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The Exchange
The Exchange 10/14/25
00:40:55
Listen to the day's top stories, the must reads & a whole lot more for today's modern investor.
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- [00:00]
Joe Kernan
Hey, Fidelity, what's it cost to invest with the Fidelity app?
- [00:05]
Katie Stockton
Start with as little as $1 with.
- [00:07]
Joe
No account fees or trade commissions on U.S. stocks and ETFs.
- [00:11]
Dom Chu
Hmm.
- [00:12]
Joe
That's music to my ears. I can only talk.
- [00:17]
Dom Chu
Investing involves risk, including risk of loss. Zero account fees apply to retail brokerage accounts only $0 commission applies to online US equity trades and ETFs and retail fidelity accounts. Sell order assessment fee not included. Some account types and securities excluded. Details@fidelity.com commissions Fidelity Brokerage Services, LLC member NYSE SIPC.
- [00:33]
Steve Leesman
The wrongs we must right. The fights we must win. The future we must secure together for our nation. This is what's in front of us. This determines what's next for all of us. We are Marines. We were made for this.
- [01:05]
Joe
Fed Chair Jay Powell, as you just saw, wrapping up a Q and A session at the national association for Business Economics annual meeting in Philadelphia. And he says there isn't now a risk free path for monetary policy. The Dow and S and P, meanwhile, have turned positive. The Dow is down more than 600 points at the low, the Nasdaq almost positive. The yield on the 10 year back below 4%, hitting the lowest level since September 17th. Let's get to senior economics reporter Steve Leesman for the biggest takeaways from the Fed chair. Is that the oddest couple that you've ever When I got I looked over and I said that's not that person looks like Cathie Wood. And then I look closer and that is Cathie Wood. Do you know what her Bitcoin forecast was for? You know what price? Steve?
- [01:58]
Steve Leesman
No, I don't, Joe.
- [01:59]
Joe
2.4 million by 2000. It just was that to me, the juxtaposition of of Jay Powell with Cathie Wood was, was a little did it strike you as a little bit odd or not?
- [02:13]
Steve Leesman
You know, they put some interesting pairings here, is all I'll say.
- [02:16]
Joe
I guess it's like maybe it's like us.
- [02:20]
Steve Leesman
Exactly, exactly. But we did pick the right ties this morning.
- [02:23]
Joe
Yeah, we did. Look at that.
- [02:25]
Steve Leesman
But right, exactly. And the right color suit. Look at you with a suit on, by the way. And awake afternoon, which is unusual, of course. Fed Chair Powell suggesting I think it's interesting to go through the nuance on this though. He suggested but didn't explicitly say that rate cuts are likely to continue. He told the nay meeting at the Fed's outlook for employment and inflation have not changed much since September, when Fed officials were forecasting another two rate cuts this year.
- [02:54]
Dom Chu
Rising Downside risks to employment have shifted our assessment of the balance of risks. As a result, we judged it appropriate to take another step toward a more neutral policy stance at our September meeting. There is no risk free path for policy as we navigate the tension between our employment and inflation goals.
- [03:13]
Steve Leesman
Powell said the Fed was using a range of private sector and still available government reports to gauge how the economy is doing in the wake of the shutdown. That data so far suggests higher downside risk for employment and inflation mostly from tariffs, not part of a broader inflation problem. He also noted that data prior to the shutdown showed the economy on a firmer path with those better growth. Now this may be something that excited the market because separately the Powell said the Fed may approach a point in in the coming months where it stops reducing the balance sheet or Kutty three points he made about that one there's some signs of liquidity conditions are tightening from firmer repo and other things that the Fed's monitoring the portfolio is overweight longer assets, underweight shorter term assets and finally the longer term the portfolio should be primarily composed of Treasuries. Last thing is Powell's comments were not a decisive endorsement of those future cuts. He just said the situation hadn't changed in September and and he did not lean against Joe, this is important lean against the market expectations which as you know are pretty firm for those two cuts this year.
- [04:13]
Joe
How can anything change when you're not getting any government data?
- [04:19]
Steve Leesman
It's a good question. It's why I didn't expect much change at all in his outlook. Had there been a bunch of reports had they surprised to the upside or the downside it might have changed his view but basically they're going on the trajectory they were on. Joe, it's a bit like you're in a car and all of a sudden you can't see anything so you just kind of keep the wheel straight. Well that wheel showed that you had the downside risk for employment increasing and you had inflation was mostly from tariffs and not broader. But we'll see next Friday Joe when we have that CPI report come out.
- [04:49]
Joe
Well CPI report is not coming out, is it? That's what I'm saying. They're talking about November now maybe Steve, at least till after the you got your plane ticket to the no Kings March. I think it's next Sunday. I don't think they're doing anything Joe.
- [05:05]
Steve Leesman
I must say unless I miss something Joe and I'll take a look at this. There's a CPI report coming out October 24th, did I not report that? I don't. Maybe I didn't.
- [05:15]
Joe
Okay.
- [05:15]
Andrew Slimmon
And you think it's going to be.
- [05:16]
Joe
Done for a little bit either way, even if the government's still shut? It's coming.
- [05:23]
Steve Leesman
The reason the government said it's coming, Joe, it's interesting how politics gets into data, but it's because they needed to calculate the Social Security cost of living.
- [05:33]
Joe
I know that. That's why I thought reopen. I thought they had to reopen to do that. But they can do, they can do it without reopening.
- [05:41]
Steve Leesman
Well, apparently they've called a bunch of workers back. And there is one interesting question, Joe, that I was listening to in the Q and A and in the speech, which is that September jobs report was done. And I'll just say there's a little scuttlebutt here in the hallways about does Powell have that report? Does the Fed have that jobs report? We don't know that. He didn't really let on, but we kind of think he maybe sort of does have it.
- [06:09]
Joe
All right, Steve, I was just trying to get to the government whether, you know, whether it looks like November now or what. So we won't get the, get certain things here and there. They've got some other anecdotal evidence numbers that they can use from time to time. Right, Steve, do you.
- [06:25]
Steve Leesman
Yeah, well, I'm actually working on. We have a, an inflation report that could be a proxy. I have another way of getting jobless claims. I'm doing overtime on this, trying to find the private sector data. And I'm doing it all for you, for you. Coming to you. I want you to have the information. I'm going to hopefully have it. We're working on, we're going to have a jobless claims proxy. I'm working with my friend Nick Wells at CNBC on the inflation story and we have the ADP data. So we're trying to, you know, what's the right way? We're trying to paint a picture with our, with our, you know, with our claws here.
- [06:59]
Joe
All right, very good, Steve. Yep. Great outfit. I mean that obviously. Great minds.
- [07:06]
Steve Leesman
How can you lose?
- [07:07]
Joe
Dom is laughing. Let's chat some markets. I saw Dom and I immediately want to know, okay, Caterpillar.
- [07:13]
Dom Chu
So it's up like four and a half, 5% of this, like 25 points.
- [07:16]
Joe
So the Dow is down 600. So now it's up 300. And Goldman Sachs is still down, I think, double digits. So you do the divisor on all these. If Goldman Sachs down 10 some 70 points. Some things are up, sure. Home Depot I think is up to. Did you look for me?
- [07:31]
Dom Chu
Yeah, Home Depot is up there. I think Disney shares I want to see a little. They were up a little bit as well. If you take a look at the overall picture for the Dow right now though, it is the outperformer. We've seen that 900 point swing at this point because we're at session highs up roughly 300 some points at this point. The last I checked, the tech heavier NASDAQ is still the laggard right now for some of those obvious reasons. But the reversal that we've seen so far during the course of the day has been notable only because we were looking for this consolidation phase that was supposed to be playing out over the course of the last few days, especially since Friday. It was a potential catalyst for at least some people to say maybe there is still risk out there and that's something that we want to pay attention to. But other folks used it as a way to say buy in some discount prices. Now The S&P 500 got all the way on an intraday basis down to that 50 day moving average, the 50 day rolling kind of medium term price trend for the markets overall for the S and P and we bounced off those levels. So as you kind of look at what the path of least resistance is, there is still a feeling like people want to step in and buy the bid no matter how or by the dip, no matter how much it is and maybe they'll stay that way.
- [08:37]
Joe
Infrastructure play is one of the brokerage firms favorite was Caterpillar. So that's up. American Express is up almost 12. So yeah, Home Depot up 7. So right there maybe we're well and.
- [08:49]
Dom Chu
It'S not just that as well. If you take a look at the reasons why the trade imbalance, the trade story with China is the main catalyst for the downside volatility that we've seen. If you now start to believe that there are reasons for you to be somewhat optimistic, we've seen this story play out before. Volatility has been there for trade over the course of the last couple of years at this point now and every single time some downside draft has happened, eventually things end up working themselves out. The President himself alluded to it over the weekend, right, saying that you know, things are going to get better. Don't worry about China so much. This has been a blueprint for a lot of investors over the course of the last several quarters at this point with regard to trade, China, the US and just the market volatility that can go along with it. Now what we haven't seen up until Friday was that kind of move play out pretty much since around late spring, around the so called Liberation day lows. Right. That was the real reason why people were caught a little bit off guard. But they then remember what happened in the wake of that and say maybe this is the way it's going to work out again in the future.
- [09:50]
Joe
Were you scheduled on.
- [09:52]
Dom Chu
No. Well, I am scheduled. I was scheduled to be on with you later on to provide an update on some of the stock movers out.
- [09:57]
Joe
Well, you're welcome back but thank you because I wanted to talk.
- [10:01]
Dom Chu
Well, I always like, you know, we.
- [10:02]
Joe
Get to talk over computer screen. Yeah, we do. And I usually don't see you.
- [10:05]
Dom Chu
That's close.
- [10:06]
Joe
Where are you when you're with. Are you out here in the morning?
- [10:08]
Dom Chu
Yeah, you know, I'm right over here. You can't really see it over here off set.
- [10:11]
Joe
Everything looks different out here.
- [10:12]
Dom Chu
Studio A is very big though compared to the NASDAQ in terms of the studio size. But that's where I would normally be, right by the telestrator behind me right now.
- [10:19]
Joe
Joe, there are no peacocks anywhere.
- [10:22]
Dom Chu
You notice that the main newsroom one is gone?
- [10:25]
Joe
No, I don't think anyone heard what I said. So people have noticed. People have noticed because reversing, baby. And I'm, I'm proud to be. My next guest says the bull market is rolling on and there's good reason for that to continue. Joining me now, Andrew Slimmon, senior portfolio manager at Morgan Stanley Investment Management. Andrew, the first thing you say is that you worry about the bubble in the non profitable tech stocks. I thought that was the difference. The difference this time versus 1999. There aren't that many non profitable high flyers. I mean they're profitable, most of them aren't they? Are they just rich in valuation?
- [11:02]
Andrew Slimmon
Well, you chose the. Hey Joe, you chose the peak of the Internet bubble in 1999. I don't think it's comparison. The move up in the nonprofit tech stocks in that era was 400%. The move up now is like 100%. So we're on our way. But I think it's too premature to say this is 1999. But to be clear, that is the number one thing that worries me. I am worried about the, the speculative stocks are leading the charge. Look today they're up again strong and that's, that's a warning sign. So I love Friday when the market pulled back. They Got hit. That to me, extends the bull market cycle. The more money that goes into these stocks, the more it worries me the Duration of the Mag 7.
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Joe
They're all profitable, aren't they?
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Andrew Slimmon
Correct.
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Joe
Okay, so you're.
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Andrew Slimmon
We're not talking about those stocks.
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Joe
And you're not talking about. You're not talking about, like, large language. You're not talking about lambs or private.
- [12:05]
Andrew Slimmon
Quantum computing, nuclear stocks, car. Flying cars, crypt, you know, you name it. It's the losing. Yeah. It's the speculative ones.
- [12:15]
Joe
Speaking of flying cars, Cathie Wood was just on interviewing Jay Powell. I mean, I don't think she asked him about the flying taxis yet, but I thought that was. That was interesting. So you like when you see a little deflation. I'm talking about in the bubble. You see the bubble deflate a little and you step right in. Is that it?
- [12:33]
Andrew Slimmon
I think it's great. That's what we need. But because. Take a step back, Joe. On the positive side, if I said to Joe, don't overthink this. The Fed is cutting. That means, you know, you know, monetary policy is friendly. And by the way, the one big beautiful bill, there's going to be a lot of tax savings next year. So fiscal policy is friendly, too. Those are two very powerful things driving the market. Don't overthink it. Right. The one thing that hangs out there is this kind of feeding frenzy and speculative stocks. But other than that, I think it's a very bullish backdrop.
- [13:06]
Joe
And it is not, as far as sentiment goes. We are not overly bullish right now. It's not really a loved market yet.
- [13:14]
Andrew Slimmon
It's amazing to me. It's amazing to me that's the case. And then. But the pushback, Joe, is people say, well, the market's expensive. And I say, well, what do you want? The market's in the fourth year. You know, it's moving into the fourth year of bull market. You got fiscal monster policy. Friendly sentiment isn't too high. I mean, you can't have everything. Yeah, the market's a little rich, but other than that, I think there's some very strong reasons to remain optimistic, with the exception of these speculative stocks.
- [13:42]
Joe
You know what? We didn't used to hear people talking about the obbb. But you know what you haven't mentioned, it's not even in the notes anywhere. I don't see any words that begin with T. In fact, why aren't you. Yeah, that's so first half of the year.
- [13:58]
Andrew Slimmon
So first half of the year it is, but I think One of the things that people forget is that a lot of the tax benefits to corporations offset tariffs. So look, my point of all this is we all try to expect, okay, what's the unknown that's going to happen? Well, the reality is we had an unknown and look what happened. The froth came out of the market on, on Friday and it started off that way today. And then you get Jerome Powell, you know, talking about cutting rates and right back to the speculative stock. So I know what the leadership is, but be wary when unknown things like a new tariff tweet comes along. That's what's going to get hit.
- [14:39]
Joe
So, Andrew, we know that currency fluctuations, when they're favorable for a company, they kind of say, yeah, you know, that's good. When they're not favorable, they say, well, it's fine. It was just, you know, it's not our fault. It's the dollar. But the dollar has been weak, but it's moderated recently. How's that going to play into the earnings outlook after this quarter?
- [15:02]
Andrew Slimmon
Non event. I just don't think it will be event. Now. It's been a big event in terms of people's allocation because the dollar went down the first half of the year. The rest of the world did better, especially Europe. And everyone thought, oh, this is the opportunity to invest elsewhere. And I kept going. Yeah, but you really want to take your money out of the US to go to Europe where there's very little technology. It's not, they're not benefiting from the trade. And ever since then, the dollar's moderated and the US has outperformed Europe. So, you know, I just don't think the dollar is going to impact earnings this quarter. But overall, I think it's going to be a good earnings season.
- [15:37]
Joe
All right, Andrew Slim and Morgan Stanley. Thank you. Got to get to the. Trying to think of how valuable what I can call you, I can call you the sixth man, although you're a woman and there's only three people on squawk walks. But you're so valuable this morning.
- [15:51]
Joanie
Thank you.
- [15:52]
Joe
Because we've got a lot going on and these banks come fast and furious. There's 15 metrics to look at probably in every one of them, is there not?
- [16:01]
Joanie
There are definitely 15 or more metrics.
- [16:03]
Joe
To look at, you know, what analysts are expecting versus what the company posts. And you're right there like Johnny on the spot. So go, Joanie.
- [16:13]
Joanie
I was picturing a porta potty, but yeah, that's right.
- [16:17]
Joe
I forgot about this. Goldman Sachs is still down 10 bucks, I think. Yeah, yeah, go across the. Tell us about all of it.
- [16:23]
Joanie
So Goldman is down because they missed expectations on expenses. You also have lower shares for JP Morgan as well, and that largely has to do with a miss on net interest income as well as some higher provisions for loan losses. But Citi and Wells Fargo, those two performers, are the standout this morning for really idiosyncratic reasons. Wells is higher. That one is up, let's see, about 7.7% right now after hiking their medium term return on tangible common equity to as much as 18%. That's up from just 8% nearly five years ago. So a more than doubling of that efficiency metric. Citigroup shares also getting a boost after that firm saw revenue growth and record Q3s in each of its five businesses. The firm also beat on net interest income, that's the profitability metric for loan making and is setting aside less than expected expected for potential credit losses. So kind of the mirror image of what we saw with JP Morgan in the quarter. Now, overall credit metrics looked pretty sanguine despite concerns over two auto bankruptcies in recent weeks. One of them, tricolor, resulted in $170 million of charge offs for JP Morgan. Now, that's a pretty small amount for a firm of JP Morgan's size, but Chairman and CEO Jamie Dimon was asked about it on the analyst call earlier.
- [17:41]
Steve Leesman
My antenna goes up when things like that happen.
- [17:43]
Joe
And I probably shouldn't say this, but when you see one cockroach, there are.
- [17:47]
Andrew Slimmon
Probably more, you know, and so we should. Everyone should be forewarned on this one.
- [17:52]
Joe
And first brands, I'd put in the same category.
- [17:55]
Steve Leesman
And there are a couple other ones out that I've seen.
- [17:56]
Andrew Slimmon
You know, I put in similar categories, so.
- [17:59]
Steve Leesman
But we always look at these things.
- [18:00]
Andrew Slimmon
And we're not omnipotent, you know, we make mistakes, too. So we'll see.
- [18:06]
Joe Kernan
Yeah.
- [18:07]
Joanie
So Dimon also went on the call and talked about how they're reviewing their processes and their underwriting standards and always looking to improve on different metrics of that sort. But a lot of questions about credit quality, a lot of questions about the interconnectivity between private credit and the banking system. On pretty much every call we saw.
- [18:25]
Joe
This morning, Joe, J.P. morgan. So if you had to say one thing for it's done. Well, I mean, do you know anything else to say? Why the stock is off a little bit today?
- [18:35]
Dom Chu
Yeah.
- [18:35]
Joanie
Oh, well, they can't buy back stock. At least that's a question that's asked every single quarter. And diamond always says, why would we buy back stocks at these levels?
- [18:43]
Joe
I mean, it's three times book almost. Yeah, it's what, 2.5?
- [18:46]
Joanie
Yeah, exactly. About 2.5 at this point in time. So, you know, from his perspective, why would we buy back stock when it's this expensive? Now, he doesn't want the stock to go down. But in terms of use of capital, which has been a big overarching question in recent quarters because you've seen seen capital levels presumably increase with the rollback of some of the regulations that were causing them to have more capital. So, you know, are you going to use it for M and A, Are you going to use it for buyback? So far we haven't seen too much in new use cases for capital. But that's certainly a question that pops up every time.
- [19:16]
Joe
Is anyone below one right now?
- [19:18]
Joanie
I believe Citi is still. Still below one. Still below one, still below one. But it is the best performer year to date of the big six.
- [19:26]
Joe
The big turnaround. It's really multi year along, multi year.
- [19:29]
Joanie
Working its way up there.
- [19:30]
Joe
All right, thanks.
- [19:31]
Joanie
See you tomorrow.
- [19:32]
Joe
Who's tomorrow?
- [19:33]
Joanie
Bank of America? Morgan Stanley.
- [19:35]
Joe
Okay.
- [19:35]
Joanie
And I'll be with you at the nasdaq.
- [19:37]
Joe
You'll be down there?
- [19:38]
Joanie
I will. I know.
- [19:39]
Joe
Awesome.
- [19:39]
Joanie
Just when you thought you were sick of bank earnings coming back.
- [19:42]
Joe
No, I'm pretty sure I'm sick of them. No, I'm not. No, no, I'm looking forward to that tomorrow if you're doing them. Coming up, bitcoin hovering around 112,000, down more than 10% from last week's record high. We'll look at what the next catalyst could be to get that crypto trade back on track. Plus, trade tensions with China back on the rise. You saw that with the rare Met and the government shutdown turning two weeks old, who knew? We're going to round up the latest from Washington. The exchange is back after this.
- [20:13]
Andrew Slimmon
This is the exchange on cnbc.
- [20:19]
Dom Chu
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- [20:49]
Joe
What made you.
- [20:50]
Joanie
Confident that you could do something that hadn't been done before?
- [20:54]
Joe Kernan
I have no fear of failure.
- [20:56]
Joe
Trailblazing women, changing the game.
- [20:58]
Katie Stockton
One of my favorite pieces of advice.
- [21:00]
Joe Kernan
Think about what your boss's boss needs. Leadership can look in many, many different forms. It really does come down to just trusting yourself.
- [21:08]
Joanie
Life is short and you just got.
- [21:09]
Joe
To think big to accomplish big things.
- [21:12]
Joe Kernan
Julia Boorstin hosts CNBC Changemakers and Power Players. New episodes every Tuesday, wherever you get your podcasts.
- [21:20]
Joe
Crypto's improved a little but still in red stocks making a strong recovery. Bitcoin down more than 2% and hovering below 113,000. Solana and Ethereum also under pressure. Let's talk what's next for crypto with our panel. Meltem Demir, Crucible Capital general partner along with Matt Hogan, Bitwise Asset Management cio Meltem do you, can you tell me about last week and exactly what happened on that that day? It almost looked like margin selling. What was that from?
- [21:52]
Joe Kernan
Leverage is a hell of a drum, Joe. That's, that's what I can tell you. What we saw is cascading liquidation 2.0. We saw this in 2022 in too. It was borrowers that were off chain. This time defi functioned exactly the way it was supposed to. There were some liquidations happening, triggered more liquidations and we saw a $19 billion liquidation cascade again. Leverage is a hell of a drug, Matt.
- [22:21]
Joe
Meanwhile, gold has at least in recent sessions or recent months has proven itself as non correlated rush to safety. All the things that bitcoin bulls aspire to for the crypto trade. One of these days. It's not here yet. Yeah, I think it's here depending on your timeframe. Joe. Yes, bitcoin has been more volatile than gold. Gold is ahead of it right now. But I think gold's going to drag.
- [22:49]
Andrew Slimmon
Bitcoin up if you pan out.
- [22:51]
Joe
Over the last year the debasement trade has been bitcoin and gold. They've taken turns leading. Gold's ahead right now.
- [22:58]
Andrew Slimmon
But I think we're going to see.
- [22:58]
Joe
A strong end of the year. So I wouldn't, I wouldn't count bitcoin out. You can talk melted about. I don't. I'm not in a position to understand Solana and some of the other. I mean when I get done with etherium and bitcoin, you know, then we're in dogecoin type type territory for me. They all move in tandem though, right?
- [23:21]
Joe Kernan
Well, they used to. Not so much anymore. I think what we're seeing is we used to view the crypto market as sort of one market. Bitcoin dominant, right, is still over 50%. So historically things have really moved in tandem. When bitcoin runs, alts will catch up and we'll see sort of the whole crypto complex run. I think this is the first time, this is year 11 in crypto for me that there's no longer one crypto cycle. There's bitcoin, there's altcoins, Ethereum, Solana, the high caps, and then there's everything else. So I don't think we have the same correlation we saw before. So it's no longer market beta of 1. There's different subsectors in crypto, Matt.
- [23:58]
Joe
We got our, you know, got our ETFs, we got our institutional, you know, starting to see increasing ownership move in that direction. I don't know, is there another halving? What's on the horizon? Maybe, maybe some government maybe finally getting some domestic regulation or clarity on what it's going to look like. Is that what's next for bitcoin? So for a short term catalyst, for sure progress on the Clarity act in Congress, if we see that if the government reopens would be positive for crypto. But the real bull story for crypto is just the slow moving freight train of institutional investment. I've probably done a half dozen meetings with institutional investors and financial advisors over.
- [24:40]
Andrew Slimmon
The last two days.
- [24:41]
Joe
None of them talked about what happened over the weekend. None of them talked about the liquidations Melton talked about. They talked about this need to get exposure to crypto. They're currently on zero. They're going to 5%. That's the big story. It's a slow moving bull market, but it's a very strong long term bull market from my view. Very good, thank you. Matt Hogan, Meltem Demirs. Coming up, we'll go a long way from crypto back to almost what is a blue chip again in a big way. GE Aerospace shares up 80% this year. I think it was one of the big gainers today as well. In fact, yeah, it's up $4, $3,71 now. The company's announcing a multimillion doll. Our Morgan Brennan sat down exclusively with CEO Larry Culp and joins us next with her exclusive interview. The exchange is back after this.
- [25:38]
Joe Kernan
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Joe
Save on Ugg, Nike, Rag and Bone.
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Joe Kernan
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Andrew Slimmon
Because there's always something new.
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Joe
I'm giving all the gifts this year with that extra 5% off when I use my Nordstrom credit card.
- [25:56]
Joanie
Santa who join the NordicLub at Nordstrom.
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Joe Kernan
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Joe
Big gifts, big perks. That's why you rack.
- [26:05]
Dom Chu
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- [26:37]
Joe Kernan
Welcome back to THE Exchange. I'm Kate Rogers with your CNBC News update. A federal judge has ruled the Trump administration violated a previous court order on FEMA grant funding. The judge said Homeland Security did exactly what his ruling forbade when it imposed new conditions on states before they received emergency, emergency grants from fema. The judge ordered those conditions be removed by next week. Israeli officials said today the flow of aid into Gaza will be reduced in half and the Rafah border crossing between Gaza and Egypt will stay closed through Wednesday. The decision comes after Israel said Hamas has been too slow turning over bodies of deceased hostages. So far, only 4 of 28 have been released. Hamas previously said locating the bodies has been difficult. And AMC Theaters is re releasing the film's Annie Hall. And something's got to give in tribute to the late actress Diane Keaton. Multiple outlets reporting the movies will be shown in 100 of AMC theaters nationwide for a week starting Friday. The Oscar winner died unexpectedly over the weekend. The Exchange is back after this.
- [27:43]
Joe
Welcome back to the Exchange. Renewed US China trade tensions adding to the wall of worry as we enter day 14 of the government shut down. Our next guest says President Trump is focused on geopolitics right now, but his attention may be needed here at home to break the shutdown impasse. Joining me now is Tobin Marcus, head of politics and policy at Wolff Research. We saw Friday we understand how important China is and we can do a lot of we could even do India in terms of trade deals. But the big elephant in the room has always been China, Tobin. And it's been kind of a Tolstoy novel watching what's going on, citing a Russian. But started out in March, looked bleak. You know, a lot of, you know, really bellicose language back and forth on trade and Then everything sort of quieted down. What happened after that initial detente that we reached? Did we add some export controls? What caused China to do that with the rare earth, with the rare materials?
- [28:45]
Tobin Marcus
So, you know, I think there's multiple motivations for the move that we saw last week to dramatically expand their rare earth export controls. It is, on the one hand, they positioned it as retaliation for some US Moves. You know, both these new fees that we import imposed on Chinese vessels at ports, but I think more importantly, our expansion of what's called the entity list to apply it to subsidiaries also, which effectively applied US Export controls to thousands more Chinese entities. They were pretty upset about that. They thought it broke the kind of informal understanding that neither side was going to be doing new restrictive stuff after the last round of talks in Madrid. So that's one motivation. But I think it also is something they've clearly been planning for more than just a few weeks. So I don't think it's just a response to that. I think it's an effort to add pressure to the US to try and get the tariffs fully removed. You know, the sort of truces that we've managed to get in place since May are still somewhat asymmetric. Like the tariffs that we have on them are much higher than the tariffs they have on us. And I don't think they are fully satisfied with what they've been able to achieve so far.
- [29:41]
Joe
Well, that was a very. I mean, the rare earth materials and the way that they instituted those controls, at what point? 1%. I mean, that was a shot across the bow. People characterized it as almost nuclear war on an economic front. So they had to expect something like Trump's response. I was surprised that it softened so much over the weekend. Are we really. Is it all just theater and between both countries?
- [30:09]
Tobin Marcus
So I certainly don't think it's theater. I think Trump is trying to project calm towards an outcome that we don't have yet. You know, I think there's a clear commitment to talk. You know, we have staff level talks have resumed already. I think both sides sort of realize after getting through that period in April that it's not sustainable for anyone to have sort of catastrophic.
- [30:30]
Joe
So you expect, you expect a positive outcome, but at the same time, you point out where it's as tenuous as it's been since March.
- [30:38]
Tobin Marcus
Yeah, that's exactly right. It's not theatrical in the sense that there is an actual issue it needs to actually get solved. But I do think that we will probably get there. You know, I think Getting there gets us back to a truce. I don't think that we're really within sight of this sort of big deal that lots of people have been speculating about going back to last year. Maybe we can get some huge Chinese investment, get the tariffs fully removed. That looks pretty remote to me.
- [30:59]
Joe
But I do think quickly on the shutdown, you think it's a mistake for Republicans to go with really large layoffs and closures of agencies that come back? I do. You do?
- [31:14]
Dom Chu
Yeah.
- [31:15]
Tobin Marcus
So I think on the one hand, it's something that the administration has shown they don't really want to do. I mean, they ordered agencies to prepare for these massive reductions in force way back in February when Doge was at its peak. They haven't really gone through with that. So I think that goes to show that they see some risks there. But from my perspective right now, the shutdown is not really impacting people. You know, you have things starting to show up like air traffic delays from, from air traffic controllers doing stickouts because they're not getting paid. But for the most part, it's something that markets and ordinary people are able to shrug off. If you use this as an excuse to go and start, like truly large scale firings that really are optional, I think that both takes ownership of it in a different way and sort of creates self inflicted consequences in a different way. For now, I think Trump is happy sort of riding high on peace deals, confronting this emergent situation on China and letting Democrats spin their wheels.
- [32:03]
Joe
All right, Tobin Tobin, Marcus Wolff Research. Coming up, shares of GE Aerospace are up about 70% just since President Trump was elected. We're going to hear from CEO Larry Culp in a CNBC exclusive on the state of demand and where the company is investing to meet that demand. That's next. That's not possible. I know we're here. You know, no one's going to die. Recent data showing weakness in the. Who's this guy? In the labor market. But one area where workers are in high demand, advanced manufacturing. We were just talking. Larry culp's been there seven years.
- [32:38]
Joe Kernan
Seven years. October 1st stock, by the way, up 11 fold since he took over.
- [32:42]
Joe
11 fold.
- [32:42]
Joe Kernan
11 fold. I realize you've got three different companies now, but just I was looking at.
- [32:47]
Joe
Perspective and you sat down with him. And you're Morgan Brennan.
- [32:50]
Joe Kernan
I'm Morgan Brennan. And Joe Kern. It's good to be sitting here with here with you.
- [32:53]
Joe
People are panicked in there, so they're not used to the squawk box model.
- [32:58]
Joe Kernan
All right, we're bringing we're bringing the morning to the afternoon here. I spoke with CEO Larry Culp. As we just told the skills training program that GE just, GE foundation just announced this morning. Joining me earlier from the company Cincinnati Training Center, Culp noting that the investment is not just about feeding the engine manufacturing pipeline at GE Aerospace, but also about getting more workers into more jobs throughout the aerospace supply chain. I asked Culp why this is so necessary and what it signals about the need for highly skilled workers as the broader labor market shows signs of softening.
- [33:33]
Andrew Slimmon
It's necessary because as you well know, the industry at large was really laid bare back in the pandemic. And we've seen this wonderful rebound in demand, not only from the airframers as they ramp new airline production, but from the airlines who need more parts and services, while at the same time we have our defense customers around the world raising their own expectations. So we feel that GE Aerospace, we're in pretty good shape. We've got 53,000 people on our team today. More than half of those work in manufacturing operations. We'll bring on another 5,000 this year. But what we really want to do is make sure that we're touching anyone and everyone who can be a part of this industry wide ramp, particularly those who could work for a sub tier, a tier 2, a tier 3 supplier who are critical components of our overall supply chain.
- [34:30]
Joe Kernan
It's interesting that we're having this conversation right now as there's this bigger, broader debate in the markets about the softening of the labor market. And it sounds like the read through here is that looking across the industry, there still aren't enough of these highly skilled workers.
- [34:46]
Andrew Slimmon
Morgan, that's exactly right. And again, we've got this wonderful opportunity where our customers are looking for us to increase our supply between now and the end of the decade. We're virtually sold out in that regard. So we need to do more every quarter, we need to do more every year. In turn, we need the team in place to be able to help us here at GE Aerospace across our supply base. And it really is an industry wide effort. We're doing our part with this $30 million announcement that we're making today in workforce development. But it's something I think all of us across the industry need to take on now.
- [35:20]
Joe Kernan
Culp also telling me he continues to see, quote, very strong demand from the airframers, meaning Boeing, Airbus, and that he thinks GE will, quote, be challenged to keep up with their expectations. That said, supply chain continues to improve. We'll probably hear more about that. Next week when GE reports earnings. Also Culp saying that GE is using AI not only to improve manufacturing and servicing of jet engines, but also Joe, to help train these workers. We talk about whether AI is going to replace jobs when it comes to factory jobs and servicing jobs and shop floor jobs. Those are not going anywhere. Those probably get more valuable, which is a point that he made to me in this conversation. You can catch the rest of the interview on closing bell over time. That's going to be kicking off at 4pm Eastern.
- [36:02]
Joe
Did you save the best for closing Bell over time?
- [36:06]
Joe Kernan
It's all great. It's all killer. No filler.
- [36:09]
Joe
Tell me again. Okay, so if you add all the constituent parts back together, how much is. Because I know GE well, because I wrote it all the way down, obviously. GE used to own cnbc. Can you.
- [36:24]
Joe Kernan
Are you giving me like a pop math quiz when you have the computer in front of you and I have nothing but my phone?
- [36:29]
Joe
No. What did you say? Seven? You said one of the things was it's up how much ges 11.
- [36:34]
Joe Kernan
11 fold.
- [36:35]
Joe
11 fold. And you would need to add back some of the constituent parts to get the.
- [36:39]
Joe Kernan
I believe. So this was the conversation. This is a conversation I've had.
- [36:43]
Joe
It's staggering. I mean, the drop was gut wrenching because there was a time it was a $600 billion market cap company under Jack Welch and it dropped down to well below 100 billion in this.
- [36:59]
Joe Kernan
It was a massive undoing of an American crown jewel manufacturing. And when Culp took the helm October 1, seven years ago, that was the.
- [37:07]
Joe
I just can't believe.
- [37:08]
Joe Kernan
True beginning of a turnaround. And obviously we see what's happened now.
- [37:11]
Joe
I can't believe it's been seven years. Time flies. But. And it was a slow start for him. But. But here we are.
- [37:18]
Joe Kernan
Here we are. And there's a pandemic in the middle of that and everything else. But supply chain. I think going back to this workforce conversation that I had with Culp, I mean, supply chain continues to be coming out of the pandemic. Continues to be. And with all the voracious demand in aerospace, continues to be, you know, a challenged piece of the puzzle here. And I think all this workforce investment gets at that supply chain dynamic.
- [37:38]
Steve Leesman
Yeah.
- [37:39]
Joe Kernan
Kind of reminds me of or doesn't remind me. It goes back to what Delta said last week about strong air travel, particularly in the higher end. You're seeing that in the suppliers and the OEMs as well.
- [37:49]
Joe
The trouble started like a couple of days after ML took over. You remember what happened September 11th. You remember what happened to the, the airline industry, jets and everything else. It's been done. A long, strange trip. Ge, thank you and we look forward to the rest of the interview. Oracle unveiling plans to deploy 50,000AMD AI chips in a new data center beginning next year. Seema Modi has more for us today in Tech Check live from Oracle's AI World conference in Las Vegas. Hey sima.
- [38:21]
Joe Kernan
Hey Joe. Well, we know the art of artificial intelligence chip market has been dominated by Nvidia. But this expanded partnership between AMD and Oracle, it really shows how AMD is increasingly being seen by the market as a proof point that its next generation AI chip is a viable alternative.
- [38:38]
Steve Leesman
We've been working with AMD for several.
- [38:40]
Dom Chu
Years and we're super excited to actually offer their new generation of GPUs second.
- [38:45]
Joe
Half of next year, I think.
- [38:47]
Tobin Marcus
I think AMD has done a really.
- [38:48]
Joe
Fantastic job just like Nvidia.
- [38:50]
Steve Leesman
And I think both of them have.
- [38:52]
Dom Chu
Their own place.
- [38:54]
Joe Kernan
Now. It's not just AMD and Nvidia that are battling it out to manufacture and design these high performance chips in inference the process using AI models to run tasks and solve problems. There's Broadcom, there's Grox Rebre which pulled its IPO earlier last month. Nvidia by the way, is by no means being left out of AI World. Oracle announcing the rollout of what they say is the largest super supercomputer in the cloud that connects hundreds of thousands of Blackwell chips across multiple data centers is being seen in collaboration with Open Air at its Stargate campus in Abilene, Texas. I did catch up with Futurum Group's Daniel Newman here who said Oracle now really to show investors that it's making these big bets. But now it needs to show investors that these investments will pay off. We will hear from founder and chairman Larry ellison in about 22 hours. Joe, where we're expecting him to sort of define Reset. Oracle's vision. You know he started this company in 1977. I wasn't even around. You definitely were. But the whole vision of that company has certainly changed because of. I.
- [39:57]
Joe
Certainly has. Everything has at this point. Sima, thank you. Coming up, a wild ride for stocks so far this week. The Dow swinging more than a thousand points today from low to high with the volatility back at June levels. We'll check the charts for the market's next move with technician Katie Stockton. That's next. Welcome back to the Exchange. The VIX touching its highest level in about four months amid Trade tensions and a bubble concerns. My next guest says this momentum shift indicates a change in sentiment. Joining me now, Katie Stockton, Fairlead Strategies founder and managing partner in a CNBC contributor. You're just the person I could ask if you compiled statistics on people correctly calling bubbles and is it above 0% for people being right at least immediately? It's never happened in the history of the world, has it?
- [40:51]
Katie Stockton
It's like a bubble of people calling bubbles, right?
- [40:54]
Tobin Marcus
That's right.
- [40:55]
Joe
It isn't. It's not going to pop anytime soon, probably right.
- [41:01]
Katie Stockton
But it does feel like as of Friday we had a sentiment shift that is notable. What we had been watching for on the Vix was a move above resistance around 18 and of course we did go decisively above that also cleared the 200 day moving average and that usually does preclude or sort of predict an increase in volatility for maybe up to three weeks or so. And so that's what we're bracing for. We did see enough follow through Monday and today to suggest that that is underway. So we think this is really the first meaningful pullback for the S&P 500 and more broadly since the April low and that it's something that buyers will ultimately welcome. But we're going to wait until we have positive technical catalysts to act upon. And right now we have far more negative catalysts so we're going to respect those.
- [41:52]
Joe
It was just a week ago or so. I don't know if you remember when you were on, not on this show but in the morning and you mentioned the VIX that had been quiet, that changed. So in, in just a week and a half that that totally changed and it moved through these moving averages already.
- [42:08]
Katie Stockton
That's right. So it changed very quickly and at the same time it looks like that 20 day moving average that we had been focused on for the S&P 500 as our other risk metric is now rolling over. And that goes for a lot of stocks from a bottom up perspective as well. And that reflects a, I guess contraction in market breadth or participation that's made it already harder kind of since late September for folks to take advantage of this uptrend. By no means does this mean this is a bearish reversal, but certainly seems to be the start of consolidation. And if we reference the demarc indicators we'd had sell signals arise on the weekly charts again since the first time since April that was established. So for me that would suggest that this could be actually somewhat prolonged maybe in the nature of eight, nine weeks and that's out of line with positive seasonal influences which really tend to manifest themselves in November. And yet we didn't have the normal seasonals in August, September, early October either. So maybe it's just different this year.
- [43:12]
Joe
We don't really have enough time. I can't believe you're thinking below 4 on the 10 year. And gold is going to keep moving. Just give me about 10 seconds on that. I guess you say yes, 4 has definitely been support.
- [43:26]
Katie Stockton
It's a key level. It's taken out. That's 367 as the next 367.
- [43:30]
Joe
Okay.
- [43:31]
Katie Stockton
And gold. Just watch the 20 day. It obviously has very strong momentum and we can't derive a new upside objective. But I want to stay on the right side of that uptrend.
- [43:40]
Joe
Very good. All right, Katie Stockton, that's all new information from last time you were on and we appreciate you being on the exchange. See you again, hopefully on Squawk. Thanks for watching the exchange. Power lunch starts right now. What are you doing in a meeting?
- [43:55]
Dom Chu
That could have been an email.
- [43:57]
Joe
That's right.
- [43:59]
Dom Chu
You're losing interest.
- [44:01]
Joe Kernan
Don't let it happen to your money too.
- [44:03]
Joanie
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- [44:06]
Joe
Work, but we can help with your savings because Vanguard believes in giving you more.
- [44:13]
Dom Chu
So how much interest could you earn?
- [44:16]
Joanie
Find out@vanguard.com cashplus offered by Vanguard Marketing.
- [44:21]
Joe
Corporation member FINRA and SIPC.