Power Lunch - Power Lunch 9/26/25

Episode Date: September 26, 2025

CNBC’s Morgan Brennan takes 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.

Three, two. Welcome to Power Lunch. I'm Morgan Brennan. Filling in for Brian Sullivan. The market's breathing a sigh of relief after latest inflation data coming in line with expectations. But President Trump's new round of tariffs, triggering fresh uncertainties, potentially leading to higher prices. We will have to see and we'll have to discuss all of that. With Washington insider Joe LaVornia, who's on set in just a moment. Plus, Tesla slumping EV sales weighing on the stock.

Can the EV King retain its crown amid rising competition? We're going to speak with Steve Wesley, a former Tesla board member, a venture capitalist, about those opportunities in AI. Speaking of which, the heat is back on in the AI arms race with Open AI announcing a rapid fire series of deals. Today, it's rival Anthropic announcing big growth plans of its own. We're going to have more on that in just a moment. But first, we do begin with the economy and markets. Big inflation report today showing consumer prices increased at an annual rate of 2.7%. That was the headline core PCE, though.

that's excluding food and energy coming at 2.9 percent, both in line with expectations. But is the data reflecting the inflationary impact of tariffs? Let's discuss with Joe LeVorne, counselor to Treasury Secretary Bessent, and here on set with me. It's great to see you, Joe. Welcome. Great to be here. Thank you. All right. So inflation data that we got this morning, Core PCE, basically in line with the month prior. And actually, we saw the month before that revised lower as well. What is that telling us? Actually, I like to look at the goods piece because that's where the tariffs

would show up. And goods prices, annualized goods prices, since President Trump took office or only about five or six tenths. Even if you look at the data from April, when all the tariff effects really start to drive historic revenue increases, the increase is well under 2%. There isn't a tariff effect yet in the data. Does that change? I want you to take a listen to Ken Griffin from Citadel.

Here's what he had to say about this on our air yesterday. And the belief is that the inflationary impulse from tariffs has only passed about 50% through the economy at this point in 20%. So you see it coming. Oh, it's still coming. It's still coming. So you don't buy the argument that the others, the exporters pay the tariffs, that the importers absorb the tariffs and their margins and that the consumer won't feel it as much.

I mean, you don't believe that either. This is what the audience has been trying to. That's just not going to happen. It's not going to happen. The consumer's going to pay. The consumer's going to pay. If you look at things like audos, clothing, pharmaceuticals since April, there's been virtually no inflation. Now, that may change.

some point. My colleagues in CEA said if they looked at the relative price of imported goods, they're actually down relative to other products. So again, this debate, I think, is very robust and still vibrant on what, if any, effect, tariffs are having, who's absorbing them. But the thing is, the fact that we're talking about this, and it's almost October, tells me that the people who worried about the terrorists are wrong because this was supposed to occur way back in the spring. So it's clear that President Trump was right on this, U.S. has negotiating power, that the bulk of the tariffs are being absorbed by foreign exporters. Now, if at some point does it show up, it could, but it's still going to be quite de minimis,

and the broad inflation trends, I believe, are much lower. Of course, we've got the announcement that we've got more Section 232 tariffs that are going to be going to in places as soon as next week. In some cases, regarding pharmaceuticals, there's a lot of asterisk attached to that as well, furniture, other types of household goods, heavy trucks as well. So how does that factor in? Well, the pharmaceuticals, the EU and Japan already have an agreement with the administration, so they're excluded from these new announced tariffs, and more details will be forthcoming. What's interesting, you asked about the inflation data, and that was what people keyed on this morning.

But to me, the real story was the consumer spending numbers, which I saw. Stronger than expected. These are trumping-in-type numbers. We're going to get these huge increases. And I said, you know, we're going to see GDP marked up. And sure enough, the widely followed Atlanta Fed, which I highlight a lot because they're nonpartisan, their objective, has GDP. three nine. I would have liked them to go to four, but that's four percent-ish GDP following nearly four percent growth last quarter. That's exactly what President Trump said would happen.

It's what Secretary Besson's been advocating, and it's in an environment where inflation's coming down. The benefits from the tax bill have yet to be felt. So the forward is great once the one triple B kicks in, and these big tax cuts for middle and lower income consumers are felt in 26. So you see this is a read-through to the fact that wages are increasing or growing. faster than the pace of inflation. Yes. Well, actually, if you look at what we call the real blue-collar wage boom, which uses a variation of the CPI, that is showing growth in excess of one percent, which is the fastest eight months of any president in history. We're now back above where we were at a similar point in President Trump's first term, and that is one of the

reasons that we're certainly fueling much faster consumer spending. Workers are taking home more after tax pay as the cost of living is slowing. So how do some of these provisions in this tax bill now factor in, especially when you are talking about the blue class or working class piece of the consumer as well. I mean, I think about no tax on tips. You guys just put out, the Treasury just put out guidelines on this a week ago, although it looks like automatic tips are not included in that. That's right. So this was what President Trump wanted, and he pushed really hard to get it signed on July 4th. I think very few many people outside the administration thought it would happen. Secretary Bessel worked really hard with the various parties to get it done.

the president signed it as he wanted. And what that allows is the IRS to write the rule so that people could get their money early in the new year. What you're referring to are qualified tips. In other words, if you go to a restaurant and that restaurant charges a 20% fee automatically, whether it's just whether you're with yourself or another friend or whatever or a group of six or more, whatever it might be, that's not included. So it has to be a voluntary tip that then is not part of the process. But the other thing I want to just add, this was cool about, it's really neat about,

the legislation is that it includes digital asset folks, so like YouTubers, podcasters, live streamers. It's a very expansive list that's designed to take advantage of the 21st century economy. So as somebody who works their way through college, waiting tables and bartending, I think all of this is super fascinating. How does that work with the digital economy, though? Yeah, so when they get tips, when people tip them for their work, that will be excluded in the bill. Hmm. Okay, the other piece of this, and I hear about this from quite a few CEOs, including CEOs, who talk about the uncertainty tied to trade dynamics and tariffs, they talk about the certainty on the flip side of that associated with this tax and budget

bill and what it does to incentivize reinvestment here in the U.S. I mean, your colleagues and Treasury have talked about this idea of a CAPX boom. What does it take to realize that? So I'd say if you look at the first half data, you know, we're up almost 15 percent annualized. That's more than a 10, almost a 15-year high. Certainly the AI story is, very powerful, but broad-based investment spending is already accelerating. That is largely due to anticipation of the bill getting passed because it's retroactive at the beginning of the year. But also, the President wants energy abundance, deregulation, the continuation of low corporate tax rates as an incentive to bring foreign capital in, overlaid with the tariffs. So it all

works together to re-industrialize and reinvigorate U.S. manufacturing. The President wants us to build things again. And it's buildings, its factories, buildings that would be put up by American workers, employed by American workers. It truly is an America-first approach, and the design is to get those real blue-collar wages accelerating even faster. AI infrastructure. It was broken out in the commerce data that we saw yesterday with GDP first time ever, I believe, and this has been a big week in general for some of these big announcements

by companies that are looking to invest further into infrastructure. Is there a risk here of boom-bust cycle, or are this becoming too bubbly? No, because if you think of the money that these companies themselves are generating, and how incredible the opportunities are. And by the way, it's not just, you know, when I think of AI, I kind of lump it all into like the data centers and the crypto. The administration passed a genius act. Secretary Besson and the president are very proud of that

because it basically is going to make the U.S. to crypto capital of the world. That ties in with stable coin, which you can increase demand for treasury. Your treasury bills reinforces the fact that we're the reserve currency of the world and that has to stay that way. So everything kind of fits in together. And so I think this is real. It's both breath and depth. I want to get back to Stablecoin, but first just another question on AI.

How are you factoring that into economic models? On the one hand, a boom to economic growth, potentially a boom to productivity. You see more companies begin to adopt this and implement it more. But then you're arguably starting to see it show up in some of the later labor data, and that is what it's doing to the workforce and displacement. So here's what we've got this really good GDP. We know the labor market is not anywhere near as strong as people thought the end of the year when President Trump took over. We had about a million and a half downward revision of jobs, so that's what will officially will ultimately be reported.

So that immediately means that productivity growth is accelerating. Under President Trump's first term, he had a 3% economy with rising productivity and low interest rates, and we had higher wages. So worker wages don't cause inflation. We need worker wages higher. Workers have been artificially, those wages have been depressed by foreign labor that's come in. that's depressed weight, you know, market-based wage rates. So we could have strong wages, high productivity, rising living standards, falling cost of living as we did under the first Trump administration,

and not have inflation. Inflation is always and everywhere a monetary phenomenon, and right now money and credit creation are not excessive. So do you think immigration is having a bigger impact on the softness then that we're seeing in monthly labor data, or do you think AI implementation at companies where college grads and white-collar workers who are an entry-level positions, are the first ones phased out is?

No, Morgan, because the data was slowing rapidly last year, and we already had these downward revisions that effectively apply to before President Trump had any impact to change the labor market. The labor market was already weakening. It says, really not an AI story or an illegal immigrant story. This is really the economy just not being as great as we were told because the BLS missed the mark by a wide amount. Now, if the economy continues to boom as it is,

and by the way, a booming economy, I think, really sort of pushes back against this corporate uncertainty you hear a lot about. I just think that's just a catch-all phrase that maybe some companies want to use just to maybe protect themselves, or maybe they are uncertain. But as the uncertainty abates, as people learn more about what was in the tax bill, and consumer spending improves, that will create income, which then creates jobs, which reinforces the income and spending pattern, you're going to have the economy do extraordinarily well next year. So when Secretary Besson says early in the year, look, we could grow at 3%, 3% plus, right now that's what we're seeing.

Speaking of uncertainty, shutdown risk next week, seems that seems like a certainty, I guess, if you will, at least right now. Yeah. So how do you factor that in in your term? Well, I don't expect the, I don't, I mean, I wish the Democrats, you know, weren't hypocritical and kind of did what they said they were going to do back in the past and don't shut the government down. But that won't have any, what President Trump is building is a strong fundamental economy that raises living standards and wages for everyone, but in particular the lower and middle class households.

And therefore, however long a government shutdown would last, I don't think it'll have any bearing on the fundamental thrust of where the economy is headed, which is higher. Okay. And finally, I just have to go back to, we're going to almost do a full circle here. Inflation, maybe not higher at a pace that's higher than what we've seen recently, but it's still sticky here. You just talked about stable coins and what that's going to do to the demand for treasuries. I assume that means you think treasury yields are coming down regardless. Well, I think the Fed should be cutting interest rates because the cyclical parts of the economy are soft, and the economy should not be held back by monetary policy that the Fed itself says is restrictive. On the stable coins, that's important because the Treasury Secretary knows our reserve status is very important.

And by having stable coins, that was going to increase the demand for treasuries in particular bills. And what's a $2 to $300 billion market, the Secretary believes can be a $300 trillion market. I mean, it could really grow exponentially. There's a lot. We just covered a lot and there's always more to get to. Joe LaVorna, appreciate it. Thanks for kicking off the hour with me. Well, now we're going to dig a little deeper into the Treasury markets where the tenure is hovering below a key level. Rick Santelli joins us now from Chicago with the Bond Report.

Yes, indeed. And we might be hovering below a key level at four and a quarter, but we're well above a very significant level 4%. If we look at this morning's data, one thing that really stuck out, we indeed did have. strong personal income and spending as you were just discussing. But taking politics out, inflation's sticky. I don't care who cost it. I don't care to put a blame on it. All I'm saying is if you look at it over the hall for the last year and a half,

it really hasn't done anything to remain closer to the 2% target. Let's look at year-over-year core PCE inflation. It came in at 2.9 today. That's basically a five-year chart. You can see the right side. Not only is it well above pre-COVID levels, but it's holding pretty much at slightly below 3%. The targets 2%. That alone should give the Fed a bit of pause in terms of any type of aggressive easing strategy unless the labor market really deteriorates.

But as we learned yesterday, 218,000 on claims was pretty tame. University of Michigan's sentiment deterioration. That's a two-year chart. So we did see sentiment easing back a bit. A one-week chart of Treasury says it all. We are basically up seven basis points on the week in a two-year. We're up about five basis points on the week in a 10-year. And one thing we don't talk about enough.

Since the Fed ease, we see that the dollar index is up about 1.6%. They eased on the 17th, and you can see that's where that chart starts. And we've been moving higher pretty much every session. Morgan, back to you. Rick Fantelli, thank you. Well, coming up. Tesla charging ahead. The stock, the outperformer among the MAG 7 following two price target increases on the street.

But can it keep up with rising competition in the EV space? Does that even matter or is there a next chapter we should be focusing on? We're going to speak with an insider. Next. Welcome back to Power Lunch. Tesla shares are moving higher again today. They're about 3.5% right now. That's following a pair of price target increases on the street.

Analyst that Deutsche Bank raised the price target from $345 to $435. bucks per share, saying Tesla is poised to gain ground, and Wed Bush's Dan Ives hiked his target to over $600, making it one of the highest calls on the street. So, is Tesla on pace to soar to new highs in the year ahead? Well, joining me now right here on set is Steve Wesley, the founder of Wesley Group and a former Tesla board member. It's so great to have you here in person. Great to be here. All right. So what do you think? Is this beginning of the next chapter for Tesla? Well, I think it's a tale of two cities. Look, I think they're going to post a solid Q3, 465,000 vehicles, about $25 billion for the year.

They're going to be a little up in China, down in Europe. And the U.S. is going to be solid. Why? Because everybody's rushing to get a car before the September 30th deadline when the tax rebates go away. So the big question is, how does Q4 look like when those rebates are gone? And the big picture is this. Every automaker in the world is going all electric. Why?

The cost of batteries keep going down. But Tesla's got to get new product into market. They've got to get lower cost product into market. They've got to open new markets. And they've got to prove they're a technology company. They need more regulatory approvals to get that full self-driving going. So how much hinges now on Robotaxi in light of that? A lot.

Again, Tesla's trading an extraordinary multiple today. They've got to show that they really are a tech company. Right now, they are lagging behind Waymo badly. They've got to get regulatory approval in new cities to show that they're competitive. and they have the best technology. AI, autonomy, robots. Is this something that's already factoring into the stock here at these levels? I think Elon has made a big deal about pushing humanoid robots.

He's made bold claims, 5,000 units by the end of the year or more. We'll see if they can deliver on that. It's not going to be easy. Okay. I do want to shift gears here because under the hood, Tesla is also an energy company and a energy storage company. In general, you're here on set because of Climate Week here in the news. here in the New York metro area.

So what are your thoughts on energy more broadly right now? And this transformative moment we seem to find ourselves in. Everybody is focused on AI and who's going to win the AI wars, the US or China. To win the AI wars, you have to win the energy wars first. US is going to have to put historic amounts of energy online to power the global economy, to our economy,

as well as our military and everything else we need. We're going to have to put a historic amount on. That is what Climate Week is all about. How can you do that and stay green at the same time? The big picture is we're entering into a revolution of AI. It's going to stimulate a boom in data centers at precisely the time the global transportation fleets are becoming electric. How do you provide the power to support all of that demand? It's going to require a lot of new thinking.

All right. So what's some of that new thinking? Well, for most utilities, and our venture firm has 14 of the world's largest utilities as investors, it's going to be an all-of-the-above approach. You need more natural gas, and we've got a lot of natural gas, but we don't have enough turbines to get it online. You're going to need more nuclear, but that, by and large, it's going to take five to ten years, maybe longer. For the interim period, that's where all the action is. We think you're going to see an increasing amount of batteries supporting the utilities.

Tesla, by the way, fastest-growing division of Tesla. I'm sure you know this, maybe all your viewers don't. It's the energy vision. Over 14 billion of the 100 billion, Tesla's likely to post this year will be in energy. But there's something else coming, and it's called a virtual power plant. What utilities are going to need to meet the power demands of the future is the ability to tap into aggregations of power walls,

power walls, which we're already doing in California, and at some point in the very near future, aggregations of electric vehicles, people who are willing to let the utilities borrow power to support during times of peak demand. So you basically plug into the power safe and the power off of electric vehicles? It's exactly correct. Today, there's already virtual power plants. In California, PG and Tesla have gotten together, and they've signed agreements with over 100,000 people with power walls in their garage.

And at times when we're close to having brownouts on those super hot days in California in July, P.G&E will pull in as much as 395 megawatts of power when they get close to peak demand. But in the future, they'll be doing 10 times that much. Wow. Okay. I mean, I think this is part of the case around Generac, too, in what they've been building out quietly in the background in addition to their generators as well. Okay, so what are you excited then in terms of as you invest in all of this, where are the investments? What are the names that need to be on folks' radars? Well, there's, first, firms like Vistra, the independent power producers, they are booming. Vistra had the third fastest rising stock in the world last year, one notch ahead of NVIDIA. That's pretty good because virtual independent power fighters used to be kind of a boring space.

Everybody needs their power. Vistra constellation will be kind of near the top of that list along with the firm called TALA. But there's a lot of other things coming. cybersecurity becomes a big deal because the most targeted industry sectors in the world are banks, and then right behind it, energy companies. We need to keep the energy infrastructure going and running all the time. Right behind that, we're moving into a period of autonomous vehicles. It's been science fiction for the last two decades.

It is here now in five American cities rolling out to another six in the next year, including New York. That's going to change a lot. Get your seatbelt on. Okay. Steve Wesley, thank you. I'm strapping into my robotaxie and preparing for the future here. It's coming sooner than we think. All right, well, I'll be sitting down with Tesla's chief designer Franz von Holthausen Tuesday at the Upsummit in Benton, Arkansas. That will be right here on Power Lunch. So we will continue this conversation next week. That's going to be an exciting one. Meantime, the AI hiring boom isn't just a Silicon Valley thing anymore. The whole world is getting in on the act. We're going to get that story when Power Lynch comes right back. Stay with us.

Welcome back in the global race for AI supremacy. Competition is heating up. And today, one of the biggest players is making a major move. We have exclusive details on Anthropics plans to supercharge its international operations. Mackenzie Sagalos joins us now from San Francisco. Oh, again, so tongue-tied. How are you, Mac? I'm good, Morgan. And you're going to recognize this move as it is right out of the of Palantir's Playbook, Anthropic is sending engineers directly into companies around the world to help them build new tools and workflows on top of their AI models. The startup is launching an international hiring blitz, opening new offices in Tokyo, its first in Asia Pacific, and across

Europe, while planning to bring on country leads in India, South Korea, and Singapore. I spoke exclusively with the company's chief commercial officer, Paul Smith, who called this their most aggressive expansion yet. Now, the idea is to embed the people who actually built Claude, their flagship model inside major enterprises to drive real results. That so-called applied AI team, it'll grow fivefold this year. Now, the Global Salesorg will triple, and it comes as nearly 80% of Claude usage now happens outside the U.S. Anthropic is scaling fast to compete with OpenAI, growing from under 1,000 business customers to over 300,000 in just two years, and it's happening in the same week that OpenAI has really redefined the AI race, unveiling new

commitments to spend $850 billion on infrastructure on top of its existing deals with the likes of Oracle, SoftBank, and Nvidia, which shows that the front line is really moving from model architecture to compute. Morgan? This is super fascinating to me. I want to go back to a stat you just put out there, and that's that 80% of Claude use is happening outside of the U.S. How much does that speak to the traction they're having if Open AI was sort of the first one on the market in the U.S. versus just how adoption is happening globally right now? Well, what's interesting here between OpenAI and Anthropic is it Anthropic has really always gone after the enterprise player. So whereas OpenAI rose to stardom off the back of really being that consumer-facing product through ChatGBT, Anthropic was like singularly focused on appealing to enterprise customers. that. I'm talking about a mix of G20 customers abroad and your classic enterprise players. And what's

also interesting is that both OpenAI and Anthropic have newly in the last few months been making this global push. And that is a product of the fact that they are trying to scale their go-to-market teams. Because Open AI, they were historically selling their products through Microsoft. But in the last 18 months, they've grown their team from 500 to 700 people under Brad Lightcap. Wow. McKenzie Segalos, great reporting today and all week. in general. Thank you. Coming up, the NASDAQ on track to snap a three-week winning streak. But despite concerns, the AI trade is overhyped. Our next guest remains bullish on big tech. He's going to explain that next. Welcome back to Power Lunch. Let's going to check on the markets,

shall we? You see all the major averages right there on your screen are up fractually right now. The Dow's the big outperformer up 8 tenths of 1%. And that's after a key inflation report that met estimates this morning with PC. That's the Fed's preferred gauge of inflation. In spite of the gains today, though, the major averages are still on pace for their worst week in a month. Probably says less about the moves we've seen this week and more about the lack of volatility in the market in general in recent weeks. But your next guest says we could actually see more of that too starting next week. Jeff Kilberg is founder and CEO of K-Cam Financial, a CNBC contributor. Jeff, it's great to speak with you. And yeah, next week we're coming up on the

end of the month. We're coming up on the end of the quarter. So you think more volatility? There's a lot of inputs, Morgan. And great to join you here today. But we look at the VIX. Look at the VIX today, down about 7%. Therefore, no one really seems in the options market, that is, Morgan. No one seems to be worried about the government shutting down. No one seems to be worried about the rally potentially pausing. So I get excited when you see GDP revised up. I think the inflation number, that is a bit of a conundrum for the Fed because now they are shifting their focus to more of the unemployment. But I think the rally can resume. If you look at where we are in the S&P 500, it's 6650, 4802, which was the low.

on the Liberation Day low back on April 8th. It seems like such a long time ago, nearly 35% ago. And I don't see the headwind, and nor does the options market in the VIX price anything that's going to present to headwin for the next 30 days. Interesting. So you don't think that stocks are too richly valued here or that, you know. I didn't say that. I didn't say that, Morgan, but what's fascinating me is that it's the end of the month,

end of the quarter. So you're going to see some folks sitting in cash. There's about almost $8 trillion dollars sitting in cash. They may be chasing this in the month then. But Q4, a lot of people are forecasting. doom and gloom, that's when you see meltups, that when you see people get caught offside. So I think we're going to continue to see the market move higher. It's not going to be a straight line. You will see Vality come back into the market with high volumes kicking off the quarter

and closing the old quarter. But what I do believe is that we've overcome so many different headwinds, not to get political, but all the different political headlines have been pushed into the marketplace. It just seems to keep on going higher for all the right reasons of profits, earnings, and that's what I get focused on. Does this move higher? Do we continue to see this market broaden out here, or does the concentration remain with Big Cap Tech?

Well, what's fascinating, if you look at a chart in the last month, Morgan, you've seen this magnificent seven rotation, you've seen Invidia, you've seen Microsoft, seeing some of those names profit taking in those names, and all of a sudden the Googles have popped up. Let's put Tesla to the side. I don't really put that in the Mag 7. But if you look at

some of these magnificent names, you are seeing a rotation, but you are seeing broadening. Intel. Now, I don't know how I feel about 10% being owned by the U.S. government, but let's put that off to the side, Morgan. But you're seeing Intel. You see an IBM. That is the new potential computing king in the world of quantum. You can hear the word quantum a lot going into Q4 and in 2026. So I do take a little solace that we are seeing this AI theme broaden out slightly. All right. What are the names you like here? Well, if you talk about IBM, it's fascinating. You know, they talked this week and they finally

have a proofcase of quantum computing. Yeah. And I know it's about 100 million gates that are going to come online, so 200 million qubits. I don't know what all those numbers mean, but I do know it's an analogy. If you think about Doc Brown and back to the future, Morgan, when you talk about 1.21 gigawatts allowing the flex capacitor to make time travel allowed, well, that's what basically we are seeing IBM saying. The full capacity of quantum computing should come to fulfillment in 2029.

And that's going to change the game in crypto. It's going to change the game in the way we transact electronically. And I also seen a test case with HSBC this week on their bond trading desk, which is improved by nearly 34%. So there's a lot coming at us. I thought quantum computing was very far off in this and future. But IBM potentially could be just a rocket ship moving forward here. And it's very different than the old big blue boring blue chip in name was for so many years. Yeah, probably before the end of this decade, if not sooner, to your point.

And I got to tell you, I'm here for 1980s movie reference, back to the future trilogy. one of the best. I love it. I love it. Okay. So I guess finally, just sort of big key takeaways looking across different asset classes right now because, you know, stocks have been powering higher, gold's been strong, you know, treasuries have been relatively tame here. You've had other commodities make some moves as well. Crude's actually been the big outperformer with more hawkish stance on Russia from Trump this week. I think you hit the nail, commodities are important. Certainly a great input, Morgan, but I think you hit the nail on the head on the treasures. A bit a pump fake, we are seeing this easing cycle resume. We're anticipating one or two more cuts

the end of the end of the end of the end of the curve going the other way. But I think the wind in the sales that we are going to slowly see rates come down, that will power equities, U.S. equity specifically as we continue to see markets get repositioned going into Q4. But I'm costlessly optimistic. I understand markets don't move in a straight line up Morgan, but the Vicks melting and a lot of shorts are underinvest in the market. That will push the market higher, right wrong or indifferent. Valuations being high at all, that's going to move the market higher. Okay. Jeff Kilberg. Great to have you on. Great to get your thoughts. Great to see you. Well, let's go over to Contessa Brewer for a CNBC News Update. Contessa. Hi there, Morgan. The New York City

Medical Examiner's office says the man who targeted the NFL headquarters in a shooting in July had low stage CTE. That's the neurodegenerative disease caused by repetitive brain trauma. Often it is associated with football players. Authorities say the shooter, shame, tomorrow left a note at the scene on Parkin Avenue in Manhattan, repeatedly mentioning CTE. He killed four people and himself at that high rise. The National Guard is expected to arrive in Memphis, Tennessee next week. The governor, Bill Lee, announced today 13 agencies from the FBI to the DEA will be part of an effort to crack down on crime in that city. He said he expects no more than 150 National Guard members to be part of the deployment in Memphis. And Sony announced

a sequel to the social network today. That's the 2010 film based on Mark Zuckerberg's founding of Facebook. The Social Reckoning will hit theaters October 9th, 2026. That will focus on Wall Street Journal's 2021 Facebook Files Investigation, which found that Facebook knew the platform contributed to real world harm, but didn't act on it. Morgan? All right. Contessa Brewer, Thank you. Up next, President Trump's next tariff target, the pharmaceutical industry. We're going to take a look at what it means for investors in the sector when power lunch returns and devil's in the details here. Crypto watch is sponsored by crypto.com. Crypto.com is America's premier crypto platform.

We have some breaking news on electronic arts. Steve Kovac has the headlines for us. Hi, Steve. Yeah, Morgan. Look at their shares. They're popping better than 15 percent or around their So after the Wall Street Journal just put out this report saying, Electronic Arts is exploring a go-private deal at $50 billion. This would involve Silver Lake, the Saudi PIF, and some other investors. I reached out to EA for comment. We have not heard back from them yet. But you might remember just a couple years ago, Morgan,

their big rival Activision was acquired by Microsoft in that $69 billion deal. Since then, everyone's been wondering, what's going to happen to electronic arts, what's going to happen to take to interactive? And there was some talk even about our own parent company. Comcast getting involved with electronic arts. Those deals never went through here, but you do see a lot of excitement here. Shares are up 15% on this go-private report, Morgan. Okay, Steve Kovac, thank you. Sounds like Silver Lake's been very busy this week with the potential deal-making.

Well, President Trump targeting the pharma industry in his latest round of tariffs. The president saying he will impose 100% tariff on any branded or patented pharmaceutical products entering the U.S. from October 1st on. It won't apply to companies that are building drug manufacturing plants here stateside. Your next guest says that these tariffs could potentially have a big impact, but for now, he's still bullish on the group overall. So Vamel Devon is Senior Farmer Analyst at Guggenheim Partners. joins us now. Vommel, it's great to have you. Yeah, thanks so much for having me.

Okay. So Devils in the details, as I said before the break, on these tariffs. How many of these big pharmaceutical giants are already building out manufacturing capability here in the U.S.? Yeah, almost all of them, honestly. So I think as this news has played out over the year, I'd say most of the large companies have already announced plans to increase investment in manufacturing in the U.S., those plans obviously will take some time to be up and running. But in the meantime, they've also stockpiled inventory in the U.S. for their key products. So I think most of them in the near term are fine. Maybe there's a little bit of a headwind next year, 2027, as the manufacturing picks up.

But again, as you mentioned, the details really matter, which, you know, what they're going to be. the tariffs would be, what product would be applied to. So I think it's on the investors, and we're watching closely, but I don't think it's really driving investment decisions. Certainly not within the sector, maybe. Some people avoiding the sector altogether, but within companies looking across the sector, it hasn't really been a big driver of how investors are thinking right now. Okay. And of course, in terms of potential tariffs, it depends on the country, and we're talking about branded or patented products. I was reading that something like roughly nine out of ten prescription in the U.S. that are filled are filled, are filled with,

with generic drugs, which wouldn't be impacted by these tariffs as well. So how to factor that into this landscape? Yeah, so that's right. So most generic drugs, a lot of them come Europe, a lot of them come from India, other countries. And that's predominantly what people are using here. There is obviously a public health issue to think about here, too, that we want to make sure we have access to these products in the U.S. So that may be why they've been kept out of this specific order. Obviously, things could change. in the future. But this is specifically talking about newer branded products, excluding all the generics, which again is predominantly what most of us are using. So for the

large pharma companies, the sales and profits are driven by these branded products. But again, until we don't know those details, I think even the companies when we ask them, they're not sure what to make. They are investing here. They're building out their U.S. manufacturing. And that's all they really can do until there is some official information that they can act on. Okay, so what has you largely bullish on large-cap pharma right now then? Yeah, most of our enthusiasm on the different companies is driven by the innovation that we're still seeing. I think there's a lot of room to go. Our top two picks in the large-cap space for us specifically as AbbVee, which has a couple big growth drivers in Skadrizi,

RINVOC novel product in the immunology space. And then just this week we upgraded Johnson & Johnson to a bi-rating. And that's driven, again, by innovation we're seeing in oncology, because of the bladder cancer where they got approval a few weeks ago, lung cancer, multiple myeloma, and then again immunology. They have some exciting pipeline products in areas like psoriasis, inflammatory bowel disease. So there's still a lot of men in these areas. We still feel very optimistic that the science is going to drive the story here, even if there's

some of these near-term questions around terrorists or obviously U.S. drug pricing. There are headwinds that this industry has overcome. We keep saying if they drive innovation, they'll be rewarded and share all the real. will be reported. Okay. Is MNAs still something that's going to factor in here, especially if you are talking about product pipeline for the future? Absolutely.

Most of these companies, maybe not Advian J&J, which is like me like them a little bit more now. But most of the big companies have big patent holes to fill in the next several years. Companies we cover like Merck and Pfizer or Bristol Myers. So we've seen them all be active in acquiring newer products from small biotech companies, but there's still a lot of holes to fill. So we've seen a little bit of a pickup in M&A, pharma companies buying smaller biotechs this year. We definitely would expect that to continue in the next year and beyond because from 2026 to 2030, again, most companies are losing big blockbuster products and their internal pipelines are not enough to replace those sales earnings. Okay, formal.

Thank you. Thank you. With shares of many of the big pharma stocks actually trading higher today on the heels of this news. Well, don't miss an exclusive interview on Mad Money tonight with the chairman and CEO, of Johnson and Johnson, that kicks off at 6 p.m. Eastern. Up next, Boeing, gaining a little altitude, finding some smoother air. Phil LeBoe will be here with the details. Stay tuned. You're watching Power Lunch on CNBC. Welcome back. The path back to a normal production schedule appears to be getting clearer for Boeing. And a significant sign of returning trust, the Federal Aviation administration announced it will ease some delivery restrictions on the 737 max and the 7.37,

787 Dreamliner. So joining us now with the latest details on what this means for Boeing's production. Our airline industry reporter, Phil Leboe, Phil, what exactly does this news mean? What is FAA delegating back to Boeing? And what does it mean for the company and next steps for some of these aircraft to come online? It's a huge step, Morgan. Essentially what the FAA is saying, the ability to certify aircraft before they hand the ticket over to the airline or the leasing company and say, here's your plane. That has long been allowed by Boeing and Airbus aircraft manufacturers, simply because the FAA cannot inspect every single plane. But that stopped after 2019, and the FAA said we will do every single inspection. Now it is giving Boeing that ability to,

once again, on a limited basis, sign off on 737 maxes as well as 787s. And again, this is about issuing certifications, the final airworthiness certification. And the idea here is that it will speed up the final checks before the aircraft are handed over. In the statement, the FAA said, safety drives everything we do. And the FAA will only allow this step forward because we are confident that it can be done safely. The 737 max, at one point they completely shut down production. Well, they have gradually been ramping it back up, especially under Kelly Orpberg, the current CEO. They're currently at 38 per month. They do plan to get up to 42 per month. Once the FAA gives them the authority to do that. That is likely to happen over the next couple of months. As you take a look

at shares of Boeing, also keep in mind, they had a big order today that was announced by Turkish airlines. 75-7-8-7s. They're also contemplating or finalizing, we should say, a deal to buy $150737,000, though that has not been finalized at this point. Bottom line is this, Morgan, you want the ability to sign off on aircraft deliveries as quickly as possible. You don't want to have to wait for somebody from the FAA to say, okay, everything checks out. Now that they will have this authority, in theory, as they ramp up production, things should go quicker. Wow. Okay. So in light of that, you're talking about potentially faster realization of deliveries, which means faster realization of revenue, plus there's the ad and stamp of approval of greater trust from regulators

here. How much is this not just propelling Boeing, but also its supply chain? I mean, GE Aerospace, that chart looks almost parabolic for the year. It's up 70, percent this year. It's, it's all of the aerospace suppliers and primary companies, whether it's Airbus, Boeing, GE Aerospace, you look at all of the companies that are part of that whole ecosphere, if you will. We're seeing greater production, not just by Boeing and Airbus, but also by Airbus and other companies. And as that continues to grow, Morgan, you're going to see the revenue increase. Free cash flow will increase. And this is important to note here, Morgan. The FAA did not make this step without first saying,

are we confident that Boeing has truly done everything that it said it would do in terms of fixing the manufacturing process, which was clearly broken? They are confident in that, and that's why they have taken this step. Now, if they take the full step at some point in the future, that will tell you that Boeing is truly back to where they were before the max crashes. Okay, Philibaut. Thank you. Shares of Boeing up 4% right now. Well, next, we're going to hit the high road.

We're going to keep on trucking towards some of the most red stories on CNBC.com. That was a hint. Stay tuned. Powerlump to be right back. Highlight one of the most red stories on CNBC.com today. Shares of Pack are hired today after President Trump announced that he will impose a 25% tariff on imported heavy trucks. That begins October 1st. Trump said in a social media post that, quote, large truck company manufacturers will, quote, be protected from the onslaught.

of outside interruptions. Now, Packar is the owner of Peterbilt and Kenworth, and it manufactures more than 90% of its trucks, U.S. trucks domestically. So read this story and many more by going to CNBC.com, and I think I'd also just keep in mind around that is how many other companies, U.S. trucks, are manufactured or at least final assembled in Mexico.

So that's going to be another dynamic to watch in all of this. And coming up on closing bell, overtime, We're going to be digging into one of the hottest stocks around. Iron, it's up 500% in three months, more than 350% this year. Sound big today on a downgrade from JP Morgan to underweight from neutral. The firm also cut the price target from 24 to 16 bucks. But we're going to talk to co-CEO Dan Roberts about the AI Data Center buildout, also Bitcoin mining that does it for us here. Closing bells next.