Power Lunch - Government Shutdown Continues 10/31/25

Episode Date: October 31, 2025

Amazon jumps after reporting on Thursday. A portfolio manager joins the show to give some stock picks at the end of this pivotal earnings week.  What are the pressure points that could push Congress to make a deal to end the government shutdown? It's all here on Power Lunch.   Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

It was good for me, and it's good for the markets. Contessa, thank you, because we are green across the screen. Stocks set to close out another week higher. Welcome to Power Lunch, everybody, and we are wrapping up our week here in San Francisco because big tech earnings, they rule the markets, they rule your money, the NASDAQ up again, down a little bit, the NASDAQ up one half of 1%. Amazon, the big single stock story. It is up more than 10% of big earnings beat. There are more in moments on that. InVIDIA, Google, Tesla, all popping nicely since Monday. Only Meta and Microsoft set to end the week lower. Microsoft could turn around. Meta down 11%. I'm willing to rule that one out. All right. Plus, the first ever interview with one of California's last remaining oil and gas producers. He would talk to us about his business, AI, and what it's like to do business here. He's literally sitting next to an AI opportunity. He is your power player, Francisco Leon of California Resources. and move over Optimus Prime. There's a new robot in town armed with a broom.

It is called Neo. It will clean your home. It is coming next year, but it does have caveats. Joanna Stern got to test her out, and she is here. All right, welcome, everybody. Happy Friday and happy Halloween. We kick off this hour with more treats than tricks, because Amazon, shocking many, with a big earnings beat and a rocking stock.

Look at that. Amazon shares up almost 24. bucks right now. You do 10.6 billion shares outstanding. That means roughly carry the one. Amazon is adding about $245 billion in market value right now. Put another way, Amazon effectively adding an entire sales force or an entire Goldman Sachs in market cap just today. Wow. Let's talk about the quarter and more. Mackenzie Sagalos joining us now on set. I hope that laid it up nicely. I mean, to have a good day is one. thing to add a sales force of market value is an entirely different thing. What's behind these

big time numbers? I mean, what a difference a day makes. Yesterday, we were going into the Amazon print, kind of concerned about their AWS, their cloud business. That's really its profit engine. It went down last week, kind of a big deal. It did go down for 15 hours, but their Q3 revenue number for AWS was $33 billion, up more than 20 percent, and what was really key here. And this is when we saw the stock start to soar after hours was when CEO Andy Jassie. said on the call that he expects that kind of momentum to continue. We haven't seen a 20% jump in three years, Brian. Wow, what was behind that? Like, what's the, what's powering the quarter? And of course, the shutdown came this quarter, so maybe we'll find out about it. But what is behind

a 20% jump? It's all about those AI customers. So Anthropic is their marquee partner on that front. They are building a hyper-scaler campus for them exclusively for Anthropic in Indiana. And so a lot of it is that AI demand. Jassy kept talking about their is so much compute asks from those kinds of customers that they are basically working at record speed to bring that online. And that's what we saw in Indiana. In less than a year, they went from cornfields to data centers. Yeah, hyperscale. Really a fancy.

Is it just a fancy word for data center? I mean, to use the word sounds better, you were there in Indiana, doing a big piece for CNBC.com. What's there? What's the big hoopla, for lack of a better term, around this Indiana Amazon project? Well, what's really fascinating, I think that this is a big part of the winning narrative, both for Amazon, but also for Alphabet. They have these in-house AI chip programs, which basically go head-to-head with Invidia. And what Jassy likes to talk about is that they undercut the Blackwells on price by roughly 30 to 40 percent cheaper than the industry standard. And so what you find in Indiana is a complex entirely powered by these, they call them Traneum.

So those Traneum chips. And that is how... That's an Nvidia competitor. It's an Invita competitor, yes. Who makes those? We know? Amazon does. Amazon makes, so now they're a chip maker.

Yes, and so they sell chips like Frito Lay, and they also make chips. Yes, and so does Alphabet. And you know, of all of the hyperscalers, they've all reported now, the two winners are the ones that have the two in-house chip programs, which really gives them a strong cost advantage. And you saw on both of those earnings called Sundar Pachai, too, over at Alphabet, talking about their win in part because of that in-house solar. It's a longer form piece on that Indiana thing.

How do we see that? Where can we watch that? CMBC.com slash my name. CNBC. I've heard of it. CNBC.com. And we just search for it because it looks like a cool thing. It is. We've got a digital video component.

My colleague Katie Terraceoff was out there with me. We've got a broadcast segment, a story. Sounds like the whole package. I can't wait. That's a hyper-scaler of television. McKenzie Segalos, Amazon, up $240 billion today. McKenzie, thank you very much. All right.

Stocks overall set to close out another winning week. another winning month. Okay, the Dow's down fractually right now, but here's a very good RBI. Not including today, because it's a slight decline, the Dow is on pace for its sixth up month in a row. It may not sound like a lot, but it's actually the longest winning streak for the Dow Jones Industrial average in seven years. If that wasn't enough, here's another good Friday market stat for your cocktail party tonight. With today's close, or yesterday's close, the S&P 500 finished above its 50-day moving average for the 127th straight session. That is the longest streak since a 130-day streak

ended in March 2011. So today, Monday, Tuesday, and we tie the record. We finish up again on Wednesday. We set a new record going back to 2011 when I was 12 years old. Your first guest today says that as long as the job market in America does not collapse, stocks should keep moving higher. Michael Cagino is president of portfolio manager, a permanent portfolio funds based right here in San Francisco.

So great to have you on set or I guess it's great to be on your set, Michael. Good to have you. Yeah, it's been a while since being in the Bureau. It has. It's great. It's important. And you have a really unique and interesting strategy. You have a lot of gold.

You have a lot of cash. And then you have a lot of higher growth stocks. I'll get to the stocks in just a second. What did you see in gold that others must have missed because you've just present? because you've just printed money on gold, I imagine? Well, there's no question recently that's occurred. But when you look at the gold is very long cyclical. Okay, so there was a period where there was a reval.

It was not doing anything for years. Nothing. And so there wasn't a lot of interest in it. So some of that is just a revaluation trade. Then when you look at all the macro factors, the declining Fed rate policy likely, geopolitical issues, central bank buying to support maybe currencies that may compete with the dollar for market share

on transactions. So you have a lot of factors. Real interest rates are likely going and break even negative. So retail buying strong. You can go on and on. There's literally a book. I think it's Nathaniel Popper. If I got the author, incorrect, forgive me. And it's called Digital Gold. And I read it a number of years ago. It's about Bitcoin. I thought Bitcoin and Crypto were going to replace gold. But instead, they're both going up together. Does that surprise you? Short-term correlations can do anything. But I think people need to understand that. You know, they are not the same asset. They're different.

They don't respond. I mean, crypto to date, and it's shorter term trading history here, going back to when it was created 10, 15 years ago, is more correlated to the triple Q's or tech and easy money than it has the performance of gold. So it's an asset class, but it's not necessarily a replacer of gold or does the same things. And investors need to keep that in mind. Okay. So we just showed kind of your mix. You've got cash. You've got gold.

You've got what you call commodity stocks. You've also got, though, high growth, what you'd call high growth stocks. Your biggest single holding, at least as of the last reporting period, Palantir. Another big winner. Are you still believing Palantir is going to keep winning? Yes. They have a huge addressable market. They're growing revenues and earnings very quickly.

It's definitely a high-price stock. But as with most growth companies, that's what happens. You know, you look for opportunities to buy it when it gets cheaper sells off. One of your other big holdings is meta. We obviously, Meta had a, you know, listen, it's had an amazing. It's got a terrible week. It had a terrible day. It's worst day in, I think, three years. Stock's down 11% this week, but let's be clear. Still up for the year. Still has made a lot of money. Did you use any weakness and meta to buy more?

We did buy a little bit more, and I think the market reaction is overdone, and that's just faith in the company. You know, you look at that group of stocks this week, and most of them went up after the earnings reports, and the Kappex numbers were just as big, if not bigger than Facebook's. So the conventional wisdom of those Facebooks can spend a lot of money, they're issuing bonds, on, uh-oh, look out. But the other companies are spending just as much. And those companies are also growing revenues and earnings just like Facebook. So Facebook has a great history over time of reinvesting in the business in well-time cycles that end up growing the business for the next few years. So adding, well, you added a little more meta this week. We did. And we think that longer term,

it's trading basically a market multiple right now, which is unusual. And, and so we think long-term, we believe they're going to get it right. And it's going to translate to future growth going This next pick is really interesting because, yeah, Palantir, Nvidia, meta, stuff we talk about pretty much every day on CNBC. Yeah. We don't talk about Texas Pacific land, TPL. Yep. Smaller, smaller name.

One of your biggest holdings. Yeah, it's a royalty. It's a landowner royalty company based primarily. It's Texas. And they make money basically on oil and gas and increasingly some water rights under the land that are paid royalties to the company. it's a play on domestic oil production. Quiet company.

They don't crow a lot. They're not out there. By the way, TPL, you're welcome to come on many time on CNBC. But I would imagine, is this a cash flow story? They've been around forever. And, you know, CAPX is obviously very light, right? So it's a high margin business. They print money based on royalties.

And as long as energy production and potentially water rights issues are positive down there, the company should be expected to do well. Okay, that's drilling. Let's move on quickly. wrap it up with mining, Freeport MacMoran. Is this a play on just expected massive copper demand from generations to come? Yes. In a word.

Michael Cajito, thank you. I mean, those stocks generally, whether energy, whether their materials have not kept up with broader market, okay? And so we think from a long-term standpoint of a long-term investors that this is an area for an investor to be in. Copper is at five bucks a pound. Generally, Freeport produces and mines very efficiently at those levels and even better if it goes higher.

It translates to the bottom line. They're very good at managing shareholder returns in good environments for them, buybacks, extra dividends, et cetera. And we think that because of the supply demand mismatch over the long term in copper, it's used in so many things, that it's a good long-term story at a reasonable price right now, whereas some of the tech stocks we've been talking about are rich. And, you know, you might be more of a waiting.

But apparently not meta. Apparently not meta. Not currently. I don't know how long it's going to last, but not meta right now. Michael Cagino, you might be the only guest we have on, and I say this is a huge compliment, and go from gold to meta to Palantir to Freeport MacBrand, to Texas Pacific Land. That's why we love having you on. Don't be a stranger.

Anytime. It's enjoyable. We're going to come back. We're going to come back. Michael, we're going back. San Francisco, Michael, thank you very much. Thanks for having me, Brian. All right.

We're also coming off the Federal Reserve's second rate cut of the yield. But yields, they're not going down. And that means the cost to borrow money might actually be going up. In fact, the 10-year yield holding above 4%. Rick Santelli joining us now from Chicago with the bond report. Rick, I went on like a, it was like a 10-second mini rant yesterday, but the gist was basically this. The Federal Reserve can say and do what it wants.

The bond market is the boss, and the bond market is going to do what it wants, and it wanted and wants, clearly, to take interest rates, if not higher, not lower. Yeah, it's a very interesting dynamic, especially for those that are in the current administration or those that are looking towards housing to be the one part of the economy we'd like to see juiced up a bit because it's not cooperating. The market's not cooperating.

That doesn't mean the Fed can't do quantitative easing again in the future where they manipulate long-term rates by buying the securities. But the market could even push back on that. Let's start at the beginning. Okay, here's twos and tens. The day before the Fed cut in October. The two year was at 349. The 10 year was at 398. Obviously, they're both higher.

Let's go back to the pre-September cut. So we'll go back to the close before the rate cut on the 16th to September. You can see both twos and tens indeed are higher. And as we sit right now, we're up 10 basis points on the week in both twos and tens. Look at the dollar index. The dollar index, feds ease twice. Dollar index is basically gone from close to 97. to getting ever closer to testing 100.

So really, this is a case study in the realities of how much the Federal Reserve can do without quantitative easing. And let's do remember what the entire globe really encased in debt, doing quantitative easing could have a high price tag. Ultimately, the Fed's balance sheet was $9 trillion, now at 6.6.

So they made a lot of progress, but that's still well above where it was before the credit crisis when it was under. under a trillion dollars. Very quickly, follow up, Rick. How much is the bond market starting to look past Jerome Powell? I'm not saying Jerome Powell is irrelevant. Not at all.

He's still the Federal Reserve Chairman until I think May of next year. But that's not, that'll be here soon. And we're going to have a new Fed chair. You know, I think what we're discussing here actually takes away some of the thunder, no matter who's the Fed chair. Because if the Fed chair is more into a dovish stance, it still doesn't guarantee they're going to get. get what they want out of the market.

And really what everybody wants is lower mortgage rates. Yeah, and I'm sure homebuyers are annoyed because they hear Fed cut. Rates are going down. And guess what? Mortgage rates stay steady or even go up. Rick Santelli, have a great weekend, my man. Thank you. Right after the break, the government shutdown really starting to bite.

Millions of Americans missing full paychecks this week. Democrats and Republicans appear no closer to any kind of a deal. Why can't they just make a deal to help fund snap, and food stamp benefits? I don't know, but we're going to ask Ed Mills, that question, and more next. Well, welcome back. We are now on day 31 of the government shutdown. And if no deal is reached today, the impact of the shutdown will get a lot more severe for millions of Americans. We're showing you three big areas here.

All right, 42 million people will lose their snap, basically their food stamp benefits. Also, Affordable Care Act Open enrollment begins tomorrow, and without an extension of the ACA subsidy. and rollees will face a much higher actual premium cost when they sign up for their 2026 plan. And earlier this week as well, TSA and air traffic controllers stopped getting paid, which means your flight may be impacted. So what is a road to any kind of a deal? Because a deal has to at some point be made. Joining us now is Raymond James Washington Policy analyst Ed Mills.

Ed, there's a lot of complex stuff we can get to. But I want to start off with a very simple question that I don't know the answer to. can they just come together for like a small bill and pass something so that food stamp benefits don't run out? I mean, millions of kids not being able to have food or afford food and families, that's awful. And it's a stupid look for both parties. Are they just legislatively able to come and do something like that and work on the other stuff later?

From a technical perspective, absolutely, Brian. From a political perspective, absolutely not. Democrats actually propose that in the Senate. Republicans blocked that because they said if Democrats really wanted this, there's a different vote that they could take, which is to support the continuing resolution, reopening the government. Republicans would argue that if you do that, that is going to only delay the opening of the government overall. And so to me, kind of the fact that there is going to be these missed payments, it starts the beginning of the end to the government shut down? Unfortunately, Brian, we're not at the end of the end just yet.

I mean, both parties go on TV. Thank God we're not a political channel, but they go on TV and they point fingers at each other and say this one did this, this one did this. I can't, to be honest with you, Ed, I can't really follow it. Sounds like the Republicans could just come up and say, we want to, you know, provide food stamp benefits to 42 million people. It seems like a good thing. Why is this not happening? I don't get it. Yeah, it's because it would prolong the shutdown. There was a separate kind of attempt to make sure that there was a vote just on military pay, and that didn't go anywhere either, Brian. So right now, I think what we're going to see is the pressure bill, because we have these

mispaychecks, people's rent, mortgages, because we are going to see TSA delays. I was delayed back and forth to the West Coast this week. That's going to build, and you need that pressure. Ultimately, I think probably what we could see is an agreement to negotiate on the Affordable Care Act subsidies once the government is reopened. And so I could see a reopening of the government in the next couple of weeks, an opportunity to negotiate. And it's kind of almost semantics at this point, Brian, because Republicans say they will negotiate, but we first have to open the government. And Democrats are saying, well, we're not going to negotiate until you open the government.

But the pressure building, reopen the government, short-term CR, clear the decks on everyone getting paid, people getting their benefits. And then Democrats would have an opportunity if they don't like the deal to shut the government down again at the end of the CR if they haven't gotten this all to the problem on the affordable care. Listen, most people in Congress either came in rich or have become rich somehow. I don't know. They go into Congress and make a couple of grand a year and they end up being worth $20 million. Figure that one out, Ed, if you can. I don't understand it's the best path to wealth, I think, in America.

But that aside, you know, they're not the ones that are going to be hurt. 42 million families losing food stamp benefits, losing snap benefits. You know, there's nothing more important than that. I'm hoping to fly home now, basically, go back east from San Francisco right now. When people stop, when their flights stop going to, you're going to see a lot of outrage in corporate America. How much leverage do you think corporate America might have to say, listen, guys, my teams can't travel, which means business is going to start to shut down, which means tax revenues could also get hurt. Yeah, Brian, what we've been telling folks at Raymond James from the beginning is that for this to end, something has to happen. Something has to upset the status quo. This has been the non-shutdown shutdown, shutdown.

For the most part, most Americans have not seen an impact of this. The military got paid at the 15th of the month. Now that we are a month into this, there is going to be a lot of folks that are not getting paid. We kind of highlight the SNAP and WIC benefits. We highlight the kind of impact on ear, traffic control. But politically right now, Brian, both sides think they have more to lose to end this fight rather than solve the fight. So they'd rather dither, dither over politics and finger pointing for some theoretical. I get we have an election next week in New York City and governor of New Jersey and governor of Virginia. Sounds like the both sides would rather is kind of dither over that and play the blame game because it's better to do that than actually feed

children. Yeah. And I think it is also the fact that Democrats wanted to have a kind of November 1st, you know, kind of open enrollment period where people see exactly what the increase in their Obamacare premiums will be, get a round of stories related to that, and then move to kind of reopening the government. So that's why I say we're at the beginning of the end, not the end of the end. I do think that there's an opportunity to reopen this government, but we have to probably get until at least Wednesday, and we'll really look at the election results in New Jersey, New York, and Virginia to determine that. And sit tight, actually. I'm going to come back to you because we have breaking news right now about the SNAP benefits. I don't know what it is, but Emily Wilkins does. And she joins us now from D.C.

Hey, Brian, well, we were waiting to see how federal courts would rule today on the Trump administration deciding to not be funding the SNAP program on November 1st. We now actually have two different judges making two different rulings. Let's start with the one in Rhode Island. That judge basically ruled from the bench telling the U.S. government that they need to fight. funding for that SNAP program. They mentioned the contingency fund. This is the one that Brooke Rollins, Ag Secretary, just told us a little bit ago they couldn't use. Now, a federal judge is saying, you need to go ahead and use that. A Massachusetts judge, on the other hand, also seems to be leaning in the direction that the government will need to provide SNAP benefits somehow, that they cannot cut off the program, but they're saying that they need the White House to actually put in writing that they plan to not continue to fund that program or that they're not planning on finding a backup source of funding. So two different judges there, kind of in the

same vein, though, it sounds like the overall takeaway from this is that the courts are telling the Trump administration that they are going to have to find a way to get funds into the SNAP program, and they're not just going to be able to end it tomorrow, as was feared. Brian? Emily Wilkins, Emily, thank you very much in Washington, D.C. Let's go back down to Raymond James's Ed Mills. Ed, you know, obviously just a couple headlines there, not giving you much time to think about it. But do federal judges, I mean, this is two federal judges in Rhode Island and Massachusetts, right? So they could say what they want. Is the government going to react based on what these federal judges say? I think that's to be determined. I think it is a very strategic move to move

it to Rhode Island and Massachusetts. They chose judges that they thought were going to side with them. Democrats have pointed out that the Trump administration has found ways of paying for military troops. They have found a $40 billion fund for Argentina. So, you know, the good thing here, Brian, is that if we do have this judgment, we could see these SNAP benefits paid out. But that doesn't guarantee this as an administration that follows that decision. They could appeal it. And we have a lot of uncertainty. The only way to guarantee these individuals get these funding is to actually open the government.

Yeah, that's the best way to do it. And it's the first circuit up there in New England. We'll see if those judges' rulings, I guess, for lack of a better term, have any impact at all on Congress, then people could make the argument about who's actually running the government. Is it Congress or is it federal judges up in Rhode Island? Either way, we want kids to get fed. We want TSA and air traffic controllers to get paid. And I know you appreciate them. I appreciate them. Hope everybody's kind and polite at the airports. Ed Mills, thank you very much. Thank you. Yeah, folks, if you're delayed at the airport, just be nice. That's it.

Okay? They're working without pay. All right. Still ahead. A recent wave of defaults pointing to cracks, Forming private credit, your market navigator is next. Welcome back to Power Lounge. I'm Dominic Chu. Time now for your market navigator. There are growing concerns about the health of private credit. A recent wave of defaults has highlighted risk among corporate borrowers and some technical tailwinds, including limited credit supply, is masking some perhaps rising default risks. So how should investors navigate the private credit markets and other high yield type markets? Our next guest is here to tell us just that. Joining us now is Thomas Urano, co-managing director at SAGE Advisory.

Thomas, this is one of the interesting topics of the moment right now. This idea that we are seeing maybe the initial stages of credit marks, credit markets, showing some deterioration. Should we be worried? Yeah, so, you know, let's just call some balls and strikes here. What have we seen? We've seen tricolor and we've seen first brands both engaged in some fraudulent activity. We've seen Zion's Bank and Western Alliance Bank both hit with some real estate fraud. Recently, there was the HPS investment partners who reported exposure to telecom issuers

who were engaged in fraudulent accounting, right? So these are just examples of risks that can accumulate during periods of, say, easy credit availability and limited transparency. And I think the bottom line is that the credit boom that we've seen over the years from non-bank lenders has created some blind spots that are only now revealing themselves. What type of evidence are you seeing that perhaps those credit markets are a little bit tightly wound these days? Right. So I think, you know, there's a combination of things if we look at market pricing, first of all, investment grade spreads, high yield spreads, right? These are back to near pre-2008 tights, right? At this level of

pricing, the market is suggesting that investors face little probability of default risk, right? And to that end, we've seen strong fund flows and investors are piling into credit on limited supply. And so that's creating this sense of security for investors in the credit market. However, that recent wave of credit problems, largely tied to fraud thus far suggesting otherwise. All right. And really quickly, just a couple seconds left here. What's the best way to navigate that? Well, I think another way to think about the tightness of credit spreads is really the inverse,

which is the cost of quality is low, right? consider a more defensive posture in your credit allocation, right? This is an opportunity to add some liquidity, add some quality into your portfolio, and maybe look for another opportunistic time to be engaged in high yield or other lower quality segments of the bond market. All right. Thomas Yerano at Sage Advisory with The Navigator today. Thank you very much. We'll see you soon. Brian, I'll send it back over to you guys. All right, Dominic Chubmarket Navigator. Thank you. All right. Coming up, what happens to gasoline prices in California? If more refineries get shut down, well, they are. And we're going to speak.

with one of the last remaining oil and gas companies based right here about how they are trying to help. There's a big AI opportunity there as well. Francisco Leone, California Resource CEO on exclusively next. All right, time now for another power play. California Resources Corporation, the largest oil and gas producer based in the state. They drove for oil and gas in the central part of California. Last year, they made a $2 billion deal to combine with another California-based oil and gas company called ERA. CRC also just launched the first car, car, capture and storage project in California. That is also involved in a first of its kind net zero cement facility.

Francisco Leon is the CEO of California Resources Corporation. joins us now for a power lunch exclusive. And I think, is this your first ever CNBC interview? It is. It is. Thanks for having me. Well, I'm glad you could do it. Thank you for coming on.

This is interesting. Before we get into sort of your company in general, $5.50 a gallon, I'm driving around here. I'm thinking, okay, there's a refinery going to be shut down. I think later this year. They're talking about shutting down a refinery across the bay over this way. Benetia, not yours. It's a Valero refinery. What's going to happen to gas prices if all these refineries keep shutting down?

Yeah, affordability is at the forefront, and it makes sense. The energy is the economy. So it is something California deals with. Let me give you some stats. California consumes about 9% of the oil in the U.S. We also pay about 40% higher prices than the rest of the country. That's higher than Hawaii. So we do have a problem.

The solution, though, is local production. The production that companies like California resources produced in the Central Valley, California is the answer. It provides jobs. It provides resiliency. It lowers prices. And it also has a lower carbon identity. So that's the answer. And that's what we're pushing forward.

There was a company. I don't know if you heard about them. They're called Chevron. And they were based just across this body of water, across the bay here on the other side, what they call East Bay, out outside of basically San Ramon, California. They left. They're now in Houston, Texas. They still have some people left. What's it like running an oil and gas company in California, Francisco?

Yeah, you know, some people have made the business decision to leave. We, on the other hand, double down. We are a California-built business, and we're in the intersection of providing reliable, affordable, and clean energy. It's a big market. It's 40 million Californians, and the oil is still needed for many, many years. So it's a market that we like, and it's a market that we're going to be successful. There's obviously a lot of doubters. They hear oil and gas.

They hear clean. They think there's no way. Now, you guys have just launching your carbon capital. and storage facility, kind of, if you know California folks, sort of out toward Bakersfield way, realistically, how sort of clean or environmental can we do something that most people would deem to be just an unenvironmental thing? California can do it the cleanest in the nation. And we just broke ground on the project.

So we went from talking about the future of CCS to now the present. We broke ground. We're going to inject CO2 at the beginning of next year. We're going to decarbonize plants. And so here we have a cap and invest program that penalizes the manufacturers and power plants for having emissions. So we're providing a market solution to fix that. And we're really excited about partnering with hyperscalor. They bring data centers into the state and we expect demand to grow for power.

They are looking for baseload, clean, 24-7 power, and we can help with that. Well, you either read my mind or I guess my notes because that was my next thing. So I'm thinking you guys produce gas along with oil. Natural gas is generally a byproduct of drilling for oil. So all the gas is coming out of the ground. Is there an opportunity for you guys to supply that gas to some kind of new power facility and put a giant data center out by Bakersfield? You've also got a lot of sun, by the way.

So is this an AI opportunity for your company? Absolutely, and that's exactly where we're going to build it. We not only have the natural gas supply, but we also have a power plant with excess capacity, Lots of land to build, and now we have the CO2 storage site. So we think the Central Valley, close to Bakersfield, close to Taft, it's an ideal place to serve the L.A. market. As hyperscalers are coming for inference, latency, we think that's going to be the site where data centers come

and we're in and out of the power plant. And then this cement takes a massive amount of electricity and power to produce, but it's also very carbon-intensive. You've got this net-zero deal with a cement company. Tell us about that, because again, we need cement, but it is also one of these things, just incredibly energy intensive. Yeah, and cement factories in California are looking for that net zero alternative. They get tax on emissions in order to stay viable and competitive.

They're going to need to make those emissions go away. We can provide that service. It's something that we're tailoring our business to do, and ultimately it's a market-based decision. What that means, people should pay more for the cement made in California elsewhere because it's decarbonized. 9% of America's oil is consumed here, and yet refineries are shutting down. Maybe there's an opportunity there. It's a challenge. We appreciate you coming on.

CNBC for the first time ever. Francesco Leon, thank you very much. Thank you, Ryan. California Resources Corporation. Let's get it right now to Kate Rogers for a CNBC News update. Brian, hours after Ohio's GOP majority approved a new redistricting plan for the midterm elections, Virginia's Democrat-led legislature approved a new constitutional amendment that would allow congressional maps to be re-rejurial. for next year's elections. It's the first of several steps needed to accomplish its change,

but if successful, could give Democrats two or three more seats in Congress. Elon Musk's SpaceX is set to receive a $2 billion contract as part of President Trump's Golden Dome Project. That's according to the Wall Street Journal, which reports that SpaceX will create satellites that track missiles and airplanes, and that space acts will have a, quote, major role in two more Pentagon satellite projects, one for military communications, the other tracking ground vehicles. And Getty Images just announced a multi-year partnership with AI chatbot perplexity. It's the latest licensing deal between digital platforms and AI startups as they try to protect their intellectual property and create new revenue streams. Getty did not disclose

financial terms of the deal. Brian, back over to you. All right, Kate Rogers, thank you very much. Folks, do you want a robot to clean your kitchen? Well, there's actually a company working to make that happen. With some caveats, Joanna Stern got to test out Neo and will join us about what she found out next. The Jetsons has officially arrived. Sort of. This role video is Neo. It is a human-looking robot made. It can do your dishes. It can clean stuff. It can fold your laundry. This is real. You can pre-order one today with an expected delivery next year. Now, Neo is not cheap. It's about $20,000. And at the price tag, didn't turn you off this might.

Yes, Neo is technically a robot, but it is operated by a human being wearing a headset. In other words, a human being is watching its and your every move. So let's talk about that and also a little bit about the rise of what I'll call the robot car. Joining us now, Wall Street Journal's senior personal tech columnist and CBC contributor, Joanna Stern, who got to recently test out Neo. What was your hot take on this, on this robot made? Well, look, there's, there's a lot of hot takes because this was crazy. I mean, that was my first reaction.

And this wasn't the first time I've met Neo. I've been working on a book. And so I've met Neo previously. But anytime I meet this robot, I sort of think, wow, we are in the Jetsons. Holy crap. Look at this thing. It's doing things in this house. It's doing the things we would always dreamt of, the dirty work we don't want to do.

The literally like folding, you know, your clothes or putting your clothes in the hamper. Here it's arm wrestling me. I mean, like, look, all these things. Yet, as you said. Who won the art? Wait a minute. Hold on. You can't just say you arm wrestle a robot and then move on. Who won the arm wrestle? Like, did you feel, I mean, it's a robot. It could like snap your femur or something. You would think. You would think, but this robot is designed very differently. It's designed really for safety. And it's actually not that much stronger than a human. As you're seeing right here, I asked it to crack a walnut. And it couldn't. I mean, it's obviously hilarious. It just starts hitting it on the table.

But no, I almost broke. Look, I'll tell you right. I broke the robots arm, okay? I injured the robot because I was wearing the headset to navigate this. And so as you mentioned, the way this really works right now and everything I saw this robot do wasn't autonomous. It was done with a teleoperator wearing a VR headset controlling the robot. And so when you put on the headset. That's critical, I think, right?

Like, there's a human being, this is a robot, but there's somewhere there's a human making it do the stuff that we're watching it do. There is, at least right now, and that is what this company is betting on. They need the data of this robot doing things in homes to make the autonomous versions. And this is the race happening right now in all humanoid robotics. They are home robotics, but all robotics, really. They need the training data, right? very similar to how our generative AI systems are trained on the internet and all types of bodies of information.

What they don't have is real world video of people doing things in their homes to teach these robots how to do it. And so 1X technologies, this startup in Palo Alto, is saying, hey, we're going to put our robot in your home and we're going to teach you it. And the CEO is very honest about it. He just says, look, this is the equation. We give you the robot. You have to pay $20,000 for it.

We could talk about that. and then you're going to give us the data and we're going to make these robots way better and in five years' time, they're going to be doing a lot of this on its own. Well, the Roomba probably knows your house too. Very quickly, you know, I'm now about a year in on Waymo.

I'm not as advanced as you, Joanna, but took Waymo's in L.A. I was in a couple of Waymoes yesterday. I posted some videos. All due respect to all the taxi and Uber drivers and Lyft drivers out there, that's my video from last night. I've got my Grateful Dead plan.

I got to choose my music. this felt like the future of transportation to me. What's the Waymo and robotic car opportunity here? Look, a lot of what we're talking about with the humanoid is actually where self-driving cars has been. They needed Waymo many years ago, starting actually in 2010, started training their cars on driving video. Tesla's been doing it. Waymo's doing it. Zooks is doing it owned by Amazon. This is where it's going.

And we're seeing it now happen. You're seeing it in your experience last night. Holy crap, right? You're like, wow, this drives really well. There's a lot of benefits to it. And that's the training that had to happen over a long period of time with a lot of safety in mind. Similar thing in home robotics. But as I told the CEO, it has to happen in your really private space, which is kind of thing.

That's interesting. Yeah, it is. And the robots, it's not just like Siri or Alexa sort of semi-listening. it's a robot, I assume filming, knows where you live, knows how you live, knows if you're messy or clean, whatever it is. Still an amazing story. Joanna Stern, you're amazing. Look forward to the book, by the way.

Thanks for coming on, Joanna. Thanks so much. All right. Oh, we've got a news alert that may impact your travel plans. Philibault asking for a friend. What's going on? Flying into JFK? No.

I know you're leaving an SFO at some point. No. Are you flying into her? probably hopefully you're going to be okay. JFK is is halting all inbound flights until 3.30. We've seen this not just at JFK, but other airports as well. And it pops up because of the staffing for air traffic controllers. And we know about the shortage and what's happening for the New York airspace. And that's why right now, combination of staffing as well as some high winds are causing delays or ground stops, JFK, LaGuardia, Newark. And those issues, by the way, we're seeing them pop up. at different places around the country. Brian, earlier today, Syriam put out a note,

and Syrium tracks all the takeoffs and landings around the country every single day. They noticed an uptick yesterday in terms of flight cancellations. Now, some of that was due to the weather in the northeast, but you can also attribute some of this to air traffic controllers who are not coming in. They're calling out sick or they're just not there. The staffing is not where it should be. So airports have to slow down arrivals and takeoffs. at various airports around the country. I've said this before, Brian, I've said it again. I'll say it again.

The last government shutdown, it didn't end until there was a day where you had a lot of outages or ground stops around the country, finally made people in Congress listen. I wonder if that's going to be the case again this time, because now we're 31 days. It's about 35 days last time when that happened. Yeah. I think you're exactly right, Phil.

I think when there's a day when you can't travel, when commerce shuts down, when people can't get to sales meetings or to family events or funerals or graduations and they just lose their mind. Okay, but don't do it at the airport. Always be nice to everybody that's there. But when that happens, corporate America, that's what it's going to get fixed, I think, Phil. You're exactly right.

Brian, I've been on the road a ton over the last three weeks. And the one thing that people talk about when they ask me about what I think about what's happening with the government shutdown and air traffic control, they all say the same thing. It's Congress's fault. not a Republican, not Democrat, Congress's fault. They're fed up. And they're fed up because they're like, look, I'm trying to leave my life. And this is the garbage that I have to deal with. And that's the bottom line here. Yeah. And I want to say thank you to all the TSA workers and FAA workers and air traffic controllers that are coming to work. I love them. I will love them a lot more in the next 24 hours.

Phil, it's an important story. And by the way, Congress is just rendering itself more relevant. Right? I mean, that's both sides are just rendering themselves useless. Yep. Phila Bow. Thank you. All right, on debt, another Power Lunch exclusive. Our check on what cities are winning the stock market at one place on our top three, I'm telling you, it's going to surprise you. Well, let's close on our week here with a look at San Francisco stocks in our exclusive Power City indexes. If you need a reminder, there's a 37 city and metro area stock indexes that I built with the 12 largest market cap companies in each area.

San Francisco has been a treat for investors this year. See what I did there? The San Francisco PCI Power City Index up about 11% led by big gains in Cloudflare, the aforementioned Uber, DoorDash, and Wells Fargo, nine of the 12 stocks in the San Francisco PCI higher this year. And with that gain, San Francisco ranks not first, not second, but third out of cities this year. Philadelphia is actually just slightly ahead of San Francisco.

Philly, just under 12%. And Silicon Valley, which is very different than San Francisco, Silicon Valley crushing the competition in our PCIs, Silicon Valley Power City Index has a median gain of 19.5% led by App Loven, Broadcom, yes, Nvidia, Alphabet, and Netflix. There's still time, but unless something dramatic happens, the Silicon Valley title pretty much is wrapped up for the Power City Index. We'll see if San Francisco can sort of overtake full.

Philly and finish second. By the way, speaking of area stocks, just another general reminder. Head to our website. Find out more exclusive CEO interviews with some red-hot San Francisco stocks that we have done here off the live show. Speaking of shows, Ariel Investments, betting big on women's sports earlier this year. The firm rolling out new ideas to invest in women's sports at the Milken Global Conference in Los Angeles earlier this year. I sat down with Ariel's Jason Wright about just that. This is a classic aerial investment. Ariel has historically looked at undervalued, misunderstood asset classes within the broader market.

They've often been small cap investments. And that's exactly what this is. This is the small cap of sports, undervalued, without the attention paid to it. We are going to give it the focus attention to come in at scale. Season two of CNBC Sport on the record continues tomorrow. Two new episodes airing at 3 p.m. Eastern Time. you're going to hear from those guys, Mark Lassery, Jerry Cardinald, Jason Wright, who you just heard from. Also, Scott Hansen, yes, he the host of the NFL Red Zone, Adrian Wojernarski, Adam Schaefter of the NFL, big names, longer form interviews.

Check it out. 3 p.m. Eastern Time tomorrow right here on CNBC. All right, it is almost time to wrap it up, but not before we hit our stock of the week. And this one has a little bit to do with AI, but it's not an air. AI Pure Play. Our stock of the week is logistics firm, C.H. Robinson, C.R.W. The shares rocketing 23% since Monday. Earnings at C.H. Robinson, solid across the board. And yes, it is leveraging artificial intelligence to help its business. Now, the market obviously liked the news. You had Barclay raising its price target to $145 from $130. Loop Capital, also taking its target up to $160 from $1, $1,000. 133, got other firms chiming in as well.

CH Robinson's stock at a record high, it's up about 50% in five years. So trucking, shipping, and flying goods all around the world for the win. C.H. Robinson, our stock of the week. All right, very quickly, this, Coinbase shares, they're up right now. It's on earnings, some more crypto trading, but that's not the real story here. Coinbase actually giving a shout out to the prediction markets on their earnings. call with Brian Armstrong effectively saying they had looked at the prediction markets about words he might say and use.

And they kind of gamed this system. By the way, Coinbase earnings, pretty good. That stock is up 7%. But kind of this news about the prediction markets, really the ones getting all the attention. All right, wrap it up with a very quick, very quick market check. Again, we are headed for our sixth monthly gain in a row for the Dow Jones Industrial average. first time that has happened in years.

I know market pros don't watch the Dow, but either way, it's still a pretty cool market stat. That's it for us. I hope to see you back east on Monday. We'll see. Loved all the TSA workers out there. Thank you. Closing bell.

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