Power Lunch - Possibility of a Government Shutdown Looms 9/30/25

Episode Date: September 30, 2025

Republicans and Democrats have until midnight to at least pass a stopgap funding bill to avoid a government shutdown. Pimco's Libby Cantrill weighs in on what would happen if a shutdown does occur. And State Street's Michael Arone gives his read on the markets right now. 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.

They may be bullish on bowls, but the stock market is moving lower as the specter of a government shutdown looms. Welcome to Power Lunch, everybody. I am Brian. Kelly is off today. Well, we're going to hit the markets and your money and also bring you some very surprising stats around government shutdowns, including why the very term shutdown itself is just a little misleading. Plus, a very rare interview with the chief designer for Tesla. We'll talk about what may be next for the brand and from the road to the water and put on your suit for this one, your swimsuit. Because the CEO of Malibu Boats is here and he is bringing some toys with him.

They are outside and we will go see them here in a few minutes. We've got a lot to do, but we are going to begin, of course, in Washington. And the looming government shut down or partial shutdown. The Senate expected to vote again on an 11th hour stopgap measure. afternoon that would keep the government funded, but only until November 21st. Let's get the very latest on where we stand as the news changes and breaks, minute by minute, an hour by hour. Emily Wilkins on Capitol Hill with what we know now. Emily. Hey, Brian, well, yeah, you're right. The next vote is expected to take place later this evening,

but we have already been told that we can expect that that vote to fail. Remember, that's the one you need that 60 vote threshold. You need at least seven or eight Democrats joining Republicans, at this point, the numbers are just not there. And we just don't expect them to get there by the end of the evening. Democrats really here holding out to get some sort of provision on health care. And that, in turn, has ratcheted up what we could see if any potential government shutdown comes. President Donald Trump just now chatting with reporters about what the impacts could be. Listen to what he said could happen in a shutdown. We can do things during the shutdown that are irreversible.

that are bad for them and irreversible by them, like cutting vast numbers of people out, cutting things that they like, cutting programs that they like. We already know that the Trump administration is looking at not just furlowing federal employees, as is normally done during a shutdown, but actually doing massive large-scale government layoffs.

And now we might have some more specific numbers from the Congressional Budget Office putting out a notice this afternoon that in the event of a shutdown, They expect 750,000 furloughed employees each day. That could lead to $400 million of total compensation costs. And remember, during a government shutdown, federal workers don't get paid, federal contractors don't get paid, folks in the military don't get paid.

So huge potential economic impacts there. The Congressional Budget Office going on to say those impacts could be very far ranging into the private sector, saying that the CBO expects that if a government shutdown persists for several weeks, Some private sector entities would never recover all of the income they lost as a result of the suspension of federal activity. Of course, it remains to be seen exactly how long a shutdown would go. The longer they go, the worse, the impacts tend to be. We do know that if a shutdown is going to be in place on Friday, it means we're not going to get job numbers. It also means that the Bureau of Labor Statistics isn't going to be collecting some of the key information

that the Fed and other economists look to to really get a sense of where the economy is. And that, of course, Brian, is just one of hundreds of impacts that could come. And at this point, it's very uncertain. It's certain we're going to go into a shutdown at this point. It's very uncertain exactly how long it would last. Brian? All right. Emily Wilkins on Capitol Hill for now.

For now. Emily, thank you. All right, so let's stay on that topic. And it's an important point when you hear the word shutdown. Because when you hear shutdown, it's easy to assume that everything. I mean, the entire store is closed. Not the case. Let's welcome in Pimco's head of public policy, Libby Cantrill.

Libby, welcome. A lot of 750,000 people, huge potential impact. But I do want to remind our audience that I think this is critical because a lot of people are scared. People get Social Security. They use Medicare for health care. They're scared. Let's be very clear.

During a, quote, shutdown, people still get Social Security. They still can access Medicare and Medicaid. The Federal Reserve operates. The military operates, though, backpaid. Law enforcement operates. Air traffic control operates. TSA, again, backpaid. Let's hope they come to work.

Impacted by a shutdown would be, as Emily said, government data, the jobs number is not going to come out, government services, you've got national parks and weather services. So it's not a complete shutdown, is it? is not a complete shutdown. Actually, if you look at the annual federal budget, around $7 trillion, we're really only talking about a quarter of that budget. This is the stuff that Congress appropriates that they fund every year. As you said, it does not affect Social Security. It does not affect mail service. It does not affect Medicare. It does not affect the Federal Reserve,

something that we, of course, are paying attention to. But what it does affect, as your previous commentary was just saying, in terms of data, which is quite critical at this period of time. And also those, not only those 750,000 furloughed workers, but this is actually quite important, there's about 600,000 additional workers who will have to show up to work, but also won't get paid. So we are looking at kind of the range of 1.3, 1.1.5 million folks who will not get paid. Now, do they get back pay? Yes, they do. But it still hurts when they're not getting paid. And a short-term shutdown, as I think everybody understands, really is not a macro event.

It is not intended to be a market event. But should this be prolonged, there could be some non-linear effects. Of course. So the longer it goes, the more it hurts consumption, the more it could hurt. By the way, we shut down a lot of American cities for other reasons a few years ago, not minimizing this one bit. But what's interesting is that, and look at this chart from Deutsche Bank. Sorry, I had to reference. It's their chart, Libby, their chart, is that stocks tend to go up when there's a shutdown.

Not minimizing the shutdown. Painful for a lot of families. Painful for a lot of businesses that rely on government workers, delis, whatever it might be. But the stock market doesn't seem to care. The stock market has been, and I think understandably, continues to be sort of annoyed to this sort of political dysfunction, if you will. What you've seen, I don't know if that chart had captured this, what you see is usually risk assets selling off into the shutdown. So the first day of the shutdown, they sell off, exactly. And then they do, there's sort of a relief rally, if you will.

In our world, what you also see is that yields end up rallying. There usually is sort of this flight to quality, if you will, flight to safety. That benefits treasuries. Dollar usually sells off. Gold also rallies. And that sort of you're seeing that as well today. But do we know why? Why? Because the market just thinks by now we're used to it. The government will eventually, quote, reopen. It's just a measure of how long it lasts. Yeah. So I think that, and I think that is the operable question here. And, you know, talking to clients this morning is really what they're asking. How long can this shut down go on? Again, if this is just a matter of days, even if it's less than sort of two weeks, then this is really a non-event. I think the concern that we have, though, of course, we're the bond people. So we're a little bit, you know, glass-house.

half empty, is that there may not be a logical catalyst to reopen the government. Remember that the last time that we saw a full discretionary government shutdown was back in 2013. That lost it for 16 days. The catalyst to reopen that was the debt ceiling deadline in mid-October of 2013. There is no such catalyst here. So I think the concern is that if we do shut down, and it looks very likely, something we've been telling clients for the last couple of weeks, is that there may not be a natural, you know, intimate impetus to actually reopen the government. And that will have an economic impact and then probably will weigh on markets. And you have said that. I know because I read your work. By the way, it's excellent work as always. You and the entire-

It's not as snazzy as a boat, but you know. We got boats later. We got boats later. That's we're going to end on the fun stuff, start with the more serious stuff because, but here's the reality, too, I guess, is that political parties, doesn't matter which party you're in. Okay, red team, blue team, whatever. When the other team's in charge, you have a political strategy, I assume, to want to blame something on the other guy or the other team. So if one team's in charge, are we more likely to have a shutdown because then you can be like, well, it's their fault. And I don't mean either party. I mean, each party can do this. And if you're on the radio, I'm pointing both ways, because you can blame the other team for what happened. But you don't

want to go on so long that you really crash stuff because then just people get kicked off at both teams. Yeah, I mean, usually government shutdowns have been losers for both parties. I mean, very, there's really no as they should be. You both kind of look incompetent, right? Yeah, absolutely. And you just think, okay, if Congress and the government has sort of one role, which is to keep the lights on, and they can't even do that, it does not necessarily, you know, increase, you know, folks, you know, faith in the operation of the political system or what have you. I think, again, the big issue here, and one of the reasons why we do fear this could be a little bit of a longer shutdown is because it seems like the incentives of each party is to kind of

keep this shut down. Really think so? Well, because the Republicans, I think for good reason, are saying we, you know, that they've done what they needed to do. They've passed a clean government funding bill. to mid-November, kind of a bridge, no, you know, devoid of partisan riders, the Democrats, which usually has been, at least historically, the party that has wanted to keep the government open, they are the ones that are insisting on, you know, arguably attaching something that really isn't relevant to the funding bill. And so I think they are trying to break through with their

political base. They're trying to show folks that they are sort of fighting the president. They really haven't had an issue that they've been able to kind of rally around. And this So again, this is just the political incentives, unlike other shutdowns, the political incentives seem to be pointing to a longer shutdown versus a shorter shutdown. Okay, well, we shall see. And as we showed earlier from the firm that shall not be named chart, that stocks tend to go up. But is there a point in a shutdown?

And I hope we don't find this out that things break. Things really start to crack. The market cracks, the economy cracks, the bond market, whatever it is. something cracks because during COVID, of course, we shut a lot of stuff down, but we also had big stimulus bills that could help businesses get through those periods. Some areas stayed closed for a couple weeks, some for a couple years, but we tried to incentivize that. Is there a point at which there is a breaking point? Yeah, so the last, and again, sorry, the last sort of partial discretionary government shutdown was back in 2018. That lasted for 34

days. And you did actually see, you know, some heaviness in terms of markets and what have you. But you also saw some stress around air traffic controllers. Because asking folks to show up to work and not be paid absolutely, as you can imagine, one pay cycle that's okay usually. But if it is prolonged, that that does way on morale, it weighs on engagement, it weighs on who is showing up. And so for these critical services, these folks who are not getting paid, I think that is sort of the breaking point from the government services person. Yeah, it's well said, and we'll see what happens. Let's hope if this shutdown does occur, that it is brief.

Both sides make their point. They get to go on TV and be like, we told you so, and then they just, we just move on with our lives because that's what tends to happen. Let me Cantrell of Pimco, must read research always. Let me thank you. All right, also, let's take a look at oil today, because oil is actually down about one and a half percent on pace for its third straight negative quarter. energy was the best performing sector a few days ago. Today, it's the worst. You got Baker Hughes down 4.5% slumberz-a, Halliburton, all lower as well. Some talk that OPEC's going to add more

production to the market. Again, maybe not an all-out market share war, but certainly more oil, particularly when you have a Chinese economy, which is not growing very quickly. Good for the price of gas, probably, if the price of oil continues to go down. We're going to take a short break. We're back right after this. All right, welcome or welcome back. Your next guest says that stocks are due for a fall, but it simply may not happen. And that me, you may need to get a little more real about your investing technique. Michael O'roni's chief investment strategist at State Street Investment Management.

Mike, always appreciate having you on. You know, stocks maybe do for whatever, but it doesn't mean they're going to do that, does it? It doesn't, Brian. The foundation for this bull market remains solid. So trade is coming into clearer focus. not perfect, but we've avoided the worst outcome. Now we're throwing a little gasoline on the fire with both fiscal policy and monetary policy. Oh, and by the way, earnings are growing by double digits, and analysts keep increasing their expectations for those earnings. The U.S. has never

had a recession when earnings have been growing year over year. So there's a lot to be thankful for as we head into a difficult seasonal period, but certainly risks are rising as well. Well, we don't know what's going to happen with this potential partial government shutdown like we just highlighted, but it sounds like, Michael, because earnings continue to go up, that may be one reason that the markets have kind of treated this with a yawn. I mean, we're down a little bit today, down a little bit last week, but overall, markets not really reacting to this. Government shutdowns historically haven't meant much to markets or the economy. Brian, the last six shutdowns, GDP actually expanded, and 11 out of the last 12 shutdowns, GDP expanded.

And the last five shutdowns, Brian, the S&P 500 has actually climbed. So ultimately, this tends to be a big shrug of the shoulders from investors. So I do think earnings are going to be the big story. That's coming up in a couple of weeks in terms of the heart of earning season. The consumer continues to be spending. So that's good as well. And we're going to enter a seasonally positive time for markets if we can just get through October. How is it that the economy continues to go up?

when you have hundreds of thousands of people and indirectly and directly who may not get paid? It's an odd question here, right? And ultimately, what we tend to see is a bit of a pause, some short market volatility, and then a rebound, kind of a catch-up period is ultimately, I think, what happens. Let's remember, we're starting from a pretty good starting point. Unemployment rates at 4.3 percent, continuing claims after they increase. some have also started a cool, meaning companies continue, at least private businesses, continue not to lay off workers. And overall, the average shutdown, eight days. This feels a little

bit more like 95 or 2013. Those were 21 days and 16 days respectively. As was mentioned earlier, there's no natural catalyst here for this to end, but I think it will be short-lived and investors will move on. There's probably other greater risks that could threaten this bull market. I want to hear what those risks are, and I'm going to ask you one and tell me if you think it is a risk. I do, but nobody else seems to, so maybe I'm insane, but, you know, we've known that for a while. The Supreme Court is going to decide if the tariffs are legal or illegal. I think that's November 5th or around there. We should get the ruling.

If tariffs are found illegal and basically everything we talked about for like the last nine months is just kind of tablo rasa, wiped clean, is that a market risk? Potentially, Brian, I think the way that this shows up, and we got a glimpse of this when the appeals court deemed that what Trump overstepped in terms of IEEPA. And so if the Supreme Court affirms that decision and we have to return some of the tariffs or refund them, you saw the biggest impact was on long-term yield, bond yields. They climbed. And of course, that can prove problematic with the markets. And they climbed because there was fears that there wouldn't be.

revenue offsets to the one big beautiful bill act. So I think that's the way it manifests itself. But you can see here in some of this frenetic kind of trade policy that's happening in real time over the last week or so that the Trump administration is laying the foundation, should the Supreme Court rule against them to pursue other avenues on the tariffs. It'll just induce some market volatility. So what are the risks then that you referenced, Michael? So I think the biggest risk here is that the economic data and the labor market data don't seem to be as bad as feared. So, Brian, what happens if the economy's still growing at a pretty good rate?

The labor market is in that curious kind of balance that Powell describes. Ultimately, now if all of a sudden the Fed starts cutting rates aggressively into that, inflation could reaccelerate. And that's not uncommon, or it's common, I guess you could say. that after a peak period of inflation a couple of years ago, you have a down draft and then ultimately a re-acceleration. Should that occur, markets and investors are not prepared for it. Yeah, and well, now they are because they listen to you and your team's work. So Michael O'Roney, a State Street, really appreciate the views, good points, and everything.

It's kind of a weird and uncomfortable thing to say that markets don't really care about government potential shutdowns, but they don't. And this is like my sixth potential shutdowns. So maybe I'm just getting old. Michael, thank you. Or older. Coming up, a very rare interview with the chief designer for Tesla. Plus, let's have a little fun.

The CEO of Boatmaker Malibu is here. He brought some toys. We got two new boats outside. I can't wait to go outside. Interview him and see those boats in person. It's coming up at a few minutes. Welcome or welcome back. As you might have just seen, we've got a very cool boat segment coming up with the CEO of Malibu.

But that's at a few minutes. Right now, let's talk about navigating the markets. And Skyler, Wynand, his chief investment officer at Regan Capital, joins us now in our market navigator segment. Skyler, great to have you on. We just showed also some of the oil stocks are down. The oil services company, formerly known as Schlumberj, now known as SLB, on your radar. Why? Yeah. Post-Liberation Day, you had oil dropped from 71 down to about

60 bucks, still trading in that area. And a lot of the oil services companies also haven't moved since April. But you take SLB that has 80% of its revenue outside of North America and is generating more and more as a percentage of revenue on AI plays and services plays. We really like this as more of a picks and shovel play on oil, but as well as natural gas, coal, renewable energy sources. They're broadly trying to diversify away from just the traditional oil and gas towards, you know, we think wind, solar, we're going to need all the energy we can get to fuel the AI boom in the U.S. and worldwide for that matter. And Alibuilipush, who is the CEO of SLB we've talked to, is from France.

And I only mention that because many of the international markets around the world have done better than the United States. But for us, maybe it's hard to figure out what stocks to buy. You say don't think about it. Buy something like the core international developed ETF. I-D-E-V is the ticker because these are some of the biggest of the big of the primarily European companies. That's right. Buy it all. The dollar's down by 12% this year.

If you look at the S&P on a euro-weighted basis or reverse it for a euro, it's basically flat. So most of the gains in U.S. stock markets this year have come from dollar devaluation. We think that continues. We think we're on pace for another 8 to 10 percent dollar devaluation based on administrative policies, based on a little bit of shakiness and the long end of the bond curve. So take your pick, stay in developed countries, but you're looking at. looking at investing in Europe at about an 18 PE, I devs at about 18 PE, whereas the S&P's at about 30. So you're buying cheap, you're buying the ability of the dollar decline, and some U.S.

weakness around, you know, call it tariffs, any type of U.S. risk. I think those will be offset by investing internationally. I love it. Very internet. I feel like I should have like want a beret or something for this segment, Skyler won. And I look at an SLB and the core developed ETF. Skyler, really appreciate your time. Thank you. All right. Up next, drones, rockets, spaceships, and flying cars. Other than that, not much to see.

Morgan Brennan, with a big interview with a Tesla executive, you're not going to want to miss. And you won't, but don't leave you keep it here. All right. Welcome back to Power Lunch. It's getting out of Courtney Reagan for a CNBC news update. Courtney. Hi, Brian. Well, Judge ruled today.

The Trump administration acted unconstitutionally by targeting foreign students and faculty who advocated for Palestine. The judge said that the departments of state and Homeland Security misused their powers by revoking visas, arresting, detaining, and deporting the campus activists. And he said their actions curbed lawful speech. The lawsuit was filed in March after the arrest of Columbia University graduate, MacMood Khalil. Italy's prime minister urged an international foetilla trying to deliver aid to Gaza to turn around today as it nears the shore. She says a confrontation with Israel could upset the potential peace deal put forward by President Trump this week. The flotilla consists of more than 40 boats carrying parliamentarians, lawyers, activists, including Sweden's Greta Thunberg.

And the Minnesota Wilde signed star left wing Carill Cap Rizzooff to an eight-year, $136 million extension today, giving him the richest contract in NHL history. The $17 million average annual salary is the high. highest of any player since the league's salary cap era began in 2005. I'm sorry if I mispronounced his name. I'm not as much of a hockey fan as I am other sports, but holy cow, what a contract. Brian, back over to you. I didn't even know Minnesota had a hockey team, so good for you.

Of course, Minnesota. They was the North Stars and they moved to Dallas, but I forget that they created the wild a few years ago. Caprazov. That's Courtney Reagan type money. And like the Raiders and, you know, which is football, of course, but in Las Vegas. It's all very confusing.

Like the Miami-O-Hillairored Hawks. Courtney, thank you. Thanks, Brian. Meanwhile, a majority of American workers say they are living paycheck to paycheck. So what happens if, like, you know, a government shutdown, the paycheck just stops? Joining us now is CNBC's senior personal finance correspondent, Sharon Epperson. Sharon, it's a good, listen, it's outside of government workers, this is an ongoing problem for millions of American families. Millions of American families, so many corporations.

laying off people too. So it's very important to really figure out what you can do about it as early as possible, starting with calculating your cash flow, making sure you understand what the fixed costs are and what discretionary spending you have or how much you're going to really need to cut back there. Figuring out other income sources that you could potentially tap is also important and giving yourself some grace, understanding that there are a lot of emotions tied up to this period and figure out how you're going to deal with that without overspending or using money to. kind of make you feel better. Yeah, so other major companies, if they, if government workers aside, other major companies, if you think that you might lose your job and you're worried about,

is there any strategy you can take to sort of help or is there? Yeah, one of the first, I don't know, how do you save money? Well, the first thing you need to know is what the severance is going to be. Is there going to be a severance package? What the severance package is going to look like?

That's very important to understand what that is. Also understanding what your potential resources are in terms of health insurance. Understanding whether or not you're going to have COBRA for 18 months that will extend your health insurance coverage if you're a private sector worker or if you're going to have TCC, which is the federal component of that, similar to COBRA, that will allow you to have it for 18 months. Also filing for unemployment benefits, very important.

And then reviewing what you're going to have to pay out of pocket, whether it's insurance or other things that you're going to need. Because things happen. And this next month is brain. Aneurism Awareness Month. Exactly. A lot of our viewers know, because you were gone for a little bit, that you had a brain aneurysm. Doing great.

I am. Look great. Thank you, thank you. I also had a brain aneurysm when I was 17 years old. 17 years old. I had never talked about it because there's no reason to, but I had it. I was in the hospital. It was not good.

I was out for a few days, and I think some would say I've never recovered, but you never know. But it's a serious. Some of our friends and family here, by the way, in CBC elsewhere have had the same issue. It's a serious issue. Doesn't get as much attention as other things. What can we know and what can we do? Well, I think it's very important to know as we close out this month. It's Brain Anurism Awareness Month.

One out of 50 people, usually not age 17, but one out of 50 people has a brain aneurism. Often nothing happens. Often it doesn't rupture. When it does, it could be life-threatening. And it's very, very important to understand the risk factors. the warning signs, the symptoms, so that you can get medical attention. Mine was almost immediate. Like the headache began and like within five minutes, I have, after about 10 minutes,

I have almost no memory of it. I don't know what- My situation was similar in that worst pain I've ever felt in my life and my head, going in and out of consciousness, and it was imaging at a hospital that I eventually got to that showed bleeding on the brain. But there are some people, I know we're not medical experts here, folks, so don't come at us, but we both are, you know, gone through this. through this, there are some people that for it's a lot slower. It's just like a slow headache for a long time.

Don't take it for granted. Don't take it for granted. And there's so many complications that can arise. I had the pleasure and the honor of speaking to a researcher yesterday who is looking at what can be done after someone has aneurysm to make sure that they don't have a second brain brain bleed. And Dr. Sunku Lee from Monafew or Medical Center where I was treated actually is getting private funding from the Brain Anurism Foundation to look at this. because as we're talking about government shutdown, we're talking about some significant cutbacks potentially in agencies that are saving people's lives. So private funding is so very important. Yes. And just folks, if you have a bizarre headache that lasts for a period of time, you don't have to be a doctor.

Just get it checked out because Sharon and I are both here to tell you. You don't mess around. And there's other people we know here too, by the way. We're not going to talk. It's their story to tell. It's a serious thing. It's a serious thing. And know your family history.

Family history, in my case, is one of the major risk factors that likely led to mine. So know your family. There is a medical history part of this? Yes, there's a medical history. My family never let me know about that. Hmm. I was never warned. Sharon Everson.

I'm glad you're doing so well. Same to you, my friend. Thank you very much. Some would argue I'm not. For strategies to cope with unexpected financial events, like a layoff or a job interruption for any reason, check out Sharon's free Money 101 newsletter using the QR code and the screen or go to cnbc.com slash Money 101. She also does it on Espanol. I do. Yes. You know. All right. Well, coming up, a very rare interview with the chief designer for Tesla. And then we're going to

look at some really cool boats. Wait, wait, whoa. Sitting in my boat. Get out of the boat. I'm kidding. Got the CEO of Malibu with us. We're going to go out there at a few minutes. Check it out. Oh, I got some breaking news out of the White House. This means we're going to go to Aeman Jabbers. Amen. Brian, Eli Lilly is the company that is in a go to go. with the White House for a pharma deal similar to the one that Pfizer struck earlier today. That confirmed by the White House to me just within the past couple of moments. You can see Lilly's shares there have been moving throughout the day. That's because the president mentioned the company in the Pfizer event.

He said how terrific Eli Lilly has been to deal with. And he also said he is in negotiations with another company. He didn't specifically put those two things together, but I can now, from our reporting, put those two together and say that, and say that Eli Lilly, according to the White House, is the company that's in negotiations. No details here, Brian, on exactly what those negotiations look like or where that deal might land or when we might see it publicly, but it is apparently in the works behind the scenes here. Back over to you.

Wow, Lily, popping on that news. Amon Javers, great stuff. Amon, thank you very much right now. Let's go to the great state of Arkansas. Because it's actually a very big summit happening there called the Up Summit. It's in Bentonville, home of a little retailer known as Walmart. Morgan Brennan, down in Arkansas. with a really cool and special guest, Morgan.

Hey, Brian, that's right. So I'm here at the Up Summit, and this really is where you get to see the future of mobility and the fact that it's already here. So joining me now is Tesla chief designer Franz von Holtshausen. It's great to be speaking with you. Likewise. You're getting ready to present here later

with an executive from your sister company, SpaceX. What's the message? We're talking about abundance, teamwork, first principles, collaboration, how the companies work. It's amazing to have been on this journey with watching Tesla being a part of it through with Elon and also SpaceX, you know, working side by side achieving somewhat impossible tasks. Yeah. And it's pretty awesome.

You've been at Tesla since 2008. You've had a hand in where I've been the visionary. One of the visionaries behind every vehicle, every product really, that's come out of Tesla. One of the longest reporting executives to Elon. What is it like to work with him, to work for him? How should investors understand his role at the company now? I mean, Elanj is a visionary. Somebody who continues to just push the boundaries, looking for a future that we really want

to aspire to be in, worth fighting for. And I think as a designer in that environment, we have the ability to craft and create, like, this vision of what the future could be. And we always say like the future should look like the future. And so we're constantly working on developing projects that feel like the future. And I think you can see that in products like the Cybertrack and the Cybercab and upcoming vehicles, even Optimus.

So it's super exciting. It's always pushing even now. From day one, it's always been the same. And it's also incredibly fun. Yeah, and all three of those that you just mentioned here on display as well. The Optimus robot is actually just right down here in the hangar over your shoulder. How to think about the development of this humanoid robot and what that means in terms of production, especially when Musk has talked so much about how this will be such a big

piece of the future of Tesla. Yeah, it's going to be a huge piece of Tesla, but I think a huge piece in our world as we look into the future, the ability to take menial tasks and things that you don't really want to do and have them uploaded to somebody, a human that can do that. And so we've been designing the robot that really looks at how humans work in the world. This world is designed around humans. And so I think having a robot that can do the things that humans can do can really start to take those menial tasks away and enrich in our lives, make our lives better. We get to spend more time doing the things that we love.

Is the optimist performing the way you anticipated this far along in the journey? What still needs to happen to get it to the point of truly the humanoid and on factory floors and in people's homes? Yeah, I mean, it's been incredibly fast-paced, but the progress is, like, unbelievable in the short amount of time that the team isn't working on it. We've been growing the team and building the project the same time. And, you know, I think we're – the things that we're working on are really incredible. And I think we're breaking ground in this space every day. The team is really energized and fired up.

Elon's incredibly involved in this. And, yeah, it's a great project to be a part of, and seeing where the future of humanoid robots is going to go. and how it's going to enrich our lives is super exciting. CyberCab is also on display here. What does the ramp look like for CyberCab? And should we expect any sort of design changes or tweaks along the way? Basically what you can see here at the summit is what we showed at the 1010 event last year. And it's using the full self-driving stack and capability that are in all of our vehicles.

And the car will look essentially like the one that you see here. There's maybe some minor changes, but it's, only improvements to make the car more efficient and better. It's really a two-passenger vehicle. Like 98% of ride shares are one or two people, so it really focuses on doing an excellent job at that, low cost per mile. And yeah, I think it's going to be a game changer when we get that on the road. We're going to see the sub-30,000 dollar vehicle. And if so, what does that mean for the design ethos of that vehicle? Well, I think there's a walk that we've been doing with these vehicles and always trying to get the best costs out of them.

You know, Model 3, Model Y. We're continuing to take costs out of them, but enrich the overall experience. I think you see some of the improvements in the recently launched Model Y, and it's a better car for equal or less price than the previous version. And we're constantly looking at how do we get more for less? And finally, just because the EV tax credit expiration happens today, how to think about that and what that means in terms of activity and sales. at Tesla? Well, I think when you have a great product, people really focus on trying to have the best

product. All of all the Tesla vehicles are the safest vehicles on the road. That alone, on those merits, should really warrant people looking at Tesla in general, just keep your family safe. So we're trying to make sure that we have the best vehicle at the best prices. And IRA or no IRA, I think, you know, the best ball always rises to the top. The best will always come to the top. Franz von Holtshausen. It's great to sit here with you, chief designer of Tesla. Thank you so much.

Thank you for having. Brian, I'll send it back over to you. I love the interview. And also I love the little dune buggies over Franz's left shoulders. There's like Scooby-Doo, 1978 VW. See them in the background? There's an orange one and two red ones. Oh, yeah.

All right. These are the Meyer-Manks vehicles. There's vehicles all over the place. Vatolz. Drones. I love it. Commercial space station mock-ups. Yes, Morgan, thank you. By the way, we're going to stay with vehicles because after the break, we're going to go outside to look at two really cool boats in the CBC parking lot with the CEO of Malibu.

Cars to Boats. Whatever floats next. All right, welcome back. Let's wrap it up with this. Malibu Boats. Not only makes cool boats like the Cobalt 31R behind us here and a wake-setter lake boat right there, but also their publicly traded company. MBU is the ticker and the CEO, Stephen Menetto, joining us now. Stephen, thank you for joining us. I feel kind of silly out here in a

suit talking about boats. I'd rather be on the boat. How is your business doing right now? Because many would view this, these are beautiful boats, by the way, as a discretionary item. How do you see the consumer right now? We're chopping right along here. So we're not seeing a comeback yet of the industry, but we're also not seeing a tailing off. So the cash buyer is pretty strong. And these types of boats are just doing well in the marketplace. Because I would assume, and you've been doing this a long time, you came from Polaris, fun things. You get a lot, I'm sure your house has a lot of toys. But, you know, those can be the first things people cut back on if they feel the economy's turning down.

It's important. You're not seeing that yet or maybe never. Yeah, we're seeing the payment buyer cut down a little bit, but we still have that cash buyer. Plus, we've introduced 11 new boats this year. So that innovation keeps having people come back to the marketplace. You know, we talk a lot on CBC, obviously, about tariffs. Yes. These boats, this trailer, these boats, everything, almost everything is made right here in America.

Yeah, we have our manufacturing facilities here. Terrace hit us a little bit in our sub-tieres and our suppliers, only about 150 to 300 basis points. So, you know, we feel a little bit, but not a lot. So you feel maybe about a one and a half to three percent price increase because of the tariffs? Yeah, and we're trying to do the best we can to offset that price increase. But if we, you know, we'll probably have a mild one as we go forward. You know, Morgan Brennan just talked to the head designer at Tesla. Tesla's got a range of cars from 37,000 up to the Model S, 100,000, same as you guys, really.

You've got smaller boats that are sort of flat, you know, almost like fishing into flats boats. You got wake boats and you've got ocean-going boats. Are you seeing sales steady along all price points or a differentiation? We definitely saw the value boats down there, you know, drop off a little bit. it's been picked up by the upper boats. We're selling boats all the way up to 45 feet, up to $2 million, and they're still selling. Well, you said Malibu, two million. Now, Stephen, no. Okay, I know, I don't know anything about hockey, but I know about boats, and I will, $2 million. So you guys keep going up the price spectrum with like the pursuit.

MBI, our parent company owns eight different brands. Yep. And one of our brands is Pursuit, and that's where we sell that 45 foot pursuit, ocean going boat. That's about $2 million. How big would you, how big do you want to go on the boat size? Is there like a level of which you're saying, okay, that's a little rich. That's a little big. Are you going 100 foot or what are you doing? Well, we're not ready to go yacht yet, but we're going to keep going to where the customers go. And so we do see bigger, longer boats in our future and more feature rich boats because that's what the consumer wants.

So we, we stay really tethered to the consumer and we give them what they want. Yeah. And, you know, these boats like the Malibu, wake setter behind us, they can do a lot. There's a lot of technology in these, in these boats. you know, where you can control the size of the wake, but that also kind of ticks. There's a lot of lake fights now. What kind of headwinds do you have that are outside price points?

Yeah, we continue to have technology drive more fun on the boats, but with that, we have to drive responsible boating. So we're giving them technology to see how far are they offshore, how deep in the water are they, so they can control their waves, so it doesn't cause problems on these lakes. And we're also working with the WSIA to make sure that we're paying attention to how our boats are used on lakes. and trying to help out everyone.

Because it was a Wall Street Journal article recently. They called the monster trucks of the water. Because you got ding-dongs that'll take this boat and they make a giant wake right off shore. Don't do that, right? I mean, just boat in the middle of the lake where you're going to minimize the damage to the shore your neighbor's dock. Absolutely. Responsible boating is the key. All right.

Well, responsible boating, I'll tell you what's not responsible is wearing a tie in an interview with the CEO of a bow company. When can we get the cobalt out on like, I don't know, the Hudson River? We can do that right now. Let's get it out there. You can come along. We should get that out there. Any final message that you've got for the Trump administration, we're talking about tariffs. She said not a huge impact, but as the CEO of a consumer products brand, what do you want to see from economic policy? We want to see more consumer confidence. All the economic policy, the consumer is pretty resilient, but they're just not feeling it right yet.

We need the government, you know, the administration to kind of change that consumer sentiment. All right. Well, Stephen, you helped me get out of a tie, put on some shades, brought your beautiful boats up. from Lake Hopat Kong Marine. We do have lakes in New Jersey. Stephen, is a real pleasure. Pleasure. Thank you very much for coming out here, guys. You may never see me again,

but if you do, it'll be tomorrow. Closing bell starts right now.