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The Exchange
The Exchange 10/16/25
00:43:54
Listen to the day's top stories, the must reads & a whole lot more for today's modern investor.
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- [00:01]
Eamon Javers
Introducing Fidelity Trader plus, the next generation of advanced trading from Fidelity. Customize your tools and charts and access.
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Joe Kernen
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Eamon Javers
The all new Fidelity Trader Plus. Learn more about our most powerful trading platform yet@fidelity.com TraderPlus investing involves risk, including risk of loss. Fidelity Brokerage Services, llc.
- [00:27]
Joe Kernen
Member NYSE, SIPC Score holiday gifts everyone wants for way less at your Nordstrom Rack store. Save on Ugg, Nike, Rag and Bone, Vince Frame, Kurt Geiger, London and more.
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Iso Kant
Because there's always something new.
- [00:42]
Joe Kernen
I'm giving all the gifts this year with that extra 5% off when I.
- [00:46]
Savita Subramanian
Use my Nordstrom credit card.
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Dan Clifton
Santa who join the Nordy Club at.
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Bertha Coombs
Nordstrom Rack to unlock our best deals.
- [00:52]
Joe Kernen
It's easy. Big gifts, big perks. That's why you rack.
- [00:57]
Savita Subramanian
You're listening to THE Exchange.
- [00:59]
Joe Kernen
Here's today's show. Welcome to THE Exchange. I'm Joe Kernan in for Kelly Evans. Stocks you just heard, losing some earlier gains as investors juggle the latest round of earnings against trade tensions and falling yields. The 10 year back below 4% to its lowest level since April, down 7 basis points at the lows the 2 year, the lowest since 2000 in 22. The move lower started after a weaker than expected Philly Fed survey. Second straight day that there's been some reversals in the averages. Taiwan semi lower despite another raise in guidance. Profit surging 39% year on year, hitting yet another record high on record chip demand. And speaking of records, another one for gold big time today and for silver. And for those keeping track on pace for the 48th record close of the year for gold. Bitcoin slumping meanwhile as well below 109,000 regional banks under pressure. The KRA Regional Bank ETF down more than 4%. Let's begin in Washington, though, with news that President Trump and Russian President Putin are speaking today against the backdrop of a China trade war government shutdown. Eamon Javors joins us for more. I hate to just call it fomo, but Putin feel left out given some recent developments.
- [02:26]
Eamon Javers
Eamonna that's possible, Joe. I mean, what we know is that the president is not only speaking to Vladimir Putin, but he's also apparently live tweeting that conversation just about an hour ago posting to social media. Take a look at what he put up there for the rest of us to see. He says I'm speaking to President Putin now. The conversation is ongoing, a lengthy one. And I will report the contents as will President Putin at its conclusion. Thank you for your attention to this matter. So we have not had that report yet from either president. But the suggestion here from President Trump that he'll report contents of the call at the conclusion of the call, which he describes as lengthy, gives us a sense that there's some announcement of some kind coming. Whether that's significant or minor, you know, still tbd, and we don't have any indication from the White House when we might get that announcement. Obviously, the timing of all this is significant because as you were sort of alluding to, Joe, we see the president is going to be meeting with Volodymyr Zelenskyy of Ukraine tomorrow. And on the agenda for that is the question of whether or not the United States is going to allow Zelensky and the Ukrainians to have access to those long range Tomahawk cruise missiles, which you know, could be devastating to the Russian military effort and have been, you know, a stalwart of the US Arsenal for many decades now. Tomahawk cruise missiles, of course, could reach Moscow from Ukrainian territory. So there's a real threat there. The president has said he's considering releasing those to the Ukrainians. So we'll see whether that decision comes about tomorrow and whether today's phone call, Joe, is an attempt to sort of get ahead of that in some way and by announcing something. We'll wait and see.
- [04:05]
Joe Kernen
We could conjecture about a lot of things. Amy. My first response was, oh, great, you know, more talk from Putin. But we've all gotten inured to it of not getting any. I think the president got frustrated too with Putin, but suddenly there's India with oil and suddenly there's some actual consequences, maybe economically, but the missiles you were talking about, maybe this is the only thing Putin understands and maybe we could get somewhere. The president must think so.
- [04:34]
Eamon Javers
It's entirely possible. I mean, the president has said that he's frustrated with Putin. He's expressed again and again how frustrated he is with the continuation of the Russia Ukraine war, that he thought that this would be one of the easier wars to solve. He views himself, he's very much in man of peace mode coming off of the peace agreement in Gaza or at least the hostage exchange and release in Gaza. That has been very encouraging to this White House and builds some confidence that they might be able to do something in Russia, Ukraine as well. And the president is a guy who understands leverage, as you point out, Joe, he is putting all the economic leverage on Russia that he can. And he has said publicly that he feels like the Russian situation will be solved once the oil price out of Russia reaches a certain threshold. The President has said publicly he doesn't believe that the Russians will be able to finance their war machine any further. And that will be the decisive point. So are we there yet? You know, might be jumping the gun to go all the way there, but clearly there's something going on behind the scenes that the President wants the world to know. He might be on the verge of announcing.
- [05:43]
Joe Kernen
I like the way you said that. Are we there yet? That's a familiar, that's a familiar sound. I think he's working on. He's got what, 363 days to the next Norway announcement. Right. You never start too early.
- [05:56]
Eamon Javers
And the Peace prize is based on the previous calendar year. Right. So you'd want to get it in before December. If you're, if you're angling, if you're angling for a Peace prize next year, you want to get it in calendar year 25.
- [06:09]
Joe Kernen
There you have it. All right, Eamonn, you know, keep watching. What are they called on social, whatever that thing is. True social.
- [06:16]
Eamon Javers
True social.
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Joe Kernen
Not a tweet, though. What is it?
- [06:19]
Eamon Javers
They call it a truth.
- [06:20]
Joe Kernen
They do. What if it's a be? It's still called it. It's an alternative fact. All right, we got to go. Thanks. Amen. While the administration seems to be dealing with a number of battles, the market seems to be taking it in stride. When Friday sell off we saw from trade concerns has calmed a bit today. Not so great. Our next guest says that's because investors are paying attention to different things in D.C. fiscal and monetary policy, which I think Dan Clifton, head of policy research at Strategic Research, which is a Baird company, both of those are, are going to be positive, I think, at least for gdp, aren't they, Dan? There's some, there's some serious scratch coming our way in the economy from these things.
- [07:05]
Dan Clifton
Absolutely. Joe, great to see you. I mean, there's a lot of noise here from Washington and there are some real risk. China, what's going on in Russia, those are definitely risks. But when you look at the pipeline of fiscal monetary stimulus coming down the road, companies just received $100 billion, the first tranche of the one big beautiful bill, tax cuts for making investments in America. You're going to get $150 billion of tax refunds on the consumer side in February, March and April. And it's clear now the Fed is more worried about employment than they are about inflation and that there seems to be a Fed rate cutting cycle come in. And just to add to that on Tuesday, the Fed chairman came out and said, hey, you know what? We're going to stop contracting our balance sheet, the quantitative tightening process. So you have two tools, two stools of monetary policy, two stools of fiscal policy. And I believe that the equity market is pricing in growth and it makes it easier to withstand the government shutdown with the idea that we'll get it resolved at some point the government's got to reopen and allow us to kind of, kind of just at least take a deep breath on what China is trying to do on rare earths and how these negotiations are going with Russia, Ukraine.
- [08:19]
Joe Kernen
When I saw you talking about corporations in the obbb, I looked up. Exactly. It's not just an extension of the 21% from 2017 for corporations. Can you list all the other things? There's expensing, there's all kinds. There's like five other things that will help corporations that were in that bill.
- [08:42]
Dan Clifton
Absolutely. And so if you want to onshore, you want to create the incentives to onshore. And so what this bill does is it gave 100% expensing of property. You build a factory in America, we'll let you write that off. That's what that bill did. Now, that hasn't really happened yet, but the way it was designed, it was retroactive to January 1st. So any company that made an investment in a cap.
- [09:04]
Joe Kernen
Good order.
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Dan Clifton
Or any company that did research and development, they got a retroactive tax cut on September 15th. And let me just talk to you about how big this is. It's been about $100 billion of tax cuts that they got in the month of September. It's almost identical to the amount of tariffs that have been enacted since Trump's come into office. And so what we call this, Joe, is the sterilization impact. You're sterilizing the negative impact of tariffs. We with fiscal policy. And I think a lot of the data that we have been seeing over the last month or two is backward looking now because we've just replenished companies to be able to make investments, keep employees in place, maybe even hire some employees. And that's why I think that growth is going to reaccelerate into 2026.
- [09:48]
Joe Kernen
A couple of things that are concerning Dan, that occurred to be okay, so the obbb, we got to get this no king thing out of the way. Probably, but I didn't realize. So tsa.
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Bertha Coombs
Yeah.
- [10:01]
Joe Kernen
If they start not showing, do we just basically freeze the airline? Could that happen near term? That's not good for the economy.
- [10:11]
Dan Clifton
Now, you know, I've been on the road the last two weeks. I'm on the road right now. I've had no problem with flights. I'm probably jinxing myself. You do see a little bit of a slowdown at the tsa. But what's going to happen is federal employees have missed one paycheck. They're probably going to make a second paycheck. Once that happens, then you start to see people calling out. You start to see slowdowns starting to happen. And that's a pressure. I will tell you the biggest pressure I see right now is that you have congressional aides who don't make a lot of money and they're going to have a rent payment due and their boss is keeping the government closed. So don't underestimate the internal pressure from the congressional aides. And you do have to get past these no King rallies. It's just hard to see the Democrats and making some sort of deal before the no Kings rally on Saturday. I think once you clear that out and they start to realize there's elections coming in New Jersey and Virginia, people need to start getting paid. I think you'll start seeing some resolution, even if it's a short term resolution, to be able to start to resolve this government shutdown. But this has not been a confidence inspiring mission from our, from our members of Congress given that they've kept this government shut down over really relatively small issues. And if you look at the president, the president's basically saying like I'm doing world peace in Russia and the Middle east and Congress is playing these small ball games by keeping the government shut down.
- [11:32]
Joe Kernen
It's a cr. If someone told me we're not doing a continuing resolution because we want to make sure that a no Kings rally gets enough, you know, that they're not, you know, telling us we folded, that would make me mad. If I was a government employee and I was, I'd switch, I'd be, I'd turn into a Republican from that.
- [11:49]
Dan Clifton
The risk for the Democrats here is that the federal employees in Northern Virginia get upset at everybody and they just don't show up. That means fewer Democrats are going to show up. And so all of a sudden, if you start seeing the New Jersey and Virginia races closing and the New Jersey race is already closing, this could actually turn the Democrats in a shutdown right now where they're holding their ground because they think they're winning. So they've got to be very careful on how they approach this.
- [12:12]
Joe Kernen
The other thing we got to go the Other thing is, is that shot across a bow with the rare earth they got a, they can't be serious about. They got, that's got to be an opening shot that was being used to negotiate because that is, someone said the economic equivalent of nuclear war. We got to do we take the president's word for it, everything's going to be fine. I mean, do we know that?
- [12:37]
Dan Clifton
Well, there's some underlying dynamics where a junior trade negotiator from China came over here and was warning about this over port fees. And you know, I see the Chinese starting to walk this back. This is not just a US Problem. This is going to affect every country in the world and they're pushing back extremely hard. They couldn't believe the lines that were crossed. So you could sit here and say, oh, the U.S. put in port fees or they're sanctioning their drone makers that are going and hitting Ukraine, but that's not proportional to what the Chinese did. And my guess is that that will be walked back. What I'm arguing is that Trump and G have to resolve this. This has to be done at the world, at the leader level and that's what we're going to see. And Joe, think about what we're coming up to in October 28th. We're going to have the G Trump meeting, we're going to have the Fed meeting, we're going to have the treasury deciding how their debt is allocated. We're going to have the IPA tariff hearing in the Supreme Court and we're going to have these elections. So policy is going to have a huge impact over financial markets and it really begins to crescendo on October 28th. I think the main event here is the Trump G meeting, I do think.
- [13:40]
Joe Kernen
All right, Dan, we got to run. Thank you. Dan Clinton with Strategus. Well, if you're watching the judge, he was talking about biotech stocks towards the end of the show outperforming the broader market so far this year. Those healthy returns continue. Corey Firestone certainly thought so, but we'll talk about that. Plus, bank of America's Savita Subramanian says that the AI train is rolling onto the non tech sector's now broadening out. We'll tell you where she expects to see the most upside ahead. The exchange is back right after this.
- [14:15]
Bertha Coombs
This is the exchange on cnbc.
- [14:22]
Joe Kernen
The heaviest metal credit card of all time, rumored to be one of only 18 in existence, plated with the very same tungsten that forged the international space station and wielded at business din 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. FedEx. The new power move.
- [14:52]
Dan Clifton
What made you confident that you could do something that hadn't been done before?
- [14:56]
Savita Subramanian
I have no fear of failure.
- [14:58]
Joe Kernen
Trailblazing women, changing the game.
- [15:01]
Savita Subramanian
One of my favorite pieces of advice, 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. Life is short and you just gotta.
- [15:12]
Bertha Coombs
Think big to accomplish big things.
- [15:14]
Joe Kernen
Julia Boorstin hosts CNBC Changemakers and Power Players.
- [15:18]
Bertha Coombs
New episodes every Tuesday, wherever you get your podcasts.
- [15:23]
Joe Kernen
Welcome back. It's been hard to miss this. The XBI Biotech ETF hitting the highest level in more than three years today. It's been quietly outperforming the S&P 500 so far this year. Our next guest sees that strength continuing, at least in the near term. Joining me now is Jared Holtz, health care equity strategist at Mizuho Securities. And you know, the simplistic rationale, I guess, Jared, would be that AI changes everything. But near term everybody brings up health care, specifically drug development and even biotech for an immediate beneficiary. Is it that simple?
- [16:00]
Jared Holtz
Hey Joe, how are you doing? I'm not sure it's that simple. I think I certainly helps as a, as a longer term narrative. I'm not even sure, you know, we've seen any of the AI capabilities kind of bleed into the sector yet. But certainly long term it's going to have an impact. And you know, if you want to have a long term view on biotech because you think AI is going to be, you know, very significant as far as it, you know, interfaces with the industry, I think that that's the right call.
- [16:28]
Joe Kernen
Well, give me more. I mean, there were some patent expirations. Is there a tipping point coming with some of the dues that we've paid in basic science research over the last 10 years and we're going to start to see a quantum leap in drugs that are being development or that are being developed.
- [16:52]
Jared Holtz
I mean, there are so many different factors. A lot of the clinical data that we've seen lately out of this industry has been positive. You know, there's obviously an element of luck to it too. I mean, this stuff comes and goes, but I think as the data capabilities get better, that should probably help with respect to what we see out of, out of trials. And I think, you know, like you mentioned, the pharmaceutical industry still has to face loss of Exclusivity. There's, you know, there's pricing pressure coming from a variety of avenues here. And so, you know, part of what makes biotech interesting I think to a lot of investors is that the large cap pharma companies will continue to kind of dive in here. And there's a huge M and A trade going on here as well.
- [17:37]
Joe Kernen
Kind of, kind of incredible. I'm trying to figure out, I think, Jared, whether these are going to be really attractive to major pharma companies too. Is there any M and A potential that has the, some fluff in these stocks right now? Is there any premiums in here based on being bought by some? And the other thing, I mean RFK and some of the moves that we've seen and Sarepta, that, that mess that we went through doesn't seem like necessarily a golden age of some of this stuff, does it? Couldn't it be impacted by some of the moves that that rfk, hs, HHS makes?
- [18:20]
Jared Holtz
Yeah, I mean, a golden age, I'd be, you know, I'd be hesitant to call it that. We've seen a lot of the, you know, some of the risk factors from RFK already. I mean, when he came into power, the sector traded down immediately. And I think it's just taken some time to get, you know, the biotech sector to thaw out a little bit, you know, from some of the noise and the hysteria that was made, especially over vaccines. I think if you want to be a little bit more positive on biotech broadly. So much of the RFK rhetoric has squarely been on vaccines and not much else. To me, the Sarepta issue was more of a one off. You know, it's been a very controversial stock, a very controversial company. And so I think they're trying to get their footing now as far as M and A. Yes, there's M and A premium here. We're probably, we're headed towards what could be the most significant M and A year yet. We're kind of annualizing towards 20 transactions just in the public domain north of 500 million. So we're there. Like, I think everything is kind of kicked into another gear here, but I think as far as like the broader industry is concerned, a lot of the trends sort of hold into 2026.
- [19:31]
Joe Kernen
All right, Jared, you know why they call it news? Because it keeps happening and then it becomes new. And we got to go. Jared Holt, Mizuho, thank you. And here we do have some news out of Washington. We're going back to Eamon Jeffers phone Call is.
- [19:47]
Eamon Javers
Yeah, that's right, Joe. We were just talking about it. And now we have the update from the President of the United States on social media posting a lengthy detailed account of his conversation with Vladimir Putin of Russia. I want to direct your attention here to the end of that social media post because I think that's where the news is. He says that we spent a great deal of time talking about trade between Russia and the United States when the war with Ukraine is over. At the conclusion of the call, we agreed that there will be a meeting of our high level advisors next week. The United States initial meetings will be led by Secretary of State Marco Rubio together with various other people to be designated a meeting. Location is to be determined. He then says, president Putin and I will then meet in an agreed upon location, Budapest, Hungary, to see if we can bring this inglorious war between Russia and Ukraine to an end. President Zelensky and I will be meeting tomorrow in the Oval Office where we will discuss my conversation with President Putin and much more. I believe great progress was made with today's telephone conversation. So the news here is that there's going to be a high level meeting of advisors that is at a location TBD next week led by Marco Rubio and then a potential additional Trump Putin face to face meeting in Hungary. Joe, and you remember of course, the last Trump Putin meeting in Alaska. The President emerged from that frustrated with Vladimir Putin, even though he gave him a ride in the beast in the presidential limo. He flew over the B2 bombers. A whole lot of pomp and circumstance there for the Putin meeting in Alaska. The President emerged from that expressing some frustration that he can't get Vladimir Putin to move on the issue of Ukraine. In recent days he has said that he feels that Putin simply just doesn't want to give up this war, doesn't want to stop fighting. Something has changed here in this phone call, or at least in the diplomatic maneuvering here, because they are scheduling a meeting and it does look like we'll have another presidential face to face. So does that indicate an opening for progress in settling that conflict? As always, tbd. But clearly the President is encouraged by what he heard on that call with Vladimir Putin today. Joe.
- [21:55]
Joe Kernen
Well, we'll see whether, you know, we have the most drone attacks since the beginning of the war, like tonight, which is sort of what happened last time, right? And then right after that meeting it was like, it was like almost disrespectful, I thought.
- [22:09]
Eamon Javers
And you wonder, Joe, whether this is Putin trying to get inside the decision loop on the Tomahawks. Right. Trying to get in front of President Trump before Zelensky can to request the Tomahawks before those Tomahawks have been authorized. And now you put this potential meeting, potential big set piece in Hungary on the table. Now the question is, does the United States want to destabilize that potential meeting by authorizing these Tomahawks, or is this a way for Putin to get the US to hold off on the Tomahawks by dangling a meeting in the future? You know, and then the sort of the double, triple logic of that. Does the United States want to not allow them to get in the decision loop and so therefore become more likely to give the Tomahawks? It's very, very tricky stuff.
- [22:51]
Joe Kernen
That song by the who, we won't get fooled again. What is that? I don't know. So, yeah, another delay. Are you going to monitor the truths coming out of Truth Social? Okay, let us know.
- [23:02]
Eamon Javers
I mean that's all we do these days. We have alerts, you know, when he posts it, like dings throughout the bureau. Right.
- [23:09]
Joe Kernen
All right, Eben, thanks for your attention to this matter. See you later. Coming up, an inside look at the Middle east growing role in financing the AI build out and why the White House is becoming more involved in the deal to save TikTok.
- [23:29]
Dan Clifton
What made you confident that you could do something that hadn't been done before?
- [23:33]
Savita Subramanian
I have no fear of failure.
- [23:35]
Joe Kernen
Trailblazing women, changing the game.
- [23:38]
Savita Subramanian
One of my favorite pieces of advice, 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. Life is short and you just gotta.
- [23:49]
Bertha Coombs
Think big to accomplish big things.
- [23:51]
Joe Kernen
Julia Boorstin hosts CNN CNBC Changemakers and Power Players.
- [23:55]
Bertha Coombs
New episodes every Tuesday, wherever you get your podcasts.
- [24:00]
Joe Kernen
Welcome back to the Exchange. All three. It's not me. All three major averages are in the red. Happened yesterday to off session lows though. But we were up all morning long, especially pre market. The Russell 2000 also underperforming. This is interesting. Treasury yields back below 4%. The 10 and 30 year yields at their lowest level since May and the two year yield at its lowest since 2022. Dom Chu is over there nodding because he knew all nothing that I said was new to you.
- [24:31]
Bertha Coombs
No, it's because you and I have been watching this stuff for the balance of the morning through the afternoon. So we've kind of seen the progression.
- [24:37]
Joe Kernen
Great minds.
- [24:38]
Bertha Coombs
Yes, they. Well, I don't want to. You are a great mind. I'm just here to learn from you anyway. All right, so let's talk about some of the movers. So far, earnings are still driving a lot of the action. Let's start off with the good news first. That's JB Hunt shares up nearly 21% here, making it easily the best performing stock in the entire S&P 500. In the session, the transportation logistics company reported better than expected quarterly profits. Also revenues as well. JB Hunt was helped along by operating income growth in its intermodal division, which moves goods across a combo of its truck and rail operations. So keep an eye on JB Hunt. We're going to stick with transportation for our next movers, but the transport of people this time. UAL shares United Airlines down five and a half percent, making it one of the worst performers in the S and P mixed report for America's second biggest airline by market value. Profits topped estimates. Revenues came up just shy of expectations. United, though, was helped along by higher growth when what else? Sales for its premium seed offerings relative to basic economy. So keep an eye on UAL and we're going to end with the tech side of things on shares of HP, which are down now roughly about 10%. The provider of business level tech solutions, hardware, cloud computing, held an analyst day today where it gave a full year forecast for fiscal 2026 that came in below expectations as it looks to try to position itself for higher growth opportunities in places like networking, cloud, AI over the longer term. HP, by the way, also did announce a 10% boost to its dividend and added $3 billion to its share buyback. So overall, HP shares down about 9%. Joe, I'll send things back over to you, all right?
- [26:08]
Joe Kernen
And I'm going to send them now over to Bertha Combsdom for a CNBC news update. Bertha.
- [26:13]
Bertha Coombs
Hey Joe. President Trump and Health Secretary Robert F. Kennedy Jr. Will reportedly unveil a new initiative this afternoon to expand access to in vitro fertilization, or ivf. According to the New York Times, the White House will call on employers to offer coverage for IVF and broader infertility coverage to workers similar to how they would offer vision or dental coverage. IVF treatments typically cost between 15 and $20,000 for a single cycle. Fashion house Giorgio Armani has named its global chief commercial officer giuseppe Marsoco as CEO today, effective immediately. Marsochi has been with Armani for 23 years and will oversee a planned sale of a 15% stake in the company, as outlined in designer Giorgio Armani. Companies Will and Apple and CNBC'S parent company NBC Universal, have signed a deal to bundle the Apple TV and Peacock premium streaming services. Companies said the bundle will launch on Monday and offer the services at a 30% discount. The premium tier will cost subscribers 1499amonth or 1999amonth for premium plus. Premium plus bundle.
- [27:30]
Eamon Javers
Joe.
- [27:31]
Joe Kernen
All right, Bertha. I have to move, really have to move. Bertha Coombs, thank you. Coming up might be before Bertha's time. Grateful Dead coming up, bank of America Savita Subramanian is going to join us with where she sees stocks going from here, plus the sector she's downgrading. Oh, no. We'll have that when we return. Welcome back. Stocks and yields both lower as investors navigate some trade tensions, earnings and the government shut down all those things. Factoring in, my next guest says that while she's still keeping an eye on tariffs, she expects the air rally to continue to broaden out to non tech sectors. Joining us now, Savita Subramanian, head of equity and quantitative strategy at B of A securities. Usually you come in, you're on set. I guess it's easier down in the city. But thanks for joining us.
- [28:30]
Savita Subramanian
No time to commute. Yeah. No. Great to be here. Yep.
- [28:34]
Joe Kernen
Are you in terms of we've been expecting this with AI, some of the, you know, as it broadens out when these things are so richly valued at this point. Are these things you're talking about going to be beneficial beneficiaries of AI or down the supply chain for building out the AI or both?
- [28:55]
Savita Subramanian
I think a little bit of both. I mean, where we're seeing this sort of a train go, I mean, it's obviously stopped at power and utilities. And we've seen a big rerating in some of those stocks. And now I think it's moving into more of the areas around tooling industrials, you know, getting all the generators into those data centers that need to be tooled up. At this point. We're also seeing really interesting use cases of AI that have been helping margins of some of the more labor intensive areas within health care. We just upgraded health care from underweight to overweight about a week ago on the premise that it's seeing less margin risk. It's actually one of the sectors where the use cases around AI helping efficiency are really, really abundant. Our analysts have written a lot about this theme. So I think there are, you know, kind of different areas of the overall economy that could benefit. When I think about the potential victims, I think what's disturbing is we are in an environment where one of the Biggest contributions to consumption growth over the last few decades. That is white collar services, professional professionals in that age bracket of 25 to 45, that group is. It's harder and harder to see jobs. You're seeing less new jobs created in that cohort. So I think that the consumption story becomes a little bit harder from here. And we're starting to see that in some of the data. So that's something I would watch. And we just downgraded consumer discretionary from overweight to equal weight.
- [30:39]
Joe Kernen
So we've had a couple of people come on and say, yeah, things are good, earnings are going to be pretty good. But this time around, with the move we've seen since the April and May lows, I mean it would have to be like blockbuster to move it, right?
- [30:54]
Savita Subramanian
Exactly, exactly. Yeah, I think that's right. I think the bar is really high today. And this is happening on top of, I mean, the market cap to GDP of the S&S and P500 just hits a new record high every day. Well, except for today, I guess, so far. But I mean, it's a really, really expensive market environment where I think the problem is we're not necessarily seeing a lot of risks priced in. Meanwhile we have this information vacuum around government data. We have to kind of guess at what's going on. We've got, you know, we've got this potential for, you know, some of these hyperscalers are getting more asset intensive. They're starting to see, you know, kind of higher depreciation expense that usually comes with a lower multiple. Some of these companies are raising capital to, to, to spend on capex. And historically what we've seen is that's a recipe for underperformance, not outperformance. Of course, I mean, I'm not knocking the ROI on these AI projects, but I think that there's something kind of different going on in the market today than what we saw coming out of that, that Post Liberation Day swoon.
- [32:08]
Joe Kernen
So Savita, you're bearish near term, is that fair to say?
- [32:13]
Savita Subramanian
Yeah, I mean our year end target is, is below where we are today. We're at 6,300. I mean, we're looking for, you know, kind of continued positive returns for the market over the longer term, but really more from a broadening of performance. And what I worry about is we've seen some more tariff uncertainty, some more policy uncertainty. And what that did back in April was it created a little bit of a pause in terms of companies committing new capital, hiring people, you know, kind of business as Usual. So if this is creating that same type of pause, I worry that that could push out a broadening of the market, you know, into 2026. So yeah, that's what we're watching.
- [32:56]
Joe Kernen
I mean, yeah, tariffs, but it's not capital T tariffs like it was like in April. It's valuation and like small case T tariffs. I mean, still a concern.
- [33:08]
Savita Subramanian
Exactly. But it's still a concern. I think it still problematizes planning and spending. So that's what we're watching.
- [33:14]
Joe Kernen
We can never make anything else. But because it has 0.1% of some rare, there's nothing that doesn't have point 1%, is there? There's nothing that doesn't have point one percent of a rare earth material. I don't know what would be, you know, would be like the Flintstones. All right, so Viva.
- [33:31]
Savita Subramanian
Thank you, Bedrock, thank you.
- [33:33]
Joe Kernen
All right. To see of a securities. All right, we got a market flash on Oracle. Sima Modi has a story. Hey, Sima.
- [33:39]
Bertha Coombs
Joe.
- [33:40]
Savita Subramanian
We are watching shares of Oracle spike higher as the company's analyst day kicks off. And executive executives are talking about the big opportunity once again in cloud infrastructure where they discussed infrastructure seeing a 117% year over year growth in the first quarter of 2026 and how that will fuel gross margins going into today. Joe, the big concern was around the longer term profitability picture. And what the executives are doing on the call right now are outlining some of those deliverables and metrics around what the margin profile of cloud could look like. And that's giving investors a bit more, more clarity around what that return on investment picture looks like, especially as this company continues to spend a massive amount on artificial intelligence chips. We're looking at shares up another 6%. And as you know, this is the best performing mega cap tech stock so far this year on this whole bet that I will pay off up about over 80% now in 2025. Joe, we'll keep you updated.
- [34:32]
Joe Kernen
I was just trying to quickly get a market cap. I can't believe what, what we've seen with with Oracle recently. Almost 900,917, amazing. Sima. Okay, thank you. Coming up, both the Biden and the Trump administration is calling domestic ownership of TikTok's US operations a matter of national security. But one of the key players in that ownership deal is raising concerns of its own. That's next the exchange. We'll be right back. We're getting new details now surrounding the backers of a U.S. tikTok deal. Steve Kovac is following that for today's tech check. Hey, Steve.
- [35:14]
Bertha Coombs
Yeah, it's not just TikTok either. So, look, Joe, we talk so much about household names like in video or Microsoft with all these ideals in recent weeks, but there's a new name that keeps cropping up, including in yesterday's $40 billion deal to buy that data center company called Aligned. And it's also, like you said, involved In Tech Talks, U.S. business. This is MGX. It's a firm backed by Abu Dhabi Sovereign's Wealth Fund, and it formed less than two years ago and it's already making huge moves. For example, its partners with Microsoft and BlackRock on a consortium to spend $100 billion on AI infrastructure here in the United States. Microsoft also did a deal with MGX last year for AI data centers in the Middle East. And Microsoft invested one and a half billion in MGX's sister company, the tech holding firm G42. Now it's also part of that group buying TikTok's US business, raising some questions about foreign money in a deal that was supposed to be all about national security and a whole lot more. That's just a taste of everything they've been involved in. Now, MGX is run by a guy named Tanoon Bin Zayed Al Nahyan, and He is the UAE's National Security Adviser and also the brother of that country's president. And there's a connection here to President Trump. MGX reportedly invested $2 billion in the crypto firm Binance using coins it actually bought from the Trump family's world Liberty Financial. And guess what? Just shortly after that, he was in the Oval Office with President Trump this spring announcing a one and a half trillion dollar investment from MGX in the United States over the next decade. So why are we seeing so many deals with MGX with all these US Companies? I caught up with Patrick Moorhead. He's a tech analyst who's on CNBC all the time. He said not only do they have deep pockets and they're willing to take a risk to diversify their wealth from beyond oil, it also helps US firms protect against China moving into the Middle east and making inroads there in artificial intelligence. Also, Bradley Tusk, he's a VC here based in New York City. He said the risk for them is looking too close to Trump. But the relationships with the President so far has been really good for business. It's involved in just about every major deal we've been talking about, Joe.
- [37:22]
Joe Kernen
We kind of put the security, the whole notion it was all about security on hold A while ago.
- [37:28]
Bertha Coombs
You know, one day we're gonna find out what it was.
- [37:30]
Joe Kernen
All those young voters. It was Baron Trump.
- [37:32]
Bertha Coombs
No, no, I mean what it was that all the Congress people saw.
- [37:35]
Joe Kernen
I'm talking about why.
- [37:36]
Bertha Coombs
Oh, the young voter thing. Of course, it's popular, et cetera.
- [37:38]
Joe Kernen
But there's so many reasons that informed the President's changing opinion on TikTok.
- [37:44]
Bertha Coombs
There's also a reason that in a bipartisan fashion and in very rapid fashion, they all decided to ban the thing and then suddenly.
- [37:52]
Joe Kernen
Have you ever been on. Have you.
- [37:55]
Bertha Coombs
I don't put it on my phone, but.
- [37:57]
Joe Kernen
Have you? Oh, I don't. I don't have any. You don't have any videos?
- [38:00]
Bertha Coombs
No, no, no.
- [38:01]
Joe Kernen
I would go on Tick Tock if you.
- [38:02]
Bertha Coombs
No, I've never posted. I've. I've used it.
- [38:05]
Joe Kernen
Call me late, whatever. Call me.
- [38:06]
Bertha Coombs
I have no idea.
- [38:07]
Joe Kernen
Britney Spears thing. You don't remember that?
- [38:09]
Bertha Coombs
No.
- [38:09]
Joe Kernen
Okay.
- [38:10]
Bertha Coombs
I have no idea what you're talking.
- [38:11]
Joe Kernen
So you've never posted anything on.
- [38:12]
Bertha Coombs
Never posted. I've perused it, but I don't keep it on my phone.
- [38:16]
Joe Kernen
No reason for me to look at it.
- [38:17]
Bertha Coombs
No, I'm too old.
- [38:20]
Joe Kernen
Great. Coming up, Apple's Eddie Q saying sports streaming has gone backwards, but it turned out Apple may actually be part of the problem. We'll discuss that. The exchange will be right back. Welcome back to the Exchange. There's a new sport coming to Apple TV. CNBC's Alex Sherman reporting. The tech giant is close to announcing a deal with Formula One for its US rights. He joins me now to discuss. It doesn't include Brad Pitt.
- [39:05]
Eamon Javers
No. But I mean, I think that was the genesis of this.
- [39:08]
Joe Kernen
I think so, too.
- [39:08]
Eamon Javers
Relationship with Apple.
- [39:11]
Joe Kernen
Mainstream.
- [39:12]
Eamon Javers
Yeah, absolutely right. And that movie. So I spoke with Eddie Q, the head of Apple services yesterday. He said to the audience that the two of us were speaking with. I sort of moderated a panel with him that that movie is the biggest sports movie of all time. And I tried to press him on this news that Apple is going to buy F1 rights, which I hear is imminent, a deal that's going to be announced very soon. It hadn't been announced, it has not been announced yet, but he was speaking to an audience of Motorsport fans. So I was saying, if Apple isn't going to do this deal, this is one of the biggest trolls of all time to be speaking to a group of Motorsport fans. We started talking about Apple's ambitions in sports more broadly, and I was trying to press him on. Look, if you're going to get F1 rights. What is Apple going to bring to the table here in terms of a viewing experience? It's known as this kind of cutting edge company. What are going to be the bells and whistles? He said, look, stay tuned on that front. But he also said that the viewing experience today, particularly for younger people, simply isn't in the place where it needs to be. Take a listen to what he told me.
- [40:16]
Dan Clifton
I think having, having a single place where there are no blackouts, no matter where you are in the world, anyone can buy it.
- [40:24]
Joe Kernen
From that standpoint, you can watch any game. It's easy to switch back and forth.
- [40:28]
Dan Clifton
From that standpoint, things, you know, picture.
- [40:30]
Joe Kernen
In picture has been around forever, you know, but it's really hard to do if you, if they let you do it at all. But in most cases, they can't let.
- [40:38]
Dan Clifton
You do it because of the rights issues. I mean, there's just, this is pretty basic stuff that I think can grow the sport. And I think one of the concerns.
- [40:47]
Joe Kernen
That you see is, you know, when I was a kid, you were competing.
- [40:52]
Dan Clifton
Against what, you know, I had, you know, five TV channels or whatever there.
- [40:56]
Joe Kernen
Is from that standpoint. Now, you know, if you're a kid growing up today and you want people.
- [41:01]
Dan Clifton
To watch your sport, there's a lot of competition for those, for that, you know, eyes. And so I think the bar is really high. And I think if we want people to watch games and we want all.
- [41:13]
Joe Kernen
Of sports to grow, I think some of these things need to be fixed.
- [41:18]
Eamon Javers
For my full interview with Eddie Q. Be sure to sign up for our newsletter, cnbc.com cn sport and also this weekend, or I guess it will be this coming weekend, October 25th, our weekend show, our CNBC sports weekend show begins. There will be six new episodes rolling out one Saturday after another.
- [41:37]
Joe Kernen
Did not know that. That's, that's great. All right, thank you, Alex. Coming up, utilities outperforming and nuclear stocks surging this year on big tech, big spending plans. Up next, we're going to talk to the CEO of the company building an AI campus that generates its own energy. Where would you do that? Yeah, Texas. The Exchange will be right back. The massive AI investing this year, creating a tangled web between startups, chip makers, cloud providers, and infrastructure companies. And my next guest company is in that mix called Poolside. It just announced it's going to build a massive data center complex with Core Weave, which gets most of its GPUs from Nvidia. Nvidia is an investor in both Core Weave and Poolside. And joining me now to discuss it, ISO Kant co co CEO of Poolside can you describe that to me? It seems like too good to be true. Fracking country to build a data center. It's like, do you even need a. I mean it's right there, right?
- [42:48]
Iso Kant
Absolutely. Joe. If you look at this, you know the key layers that are growing in the world right now are energy, compute and artificial intelligence. And at the bottom of that sits natural resources. And so West Texas is an incredible place to be able to power energy generation by not straining the grid, but by doing it directly next to where you're building your data centers.
- [43:09]
Joe Kernen
Who's funding all this and is it a done deal? Any question at all that the money's going to be there?
- [43:17]
Iso Kant
So we have a space full of headlines and numbers, but you asked who's behind this? So Poolside Our company is an artificial intelligence company on a mission to reach AGI and we specifically focus all of our work on bringing intelligence into the enterprise. And so when we look at who's behind our company, it's set of venture capitalist backers and, and financial institutions. There have been some rumors around fundraising, but if you really think about what matters in this place right now is the fact that this project is underway, it's ongoing and we'll be starting construction in the next 60 days.
- [43:54]
Joe Kernen
So you've seen a lot of the announcements in the last, probably just the last six weeks. Mind boggling. And we've moved. We may need to go past what's after a trillion. I think it's a quadrillion. But a lot of the numbers that we're talking about, we're not using bees any. There are some tease. Is all the, are all these things feasible? Will the money be there? Because I don't think the money's even been printed yet for some of these projects that we're seeing.
- [44:22]
Iso Kant
So I actually think you're spot on. I would go as far as saying is that we're clearly seeing bubble behavior in this market, but I don't think it's across the entire market. What we're finding ourselves in is what I would refer to as a pre and post electricity moment for artificial intelligence. We are seeing that AI is going to touch all of the knowledge work that we do on a daily basis. It's sitting in our pockets and so we have an insatiable demand for more of it. And in these moments, pre and post moments in history, bubbles get created but also essential infrastructure gets created. Electricity, railroads, cloud compute, semiconductors. So I think what matters is how you are as a company in this time. To me, the key is about building responsibly, not speculatively, not headlines about promises of the future, but about things that are actually happening right now and are imminent.
- [45:14]
Joe Kernen
So should I try to buy up some land in West Texas? Isn't that a good idea for everyone? What are they going to use? If it's not natural gas, what will be the source? So we don't have a lot of time left. Give me about 30 seconds.
- [45:29]
Iso Kant
So look, America has a shortage of energy for the data centers that it wants to build. And natural gas mixed with renewables is absolutely the way to go and to scale this. But it goes far beyond land. The bottleneck is not just the ability to get access to land and power, it's the ability to actually incrementally deliver data centers and the intelligence that users at the end of the day will use in their businesses and in their pocket.
- [45:53]
Joe Kernen
Very good ISO, Kent. Good luck. Keep us updated on that. And there's a lot. There might be some other good reasons to be in Texas too. I hear they have some pretty good tax regimes. Your co CEO of Poolside that is going to do it for the exchange on this. I think it's a Thursday. Thanks for watching. Power Lunch starts right now.
- [46:14]
Savita Subramanian
You've been listening to the Exchange.
- [46:16]
Eamon Javers
Make sure you're subscribed to get each.
- [46:18]
Savita Subramanian
Episode every day, same time, same place.
- [46:22]
Dan Clifton
What made you confident that you could do something that hadn't been done before?
- [46:26]
Savita Subramanian
I have no fear of failure.
- [46:28]
Joe Kernen
Trailblazing women, Changing the game One of.
- [46:31]
Savita Subramanian
My favorite pieces of advice 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. Life is short and you just gotta.
- [46:42]
Bertha Coombs
Think big to accomplish big things.
- [46:44]
Joe Kernen
Julia Boorstin hosts CNBC Changemakers and Power Players.
- [46:48]
Savita Subramanian
New episodes every Tuesday.
- [46:49]
Joe Kernen
Wherever you get your podcasts.