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Stocks Sink, Disney Disappoints & 'Lacing Up for Liftoff' 11/13/25
00:43:50
Stocks sharply lower as the tech sell-off persists, but one strategist says it's too early for an AI bubble. Disney shares on pace for their worst day since April on mixed results. Plus, a retail bright spot.
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Introducing Fidelity Trader Plus. With customizable tools and charts you can access across all your devices, try our most powerful trading platform yet@fidelity.com TraderPlus investing involves risk, including risk of loss. Fidelity Brokerage Services LLC Member NYSE, SIPC hey there. It's Dr. Sanjay Gupta with some exciting news to share. CNN is now streaming. That means you can read, watch and stream everything in one subscription. You can watch news live 24. 7. You can also export, Explore, catch up videos and explainer videos. And you can also watch the library of CNN's originals, including my latest documentary, it doesn't have to hurt, just go to CNN.comAllAccess you're listening to the Exchange.
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Here's today's show. Scott, thank you for that and welcome to the Exchange, everybody. I'm Contessa Brewer in for Kelly Evans. Today while the stocks are at session lows, the Dow retreating from records and the Nasdaq again the biggest laggard. You've got the dow off by a percent s and p off by one and a third. The Nasdaq down more than 2%. Look at the yield on that 10 year. Treasury though, it's moving higher, 4.098%. Broadcom, Nvidia, Tesla, Alphabet, some of the biggest tech losers today. You've got Broadcom down by almost 5% and Tesla's off by almost 7%. Cisco, though is bucking the trend. It's up 4%. This is its best day since early April. The company raising its annual forec on what else? AI driven demand. Those shares up 4% right now. On the flip side, we've got Disney down big. It's off by 8%. Concerns over results, continued concerns about linear TV and the future. We have more on that ahead. And a quick check here on gold slightly lower. Right now it's at 4207 off fractionally, touching a three week high earlier, a 5% so far this week. It was a week that saw the longest government shutdown on record coming to an end. And with that headwind in the rearview mirror, the Fed is in sharper focus. Probabilities are on the move with a December rate cut now just a coin toss. That's where we begin. CNBC senior economics reporter Steve Liesman joins me now. Steve, what are you looking at for December?
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Well, a little less than a coin toss. We'll get there in a second. But the probability of December rate cut is in. The futures markets now below 50% after several Fed officials have either said explicitly they would not support a rate cut or suggested the bar is high. In fact, in just the past few minutes, Cleveland Fed President Beth Hammack, not a voter this year, but still someone we listen to, said the Fed has to remain restrictive to keep putting downward pressure on inflation. But it was comments yesterday from Boston Fed President Susan Collins, a voter this year, that moved the market initially and sharply. Collins saying she thinks the Fed should hold rates steady, quote, for some time. Before Collins spoke, markets put a 64% probability on the December rate cut, but now that's fallen to 47%. Actually right now below 47%, 46.5%, although there is still a 69% probability of a rate cut in January by CNBC's count. And it is a little bit subjective. About half of the voting members have expressed some form of doubt about a December cut. We'll go through it now. Collins joins Casey Fair President Jeff Smith, who dissented against the cut at the last meeting. We think he would be unlikely to vote for one this time. Presidents Goolsbee and Musalam speaking at this moment and Governors Jefferson and Cook have all suggested going slowly or cautiously here. While Governors Myron Bowman and Waller, they're presumed to favor a rate cut. Those who want to cut rates mostly acknowledge the inflation but point to weakness in the job market and say the Fed should look through tariff related inflation. Those opposing a cut see inflation in the data that has spread beyond tariffs and and don't see worrying signs in employment or the economy.
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Contessa, you know, it's interesting the look through the inflation because that has trickle down effects to lots of different areas. What people pay for their car insurance, for instance. When it comes to the job market, we're expecting to get a flurry of data now that the government is reopening. How might that influence how the Fed is thinking about this December cut?
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So I don't think anybody is sort of standing in concrete. Maybe they're standing, you know, they've dug themselves a hole in their standing in it, but I don't think they're stuck in it. And I think that's a great question, Contessa, because I think that when you listen to these folks, they're all definitive, they're all sort of not using completely definitive words and there is room to maneuver here. So my answer to your question is if there's definitive data showing that the job market is really weakening beyond expectations and that of course is a subjective analysis. There's or there's definitive data showing that inflation, for example, is rising and spreading beyond just the tariffs into the service sector. I think you could get people switching sides or the committee coalescing and coming closer together right now. However, I think the remarkable thing is if you look at that wall we put up there again, you'll see it's really six and six really or six. And I don't know if maybe we don't know exactly where Williams stands. He seems to be a little bit more on the dovish side. But also we don't know most importantly where Powell stands on this. Almost certainly he's holding fire at the moment, Contessa, to try to figure out where can he put a consensus together of this very fractious and divided committee at the moment.
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All right, Steve Liesman, thank you for kicking off this hour with us. Does the market need this December cut for support? Joining me now, Chris Heisey, chief investment officer for Merrill and Bank of America private bank. It's good to talk to you today. Chris, just answered my question there. Do you think that the markets really need the Fed to cut to keep steaming along?
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Well, I think, you know, right now in the short term the enthusiasm at least taking off and backing away from the potential cut that everyone expected to be coming in December is putting the weakness on the market. But does it really need it? It really doesn't. The market has been factoring in a much better profit cycle, looking all the way through 2026, of course having easier financial conditions and more liquidity and is going to help in the short term and we do expect that through 26. But pausing or having a cut in December is more of a very near term, small hurdle.
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You think that there's a kind of flywheel that is keeping equities humming along.
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Right? Right. If I could peg it down to three specific areas. Obviously we all talk about CapEx, CapEx in general, particularly in artificial intelligence. But what we think is deeper than that is just not AI. It's this entire digital infrastructure which has a lot more room to go than just one vertical which is large in AI. The second area is boomer spending. You could see it in travel, leisure and entertainment and it's masking over some of the low end weakness that we are seeing. But in aggregate, consumer spending is still healthy. And then finally it comes down to profit momentum and that's where the flywheel starts to come in.
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So Chris, hang with me here for a second. I want to get over to Rick SANTELLI because the 30 year bonds are up for auction. Rick, what are you seeing?
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It's not a great auction. I gave it a C minus. I was probably generous. 25 billion 30 year bonds. Look at the charts. Yields moving higher. Why? It had a tail of one basis point meaning the when issued market was trading lower than the actual yield at the auction. So if you're the government, you want to have the highest price. Well, higher yield equals a lower price and that's the problem here. All the other metrics were a bit below average, but nothing huge. Basically comping towards August in terms of weakest bid to cover, meaning how many dollars were chasing every dollar worth of securities available and dealer takedown, which is what's left at the buffet table after investors are done. Those were the weakest since August. Only several months, but Nonetheless this completed 125 billion of supply. Yesterday's 10 year was very borderline average. This is a bit below average and it really does send a message that without data there's a bit of pessimism out there which is evident. Steve Liesman pointed out yesterday some of the guidance from the Fed started to bring percentages down, but it was today it went below 50. About an hour and a half ago it was 49. Now it's 47%. And I don't pay that much attention to percentages. But the key here is, is that the Fed guidance has taken what was a lock on a rate cut for December and it's now put it at either a coin toss or less than a coin toss, which means it's all working. The market doesn't like to be disappointed, the Fed doesn't like to disappoint the market. And the interaction between the two is where we stand today. So yields are now up across the entire curve and the big area you want to pay attention to on a closing basis is right around 470 for the 30 year and 410 for the 10 year.
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Contessa, back to you, Rick Santelli, thank you for that update here. Chris, when we're looking at the yields, are you expecting to see more steepening?
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We certainly do because the short end coming down, looking through over the next 12 months and what Rick said is absolutely very important. Again, he said something very important. When you think about the action that's going on today, a little bit less liquidity. Market doesn't like to be disappointed. The back end going up, it didn't go up as much as it did back in April, obviously. But that does take some of the euphoria and froth out of the equity market and it adds some uncertainty out there and I would be taking advantage of this weakness today.
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All right, we heard from Steve Liesman that there is some encouragement for the Fed to look through whatever inflation the tariffs are bringing with them to the table. There's a lot of skepticism this week about this AI bubble with the social media post from Michael Burry and Jim Cramer laying down some serious concerns about the debt financing for some of the big data centers. When you're looking at portfolio strategy, what's your best advice right now about where we're heading into the last month of the year and how we start 2026?
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Well, we always try to figure out is the narrative holding and we look at our data through the bank of America Institute, the consumer data and spending is still around normal in aggregate. Are there weak spots? Yes. So we check the box and we say is the consumer healthy enough to continue this into 26? The answer is yes. Then we look at liquidity on a short term basis. That should start to pick up again in December. Then we look at profit momentum and margins. That's critical for small caps. All of those things are gathering better momentum as we go into 26. So we're going to stay overweight equities. We want to use weakness in markets like today when there's no real fundamental news out there. And as far as I being in a bubble, bubbles happen when debt financing comes in at the later stage of the build out and that debt financing can't substantiate some of the cash flows that are coming back in off of that capex to pay down that debt. We're not there at this point. Should we be on guard and always look for that? Yes, but we're not even at that level yet in total spending or in debt financing.
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I want to take a look at the European stocks. Right now I'm looking at the dax. It's off by one and a third today. The footsie is off by a percent. But you saw some of these stock exchanges hitting record highs this week. It's been on fire. What's your sense of international investments versus us?
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That's a great question. Obviously over the last decade or so you had a little bit of a head fake every few years in non dollar assets, particularly in the developed world and occasionally in the emerging market world. We're neutral across the board. We closed out our underweight earlier in the year around January, February of this year. So we've been riding the momentum there. Right now growth is slowing a little bit in Europe and the uk. Japan is picking back up again. The emerging markets because of their exposure to real assets is extremely heavy. They have a lot of exposure to tech financials and consumer discretionary. Sounds like the United States. So we're going to continue to ride this momentum. And for dollar based investors, having at least a neutral allocation makes sense to us.
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All right, Chris Heisey of Merrill and bank of America Private bank, great to see you today. Thanks for your perspective. We have some breaking news right now on the AI front. And MacKenzie Segalos is in San Francisco. What do you have, Mackenzie? Hey, Contessa. So Anthropic says it's uncovered what may be the first documented case of an AI orchestrated cyber attack. A sign that they say of just how fast the threat landscape is shifting. Now, this goes back to September when a Chinese state backed group used Anthropic's Claude models to automate nearly every step of a global espionage campaign. Now, in this case, hackers jailbroke Claude code by posing a cybersecurity test. And we know that hackers have long used AI for things like crafting phishing emails or scanning for vulnerabilities. But this was a lot more sophisticated than what we've seen before. You've got Anthropic saying that Claude was handled up to the model itself was handling up to 90% of the attack, with humans only stepping in a few times to approve decisions. So we're talking cyber attacks with the click of a button. Claude essentially writing and deploying exploit codes, stealing credentials and exfiltrating sensitive data and even documenting the attack to then reuse later. Roughly 30 government and corporate targets were hit. A few intrusions were successful before Anthropic shut it down and alerted authorities. And it is worth noting Contessa, Anthropic only acknowledged this attack from two months ago after the Wall Street Journal broke this news today. Anthropic, they are calling it a turning point where AI has gone from assistant to operator, warning that unless defenders start using the same tools, they risk falling behind. Now, we're going to have to keep a closer eye here on the cybersecurity firms and how they're doing and also Cyber Insurance, which is responsible for covering all of these businesses from said attacks. Mackenzie, thank you. Coming up, Nike getting an upgrade to buy at Wells Fargo. With the firm raising its earnings forecast for the next year and beyond, what do they see that could turn this stock around? The analyst behind that call joins us next. Plus, Disney and the disaster du jour after posting mixed quarterly results. Break down the numbers whether Disney streaming gains can make up for TV pains. The exchange is back right after this.
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This is the exchange on CNBC. Hey there, it's Dr. Sanjay Gupta with some exciting news to share. CNN is now streaming. That means you can read, watch and stream everything in one subscription. You can watch news live 24. 7. You can also explore catch up videos and explainer videos. And you can also watch the library of CNN's originals, including my latest documentary. It doesn't have to hurt, just go to CNN.com allaccess the heaviest metal credit card of all time, rumored to be one of only 18 in existence, plated.
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With the very same tungsten that forged.
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The international space station and wielded at business dinners like a samurai sword. It's a classic corporate power move, but the real power move having end to end visibility on your most critical shipments.
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FedEx, the new power move.
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And now a next level moment from AT&T business. Say you've sent out a gigantic shipment of pillows and they need to be there in time for International Sleep day. You've got AT and T5G so you're fully confident, but the vendor isn't responding. And International Sleep Day is tomorrow. Luckily, AT&T 5G lets you deal with any issues with ease. So the pillows will get delivered and everyone can sleep soundly, especially you. AT&T 5G requires a compatible plan and device coverage not available everywhere. Learn more@att.com 5G Network.
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Nike shares up more than 2% today on the heels of an upgrade from Wells Fargo. The firm writes they're seeing greater visibility into Nike's reach, revamped strategies, more material green shoots and dissipating headwinds to the overall business. Wells Fargo upped its price target from 60 bucks to 75, implying a 15% upside. From here. Let's bring in the analyst behind the call, Ike Borschau, senior analyst at Wells Fargo Securities. What kind of visibility did you want that you got?
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Yeah, thanks for having us. I think it's twofold. I think there's two things on revenue that are really starting to take hold. And Remember, we're about 12 to 15 months into new CEO Elliot Hill's tenure, so the timeline kind of makes sense. But number one, the biggest headwind to this business has been what they call the classics. This is Air Force One, Air Jordan One, and Dunk. It's been a big headwind on the business for multiple years. We think it's about $6 billion being erased over the last two years. Our call is that that's going to hit some level of stabilization going forward. So basically a bad guy.
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Why do you think it's going to.
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Stabilize because of the work we've done on prior big franchises in footwear, namely franchises like Old School with Vans or Stan Smith with Adidas. You can kind of see that as well as many industry checks that we've already spoken to. So bad news gets less bad. Now. The good news is the non classics footwear has meaningfully accelerated growth. So we're up in the 20% range and apparel is growing. So if I got the good guy growing, the bad guy getting less bad, there's an inflection in revenue that's on the horizon. That's where the call really starts.
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What about consumers and this bifurcation that's happening? We're seeing it. You know, I cover gaming and lodging and other leisure and hospitality companies. It's so divided and it's so stark. Are you seeing that in retail as well? I mean, is Nike facing that both in the United States and, I don't know, elsewhere around the world?
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Yeah, I think the US Consumer and I think the consumer in general is a question mark. But I think two things to keep in mind. One Nike specific, one US Macro specific. I think there's views that Holiday is going to be a little bit challenging. That's why this group has been under pressure. However, early 26 does seem to have some tailwind. Whether it's tax refunds or stimulus. A couple thousand dollars extra people's pocket, you don't really remodel your house with that. You buy an extra pair of sneakers, you buy an extra handbag, you go shopping. So that's a tailwind now on Nike. Incremental innovation so far has worked. You're talking about silhouettes in the performance running channel. Think about the marrow. 18 has been a resounding success. Pegasus relaunch, so they're making inroads. So the green shoots are creating better visibility. So again, they got. You got to crawl before you walk in with Discretionary, you want to be early with these names under earning revision activity. That's why, you know, maybe you're a quarter early before the inflection, but that's, that's how the group works. That's how you have to invest in Discretionary.
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What are you seeing in terms of China? The fact that it looks like there has been some ratcheting down of rhetoric, some stabilization and what we're expecting for tariffs. How does that affect Nike's overall business?
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China's a bad guy in terms of the fundamentals of the story. The marketplace is still full of product. You got to work that down. They got everything strategy. The good news is China's 15% of sales, North America's 50, the 50s working. That's really where we want to focus. And the checks we've done in China would suggest that the marketplace cleanup in China for Nike probably doesn't get complete till summer 26. The good news is that now then adds another layer of margin opportunity and upside growth into next fiscal year on top of what we're already talking about today. So I kind of view that as gravy to the multi year story.
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The stock is up, as I said, more than 2% right now. Ike Borchal, Wells Fargo, thank you.
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Thank you.
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Coming up, it's hard to buy a home these days, but what about buying shares of a rental home? After the break, the story of one startup backed by Jeff Bezos that's doing just that. We're back right after this.
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Hey there. It's Dr. Sanjay Gupta with some exciting news to share. CNN is now streaming. That means you can watch and stream everything in one subscription. You can watch news live 24. 7. You can also explore ketchup videos and explainer videos. And you can also watch the library of CNN's originals, including my latest documentary, it doesn't have to hurt. Just go to CNN.com AllAccess and now a next level moment from AT&T business. Say you've sent out a gigantic shipment of pillows and they need to be there in time for International Sleep day. You've got AT and T5G so you're fully confident, but the vendor isn't responding. And International Sleep Day is tomorrow. Luckily, AT&T 5G lets you deal with any issues with ease. So the pillows will get delivered and everyone can sleep soundly, especially you. AT&T 5G requires a compatible plan and device coverage not available everywhere. Learn more@att.com 5G Network.
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Welcome back to the Exchange on this Thursday, stocks at session lows across the board. You've got the Nasdaq as the worst performer. Right now. It's down by more than 2%. Dom Chu has a closer look at the day's biggest movers.
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How about ones that are bucking the trend? Contessa. So some earnings movers in today's trade. We're going to start with the big move higher 4% in Cisco Dow component. Those shares are bucking the overall down market after the computer networking equipment maker posted better than expected quarterly results and gave a better than expected outlook with strong AI product demand driving a lot of that bullishness. And by the way, Cisco is also getting close to attaining its record highs that it last hit during the dot com era back in March of 2000. If it gets toward that $82 mark, that's when you could see those record highs all over again. Next up you got shares of department store chain Dillard Soaring by roughly 18 19% right now after its own better than expected quarterly report. Notable beats not just in revenues but also sales growth at store locations that have been open at least a year, those so called same store sales. So keep an eye on Dillard's up 19% and we'll cap things off with a check on another part of the market. Bucking the down tape, the Spider Healthcare ETF Ticker xlv. It's up about a percent in midday trading. Even more impressive, it's currently working on a nine day winning streak. That's the longest winning streak ever for the XLV, which is 10 days that ended back in January of 2004. Investor sentiment seems to be improving again for a sector that's been understandably an underperformer for medium to longer term. So maybe a mean reversion. Trade Contessa XLV nine day win streak. The record is 10. I'll send things back over to you.
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Okay, Don, thank you. A real estate platform that lets you buy pieces of rental homes. Now taking it to a new level and launching a trading platform for those shares. Diana Oleg joins us now to explain how it all works. Diana sounds fascinating. It is. Contessa so Arrived is a startup backed by, among others, Jeff Bezos and Marc Benioff that lets investors buy and sell shares of single family rental homes for as little as 100 bucks. Now, rather than investing in a public REIT, investors can build their own portfolio of properties which are managed by Arrived. Not only do the properties generate income from rents, but they can appreciate over time. Investors pick and choose homes like this one for more than 500 properties in 65 cities. Some properties have more than 1,000 investors just on one home. So far, more than 850,000 investors have collectively invested over $330 million in arrived homes, according to the company. Now Arrived is launching a secondary market platform where investors can trade their shares of homes in minutes with each other. This new platform comes at a time when traditional home buying has stalled and investors are finding it increasingly expensive to purchase single family rentals on their own. Home prices and interest rates are still high, but weakening. I asked Arrived CEO Ryan Fraser what happens if home prices go down. He said the company has become very choosy about its markets and most of the properties have no mortgage, so 100% equity in the home. Still, the trading platform raises questions about risk to home valuations and even the broader housing market. We first broke this story in the Property Play newsletter, so don't forget to sign up for it. It's free cnbc.com propertyplay contessa okay, so if you want to be a landlord, even partially, partially, why would you, why would you want to go and trade on this platform? What do you get out of it? And you asked about the risk. I don't, I mean to say, oh, we're very choosy about where we put our homes. Okay. But home prices still go down sometimes. They do in some markets. As we know, all real estate is local now. It's kind of that low price point that makes this attractive to investors. Because if you talk about crowdfunding in properties, which we've definitely seen before, or fractional ownership, you often have to have upwards of $50,000 in order to do this. So you only need $100 to do this. Now, why go on the trading platform? Because a lot of these homes are already fully sold. So the only way to get in is to buy your shares from another investor on this platform. So in my view, I guess the risk would be. So let's say you start trading these prices up because the only way to get in on this platform is for somebody to sell it to you at a higher price. That's the only reason they're going to want to sell. So then you start inflating these shares of homes, but the price of the actual home itself is either flat or maybe going up a little bit. You know, prices right now are not up nearly as much nationally as they've been in the last couple of years. Some markets are seeing prices go down. So what if the value of that home is even lower and you're buying shares at a much higher rate? What is the risk to you as an investor? That's the question. It's fascinating. It's all, it's so innovative. Thank you for bringing us the story. And property play is actually very interesting and innovative as well. Bertha Coombs now with a CNBC news update. Hi, Bertha. Hi, Contessa. A Starbucks union has launched a strike in 40 cities on red Cup Day, one of the busiest days of the year for Starbucks. It comes after the union voted down a proposal, a proposed collective bargaining agreement back in April. The strike involved 65 stores and more than a thousand baristas, according to the union. Starbucks says past strikes have impacted less than 1% of its stores and the vast majority of its 17,000 locations are open and ready to serve customers. Meanwhile, officials from the European Union have warned Ukraine that it must crack down on corruption following a major embezzlement scandal at Ukraine's state owned nuclear power company.
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According to the Associated Press.
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The report further said that Ukrainian President Volodymyr Zelensky promised, quote, full transparency, long term support for the independent, anti corruption authorities. And former NFL star Antonio Brown has been released from prison after posting a $25,000 bail after pleading not guilty to a second degree attempted murder charge. Brown and accused of grabbing a security guard's handgun and firing two shots at a man he had been in a fistfight with at a celebrity boxing event on May 16. Brown could receive up to 15 years in prison if convicted. Contessa Bertha, thank you for the update there. Coming up, Disney is getting demolished after a mixed earnings report between its dispute with YouTube, TV, declines in the cable business and no success plan. Still, investors are left with a lot of questions. We're going to try to answer them after the break. The exchange back right after this. Disney may not be the happiest place today. It's down 8% almost after missing Q4 revenue expectations. The company said, well, yeah, we had weakness because we're struggling with linear tv, go figure, and a lackluster theatrical film release. But the chief financial officer, Hugh Johnston, told cnbc, being broad is what sets Disney apart from the competition. Here's what he said when we asked him about Netflix.
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Well, they've got a great business too, but they're, they're very narrow, but they're deep on general entertainment. Our strategy is different. We run broad in terms of dtc. We have news, we have sports, we have broad scale entertainment, kids entertainment. Who knows, ultimately on the service you may see gaming and things like that as well. So I think it's basically the portal into all things Disney. And with the IP that we have, we're going to monetize it.
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For more on this, let's bring in Barton Crockett, who's a senior analyst at Rosenblatt securities, along with Julia Boorstin. I always love it when we get to sit at the same table together. Julia, let me ask you, when they're talking about being broad, are they trying to be all things to all people at all times? I think it's really about general entertainment that's founded with its sort of origin on this, this family brand of Disney. And if you look at the strength of this new bundle they said of new subscribers to their ESPN app, they said 80% of those new subscribers to ESPN All Access are also paying for Disney and Hulu and they're really working to make Hulu the general entertainment brand. You have Disney for families and kids and those iconic brands and then you have sports. And so they're really focusing on streaming and said they're very optimistic about the growth of that bundle driving those results. And that's why they reiterated their guidance for EPS growth for the next two years. And when he says maybe even gaming, does he mean video gaming or. In my world, gaming means gambling, which. And it's not that far fetched because of ESPN's tie up with Penn, which is now ending early. Exactly. So you have ESPN and the tie in with gaming, your part of gaming. And then you also have the fact that Disney did a deal with Epic and they've been working to bring Disney's brands into Fortnite and make sure they're really integrated into the video game world as well. So I think it could be both. Okay, so Barton, talk to me a little bit about what investors need to hear from Disney at this point. What, what aren't they hearing that's causing this sell off?
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Well, you know, look, I'm a little bit surprised at the sell off. To, to my mind, this felt like maybe a couple of percent down, not kind of high single digit percent down. But look, I thought that it was encouraging that they're able to retain their outlook for this year next, despite everything going on, all of the YouTube, TV kind of outage talk, the macro concerns. And I think that we can spend a lot of time talking about the streaming, but the reality is that this company's P and L sinks or swims on theme parks and the theme parks have, were a little bit mixed, but overall just some great strengths. I think, you know, the disappointment was, you know, at a slight level that the domestic business decelerated a little bit, but the international accelerated and their bookings and their ability to fill up these new cruise ships that they're launching is just amazing. So that's, you know, that's the Disney magic right there is the theme parks. And you know, in terms of the Disney plus, I was just incredibly surprised at how much they were able to grow the subscriber base. They're adding 3.8 million more subscribers in the quarter, really on the back of content strengths and some of their expansion internationally. So those are good things. Those are things that I think when people settle back and take a look at what's going on they'll feel more comfortable about. But yeah, so I'm a little bit surprised at the reaction here.
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And Barton, there's obviously been a lot of interest in this blackout. Disney channels blacked out on YouTube TV. Hugh Johnson told us they're going to wait as long as it takes to get the deal that's right for them. How much do you think this is going to end up costing Disney? And do you think there will end up being a benefit in terms of an addition of D2C subscribers?
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Well, look, you know, the cost is kind of dependent upon how long and, you know, there's been, you know, say 10 bucks a sub for a month, you know, times 10 million subs. So you can do your math on how long you think it is. But the, the thing that I thought was encouraging was how confident they sound about this fight. I think that the bear story that's meaningful for Disney is that somehow an Internet juggernaut like Alphabet Google can just roll over them that they don't need YouTube TV and they can just, in the process, squash Disney. The reality is that Disney feels confident they're talking about YouTube TV needing them, and they're reiterating their guidance despite this going on. So to me, that feels like there's going to be a deal in the offing in the not too distant future. And I think there'll be some relief once we get that.
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Do you think that all the focus on the media side of this is sort of overshadowing the opportunity in experiential. I mean, because when we talk about the parks, I'm covering cruises now, and I'm looking at what Royal Caribbean, what Norwegian, what Carnival says about bookings next year and thinking, you know, Disney not only has the parks, but it has the cruises. It has some experiential stuff that. Real differentiator. Yeah. And they do have these two new cruise ships coming on online in the first half of next year. And it sounds like bookings are very strong and just because there's more capacity, that's not going to be a problem. He did use the word choiceful. He said that consumers are being more choiceful about how they're spending their money, but that they're not skimping on Disney vacations. So it sounds like they're growing to meet the demand. But these experiences are not cheap. I mean, it's so funny. I probably would have used choosy, but when people invent a new word, I'm like, okay, go for it. That's perfect, Barton. Thank you so much for joining in the conversation, Julia, thank you. Appreciate it. Coming up, as more Americans struggle to afford life saving medications, a cottage industry stepping in promising patients free or cheap drugs. A CNBC investigation reveals where the prescriptions may be coming from, potentially putting their lives at risk. As we head to break, stocks move lower. Dow S and P, Nasdaq all selling off right now got the Russell 2000 off by more than 2.5%. And the yield on the 10 year hovers above 4.1. The exchange is back in two. Lowering the cost of prescription drugs has long been a top priority for the Trump administration. But it's not fast enough for employers and families desperate for a solution. A CNBC investigation uncovered popular insurance schemes that offer huge savings on medications but could put patient lives in danger. Here's Melissa Lee with Risky Rx. A question being asked across the country. How can I afford my prescription drugs? Prices are skyrocketing. It's a broken system and we need to make sure everyone is paying attention. With some specialty medications costing tens or even hundreds of thousands of dollars per year and prescription drug prices in the U.S. averaging nearly three times more than in other countries, driving people and employers to find a solution, it's such a.
- [35:56]
A
Desperate thing to think that you might.
- [36:00]
B
Not have your medication at all. A booming cottage industry is selling itself as an antidote, often getting the drugs overseas for a fraction of the cost.
- [36:09]
A
We do a public service. We help people get access to medications.
- [36:13]
B
But there's a major catch. What they're doing is illegal and it's putting American lives at risk. What I tell my friends and family is that the most expensive medicine that.
- [36:24]
A
They could get is one that isn't.
- [36:26]
B
Safe, isn't effective or isn't high quality and doesn't meet the standards that are in FDA approved medicines. Patients and employers are desperate for a solution. The question is at what cost? The FDA says it's illegal to import drugs that are available and sold in the United States. All of these drugs are in fact available domestically. Correct. This is just a preview of our full length documentary. To watch the entire story, go to cnbc.com riskyrx all right, so how does it work? Basically, these are employer health plans. Usually these employers are cash strapped employers. So think small businesses on Main street, municipalities, school boards. They're looking to cut costs. And so they have their plan. The plan administrator decides we're going to carve out the coverage of the very expensive specialty medications, which are drugs that treat illnesses like cancer or multiple sclerosis. And we're going to farm them out to these companies called Alternative funding programs or AFPs. Okay. Some of these AFPs, the ones that we were investigating, they import these drugs. The way they get paid is they get a fee or they get a percentage of the savings. The patient gets the drug for little or no cost. Everybody seems to win except for the fact that these drugs are coming from overseas. And there is no guarantee of the safety of these drugs, the efficacy of these drugs because they've been outside of the supply chain or whether or not these drugs are real. When a small business or a school board decides we're going to go with this afp, is it disclosed to them that they're importing drugs from other countries and that the same quality controls may not exist? It is disclosed to them that they are coming from other countries. They're usually told that they're coming from places like Canada, the uk, Germany, So places that the average person would think are safe. They have the same sorts of standards as the fda. When in fact some of the cases that we investigated, the pharmacies may be located in Canada, but they're actually sourcing the drugs from places like India or Turkey. These are countries that are known to be epicenters of counterfeit drugs and drug trafficking. So really, you know, patients may think that they're getting drugs from tier one countries, so called tier one countries, but they're just being trans shipped. When you talk to the pharmaceutical companies, I presume that they're really fighting back against this, but they also want to sell their medications in the United States at the rack rate that they're getting here. I mean, there's obviously they want to protect their profit margins and they want to protect their intellectual property. So for instance, Gilead is suing an insurance company called Maritane, which is a division of Aetna, which is owned by CVS Health. Maritane contracted out to an afp, which then sourced Biktarvy, which is a Gilead drug from Turkey. And one patient received Biktarvy straight from a Turkish pharmacy in Istanbul and it got delivered straight to the patient's mailbox. The drug was in Turkish packaging, the instructions were in Turkish, everything. And that's how Gilead got tipped off. But at the same time, they want to protect what's known as Biktarvy, that trademark, what it stands for. And if there is something that is not right in the supply chain and harms patients, they'll be associated with. Biktarvy caused this patient death. Biktarvy caused this patient Harm and they want to protect their reputation. Absolutely. OK. And again, there's a full length documentary on CNBC.com/ risky Rx. Melissa, thank you so much. Coming up, tech is the worst performing sector today. You have Tesla and Shopify, Applovin, Palantir and Arm among the big laggards. Look at those numbers. We'll look at the next leg of the AI competition, where it could come from as bubble fears persistent. The exchange will be right back. Tencent posting 15% revenue growth in its third quarter. It says its 3D world generation model is now industry leading. This is part of a bigger push into a new type of AI model that goes beyond just language. Deirdre Bosa digs into world models for today's tech check. Hi Dee. Hey Contessa. So large language models they display, describe reality, world models simulated. This is a huge breakthrough. It could open up entirely new markets and change even the economics in this next leg of AI. It is also a space that is speeding up. Google, Tencent, Nvidia, they're working on world models. The FT reported this week that met as chief AI scientist Yann LeCun is leaving to pursue them. And AI pioneer Faye Fei Li just came out with one of the first commercial products called Marble. So we tried it out to show you what this new frontier is capable of even at this very early stage. Now, we started by uploading this 2D photo of CNBC's global headquarters. Looks familiar. Uploaded it to Marble, one of the first, as I mentioned, commercial products from World Labs. About five minutes later, we had on the surface what looks like, you know, a not great AI generated copy. But look, this is actually something way more powerful. It's an interactive 3D model. You can move through it, change perspectives and even stimulate how light or objects would behave in the space. Now, from just a single image, the model built an understanding of depth, physics and context. So it's learning how the world is structured, not just how it looks. And eventually it could navigate, even act in that world. Now, until now, most of the competition in AI has been about scale. Who can build the biggest model? World models, they may not need the same brute force GPU power. They apply learned rules rather than crunching probabilities over trillions of text tokens. So that would be a big change. Initial use case is video games and movies. But eventually, if these models become smart enough, capable enough, they could generate training data for AI and robotics, really supercharging the field of physical AI, to say nothing of what they could do about health and medicine and all of that as well. Absolutely, Deirdre, thank you. Still ahead, Flutter missed on the top line, trimmed guidance for the year, beat on earnings and announced it's launching a new prediction market, a platform it's doing with CME Group. But the shares are plummeting today, down nearly 13%, nearly 34% since its August high. The analyst says the sell off is overdone. He tells us why. Next exchange will be right back. Welcome back. Shares in FanDuel parent Flutter are plummeting today, down 13% even as FanDuel announces it's launching its own platform for event contracts or prediction markets that would compete with Kalshi and Polymarket, Robinhood and Crypto.com FanDuel predicts will be open for trading in December in partnership with CME Group. And FanDuel CEO Amy Howe told me it will offer sport predictions not on tribal lands though, and not in states with legal sports betting.
- [43:27]
A
So in some respects we feel like we have an obligation to do this and we're leaning into it.
- [43:32]
B
You know, next year we could spend 200 to $3 million in marketing this product. We'll do that with the same level.
- [43:40]
A
Of discipline that we've always done.
- [43:41]
B
Joining me now to discuss is Chad Bynon who is the senior gaming, lodging and theaters analyst at Macquarie. This was expected because we knew they had partnered with CME Group. But the announcement that they're launching in December and have said we're all in on sports betting where we're not already operating legal sportsbook is maybe somewhat of a surprise because there's been some reticence. State regulators have said in Nevada, for instance, if you do this, we're not going to give you a gaming license sense.
- [44:13]
A
Yeah, absolutely. Thanks, Contessa. Look, it's threading the needle here. You have flutter and DraftKings down over 30% since the highs and in August. DraftKings reported first this earnings season and they announced a similar type of approach launching in December and also only in states where they currently don't offer sports betting. What we heard from the, the omnichannel companies, the land based companies like Caesars, mgm, Pen Entertainment, is that predictions could be an existential threat and they believe that if they launch this that that could damage their license on the land based side. So FanDuel came out last night or Flutter came out and said exactly what you said. They did have to withdraw from the state of Nevada as did DraftKings. But they're looking at it from two perspectives. One, they want to win right wherever they are they have won, they've had a podium position and they believe they can be top three. And then secondly, this could put a little bit of pressure on politicians, on the policymakers from regulatory standpoint and potentially legalize sports betting in states that don't have it, which is about 40% of.
- [45:22]
B
The US and I wrote about this in CNBC sport newsletter today. But it also could get the tribes to come to the table and maybe sit down again and talk about how do we move forward on sports betting in the state of California, which would be huge change and it may get some momentum in Texas where they have been at least one leading politician has been very against gambling. I got to ask you though, it's not the only thing that they should consider. I mean they've had sport friendly outcomes. The fans have been winning, the house has been losing. In NFL this fall. They talked a little bit about that. But prediction markets are taking up all of the oxygen. Is it really be that big of a deal? Should investors be selling off because of Kalsheet?
- [46:08]
A
It's been tough to decipher since the sell off that I talked about about 30% since the August highs. What has been a result of prediction markets versus some of these customer friendly results? Our numbers since the beginning of the year have only moved about 5% for next year. So that's kind of a telling sign that things are okay, right? The, the, the hold rate is going to come back in favor of the books at some point next year. You also have the World cup and what they talked about in terms of wage growth is very strong so far in the NFL, so far in the NBA. So we're looking at a stock that really the sell off has been all multiple and not estimate revisions. So we really like it here at these levels. We maintain $330 price target.
- [46:52]
B
Thank you for that. Down 13% and that does it for us. Thank you for for watching the Exchange. Power lunch starts right now. You've been listening to the Exchange. Make sure you're subscribed to get each episode every day, same time, same place. Save over $200 when you book weekly stays with VRBO this winter. If you need to work, why not work from a chalet? If you haven't seen your college besties since, well college you need a week to fully catch up in a snowy cabin. And if you have to stay in a remote place with your in laws, you should save over $200 a week. That's the least we can do. So you might as well start digging out the long johns because saving over $200 on a week long snowcation rental is in the cards book now@vrbo.com.