Power Lunch - Power Lunch 11/7/25

Episode Date: November 7, 2025

CNBC’s Kelly Evans and Brian Sullivan take you through the heart of the business day bringing you the latest developments and instant analysis on the stocks and stories driving the day’s agenda. ���Power Lunch” delves into the economy, markets, politics, real estate, media, technology and more. The show sits at the intersection of power and money. “Power Lunch” gives viewers a full plate of CNBC’s award-winning business news coverage, plus a healthy dose of personality from the show’s anchors and the network’s top-notch roster of reporters and digital journalists.  Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Dominic Chewing the Exchange, love you. Thank you. All right, stocks ended the week on a sour note as tech keeps taking a licking at least this week. Consumer sentiment nearing all-time lows. Other than that, welcome to Power Lunch, everybody. I am Brian Sullivan. Kelly will be back in early December. The averages, they are lower across the board for a second straight day. Nasdaq, Tech, the biggest drag down more than 1% InVIDIA, AMD and Microsoft among the biggest laggards on the day. And it comes as new data shows October layoffs. The worst. in 20 years. At the latest University of Michigan consumer sentiment level, the lowest level on record. Wow. Love much more on that ahead. Plus, Tesla's trillion dollar man, maybe. Shareholders overwhelmingly voting in favor of a massive 13-figure pay package for Elon Musk, but is it all for not? We'll lay out the nearly impossible milestones. Musk would have to hit to get any of that cash. And we are tracking the unfriendly. Skies for your airlines canceling hundreds more flights across the nation. The FAA ordering cuts due to the government shutdown.

Now on day 38, we'll tell you what you need to know if you plan on flying anytime soon. Lots to do, but we'll begin here. The big news in energy today. The Energy Department announcing a deal to sell more American natural gas to Ukraine. The gas would come from Poland but be sourced by American companies, shipped to Poland, and then piped to Ukraine. This is not just a big deal for the U.S., but also for Ukraine. The gas will help the country keep the lights and the heat on during the long winter and be able to produce more of what it needs to defeat Vladimir Putin and Russia's war.

Also in the news, Greece agreeing to buy a huge amount of natural gas for the United States. It's a 20-year deal, and it involves a joint venture with American gas exporter venture global. Let's talk about all of this, AI, and maybe even rare earths. Joining us now on a CBC exclusive from Athens, Greece, Energy Secretary Chris Wright. Secretary Wright, thank you. I know it's very late there. We appreciate you taking some time on a Friday night, out of your schedule.

But it's a big deal. It's an important story. How much gas are we talking about going to Ukraine? So it's super exciting to be here, Brian, with you. And yet Ukraine needs probably a little more than 150 BCF of additional gas into storage this winter. Some of that will come from the south, some of that will come from the north. There's several BCF, maybe 10 to 25 BCF in the deal that was just signed, but there'll be other deals, and they all have flex on upside. Because the gas, of course, coming to Europe won't just go to Ukraine, but Ukraine is the urgent need.

We need to make sure the extent possible the lights stay on and people can heat their homes this winter in Ukraine. Russia's attacks on the energy infrastructure have just been relentless. Do we feel like this is also a bit of a turn, Mr. Secretary, where Europe has come to realize that this is not just a couple-year issue and the war ends and Nord Stream 2 pipeline is repaired and everything kind of goes the way it was. This is the new normal, the new paradigm, and American natural gas is critical to it all. Oh, absolutely, Brian. That's the theme of the whole gathering here. We've probably got 16 nations. here, every one of them. The overriding goal is remove any dependence on Russian energy and

dominantly replace that with American energy. We're by far the world's biggest energy supplier. And of course, we're the most secure supplier and we're the geopolitical partner you want to have Europe wants to have. And of course, with President Trump, it's a dawning of a new day about relationships with Europe, about America leaning in and clearly showing we're going to keep growing our energy production, and there is no better supplier of energy on the planet by far than the United States. By the way, speaking of the president and speaking of relationships, it seems like your relationship with the president is just fine, right? Do you have a good relationship with the president? Oh, my gosh. Of course I do. I wouldn't be in Greece

signing LNG deals and selling American energy over here, if not for the president's bold pivot from just the totally wrongheaded policies of the Biden administration. But the president and I get along great. I almost laugh when I read the silly stuff in the press all the time. But yeah, we've had a great relationship since the day I arrived. Well, you're a Colorado guy, so welcome to D.C., I guess, Mr. Secretary. That's how things go. The other part of this story is Greece, a deal with the United States, Venture Global is involved.

I believe some of their representatives are there in Athens with you as well. How big of a deal is this? What are we talking about the benefit to the United States might be from these deals? So this is the first time Greece has ever signed a long-term LNG deal. You know, they built some LNG import terminals. All the talk is about at least doubling their import capacity for natural gas. But Greece is going to become a gateway into eastern and central Europe. There are countries excited about that.

They're going to continue to invest in infrastructure. But today was signed the first 20-year long-term natural gas purchase agreement from an American company. And of course, it's just a start. You layer in these contracts in leaves, but this is the first one. I'll tell you another thing that was quite different in Greece today was there when an announcement, a deal also signed with Exxon and two Greek companies

to drill an exploration well offshore in Greece, and the crowd erupted in applause. It is a new day for energy in Europe and a new day in cooperation between the United States and the European nations. Well, let's move on also to the topic, not of today, but of the year. That, of course, is AI. And what a lot of people may not realize about your department, the Department of Energy,

is you also run America's labs. Most of the labs that we have and some of the scientific facilities are overseen by you and your agency. You've just announced the deal a couple of days ago with Nvidia and Oracle to build a massive supercomputer. What is America's role going to be in AI? the government's role? Well, the government's role is two things, Brian.

One is an enabler. We've got to get out of the way and allow this hundreds of billions of dollars of investment capital to build those, not data centers, I call them intelligence factories in the United States. We had an overburdensome regulatory environment the last few years that made it hard to build things in America. We've got to make it easy to build things in America. But of course, we also want that computing power, that artificial intelligence, to drive forward science faster. So we can have drug discovery and new material advancements, new energy developments, fusion energy, for example, and for our national defense. So yes, the 17 national labs,

they need artificial intelligence at scale. And the fastest way to do that is not the normal government procurement process. It's to make quick deals with these developers. Say, develop on our land, build the infrastructure there. We'll permit with you, we'll operate the facilities and we'll share the computing power. And we've been thrilled at how fast private businesses have jumped in with big money and fast development schedules. It's a win for them. It's a win for the private sector. It's a huge win for the national labs, science in our country, and national defense in our country. But you know some of the concerns. I don't need to remind you. There is real worry about the availability of power. We had a guest on from Morgan Stanley last week. We're 49 gigawatts

short. That's tens of millions of homes short. worth of electricity to make all these things happen. Small modular reactors, Oaklo, a company you were formally on the board of, these companies have all boomed because of the expected surge in demand. Are you confident, Mr. Secretary, that we can actually reach some of these really, really aggressive and heady goals? So we have to reform the system to do that too, Brian. You've probably seen some of our announcements in refirming FERC,

making it easier and quicker to build large-scale generations. in the United States, transmission as well. We've also got to get a lot more out of our existing assets. And there's some creative ways to do that. You'll be hearing more in the coming months. And we're also going to stop closing the coal plants. I mean, the Biden administration left us with a plan to close 100 gigawatts of coal and natural gas plants and build only 22.

So we'd have a 78 gigawatt reduction in our capacity. That's just nuts. We need to add 100 gigawatts, not go to. 78 gigawatts into the hole. So it's a radical pivot, but President Trump's a bold leader. He's working with business. He's working with the regulatory regime. So it's a race. It's a challenge. I'm stressed by it, absolutely. But are we going to pull it off? You bet. You bet we are. You said you were stressed a little bit by it. What is the most stressful part of it? Is it the money? Is it finding the power? And do you worry that a lot of these comments, and we're going to

talk about this, our next segment, by the way, not with you, but with our reporter McKenzie Seagallos about Open AI, do you worry some of these promises of money aren't going to happen? Now, the capital, I mean, AI is transformative to the economy. I think the capital availability is simply tremendous. So certainly there's capital available to build power plants. What I worry about is just the speed of doing that. If you don't build big things for a while, the supply chain atrophies a little bit. We need to stand up our supply chain to build parts that go into power plants,

construct the plants themselves. So that's the challenge. It's just the speed at which we can build these new assets. The thirst for the output and the capital to build them, it's there. And you're confident we're going to have the fuel, literally the gas, the fuel for nuclear for Oaklo and others. The fuel to power all of this, and then the ultimate fuel is money. As a private sector guy, Mr. Secretary, in your previous life, you know that. It sounds like you're confident that the money ultimately paid for by the private sector is going to be there. Yes. I mean, look, I don't know the exact CAP-X budgets. Those are going to move around, but will hundreds of billions of dollars be spent to develop intelligence factories?

That's a certainty. Absolutely. The natural gas supply chain is just phenomenal. America has just an enormous amount of natural gas. So we add five or ten more rigs, and we can build tens of gigawatts of new gas generation. So gas is not a limiting factor at all. Gas turbines, that's a little bit more of a challenge. But GE-Vernova is rapidly ramping up their capacity to get those out faster. You raise the nuclear fuel question. That is a bigger challenge. That's also a timing question.

Of course, we can ramp up enrichment and fuel production in the United States, but that takes time. So we're racing and driving as hard as we can on that. But I think the fuel cycle, we'll get the fuel probably up to speed just in time for the reactors as they come online. Those are exciting challenges. These are the kind of challenges you want to have. But are we going to fall flat in our face? No. Are we going to have challenges along the way? Absolutely. It does feel like a third or a fourth industrial revolution this time on the power side and the knowledge side. Mr. Secretary, we're going to let you go. I know it's about 915 in the evening there on a Friday night.

We really appreciate you taking some time to join us here on CNBC, sir. Thank you. Thanks, Brian. My pleasure. Take care. All right. Take care. All right. Up next, we'll be. talk a little more about it. Open AI suddenly on the defensive, even a top executive now canceling a planned interview with CNBC. I'll get more details on that next. I welcome back. We just talked a little bit about it. It's no secret that AI's ambitions and promises are sky high. And perhaps the biggest wheeler and dealer in the space is Sam Altman and his Open AI. Altman's saying that Open AI is on track for 20 billion in AI related revenue this year. That's ahead of its own

internal goal of 13 billion. They've got a massive goal of 100 billion or more in sales in just five years. But here's the reality. Some on Wall Street are wondering if the math really doesn't compute. Adding to some of the concerns, CFO Sarah Fryer, floating the idea of a kind of backstop from the federal government for the nation's AI buildout, those in comments on Wednesday, I think, to the Wall Street Journal. That was an idea which apparently made White House AIs David Sacks, quite unhappy. An Open AI now suddenly on the defensive. And a tech heavyweight is weighing in noted tech investor Brad Gersner offering his take on Open AI's revenue goals this morning. Listen. I've watched the world's great entrepreneurs, Steve Jobs, Elon Musk,

you know, Sam Alman, get frustrated by investors asking those questions. I kind of look at it. I like somebody who's feisty and says, we're going to blow those numbers away. But at the end of the day, have to deliver it. We obviously should note that Gerster's firm, Altimeter Capital is an investor in Open AI. So here now with more on Open AI, sort of semi-damage control campaign is our own McKenzie Sagalos. And McKenzie, I do want to note to our audience that Sarah Fryer, who is the CFO of Open AI, was scheduled to speak with Sarah Eisen today at that same conference in California. We promoted the interview yesterday, but last night, Fryer, we don't know why backed out. Again, don't know why, but kind of a shame Sarah didn't get to ask Sarah Fryer to go into more detail.

So what do we know as of Open AI and some of these promises right now? We know that Sarah Fryer's comments to the Wall Street Journal really struck a nerve with Wall Street, tapping into that AI bubble anxiety. You've got Giloria DA Davidson really pointing to this larger narrative that people have been talking about whether Open AI is at this center of a web that could be a single point of failure. And Brian, I got the stock chart up for Oracle. It's trading it around $235 right now. That's down below where it was before it announced that Open AI deal.

It's a huge run-up. Its biggest price run since 1992 is still come back down. And that's Gil Loria's point here that names like Oracle and Broadcom. These guys are placing orders to fulfill the huge compute contracts at Open AI has signed with them. And then there is now this concern newly resurged this week off the back of those friar comments of whether or not Open AI can pay to fulfill all these contracts. Yeah, this is very critical to understand. And I know for our audience that doesn't do this for a living,

it might start to get a little bit convoluted. Heck, it's probably convoluted for those of us, me, who do do this for a living. But I want to give kind of an analogy of what's happening here. And McKenzie, tell me if I'm right or wrong. Let's say I agree to pay you next year a fixed amount of money. I don't pay you, but I say I'm going to pay you. You rely on my promise.

And you go out and you buy a lot of things based on that money. Now you're on the hook to me. You better hope that I do what I say and pay you the money. Is that kind of where we are? Open AI is making a lot of promises. Companies are relying on it, but they better hope that Open AI comes through with the cash. That's exactly right.

And it's not just names like Oracle and Broadcom. You've also got the biggest hyperscalers who are tied up in that Open AI trade. Microsoft, who also, a big investor in Open AI to the tune of $13 billion, they just signed a $250 billion cloud compute deal with Open AI. Amazon Web Services, a $38 billion deal with Open AI. And it's not like these hyperscalers have that amount of spare compute lying around. They're going to have to build to match that demand, which is why you saw those revised CapEx numbers when they all reported last week. But it's not clear. We don't know, because Open AI is private. If any, some, all, none, of that money has actually been wired to those companies, right?

Well, a lot of these deals, and, you know, NVIDIA is a part of this as well. They signed a $100 billion deal with OpenAI, but these deals are structured in a way that we haven't seen before, essentially swapping equity for chips. So in the case of NVIDIA, they're investing into Open AI, so they get an equity stake. And so they're giving Open AI cash with ostensibly goes into a big pool of money

that they can then use to pay NVIDIA for the chips they're buying. But with the AMD, AMD is handing open AI equity, 10% equity in their company virtually for free, again, for chips in return. So there's a question of, you know, you're giving some to get some, and that's the concern here of, you know, kind of swapping money between the same players. You're seeing a lot of upside in the markets. We've talked about this for a long time. And I think the character Wimpy from Popeye said it best. I'll gladly pay you Tuesday for a hamburger today.

McKenzie Seagalos, thank you. Anybody remember Wimpy? All I did with these hamburgers. All right, coming up. The trillion-dollar pay package that may never deliver will lay out the nearly impossible task at hand for Elon Musk to get a, yep, 13-figure payout. All right, despite a lot of aggressive comments on both sides, Tesla shareholders did approve CEO Elon Musk nearly $1 trillion pay package.

But before everybody goes bonkers over the $1 trillion figure, know the details. because the pay package, while massive, only happens if Musk and Tesla hit some very heady, maybe impossible targets. Example, they've got to reach 20 million vehicle deliveries, that's hitable, but they also got to reach 1 million robotaxies in commercial production, and 1 million humanoid robots delivered. And even your next guest is not so sure Musk can pull that off. Tim Higgins, the business columnist at the Wall Street Journal, CNBC contributor. By the way, literally wrote a book on Tesla and Musk called PowerPlay, Tesla, Elon Musk, and the bet of the century. Tim Wilkham, maybe you need to rewrite like the second book. Maybe this is the bet of the century because $1 trillion, even by Musk standards, is big money.

Absolutely. And Musk is talking about how this is a new era, a new book for Tesla going forward. It had been a car company. Now he wants you to think about it as a giant robotics company, and that's a giant bet. That's a huge gamble. Do you think it's reachable, the targets that we just laid out? Well, some of them are, right? Getting 20 million vehicles out there, that seems like that should be pretty easy, actually,

given the rate of vehicles that they've been doing and they've already sold. Now, the question about these robot cars, potentially, the humanoid robots, that's a big question mark. We haven't yet seen these robots that could be deployed in the home. I mean, think about safety issues. When I talked to robot experts out there, just in general, they think there's many years' worth of development needed to do this kind of thing. Yeah, the 20 million. So I'm trying to look at the numbers. You got whatever, a million plus that have been delivered.

So how long, theoretically, it sort of current rates, Tim, do we know the cars might occur? And then we have no robots delivered, correct? Is that wrong? They still just have them? No, they haven't done any humanoid robots yet. They have them around the headquarters there. I was down in Palo Alto the other day, and I heard rumors that they were in the other parts of the building, but I haven't seen them in functioning settings yet. They are clearly working on them. The robot cars, they would argue that all the vehicles coming out of the factories can be turned on to be robot cars in the future.

So that's in the works. Right now, analysts are expecting maybe 1.6 million cars sold this year. Musk is talking about next year going to 2.5, 2.6, 2.7, something in that range of a run rate, then getting into 3 and 4 million years and the years after. So, you know, you start to do the math there, and they can get to 20. You know, it wasn't actually that close of a vote. It was 75% voted in favor the pay package, which some of the, you know, the vociferous people against the pay package.

And I can understand that. A trillion dollars, even in today's world, is a lot of money. But are you surprised, Tim, that in the end, it was a pretty easy victory for Musk? In a lot of ways, this was a vote on the company changing course, right? It's a vote to keep Musk. It's a vote for his vision for the future as a robotics company. Right now, if you're an investor in Tesla, you cannot be surprised that Musk is distracted at XAI or SpaceX or all of his other endeavors, you're not getting them 100% of the time.

You are putting a huge bet on this idea that the world will change if Tesla is successful in the way that he's talking about. It's not guaranteed, right? Previously, you were making a bet that Tesla could usher in the electric car idea. Now, this is a pivot, and people getting on board, they're kind of voting yes. That's really what yesterday was about was a vote of changing direction for that company and keeping Musk at the helm. Yeah, with a pretty trillion dollars.

Sounds like a lot because it is. Tim Higgins really appreciate the view and maybe look forward to the second version of the book. Tim, appreciate it. Thank you. All right. Now, let's bring in a Tesla shareholder who says that this vote really clears the path

for Tesla to hit $500 a share. Let's talk about that and more with Eddie Gabor. He is the co-founder and CEO at Key Advisors' Wealth Management. Eddie, I got a man. Imagine that you're happy about this vote in Elon Musk having a trillion reasons to stick around. Absolutely. You're right. He's got a trillion reasons to try to win the AI race. And I think that's the big difference here when you look at Tesla is the bulls or bears will debate on whether it's a car company or AI tech trade. And obviously we believe it's an AI trade. And as long as we continue to grow in this AI bubble and you think it's going to expand into 2026 like we believe we're not going to bet against Elon. And Tesla hasn't even hit its highs of 2020 of last December.

So we believe it's going to break through last December's highs and possibly finish at 500 plus per share at the end of the year. And this incentive-based concept is welcomed by shareholders. So I look at this as a very bullish development for the name. And as long as it's a bull market, we'll keep buying it. But all I hear about is how BYD, which is the Chinese, one of the Chinese EV companies, they kind of make these lower costs. Some would even say disposable cars, that they're going to kill Tesla.

So Tesla's finished in Europe, and BYD is where it's all at. Well, there's no doubt that there's a fundamental problem in the EV sales, and this is why, again, I think Tesla is going to be looked at in regards of whether they deliver on robotics to robotaxy. Because if it's just an EV play, we would not be buying the name because I think that area, the competition is continuing to get broader. And fundamentally, I don't think it's a good place to be. So this is a pure bet on AI and Elon Musk, we believe, is one of the most brilliant people on the planet right now. Well, you also think Jensen Wong and Alex Carp are pretty doggone brilliant and they are, Nvidia and Palantir. The stocks have printed money the last few months, the last year, the last couple of years.

But this week, not the case. They've been hit pretty hard. Still, again, don't want to make too much of it. They made a lot of money. Any changed views on either of these companies or maybe use some of the weakness to buy more? We are buying more on the weakness. We bought some yesterday and we bought more today because we're looking at the, the next six months. I think the reason why these growth names are selling off is because of a growth

scare economically. And when we take a look at the government shutdown ending, and more importantly, the liquidity the Fed is going to put into an economy that's not in a recession while the market's near all-time highs, I think you're going to see asset prices continue to expand. And Nvidia is the most important name in AI as well as in the NASDAQ 100 due to their waiting. So if you think the market's going to go up over the next few months like we do, you want to own the names that are going to carry the most weight. And we think these two are going to have the continued massive upside throughout this AI boom. Similar thought process with Palantir? Absolutely. Now, you'll want to sell them fast when we do go into a bare market because they will get hit

the hardest. But right now, we're going to continue to ride because we don't think we've seen the last leg of this bull market yet. All right, Eddie Gabor, key advisors, wealth management, co-founder and CEO. Eddie, like it. Have a great day. Take care. Thank you. All right. Let's get out of Bertha Coombs with a CNBC News Update. Brian, U.S. officials say Iran plotted to assassinate Israel's ambassador to Mexico, but the plan was disrupted earlier this year. According to Reuters, Iran launched the plot at the end of last year, and it remained active through the first half of 2025.

The officials say the threat has since been contained, but did not give any information on how it was exposed and disrupted. Fox has confirmed today Mark Sanchez is no longer with the network. The comment came just after. after over a month after the on-air personality and former NFL quarterback was arrested in Indianapolis, accused of attacking a truck driver. Authorities say Sanchez was stabbed in the chest during the incident. The truck driver claimed self-defense and has not been charged.

And President Trump pardoned the former All-Star Mets outfielder Daryl Strawberry today. The White House says he served time and paid back taxes after pleading guilty to tax evasion in 1995. pardon does not affect state drug charges. An official speaking on background says strawberry has used his post-career time to find faith in Christianity and get sober. Brian? Bertha, thank you very much. All right, folks, are you worried about where to invest your money right now, right? Mark it's a little wobbly this week. Well, your next test, don't worry too much. Everything's going to rally into the year-in. Coming up, we'll talk about why Santa Claus is real, and he's here. Welcome back. Kind of an ugly day, kind of an ugly week for stocks. The first real nasty week that we've had in a while. The NASDAQ is lower headed for one of its worst weeks in weeks. Some of the big AI darlings, like the Palantir we just talked about, AMD down double digits this week, kind of weighing on the broader markets. But your next cast remains bullish on stocks, forecasting kind of an everything rally into year end. There's also, by the way, a technical trade going on here as well. With the decline this week, the NASDAQ,

this is the chart we made, is about to close below. It's 50-day moving average for the first time since February. A little bit hard to see, I know, but the blue line, that's the 50-day moving average, and you can kind of see that the green part, that's the NASDAQ, is about to close just below it. First time, that has happened since back in early February. And then, of course, the tariff fear hit in the market tanked, but then his comeback. Let's talk about it all with Osang Kwan.

He is the chief equity strategist at Wells Fargo, joining us. On set, and I know this week's been a little bit weird, but the stock market were supposed to buy when prices go down. So you remain bullish. That's right. I think you buy the dip here. I think the setup for equities into the year end is still pretty positive. We just had actually a really good earning season when companies beat by 8% on EPS. It was actually the broadest beat that we saw in four years, 75% of companies beat on EPS.

So what would be, you got, you made the earning. case, the bull side on the earnings side, what would be another bull case for why you think we're going to rally to 7,100? Yeah, so we came up with five different reasons why. Earnings is one of them. The other one is seasonality, which typically gets more positive in November to December, especially for the laggers. So I think there could be a potential catch-up trade in two-year-end.

Number two, the AIPA tariff refund, potential refund. If the Supreme Court rules tariffs illegal, the government is going to have to pay back all the companies for the tariffs that they paid in? I don't know if they'll actually pay back. I don't know if the checks are actually going to get issued, but I think there will be a trade. They'll reduce future tax obligations then. It will go to the company's bottom lines. Yeah, yeah.

And I think what's going to happen is whether the checks actually get issued or not, what's going to happen is companies that raise prices are ready. They're going to keep their prices there. Their costers are going to come down. So margins are going to improve. So I think there could be potential reflation trade. into that potential event in January or so. Number three, the tax return that's going to be bigger

because of one big, beautiful bill. We're talking about $800 more per person versus last year. Number four, or actually lastly, the government reopening, I think it will, it will happen at some point. We hope we don't know when. But it's getting a little sketchy now at the airports. Things are going to, Congress is going to actually have to do its job at some point. Both parties just come together and do your.

damn job because that's why you're there and you work for us, not the way around. Political rant over. But you think that is a good thing for the equity market. That's what history suggests. And yeah, I think it's going to be an overhang removed for equities. So those are pretty strong bull reasons why you're at 7,100 by the end of the year. Your job is to analyze risk in part. What would be if you had to make it? What would be the bear case? I think it's really the hypers that's a little concerning because I think I think this end. AI CAPEX cycle is still in the early innings. We think we're in the fourth inning of the AI CAPEX cycle.

So still in the earlier part. I suspect that this could continue for a little longer than what the market perceives right now. I almost think this is like maintenance CAPEX that companies have to invest in AI to stay competitive. This is not necessarily growth CAPEX to increase their growth rate, but to stay competitive. And if that's the case, their free cash flow is coming down,

If you look at their free cash for conversion versus earnings, it's going to go down to 50%. It used to be at 100%. Their free cash for margins is going to be at an all-time low. So those are some of the concerning signs for the hyperscalers, which are the biggest companies in the SMP 500. Can they alone and that capital spending cycle, we kind of compared it the other day to when the United States built interstates from like New York to L.A. or New York to San Francisco, they did that.

And that sort of lifted almost the entire economy because the scale. of investment was so big. Is that kind of what we're talking about here, Osang? I think the multiplier effect of AI CAP-X is smaller. So I don't think it's not as big of a tailwind as traditional CAP-X. So we actually looked at how many jobs have actually been created from non-rest construction versus how many jobs should have been created based on regression. And fewer jobs actually have been created, which means the AI CAP-X cycle has created fewer jobs than what traditional CAPEX would have. Yeah.

So I think the multiplier effect is lower. And a lot of the layoffs that we saw yesterday from the Challenger data, about, you know, 20% of the layoffs were related to AI. So I think the- But also means that 80% weren't. It's the economy. But the way I described the AI economy

is EPS up, layups up. It's great for the stock market, it's great for corporates. It's great for, especially the big companies who have access to capital to increase their productivity, but not so much for the real economy. Because as we've said a billion times, and I'll say it a billion and one, the stock market in some ways is the economy, but other ways it is not, right? The stock market is attached to the economy, but it is not the economy.

Exactly. Okay, well, guess what? You can go home tonight, O'Sung, and you could say, I turned around the stock market because the Dow is actually positive, right? You came on, the Dow goes positive. Coincidence? Of course. But you could take credit for it.

So tonight you'd be like, I turn the market around. It's up 0.09.9-1-100s of 1%. Osung Kwan, Wells Fargo, really appreciate it. Thank you. Thank you very much. All right. In addition to the equity markets, we're also watching Treasury yields because guess what? Those yields, they're not positive.

4.09% Rick Santelli is in Chicago. Rick, you got the consumer sentiment numbers were terrible. You got the job numbers yesterday. What's the bond market really looking at? You know, I think the bond market is looking at a variety of issues, and the answers are unknown. I mean, think about the wild week we've had here, Brian, and we're actually almost exactly unchanged on a tenure. We closed at 408 last Friday.

We closed at 408 yesterday. And here we sit at 408. And Michigan, you know, I'll tell you what, University of Michigan was really weak. Some of the components like current account, they were exceptionally weak. And to be fair, it seems though University of Michigan kind of has gone off the rails because it is supposed to correlate with equities on some level, and it just doesn't seem to do that much anymore. If you look at the week on the tenure, you can clearly see on Wednesday,

yields shot up. Why? Nervousness over increased supply down the road. On Thursday, yesterday they went back down, and that was because of challenger layoffs. But in the end, here we sit. And I think it's quite incredible. So I think the closing is more about no data,

and without data, it really is a hamstrung market, to some extent. Here's something interesting. December Fed Fund futures. Now, forget all the percentages and everything. Just look at the chart. Now, on the left side is the last Fed meeting. So after the Fed meeting, it price dropped. Well, when the price drops, that is pricing in less aggressive easing. So what happened is before the Fed loosened on its last move, we were at basically 100% of a December rate cut. Now we're hovering right around in the 60s, sometime in the the 70s and even though it's still built in, it's close enough to 50% that should the Fed start to put some guidance out before the meeting, they could probably turn the market

around. So we want to pay very close attention to that contract. Brian, back to you. Rick, thank you. Have a great weekend. And we're also paying close attention, by the way, to the equity market because we just noted the Dow was positive. The S&P 500 ticking back up as well.

Some buyers coming back into the market with about an hour and 15 minutes up to go in live trading. Yes, the B is down, but only by one-tenth of one percent. All right, coming up, if you're headed to the airport today or this weekend, you got to listen up. Philibault is up next with just how many flights are really being canceled and what it's going to be like at the airport this weekend. Stick around. All right, quick check on Bitcoin and Ether. We talked about the stock market has started to come around. Bitcoin's up 2.25 percent, about $2,275. Ether is up about 4%, so some of the crypto complex has really come back and seen the buyers come back today. We regret to inform you that your flight to Miami from Newark Airport has been canceled.

That is literally the email I got last night from United Airlines for a trip I have planned on Sunday. Now, luckily, I was able to get on an earlier flight. But for many people, changing travel isn't that easy. So how many flights are being canceled and how bad could it get? Phil LeBoe, who has literally been traveling every day, has seen it firsthand, joins us now. Brian, the short answer is that we've seen more than 1,250 flights canceled today. That number continues to rise, according to flight aware. And the bulk of those are to the busiest airports in this country. That's because the DOT has said, look, we're not sure about air traffic controllers staffing.

So let's pull back on the number of flights that the air traffic controllers have to handle in the busiest air spaces. Today it's about 4% of the flights into the top 40 airports, but this ratchets up in terms of cancellations, 6% Tuesday, 8% Thursday, a week from today. If this government shutdown is still going on, there will be 10% of the flights into the top 40 markets that will be canceled. Can the airlines handle this? Yeah, but it ain't easy and it's not a good situation. Here's the CEO of American Airlines talking with us this morning. We can handle this 4% by reducing frequencies. But next it becomes a lot harder.

You're going to be really digging into, you know, some, you know, more heavily traveled areas. And on that, as you get to 10%, let's face it, it's 10%'s a big number. And here are the top 40 airports. We've been talking about this since yesterday. Nothing that should be surprising in here. And again, mainly reducing frequency. That's what American, that's what all the airlines have been doing. Quickly, if you take a look at shares of the airline stocks today, haven't been doing a whole lot.

The bottom line is this, Brian. The longer this goes on, the more stress it puts on the system. And by the way, within the last hour, the Secretary of Transportation said we could see 15% of the flights cut. We could see 20% of the flights cut. They are not going to put the air traffic controllers in situations where there are too many flights for them to handle, and they just have to do a ground stop. They're trying to manage this as much as possible. Anybody talking about like a bonus? I was thinking the other day, like offered TSA and the FAA employees air traffic like a bonus.

If you come into work every day, you're not being paid. At the end of it, you're going to get your back pay plus a bonus. I was thinking that might be a nice carrot, for lack of a better term. That would be a nice carrot. I have to be honest with you, Brian. I've talked with a few air traffic controllers as I've been flying around, people going through the airports, et cetera. Their attitude is, well, whatever.

I just want to do my job and I want to get paid. And they increasingly have to sit there and say, if I'm not going to get a paycheck in the next couple of weeks, I've got to make ends meet. What do I do? Not everyone, but there are some definitely who are looking around saying it's not a good situation. Yeah. Fair point. Phil, hope you get home safely. I'll be flying out, I hope, on Sunday morning, and we'll see. Phila, thank you. All right, coming up, we've been saying it for a while, but now it's getting more official warnings from a rare earth CEO that all investors in the space need to hear. And you will. Well, let's talk energy and rare earth minerals to wrap it up because MP Materials,

one of the companies at the center of the rare earth trade, reported quarterly results last night. Shares have rallied more than 250% this year, and MP Materials has a working mine. It's got real sales. I know because I've been to the mine in Mountain Pass, California twice. Mountain Pass, by the way, is where MP gets its name. In fact, if you're driving to or from Las Vegas from California, you can see it just off of I-10 right near Bay. California, a few miles into California over the Nevada line. But unlike MP, as we've talked about a lot lately, some of these rareth companies aren't actually producing anything yet. Well, now it's

heating up because the CEO of MP materials last night sending out another warning saying, quote, the vast majority of projects being promoted today simply will not work at virtually any price. Wow. Now remember, we spoke with the CEO of Critical Metals Corporation. That is a another mining company in the rare worth trade. This was yesterday, and we asked Tim about their production timelines. We hope to start construction in the third quarter next year. We've done a hell of a lot of work since we took over the project about 12 months ago, and hope to supply the world within two years.

Yeah, and those are the key words. Listen, hope to supply the world in two years. And we hope and they hope and investors hope that other words, rare earth companies like USA rare earth and the metals company and others all do what they have planned because right now these companies simply don't produce much or any revenue. And some of these only have a few employees, even though they have valuations over one billion dollars, bottom line. If you are investing in these or other companies, yes, hope for the best, but also carefully watch their timelines and their actual production start dates. Some of

Gold Rush is still just rocks in a stream, so to speak. All right, we'll take your Power Lunch on the road next week. We hope we'll give you a preview next. I mean, we've got an all-star lineup that includes the CEOs of Duke Energy, the CEO of PG&E, and the CEO of Red Hot Stock Hut 8, and more across CNBC all day. That's just Power Lunch, 2 p.m. Eastern. And I've got to issue the most important correction of my entire. career, which may be the only one. My father, love you, dad, just inform me that Baker is off of I-15,

not off of I-10. As a native Californian, I am ashamed and embarrassed to have screwed up my interstate highway systems, but it's I-15 to Baker. And that's my correction for the year. Before we go, stocks coming back, buyers coming back, maybe we end positive. Let's see what happens at closing bell, which starts right now. Thank you.