New Tariffs, the U.S. Push for Key Metals, and Countdown to Shutdown 9/26/25

Summary

The Exchange (CNBC) – Episode Summary

Date: September 26, 2025
Hosts: Melissa Lee, Mike Santoli
Key Guests: Sam Stovall (CFRA Research), Courtney Breen (Bernstein), George Janarikis (Canaccord Genuity), Emily Wilkins (CNBC), Contessa Brewer (CNBC), Eamon Javers (CNBC)

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Overview

This episode dives into the economic and market landscape amid a wave of new U.S. tariffs on a range of products, major moves in key metals and rare earths, persistent volatility and uncertainty in AI and tech markets, and the rapidly approaching government shutdown. The hosts and their guests break down what’s moving the markets, who stands to win or lose from policy changes, critical industry impacts, and what investors should watch in the days ahead.

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Market Overview & Sentiment

[01:31–08:06]

• Equities:
  • Markets showing resilience: The Dow and S&P 500 aimed for their first positive day in four; NASDAQ on track to halt a 3-day losing streak.
  • Remarks on mild pullbacks and a digestion period for recent gains (Mike Santoli: “It seems like there’s a digestion period underway and that, that could bode well longer.” [02:54])
  • Consumer sentiment is softening; 44% report higher prices hurting their finances—the highest in a year.
• Commodities:
  • Oil up 1%+ (best sector of the week); gold and silver rallied.
  • Persistent hawkish market tilt despite mixed economic data.

AI & Tech Market Context:

• Early investor Roger McNamee warns of a possible "AI reckoning"—too much capital being spent by too many players to assume all will succeed.
• McNamee: "There’s not room for all of those players to be successful when the day of reckoning comes. The longer this goes on, the deeper the reckoning is going to be..." (Roger McNamee, [03:24])
• Barclays research: Differences between the current AI investment surge and the Dot Com era (Meta’s spending is cashflow-based currently).
• General market tone: Awareness of "doubt layer" is healthy—parallels to tech bubbles, but with notable distinctions.

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Market Strategy & Small Cap Outlook

Guest: Sam Stovall, CFRA Research
[05:19–11:02]

• October is typically the most volatile month; Sam calls for investor caution amid elevated RSI and indices well above their moving averages.
• A broad market rally, highlighted by simultaneous all-time highs in S&P 500, Russell 2000, and international indices, historically bodes well for returns (+2–3x average performance next 90 days).
• Small cap spotlight:
  • “They set their first new all time high in four years while the S&P had set 89 new highs in that time frame. Whenever both of them hit new highs, the small caps were up two and a half times what they normally were..." (Sam Stovall, [08:18])
  • Projected 2026 earnings growth: Small caps +20%, S&P 500 +13%.
  • Small caps still trade at a sizable discount to long-term average P/E ratios.
• Bull market context: If the rally reaches its third anniversary, history favors continued gains; still, acceleration in earnings is needed for sustainability.
• Sector outlook: Big cap tech remains the leading growth engine for 2026, with industrials also strong; no sector expected to post a year-on-year decline next year.

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New Tariffs: Pharma, Furniture, Trucks & Key Metals

[11:02–22:01], [35:26–41:32]

Pharmaceutical Tariffs

Guest: Courtney Breen, Bernstein
[13:38–20:59]

• Policy Details:
  • President Trump to impose a 100% tariff on all branded or patented pharmaceuticals imported after Oct 1.
  • Exemption for drug makers building manufacturing plants in the US.
  • Countries with U.S. trade deals (e.g., EU, Japan) have capped tariffs (15%) on pharmaceuticals.
• Industry Impact:
  • Large pharma companies seen as well-positioned: diversified manufacturing, historical preparation for tariff scenarios.
  • Smaller drug companies more exposed.
  • Ongoing risk: Drug pricing policies remain the primary concern for sector valuations; upcoming week expected to bring further policy headlines, which may drive volatility but probably less severe implementation than headlines suggest.
• Memorable moment:
  • “What we anticipate is while there will be volatility as announcements come out, we expect that what gets implemented is going to be more narrow than how scary the headlines are…” (Courtney Breen, [19:22])

Other Sectors Hit by Tariffs

[20:59–22:01]

• Furniture imports: Will face tariffs of 30-50%—domestically focused players (e.g., La-Z-Boy) benefit. RH previously warned of $30 million revenue hit from tariffs.
• Heavy trucks: Imports get slapped with a 25% tariff. U.S.-based Paccar (Peterbilt, Kenworth) gains; Daimler (Freightliner) and Volkswagen’s Traton (international competitors) slip.
• The hosts note further pressure points on the consumer, especially as furniture manufacturing is slow/expensive to relocate.

Key Metals & Rare Earths Initiatives

Guest: George Janarikis, Canaccord Genuity
[35:26–41:32]

• U.S. government moves (including taking a 15% stake in MP Materials) aim to reduce China dependency for strategically crucial rare earths—with stocks reacting sharply on related news.
• “...the Chinese government had been artificially depressing the price of rare earth materials to disincentivize mines across the world from producing themselves. What the US Government had to do... is set essentially an artificial price at 110 for MP, take a stake in the company and participate in upside..." (George Janarikis, [36:25])
• U.S. demand remains far ahead of domestic supply, even with new facilities coming online—but government support (equity, grants) and partnerships (e.g., with Apple, possibility for Tesla and Lockheed Martin) provide runway for domestic rare earth miners.

Tariff Clarification

Eamon Javers, CNBC
[41:32–43:30]

• White House: Any tariff caps or carve-outs agreed to in trade deals (e.g., EU/Japan 15% on pharmaceuticals) will be honored.
• Important for investors to check if a sector/country has a lower cap as this will materially affect stock impacts.

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Macro Risks: Government Shutdown Looms

Reporters: Emily Wilkins, Contessa Brewer
[27:04–34:48]

Washington Outlook

• Timeline:
  • Lawmakers have mere days to strike a deal before shutdown on Wednesday.
  • Senate returning Monday to vote on a stopgap; House Republicans are on standby.
• Impacts:
  • No jobs data if shutdown lasts beyond Friday.
  • Delays in small business/farm loans, IPOs, and other key services.
  • Millions of federal workers/contractors won’t get paid; risk of layoffs cited as a new (and controversial) pressure tactic by the White House.

Travel Sector Impact

• A shutdown threatens to cost the travel industry $1 billion per week due to air/train disruptions and national park/museum closures (Tourism Economics estimate).
• 60% of Americans say they would cancel or avoid air travel in event of a shutdown.
• Already-softening international travel (notably from Canada) exacerbates risk, with ripple effects from hotels to restaurants.
• “If you have whole departments shuttered and federal workers furloughed, that most certainly would hit the travel industry. Not just hotels, but restaurants that cater then to government workers who go to conferences and things like that.” (Contessa Brewer, [31:45])

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Commodities & Sector Rotations

[23:24–25:29]

• Energy stocks enjoying their best week since June; uptick in oil prices.
• Analysts observe possible sector rotation—consumer cyclicals showing softness after recent outperformance, while energy sees flows.
• “Wouldn’t necessarily be the worst thing if energy outperformed for a little while. It doesn’t seem as if gas prices are so decisive massive in terms of the consumer pocketbook right now…” (Mike Santoli, [24:24])
• Oil-to-gold price ratio at a 15-year low; hosts discuss implications for monetary policy and commodity strategies.

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Tech Race: AI & International Strategies

[43:30–45:02]

• OpenAI and Anthropic locked in an enterprise AI market race, with both emphasizing international hiring for better deployment.
• Anthropic opens offices in Tokyo and Europe, hiring regionally to improve onboarding; will 5x its global enterprise engineering team in 2025.
• Key insight: 95% of enterprise AI deployments fail at scale—growing local teams seen as critical.
• “Anthropic… skips the consumer race, focusing on business customers, which is where the money is.” (Mackenzie Segala, [44:38])

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Rapid Fire — Top Headlines & Market Movers

[45:04–48:33]

• TikTok to be purchased by an investor consortium—a surprise $14 billion valuation seen as low for its scale vs. rivals like Snap.
• Tylenol: President posts to avoid giving it to children. Discussion about litigation and consumer behavior impacts for pharma companies.
• Intel: Surges to its best month since 1987 on reports of possible U.S. government support and investment, and rumors of partnerships with TSMC.
• Broadcasting: Jimmy Kimmel Live to return to Sinclair’s ABC affiliates.

---

Notable Quotes

• “There’s not room for all of those players to be successful when the day of reckoning comes. The longer this goes on, the deeper the reckoning is going to be…”
  — Roger McNamee on AI overinvestment ([03:24])

• “Whenever both [S&P and Russell 2000] hit new highs, the small caps were up two and a half times what they normally were…”
  — Sam Stovall, on small cap catch-up ([08:18])

• “What we anticipate is while there will be volatility as announcements come out, we expect that what gets implemented is going to be more narrow than how scary the headlines are.”
  — Courtney Breen, on pharma tariffs ([19:22])

• “…the Chinese government had been artificially depressing the price of rare earth materials to disincentivize mines across the world from producing themselves. What the US Government had to do... is set essentially an artificial price at 110 for MP, take a stake in the company and participate in upside…”
  — George Janarikis, on U.S. government involvement in rare earths ([36:25])

---

Timestamps for Key Segments

• [01:31] — Market overview and sentiment
• [03:24] — AI investment concerns (Roger McNamee)
• [06:10] — Historical bull market patterns (Sam Stovall)
• [08:18] — Small cap rally analysis
• [10:28] — Sector earnings expectations
• [13:38] — Pharma tariffs policy and industry impact (Courtney Breen)
• [20:59] — Furniture and truck sector tariffs
• [23:24] — Commodities & sector rotation
• [27:04] — Government shutdown risks (Emily Wilkins, Contessa Brewer)
• [35:26] — Rare earths and U.S. government strategy (George Janarikis)
• [41:32] — Tariff clarification (Eamon Javers)
• [43:30] — AI global expansion: Anthropic vs. OpenAI
• [45:04] — Rapid Fire (TikTok, Tylenol, Intel news)

---

Tone

• Analytical and businesslike, with an undercurrent of cautious optimism among market strategists.
• Policy discussions are clear, measured, and focused on practical sector impacts.
• Occasional quick wit and banter between hosts—maintaining an accessible, newsroom feel even as they cover complex, high-stakes issues.

---

This episode is essential listening for anyone wanting the latest on the interplay between new tariffs, market resilience, small and large cap outlooks, and evolving sector risks as the U.S. faces shifting economic terrain and looming policy milestones.

Transcript

[A]

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[A]

You'Re listening to the Exchange. Here's today's show. Thank you Don. Welcome to the Exchange. I'm Melissa Lee along with Mike Santoli. On this Friday, stocks moving higher with the Dow the S&P 500 trying for their first positive day in for the Nasdaq, meantime on pace to snap a three day losing streak.

[B]

Yields meanwhile ticking just a bit higher on the long end after August. PC report was in line with estimates, but consumer sentiment came in a bit light with 44% of consumers reporting higher prices or hurting their finances. That's the highest reading in about a year.

[A]

We're seeing some pretty big moves across commodities today. Oil up more than a percent. Energy the best performing sector this week in fact. Gold meantime higher by about a percent while silver climbing 3% to its highest level since May of 2011 so mixed economic data, but there does seem to be still this sort of hawkish tilt in the market.

[B]

I think that's fair to say. I mean, personal income and spending both came in better than expected and you have, you know, inflation kind of sitting at these familiar levels in the high twos. And yields are definitely holding their gains, let's put it that way, that they've had in the last week and a half. With that said, the overall market has had only the most mild of pullbacks. And so it's been a struggle to get really any selling pressure. It's been slowing down, it looks tired. But every day it seems like there's one or a few stocks that kind of supports the index. Today is a broader relief rally.

[A]

I think the fact that it hasn't moved a lot when there was every opportunity to sell for some reason is actually, I mean, I think that's a good sign. It seems like there's a digestion period underway and that, that could bode well longer.

[B]

You have to pay attention when the market sort of defies the negative seasonals and things like that, which so far we're doing. Yeah.

[A]

Meantime, early Facebook and Google investor Roger McNamee writing in an op ed for the Guardian investors are in for a rude awakening. But his warning also applies for everyday investors.

[B]

The problem in AI is the entire capital spending model assumes everyone is going to succeed and depending on how you count there between six major players and 11. And it's, it's just not. There's not room for all of those players to be successful when the day of reckoning comes. I have no idea. But the longer this goes on, the deeper the reckoning is going to be and the more dramatic for the stock market because what Big tech is more than a third of the S&P 500. So you know, the impact of, of a decline there is going to be felt everywhere.

[A]

The problem is that the day of reckoning may not be for a long time. And while some may actually lose and not be winners, we may not find that out for, for years to come.

[B]

Years. And honestly, this was the week where there was really a crescendo of anxiety around AI over investment as a possibility. It felt that people are pointing to the debt financing and the kind of weird overlapping partnership circularity.

[A]

Yeah.

[B]

And just the sheer volume of spending and whether in fact you're going to get payback. It's just hard to know if these companies are doing it because they feel like there's an undeniable opportunity or because they're feeling like defense too. Yeah, exactly. By the way, there are like four cloud players. I don't know. There's not to be one winner in AI modeling or whatever it is, but I guess we'll have to see. I don't think we're going to be free of this sort of doubt layer that's in the story.

[A]

That seems to be actually a healthy thing. Right. Instead of just going, you know, in an unbridled fashion. There were a couple of notes earlier this week sort of exploring the idea of some sort of an AI reckoning, as Roger McNamee would put it. Barclays was one and they were sort of taking a look at the differences between now and the dot com boom. And there were a lot of differences in terms of percentage of sales being spent and also the leverage being taken on to do this spend. I mean, you're talking about Meta. They've got a lot of money and a lot of cash flow.

[B]

For now, it's mostly being financed out of out of ready cash. Yeah, we'll see if that changes more. Our next guest says while investors are breathing a sigh of relief today after the Fed's preferred inflation gauge kept the road paved for two more rate cuts this year, they should still brace for some volatility in the near term. Joining us now, Sam Stovall, chief investment strategist at CFR Research. Sam, great to talk to you. Are we thinking that it's just the kind of negative seasonal tendencies or just something in the markets under the surface that seems like maybe there's some fatigue there or something else that you're trying to flag? Hey Michael, good to talk to you again. Well, I think it's a combination. If you look just to October itself, it is by far the most volatile month of the year with 33% more volatility than the average for the other 11 months of the year. So from that perspective, it's basically fasten your safety belts. But also just before the Powell induced plunge earlier this week, the thought being that, well, okay, well let's take a look at where major indices are trading versus their 200 day moving averages. And the S&P 500, the Russell 2000, the S& P Developed international as well as communication services and tech were more than one standard deviation above their mean. So implying that they are due for some sort of digestion. Plus they all but the Russell were trading at an RSI above 70. So I think a near term digestion of gains is certainly appreciated and hoped for by many investors. That's a good point. That it's hoped for. I think that's correct. Sam. If I kind of just look across the landscape at how people are approaching this moment in the market, it's don't be surprised if we do get some kind of a pullback. And we have not had a 3% pullback or greater in the S and P since April. So obviously, you know, we might be due. On the other hand, if the market as we were just discussing kind of resists the opportunity to go down a lot, it feels as if people are just penciling in the year end rally no matter how it goes. True. And also you have to realize that the S and P is all time high was then matched on the same day by the Russell 2000. And also we had an all time high set on the S and P developed international index. Historically, whenever you've had an in concert move to the upside like that, we have had two to three times the average performance over the coming 90 days with a frequency of advance that at least for small caps went from 62% up to 80%. So higher frequency of advance, greater average advance, mainly because you have confirmation around the globe.

[A]

Sam, are you a believer in the small cap rally at this point? I mean some would say the quality of the small caps these days not as good in terms of the earnings quality. So they're doubtful even with the advance we've seen.

[B]

Hey Melissa. Well, I think that we are likely to see small caps play catch up because as I just mentioned, they set their first new all time high in four years while the S&P had set 89 new highs in that time frame. Whenever both of them hit new highs, the small caps were up two and a half times what they normally were with an improvement in the frequency of advance. We're looking for 20 plus percent earnings growth in 2026 for small caps versus 13% for the S&P 500. And the small caps are trading at a 35% discount to their 20 year average relative P E on forward estimates. Sam, in a couple of weeks we're going to hit the third anniversary of this bull market as most are measuring it from that low in October of 2022. Where does that take us in terms of the broad tendencies? I mean a lot of the concerns that people are raising about this bull market is that it's very concentrated in terms of where the gains have come from and how the index is skewed and also obviously level of valuation just across the board. Right? Well usually if we can get past the second year as we are about to do. You know, it's almost like child rearing. Beware the terrible twos. So if we can celebrate our third birthday on October 12th, then it's like demographics. You get past age 65, you've got a great chance of making 8595. So with bull markets, once you get past the third year, then the fourth year average gain is 13% and a much greater frequency of bull markets continuing their run into that next year. So from that perspective, you know, things are positive. I do believe, however, that we're going to need to see an acceleration in earnings expectations because we're still below what we were thinking we would earn in the S&P 500 on December 31st of 2024. So I think we still need to see an improvement in earnings to keep this rally going.

[A]

So where is that going to come from in your view, Sam? Is it still going to come from big cap tech or is it going to come from elsewhere?

[B]

Well, big cap tech certainly is the the primary spot looking for about a 21% growth in 2026, but also looking for good results in industrials up 16%. And so I think that it'll be across the board where we'll see positive gains. No sector is expected to post year on year declines next year with all of them at least 7 1/2% or higher. All right, decent starting point at least. Thanks very much. Good to talk to you, Sam Stone, thanks.

[A]

Coming up, President Trump threatening to impose tariffs of 100% on all branded or patented pharmaceuticals entering the U.S. but there are plenty of caveats. We'll take a look at the names most and least exposed next.

[B]

Plus this name erasing yesterday's gains. Following a report, the Trump administration is considering taking equity stakes in more companies. We'll reveal it just ahead. The exchange is back after this. This is the exchange on cnbc.

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[A]

Welcome back to the Exchange. President Trump announcing he will impose or the US will impose a 100% tariff on any branded or patented pharmaceutical product entering the country after October 1st. But any companies building drug manufacturing plants in the US including those who have started construction or are just breaking ground, will be exempt. Big Pharma mostly taking the news in stride, though Novo had been down as much as a percent and a half today. Our next guest says most of those companies are in a strong position to mitigate tariffs. Joining us now, Courtney Breen, senior analyst at Bernstein, covering US Pharma Biopharma. Courtney, great to have you with us. Obviously there's still some some questions outstanding. I'm wondering if you're you know, as you think about companies with US Manufacturing, if companies have pre existing plants, are they also exempt? I think what we've had so far is a tweet or a post on on Truth Social rather than necessarily the discreet and detailed policy. So I Think there are a lot of questions that are still outstanding and that manufacturing in America exclusion. There are questions that arise around that as we think about not each plant that perhaps is getting established in the US is just for a single product. It may be for many products. If there is a plant being having ground broken on it or construction underway, does that exempt you for all of your other products and the importation tariffs for them coming in? So lots of questions still exist around kind of US versus ex US manufacturing sites. What constitutes enough as well as how much exclusion can you gain from that tariff. One of the questions that seemed to have been unanswered but has now since been answered by the White House is that countries with trade deals with the U.S. those companies, those pharmaceuticals will in fact be exempt. I'm wondering if you sort of think about who might be impacted then. There are countries obviously without a trade agreement where they do manufacture pharmaceuticals, like in India or Switzerland. How do you think about that impact? Yeah, it's a great question. When you look at the overall value of imports for pharmaceutical products into the US There are two things to note. First, the numbers are really high. So in 2024 it was about $214 billion worth of imports into the U.S. that number is really high because of a concept of transfer pricing where you're bringing those products in at a price into the US so that you can accumulate as much of your profit in a lower tax region like Europe. In addition, we also see that the overall industry's imports into the US are highly skewed to Europe. So Europe making up about 60% of the overall pharmaceutical imports into the US as we think about the 15% agreement that's already in place with Europe, that's a nice stable kind of number that people can deal with. When you look at kind of India or China, these are high volume contributors, but they are contributors that are much more associated with lower cost ingredients, earlier stage API or earlier kind of constituents that you might incorporate into these products rather than the finished goods where the value or the risk of tariffs being expanded is the highest.

[B]

Cordy. I suppose this was at least one overhang on the group among many or several at least. Where else are we going to look? Are pharmaceutical investors going to be looking for answers on the policy front? We still have this notion of some kind of drug pricing push or something along those lines. So how are you thinking about how that influences business models and valuations?

[A]

Absolutely. I think drug pricing has been the number one topic and all the conversations I have with investors at the Moment tariffs for the largest part had kind of been dealt with in many investors minds even though we hadn't had the announcement. Drug pricing, however, is kind of the primary driver of the margin multiple compression that we've seen for all of these companies as we look to what might get announced September 29th. So Monday is the next critical deadline. Now that we've had tariffs roll off, is much more likely that we start getting pricing news. Why is this? Because tariffs have been the leverage that the administration has had to try and request improvements on the drug pricing scenario. And that's because on drug pricing there are much more narrower paths that the administration can enact on the industry compared to what they could do on tariffs. So we are expecting a relatively noisy week next week. And I think it's important to know that headlines and what gets implemented often look quite different. So we're going to be kind of at the ready trying to digest anything that does get announced on Most Favored Nation or any other direct to consumer platforms or the inflation Reduction act negotiated 15 drug prices that we expect might start coming through as early as next week. So what's the message for investors then, Courtney, for this group as we do, I mean, tariffs ended up being sort of just a no big deal or not as bad as expected. But pricing is certainly a key issue here. And then for those who are invested in the, in the lower cap parts of the, of the market, there's, there are things that the tariff issue, for instance, would be a much bigger impact on a smaller drug manufacturer versus a Merck or Lilly. Absolutely. I do think as we look at tariffs, your ability to mitigate them is incredibly important. And I do agree that the largest cap names have the largest ability to mitigate because of their broad manufacturing base to begin with. The ability to perhaps spend capital here in the US as well as what we've already seen, which has been the mad dash of bringing products here into the US as we look at kind of what's going to happen with these names over the next days and weeks, we're already seeing kind of the large caps be at some of the lowest levels that they've been historically. We're talking about PE multiples forward PE in the low end and handles with a 7 at the beginning. Usually the sector trades in the 10 to 15 range even when there are fundamental challenges for business. So we are already at lows. What we anticipate is while there will be volatility as announcements come out, we expect that what gets implemented is going to be more narrow than how Scary the headlines are. And so we see that as a chance for a relief rally as we get to those details. Courtney, great to speak with you. Thank you. Courtney Breen. And by the way, it's not just pharma. We're watching shares of La Z Boy, Wayfair, Williams, Sonoma and rh. After the president said furniture imports will face tariffs of between 30 and 50%, La Z Boy outperforming as it has most of its manufacturing in the U.S. remember, just two weeks ago, RH warned of a $30 million hit to its revenue this year because of the tariffs. And we got another sector for sure.

[B]

So another one in the tariff crosshairs, heavy trucks. Those imported to the US will see a 25% tariff. That's now helping shares of Paccar, the owner of Peterbilt and Kenworth, which manufactures more than 90% of its U.S. trucks domestically. On the flip side, German truck maker Daimler, which owns the Freightliner brand, fell about 2% alongside Volkswagen subsidiary Triton. So, so the market is, is trying to do this trick where it sort of surgically applies the punishment.

[A]

Right.

[B]

And the reward based on these narrow sectors of being impacted. But I mean, the truck one shows you that they think that domestic makers are going to have this pricing umbrella and less competition.

[A]

Yeah. How it gets transferred eventually to, you know, to pay for those costs like a Wayfair. I mean, who is the demographic of the wayfarer consumer, you know, and how will Wayfair with already thin margins pass on those costs? So, so it's just enough grit, you know, in this consumer story when you see the labor market weakening a little bit and the consumer thinking about what they're spending, maybe this is just enough to, to spark that pullback.

[B]

Yeah, for sure. And also we've heard so much about how it's virtually impossible to add furniture manufacturing capacity any timely way here. So it is just about kind of bottlenecks and friction for sure. All right, coming up, energy stocks on track for their best week since June as crude price prices hit a three week high. When we come back, a look at classic cross commodity signals and what it says about the broader market. Morning, Zoe.

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Sleep Sound AT&T5G requires a compatible plan and device coverage not available everywhere. Learn [e-mail] 5G Network welcome back. As we close out the week, we have an interesting potential crossover in sort of a commonly watched relationship between consumer cyclical stocks and energy stocks. Rspd, that's the equal weighted consumer discretionary sector. RSPG is equal weighted energy. Now consumer cyclicals have actually been outperforming for some time, not just energy but the overall market market. It's been one of the more reassuring macro messages from the market. You see some rolling over here though in consumer cyclicals, a little bit of static on the lower end consumer and maybe some some noise about housing market exposures and things like that. Meanwhile, a nice upturn in energy as crude prices have firmed up and it's a very under loved under owned group. Wouldn't necessarily be the worst thing if energy outperformed for a little while. It doesn't seem as if gas prices are so decisive massive in terms of the consumer pocketbook right now, but maybe it complicates the relationship just a bit. Now looking at other relationships connected to energy, the ratio of crude oil prices to gold is basically at a 15 year low right here. By the way, 2020, remember crude oil briefly went negative. We're probably not going to go back there. But as you can see right here you got one really useful necessary commodity and one sort of quasi money, monetary, not necessarily as crucial commodity. Basically at an extreme right here, right now, an ounce of gold buys you 57 plus barrels of oil. For those who can make use of that, let's get over to Bertha Coombs for a CNBC news update.

[A]

Hi Mike. Ukrainian President Volodymyr Zelensky asked President Trump during their meeting on Tuesday for Tomahawk missiles, according to Axios. While he didn't mention the long range range cruise missile specifically in an interview, Zelensky told Axios Wednesday that he wanted a weapons system to force Russian leader Vladimir Putin to make a peace deal. Ukraine has previously requested Tomahawk missiles from the U.S. more than a dozen CDC web pages on topics including sexual and gender identity as well as health equity have been taken down. CNBC has learned the agency sent an email on September 19 to employees whose work is related to those pages which said the Health and Human Services Department ordered the CDC to remove some web pages but did not say why. And Six Flags Over Texas is building a massive new roller coaster that's expected to set six new world records once it's completed. The Tormenta rampaging run will feature the Highest coaster at 309ft, a top speed of 87 miles an hour and will also plunge riders into a record breaking 95 degree drop. Just reading that is giving me vertigo. There's no way, you know what I would ever go on that. No way. Certainly not the first one to go on. I'll let other people go first.

[B]

I was told once by a CEO of an amusement park company that the limits are not engineering. They're what humans can handle essentially. Yeah.

[A]

All right, Bertha. Thanks. Bertha coombs, Coming up, we're just days away from a potential government shutdown. We'll take a look at what is standing in the way of a deal and the impact a shutdown could have on the travel sector. The Dow meantime outperforming the major averages today on the brink of turning positive for the week. Boeing leading the way along with IBM, Goldman, JPMorgan Chase. That's at an all time high. We are back right after this.

[B]

Foreign welcome back to the exchange Markets now back near session Highs you have The Dow is up 406 at the high. You see it ahead here just about. Call it 810 of 1%. The S&P up half a percent. It's only down maybe a third of a percent for the week. So just a modest pullback so far.

[A]

Yep. Meantime, Congress is set to return to Capitol Hill Monday, giving lawmakers just two days to strike a deal and prevent the government from shutting down on Wednesday. Emily Wilkins is in Washington with the sticking points and Contessa brewers here on set with the potential cost to the travel economy. Emily, let's start off with you. What's the latest? Melissa? Well, look, at this point, we got less than five days left to find a way to keep the government funded. Both parties really are digging in, which means a shutdown is looking more likely than ever. Now, not all agencies have published their plans for a shutdown, but we know from past experience that there are going to be wide ranging implications. So let's start that first week. If the shutdown begins on Wednesday and it's still there on Friday, that means no jobs data is going to come out. You know, if it's just a week, these are minor impacts. But then if you start going beyond a week, the complications build. You could see delayed loans to small businesses and farmers. There will be a slowdown in the process for companies to go public, a number of other things. But maybe one of the bigger ones also is no pay for the millions of federal workers and contractors. And that really does have an impact. Moody's estimates that for every week of a shutdown, the GDP growth for the quarter will be reduced about 0.1%. Now, the Senate is set to return to D.C. on Monday. @ this point, it seems like that's when they're going to be taking the next vote on the GOP's bill to continue current, current government funding until November 21st. That again would give lawmakers seven more weeks to hash out the details needed for funding the government for fiscal 2026. When the Senate last voted on this, only one Democrat, John Fetterman, supported it, while two Republicans, both Lisa Murkowski and Rand Paul, opposed. So we're going to be keeping a close eye to see if those numbers shift. Meanwhile, House Republicans canceled their plans to return to town on Monday. But House Republicans have told me they are on standby to come back if needed, likely if there is a shutdown. Guys.

[B]

Emily, you mentioned the lack of jobs data. If the government shuts down some other services that are not going to be delivered, people aren't going to get paid. What about the threat by the administration of permanent job cuts if in fact there's no deal?

[A]

That's really critical. And that's kind of what's made this shutdown a bit different from others that we've seen, we've never seen the government actually say, hey, these workers that you're furloughing, you should consider firing them instead. And of course, there are already questions percolating about the legality of that. How do you fire people if there aren't people in the government who can actually do the firing and keep up with the upkeep of it? But I think at this point, the White House is serious. We, we have seen them go forward with a number of layoffs and a number of reductions for the workforce. And we have seen the Supreme Court so far clear a path for them to do so. Now, this was supposed to increase pressure on Democrats to agree to a stopgap to keep the government funded. At this point, it hasn't worked. We're seeing Democrat leaders in Congress continuing to say that the only way that they are going to support a stopgap is if they can get something when it comes to health care, likely something on those Affordable Care act tax credits. But they're kind of doing the thing with a negotiation where you kind of start big and then see what you can get. So they're keeping their ask very broad and very wide right now. But at this point, Republicans are basically digging in and saying, hey, if there is a shutdown, it's going to be the Democrats fault. Emily, thank you. Emily Wilkins. Let's turn now to Contessa Brewer for a look at how much the shutdown could cost the travel sector. Contessa yes, they're getting warnings now. It would be a billion dollar impact every week that the government is shut down. That's according to tourism economics. A billion dollars in losses because of disruptions in air travel or train trips because national parks and museums would likely close. We certainly have seen that happen in past shutdowns. US Travel, which is the trade group representing the industry, sent a letter to congressional leaders calling a shutdown a wholly preventable blow to America's travel economy. Quote, the longer a shutdown drags on, the more likely we are to see longer TSA lines, flight delays and cancellations, national parks and disrepair, and unnecessary delays in modernizing travel infrastructure. There's a lot of those projects going on. This was according to CEO Jeff Freeman in a news release. They're pointing to an IPSO survey that showed 60% of Americans say they would cancel or avoid trips by air in the event of a shutdown. But look, the travel industry is already seeing softer demand in the second second quarter. Through summer's end, international travel is noticeably off, especially from Canada. Hotel executives publicly have grappled with shrinking government business. Because jobs were slashed earlier this year, there were fewer government people traveling, staying at hotels. If you have whole departments shuttered and federal workers furloughed, that most certainly would hit the travel industry. Not just hotels, but. But restaurants that cater then to government workers who go to conferences and things like that. So it has a ripple effect beyond just TSA lines, so to speak. Right. And it's difficult to rebook travel. This is not like I'm not going to buy the iPhone or whatever it is. It's not transferable necessarily to another week or another weekend. That's exactly. That's a great point. It just goes away. And if you've got millions of government workers who are no longer getting a paycheck for that week. Right. Are they going to keep their travel plans or are they going to yank them? And what's the impact then? You know, we'll wait and watch to see how all of this plays out. But, you know, as they do this negotiating at the table, whose fault is it that the deals aren't getting done? You know, who doesn't have a seat at the table? The federal workers and the people who rely on that kind of spending to fuel the business.

[B]

I've actually seen some people starting to flag, you know, the big hotel chains that had such strong stock stocks kind of soften up, you know, recently. I don't know if that's a general kind of consumer caution type of a signal. What has business travel looked like, though? I mean, you mentioned internationals had a little bit of this air pocket.

[A]

But the convention calendar is very strong. When you look at Las Vegas through the end of the year, it's a packed conference calendar. The beginning of the year looks great. And they're. They're really relying on that to sort of give some juice to what was otherwise not a. Not a complete slowdown, but sluggish travel economy. The international piece of this is a big deal, and I think it's being under reported. If you've got a 10% downturn already earlier in the year from Canada, what that does to your numbers, and that does not seem to have shifted. I was at a travel industry conference last week, and I was asking specifically about Canadian tourism, and they said it's very problematic. When you ask coastal Maine, northern Adirondacks, New York, Door County, Wisconsin, people that rely on Canadian tourists in the summertime, they're really feeling the pain.

[B]

Well, and there's whole towns in Florida that are mostly kind of Canadian in.

[A]

The winter, you're seeing them yank. They're deciding, nope, not going to rent this year.

[B]

All right. I guess the World Cup's going to have to rescue international travel next year into the U.S. contessa. Thank you. Coming up, shares of this company climbing 9% yesterday on reports the Trump administration was considering expanding its ownership in the sector after taking a stake in a competitor this summer. But the stock unable to hold those gains today, falling as much as 10%. The name and what's next after this quick break? The exchange. Be right back.

[A]

Welcome back. A volatile week for the rare earths names sinking today after posting big gains yesterday. U.S. rare earths down 7%. That was our mystery chart. Following the report, the Trump administration is considering taking stakes in more of those companies. The Department of defense announced a 15% stake in MP Materials. That was back in July. Shares more than doubling since then as part of the ongoing effort to reduce America's dependence on China for those key metals. Our next guest says that while that will be a herculean task, he's already seeing signs of, quote, big time positive momentum. Joining us now to discuss is George Janarikis, analyst at Canaccord Genuity. George, it's great to see you.

[B]

Nice to see you too, Melissa.

[A]

There's two issues here. That is reducing the reliance on rare earths from China and elsewhere. And then there's the issue of the momentum in the stocks and they seem to be sort of different issues because I'm not sure if taking a stake in a, in a mining company that has a mine that just opened is going to really do the trick. But we are seeing the excitement in the shares.

[B]

Well, look, what the government did a couple few months ago like you referenced was in our opinion, brilliant. Essentially, the Chinese government had been artificially depressing the price of rare earth materials to disincentivize mines across the world from producing themselves. And what the US Government had to do in order to wean the United States off of Chinese supply is set essentially an artificial price at 110 for MP, take a stake in the company and participate in upside as the company grows its refining and its magnet production. So it was, it's what had to be done, particularly after the recent China US Negotiations. And we should expect additional deals like this not only in rare earths but potentially in other materials across the country.

[A]

So seeing what's happened with NP shares since then, are you recommending just a basket it of these stocks, there aren't too many actually that are publicly traded.

[B]

We cover two. We cover MP Materials, we Also cover USA Rare Earths. USA Rare Earths is in the business of building a magnet production facility in the United States. They also have some land in Texas where they hope to extract heavy rare earth materials which are very, very important. So those are the two that we cover and we recommend investors buy both. George, as you, as you pose it here, the government is kind of de risking, you know, investment in this area. Saying these are strategic resources and trying to backstop sort of longer term production. All makes sense. What is the effect, if anything, on things like discouraging renewable development and things like that, other things that might be a piece of the demand equation for this group? It's a fair question. So if you think about what rare earth magnets go into, like you referenced, they go into EV motors, they go into wind turbines, but they also are the feedstock for physical AI. The robots that we see either from Boston Dynamics or for Tesla, they're all going to use actuators which use rare earth magnets. They essentially, these magnets essentially enable electrified motion. So it's not only important for the renewable sectors, but it's also important for robots, also important for defense. That's why it was so important for the Department of War to get the feedstock from MP Materials in their agreement that they signed a couple months ago.

[A]

So in terms of where, where the rare earths are coming from right now, for specifically the tech trade, George, I'm just wondering how that changes, if at all, once USAR for instance, gets online fully and MP Materials, I mean, how quickly can we shift to much more United States rare Earths?

[B]

That's a really good question. So our estimate is that US consumes about 50,000 tons of rare ear magnets per year and plans to get to 10,000 USA Rare Earths to 4800. So we still have a huge gap between what we consume in what, what's needed to be produced. There are also some private companies trying to build magnet production, but it should be a vibrant next decade or so for those who are trying to produce magnets in the United States. And George, I mean, as you cover this group, I mean, I know you have a much broader selection of companies, more developed ones that you do cover, but the kind of waves of speculative excitement and then retreat that come in and out of it, I mean, is this something that you just have to deal with or is it something that for certain companies, you know, it's sort of make or break depending on their valuation and how much capital they're able to access. Look essentially for MP There's a long Runway for, for them to grow here. And what we expect for them specifically is potentially additional agreements from the likes of, you know, a Lockheed Martin or a Tesla. We're just speculating as to additional agreements they could have. They already have one with Apple to supply magnets for iPhones and use USA Rare Earths and others could see the same. There is a mad dash from American, European, Western companies to get magnets that aren't Chinese made because if we have tensions again with China and they restrict exports, it's going to make it very, very difficult for them to produce their products. And we saw that in the summer there were companies that we've heard of that had an issue the next month and actually making vehicles, for example. So it's essential that they secure non Chinese magnets to enable their products. So this is critical for the United States, critical for the west. And we expect additional headlines from companies that are looking to secure magnets from MP and others.

[A]

Last quick question because we got to go. George, but what are the percentage odds you think that USA gets the US as a, as a stakeholder?

[B]

I'm not sure if it's going to get a stakeholding from the government. They could see additional, maybe a grant, maybe a subsidy from the government that helps them build out their production. You know, there are also the potential, there's a potential for them to get equity investments.

[A]

We'll see. Right.

[B]

But we expect this to happen across the board. I mean there are other, with the US list, 40, 54, excuse me, critical materials recently. And so we could see things like antimony, for example, get support. I think they already have. There are a lot of materials that we need as a country to wean off supply from China and others.

[A]

George. Thanks George Enriquez of Canaccord. Meantime, we're getting some more clarity on the newly announced tariffs. Let's get to Eamon Jabbers with that story. Eamon?

[B]

Yeah, Melissa, this is an important clarification from the White House on, on the tariffs that the President announced last night. The White House is telling me that any country that has a trade deal with the United States where they got a specific carve out for a specific type of import to be protected or capped in terms of the tariffs. Those carve outs and caps will apply to the tariffs that the President announced last night. Why is that important? Well, pharmaceuticals, the EU and Japan got a 15% cap negotiated in their trade deals. Pharmaceuticals, the White House tells me they will honor that 15% cap for those countries that got a trade deal and will honor it. If other countries got caps on those specific items that the president talked about last night in their trade deals that have already been agreed to, the White House will honor those caps as well. So what does this mean if you're an investor? Well, it means any of those stocks that have been moving today on that tariff news from last night, you want to go back and check your term sheet from the tariffs that were announced from those countries over the summer to determine whether or not those trade agreements included a cap in that category. And if it does, that's going to be material to those stocks, guys. All right. Yeah, good clarification. Most of the US Pharma names are up a bit on this. Eamon, thank you. Coming up, OpenAI announcing massive spending plans this week. But one of its competitors, competitors just laid out its global expansion plans, which include a major hiring spree to CNBC exclusively. We'll bring you those details next. Anthropic now making a major global push, announcing today plans for an international hiring blitz as the startup says enterprise demand surges overseas. Mackenzie Segala has the news in today's tech check.

[A]

Mac Mike, this is very much a race between OpenAI and Anthropic. Both are chasing the same enterprise dollars in international markets. OpenAI launching a Tokyo office in April, then expanded into Latin America, India and Australia just last month. Now Anthropic is making its move, opening its first Asia Pacific outpost in Tokyo and launching new offices across Europe while also hiring country leads in India, South Korea and Singapore. Anthropic this morning also sharing new numbers, quantifying its global growth. The team of engineers who embed in house with enterprise customers to build those custom integrations that'll grow 5x this year. And its global go to market team, the people responsible for selling the tech that will triple this kind of international expansion is critical because the tech doesn't just plug in and work. An MIT study found that 95% of enterprise AI deployments fail scale. That's why both Anthropic and OpenAI are betting that embedding locally hired teams, including the engineers who built the models in house with their enterprise customers, will boost the odds of successful deployment. And enterprise, that is where the money is. And that's why Anthropic has largely had a singular focus on business customers from the very beginning. So OpenAI, they may have the international brand recognition, but serving consumers through its popular chatbot is expensive. Part of why we saw this week alone that they committed $850 billion to new infrastructure. But Anthropic Their strategy is all about skipping the consumer race. Guys.

[B]

Matt, thanks so much.

[A]

Coming up, we're talking Tick tock, Tylenol and tickets in today's Rapid Fire. That is next they change. 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 off, the President officially signing an executive order facilitating the TikTok deal that includes a consortium of investors. The question many are asking today is about the price tag. The price tag in this deal would give TikTok a $14 billion valuation which most think is way too low. That is the market cap of Snap, by the way, whose audience is much smaller. TikTok has 115 million monthly users. Snap has about 96 million. It's worth noting too that the 14 billion, that's, that's a number. And J.D. vance yesterday acknowledged that ultimately that numbers will be determined by the buyers and the sellers.

[B]

That's right. So we don't really know even what that covers, you know, whether ByteDance is going to retain more the economics of the U.S. business. We don't know how fast it's been growing and all the rest of it. But it is interesting because if you're a ByteDance investor, you don't necessarily want a lowball price tag on it. But Most of the ByteDance investors are said to be actually rolling it into the tick tock investment. So maybe you get it made up on the other end.

[A]

Yeah, looted. There are a lot of questions about this $14 billion number. We'll see if that, that is the final number where the deal gets done. Next up can do. Getting an upgrade to a buy at Rothschild, the firm saying that after the 20% decline the in past month the company's discount to the sum of the parts has widened to more than 40%. They add that with a strategic review by the board and activists investors in the name there's clear path to value creation. The upgrade coming on the same day the President posted on True Social that they should not give Tylenol to young children for virtually any reason the Dow created. And in terms of, you know, on the part of the consumers, should we take, you know what, I'm just not going to take Tylenol. I'm not going to dispense Tylenol. I'm just not up for that. But also the litigation cost costs that are going to follow, we certainly can't really know.

[B]

But you know, presumably in, you know, in court, in litigation, you'd have to prove harm and you'd have to rely on some of these scientific studies that Tylenol can view says have basically not created a link between Tylenol and bad outcomes. I do think the investment case is all about that kind of trying to discern what the consumer response is going to be if people are just going to say forget it it or if they just have these ingrained habits.

[A]

Yep. Topic three here. Intel up another 5% today on pace for back to back weekly gains of more than 20% about to close out its best month since 1987. This is a 52 week high by the way. The Trump administration reportedly mulling new tariffs on chip makers that don't step up domestic production. There's also a report that intel has approached TSMC for some sort of injection of cash investment, you name it. But interesting to see the reaction to all of that is the governor, the.

[B]

Government is the anchor investor and the market is treating it as too rigged to fail. It's just not going to be able to not be important because the government's there and we have these co investors now.

[A]

Right. We do have some breaking news you want to get to on Disney's abc. Sinclair says it will return Jimmy Kimmel Live to its ABC affiliate broadcast networks on Friday next are of course is the other outstanding broadcaster that's still pre.

[B]

Emptile not carrying the program.

[A]

Exactly.

[B]

Well it's going to do it for us as the the markets try to finish on a strong note this week. Thank you for watching the Exchange Power lunch starts right now.

[A]

You've been listening to the Exchange. Make sure you're subscribed to get each episode every day, same time, same place.

[B]

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