, and Key Stock Setups

(32:10–36:40)

• Katie Stockton (Fairlead Strategies):
  • Bitcoin: Still has long-term uptrend, “measured move projection” toward $135,000 in 6–12 months despite near-term volatility. (32:10)
  • “The 200 day moving average acts as a cushion, not a precise point … The mid-90s [thousand] is very realistic for Bitcoin.” (33:12)
  • Semiconductors (SOXX): Intermediate uptrend holds, but “countertrend signal” means possible short-term caution.
  • Oracle: Negative setup—recent earnings gap down after prolonged uptrend.
  • Amgen: Positive setup—“Series of higher lows,” breakout, and biotech sector momentum.

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7. AI Chip Competition: Google, Nvidia, and China

(37:17–39:53)

• Mackenzie Sagalos (CNBC):
  • Google’s new AI chip (Ironwood) to compete with Nvidia, undercuts on price, runs key models (Gemini, Claude).
  • Massive capex ($93B in 2025) for AI infrastructure.
  • “Google is the only hyperscaler really deploying custom AI chips at massive scale … rivals are still years and billions behind.” (37:17)
• Nvidia’s China Dilemma:
  • CEO Jensen Huang walks back “China will win” AI claim amid regulatory, export, and market share pressures.
  • China’s data centers forced to use domestic chips, tearing out foreign hardware.
  • “Nvidia very much feeling like this negotiating tactic in a … trade war; their China market share is down to zero.” (38:51)

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8. Supreme Court Tariff Case & Retail Holiday Impact

(39:53–45:04)

• Lorraine Hutchinson (B of A Securities):
  • Tariffs are baked into current holiday pricing for apparel & footwear; consumers will see higher prices as retailers pass on costs.
  • If tariffs are overturned, some relief is possible later, but for this holiday “expect higher prices, maybe some lower unit volume.” (41:43)
  • “If you have an undifferentiated product, a basic that the consumer feels they can go without, that’s where we’ll see the problems once prices start going up.” (43:25)
  • Off-price retailers like TJX, Ross, Burlington are expected to benefit from supply chain disruptions and product discounting; Burlington is her top pick.

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9. Spirits Industry “Hangover”: Consumer Downshifting

(45:59–48:10)

• Brandon Gomez (CNBC):
  • Diageo cuts outlook: U.S. and China weakest, sales down, consumers trading down from “premium tequilas” to cheaper drinks.
  • “The company’s interim CFO [cites] a ‘clear shift down in quality as consumers tighten their wallets and tabs as well.’” (45:59)
  • Gen Z drinking less, fitness trends, Hispanic American consumers feeling pressure (echoed by Constellation Brands, Boston Beer, PepsiCo).
  • Diageo expects to provide more outlook clarity after the critical Q4 holiday period.

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Notable Quotes

• Andy Challenger: “There is going to be continued layoff activity, that the labor market continues to cool and weaken.” (02:31)
• Steve Liesman: “Every technology has this pattern … job losses and job gains. You may not hear the gains but you may hear a lot more about the layoffs.” (06:39)
• Evan Sohn: “We’re seeing the loud layoffs ... but at the same time, very precise hiring.” (05:30)
• Drew Pettit: “The market is not the economy.” (12:41)
• Phil LeBeau: “It’s not a blank check ... the potential, over the next 10 years, is for it to be a little under $900 billion [for Musk].” (21:55)
• Dan Levy: “If Tesla can achieve an $8 trillion valuation … Elon deserves that type of compensation.” (23:58)
• Lorraine Hutchinson: “If you have an undifferentiated product ... that’s where we’ll see problems once prices start going up.” (43:25)
• Brandon Gomez: “The company’s interim CFO [cites] a ‘clear shift down in quality as consumers tighten their wallets and tabs as well.’” (45:59)

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Key Timestamps

• 00:47 – Episode Kickoff: Markets, layoff headlines, job market stats.
• 02:31–11:42 – Labor market deep dive (Dominic Chu, Andy Challenger, Evan Sohn, Steve Liesman).
• 11:42–16:27 – Market strategy discussion with Drew Pettit (Citigroup).
• 18:49–21:25 – Phil LeBeau on government shutdown’s air travel impact.
• 21:25–26:56 – Tesla shareholder meeting, Musk’s mega pay package, growth outlook (Phil LeBeau, Dan Levy).
• 27:37–30:47 – Market movers and news update.
• 32:10–36:40 – Katie Stockton on technicals: Bitcoin, semiconductors, Oracle, Amgen.
• 37:17–39:53 – AI chip wars: Google vs Nvidia; China’s impact.
• 39:53–45:04 – Tariffs’ holiday impact; retail sector analysis (Lorraine Hutchinson).
• 45:59–48:10 – Spirits industry update (Brandon Gomez).

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Tone & Style

The episode maintains CNBC’s newsroom energy, blending data-heavy segments, expert roundtables, and live market analysis. Dominic Chu guides with clear, probing questions and concise recaps between segment handoffs.

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Conclusion

This episode of The Exchange uncovers a landscape marked by massive layoffs, tech volatility, and structural shifts in how companies—and investors—navigate the intersection of jobs, productivity, and AI. With the Supreme Court and global trade policy casting shadows on holiday retail and with consumers pulling back across sectors, the conversation underscores the value of nuanced economic data, adaptability, and sector rotation for those in the markets. And as AI-driven visions—whether in hiring, investing, or Musk’s own compensation—shape the horizon, the episode avoids sensationalism but hammers home the scope of change under way.

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Transcript

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[Dominic Chu]

Here's today's show. Thank you very much, Frank. Welcome to the Exchange. I'm Dominic Chu in for Kelly Evans. Today, stocks are lower amid renewed concerns about valuations and brand new concern concerns about the state of the jobs market. The latter is sending yields lower as well with a 10 year yield back below the 4.1% mark. Big technology leading the declines. Qualcomm, the latest name to deliver solid earnings results but failing to impress investors. We've seen this same thing play out with Palantir and AMD as well. Meanwhile, Jensen Huang is walking back some comments that China will win, win the air race. We'll have more on that coming up. And we are keeping a close eye on shares of Tesla, A crucial with shareholders voting on Elon Musk's $1 trillion pay package. A look at what's at stake for Musk besides $1 trillion for Tesla and for investors. All of that's coming up. But we begin with jobs October layoffs jumping by 150,000, nearly doubling from the month prior, nearly tripling from a year earlier period, and now at the highest level in more than 20 years. That's according to a new report from Challenger Gray in Christmas. And joining us now for more on that story is the company's senior vice president, Andy Challenger. Also joining us now is Evan Sohn, CEO of global workforce data and analytics company Aura Intelligence. Also our very own senior economics reporter at cnbc, Steve Liesman. A great roundtable, so to speak. So Steve, thank you very much. Let's hang on for a second here and go right to the Challenger headlines right now. The highest October job losses in 20 years is the headline. Is it as dire as it sounds?

[Andy Challenger]

I think it is a very strong indicator that the labor market continues to cool. This isn't a fresh new story. It is something that has been happening for a while. But these numbers are a significant piece of data in the bucket that says there is going to be continued layoff activity, that the labor market continues to cool and weaken. And we're anticipating to continue to see these layoffs throughout the end of the year.

[Dominic Chu]

Steve, you and I had just had a conversation about how as an economics reporter, in the absence of true government economic data, what else can you do? Report on, analyze. Your job has gotten much harder. How much as an economics reporter do you look at numbers from Challenger, Gray and Christmas and say to yourself, what can I do to extrapolate the broader health of the US Economy?

[Steve Liesman]

First of all, I was not complaining for public consumption. I love my job.

[Dominic Chu]

Okay, but your job is harder.

[Steve Liesman]

Now, it's ironic that in the absence of official government data, the economic reporter reporting is harder than it was because we look at a whole series of indicators right now. We should have a list out tomorrow on the website that will show you all of the stuff we're looking at. But there's like 10 or 12 different indicators we're looking at. We know the Fed is doing the same thing, so we have to do the same thing. Investors have to do the same thing. We look very closely at the Challenger data. We knew all of the little components of it. But then what's fresh about what Challenger did is it put it all together and put the context around what happened last month, what happened a year ago, and this is definitely a surge that's going on. Interestingly. Dom, I'll throw it a little bit back to you. My anecdotal observation is that Wall street is rewarding these companies when they announce job layoffs. So that's something that creates a little momentum out there. What's going to happen if I announce that I'm laying people off? Am I going to get a bump in my stock or not? When that's rewarded, it creates a momentum. So I'm looking at that. We also had bank of America data, fascinating data. They're looking at their anonymous basis at their clients accounts. Are you getting a paycheck this month? Did you get one last month? Are you getting an unemployment benefit? That shows. I don't know. Relative to the Challenger data, it shows we're in a cooling market, but it didn't get worse from October to September.

[Dominic Chu]

So you're actually acting like a Wall street research analyst right now in the Mosaic approach, if you will. Right. Trying to get all of those pieces together. To figure out if you can find a bigger picture overall. One of the other elements, though, you spoke of the job cuts and possibly the rewards from Wall Street.

[Steve Liesman]

Right.

[Dominic Chu]

So let's turn to Evan Sohn now because one of the reasons why, Evan, is because for a lot of these companies that say that they are maybe reducing their workforce, part of that story, not the entirety of it, but part of it is the use of artificial intelligence either to augment the jobs that are there or to perhaps eliminate some jobs in the future that may not be needed if AI is more prevalent. Just how much of that AI story is part of the jobs picture right now?

[Steve Liesman]

Yeah.

[Evan Sohn]

So first off, thanks for having me. And you're absolutely right. This past month we track jobs, job postings as well as other data. And when you look at the AI jobs relative to the overall overall jobs themselves, they actually had 13%. So 13% of the job posts that we were tracking include AI. And it's not just the traditional AI software development. It's, it's reaching into less traditional logistics and marketing and other areas as well. So I think you're absolutely right, Dominic. We're seeing the loud layoffs, if you will. And I agree with Steve. I think Wall street awards loud layoffs. So we're going to see some loud layoffs going on, but at the same time, very precise hiring. What you're seeing on the screen here now is we were tracking software hiring throughout the month of October, and throughout the month it was dropping down and then it surged at the end. What is that telling you? It's telling you that we're, we're having a very precise type of hiring that's going on. These are smarter companies acting smarter in terms of incorporating AI and overall productivity into the overall, into their overall workforce.

[Steve Liesman]

I make one very quick point, which is I think Evan is highlighting this notion that we're going to hear about the layoffs. As we reported earlier this week, some companies will attribute things to AI that may not be AI, maybe because the business lousy. What we may not hear as much of are the hirings. Every technology has this pattern to it where there's job losses and job gains. You may not hear the gains, but you may hear a lot more about the layoffs.

[Dominic Chu]

So, Andy, with that being said, if you were to pinpoint, because the data in aggregate is of course headline grabbing, but there are pockets, there's nuance within the jobs picture right now about where the firings and layoffs are happening vis a vis, to Steve's point, kind of where the jobs are actually being added to whatever degree they are. What exactly is the data telling you about? Just where the hot and cold spots are with regard to the jobs picture.

[Andy Challenger]

Yeah, well, what we track is the job cut announcements that companies are making and we've seen now for three straight years that technology is the area of the economy that has been announcing the most layoffs and job cuts. That is due to a long period of maybe over hiring in the pandemic period and coming back down to earth. But also this very clear infusion of new technology and AI that is causing changes. We're also seeing lots of job cuts coming out of warehousing and retail. So that's an E commerce story. That has to do with increasing prices, lowering consumer demand and then service sector jobs. We're seeing lots of these job cuts at a disproportionate percent coming at the higher end of the spectrum for companies. So those are high paying white collar jobs that are corporate companies are letting people go in right now.

[Dominic Chu]

Now Evan, this doesn't seem at all to jive and reconcile with that decent ADP private payrolls report that just came out. We got some pretty decent numbers there, but I feel as though there's a but, right. There's a dot, dot, dot coming at the end of that. Is the ADP number the one we should focus on or what's happening with Challenger Gray and Christmas?

[Evan Sohn]

Yeah, so first of all, Challenger's report is really very eye opening. Look, ADP numbers are really almost about a mid month. You know, we started tracking weekly changes because the ADP report is really about what was going on throughout, really in the middle of a month. And we started to see a real change happen towards the latter, towards the second part of October. Things that were getting bad, we're getting worse in some instances. We saw a little bit of a, of a, of a, of a jump back. You just showed some numbers on the, on the restaurant side really to take a pretty serious dive towards the end of October. So I think those are really the numbers. We also rely on some data from Revelio Labs and they showed a 9,000, a little over 9,000 job loss for October. So we probably align more with those sorts of numbers in terms of how we're looking at the overall marketplace itself.

[Dominic Chu]

You know Steve, I'll give you the last word here. During the pandemic we looked at all kinds of alternative data in the absence of regulation, regular data. From an economics reporter's perspective. What kind of data, alternative data are you looking at the most in the absence of official data.

[Steve Liesman]

I'm going to answer that question a little bit differently. I think the absence of the official data and the attempt to replace it with alternative data shows the importance of the official data. And it's a bit like spelling in the English language. It's not perfect, but we've all agreed upon how to spell a certain word or a certain way. And it allows us to have a conversation that isn't essentially all over the place about what's happening in the job market. You may have alternative data that may come in and season your view, but to try to create a view of the market with just the alternative data, it's. The problem is that I don't know if the trader over here or the person over here agrees with my take. So we saw today, for example, it looked like the market may have moved on the Challenger data yesterday. It may have moved on the ISM data, but not clear, not the way it moves based upon the national data from the bls. That said, you can create, put it maybe what did you see? The word mosaic or a tapestry of what's happening in the job market from looking at all of the different components and trying to figure out, well, which ones are telling the best story. And I think the story that was told here by Evan and by Andy is the right one. A cooling. But it's not getting substantially worse here. We have come down, but remember there's a lot going on. This decline in immigration is a major factor in the lack of job growth that we're having right now. And that's going to play a role. This 42,000 number from ADP Dom, that may be the right break even rate that would keep the unemployment rate stable. So the worst part about this is we're lacking the official data at a time of perhaps profound change in the job market.

[Dominic Chu]

All right, what's interesting as well is you can get a direction based upon any of those types of scenarios and you don't even have to spell the words correctly in your analogy for us to understand what you're actually trying to say. All right, so Andy Challenger, Evan Sohn, Steve Liesman, thank you guys very much. Great discussion. I wish we had more time for it because I could ask 20 more questions at this point. Thank you guys very much. Now layoffs along with sky high valuations are giving investors some pause today. The Dow, the S and P, the Nasdaq are all down more than 1% or so. The Dow is hovering near session lows as we speak. But our next guest says what we are seeing is just the more volatile phase of the bull market. And longer term, the rally remains intact to the point of this last conversation. Joining me now is Drew Pettit, US Equity strategist over at Citigroup. Drew, you heard the conversation right now. From the macroeconomic perspective, how do you frame that against the market that is still kind of near record highs but is showing sometimes some signs at least of potential short to medium term weakness?

[Drew Pettit]

Yeah, it's funny, we've been saying this for a few years now, Don. The market is not the economy. So the right side of the brain, the creative portion here of the market is what's going on with AI and productivity. And that is huge in the S&P 500 by our estimates. AI is driving, call it half the S and P, the other half. That's where the left brain, the cyclical, the traditional macro connection comes in. And to us, you know, softening expected. As long as we don't get to recession, we should actually see inflecting earnings growth for small cap and cyclicals into 2026. When you put that together, structural spending in AI tech, build out productivity enhancement from that in a cyclical recovery in 2026 sets you up for a decent bulk case to continue just short term. A lot of good news is priced in.

[Dominic Chu]

All right, so if all the good news is priced in right now and we could expect to see a pullback, how deep could a pullback actually get? It seems as though these pullbacks keep getting shallower and shallower.

[Drew Pettit]

Yeah, to us, fair value is about 6600 for the S and P. When you discount earnings coming, look sentiment over and undershoots all the time. We barely land on fair value over history, but I think that's a decent entry point when you think about the longer term opportunity. The reason the pullbacks keep getting shallower is those base earnings keep going up. That's supportive of the market. As long as we have good earnings growth, you have to think the trajectory of markets is still up longer run.

[Dominic Chu]

Now if that's the case, fundamentally it sounds like this story is intact for the bull market to keep going higher. Is it going to be a scenario where we do see the rotation effects start to really take hold in earnest? Not just kind of the mini, I want to say meltdown, but it's not even really a meltdown, but the AI trade is certainly cooling off. Are we going to see some more moves into other key areas of the market that are not tech or telecom?

[Drew Pettit]

Yeah, I think so. I think you end up seeing it in the cyclicals. And it's funny, it's not necessarily lasting rotations. You can actually keep beta in your portfolio. We actually like having the growth beta in the AI beta paired with some cyclical beta. So what ends up happening is they don't both work at the same time, but over medium term horizons they can actually both outperform. That's something you've actually seen in the last couple months. So to us it's yeah, by beta you probably buy small cap in cyclical beta with new money and you buy the growth beta and the AI trade on pullbacks like we're seeing recently.

[Dominic Chu]

So if that's the case, are there specific parts of that market within the barbells on the large cap tech, media, telecom side and the small mid cap side of things where you would actually divert resources to what are the picks?

[Drew Pettit]

Yeah, it's funny, when we're thinking AI, we always talk about AI at a reasonable price kind of our Garp approach. And here we do like Nvidia and the semiconductors. I think you actually have some kind of upside to what's priced in. I think consensus numbers are above what the market's pricing in. Additionally, you probably do want to diversify, get some power gen, get some enablers of AI technology as well. So a couple names that kind of stand out. Amazon, again, a big enabler. I think you can put money to work there. And then on the cyclical side, we're looking for productivity enhancers and inflections in quality. I think there's some really interesting names in health care like a Boston Scientific, in financials like Capital One, and even in a name like Equifax where you might see the mortgage market improve in 2026.

[Dominic Chu]

All right, Drew Pettit with the picks out there and barbelling Beta. Thank you very much. We'll see you again soon. Coming up on the show, the record government shutdown is starting to wreak havoc on the country's biggest and busiest airports. We're going to tell you which cities are being affected and how long this could possibly. Plus Tesla's annual shareholder meeting is underway and the stakes could not be higher to the tune of $1 trillion. What's the fate of Elon Musk's potential pay package hanging in the balance there. We're going to tell you whether it's expected to be approved or not. The exchange is back after this. This is the exchange on cnbc.

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It's a classic corporate power move. But the real power move, having end to end visibility on your most critical shipments. FedEx, the new power move. All right, welcome back to the exchange. The FAA is set to cut flights by 10% at 40 airports as a result of the government shutdown, which is now in its record setting 37th day. Phil LeBeau is following this story for us. And Phil, it's not all the major ones, but it could affect some of the mid market airports that folks do fly in and out of. Just not the major hubs.

[Phil LeBeau]

The major hubs will see a reduction in flights. That's the whole design here, Dom. But where you'll notice the biggest impact it is with those regional or mid sized airports. Something like a Mobile, Alabama. Will it have as many flights into Atlanta on a daily basis? Probably not. I mean that's what we're expecting. We're waiting for the final list of airports that are impacted. We're pretty certain this is the list based on conversations with people in Washington as well as with the airlines. It's the 40 largest airports. In some cities like Chicago, New York, Washington, Los Angeles, Dallas, it's multiple airports. Houston is another example. If you're a busy airport, you're going to see fewer flights. And the whole idea here, the DOT wants to have fewer flights for the air traffic controller. So what will we expect when the flight cuts are finalized and they go into effect tomorrow? Lower frequency of flights, particularly from smaller airports into hubs. We're talking about the regional jets. So it's not the volume of people who are flying, it's the number of flights. And for some airlines brings up the question, you know what do you tell your passengers? You don't want to inconvenience them. Barry Biffle, and I'm showing you shares of Frontier. The reason we're showing you this, I talked to Barry Biffle today. He posted yesterday on LinkedIn. He said, look, if I were you, you're sure you have your flight booked with us, I wouldn't waste time. I'd also buy a backup ticket. You never know if your flight is going to be canceled and you want to have a backup ticket. I talked to Barry this morning. He says, yeah, I think it's a smart move. Take a look at the shares of the airline stocks. Talking about all the major ones here today. They're all under a little bit of pressure, not huge pressure, but a little bit of pressure. Because the question for investors is how long does this drag on? And if it gets close to Thanksgiving, what's the impact there? And also, how are they gonna manage this? Tomorrow morning, we will be live in the operations center for American Airlines talking with Robert Isom, CEO of American Airlines. They've been working on this for some time, Dom. This is not like they just put up their arms and said, oh, my goodness, flights are being canceled. They know how to do this and disrupt the fewest number of passengers possible. They know some people will have their flights rebooked and they don't want to disrupt those flight plans. But this has been ordered by the dot. So American, all of the airlines, they're working with the DOT to try to get a better sense of what airports and what flights should they cancel as they go into the next couple of days. And then the big question still hanging out there, Dom, is how long does this go on? And, you know, if it gets close to Thanksgiving, people are not going to be happy.

[Dominic Chu]

No, they won't be. And perhaps those unhappy, potentially unhappy flyers will be very vocal and perhaps provide that catalyst to help resolve the government shutdown, like in shutdowns past. Now, Phil, while we still have you here, it's also an important day for Tesla. And you cover the company. The annual shareholders meeting is underway right now as we speak. The stock is down 4%. But it sounds like Elon Musk's potential $1 trillion pay package is actually expected to be approved. What can you tell us from what you know right now?

[Phil LeBeau]

That's the expectation, Don, that it will be approved. And I get this question from a lot of people. They're like, well, nobody should get a trillion dollar pay package. It's not a blank check that they're handing Elon Musk. If this package is approved, the potential, potential over the next 10 years is for it to be a little under $900 billion. But he's going to have to hit some, some performance marks in order to reach that the market cap by the end of 10 years for him to get the full vesting of $848 billion. Has to hit $8.5 trillion. Has to deliver 20 million Teslas, a million Robo Taxis, has to deploy 1 million humanoid robots. Now some of these metrics, like delivering 20 million Teslas, that's a relatively easy one to hit. They've already delivered, I think, 8.5 million they're going to get there. That's not a question. There are others that are a legitimate question in terms of valuation of the company, does it hit $5 trillion in valuation, let's say two or three years from now? Could, but that's the question that's out there for investors. And Dom, the reason we're showing you this, this is going back to 2018. Remember the original package, Dom? Remember when people said there's no way he's going to hit all those metrics? I remember he did. And look at what happened with shares of Tesla.

[Dominic Chu]

Yeah, and shareholders maybe can't be too unhappy with an 1800% stock performance during that time as well. So you wonder whether or not, again, this is not a commentary, the number of zeros, but shareholder value created. Phil, thank you very much for that. We're going to continue this conversation because in addition to Musk's pay package vote, our next guest says that today's shareholder meeting will be critical in another way. It will remind investors of the growth opportunities ahead for the stock, like we just said. So joining me now is Dan Levy. The senior research analyst over at Barclays covers Tesla. Dan, the conversation with Phil, he talked about some of the lofty goals that are out there. Is this a scenario where Tesla, if it does reach those goals, is a company that should be paying Elon Musk a trillion dollars or near that amount in compensation?

[Andy Challenger]

Hi, Dom, thanks for having me. Yeah. Look, I think what we've generally said is if, if Tesla can achieve an $8 trillion valuation, which is roughly the upper end of, of the, of the market cap milestones. Elon deserves that type of compensation for what they're generating. And specifically it's, it's not just the operational milestones of the 1 million bots or 1 million robotaxis that are being deployed or the vehicles sold, really. It's also the profitability metrics. And that the last three profitability milestones are $400 billion of EBITDA in a 12 month period. That's really unprecedented. So to achieve that, obviously if they can do that, the company will be worth a lot more.

[Dominic Chu]

What exactly is going to be, from a research analyst perspective, going to be the most important part of that value added drive to reach the hypothetical $8 to $9 trillion market cap mark? Is it going to be in electric vehicles? Is it going to be in robots? Is it going to be in autonomous driving and robo taxis? What's going to be the primary driver, in your opinion, of a potential hypothetical $8.5 trillion value?

[Andy Challenger]

I think they've laid it out pretty clearly. The future growth of this company is not automotive. Auto is one element of the milestones and it is obviously the driver of all of the earnings today. But the future growth, they've been pretty clear, is driven by physical AI.

[Dominic Chu]

Right.

[Andy Challenger]

And so it's that application of AI. And whether it's in bots or whether it's in autonomous applications, be it robotaxi or consumer applications, autonomous, they're clearly sending you the message that that's where it is. There very well may be other end markets they can pursue that are adjacent, but it's an AI push.

[Dominic Chu]

All right, Dan, one last question before we let you go. You have a hold equivalent rating on these shares right now. What would happen or what would need to happen for you as an analyst to say this is a buy equivalent?

[Andy Challenger]

Yeah, I think, you know, the hold rating does reflect the fact that from a current fundamental standpoint, the stock is obviously quite full. Earnings today are being fully driven by the automotive business. We do have earnings that are roughly flat next year. We do see negative earnings revisions ahead. But we're also mindful that the automotive piece is increasingly being deemphasized by the market and really is about the growth aspects ahead. Look, the growth, the growth elements that they have ahead there, they're very ambitious and we need to see more on how that growth actually plays out.

[Dominic Chu]

All right, Dan Levy at Barclays with a hold rating on Tesla right now. Thank you very much. We'll see you soon, sir. Coming up on the show, Google's making its most powerful AI chip available to train models and agents. Will it be enough to help it catch up in the AI race? That stories ahead. The exchange is back after this.

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[Dominic Chu]

Edu CNBC Sport on the Record, your front row seat to sports and business. From commissioners and owners to media executives and top athletes, these are Rembrandt I'm telling you, these franchise on the Record all new Saturdays, three Eastern. Welcome back to the exchange markets right now drifting towards the lows of the session. The S and P is down roughly a full percent. The Dow Industrials down about a percent as well. And the NASDAQ composite, the tech heavier index is down 1 1/2 percent. The 10 year treasury note yield, it's catching at least a bid for the treasury note side of things. Yields are moving lower to the tune of around 4.08% right now. Let's kick off this check of market movers with some of the late breaking news from the last hour. That's for drug makers Eli Lilly and Novo Nordisk, the dominant players in weight loss and diabetes. They've seen some volatile trading on the heels of President Trump announcing deals with both companies to slash the cost of some of their key obesity franchises. The prices for GLP1 drugs for weight loss will be discounted for Medicare and Medicaid patients. They're also going to be offered direct to consumers at lower prices on a newly planned online platform from the administration called TrumpRx.gov that happens in the early part of next year. Outside of Pharma, you're seeing a big jump in shares of Snap Inc. The company's reporting strong results with revenues topping estimates alongside per share profits not immediately judged as being comparable to estimates daily. Active users came in better than expected. Snap also announced a $500 million share buyback program and a new deal with Perplexity that will pay Snap $400 million to integrate Perplexity's AI tools into Snapchat. And we'll end with a big decliner. Shares of duolingo down about 26% right now. The language learning platform reported better than expected revenues and raised its sales outlook, but it gave a current quarter bookings forecast that fell shy of estimates. Duolingo says it's making a strategic shift into prioritizing user growth and using AI to enhance teaching capabilities. Now let's send things over to Brian Sullivan for a CNBC news update. Good afternoon, Brian. All right, Dom, thank you. New details emerging in the overnight death of Dallas Cowboys defensive end Marshawn Nyland. Police in the Dallas suburb of Frisco, Texas, say the 24 year old found dead of an apparent suicide this after Nieland evaded officers during a chase and then fled the scene of a car crash on foot. Authorities say they received word from family members that Nieland might be suicidal. Meantime, former Newport News, Virginia teacher Abby.

[Andy Challenger]

Schwarzer, who was shot by a six.

[Dominic Chu]

Year old in her classroom a couple years ago, awarded $10 million today in her lawsuit against a former school administrator. The jury found the school's former assistant principal grossly negligent for not acting on concerns brought to her by several teachers that the young child had a gun at school. And a judge in Chicago says she.

[Evan Sohn]

Will order federal agents there to restrict.

[Dominic Chu]

Using force against peaceful protesters. And the media injunction comes in response.

[Evan Sohn]

To a lawsuit alleging federal agents are.

[Dominic Chu]

Using excessive force in their immigration crackdown. This ruling expands an earlier order from the same judge where she required body cameras to be worn. Dom, I'll leave it there. But we'll see you, by the way, in 30 minutes on power Lunch with.

[Evan Sohn]

An exclusive interview with the CEO of.

[Dominic Chu]

Critical Metals Corp. One of those rare earth companies does have any revenue yet. We'll ask CEO about it. That's coming up in about 30 minutes time. You got it, Brian. We'll see in about 30 minutes. Now coming up on the show, bitcoin is hovering near its lowest level since June and threatening to break below that $100,000 mark for the second time just this week alone. But could a bullish signal be forming in the bitcoin chart? We'll get some technical analysis with Fair Lead Strategies, Katie Stockton right here in studio next. We're back after this. Welcome back to the Exchange. Bitcoin prices down once again today, hovering just above that $100,000 psychological mark. It's now down about 20% in just the last one month alone. But our next guest says that long term momentum in bitcoin, bitcoin still remains to the upside. So for a closer look at the charts, let's bring in Katie Stockton, founder and managing partner over at Fairlead Strategies. She's also, of course, a CNBC contributor. So you're wearing green today on an otherwise red day in the market. So let's talk about the green possible moves in the bitcoin chart. What are you seeing that tells you it could be going higher?

[Katie Stockton]

Well, the long term trend is higher and you can see it right here. It's higher highs, higher lows. And the moving average, the purple one at least, which is a longer term one, is still mostly pointing higher. We've had a series of breakouts. The last breakout that we saw allowed for a measured Move projection between about 134 and 135,000. So that's what we have our eyes on long term. Of course, near term we are struggling with a corrective phase. This chart might not be capturing the move below 100, but.

[Dominic Chu]

Right. It would have been like right around here.

[Katie Stockton]

Yes, exactly. So we're a little bit below right now. It happens fast as you know. And I do think there's a little bit more room to the downside before we can resume the uptrend. But that's the nature of the market here.

[Dominic Chu]

Well Katie, we have broken that kind of 40 week moving average a couple of different times over the course of the last couple of years, but it never lasts. So this one feels as though it's not going to last here as well. So can we expect to see a timeline for when it could get that measured move up to the 135,000 mark?

[Katie Stockton]

Well, we would say six to 12 months as a timeline just based on the nature of the breakout that occurred. And you're right in identifying to find this is the 40 week maybe, but the 200 day moving average acts as a cushion, not a precise point. So sometimes it's a little spongy support level. We think the mid-90s is very realistic for Bitcoin. Of course now it's not very far away and what we're going to be looking for for that re entry signal is an oversold upturn. We don't have that yet. It could happen within weeks.

[Dominic Chu]

All right, so Bitcoin is one of those key flashpoints in the market. The other one that some say is a leading indicator for tech is that semiconductor trade. So let's put up the semiconductor ETF here, the soxx. What can you glean from the charts here about its direction?

[Katie Stockton]

Well, you can see the 10 week moving average is still pointing higher and that shows the momentum. It shows that intermediate term uptrend has been really very strong and steep. As you can see there's arrows on the chart. Those arrows denote a counter trend signal from our demarc indicators on this weekly bar chart. And you see the last one was pretty timely back in June of 24 and it preceded a prolonged corrective phase. It's not to say that this current one we have as of last week has that same implication, but it's enough of a reason, especially with the loss of upside momentum that we've seen elsewhere in risk on assets like semis, to pay attention and to be somewhat cautious. Maybe it's not the time to add new Exposure, maybe it's the time to be partially hedged.

[Dominic Chu]

So this is not full on bearish. It's just being a little bit more risk management oriented.

[Katie Stockton]

That's with regard to. Right. You don't want to fight the uptrend, but to manage risk through any kind of corrective phase is wise.

[Dominic Chu]

All right, so let's talk about a couple of setups, both positive and negative. Let's start with the bad news first. One of the charts that you think is set up, maybe not as well, are shares of a very big tech company out there. Let's put up the Oracle chart right now and see what's happening here. Because with Oracle you think that the chart right now is not set up very well.

[Katie Stockton]

And I might be stating the obvious with that. Now, of course, with the corrective ways that we seen, you can see it's taken out an intermediate term uptrend line. It closed some gaps on the chart. The earnings driven gap from before was filled and that's a setback. It's an intermediate term setback. Now supporting downside follow through from a momentum perspective. I wanted to choose a large cap tech name to show what unfortunately can happen when something gets a little ahead of itself too steep, starts to gap higher after an already very steep up move. So, so that's why we want to tread cautiously when you have these types of gaps that are exhaustive at times. What we want to see with stocks like Oracle that are gapping higher after prolonged up moves, we want to see that gap hold as support.

[Dominic Chu]

All right, so that's the bad news. Let's talk about the green. Possibly those are shares of a biotech company out there and we're talking Amgen specifically. So let's put up that chart. You think this is set up positively?

[Katie Stockton]

Yeah, you can see the long term series of higher lows and that's a positive for Amgen. But then notice also the curvature of that moving average. That's a nice upturn. And then more recently of course, we have the breakout that's as of this week, it's cleared some resistance. You could even argue that that's a triangle formation that's been completed with this breakout by Amgen. And then the biotech sector has been gaining relative momentum. So I think that that's encouraging, especially when you see a heavyweight like Amgen kick in like this.

[Dominic Chu]

All right, so health care and specifically biotech and Amgen may be set up for some positive moves. Katie Stockton, thank you very much for joining us on a red day. Coming up on the Show Google announcing its most powerful AI chip yet. Will it give it another edge over the competition? That story is coming up next. Welcome back to the Exchange. Google is announcing the rollout of its latest in house AI chip as the tech giant takes aim at Nvidia. Mackenzie Sagalos has more on the shifting AI race in today's tech chat. Max.

[Mackenzie Sagalos]

Hey Tom. So Google is opening access to its most powerful AI chip yet. Part of a much bigger play to challenge Nvidia and close the gap with cloud rivals Amazon and Microsoft. So Alphabet it has spent 10 years building this chip called Ironwood. It was introduced back in April, but now it is going to be available for mass sale. Now this matters because chips are becoming the deciding factor in who gains ground in the cloud Wars. While most AI models still run on Nvidia GPUs, Google's hardware undercuts them on price. Amazon and Microsoft, they do both have their own in house AI chips. Even OpenAI is paying Broadcom $10 billion to design one of their own. But Google's TPU's are already running two of the most important models out there, its very own Gemini and Claude. And that is helping Alphabet win major cloud contracts with names like OpenAI, Meta and Anthropic Bernstein. Stacey Razg on says Google is the only hyperscaler really deploying custom AI chips at massive scale, adding that rivals are still years and billions behind. CEO Sundar Pichai credits TPU specifically for driving massive upside in its cloud business. Which is why they are doubling down Google's capex spend now on track to hit $93 billion this year. A lot of that on chips with even more spending coming in 2026 domestic.

[Dominic Chu]

All right, so speaking of Nvidia Mac, Jensen Huang is actually now walking back some comments he made to the Financial Financial Times claiming that China is going to win the air race. How exactly does that play out right now?

[Mackenzie Sagalos]

So we saw this about face. So the company put out a statement on social media soon after that. Notably softer than his claim that China was going to win the AI race. And this comes at a time that Nvidia is really taking it from all sides. Their H20 chip, it is still stuck in approval limbo for an export license. So he's wrangling with the US government on that. And then both in video and AMD are up against tougher restrictions from Beijing. You've got Reuters reporting that China's forcing state backed data centers to use domestic AI chips. In some cases they are being forced to tear out foreign hardware. According to Reuters reporting, you've also got Beijing conducting a national security review of Nvidia's chips. So at this point, Jensen Huang, their CEO, saying that their China market share is down to zero. And then last one last month there was all this hope around those bilateral talks between President Trump and Xi Jinping in South Korea that maybe we'd get some progress on chip policy. And that hasn't happened. So I think that Nvidia very much feeling like this negotiating tactic in a larger, larger trade war, one of those.

[Dominic Chu]

Key stocks in the AI trade that's showing some of the biggest leadership to the downside right now. Mack, thank you very much for the today's tech check on AI. Coming up on the show, the Supreme Court continues to debate whether or not the president's tariffs are legal. Now if they're struck down, what retailers could benefit from either a tariff refund or relief that may not have to raise prices for the holiday season? We're going to dive into that trade ahead. Welcome back. As the Supreme Court considers the legality of some of the president's tariffs policies, what happens if they do actually get struck down? For a closer look at the potential impact on the retail sector, I'm now joined by Lorraine Hutchinson, the senior retail analyst over at B of A securities. Lorraine, this holiday shopping season could be one that is impacted more severely by tariffs. Just how important is this SCOTUS decision on the retail universe that you cover?

[Promotional Announcer]

The decision is really, really important. It may be a little too late for the holidays season, though. Most retailers right now have already received the product that they'll sell for holiday. So they have paid tariffs on those and they have set pricing for those products. So what we expect to start hitting the shelves over the next few weeks is apparel and footwear coming in at higher prices. To pass some of that tariff cost to the consumer, this week's ruling could be very important, important for the go forward of the retail business. But I think for holiday, what we are expecting is some higher prices, maybe some lower unit volume as the consumer reacts to that. And I think a lot of question marks around the potential elasticity of demand based on these higher prices.

[Dominic Chu]

How does your job flow, your workflow change? When, and I should say if, when and if, when and if the Supreme Court actually makes it its ruling, what exactly does that then do? How do you have to remodel things in the event that these tariffs are either struck down or upheld?

[Promotional Announcer]

Well, if they're upheld, we don't make any changes because that's what's forecast in our models right now if they're struck down. There is another potential under section 122 of the trade code that there could be a 15% tariff put on goods for as much as 150 days. So we'd have to see if any other tariffs are enacted once these are struck down and then we'd have to change our models accordingly. Right now I would estimate that apparel and footwear retailers are paying an incremental 20% tariff for their holiday goods. So a 15%, it's better, it's just not that much better. So we'd have to adjust and tweak as we see see fit. But we're waiting for that ruling and then we're waiting to see the reaction post the ruling to determine what kinds of changes we'd make to the models. And in the meantime, it's a lot of scenario analysis.

[Dominic Chu]

Sure. So Lorraine, one of those scenarios could play out into just what profit margins look like if this regime is held with these tariffs in place. How exactly do you feel as though the consumer is positioned to absorb any potential price increases? Will we as consumers writ large be open to paying those higher prices and preserving corporate margins or do you feel as though there will be a discounting regime that has to happen in order to catalyze buyers to actually get out there and make a transaction?

[Promotional Announcer]

I mean, I think the difficult part of my coverage universe is you don't really need anything that they sell. So the consumer has a choice if they want to spend the money on that article of clothing or that piece of footwear. So I think what will happen is those with great brand heat, really innovative product may be able to raise the prices and still get the full price sell through that they're expecting if you have an undifferentiated product, a basic that the consumer feels like they can go without. I think that's where we'll see the problems once prices start going up. So our concern around our group going into this holiday with tariffs hitting is there's a lot of things, things you do need that will be more expensive. So the things you don't need as much of you may really tighten the belt and try to spend less. Lorraine, I think that puts margins at risk for the group.

[Dominic Chu]

Lorraine, before we let you go, if things don't stay with those mainline retailers and end up having to be offloaded and discounted, it affects the supply chain for off price retailers. I know that you got a strong view on this right now. How exactly are companies like Ross tjx going to fare this holiday season.

[Promotional Announcer]

You know, we're very bullish on the off price sector. We have been for a while. Any disruption is typically good for them and we see the potential for a lot of disruption in this kind of environment. So retailers like tjx, Ross, Burlington Stores, we think that they all have a great opportunity to procure a lot of this excess product over the next several quarters.

[Dominic Chu]

And before we let you go top pick, Lorraine.

[Promotional Announcer]

Our topic is Burlington think weather. Turning product availability and a lot of self help margin opportunities will make this a great stock.

[Dominic Chu]

All right, Lorraine Hutchinson, B of A securities with the look on retail. Thank you very much for that. Coming up on the show, shares of alcohol stocks have been hung over in the past three months as consumers begin to get cautious on their spending. This past conversation. Also, drinking habits in effect. Will the crucial holiday season turn this sector around or not? The exchange is back after this. Welcome back. A sobering update from the world's biggest spirits maker. It's Diageo, the company behind labels like Johnnie Walker and Guinness and Don Julio tequila and more, slashing its sales and profit outlook. After reporting a weaker quarter, shares now are now trading at their lowest level in roughly a decade. So let's bring in our own spirits and alcohol industry reporter Brandon Gomez with highlights from the quarter. What exactly was the impetus for the negativity around this particular? Earnings?

[Andy Challenger]

Yeah, absolutely. And they raised a new red flag which we'll get into here. But first, net sales came in at 4.9 billion. Now that's down 2% year over year. Organic sales flat, better than analysts feared. But pricing and product mix took a toll. Volume's actually up nearly 3% but not enough to lift results. Now Latin America was a bright spot with strong demand in Brazil, but the biggest hangover markets, China and the U.S. china sales dropped more than 7% while drinkers here in the States traded down faster than a college bar crowded at last call. Organic sales falling nearly 3% here. Diageo saying drinkers are swapping out premium tequilas like Don Julio and Casamigos for cheaper pours. Now that Dom is what's new. For a while, tequila and mezcal have been the resilient labels with whiskey and beer under pressure. But the company's interim CFO calling it a quote, clear shift down in quality as consumers tighten their wallets in tabs as well. And because the company caused the company rather to cut guidance. Now Diageo isn't alone. The entire premium spirits industry is feeling a post pandemic hangover inflation weary consumers, moderation trends and tariffs shaking up global trade mix and Diageo's leadership remains in flux. CEO Deborah Crue left in July with no replacement in sight. For now though, Diageo's message to investors is wait for more guidance after the holidays. Q4 of course, the most important for booze sales with all the holidays loaded.

[Dominic Chu]

New Year's Christmas, where exactly are we though seeing you mentioned some of the weaker areas in in quarters past, we've highlighted some of the demographic shifts and demographic consumption trends that are happening. Do any stand out for Diageo? Does it continue to echo what companies like Constellation Brands have told us in the past as well?

[Andy Challenger]

Yeah, absolutely. I mean, again, you're probably referring to Gen Z consumers who are drinking last year. Obviously hear all of the fitness trends and prioritization of health and wellness in that demographic. You've also heard from a lot of the other companies about the Hispanic American consumer. Constellation Brands, that's a core demographic for them, makes up 50% of their beer business. And you can see here some of the comments that companies have made this quarter so far. Constellation Brands saying 80% of those surveyed Hispanic and non Hispanic consumers worried about the economy. Molson, Coors, Boston Beer also weighing in on the weakness in Hispanic American consumers. And it extends beyond beer. You heard from colgate Palmala of PepsiCo talking about that demographic too.

[Dominic Chu]

Yeah, it's one of the reasons why Modelo no longer the best selling beer in America. It's now Michelob Ultra per those trends as well. Brandon Gomez, thank you very much. Thanks. All right, well, that does it for us. Thanks for watching. The Exchange market's still in the red right now, but Sullivan, Brian Sullivan takes it over. Power Lunch starts right now. You've been listening to the Exchange.

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Make sure you're subscribed to get each.

[Dominic Chu]

Episode every day, same time, same place.

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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 courseroom to the workplace. A different future is closer than you think with Capella University. Learn more at Capella Eduardo.