Power Lunch - Stocks Move Toward Narrow Gains 10/1/25

Episode Date: October 1, 2025

We discuss the market environment with Citi Wealth's Kate Moore. Tortoise Capital's Rob Thummel gives his energy picks.And chef & restaurateur Bobby Flay joins the show and gives his outlook on the restaurant and consumer. 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.

Full markets and your money, mostly higher. Investors looking right past the old government shut down. Welcome to Power Lunch, everybody. I am Brian Kelly is off. It is mostly green on your screens today. Stocks, they keep going higher. The S&P 500 crossing above 6,700 for the first time ever. These are not huge moves.

But as we showed you yesterday, investors tend not to care about all the D.C. in fighting. We'll tell you maybe what they're actually fighting over. Plus, why the end of the EV tax credit could be good news for one, red hot stock. And speaking of hot, Super Chef, an entrepreneur, Bobby Flee, searing the competition in this year's CNBC stock draft. He is here in studio, Bobby Flee in a few minutes. All right, there is a lot to do. But let's begin here. The markets and your money higher to begin the month.

Happy October, by the way. So what are some of the key issues to watch as we just kind of slide into the fourth quarter? Kate Morris here. She is City Wells Chief Investment Officer. Kate, it's great to have you on set. We're starting the fourth quarter. Markets have been hot this year. Don't seem to care about a looming government shutdown. Why not? Well, because it doesn't tend to last very long, right? We've had like 15 government shutdowns since 1980. Most of the time, it's de minimis market impact. The one thing I do worry about, Brian, is that, like, we have some fragile sentiment out there. People have been anxious for much of 2025, whether it's around policy or growth. And if it goes on for too long, I don't think it inspires a lot of confidence.

That said, I'm not worried about it hurting earnings. And that is what I'm really anchored to in terms of our equity positioning. Okay. What if we get some sort of crack in AI? Like, NVIDIA doesn't raise guidance or even, dare I say, cuts guidance. Like, what were to happen if that were to happen? I think cuts to guidance in terms of spending or into demand projections would be really negative for sentiment. Really negative, right?

Hugely negative for sentiment. But I don't think that's going to happen in the near term. In fact, well, let's hope not, right? All of our channel checks suggest the spending will continue. And one thing I keep anchoring to is that AI spending and investment is existential for almost every company and every industry. Will that change at some point? Perhaps. But in the near term, especially over the next couple quarters, I think the money is going to continue to flow.

But you're right. this is a risk. Everyone is very concentrated in this part of the market. They own the same names, but they're high-quality names that are generating a lot of free cash flow and that are really driving and powering a lot of the innovation in the economy. Is it true that the following two statements can both be true? Okay. That statement number one, AI is real. It's going to be spectacular. It's going to change the world. Yes. Number two, there is a chance that some AI-related stocks are overvalued. It is possible. Right now, though, most of what's been driving the market higher has actually

been the earnings story. So if we get to a place where we get significant multiple expansion with kind of flattish earnings growth there, I would get a little bit more worried. But we've seen analysts be consistently too conservative in terms of their estimates for earnings for these stocks. So they have to keep on chasing and revising up their estimates after the companies talk to them, either at a conference or on earnings calls. It is possible that some of them may become overvalued, but right now, that's not our baseline. City wealth pays you to worry so many of your clients don't have to as much, right? I worry a lot, Brian.

I know you do well. That's your job. You get paid very well, I'm sure, to worry so your clients don't have to, or at least don't have to as much. So what is Kate more worried about? I'm worried about this growing K-shape in the consumer. This is something I'm sort of fixated on, is that the aggregate data, even if it's coming from consumer stocks and earnings, or the aggregate economic.

economic data around the consumer looks much better than what's actually happening beneath the surface. That kind of the bottom 40% or even maybe bottom 50% of households, you know, are still facing inflationary pressures. They're not feeling as confident. They're changing their consumption patterns. And then overall consumption is being carried by the upper income cohorts. I'm worried that that creates lots of fractures going forward, not just for companies, but also, of course, impacts how people vote. It is true. We had the CEO of Malibu Boats on yesterday. He brought two beautiful boats, and he kind of set the...

Got boats in here? Out there, they were outside, because they were too big to fit in here, are beautiful. But he was saying that the borrower, the middle-class sort of consumer borrower, who might borrow money to buy a boat, not a cash buyer. They're starting to feel that a little bit. We got Bobby Flay coming on in a few minutes. He'll talk about why, you know, a couple pizzas in New York City is now $60 and it's probably never going down.

What happens if that case shape, rich going one way, middle, lower income, go on another, starts to end? Does that affect the equity market? I think you've got to be even more differentiated in your equity exposure if we end up getting this broader spread between, you know, households and consumers who feel confident and those that are facing pressure, either from inflation or from low wage gains. And I think that leads to greater differentiated not just in the consumer stocks, but also in some financial services. I would also argue, you know, in other parts of discretionary spend, I'll be watching travel very closely there.

What are you watching? I'm watching to see. In travel. Like non-business airfares. Okay. That's what you track. Like, like. Yeah.

Because business. Southwest to Orlando. Perhaps. I mean, I'm not looking at that specific route, although now I want to go on vacation after you said that. Okay. But more specifically, also what happens in terms of, you know, fast casual restaurants. We've heard from a lot of the retailers that there's been sort of trading down in some

skews or consumers being more value-oriented. So I think within the retailers, you're going to see even greater differentiation as well. I'm watching for kind of more pair trade possibilities as a result of the K-shape. Let me ask a kind of a gross question. And listen to the viewer, you know, I mean, I, we're CNBC. So we have a specific audience, but I didn't grow up with that. My parents love them, solidly middle class, right? Travel around the country. There's jobs and lost jobs and whatever. Does any of that stuff matter to the equity market? Because the equity market continues to shrink, right? The number of public companies continues to get smaller, the number of available

shares through buybacks tends to get smaller, and the amount of money in the world tends to get bigger. So just on that basis alone, more money chasing fewer things. I think I got a C-minus economics, Kate, but that to me says prices are probably going to keep going up for the long term, simply because there's not as much stock as there used to be. Yeah, and there's another dynamic here, which is this buy-the-dip mentality is so embedded in all investors, institutional, individual investors, and everyone in between. And so even when there are these moments where there's a pullback and risk assets, you see people stepping in immediately and looking to add because they see this long-term trajectory.

Like the two-week tariff terror. Totally. Right. COVID, right? COVID hits March. The world shuts down. The market collapses three weeks later, starts to turn back higher and go straight up for two years. And rip tire. That's right. So I think that psychology, that behavior, has to be a big part of your process.

Like some people are saying from a fundamental perspective, perhaps we should have like a 5% or a 7% pullback. That may be true. I don't know that we could get to a 7% because the dip buyers out there. Won't let it happen. We'd have to have a big exogenous shock, something that kind of destroys our expectations for a moderate growth environment. Like the tariff shock, the president saying, I'm going to do 125% or whatever it was. Yeah. We had that moment, the Deep Seek Day.

I think it was January 26, I believe, speaking of, that's my father's birthday. So, you know, that's kind of why I remember. But that's kind of the thing. That type of exogenous event that would cause a problem effectively. Or as you were getting to before, like a big markdown in some of the AI expectations, even if it's from one company that was extrapolated across the board. So these kinds of shocks could lead to more of a pullback. But I think in general, we're going to end the year higher.

Well, I think that's the reason. I think the shutdown, a partial shutdown is why we, have behind you look is the capital. Oh. There's a big white house. I thought we were going to have an array of Bobby Flace food. That's hopefully next. Yeah. That's coming up. Kate, Kate, more city wealth. Really appreciated Kate. As always, thank you. Speaking of Washington, D.C., we got some breaking news out of Emily Wilkins. Hey, Brian. We are getting some more details about what these impacts from the government shutdown is going to be. OMB Director, Office of Management Budget Russell, Vote. He was speaking right now with how.

Republicans, we have some details from that call, vote saying that the layoffs. And remember, he's sort of the tip of the spear when it comes to federal layoffs that might happen during the shutdown. He says they might begin happening in another day or two that they want to see if they can give some Democrats some more time to come along with Republicans and keep the government funded. He also warned Republicans on that call that a couple of programs, like programs that help women and low-income children get food, could run out in the next one to two weeks.

Again, this would increase the pressure on lawmakers to either find a solution or for Democrats to go along with Republicans on keeping the government funded. And we're hearing similar from the White House where Vice President J.D. Vance just spoke. He said that he's not sure exactly how long a shutdown could last at this point, but he also warned that layoffs could be coming in the next day or two. Listen to what he had to say. We are going to have to lay some people off if the shutdown continues. We don't like that. We don't necessarily want to do it. we're going to do what we have to to keep the American people's essential services continuing to run.

Now the Senate voted just a few hours ago and once again failed to come to an agreement on keeping the government temporarily funded while they work out that longer fiscal 2026 spending. Now the Senate does plan to try again, but they will be off tomorrow for Yom Kippur, which means the next chance that they're going to have to get the government back funded is going to be on Friday. And Brian at this point, I'm hearing they could continue to vote Friday, continue to vote through the weekend, continue. to vote next week. I think it's a huge question right now exactly how long this shutdown will last, but we are beginning to get a clear idea of some of the impacts. Yeah, and I think, Emily, you know, sadly by now, we know the impacts because we've been through so many of these in the last 10 or 15 years. Do we, I'm sorry, I should know this. What are they fighting over? Like, what's the sticking point on either side? So the big thing right now is that Democrats are saying,

hey, there are these premium tax credits for the 200, sorry, rather 20 million Americans who get their health care through the Affordable Care Act marketplace, the public marketplace. They've had some help in keeping the prices of their insurance down. However, those tax credits would expire by the end of the year. And Democrats are saying, hey, Republicans, we're going to need to work with you to extend those tax credits further. Now, there are some Republicans who agree that they need to be extended in some way, shape, perform, but they want to make some reforms to it. It's going to take some negotiations. And the

view from Republican leadership is let's fund the government first. Then we can work on these tax credits. All right, Emily, Wilkins, Emily, thank you very much. Speaking of D.C., by the way, here's a live look at Democratic leaders. They're holding a press conference. They're going to, I'm guessing, I don't know what they're saying. They're going to blame the Republicans. The Republicans of a press conference blame the Democrats. I just summed up Washington, D.C. Perfectly. So let's move on. All right. So what does the bond? think about a potential government lockout? Well, let's find out. Rick Santelli, Rick, kind of like the stock market. The bond market's probably used to it at this point, but at what point does it

start to matter? You know, I can't even guess at what point it starts to matter, but as previous guests have been saying all morning, pretty much, we've seen this awe before. It is a kibuki dance to some extent. But of course, if it lasts a certain amount of time, and I'm not sure what that timeline is the markets might pay some attention. But today, they paid a whole lot of attention to Week 8-ADP report, weakest since March of 23, in addition, a negative revision to last month, and markets were off to the races. Upside and price, downside and yield, Sully. And the big thing is, if you look at twos and tens on the same chart, is that two-year yields dropped much more aggressively than 10-year yields. And even now in the aftermath, we're down about what? Seven-based

points in a two-year. We're down about half that in a 10-year. And the reason that's so important is because weak jobs underscores the labor market weakness, which has been highlighted by the Fed over inflationary issues. So the two-year yield dropping really gives us a notion of how important any weakness in the labor market is with respect to the current strategy of the Fed. But if you look at the dollar index on that same 12-hour chart, you'll notice it's come back. So it didn't pay as much attention. And by the way. All the percentages for Fed easing at the rest of the meetings this year were upgraded a bit. As a matter of fact, technically, we're over 100% on the next meeting, which means you're pricing

just a smidge more than 25 basis points at the moment. And finally, two year and 10 year, going back to the third week in August. If we closed right here, Brian, we'd be at a two-week low-yield close in twos. We'd be at a one-week low-yield close in tens, which underscores what the yield curve has been doing today in particular, it's steepening because short rates have dropped so much more. Back to you. Rick, thank you. All right now, I've got a news alert on a pair of semiconductor giants. Christina Ports and Evellis, what is the news on these semiconductor giants? Well, we know Intel and AMD have been longtime rivals, but according to Semaphore, they are in early talks for AMD to use Intel's foundry services, more specifically their manufacturing factories.

It could be a symbolic win for Intel as it really tries to rebuild credibility and chip manufacturing. And the deal fits a very common pattern just over the last two months where Intel's been collecting endorsements from, and I should say also money, NVIDIA, the White House, reportedly Apple and TSM for potential investments. We're calling them the, or I'm calling them the rescue squad. Though details on these deals are very murky. We don't know how much exactly from, I should say, Apple and TSMC. but the catch as Intel's foundries really can't match TSMC's cutting-edge technology just yet. So AMD would likely only shift less advanced production there.

Still, we counted as meaningful. At least investors are. That's where you're seeing the stock pop at least 6% right now just on the fact that AMD could potentially either become a customer or an investor, you name it. And this is less about immediate revenue and just really more about proving they could be a viable domestic alternative when U.S. chip into. independence is such a political priority right now under President Trump. But some argues this doesn't necessarily change the underlying problems of Intel,

which has to do with just their advanced manufacturing capabilities, not being up to par, Brian. All right, Christina, I dig in more, but we have some breaking news now to the White House. So Christina, Ports on Evelace. Thank you very much. Let's go back now to D.C. with more news from the White House. Amon Javers. Brian, we just got a social media post from the president talking about the Chinese lack of purchases. of soybeans, which have been happening.

They're expected to purchase billions of dollars each year. That's not happening this year, a part of this ongoing trade negotiation between the United States and China. So the president taking the social media just a short time ago to say the soybean farmers of our country are being hurt because China is, for negotiating reasons only, not buying.

We've made so much money on tariffs that we're going to take a small portion of that money and help our farmers. I will never let our farmers down. Sleepy Joe Biden didn't enforce our agreement with China where they're going to purchase billions of dollars of our farm product, but soybeans in particular, it's all going to work out and very well. I love our patriots, and every farmer is exactly that. I'll be meeting with President Xi of China in four weeks, and soybeans will be a

major topic of discussion, makes soybeans and other row crops great again. So the president trying to alleviate some of the financial pressure on American farmers as a result of the trade war by diverting some of that money that's coming in from tariff revenue from American companies that are importing and diverting some of that. He doesn't say how much some of that revenue on to American farmers. Separately, I can tell you, Brian, that press briefing that just broke up here at the White House, Caroline Levitt was talking a little bit about lithium America, as the company that the U.S. government is now taking a 5% stake in. I asked her, you know, what is the rule of thumb here? What's the principle upon which the government is resting in terms of demanding an equity stake

or a revenue stream from American companies. And what she said is that this is a creative solution that the president has come up with, to take these equity stakes in American companies, take these revenue streams from American companies in a way that will help the American taxpayer and deal with the deficit. The president, she said, is a creative dealmaker

and looking for creative outside the box thinking in terms of how to solve some of those deficit-related problems. So the clear implication from this White House, Brian, is we're going to see more of those types of equity deals with American companies, perhaps in the weeks to come. And then, of course, if the Supreme Court rules that the tariffs are actually illegal, then almost everything we've been talking about for the last seven or eight months just goes away. It just ends and we start over.

The enormous rush to undo that, you can imagine there's going to be a lot of churn as people try to figure out where things are going to land as a result of that. Of course, as the administration tries to figure out how we can reimpose tariffs with a stronger legal foundation that will stand a Supreme Court test. Dare I say the administration would need a tush push. That's a reference to your Eagles love in Philly birth. We love the tush push in Philly. Jabbers.

Thank you very much. It's not illegal, Brian. It's not illegal. There you go. By the way, BG is the big soybean company in America. That's a stock to watch. Right on deck. While your next guest says the death of the EB tax credit is a good thing for Tesla.

Plus, we are cooking up something big here on Power Lunch. Everybody chef, entrepreneur, restaurateur, Bobby Flee is in the house because he is leading our stock draft. And you'll be here on set. All right, welcome back. Let's talk about Tesla. Shares having a big year up nearly 80%. And your next guest actually says the end of the EV federal income tax credit could be good

news. Joining us down is Gene Munster managing partner deepwater asset management. Gene, why would this be good news? Brian, before that, I just want to acknowledge. that there is a near-term benefit undoubtedly from the tax credit. If we zeroing on the numbers we're going to see tomorrow, this 400 and call it 75, 80,000 deliveries, about 40,000 of those are likely coming from pull forward in demand because people want to buy a car that's 15% less expensive. And so start there is that cheaper cars do sell more. But I think where the conventional

wisdom kind of gets off track is taking a step back and looking at the bigger picture. In my experience, I've talked with a handful of people who have purchased cars, first-time Tesla buyers. And the first thing that they have said to me more recently is they are surprised by FSD. And what we saw was the sunsetting of this tax credit effectively has caused traditional automakers to slow their investment. Since the beginning of the year, when this became clear, we saw GM Ford Volkswagen all make comments that they are entombed. Toyota about cutting their EV factory output, the number of models, and in general, think about a 20 to 30 percent cut just over the past few months on this. And so the reason why I mentioned that commentary from people who are buying Tesla's now about

FSD because they get that three-month free trial is that in fact if these traditional car companies have taken the bait and decided to pull back investment EVs because of the removal of the tax credit, it puts them in an awkward position because what's going to happen with autonomy, it's not going to slowly improve. We're going to have this breakthrough moment. And for them to monetize it, for traditional auto to monetize this, they have to have an electric fleet. You're not going to have a gas powered EV. That's just not going to happen. Yeah. And so by them essentially under investing, they're not going to get to scale. It's a catch-22. And I think that they've really read the tea leaves wrong in terms of how to invest

around the removal of the tax credit. Yeah, and for the un-initiated FSD is full self-driving, and I have friends that have it. They barely touch the wheel or the gas pedal or the brake pedal on their way to work. It just basically is almost like a private chauffeur. You got to be wary. You got to kind of keep ready. It's not 100%.

I want to make that clear. How big of a technological advantage does Tesla have over some of its competition? So on the production of EVs, again, that's the method that they're going to monetize. You have to sell an EV in order to sell FSD. On that perspective is that they're making vehicles profitably. When you compare to the rest of automotive, they're losing tens of thousands of dollars. I think Polestar was like $40,000 per vehicle. So I think that that's, it doesn't measure like numbers of magnitude of difference, but I think

it speaks to, you got to be at scale. You have to be manufacturing EV at scale to be profitable. So I think from that perspective, check the box. And then this other part of the equation about where they are at with FSD and how close are we in the comment about March of Nines? It needs to be 99.99% accurate or whatever that March of Nines is for to get the nod from regulators. From that perspective, it's really coming down to two companies. It's coming down to, of course, Tesla. And then I think what's going on with Waymo.

I do want to mention, Tesla, what they've been doing in St. in Austin has been slower on the Robotex. I believe they're seeing more interventions than what they were hoping to, which has caused that slowdown. And I think does speak to, we're just not there yet, but I think we will have a moment. It's not going to be linear.

I think it's going to be a breakout moment when it comes to the ability of these models to drive safely. What did Jim Morrison saying to keep your eyes on the road and your hands upon the wheel? I think half of that would be true with full self-driving. Gene Munster, Deepwater Asset Management, Gene, thank you very much.

Thank you. All right. From no oil to oil is Warren Buffett about to add on to his already massive energy portfolio? A new report says Berkshire Hathaway in advance talks to buy Occidental Petroleum's chemicals business for $10 billion. Now, of course, Berkshire already by far the largest owner of Oxy stock, with facts that showing about a 28% ownership of the entire company. Let's talk about that and more. An Energy, Rob Thummel is a four-star energy fund manager and senior fund manager at Tortus Capital.

Rob, Oxy's got $24 billion in debt and about $27 billion in revenue, so it's not quite one-to-one, but it's close. By comparison, Chevron has about $29.5 billion in debt on $187 billion in revenue. A very heavily indebted company, do you think that Warren Buffett's just going to have to buy out the rest of the business? and kind of take it private? Well, Brian, I don't think Warren's going to do that because I think he's had plenty of time to do that, but it's a good idea. But I do think Warren's going to help Oxy reduce its debt, right? $10 billion, if that's what's paid, going to be able to reduce that debt load a lot.

Now, the debt to ebada ratio is not quite as bad as that revenue or debt-to-revenue ratio. The debt to EB-Dah is going to drop down to about 1.2 times if this transaction we materialize, and that's a little higher than what everybody else is. Like, for instance, Chevron's probably well below one times, but it will have. help reduce the debt and I think make the Occidental stock a little more attractive going forward. But you're talking about reducing it to those debt levels if this deal occurs, right? Yeah. I mean, so where is Oxy now when it comes to debt levels? Because it is, I think,

one of if not the most indebted big cap oil and gas company, maybe by far. Yeah, it's closer to two times, about 1.8 technically, I think, if you look at the current EBAA. And that partially that's because the EBITDA is volatile, right? It goes up and down with oil prices to a certain extent. And so, So that debt to EBITDA level can really go up and down based on what the oil price is going to be and what you think the oil price is next year. Why doesn't Buffett just buy the whole company? Well, he might do that. You know, it's a classic Buffett company. High free cash flow, easy to understand business, businesses that everybody needs.

So, yeah, I think that's always a possibility. He's kind of like buying bits of it, right? He owns 28% of the stock. Now he may buy the chemicals business to kind of, you know, I'll take the potatoes and I'll take some vegetables. You haven't gone for the entree just yet. We'll see. Would you own Occidental here or on this news, Rob? Yeah, so with the energy sector evolving, we think oil prices are actually going to fall. So we're not an interested buyer right now in Occidental.

We would actually rather own maybe a company at Occidental loans a little bit of, which is Western Midstream. Western Midstream is actually the energy infrastructure operator, and Occidental is one of the largest customers. The reason why we like infrastructure a lot more, a lot more fee-based cash flow, less commodity-based cash flow. You know, you look at Western Midstream, it's got a great CEO and Oscar Brown, and the board is high-quality board. It's done a great job of allocating capital. It's got a 9% dividend yield. So companies like that is what we like to own as well.

And so companies like that, we like EQT on the natural gas side more than the oil side as well. And then lastly, you know, we like electricity is the new oil. And so companies like Vistra are our companies we like to own as well. Electricity is the new oil. I might have to steal that one. Rob Thummel, great take there. The OxyNews, a big one. Rob, thank you very much. Thanks, Brian. All right, folks, if a government shutdown occurs, and if a government shutdown lingers, that means a lack of key economic data coming out of the government. Don't worry.

Your next guest has you covered on the data front. Plus, Bobby Flay's team sizzling. And this year's CBC Stockdraft, he is here, he is on set. Talk about that, the restaurant industry, and why the price of your food probably isn't going down anytime soon. All right, with the government likely closing down for a period of time, economic data is going to be MIA, enter Zeta Global. The marketing and AI company has billions of data points across all industries. In fact, their main economic index tracks the overall health of the American economy, and in August, that index fell, marking its fifth straight monthly decline.

Next release date is on Monday, October 6. Let's get maybe an early look at some of that data also, just announcing its biggest deal. ever buying marketing tech company, Marigold, for $325 million. Joining us now is David Steinberg. He's the CEO of Zeta Global. David, we're going to maybe brand this as David's Zeta data. What do you think? I don't know.

My wife and kids might like it, but the, you know, as you've said in the current environment, getting access to data is getting harder. and what we're seeing is more and more people looking at private indicacies like the Zeta Economic Index. Yeah, because with, you know, and now there's all this also, it's not just that government data may not happen, David. It's that people are arguing over the veracity. Well, they don't measure this and they don't measure that enough. So everybody's doing everything. When I'm looking at a company like Zeta Global and thinking, well, they have so many data points that, you know,

respectfully to the federal government and all the great people that work there, I'm going to, I'd rather go to you. So what are you seeing and your team seeing from the American economy? Yeah, well, as you know, we're looking, Brian, at 242 million Americans across trillions of signals. It's a tale of two cities. The wealthy are spending more and everybody else is not. And as a part of that, you're seeing discretionary spending dropping dramatically, but you're seeing, essential spending going up, which is keeping things pretty flat. I would say the single biggest theme that you're going to see in the new Zei coming out next week is an aversion to risk. We're seeing people start to get more nervous about risk, even though we're seeing them continue

to focus on retail purchasing. Yeah, and we're looking at your graphic now. Some are up, Some are down, and I see automotive down about four points. So you heard maybe Kate Moore at the top of the show from City Private Well saying, basically, we're going to be looking at discretionary travel. Sounds like you're kind of looking and measuring some of the same stuff. How much are people spending on the stuff they don't need to survive? Right. And we're seeing that go down.

We saw probably the largest drop in propensity to take down credit from July. into August, a 22% drop. When people are scared to access credit, that really affects bigger items. It affects discretionary items. Whereas, once again, going into August and then we're seeing it going into September, a little sneak peak, we're seeing that essential items are being purchased at a greater rate. So that's offsetting it and keeping the economy growing. You know, we saw the Zade Economic Index go down by four points from July and August.

You could probably see it go down a little bit more into September, but that still means GDP is growing nicely. So, you know, we believe GDP will grow at or above 2% through the rest of the year. It might not be the 3 or 4% I think everybody would like. But, you know, we could see it eke out high twos, low through the rest of the year. but it's really being driven today by essential items that people have to buy that they continue to stock up on. And, you know, Labor Day will have a nice spark into September around a lot of the sales that retailers were doing. So I think you'll see a little nice step up into September. You know, this lines up almost exactly with what the CEO of Malibu Boats was saying yesterday on our

show where he said they're seeing a slight hit to the borrower boat buyer, meaning the people that are not buying a boat with cash, they've got to finance the boat. He said, that was wobbling. Sure, I can't remember his exact words, but something like that. It sounds like your data is showing the same thing, that maybe there are some cracks starting to form in the borrowing economy, for lack of a better term. Well, with consumers dropping their interest in credit by over 22% from July and August. I think that's pretty, pretty bold statement. It's a big number. Yeah, it's a big drop, right? And I think that's going to affect large items for non-wealthy people. To the CEO of Malibu's exact point, we are not seeing a major drop in cars, you know, or other very

large purchase items because people who can afford them are buying them. the people who would have to stretch for them maybe are not buying them right now. But those people continue to spend meaningfully in essential items, which is offsetting that as it relates to GDP growth. So we think overall the economy is healthy, although I personally, and I think we'll see this sort of aversion to risk. I don't know how a government shutdown is going to affect that further. but, you know, hopefully it'll get back open soon and everybody will come to an agreement

and, you know, we'll get back to business here. Yeah, it does make me think, you know, a little bit about Charles Dickens, best of times, worse at times, and you have this dichotomy and you wonder if it's finally the COVID, a lot of the COVID-related money coming out of the system. Either way, the ZEI, the ZET Economic Index out on Monday. David, we appreciate you coming on and giving us a sneak peek. David Steinberg, thank you. Always great to be.

be with you, Brian. Be well. All right, let's now step out of money in business. Get a CNBC News Update with Martha Coombs. Brian, 20 states and Washington, D.C. are suing the Trump administration over a crime victim's policy. They're challenging new rules that stops funding for programs that help victims of crime, domestic abuse and sexual assault if those victims are in the U.S. without documentation.

The states argue the requirement violates the government. Constitution because it was put in place after the grants were awarded. Colorado investigators say they're reviewing the 2005 shooting death of famed journalist Hunter S. Thompson. It was originally ruled to suicide. They say they have no new evidence suggesting foul play, but have ordered the review at the request of Thompson's widow. And world-renowned conservatives, Jane Goodall, has died. The Institute she founded says she died of natural causes while on a U.S. speaking tour. The British-born Goodall was known for her groundbreaking work with chimpanzees and her discovery that they have human-like emotions and can make and use simple tools.

Jane Goodall was 91 years old, an amazing woman and a life well-lived. All right, what a spectacular contribution to science and ecology. She also made, Bertha, thank you very much. Short break, we're back on Power Lunch right after this. All right, our 2025 stock draft competition is heating up. Last week, comedian Sebastian Manus Calco had a message for current stock draft leader, Bobby Flee. And I got a little something to say to Flai. Stay in the kitchen.

Yes. All right. These stock stuff is for the big boys. So I plan on being at the top when this thing is all said and done. So with us now is Bobby Flee, Chef Ruff. House Ronteur, entrepreneur, the big boys. I mean, you're leading. So who's the big boy now?

I mean, I don't know what's funnier. His stand-up or his stock picks. I mean, you know, listen, Navidia, I mean, come on. It's like picking the favorite in the basketball game. I mean, anybody could have picked Navidia. I mean, you know, I wanted to be a little more creative. I picked Warner Brothers. I picked Walmart.

I will say that your expert at the table gave me a hard time about those. Yes, you're talking about Guyana. He did. We call him gorgeous Guyadami. Yes. I think it's an Italian thing with... Well, it was two-on-one. Manuscalco. We're coming after me, but now I've got up Ginger on the show.

Exactly. So it's great. I know. Take that Adami in Manus Calco. Exactly. But I think I'm up 68%. I wish I actually really owned them. Okay.

So let's get it as Warner. Yeah, you wish you did. Warner Brothers Discovery, I mean, you've got shows probably on those networks. But the potential buyout report, I mean, gave you a nice pop. The Paramount News was definitely a good pop. But you know what? I mean, it's one of those things where, like, David Zazlov took a huge shot with a Warner Brothers, took on a lot of debt, and everybody gave him a hard time in the beginning

and didn't really give them a chance to kind of get things going. And now it's kind of working out in their favor. Former CNBC executive, David Zazel. By the way. And Walmart, you have goods at Walmart. You sell Bobby Flay items. So you did the Peter Lynch thing. You kind of went with what you know.

Well, I think that's important. It's like I know people who buy stock. just based on what they use in their life. And I think that's kind of a cool thing to do because you really feel like you know the companies. So I should invest in wine and wonder bread. I don't know. Okay.

So let's talk about food and drinks. Okay. You heard Kay Moore at the top. It's talking about the K-shaped economy. You just heard David Steinberg, is it a global, say there's some cracks forming, the Malibu Boat CEO, saying a little bit in the borrower economy on the boat.

Now, these are boats, so they're a little more expensive. but you and I were talking before the show, and you said the restaurant industry is in trouble. It's definitely, I mean, it's having the hardest time in my lifetime for sure, across the board, especially in the bigger cities. Look, to me, there's three buckets, right? You have the occupancy cost, rent, always traditionally high, especially in a city like New York. You have cost of goods, you know, food and liquor and, you know, spirits, et cetera.

Since COVID, they've been through the roof, and they haven't come. back in, even though the pandemic is over. So those are very high. But I think that the biggest move is labor. And look, I get it. People want to get paid what they think they should be getting paid, and I'm completely understanding of that. But there has to be a balance

so that these businesses can stay in business so that we still have a lot of jobs. And, you know, it's going to be an interest. It's going to be very interesting in New York. You know, right now we have, you know, the person who's favored to be the mayor who's asking for $30 minimum wage. I don't know what that would do to the

restaurant business. It's setless and it sounds good. And to your point, you want everyone to get paid. These guys bust their humps in the back. Their ones doing the cooking, the cleaning, and everybody's making more money, and that's a win. Until it breaks the system in some ways, the restaurant goes away that nobody wins. But everybody I know, Bobby, is complaining. It doesn't matter how much money they have, they complain about the cost of going out to eat. Is there any sign that you see it's coming down at all? No. No. I don't see it. And I'll tell you, something, even when I go to restaurants and I go to just a neighborhood restaurant, it seems like it's $100 a person for, you know, sort of your Tuesday night restaurant. And that's just the

beginning. So everything seems a lot more expensive. But the bottom line is, and I'm going to stick up for the restaurateurs, of course, but I really truly believe this. They have to charge that. And even that is not even enough. And so just think about that for a second. Meaning they're not printing money. Your take is like, oh, the individual restaurant. If you all and a thousand restaurants, I get it. But if you have one or two, these guys are not lighten hundreds of 20s, right? If they're lucky, they're eking out a profit. Most people are breaking even or less. And this is the first time in my adult life that I don't have a restaurant in New York City. I usually, you know, for 30-something years, I had two or three restaurants all the time.

Always. I do, I will tell you that my passion is much more bigger than my, you know, my interest in profit. I just, I need to at some point, reopen something in New York. but I know if I do it tomorrow, that I'm probably not going to make a penny. So that's, it's an interesting way to go into a business. Is this why we're seeing so many, and you travel all the time, I travel enough, that there's places I've got my sort of local spots, mom and pop, and a lot of them are gone now. They just shut down or they say, hey, it's been a great 40 years, got to go.

Some of that may be other factors, but I got to imagine the cost is just so hot. They just can't, it's not worth it, to your point. It's not, well, it's not worth it when you add up all the things. And also you're taking on responsibility as a boss. And, you know, you're taking on a lot of people are taking, you know, loans and investments. And it's all on their shoulders. And really, what's the reward? That's, I think that's what happens.

And that's the unfortunate equation of the restaurant business right now. And you know what? We need restaurants. Yes. We need restaurants for vibrancy, for energy, for jobs, for creativity, for people saying, We need Bobby Flay to have a New York City restaurant, damn it. No, you're right about that. Why am I cursing?

I don't know, because you're hungry. Manas Calco got me fired up. He's coming after the Irish. But we want people to say, like, the food in New York is on fire. It's spectacular. There's so many great new restaurants. I want to go there. And, you know, right now it's kind of up in the air.

We have great restaurants here, of course. But we want that energy back. You should talk to L.A., Los Angeles. You've got to get Los Angeles on the phone. L.A. New York City. looks vibrant compared to a lot of parts of LA. A lot of restaurants in LA are shutting my hometown are shutting down. I think it's a lot of these. And they're not being replaced. I know. That's the,

problem. You know, restaurants come and go. But if a new place comes in, okay, fine, maybe the concept stunk or whatever it might be. By the way, some restaurants, you're like, that ain't going to make it. And it doesn't because you realize pretty quickly it's not going to make it. L.A.'s got problems. Yeah, well, I think our generation, we're used to paying less, there's a number in our head what a piece of chicken cost or what a steak cost. And when all of a sudden that doubles, it's sticker shock, right? I think it's going to take another generation

who hasn't started paying their bills yet to not feel like, oh, it's okay for me to pay $55 for a roasted chicken. Sounds like a lot. Well, yes, but people would come at seasoned. Don't you love that word? He's a seasoned executive. It's a nice way to say old.

Right? He's very seasoned. He's been in the business. Yeah, I'm, I love. I'm matured, I'm seasoned, I'm wise. These are all euphemisms for being old. So I get it. People are going to be like, okay, boomer.

First off, we're not boomers. Okay, like, that's the generation above us. But they're not wrong. And I get it because I don't think prices are going to come back down to your point. We're not going to ever, the $20 burger is not going to be $12 again like it was four years ago. No, it's definitely not. And do you think it's the rapidity, the steep, prices always go up over time. It's called inflation.

Yeah. But they did this. Oh, they, they went. straight up in the air, absolutely positively. And I don't, it's not going to come back. But the question is, where can we get relief? Can the big cities, if, you know, if the big cities agree to pay people a bigger minimum wage, can they be helpful on the occupancy cost somehow?

You know, can they take down some of the fees that are just, they just sort of add up and add up and add up. There's got to be some relief somewhere. Otherwise, this is just going to be bad for not just the business, but for the places that these places are not. Because I look, you know, I was not a regular, but I went to borrow America in one of your places many, many times. I'm just always crowded.

What do you mean you weren't a regular? Well, I try to spread my love around a little bit. Yeah. It was packed, but it sounds like these are just cost issues that are not coming back. Bobby Flee, leading the CNBC stock draft. A real pleasure to have you on. Thank you. Sebastian, I'll see you at the end.

There we go. All right. What if you guys tie, like the Packers and the Cowboys? There's no ties. All right. There's no ties. We're back right after this. All right, let's wrap it up by trying to make you some money because Bank of America

just dropped some of its favorite stock ideas for the fourth quarter. They got eight buys they love. Let's hit them very quickly. Got your pens or eye cloud notes ready. Let's go. The buys the Bank of America loves, Amazon, GitLab, ITT, Generac, Shark Ninja, Shark Ninja, NIA, NVR, NVR, a homebuilder, diCom industries, and trade web markets. Eight names they love on the long side. And while the bank declined to predict a so-called Santa Claus rally for stocks. the year-in-year-in, his chief equity strategist, Savita Simpermanian, recently noted that current market multiples, which are at all-time highs are likely the, quote, new normal, much like your food prices, apparently. Time for a quick RBI. This is perfect for your workday because

apparently AI is making your workplace worse, not better. Listen to this. Harvard Business Review surveyed over 1,000 people who work in desk or office-type jobs. About half of those workers said they've recently encountered something that seem to be created either with or by AI. And all that stuff caused them more work to either read or just kind of figure out or sort through. It is low quality work output that takes time to get through. And Harvard has beautifully coined the term as work slop. AI generated work slop jamming up your inbox.

Personally, I know what they're talking about. Love to hear your stories about work slop. Thanks for watching.