Power Lunch - Stocks Have Another Volatile Session 10/16/25

Episode Date: October 16, 2025

AI and the surrounding infrastructure continues to drive the market. The big banks have all posted strong earnings, so we take a look at the regional banks reporting next. And how does Apple approach sports rights? 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.

Stocks taking a bit of a pause as the government shutdown slides into its third week. Welcome to Power Lunch, everybody. I am Brian. Kelly is off. But you, we know, never take the day off. So we're going to try to help you make some money in banks, infrastructure, and more. Ideas galore across the show today. Plus, a new warning around the rare earth hope that you have to hear those stocks all down today. And the big move President Trump says India may make that could impact what you pay at the pump.

But is the story actually correct? We'll get to that. But right now, let's get over to Amman Jabbers. He has got some breaking news out of the United States Treasury. Brian, that's right. Some Bafo numbers here from the U.S. monthly Treasury statement. U.S. government reporting $198 billion surplus for the month of September. That's against a $50 billion estimate for that from Reuters.

So a big beat there in terms of the monthly surplus. senior treasury official tells us this is the largest surplus for any September on record ever. The U.S. is running a $1.77 trillion deficit year-to-date. Monthly receipts for customs duties, that's the tariffs coming in at $29.6 billion for September. September was a record month for customs duties. That's up 295% year over year. Obviously, given that the tariffs have gone into place this year, you would expect that. Customs duties for FY25, also a record totaling $195 billion.

And finally, net interest payments on the debt, a whopping $970 billion spent so far in FY25 interest on the debt, Brian. But I think the big number of people will be talking about is that monthly surplus of $198 billion for the month of September being the biggest monthly surplus for September ever. Brian, back over you. Do we have any idea where it came from? We've been working on that, trying to look through the numbers and see what's changing. Obviously, you know, it's those tariff payments that are changing in a big way.

And, of course, the Trump administration has slowed down some spending. So when you increase revenue and slow down spending, what do you think you're going to get? A slightly better fiscal picture. And as we're looking at the two-year here, the two-year started declining earlier today. you see a relatively steep drop within the past two hours or so. You know, that would be in line with this data, I would imagine, right? An improved fiscal picture, at least in the short run for the U.S. government could mean, you know, less pressure on interest rates.

Yeah, when they said, Aiman Javers has breaking news on a U.S. government surplus, I said, you mean deficit. But for at least one month, it is a surplus. Just the month of September, right? Like, it's still a deficit for the year, but we had a good month, right? That's encouraging. And this data can be lumpy, Brian. So we shouldn't just leap to the conclusion that this is going to be the trend line for the future.

I mean, you get ups and downs here. But, you know, it's been a long time in my career since we've been covering U.S. government surplus annually. You have to go back, I think, the 1990s for that. I think it was 96 or 97. Bill Clinton facing a political difficulty of how to spend all the money. They call that a good problem. You know what we could do? We should take some of the surplus.

and give it to some governors to bet on blackjack, can't lose. Amen Jabbers. Fair enough. Thank you very much. You bet. Not to the markets. Stock's giving up some earlier gains. The Dow is now down about 200 points.

AI names like Nvidia and Broadcom still in positive territory. The heel of strong earnings from TSM. But a growing number of critics cautioning the sector might be in a bubble, one that's become an insatiable beast for investments, with McKenzie estimating that AI data centers require five. I point two trillion in spending to keep up with demand just by 2030. Your next guest has some ideas that how to best capitalize on these massive investments. Joining us now is Tim Rabanowitz.

He is chief investment strategist, the innovator capital management. I'm assuming you're not going to say bet it all and hope for the best on blackjack. That's right, Brian. I mean, that's a winning strategy for some lately. For some. Okay. So let me ask you this. First off, 500-whatever trillion, billion, it doesn't matter what the number is.

Is it going to happen? Are you confident? You really believe all that spending is going to occur? I think it's a big question, Mark, Brian, but we see that as more of a concern for 2028, 2029. What we know right now is that we are in a situation where demand continues to far outweigh supply. You look at the comments from meta recently. They're going to increase, they're spending 50% next year, 35% the two subsequent years after. So this is a pocket of the market we want exposure to. We do, Brian, we think a lot of the easy money has been made in a lot of those big hyperscalers.

We want to start going down in market cap. In our frontier tech ETF, we're focused on companies $500 billion or less. We think those stocks have a lot of room to run and continue to enforce leaning into those infrastructure stocks. Okay. And I know a lot of these names, they get talked about ad nauseum. I get it. So let's try to bring our viewers some newish names.

One of the companies you like is called Celestica, C. I've heard of the ticker. I know they're kind of a contract manufacturer. That's about the extent of my knowledge. Why do you like them? Think about them as a partner for a lot of the hyperscalers. They're building a lot of the hardware switches. Another one we like, a ticker VRT. They're also involved in a lot of the data centers. They do the cooling, heat rejection. We think these have a lot of room to run. Both are trading right now at about 40 times earnings, which sounds expensive. But we look at that the next year. We look at the growth rate, all of the spending, again, Brian, that we're projected to see. that's why we like a lot of these names. Not to say that the mega caps are going to sell off. We still think that's a place to be. But looking outside, we see more upside. Well, maybe that mega cap name trade is, I don't want to say played out, because that implies there's a top.

It's not my job. I don't know. Maybe you can address that. But we often are now, or maybe I don't say we forgot, but we're remembering now that to build a data center takes a lot to your point of heat, of cooling, of water, the skeleton of the data center. if you will, and in part, that's what Vertev and Celestica do. That's exactly right. And that's why we like them. There's going to be a tremendous amount of spending here.

But when we take a step back and you look at the market broadly, there's no doubt, Brian, that we've seen valuations run up in a big way. AI has been a big part of that. But when you look at the data historically, high valuations do not tell us the market is going to sell off. It's a horrible timing tool over the next 12 months. I think as an investor right now, what you need to be thinking about, how does you maintain exposure?

manage your downside risk. Because as valuations go up, as excitement over this AI trade goes up, that means any news contrary to the narrative, any bad news, really magnifies the downside. Is it bad news or would it even just at this point with valuations in the run be less than hoped for good news? It is. Could good news actually be sort of bad news because it doesn't have to be good? Some of these companies need great. A hundred percent. And if you look at the beginning of the year, we had a target on the S&P 500, 6,700. We're pretty much right there right now. And we would say for the next, you know, the remainder of the year, we think upside is somewhat constrained and a lot of that has to do with the starting point.

It takes a lot of good news and significantly better news to continue to propel stocks at the rate that we've seen over the last year. So you look at the rest of this year. Next year, I think the expectation is for slower returns. Yeah. What's going to matter more? It's going to be the AI story or the Federal Reserve. Well, both are very important.

Sure. The Fed is incredible. They're both important, but let's be clear. I think the AI trade is much more important. I think the AI trade is important. I think you're seeing very strong earnings starting out so far. But I think what concerns us a little bit, and you see interest rates coming down today,

we're a little more concerned about the intermediate longer end of the yield curve with the Fed cutting interest rates, Brian, into an environment where we still have core inflation north to 3%. That's concerning. That's not typically an environment. In fact, almost never an environment where you see the Fed cutting interest rates. They're getting a lot of pressure to do that, but you don't want to see a situation where growth really heats up

and we have to start dealing with a situation. Yeah, but Jerome Powell, he's obviously not going to say, we're going to code a bunch of rates, he's not going to say that. But the so-called dot plots, the summary of economic projections, whatever it might be, implies, we are more likely to get cuts than holds. Absolutely. So the market, do you think the market is over-relying on rate cuts? What if we don't get them?

Does it matter? Well, it does matter. And we've seen that over the last couple years. The market has constantly overestimated the amount of cuts, the speed at which those cuts were going to come, how soon they're going to come. And I think, Brian, right now, what matters the most when it comes to the Fed, they have to be cutting rates at the right time for the right reasons. If you see them cutting and bowing to political pressures,

that's going to be a problem on the inflation side. If they're not relying on the data, if they're not getting out in front of this, that becomes more of a growth concern. So we need to see rates cut at the right time for the right reasons. Anything outside of that's problematic. All right, Tim, we appreciate it. Look at inverted, VRT, Celestica, CLS, some newer names. Tim, we really appreciate it.

Thank you very much. All right, good to see you as well. Also following a big move in the Treasury market, the two-year yield falling to its lowest level since September. And Rick Santelli in Chicago can also tell us that the 10-year bond yield is below 4% right now. And we just heard two words, Rick. I'm not sure I would have thought we would have ever heard together government surplus. Yep. No, and it's all interesting.

I'll try to put it together in a chronological timeline. That'll give you some clues. First of all, that data came out at the top of the two, okay? 2 o'clock Eastern, 198 billion surplus. However, on a full fiscal year, we're going to be spending $1.2 trillion on servicing the debt, even though it's under a trillion now. The fiscal year isn't over. And with the data out, well, the market started breaking under 4% well before those headlines were out.

That's important. So let's first look at the two year. Two years on pace for another. It's been closing basically at a three-year low for several days in a row. Because if you go back to the step of 22 earlier than that chart, a little more to the left, you'll see there's more of a drop. So we're going to be comping for a while, three years on the two-year. But the 10 years is the big news today. Well, look at the six-hour chart.

You can see that we've been sliding all day well before the headline about the surplus came out. And boom, the minute we slid under 4%, everything accelerated. Why? Look at a week today, Tuesday, Wednesday, Thursday, every day this week, we banged on 4%. Think Pac-Man here. Munch, munch, munch. We're eating the supported 4%. Government's closed.

Investors are getting a bit nervous. Once you take that many bites out of 4%, maybe the slowdown is going to weaken the economy. Maybe the China tariff thing's going to go worse than the market thinks. And I think that's really the motivation here, which means it might not last long. and when was the last time we closed under 4% almost exactly one year ago. Brian, back to you. Well, how many days, Rick, do we need to watch it then to kind of know what? Listen, we're below 4% now one day, maybe we bounce back above it tomorrow.

Is there like a number of days that Rick Santelli would watch and say, okay, that's a pretty powerful trend, or are we there now? I think a weekly close. If we close tomorrow below 4%, I would consider that more technically significant and, of course, I think the government shutdown makes it a little difficult to read because maybe after the shutdown, it'll bounce right back.

But if I was trading, if we closed under 4% tomorrow, I'd go home looking for more. Rick Santelli, the 10-year under 4%. Rick, we appreciate it. Watch for that weekly close. Thank you. Wow.

All right, coming up, make money by going to where the money is, the bodacious buying opportunity in banks. Well, welcome back to Power Lunch. Six major U.S. banks reported quarterly results this week. All six beat Wall Street expectations. The stocks have been on a tear this week with Wells Fargo, Morgan Stanley, and Bank of America, each up more than 5% since Monday.

It's a lot for a bank. However, the regional bank stocks keep slipping, the S&P Regional Bank ETF on pace for its fourth negative week in a row. It is down almost 10% to the beginning of September. But your next guest sees upside ahead. See the strong results we've seen from the major financial players will have a positive spillover effect down the line. In other words, to the regional and community bank level. Joining us out of talk about that and get some of his top picks.

Dory Wiley, president and CEO of Commerce Street Holdings. Dory, it's good to have you back on. Why do you see sort of the wealth at the top trickling down to the smaller stocks? Well, one, Brian, it's typical. Okay, if you go through these phases, the market gets confidence in the big banks, they trade up, then the regionals, then the community banks. So part of that is standard. But as you pointed out, there's been a little sell-off here lately, and that increases the opportunity. The sell-off is because of fear.

The banks have been a fear trade since 2008. Anything goes wrong. You know, they run for the hills. So what is the fear? Well, you had this first brand bankruptcy and tri-com. color. And as Jamie Diamond mentioned, you know, where there's one cockroach or maybe some more. So now everyone's looking under the bed, right? And the stocks have fallen off. And I think they've created, as long as we don't have a lot of that exposure in these banks, you look at these banks and you

see if they, you ask them, we're going to find out these earnings calls over the next week. Do you have exposure to these kind of deal where they're doing all balance sheet financing? Do you have unusual pops up in your provisions? And if you don't, they're going to be looking really good. Yeah, it's been fascinating to watch these numbers because the numbers for the big banks, the ones that we are showing on a big wall here, they weren't just kind of good. They were really good, Dory. I mean, do you think we're going to see kind of similar results from some of the regional banks, or is this more of a trading and investment banking boom that the regionals don't have? That's a very good question.

because they're all up on M&A, which is going like crazy in trading and whatnot. But at the same time, these smaller banks have higher net interest margins, and they're a little more focused. They tend to have higher growth rates than the big banks. So I do think this will continue because margins are stable and are still expanding slightly on what we'll call a steady diet of Fed rate cuts now and to come, it looks like, for the next two meetings. And they're growing.

And they're also looking at a really increased M&A in the banking sector, which has gotten really hot. Yeah. Okay. Let's talk about a couple of specific names. Huntington Bank shares. This is not a small bank. It's so be like maybe you called a super regional. Tickers HB.A.N. Tucked away kind of there in the, you know, West Virginia or lower Ohio Valley. What do you like about Huntington Bank shares? Why is it attractive? Well, I start with capital and deposits, and Huntington has the best core deposit growth of all its peers, and they're going to complete a transaction next week in Texas at full disclosure we help them work on. But, you know, in Texas is a super, super market for them to expand in. But they're also doing this in the southeast. In addition to, you get close to a 4% yield, a nice growth rate, and the PE is very reasonable at 11 in a market where everyone's worried about high PE ratios.

Yeah, well, you mentioned Texas. So your next pick is actually based in Humble, Texas, one of the birthplaces, by the way, of the energy boom. And that is Third Coast bank shares, obviously a big difference geographically and probably economically between Appalachia and Texas. So how do you merge? Why do you like Third Coast?

And did they have anything in common with each other? Absolutely. Well, Third Coast has the fastest growing, tangible book value per share of any public bank in the state of Texas. And they've been doing it for a while. They've been increasing their ROA from 0.8 to over 1%. 1.2. They're doing a really, really good job.

Full disclosure, again, we're a big investor in that bank. But it's cheap. It trades somewhere between 1.2 to 1.3 times tangible book, about 10 to 11 times forward earnings. It's got the best probably peg ratio. in the country at 0.53. So I think it's probably the best value in a bank in the country. It's in the right market with the right team, with the right growth rate. You know, everything looks really good for it. So there's no, there's no reason why that bank

shouldn't continue to succeed. Well, we just talked to Rick Sandelli about a 10-year yield. It's back under 4%. It's one day. So I don't want to make too much of it, Dory, one day doth not any trend at all make. But if interest rates the 10-year were to stay below for 4% for a period of time, does that help or hurt your thesis on some of these banks? Well, I think it does help. And I got to tell you, I was really shocked to see that come down. I was shocked even with the rate cut. I was really worried that the market would, a 10-year would go up, just like it did a year ago when it cut 50 basis points and the 10-year went up, 50 basis of points. Being below 4% with that rate cut, I thought was really, really good.

It bodes well for the market. It keeps the gross stocks doing well. Banks get most of their net interest margin on the short end of the curve. Don't forget that. It's not the long end of the curve. So they're in good shape. Dory Wiley, Commerce Street Holdings, president and CEO. Dory, always a pleasure. Huntington Bank shares, Third Coast Bank shares.

Take care. Thank you, Brian. All right, you're very welcome. All right, we've got some breaking news from Capitol Hill. This time with Emily Wilkins. Emily, what's going on? Hey, Brian. Well, look, we're trying to figure out how this shutdown is going to end.

The Senate just tried a new move where they put basically a bill on the Senate floor that would only fund the Department of Defense, a Department of War. And we can now report that that bill has failed to reach the threshold. You're not seeing a great deal of additional Democrat support there. Now, this bill did have some other partisan priorities, but it shows kind of how senators are now trying to figure out other ways that they can end a shutdown, that they can end this stalemate. But we should also note, this is the last vote that senators are taking for the week. They're not going to be back until Monday. At this point, there's still no sign of a breakthrough. And if the shutdown does go throughout next week, what's going to happen on Friday is that federal workers are going to miss their first full paycheck.

We look to that as sort of the next big tension point and see if there can potentially be a breakthrough before then. Or you're going to have hundreds of thousands of people who are not getting paid. Brian? Give us a little sort of non-journalistic, just Emily Wilkins lives there type color. Our headquarters in D.C. is kind of right catty corner from where you are. It's very clear. It's a beautiful office looking on the Capitol. When you just like walk around for work, do you feel the shutdown? Do things feel slower? Brandon, I'd say things definitely feel slower. I mean, part of it is the Senate was actually supposed to be on recess this week.

So they're in. There wasn't a whole lot scheduled. It's interesting some of the other weeks that I'm up on Capitol Hill. There are hearings, there are tours. There are people coming meeting with Senate. and yet we're locked in this shutdown on the Senate side. House side, they have not been in since I think September 19th. And it's been very odd over there. You know, every day Johnson gives his presser. He delivers his message. Jeffries gives his presser. But other than that, you are seeing no work go on. And a lot of members are kind of wondering when this is going to end. And a few of them have even said, hey, we should be back in town. We should be working. The Senate just moved a major defense bill, not the one on the floor, but the other one last week. And some of House members, are saying we have other stuff that we can be doing at this point. But then again, the partisan nature of this shutdown, it's also gone to freeze other issues. Some folks I've talked to in the crypto space when it comes to that market structure bill, that there was a lot of momentum around. That has halted, and there are a couple of reasons for that, but part of it is the partisan

environment right now. All right, Emily Wilkins, Emily, thank you very much. All right, so as we head to break, folks, the sun is shining bright on the solar stocks lately, the Invesco Solar ETF, maybe down a little bit right now, but it hit a new 52y kai earlier today. It hit one yesterday. It's up 70% in the last six months. Folks, if we want to build out our AI energy dreams of these numbers, which are just almost impossible sounding, it is going to take all the power solar clearly seen benefiting.

Also coming up here on Power Lunch, another sector, your guest says you might want to look at because it could have been unfairly punitive. Like all the times that I was a kid, we're back right after this. Welcome back to Power Lunch. I'm Dominic Chu. Time now for your market navigator. So investors have been keeping a close eye on financials in recent weeks, but our next guest thinks one group in particular in those financials has been unfairly hurt by some of the headlines around potential credit problems. The silver lining here possibly is that that could translate into some investment opportunities. So here to make the case is Jay Hatfield, CEO and

CIO at Infrastructure Capital Advisors. ICA. Jay, thank you very much for being with us. I know that as a professional trader and money manager, you are not at least immune to what's going on right now with regard to these smaller banks and lending institutions. Many of these names in private equity, private credit providers, business development companies, and even prime brokers are sinking again today. What exactly do you make of the price action? Jeffries in particular is down about 10%. Thanks, Tom. It's great to be back. Well, we do, like your prior guest, think that this credit panic is overdone. There's certainly going to be credit provisions, but we don't think there's a systemic fraud

going on, particularly in the asset market. But we have an easier trade, so we think the best strategy is to not go into the blast zone, like your prior guest suggested, but go to a sector that's heavily insulated, which is the private equity group. These are holdings in our I-cap-large dividend fund and also in our preferred stock fund because they have mandatory as that standing. But these companies have much higher quality counterparties,

particularly on the asset backside. And we don't think they're going to have substantial losses, but if they did, it's not their capital. They're managing the capital. They have some small investments in it. But for other parties, they don't want to lose their cost. mine's capital, but it's not like a bank where we're just taking direct hits. So we don't think they have really any credit exposure.

They have other businesses that are growing rapidly. These are the best financial franchises in the world. They have long-term locked-up capital with good fees and then also upside from realizations. So there really is no better companies, no better brands like KKR. So when they go on sale like this, we think it's a great opportunity to step in. And we have targets that might even seem ridiculous from where they are now. But really, these are premium companies that should trade at premium multiples. All right.

So, Jay, we just showed a graphic showing that many of these companies, your picks here are down again. We'll see whether or not investors agree with you on that front. Jay Hatfield, Infrastructure Capital. Thank you very much. We'll see you again soon, sir. Thanks, Tom. Brian, I'll send things back over here. Hold on, Dom.

Just very quickly. I want to get your take. I mean, this first brands in Tri-Color, they're both auto parts companies, they both win bankrupt. This is a week-old story. I know it's a little bit confusing because there's a lot of moving parts, but this story is not going away, at least not yet, is it? It's leading CNBC.com and explain in plain English why the market seems to care. Well, it's not just that. It's maybe symptomatic of a broader credit issue that's developing. What you're seeing a lot in some of these smaller regional banks is not necessarily tied to what's happening with first brands or tri-color, but just this general idea that there are

charge-offs that are starting to happen. There are perhaps bad loans that are starting to percolate. This is what some folks are maybe looking at is maybe the early stages of a possible credit event down the line. Now, first brands, again, just part of it, but it's not just those companies that we showed you, right? If you take a look at all of the smaller and mid-sized regional banks in America right now, many of those stocks are taking bigger and outsized hits today. Just look at names like Zions Bank Corp, Western Alliance, some of those smaller mid-sized regional banks as well, really feeling some more of that pressure. whether or not this is the beginning of more pain ahead, yet to be seen.

But there is that concern right now. That's probably driving some of the sentiment that you are seeing, especially in the regional banks, places like, say, you know, Huntington, Western Alliance, Zions and others that we're showing you right now. Yeah, and the odd thing was those bankruptcies were about a week and a half ago, but the fallout still being felt. Dom Chu, appreciate it, buddy. Thank you very much. All right, after the break, the huge move India just made that could change the balance power in oil? Or did India make a big move? It's the energy story you have to hear.

Whether it's a bank loan story, the government shutdown, 10-year yield under 4%, D, all the above or E, something else. Either way, markets are selling right now. The Russell 2000 down more than 2%. NASDAQ down over 1%. This is session lows for the U.S. stock market. Meantime, there is a huge possible story in oil and gas happening right now. President Trump saying that India's prime minister told him that his country, India, is going to stop buying oil from Russia. That is a huge headline. The problem is that India is kind of pushing back on the story, not confirming the news or really even that a conversation between Narendra Modi and President Trump around Russian oil even occurred. Now, this matters because India is one of the two biggest buyers of Russian oil along with China.

Russia is generally India's biggest oil source with about one out of every three barrels of oil coming from Moscow. And it's also not just oil. India is the fourth largest importer of liquefied natural gas, LNG. So India could be a huge potential customer for American companies like Sheneer, Venture Global, or others. if they start to buy more American gas. But what exactly to make of this sort of he said, he said, what's really going on? It's bringing Bob McNally of Rapidan Group to kind of talk about that and more.

Bob, do you have a take on this somewhat odd story with conflicting storylines? I do, Brian. Let's look at the fire behind the smoke. What do we know for sure? Gaza's done for the time being, and Iran is parked. Russia is next. That is the top priority, number one. Number two, in President Trump's mind, the key to getting Russia to the table is squeezing their revenues. And the key there is India, which, as you mentioned, went from a country that imported almost no Russian oil before the Russian

invasion of Ukraine to is now the biggest off-taker now at about 1.6 million barrels a day. So we can be pretty sure, especially India under an additional 25 percent secondary tariff, the president slapped on. Their talks going on and oil and Russia came up. On the other hand, as we see with President Trump, we saw this with Iran, we saw this with Hamas. He will go the last mile in negotiating and then further. So today's news that there'll be looks like talks coming up, perhaps the president, President Putin. President Trump wants to do this diplomatically, but it is topic number one. He'll mix diplomacy with escalation and threats and India is in the crosshairs on that point.

important point, as you normally do, Bob, that India bought almost zero Russian oil until about three years ago. The price cap hits. The price of oil goes down. They start buying a bunch of Russian oil. It's not like they started using oil three years ago. So where was India getting its oil before now? So India was getting its oil from, like many, the Middle East, Kuwait, Saudi Arabia, Iraq, those countries, when not under sanctions Iran, those countries, produce the same type of barrels that Russia produces. And as you noted, after that Russian invasion of Ukraine, President Biden and his advisors went to India and begged them to become the biggest importer of Russian oil. We wanted them to take those Russian barrels, because otherwise they'd go off the

market. And if they went off the market, gasoline prices in the United States would go to $5 a gallon. So imagine when India's whiplash. A few years ago, they're being begged by the United States to take Russian oil. Now they're being told they have to stop it. If the story somehow ends up being true, let's say that India says officially we're not going to buy any Russian oil or buy as much Russian oil. Russia still needs to sell more oil because Ukraine keeps blowing up or hitting their refineries with drones. What happens to the price of oil then? It would seem to me the price of oil globally is going to go way down because Russia is going to have to make its oil so cheap that even the greatest Russia haters are going to have to start to think about buying

their oil. Right. Well, so there's two possible effects. If Russia can still sell all of that three million barrel a day or plus seaborne oil, but it has fewer willing buyers or more desperate willing buyers, it may have to lower the discount. Right now, Russia only loses a few dollars a barrel below the world price. Those sanctions are pretty leaky. If you tighten the sanctions, you widen that price cap, you could force Russia to have to discount, maybe $10, maybe $15 a barrel below world prices. And if world prices, as I and many other barrel counters expect, are headed down because of global fundamentals, that's a double pain for Russia. However, however, if we do sanctions so tough on Russia that it has to sort of stop producing, it doesn't

have a lot of storage. If it can't place those barrels, it'll have to shut its wells. And going into winter, they won't open up until the spring. If we lose a lot of Russians, supply, it could put upward prices, upward pressure on prices everywhere. So Brian, what I'm saying to them, the White House says you're going to do it, do it next year when we're going to have a glut. As we talked about a few weeks ago, it could be just what the doctor ordered, removing a million or two barrels a day, could be just with the doctor ordered next year, perhaps not right now. Well, okay, you call it the great steepener right now. The price of oil here in America, WTI is at 57 and a half bucks, which is like low 50s inflation adjusted for just a couple of years

ago, Bob, how low does oil go? Oh, at least we think the low 50s, high 40s on daily prints. Look, we've got supply growing at roughly three times the rate of demand next year. It is an oversupplied market. It's a tsunami. However, we think something has to give. OPEC plus is going to have to cut, and we think they're aware they probably have to do that. Cut, because they've been adding bills. I know. They're going to have to hit the brakes, slam it in reverse, and do cuts, big cuts next year. If they don't, then possibly, President Trump will be emboldened and the Europeans to take more Russian barrels off the market. It'll be a free fire zone on Russia oil just what the doctor ordered.

If neither of those two things happen, Brian, if OPEC plus doesn't cut under this next year, or we don't sanction Russian-Iranian barrels, then you know who is going to have to take it on the chin. As we did in 2020, it'll be shale oil production. We lost two and a half million barrels a day in a few months. The price had to drop into the 30s and 20s to do it. But one way or the other will balance the market and something has to give next. year. That's the bad news. Wow, a lot going on suddenly with oil and energy globally. Bob McDally, Rapidan Group, really appreciate it. Thank you very much. Thank you. All right,

now let's get over to Kate Rogers for CNBC News Update. Brian, a judge permanently blocked the Trump administration from withholding $34 million in anti-terrorism funds from New York to protect its transportation system. The federal government pulled the earmarked money from the Metropolitan Transportation Authority last month based on New York's Sanctuary City policy and the state quickly sued. Today, the judge called the move a blatant violation of the law. Nearly two dozen states in Washington, D.C., filed two lawsuits against the federal government over the cancellation of a $7 billion solar grant program aimed at expanding solar access to low-income areas. The first suit will seek damages while the second

seeks the program's reinstatement. The EPA terminated the grants in August. And the U.S. Mint shared the design of a commemorative $1 $1 coin honoring the late Apple co-founder and CEO Steve Jobs. It shows a young job sitting in front of a California landscape wearing his signature turtleneck. The coin is inscribed with Make Something Wonderful.

The Mint says it will cost $13.25 when it becomes available next year. Brian, back over to you. All right. Thank you very much, Kate Rogers. All right, after the break, speaking of Apple, Apple shifting into high gear with a new sports venture. We're going to talk about Apple. Apple, TV, and car racing.

Vroom. Next. Well, welcome back to Power Lunch. Big moves could be coming in the world of auto racing. CNBC has learned Apple, close to finalizing a U.S. media rights deal with Formula One. Expected to be worth around $140 million per year yesterday. Alex Sherman still hate him for this. Speaking with Apple's senior VP of services at EQ about auto racing in America. watch this.

I think in the U.S., everyone talks about how big Formula One is now. And the reality is, is because it was nowhere. And so if you're nowhere, it's gotten huge. But the truth is, it's not huge yet. It's only about a million people or so that watch a given race. That's right. And so when you compare it from a sports point of view, that's pretty tiny. So there's a huge potential for the sport.

The aforementioned Alex Sherman joining us. I'm very jealous you got to do that. I was wondering why you said you had to do that. I was wondering why you said you hated me. Well, because I love Formula One. Before Formula One was cool, I was one of those million or about 200,000 people that watched every race. Formula One had almost no value to the media about 10 years ago. Now it's worth 140 million. What happened?

Well, Drive to Survive helped the Netflix series, which has really increased popularity. Though, to be fair, you could start to see the value increase before Drive to Survive. I think it has a lot to do with the evolution of the brand of it. F1, which has really become synonymous with high-end sponsorship. And that has driven up the value. It has become a scene. The audiences, the in-person audiences for F-1 have ballooned in recent years. Obviously, they've expanded into the United States quite a bit.

They have multiple races now in the U.S. And so this weekend. This weekend in Austin. I can't afford to go because the tickets have gotten so expensive. And I've actually raced on that track, my own car. Right. So as I said in that clip, F1 races on ESPN average about 1.4 million people. I think the Apple play here is that there is still room to go, even though that group of races is going to transfer from traditional cable TV to Apple TV. So you're going to need an Apple TV subscription if you don't already have one in order to watch F1 races in the U.S.

That deal has not been finalized, but I can tell you it's coming very soon. That's the idea. So I have Apple TV, but I'm going to give you, you know this, and O Eddie Q, a little, there's an app. There's a Formula One Apple TV app, which some of us pay about $100 a year. Yeah, big racing fans. And we can go between the international feed, the U.S. feed, we can look at every driver's in car. We can hear them cuss out, other drivers. I watch on the app. I don't watch on ESPN, no offense, ESPN. What happens to the app? I don't know. I hope we will find out soon. That is a question that I have been asked by others. I asked Eddie Q. to try to get into the different details of the deal yesterday. He refused to answer because the deal is not public. But I do hope that we will find out the details of this very soon. And also, I think the other question is,

what is Apple going to bring to the table from a viewing experience that we haven't seen before? Will there be a tie-in with the Vision Pro? Maybe you can be in the car. Look, Apple already did an F-1 movie. That is how the relationship began. You and I ain't fit in that car. No.

No, no. You're a tall guy, too. We're not fitting in that car. And Eddie Q said to me, I asked him, have you racing an F1 car? He said to me, too. Look, I'm not like, you have to be like a prime athlete to raise a car. And these guys are tiny and they have to be, I mean, people don't realize how hard it is. So this, so this happens, wink, wink, if it happens, ESPN goes away. ESPN goes away for F1 racing. Unless. So it wouldn't need like a new crew, broadcasters, pit reporters. Look, you know, Sky Sports does this internationally. So again. That's us. Right, that's us. For now. We don't know exactly what the arrangement is going to be between international and U.S. yet. And we don't know the tie-in between the app. But look, theoretically at least, if Apple follows their MLS playbook, they're going to be building this thing from scratch.

So they're going to be producing the games, and it's going to be slapped with an Apple brand. And this thing is going to be an Apple product that has the Apple bells and whistles, whatever they may be. Next segment, we got to do something about World Cup soccer ticket prices. When are we going to do that? They're extremely expensive, just like your F1 tickets are. I know he works for Fox.

I'd love to get Alexie Lawless on this and just have him go off on how much the ticket. It could be a future CNBC Sport videocast guest. And also, by the way, don't forget. Lawless, sure. Why not? You can get him on the show. Let's do it. Next weekend, the CNBC Sport Weekend show begins.

Every Saturday for the next six Saturdays, six new episodes of that coming, beginning on October 25th. On CNBC. Wow. On this very channel. I understand one of those will be me. One of them will be you. With the NASCAR. In fact, I mean, maybe two of them, I think, are you on that show.

I'm going to watch it now. Watch yourself. You can't watch yourself. You ever watch yourself? It's like, oh, it's terrible. It's awful. Alex Sherman, you're not awful. Thank you very much.

All right, coming out the battle between the U.S. and China, where China's rare earth policy continues, you'll hear from a key player in the battle with some words of caution. Next. Let's wrap it up by talking some more about some of the rare earth and critical minerals companies that become. red hot in the past few months. I mean, look at these returns this year. So far in 2025, some of these stocks have just absolutely boomed on optimism around their core business and or hope the government might buy in to a stake. Just a couple of names there. But as you know,

nothing is guaranteed in the stock market. And the head of a privately held rare earth company issued kind of a warning on CNBC earlier today. The one that we're concerned about, at least from the U.S. government's standpoint, is they reduce the price of serum and lampum and neodymium and prasiodimium, which is the bulk of the rareth deposit to a very, very low number. And then they maybe even discontinue selling things like dysprosium and turbium, the ones that are used that are very rare and are used in military applications. Because the result of that is all these new mines that are trying to be funded right now,

you've got some of them listed on your screen, are going to have some real difficulties because they're going to be operating in a negative. Now, that's just one person's view, but he is in the sector, so one would assume he knows what's going on. All these stocks right now are lower, and what we've been reporting, what we have said on this show a few times worth repeating, that while there is a lot of hope and optimism around many minerals and metal miners and these mines and rare earth, there's still a long ways to go for some of these companies. Many are focused on critical mineral mines that hope to start production in a year or two, or scrape the ocean floor for metal and mineral wealth.

A few of these names currently have no sales. They have no revenue, but investors are clearly optimistic. Or maybe they're just playing the technicals and riding the momentum. The group has been a huge moneymaker the last few months. Time will tell if it can continue, but not all these companies are created equally. Remember that. Thanks for watching.

Closing bell.