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The Exchange
The Exchange 5/15/26
00:43:41
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]
Capital One Advertiser
When your company earns unlimited 2% cash back on all purchases with Capital One, that's serious business. So Stephen at Sandcloud got a serious business card, the Spark Cash plus card from Capital One.
- [00:13]
Charlie Bobrinskoy
We used our 2% cash back to
- [00:15]
Capital One Advertiser
help build our retail presence. Savvy Steven and we get big purchasing power so our business can spend more and earn more. The SparkCash plus card from Capital One. What's in your wallet? Terms and conditions apply. Find out more@capitalone.com SparkCashPlus this episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Join host Keith Lansford for this information packed daily market Preview delivered in 10 minutes or less, including projected stock updates, monetary policy decisions and key results and statistics that may impact your trading. Download the latest episode and subscribe@schwab.com Market Update podcast or find Schwab Market Update.
- [00:57]
Kelly Evans
Wherever you get your podcasts, you're listening to the Exchange. Here's today's show. He always hits it right on the nose. Thank you very much Scott and welcome to the Exchange. I'm Kelly Evans. The tech rally taking a breather today with The Nasdaq down 2% at the lows, although we're making up some of that now, down 1.2 semis and memory names selling off in video down 3 to 4% today, Micron down 5. And the big story is global bond yields. Britain's 10 year soaring 20 basis points today. The 10 year U.S. treasury jumping 13 basis points at last check to around 4.4 4.59%. And that's what's our first guest is watching closely. He says it could become a greater problem for markets. Let's get right to our opening exchange with Charlie Brinskoy. He's the vice chair and head of the investment group at Arieyl Investments. Charlie, welcome to you. I don't know if you can kind of explain what you think is driving this sell off and is it the uk Is it inflation? Is it the price of oil? Is it just a a moment of playing catch up?
- [02:02]
Charlie Bobrinskoy
It's inflation leading to higher bond yields which has all kinds of impact throughout the markets. One theory is that tech stocks tend to have long duration, meaning their earnings are far in the future. So when you get an increase in interest rates that decreases the present value of a discounted cash flow of those earnings. That correlation doesn't hold all the time. But I think there is some truth to it here. One thing just inflation has continues to surprise people to the upside Bond investors have just gotten burned. The total return on the Barclays AG, which is the S&P 500 of bonds, is about zero. Over the last five years you've earned 78% in the stock market. You've earned about nothing in the bond market. And that's because interest rates keep ticking up on higher inflation which is coming from deficits and low, less globalization lots of places. But inflation is surprising to the high side.
- [02:58]
Kelly Evans
You know, a lot of people have been talking about whether to dump bonds from the portfolio. You know, why do a 6040 split if they're going to get you nowhere? But I think we all understand intuitively if you get an economic slowdown, you'd want some exposure there.
- [03:09]
Charlie Bobrinskoy
Yeah, unless it's an economic slowdown with inflation and then you get nothing. And so I'm recommending to people that you stay relatively short. You can still get 3 and 4% in short term interest rates and not take the exposure to long term inflation that you get with a 10 year bond.
- [03:29]
Kelly Evans
That being the case, what. You know, we can argue back and forth about whether it's exactly the reason why tech is selling off. We were at an all time high yesterday, so I don't want to make too much of it. It feels almost as if the developments in global sovereign debt markets are much more important than whatever the impact might be on Micron, for instance. I mean they're worth discussing in and of themselves. For all of us who have wondered when these bills are going to come due and to what extent this borrowing can keep going. It was interesting even to, you know, hear the cost of the Iran war on the US Defense Department and they're trying to make tough decisions elsewhere to, to absorb and offset that. So is this a moment where markets are going to, where it's going to be a wake up call or do you think it's just a tempest in a teapot?
- [04:10]
Charlie Bobrinskoy
Well, it's one day tempest. I mean I think fundamentally we have the AI trade is clearly very important not just to the stock market, to the overall economy. And, and people are acknowledging that there's going to be a lot of money spent, a lot of money borrowed and if interest rates on that debt is higher, it's going to change the economics. But we've got, you know, you're old enough and I'm old enough to remember the dot com bust. It brought a lot of stuff down with it, including the economy, including the overall market, including a lot of non tech stocks. So I think figuring out what AI is going to be worth is hard in the long term. But what's not hard to figure out is there's a lot of spending going on building stuff right now and that needs to continue because that's holding up the US economy.
- [04:55]
Kelly Evans
Speaking of debt, let me make this pivot to apa, one of your holdings. And when we were discussing it in the past, some of those who are concerned about whether to add it to their portfolios would say, well, that company has high debt loads. Right. So can you talk a little bit about whether rising bond yields, like if they matter for governments, do they matter to companies? Does it matter to apa? How do you feel about that one along with the rest of the energy space?
- [05:20]
Charlie Bobrinskoy
Yeah, so they. It's a great question, Kelly. They're making money hand over fist. You can imagine with oil WTI over a hundred dollars. They've had a huge print. They just made a lot of money. They're gonna be making more money when the Suriname investment comes in, when their Alaskan investment comes in. And they are using a lot of that cash flow to pay down debt. I personally would rather they bought back stock at these levels, but they are paying down debt. So it is fair to say that of the names that people point to in the oil and gas exploration space, Apache has more. Some of the people like Chevron or Schlumberger or even Exxon. So that's a fair criticism. But right now they are making plenty of cash flow that's paying down debt.
- [06:02]
Kelly Evans
You like Chevron too. You like Barrick Mining. I mean, in a weird way, inflation's not good for any of these stocks. They all have input costs. They all deal with labor. If that. If that's really the kind of environment we're going to be in.
- [06:13]
Charlie Bobrinskoy
Yeah, but those hard assets. Inflation should be positive for the price of oil, and it's certainly positive for gold that Barrick Mining is pumping out. And yet these stocks are trading at very low levels. One difference between gold and oil. The forward curve for oil is predicting that we're going to get back down to 70, 80 a barrel, while the forward price of gold is higher than today's spot price. If that continues, Barrick is going to make just a lot of money over the next year. Barrick is also spinning off and creating a separate company for their North American assets. People. Some people don't want the political risk of assets in Pakistan. So there's a lot of exciting things going on at Barrick.
- [06:55]
Kelly Evans
Why is the gold forward price over the spot price? Just reflecting speculation.
- [06:59]
Charlie Bobrinskoy
Yeah, I mean, that's more than 50% of the time you're going to have forward prices be higher because of interest rates. And so it is actually unusual to be in backwardation, which is what it's called when the forward price is below the spot price in oil. So it's an unusual market. Right now people think we're going to get resolution in Iran and that'll bring the price of oil down. Frankly, I think demand for oil is going to surprise to the upside. There are lots of industrialization going around in the world. Consumers are driving, flying and I think we're still going to get a trend up in demand for oil and we're spending less money on CapEx looking for oil. So I think those two factors together are going to surprise oil to the upside.
- [07:41]
Kelly Evans
And did you say you had seen the same sort of phenomenon with gold?
- [07:45]
Charlie Bobrinskoy
Yeah, so no, actually, Kelly, because this price of gold is so high and has surprised people. We are getting a lot of spending in developing new mines. Now the new gold that comes out in the market is very small compared, say to oil situation where you're having to replace it so quickly. There's relatively little gold production compared to oil production. And so it's just a much more finite commodity. And therefore when we get an increase in demand for gold, which we are getting from central banks around the world, we get the kind of spikes that we've had with gold.
- [08:18]
Kelly Evans
Just an observation as we talk to you, Charlie, is that your portfolio and the growth stock, the tech portfolio, are doing well? What does that tell you?
- [08:29]
Charlie Bobrinskoy
Yeah, it tells us that value stocks were cheap and that everybody wanted to be in tech. And as a result, the gap between the PE multiple of value stocks and growth got too wide. And so value did pretty well here. Now, this quarter has been a little bit bumpy, I have to say. The NASDAQ composite has beaten the value composite pretty handily here quarter to date. So I would like to return to where we were in the first quarter when value was so strong.
- [09:00]
Kelly Evans
All right. Do you want to talk about the Knicks?
- [09:02]
Charlie Bobrinskoy
I'd love to talk about the Knicks, obviously owned by msgs, Madison Square Garden Sports. Madison Square Garden Sports, controlled by the Dolan family, has announced a spinoff where they're going to separate the the Knicks and the hockey team, the Rangers. And that's going to happen later this year. There's some tax law that makes it a lot more advantageous to be private than public as a basketball team. So we think there is a chance that we will actually get a privatization of the Knicks, who are on a hot streak right now, winning every game they play. That just means lots more ticket sales, lots more interest, and hopefully a buyer, potentially at least a partner for Jim Dolan and the Knicks should be the,
- [09:43]
Kelly Evans
you know, own a piece of this winning.
- [09:46]
Katie Stockton
Nope.
- [09:46]
Kelly Evans
It's going to the private markets. But I was going to ask about the historical performance of a lot of these publicly traded sports teams, which always seems to fall a little short of what the excitement that we see in private markets. But then the Knicks and Rangers going private, I mean, that would be a big story.
- [10:00]
Charlie Bobrinskoy
Yeah. And MSGS has worked as a stock. You're right, Kelly, that the track record of these names as public companies is not great. But the MSGS is a little bit of an exception. I mean, it was trading at less than half of the private market value. Forbes does a published list every year of what they estimate each sports team is worth. And the Knicks and MSGS was trading at about half of that. Now that we've really closed the gap and I want to warn people we're getting close to fair value with msgs. So I'm not pounding the table on the stock today. We love the fact they're winning so many games, but it's not nearly the discounted price that it was a year ago.
- [10:37]
Kelly Evans
Look at that 78% run. Speaking of spinoffs, quickly, before you go, and I'm speaking from one that's doing pretty well lately. We feel great about Versant, but you're also watching other spinoffs in the corporate world. Jnj, a few others. Which ones are they?
- [10:52]
Charlie Bobrinskoy
Yeah, so I mentioned Barrick Gold, that's going to separate its North American operations. There's a company, Resideo, which is the old Honeywell thermostat business that's going to split off. You said jj there are a lot of people that are going to do spinoffs to try to become more pure play. We believe in that. We think it increases the chance to of takeovers. You technically you can't do a spin off in contemplation of a takeover, but so long as you don't have a deal, you typically can get it past the irs. So there's a lot of these spinoffs happening which generally are very positive.
- [11:24]
Kelly Evans
Look, GE is the poster child, I think, for, for what they can do for sure. Charlie, really appreciate it. Thanks so much today.
- [11:30]
Charlie Bobrinskoy
Thanks, Kelly.
- [11:31]
Kelly Evans
Charlie Bobrinskoy with Arieyl Investments. Well, one trade that's been outperforming in kind of a red tape today is the software space. The IGV software etf is looking to close at its highest level since that so called SaaS apocalypse back in February. ServiceNow, Adobe Salesforce all rising 4% or more. Our next guest told us 10 days ago that the setup for software was starting to look more compelling. I think she called it a newfound source of leadership. Let's bring back Katie Stockton, the founder and managing partner at Fairlead Strategies and a CNBC contributor. Katie, we're not trying to be day traders here. Is the run over or could this still have a long ways to go?
- [12:07]
Katie Stockton
You know it does feel somewhat meaningful from a technical perspective in that intermediate term momentum has improved alongside a long term oversold indication. Plus we do have some breakouts from a bottom up perspective. I think the most obvious one within the IGV ETF would be Oracle. It broke out above short term resistance and subsequently saw upside follow through. We don't yet have a breakout in Microsoft, but I think it's getting close. If we were to see Microsoft just hold above 400 next week, that would take it above the cloud based resistance level that we watch so we see some constructive action from a bottom up perspective. These of course are turnarounds, so they're very much unlike a strongly trending higher type of segment of the market. We could all guess that that semiconductors that are suffering at the same time, we're seeing that rotation into software. So it feels like a bit of the same trade where maybe there's some profit taking in areas of the market that seem overbought to people and then they are seeking opportunities that look a little bit lower in their valuations.
- [13:13]
Kelly Evans
I'm glad you mentioned Microsoft because as we're talking about software and some of these old tech names, we've had Bill Ackman apparently building a position at the lows there. Chris Crisanti was on our program yesterday. We didn't get a chance to talk about it, but soft Microsoft was one of his favorite stocks right now, while others in the Valley I know have been talking about how they lost their lead and whether they can regain it on the, on the AI front. What about Cisco with that pop yesterday?
- [13:37]
Katie Stockton
Yeah, so for Cisco, I mean that's what this market is very much capable of. We're seeing stocks that have already seen really good runs gap up in response to good news and that includes Cisco. And of course now we have Nvidia on our radar for its earnings report next week. So when this happens, what we always recommend is that people watch that gap very closely or mind the gap. For Cisco, it's right around 114. If it were to fall into that gap very quickly, that usually is a setback that cc some profit taking. So we just respect the breakouts that have unfolded and respond to them. We've been seeing breakouts yield positive follow through, positive momentum of course is behind these segments of the market. So it's certainly not a bad thing. But we would watch those gaps and that.
- [14:26]
Kelly Evans
Do you think that can happen even if the broader markets and I think this is kind of where you're looking at things. If the broader markets are in more of a consolidation phase for the next
- [14:34]
Katie Stockton
couple of weeks and the bottom up work is sometimes diverging from the major indices and we've certainly seen that on the sector level where consumer has done poorly, health care segments have done poorly, and yet tech has been just this primary source of upside leadership and we could see that relationship change. But I think it's important just to be very aware where there are breakouts occurring. Most recently we have new breakouts in both Apple and Nvidia ahead of earnings. And again, while those stocks might feel overext from a short term perspective, breakouts are typically bullish intermediate term development. So we want to respect those as something that could suggest that we could see upside follow through for at least the balance of Q2 beyond near term consolidation.
- [15:20]
Kelly Evans
A couple more things I just want to squeeze in real quickly if I can. Nvidia reports next week. Any indication there? And on the 10 year, is today's move to the upside significant?
- [15:28]
Katie Stockton
Well, I think with Nvidia we're expecting a confirmed breakout as of today. Those are two weekly closes above 212 for us and you can arrive at a measured move projection which would be long term. We're talking about six to 12 months of about 289 and that's well above current levels. So we're encouraged by the breakout. It does appear a bit overextended. But even still we've seen what stocks are capable of in terms of their earnings responses in this environment. So we can't rule out a gap up even though it's been very strong to date. And of course a lot of the weakness today has been attributed to the move in yields and inflation. And it is just one day. But yet the move in treasury yields is significant because the 10 year yield is now decisively above about 4 1/2% resistance and the next major resistance is around 474. But more importantly, if you zoom out on the chart of yields, it looks like they're advancing from a prolonged trading range or triangle formation. And that's another thing that does tend to see upside. Follow through.
- [16:32]
Kelly Evans
All right, not not the news we wanted but the news we we suspected after a 13 basis point jump. Katie, thanks very much. Appreciate it.
- [16:40]
Katie Stockton
Of course.
- [16:40]
Kelly Evans
Katie Stockton with Fair Lead Strategies. Coming up, President Trump wrapping up his state visit to China where the two delegations covered a huge range of topics. We'll have the takeaways from both sides next. Plus pioneer of electronic trading Thomas Peter Fee will join us on the heels of Interactive Brokers new prediction market platform, details of their new partnerships and what more is ahead. The Exchange is back in a couple.
- [17:07]
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- [18:43]
Kelly Evans
President Trump leaving Beijing today after two days of talks spanning oil, Iran and Taiwan. With Chinese President Xi, President Trump on his way back to China. But our hardworking team is still on the ground in Beijing. That includes Eamon Javers and Eunice Yoon standing by for us. It's great to see you both once again. Eamon, what do you think the White House got out of this trip? And what did we learn?
- [19:06]
Capital One Advertiser
Well, Kelly, we didn't learn much. I mean the President left Beijing at about 2:41am East Coast Time without announcing any kind of major trade deal. So some of the things that analysts had expected might be part of this, a formal extension of the trade truce that they agreed to in Busan, for example, that wasn't announced. There have been a lot of talk about the creation of a board of trade and a board of investment as sort of formal structures for the US China relationship. Those weren't announced. The President announced some purchases of Boeing aircraft, but we haven't seen those confirmed by the Chinese side, which of course would be doing the purchasing or by Boeing yet. So we'll see if that materializes. And there's also some optimism around some agricultural sales, but we haven't seen specifics on that either. So as the President leaves here, what he got, I think is sort of warm, good feelings with Xi Jinping. You know, they had an excellent visit on a person to person basis. There were, you know, warm greetings, a warm lunch, a reception for the President and the business leaders that came with him. But other than that, he left Beijing pretty much empty handed.
- [20:15]
Kelly Evans
Kelly and Eamonn, on the question of what did we learn, do you think the Taiwan issue got more prominence than the US Side expected going in?
- [20:26]
Capital One Advertiser
I think it did. I think, you know, generally speaking, with one of these, you do expect the Chinese will bring up Taiwan, the US Will reiterate their position, and sort of that will be that. And you get it in the form of a readout. In this case, we got a very direct confrontation from Xi Jinping toward President Trump, warning him that if the United States handles Taiwan badly, it could end up as a confrontation or clash between the two countries. That was pretty abrupt and direct and right out of the gate. And then we saw the President on Air Force One on the way back talking to reporters. And he said in that conversation that Xi Jinping had actually asked him directly if the United States would defend Taiwan militarily if the Chinese attacked it. And the President says he didn't respond to that. But just the fact that Xi Jinping was asking that question of the President is a pretty remarkable thing. And it certainly gives you the sense that some sort of action on Taiwan is at least in the mind of President Xi, not necessarily, you know, that he plans on doing it, but he's certainly thinking about it and wants to know what the President's reaction would be.
- [21:33]
Kelly Evans
Eamonn, thank you so much. We appreciate Eamon Javers as we turn to Eunice. And Eunice, I have to say, you were the One earlier this week, who flagged to us that the Chinese media was talking about and ramping up expectations about the Taiwan issue. So I'm curious, what are the big takeaways from Beijing's side?
- [21:51]
Eunice Yoon
Well, the takeaways here are that the Chinese have been able to buy themselves some time to pursue their economic and political agenda. The state media has been citing President Xi as saying that President Trump wants to make America great again, while President Xi will be able to get Chinese rejuvenation. So the two sides are going to be on equal footing. The relationship will also be based on what the state media have been attributing, of course, to President Xi as saying that there will be a new vision of the relationship that is based on strategic stability. So from the Chinese perspective, that stability would be able to allow them to pursue policies without the pressure of the Americans. But I think there's also an indication that, as Eamonn had described, the good feelings might not last very long. There have been no mentions at all of President Trump's comments about Taiwan in the state press, which is a suggestion that the Chinese were not very happy with what was said. Instead, what the focus has been here is on the CEO visits. So the Commerce Ministry today said that the Commerce Minister had met with the CEO of Visa, with the CEO of Qualcomm, and also the foreign minister tonight, at least in the state press, they released it tonight that he had flagged that President Xi Jinping will be going to the United States on a state visit in the fall. So that would be the second of what's expected to be four meetings between the two this year.
- [23:27]
Kelly Evans
That's a lot of meetings, isn't it? And I'm glad you confirmed that, Eunice, because one of our guests yesterday thought it was a big risk that the president was taking to invite Xi Jinping over just six weeks before the midterms when it's not, you know, that cozy relationship is not that popular with the Republican Party. But four meetings in total this year, that's a lot.
- [23:46]
Eunice Yoon
It is a lot. And from the outset, both sides have been talking about how there should be more stability built into the relationship. And so some of the conversations I've had with different sources and analysts is that that because it's beneficial to both sides, they. They really saw that 2025 was supposed to be kind of a low point in the relationship. That, and we've been hearing it a lot here, that 2026 was going to be a landmark year where the two sides would be able to kind of mend fences. But again, I still think that there is a lot of vulnerability built into this relationship because there is a clash if the Chinese do continue to pursue their political and economic agenda without really addressing a lot of the concerns that other trading partners have. And just another example of this is that we've already gotten reports that the next big leader to come to Beijing is going to be none other than Russian President Vladimir Putin. He's supposed to come here on Wednesday, A very close friend, of course, as described in the state press of the Chinese president.
- [24:55]
Kelly Evans
Poignant. And now every time you report, Eunice, I look for the green lasers in the background. I'm just not that we would see them per se, but I know to be on the lookout. Thank you for everything, including always being up in the middle of the night for us. Really, really appreciate it. Our Eunice Yoon. And we want to hear from you on this issue. Scan the QR code on your screen now to vote in today's Power poll, we're asking what's the biggest takeaway from the Trump XI summit? Tensions rising, easing or status quo? We'll reveal your thoughts and those results next hour on Power Lunch. And sticking with China, the country's automakers are getting a surge of interest from our neighbors to the north. Phil LeBeau is in Halifax, Nova Scotia with that story.
- [25:33]
Phil LeBeau
Phil Kelly, it won't be long until Chinese made electric vehicles are sold here in Canada. The dealers are ready. What about the people of Halifax and across Canada? We've talked with a few. We'll talk about that after this break.
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Kelly Evans
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- [27:20]
Kelly Evans
Welcome back. Canadian dealers are racing to get their hands on Chinese made cars. But can they even get enough of them? Philippeau is in Halifax, Nova Scotia with more. Hi Phil.
- [27:32]
Phil LeBeau
Hi, Kelly. They're going to get some and that's going to start in the next couple of months. Right now, three Chinese automakers, byd, Geely and Cherry, they're setting up dealerships here in Canada. Haven't established any yet, but that's going to happen relatively soon. So here's how many imported Chinese electric vehicles will be sold here in Canada. 49,000 annually. That happens through the end of the decade, then it moves up to 80,000 annually. They each come with a 6.1% tariff, huge improvement compared to the current tariff on all other Chinese vehicles, which is 100%. Those sales again start this summer. And we talked with one dealer here in Halifax who believes there's going to be plenty of appetite for these vehicles.
- [28:12]
Thomas Peter Fee
I think that the reaction will be a lot of curiosity and interest. I think that the traditionals will still
- [28:19]
Mackenzie Segalos
hold the majority of the market share for several years. But I think that there will be
- [28:25]
Charlie Bobrinskoy
a perpetual, you know, inroads on these brands, these Chinese vehicles as they land here in Canada and in North America.
- [28:35]
Phil LeBeau
For some perspective on Canada or China's auto exports, look how many they exported last year, 8.3 million. It's been a steady ramp up since 2020. And when you talk about the EVs coming from China, obviously BYD is the number is the name that people associate the most with these electric vehicles coming from China. But there's a whole slew of them and as we mentioned, it's byd, Geely and Cherry. One last thing I've had people ask me, well, who will, who will buy these vehicles and will it take away share from other automakers who are established here, the four dominant names up here and they all have between 13 and 16% market share. GM, Ford, Hyundai, Toyota, they're going to still do well, Kelly. But yes, there will be people who will want to buy a more affordably priced electric vehicle. And if BYD or Geely or Sherry, if they come in with a model at 35, $40,000, there will be appetite here for that.
- [29:29]
Kelly Evans
This is fascinating again, as we feel the Chinese EVs, you know, they're coming for the US at some point. We still have 100% tariff, if I'm not mistaken, on those. So. But Canada changed theirs to just 6% for EVs only. It's still 100% for combustion engines.
- [29:44]
Phil LeBeau
And correct, it's just for these 49,000 annually through the end of the decade. Then it goes up to 80,000 annually. And the question is if there's going to be enough demand here and does the market shift and at some point does the leadership in Canada say, okay, let's raise it 49,000 to a higher number, or do the Chinese automakers at some point say, maybe we should establish a manufacturing plant in Canada for that to happen? Kelly, by the way, almost everybody agrees you're going to have to see the U.S. open up. Canada alone is not enough to support a manufacturing plan. It's about 1.8 million in annual sales here.
- [30:22]
Kelly Evans
I always watch the Beijing Auto Show. I mean, beautiful cars, crazy technology. And yeah, I think it's just a matter of but I don't want to get into a whole separate chat, Phil, that we don't have time for. But when you come back, I would like to do that and talk about how long, how much longer the US can hold that off. Phil, thanks very much, Philippeau.
- [30:40]
Kate Rooney
We appreciate it.
- [30:40]
Kelly Evans
Let's get to Mackenzie Segalos now for the CNBC news update. Mackenzie.
- [30:44]
Mackenzie Segalos
Hey, Kelly. The US May ask Israel to give it Palestinian tax money to fund President Trump's Gaza plan. Reuters reports that President Trump would request the funds, which the Palestinian Authority estimates at $5 billion, be sent to his Board of Peace. The US closed its flagship Gaza mission earlier this month. The Texas Supreme Court today refused to declare that state lawmakers who fled last year to avoid a redistricting vote have to vacate office. Texas Governor Greg Abbott filed the suit against those lawmakers directly to the state Supreme Court. The redistricting had been pushed by President Trump, whose FBI agreed to help track down the lawmakers and force them to vote. And the Equal Employment Opportunity Commission is
- [31:24]
Kelly Evans
suing a Chick Fil?
- [31:25]
Mackenzie Segalos
A franchisee after the franchisee denied an employee's request for Saturdays off to observe her Sabbath. Chick Fil A is famously closed on
- [31:33]
Kelly Evans
Sundays for the Christian day of worship.
- [31:35]
Mackenzie Segalos
Leadership Chick fil A declined CNBC's request for comment. However, the Company is not named in the lawsuit. Kelly, sending it back to you.
- [31:42]
Kelly Evans
Interesting. Mackenzie Banks. Coming up, Interactive Brokers expanding its prediction markets platform. We'll talk to founder and chairman Thomas Peter Fee about that. Next. To the exchange, Kelshi places the odds of the S and p ending above 70600 this year at 81%. It's an example of the kinds of contracts you can trade there. As prediction markets have become more popular, the field is getting more crowded. My next guest is a pioneer in this space. His company, Interactive Brokers is now increasing access to several prediction platforms, including Kelshi this week. Joining me now is Thomas Petterfi, the chair and founder of Interactive Brokers. It's great to see you again. Is this capitulation?
- [32:26]
Thomas Peter Fee
Is this capitulation? What do you mean?
- [32:29]
Kelly Evans
Is this capitulation to Kalshi Polymarket and others coming and expanding this market from a niche to a mainstream product?
- [32:37]
Thomas Peter Fee
Oh, not at all. So there's a lot of misunderstanding about prediction markets. It represents different things for different people. The primary importance of prediction markets for IBKR is that they are a source of vital information for our customers. Our customers must know how the economy is evolving in different regions on consumer demographics and industries around the globe. They must be able to invest in companies that are best able to optimize the goods and services to meet emerging demand. So we must know what kind of demand is coming, where. Accordingly, the role of prediction markets is to provide information in the form of probabilities.
- [33:28]
Katie Stockton
Right?
- [33:28]
Kelly Evans
And Thomas, let me just ask it this way. Then it is because as to quote from your statement, clients of Interactive Brokers can now access the combined liquidity of all three prediction market venues, which includes Kalshi, CME and Forecast X, and receive the best available net price. So to put it differently, is the question which platform is going to be the aggregator of all these? Or is the answer that all of the trading platforms we think of yours, I don't know, Robinhood, everybody else, that everybody's going to want to give clients access to all of these as prediction markets go mainstream.
- [33:58]
Thomas Peter Fee
I cannot speak for other platforms, but we are certainly going to. We aggregate currently information from all the stock and options exchanges and make it available to the consolidated code to our customers. We are doing the same for prediction markets and other platforms are likely to try to do the same.
- [34:22]
Kelly Evans
When you and I spoke in the past, we were talking about this question of prediction markets. You were very clear that you wanted to include the ones that were kind of high level and that were relevant to your trading audience.
- [34:32]
Thomas Peter Fee
Absolutely.
- [34:33]
Kelly Evans
Does that remain the case today? And are you selecting, in other words, is sports going to be on the platform?
- [34:39]
Thomas Peter Fee
Yes, on our platform, you will not be able to trade sports, for example, but we will certainly aggregate all the economic indicators, the election probabilities, the climate events, et cetera.
- [34:55]
Charlie Bobrinskoy
Right.
- [34:56]
Kelly Evans
All right, so your Stock is up 68% over the past year. What do you think is driving that? We see similar phenomenon with cboe. Are we seeing that an increase in the number of options, contracts, bets that the public and institutions are placing is driving engagement with platforms like yours?
- [35:12]
Thomas Peter Fee
Well, our, our stock price, I think, is rising because it's, it's evident that we have more and more customers and sophisticated customers come to our platform. They, they have successfully beat the S and P over the last three years. So we are providing the preeminent platform for sophisticated traders. That's why our stock is rising, I believe.
- [35:37]
Kelly Evans
Then my final question is, can you explain to us where in the kind of regulatory and legal system you view prediction markets as sitting? Because I still don't fully understand the answer to that.
- [35:49]
Thomas Peter Fee
Well, it is currently regulated by the cftc. We are looking at potentially questions that will be regulated by the sec and they have to do with individual stocks, but it is not going to be regulated by the states. Maybe sports will be, but that's a different matter.
- [36:12]
Kelly Evans
I see. And it seems like it's driving more and more of the activity for folks these days. Thomas, thanks. We appreciate it. We hope to check back in soon.
- [36:21]
Thomas Peter Fee
Thank you very much, Thomas.
- [36:22]
Kelly Evans
Peter Fee from Interactive Brokers coming up. Goodbye, Siri. Hello, Alexa.
- [36:27]
Eunice Yoon
Why open?
- [36:27]
Kelly Evans
I could be trading Apple for Amazon. We'll dig into that next. Before we go, take a look at shares of Cerebras. That was yesterday's mega IPO. They're down in their second day of trading about 3%. They briefly broke below the $300 mark, still well above the 185 IPO price. 350 was the open yesterday around this time. Its market cap topped $100 billion yesterday and now sits just under 65 billion. Still a pretty impressive debut. We'll be right back. Apple has been criticized for looking for a better strategy when it comes to artificial intelligence. And now it's facing a potentially big setback, a fraying relationship with OpenAI. Kate Rooney has more in today's tech check. Kate.
- [37:14]
Kate Rooney
Hey, Kelly. So from what I'm hearing, that relationship between apple and OpenAI is cooling off. And at the same time, Amazon is actually becoming more strategically important to the AI giant. So a source familiar with the matter confirms that OpenAI is considering legal action against Apple. This started a couple years ago when ChatGPT became the main AI model for Siri and Apple Intelligence. It is a powerful distribution channel of course with billions of iPhones out there. But according to one person, Apple has under delivered has not met the expectations and OpenAI is now considering a breach of contract letter or a lawsuit eventually. Bloomberg was first to report some of these details. Apple and OpenAI declined to comment on this, but Kelly, the landscape for both of these companies has shifted dramatically in just the last couple of years here. Apple reportedly now testing technology from rivals Anthropic and then Google's gemini with Siri. OpenAI on the other hand has complicated things by building its own AI devices and hiring iPhone designer Jony I've meanwhile, OpenAI has moved closer I mentioned to Amazon. It does speak to the company's changing priority priorities internally. Enterprise right now is a lot more lucrative and important as a priority than consumer is and has been a big focus for this company. Executives internally have been talking up aws. From what we've seen earlier this year in a memo that we saw, the Chief Revenue officer talked about demand thanks to that Amazon partnership. She called it staggering at the time. Amazon is also investing up to $50 billion in OpenAI and providing compute as well. ChatGPT could also help with some of the heavy lifting on Alexa's AI revamp as we talk about that consumer distribution. Kelly Absolutely.
- [38:49]
Kelly Evans
Although for Apple they're going with Gemini. So it's hardly I mean some would say Gemini is better. They're certainly at least on par with one another. So it's not as if those using the Apple device are going to get a, you know, an inferior experience.
- [39:02]
Kate Rooney
No, it's a great point. It's not like Apple is being left out to dry here because there are other options. I think a couple of years ago OpenAI was seen as the front runner and see especially in consumer as well ahead of of the rivals. I mean Gemini in that time period has caught up in a lot of ways. Anthropic has caught up and they're now seemingly more on par, although I feel like it changes every week for who we think is ahead. But Apple has a lot of options and in a lot of ways has leverage on the negotiating side. I think this is also a result of that leverage that OpenAI is kind of hitting back on this clearly and according to our sources does not seem like they have lived up to the expectations. So I think Apple historically has at the Leverage because they've got the billions of iPhones. We all have one of these in our pocket.
- [39:48]
Kelly Evans
I know. As I'm trying to put it, put it down.
- [39:50]
Kate Rooney
I know.
- [39:51]
Kelly Evans
Quick follow up, Kate, on the AI front.
- [39:53]
Kate Rooney
Sure.
- [39:53]
Kelly Evans
I thought I caught that. You're reporting that what is anthropic worth Now? Is it $900 billion in the private market?
- [40:00]
Kate Rooney
Billion dollars from what we're hearing. So that I have heard that they are now close to or have signed a term sheet to raise another $30 billion. It all goes back to compute that they need more computing power. We talk a lot about mythos, we talk about Claude, Coke. All of that requires computing power. They need more money and investors in Silicon Valley are clearly willing to give it over and that would lift their valuation to $900 billion and put it above OpenAI's as we talk about that rivalry, 900 billion versus 850. These numbers are just getting absurd. But IPO, we just have never seen this level of valuations and it's going to have a lot of implications as they go public.
- [40:36]
Kelly Evans
What's so amusing is not just that we're seeing these valuations ahead of an ipo, but that they're warring with each other by the tens of billions of dollars in market cap at this point and RAC debut. We'll talk about that next week. How about that, Kate? Thank you. Really appreciate it. Kate Rooney, take a quick look at stocks where we've seen some pressure from rising global bond yields. Not horrible. We're down a little less than 1% for the Dow and the Nasdaq S&P down three quarters. Look at the Russell's though. They're always said to be more interest rate sensitive. And those are down more than 2% today but still mostly on track to end the week higher. And the 10 year treasury yield for 58. We're back right after this. Back as we keep an eye on this market sell off. This afternoon we mentioned that bond yields globally have been on the move higher. Katie Stockton telling us just a few moments ago that that trend could continue. What are the implications for the tech trade and more. Let's bring in Victoria Green, G Squared Private wealth CIO and a CNBC contributor. Victoria, really appreciate you making the time. This is a moment where record highs all week long, right. No one wants to make too much of what's going on with micron down 5% but at the same time everyone wants to catch the turn if that's what we're about to witness in some of these high flying areas.
- [41:49]
Victoria Green
Right. And I think the question is this inflationary transitory or not? And that's really what investors are grappling right now. Are we going to get oil moving? Are we going to get inflation down? This hot ppi, the hot CPI we saw this week, is this transitory or not? And I think we're starting to get nervous about this. We're in the hands that this is a keep calm and carry on. We could definitely see some dislocations. We could definitely on the longer duration, the small cap, that stuff's going to be more rate sensitive. But the base case scenario still has to be Iran. A deal gets done, oil starts flowing, inflation starts to come down. I think the markets are just pricing in a little bit more stress that, hey, this may stick around a little bit more. It may impact consumers. And we're going to see that next week. We've got all these consumer names reporting next week. We're going to see the commentary is going to be absolutely fascinating from Walmart, from Target, from T.J. maxx, you know, what are they seeing and what's their outlook?
- [42:40]
Kelly Evans
Perfect time for them to be putting in their results. And by the way, the market now sees the next Fed interest rate move as a hike. That's on our website. Jeff Cox, following this inflation surge, over to the consumer names to pick up on that front. Victoria, we'll jump off of this. Thank you. We'll come back in a moment if we need to. Victoria Green, in the meantime, adding to the inflationary pressures, how about the price of crude oil around 105 a barrel. As overseas tensions have been heating up, that's got Alaska back in the spotlight. The Trump administration looking for ways to ramp up domestic production. And one company has a head start there. ConocoPhillips receiving federal approval for its drilling project in Willow in Alaska's North Slope. That was about three years ago. Morgan Brennan joins us now from that very region with ConocoPhillips CEO Ryan Lance. Morgan.
- [43:26]
Mackenzie Segalos
Hey, Kelly.
- [43:27]
Morgan Brennan
That's right, Ryan. It's great to have you here on cnbc. Welcome. This is especially special because this is really where you cut your teeth at ConocoPhillip sitting in a facility that you actually built more than 20 years ago. I'm about to get on a bus and head to Willow, which is the first, biggest, largest project we've seen in Alaska's North Slope in more than two decades. Why is Willow so significant?
- [43:47]
Ryan Lance
Yeah. So thank you. Welcome to the top of the world, Morgan. This is a place that we referred to as our third child in our family. This is the gateway to NPRA. And importantly, Willow is about 20 miles further west of here. So we're able to extend that infrastructure 20 miles further west. Willow is an important project to the company. Along with the LNG investments we've been making, we've been leaning into these long cycle investments. We had a pretty constructive view of the market. We'll take about $7 billion of additional free cash flow over the next three years as these projects come online, which really doubles our free cash flow from 2025 to what we expect to be generating in 2030. And Willow is about half of that. So it's a big important project, extends the infrastructure out further along the north slope and allows us to lower the cost supply of future developments in the area, which is why the permitting and the reform and the things that we're talking about at NPR is so important to our company and I think too Alaska and the United States.
- [44:43]
Morgan Brennan
Yeah, 180,000 barrels per day poised to come online at Willow. At the peak. You see first oil, potentially 2029. We've seen this reversal in Alaska, but Alaska is also in focus right now because we just saw this China summit wrap up and both Treasury Secretary Besant yesterday on CNBC and Energy Secretary Chris Wright on CNBC this morning said Alaska could be a natural fit for any energy exports to China.
- [45:07]
Ryan Lance
Yeah, I think what we've seen, Alaska is such a resource rich state. So when you think about just the oil and gas of that equation, a lot of gas up here on the North Slope and we're efforts trying to monetize that gas, the oil, we're the farthest west of the United States, so we're closer to the Asian markets there. We've taken some of our crude in the past to Asian markets. When the, when that's open, we primarily produce the oil and move it to the west coast markets in the United States, but it's a natural fit to all of Asia. What we're doing up here in Alaska. So continuing that development, continuing that opportunity to produce hydrocarbons up here I think is really, really key to not only Alaska, but to the continuing the energy dominance that the United States currently enjoys.
- [45:47]
Morgan Brennan
Yeah, it's pretty incredible to see the US Record oil exports right now and a net energy export as well. So it brings us back to what we're seeing. It's been two months since you've been on cnbc, what we're seeing in the Mideast right now and what that means for global energy markets. Your thoughts on the impact of the
- [46:05]
Mackenzie Segalos
Persian Gulf War right now, you know, it's reasonably significant.
- [46:09]
Ryan Lance
Obviously, the oil price has gone up quite a bit. We're one chess piece on the chessboard and there's a lot of objectives the administration's trying to accomplish with Iran, certainly. But with respect to the oil and gas markets that you've described, the net effect of everything, we've taken about 10 million barrels a day off the market. And the longer this persists, we're going to start digging into inventory levels and in the next month or two, inventories will start to reach low enough levels that countries are going to be in a difficult spot. So they have to find an alternative to the crude or they have to raise the price in order to track that crude into their economy. So we are at an important point here as we think about and we watch the inventory levels and we watch what happens on the demand side in order to balance the supply and demand in the market.
- [46:55]
Morgan Brennan
Yeah, we're butting up against the end of the show, so we're have to leave the conversation there. But Ryan Lance of ConocoPhillips, it's great to be here with you and Kelly. We are headed to Willow and a bit later today. Coming up on closing bell over time, I will be joined by Interior Secretary Doug Burgum to continue this conversation as we see news coming out of of the North Slope and specifically the MPRA throughout the day.
- [47:14]
Kelly Evans
Pretty hot for a cold place. Morgan. Thanks very much, Ryan. Thanks as well. Conoco CEO Ryan lands that's it for us. Thanks for watching the Exchange and I'll join Brian Sullivan for Power Lunge right after this quick break. You've been listening to the Exchange. Make sure you're subscribed to get each episode every day, same time, same place.
- [47:37]
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