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)

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.

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.

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.

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.

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])

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.

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])

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.