Power Lunch - Stocks slide to start December 12/1/25

Episode Date: December 1, 2025

Where do stocks go from now until year end? Klarna CEO Sebastian Siemiatkowski joins the show to give his read on the consumer during this busy period for retail.  And Morgan Stanley's Stephen Byrd discusses what's next for data centers and power demand.   Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

And welcome to Power Lunch, everybody. I am Brian. Let's welcome back Kelly Evans. Thank you. I know you just saw her like five minutes ago. She is back from maternity leave, an early holiday trick, kickoff December. Usually, by the way, one of the strongest trading months of the year. Stock so today right now, they are down.

Crypto and tech pressure in the market. So can't. Will Santa Claus still show up the stage, the seasonal rally? Kelly. Well, today is also Cyber Monday. Adobe Analytics says Americans have spent nearly $12 billion on Black Friday, and they'll spend even more today. Big chunk of those spendings, that is with Buy Now Pay Later plans. And the CEO of Klarna will join us exclusively for his read on the consumer and the holiday shopping trends. And an attack on an oil facility in Kazakhstan, actually in Russia, potentially souring peace talks between Russia and Ukraine. Halima Kroft here to talk about that and

the odds that the U.S. goes into Venezuela or tries to remove Nicholas Maduro. We've got a big commodity focus as well. So let's start kind of there with stocks and your money, maybe a little commodity sprinkled in, and whether or not we can mount a so-called Santa Claus rally into year-in. Your first guest says, yes, we can, but as always, you've got to know what you own. Joining us on set is Wad Allen Associate CEO and Chief Investment Strategist, David Waddell, David, great to have you on. Great to be on. It's Cyber Monday.

Kelly is back. I mean, we're going. Let's go. Well, we're not going because the stock market is down. It'll be green by what time we finish. You think so? It's looking. It might be. Looking better.

So what's your expectation for the month, heading into year-in and early, dare I say, 2026? Well, I think peering into 2026 is what will get us into, you know, 7,000, maybe by the end of the year, which sounds like a bold prediction. It's not, it's only 2% away from where we are right now. But if you look into next year, you're going to get a whole lot of stimulus. You're going to get monetary stimulus as they cut rates. We'll probably see that here soon in December. You'll get a whole bunch of fiscal stimulus. I mean, the one big, beautiful bill should pump us up, you know, half a percent, one percent on GDP.

And I don't know if you've heard about this AI stuff, but that capax is another half a percent to one percent of GDP. And we also get deregulatory stimulus, a little bit harder to quantify, but it's operating. behind the scenes, you know, IPOs and things like that have been low. We'll probably see more active capital markets. And then maybe currency stimulus, because what we're seeing today is that the Bank of Japan will probably hike on December 19th, and that drove the yen up a little bit, gave the market the yen yips, which is what we got when we woke up this morning. But the dollar comes down. We saw that a little bit today. And actually, that's somewhat supportive for the markets. So if you look at the cornucopia of stimulus going into 2026, it's

pretty hard not to see earnings expansion and therefore not to see a higher S&P target rate. So I think it's pretty bullish in 26 and that takes us to the end of 25. All of that said, you do have some concerns about what's going on with AI. Some good numbers in here that I think help us to think about how big this is. You say this arms race is going to be $3 to $4 trillion in investment required probably by 2030. Right. To earn a 10% return on that capital, you need a trillion dollars of new recurring annual revenue. In other words, equivalent to building an Amazon Web Services-sized business every single year between now and 2030.

You say, you just don't think that's going to happen. Yeah, it's fanciful. It's not going to happen. But this is what bubbles do, right? Whether it's the railroad or it's computers or whatever the case may be, you're going to have winners and losers. You're going to have spectacular failures. You're going to have Enrons. You're going to have Worldcoms.

It's just going to happen. I don't know who's primed to produce that kind of disaster, but it's in the mix. But that doesn't mean that the rails don't get laid, right? So there's still a whole bunch of uplift. And it'll take 50% debt financing next year. And when you look at the CDS's that blew out, it was Oracle, it was CoreWeave, it was some of the others, but it wasn't Google, it wasn't Microsoft. So we've still got some runway here. But the good news is we now know how this cycle is going to end, right?

There's going to be overcapacity, which is going to lead to over leverage, which is going to lead to at some point overvaluation. And then there's going to be somebody who reports that there's too much cap-bex, not enough demand, or they, They can't monetize it to that pace. Or one better, an ex quarter, and then the whole thing. Yeah, exactly. But that's fine. Did you see what Masa Sun said about this? Do you get this out?

Roll it. No, no, yeah. Do we have the soundbite from Mothieroshi Son? Let's run it. The people who ask questions about AI bubble, the people who ask that question is not smart enough. So there's the richest man in Japan. and Japan, arguably one of the greatest investors in global history, at least modern global

history, saying that if you think we're in some kind of AI-related bubble, you're just not smart enough. I don't know what the stock price has done this year, but I think it disagrees. So if you look at the AI bubble, it's blowing. It hasn't gotten to the extent of bursting yet. But here's an example. So it's not new, right? We've had the whole sort of obsession with the Mag 7. Now look at it year to date. Only two of the mag sevens outperform the S&P, and copper mining stocks have outperform the mag seven by like 50%. It's not the only area of the market anymore. And we should be concerned. We should be concerned pricing the debt. We should price it with a great deal of skepticism. We should do the math that we just did on how much excess revenue it's going to take out of the

complex to generate positive ROIs. That's good. So that keeps the bubble from overinflating, I think. So we're not there yet. I'm not worried about it yet. You know, somebody noted today, it's the third year anniversary of ChatGPT. You know, the Netscape bubble went on for five years. I think we still got runway here, but that doesn't mean that we don't end up somewhere like that. Right, but that's kind of, no, you still want that, even while you're saying that, we were just talking about NVIDIA, trading it a 25 times P.E. Yeah.

You go, okay, it's not a hundred, you know, it's, so maybe that story is a few years down the road. But right now you can kind of still, you know, take this to the bank and say, these are solid, aren't. You can, except now that there's some question about, are there other competitors to Nvidia? I mean, the hardest thing about being a monopoly in technology is that the whole industry is defined by obsolescence, right? So if you've got 70, 75% margin or share in 75% margins, somebody's going to come after you. And whether that's Google or somebody else, I mean, you've seen what's happened within that. So there'll be rotations, I think, in leadership, and that's already happened. So, you know, maybe that PE's real.

maybe it's not. Who really knows? I still think you could be in the complex, but the winners of two years ago aren't necessarily the winners of two years from now. Yeah, and both things can be true. AI is real. AI is going to be great,

but AI is a long way off, probably longer than we think. We have a guest later on on the show this hour. I don't want to steal too much away from that about this huge hole in power. If you don't make the electricity, you can't make the data centers, that's it. I mean, it's always the weakest link in the chain

that causes the problems. So for, say, year, are our viewers and listeners better off owning a Freeport MacMaran, a copper miner, than an NVIDIA? Well, New Corps is up today. The copper miners are up today, right? The infrastructure stuff is going to get built. The question is how much exposure you want to the leverage aspects of that.

And so I think that the physical plant build out, the miners, the materials, you know, we haven't talked about the banks. They're actually up today because you get a little bit of a standard. deeper yield curve. That's good for regionals. That's good for megabanks. They really haven't taken off in this cycle this year. So I think there are plenty of places to go. This is my favorite stat of where we are at this particular moment right now. The MAG 7 have given you 50% of the returns year-to-date in the S&P 500. But if you equal weight, and you know, I've been a fan of mid-caps and I'm patient. But if you equal weight, small caps, mid-caps, emerging markets,

and developed international, you have outperformed the S&P year-to-date. You did. You it with a P.E. that was 35% lower. So I don't think you have to chase AI to get paid anymore. I think diversifications back. And while this year was putting the Trump agenda in place, next year's in practice. And all the things that you said are required to power the Trump agenda. So I think the market continues to give you other ways to win. I don't know if it'll just go ahead and discount those midterms and be like, you know, we already, we had the strong market for that already. Now we're going to turn to the worry page of like, you know, less power or whatever happens that year.

There's always something good to worry about. I know. David, it's great to say. Thanks so much. David Waddell with Waddell and Associates. Let's talk more about these moves that we've been seeing in global markets after Japan's 10-year yield jumped to its highest level since 2008. The mega Japan governor said they're considering raising rates at the next meeting.

Would it be a hike later this month? Is it enough for what the markets want? Rick Santelli has more from the Chicago bond report. And Rick, this really sent reverberations globally. People say it's why Bitcoin's down. today. It may. Indeed, it may. And we're going to get to the Japanese side at the end of this because I have some interesting charts. Let's start at the chronological beginning coming into our time zone. As you look at twos and tens for one week, they popped out of their recent range. They popped through

that ceiling. Basically just under three and a half for a two year, right around 404 for a 10 year. And it happened? Well, it happened along with all the other issues going on globally. Look at a one month. of twos and tens, really have reversed course. And once again, I don't want to sound like a broken DVD, but we have hard time staying under 4%. And once again, that does seem to be the case. Now, let's get back to Japan. On the 19th, most likely we'll see a rise in rates by the Bank of Japan. They've been hinty. They may do intervention in the currency market. But they learned many, many years ago after decades of intervention, it really wasn't something that worked out in the long run. It was a waste of money. However, we're just coming off 10-month

highs against the end in the dollar. The euro currency was at 33-year highs against the yen. And today, as Kelly reported, 10-year yields hovering around 186, highest since 08. If you look at a two-year on that chart, also the highest since 08 has never been above 1% since then. So all of this, of course, is affecting our rates as well. But maybe, maybe it is. isn't going to be the contagion so much on the actual rates moving up as it's going to be about all the issues going into supply and bigger question. And I'll leave you with the biggest question of all. Will the Japanese investors stay more at home to try to control their markets

versus invest in our long-term notes in bonds, which has been a big help, of course, as we issue more and more along with the rest of the world? That's the big question. Brian, back to you. But it's still focused, rightly, on Japan. Rick Santelli, thank you. Talk to you soon.

All right now, folks, we've got a news alert on Amazon Web Services. McKinsey Seagallos. Joining us now with more from San Francisco. What's going on, Mac? Hey there, Brian. So Amazon is rolling out new AI tools to help big customers update the old software that still runs a lot of mission-critical systems. This is all about making legacy infrastructure work for the AI era

without having to rebuild their underlying code or rip out existing hardware. Now, this launch comes just a few hours after AWS and Google unveiled their first joint multi-cloud networking service, which lets big enterprises run key workloads across both clouds instead of betting everything on a single provider. It also helps those same companies better hedge against possible downtime in the event of any outages. Now, this all lands just days after the trading halt at the CME due to cloud disruption and after major outages at both AWS and Microsoft Azure in October, which have put more attention on how brittle the current setup can be. Really, the takeaway here is that the next leg of cloud growth

is less about signing brand new customers and more so about shoring up the systems already in place so that they can stay online when something breaks. Guys? All right, so how do we read this as a longer-term thing? Like, is this a... I never understand the ins and the outs of, technology as much as you do, McKenzie.

Is there a longer-term read out here? I mean, think about what Amazon announced last Monday. $65 billion in fresh CAPEX commitments. That's more than a 50% jump on their current annual CAPEX spending. And what that signifies is that legacy infrastructure isn't quite there to support not just the new customer base, but specifically the new AI customers who are coming online. So that East Coast Hub that went down in October, it was a lot of, a part of what used to power traditional corporate customers, but now we're seeing a new kind

of AI client come online, whether it's Anthropic, and of course, Amazon just signed with Open AI. And the point here, this is about the fact that, one, they're building out fresh infrastructure, but in the meantime, they need to have redundancies built in. That's an industry term basically talking about these backups, hence this partnership with Google Cloud. McKenzie Sigalos and San Francisco with the news on Amazon and Google as well. Well, McKenzie, thank you. And speaking of big tech, take a look at shares of Apple, which actually just hit an all-time high coming off their six straight positive months. This is a new record high, 281 and change for Apple here.

After the break, we'll also have an exclusive look into Black Friday shopping trends and check on the health of the American consumer with the CEO of Klarna next. Welcome back at Cyber Monday. could be a new record, should be every year. Shoppers are expected to spend $14.2 billion today. 9 p.m. is the peak hour, Courtney Reagan told us the last hour. Anyway, up about 6% from last year, Adobe thinks. And a big driver of that spending is more consumers hitting by now pay later at the checkout. In fact, Klarna saw its biggest Black Friday ever with sales up 45% year on year. Will it continue? And what does it tell us exactly about the consumer? Joining us now in a CNBC exclusive is Clarna CEO, Sebastian Semiakowski.

Sebastian, I haven't seen you since the IPO, so congratulations and welcome back. It's great to be back. And it's been a little bit of a choppy start for you guys as well out of the gates there. So marry these narratives for me. How is the consumer doing okay according to our guest last hour? But Klarna's, I don't want to say you're struggling, but it's been an adjustment to the public markets. What explains that? Oh, you have to ask the market.

I feel that like you look, I think we did a great earnings report to our first quarterly. I'm very happy about the progress. We've hit over, you know, 2 million active cardholders in the U.S. So I feel a lot of this. And there's a look at this, like 45% growth, Black Friday versus last year. So, you know, I think hopefully eventually markets will see the value of what we're doing and that will come along. I don't know if these are from you specifically, if you can track it with this granularity, but that Birkenstocks and AirPods 4 and whatever the Baccarat Rouge fragrances and the Ninja home goods,

mattresses are doing well this year. So there are some areas. Is that right that are really seeing breakout? Yeah, well, look, I think one thing that people don't know about Klaan is we're the only payments company our size that have skew level data on every transaction, right? And so we can see, for example, like Birkenstock last year was bottom. And then this year, dramatically, you know, first top, top one spot for AdWattschoo Brands, Timberland capturing a second one. So people are interested in those tickers. Home goods.

Ninja, which is obviously also a list of the company, has done. fantastic well in that sector. They're called Shark Nina, right? And then you have Apple, obviously, where airports for, as always, top tech product. That's not changing. But Sony doing really well with PS5, Slim and Pro Models. So a lot of interesting things just showing that, like who's doing extremely well this year round. Well, yeah, Sebastian. Hey, it's Brian Sullivan. So, you know, there's a different way. A lot of people being critical of B&PL by now, pay later. But a different attack we talked about last week with Courtney Reagan on air here is that how much, if you have the data, how much do you replace or supplant store branded credit cards, which can often

have APRs up to 34%? Basically, usury interest rates in some cases. People might be better off going to the Buy Now Pay Later model than taking out some of these cards. Do you take their share? Very much so. So, I mean, the point is that in the US, there's this group called self-aware avoiders. People who've tried credit cards, didn't like them, found that they are the product of the devil. They're pushing you into revolving. It could be a store credit card, could be a traditional credit card from the bank, and they're looking for alternatives. And our product brings back what used to be how cards work, right? You swipe and you press one for debit or two for credit. So these are actually more careful spenders. They want to use credit occasionally,

but when all their purchases. And that's what we've seen. I mean, I've been doing this for 20 years. Now, the challenge we have a little bit in Buy Now or Pallator is a lot of people call things buying an Opelator. There aren't necessarily buying an operator. To me, the key buy an operator product is 0% for fixed installments, short-term lending. There's a pretty, you know, average order value of $100.

You know, a credit card customer will revolve and maybe keep a balance of $4,000. So there's a very, very big difference. And this is the one that American consumers are really becoming, you know, love, because it's just so different to what you're used to. It's affordable, it's easy, and it doesn't push you into depth. So what are Americans then, and maybe Europeans do, but what are mostly Americans getting wrong about Buy Now Pay Later? Are they, to your point, calling companies being Buy Now Pay Later

that aren't their sort of credit cards in disguise, or what? Yeah, I think it's a lot. I think there was another post trending on this with 10 million views on X last weekend. The point is that what people don't understand, especially in the U.S., is on the merchant side, we know that it costs about 2% to accept credit cards, but in addition to that, banks make another 2.5% of consumers revolving. So on $100 spent in the U.S., there's $5.5 made on both merchant and consumer side. What we're doing is offering a 0% interest credit that is very affordable for the consumer

and cost the merchants an equivalent of accepting credit cards. So it just becomes a much healthier model for both sides. Emergency uptick in sales, they're being rewarded for that, and consumers see that this is a better product for them financially, more financially responsible product. So I just think it will take time before people fully appreciate and see this. We have seen this in Europe for the last 20 years, and it works really, really well. Consumers are flocking to this product and seeing a benefit of it

over the traditional products from the banks. All right. So you think Apple's going to beat its earnings next quarter? No, you should offer that kind of granulary, don't you think? Become a prediction market. Right. Buy now, predict later. Ooh.

Yes. Right, Sebastian? But I also want to, since I'm a lot on AI, I just got to say, your conversation with David was fantastic. I think one thing that people also miss on AI is that it's the most effective compression technology ever created. What does that mean? I'm sorry.

What is compression? I know what it means when it comes to mattresses. What does it mean? Yes. Which apparently are selling with. Think about this way. How is it? How is it possible that all human knowledge has been compressed and can fit on a USB stick?

Right, right. Which is actually true. And the reason for that is that when you put things in the database, you just duplicate records. But when you put things into a model, you remove all the duplication and you squeeze everything down. And so far that has only been on the knowledge. That's why you can take the whole chat chip 55 and put it on a USB stick. Yeah, but that said, Sebastian, there's like multiple square miles of melting data centers to power. in the background. I mean, but maybe you're right. Maybe a basic LLM can now just go on a USB drive.

When you compress knowledge like that, what happens when you start compressing proprietary knowledge, proprietary data? There is a counter effect here that might very well mean that we need less compute than what we currently predict. So I think that's one thing that I wanted to add that discussion that I think is very important when it comes to it. Now, you know, all of us may want to generate Star Wars movies with our faces on. So maybe, you know that. Just to make sure I'm tracking this is great. You're saying it's going to be its own demise. It's so good that we don't need that much compute anymore or something like that? That's exactly it, because it compresses. It makes things smaller and tinier. Like, again, I'm taking all human knowledge fixed on a USB

stick, right? How is that possible considering the data centers we have to date and the size of it? That is because it compresses. When you add the same information, it doesn't store another copy of it. It compresses, keeps, that's just the same information already knows. But what about new information? It's only so far going to know. Don't you need current events and all that full, current events and, you know, don't you need all that folded in? Current stock prices. But it's underestimated the importance of the compression aspect to how much it reduces the size of data and information. We duplicate so much as humans.

We do the same things over and over again. And when you apply AI and you compress it, that is the counter effect that reduces your need for compute. Now, again, as I said, there might be that people want to produce Star Wars movies with, their own family's faces. So there might be a lot of reasons to generate new stuff as well. And the question is just like what is bigger? But in enterprise, in enterprise, we don't want duplication. We don't want to compute anything unnecessary. I don't want to pay more to AWS than I have to. So anything you're able to do to compress is going to allow me to drive my business more economically is going to reduce the need of data. And AI allows us to become more and more

efficient in utilization of data. And I think that effect is underestimated when people have this discussion. I love it. Brings the heat. Sebastian, thanks. We'll leave it there. Until next time, Sebastian Semyakovsky. We're going to stay on that topic because coming up, we'll ask another person, is all the hype around AI even possible? Another eye-opening report on just how much power America is short when it comes to AI. That's next. All right, we've talked for a long time about how much more electricity America is going to need to power all of our AI dreams. You've also talked a lot about how big of a hole there is in making all that power. Well, that hole may have just gotten a little larger.

Morgan Stanley's team now projecting a 47-gigawatt cumulative shortfall in power demand versus power supply. electricity is confusing. Put that in a very, very rough perspective. One gigawatt of power is sort of roughly about 750,000 mid-sized American homes. So that's about 30 million plus or more homes of power that simply does not exist. We're building a lot of it out. But where will the rest of that power come from? Joining us not to break it all down is the author of that research, Stephen Byrd, Global Head of Thematic and Sustainability Research at Morgan Stanley. And you had a lot of people at Morgan Stanley involved. in this latest report, Steven, so I want to give them credit as well. I want to start by actually, did you hear the conversation we just had with the CEO of Klarna? Yes, I did. We probably could have done the whole interview about his ideas on AI rather than on this whatever Cyber Monday they call today. What's your take on that idea of compression and that we may not need as much computing power as some of the models may suggest? Yeah, I fundamentally disagree in the sense,

what we're seeing is, as these models are trained on greater amounts of compute, that their capabilities just increased dramatically. So what we're about to see in the United States, and those will show up in the spring, is the big five model developers, folks like OpenAI, are going to apply 10 times the compute. And if scaling laws hold, and there's a lot of good reason to suggest that will, the resulting model should be about twice as capable. So for training, we see an increase in compute, but also just for inference,

we see an increase as well. For example, the complexity of what we do with AI is increasing at a nonlinear rate. So, for example, from a classic agentic use case, just a simple query, which all of us use on GPT or claw, whatever model we use, versus, say, video usage, the compute intensity goes up dramatically, deep research projects, the compute intensity goes up. So what we're seeing is the data shows almost a vertical line up in terms of the growth in the demand for compute. though Sebastian may be speaking to sort of the underlying core sort of corpus of human knowledge as a certain amount. But I guess what we're speaking to is the use of compute to solve lots of problems in the world of business every day. That looks to be set to accelerate very rapidly.

Let me ask a question that I get asked all the time. And frankly, I don't know the answer to it. I mean, I hate to say that. As a TV news anchor, we're supposed to know everything. Aren't we like America's trusted advisors? I don't know. which is, why do we need so much power for the compute? Why does the Claude or the chat GPT prompt on our phones?

Why does that require a mile-long building filled with GPUs, CPUs, and TPUs? You know, one way to think about what AI is doing is it is a very, very complex model that's essentially taking massive amounts of data and optimizing the solution. that optimization program, essentially, these neural networks, but they do require just a tremendous amount of compute. It is, and when I look at the architecture, it reminds me a lot of a human brain. That is just very complex, but it's absolutely worth it in the sense that the results are unlike anything that a sort of static CPU, the old generation of processors could do.

So, for example, at Morris Stanley, you know, we draft prospectuses. And with AI, we can do a lot of the initial work, a lot of the creative work, taking all of just raw data from a company and synthesizing that with AI in a way that's really quite remarkable. So it does take a lot of electricity, a lot of compute, but it's absolutely worth it in the sense that the breakthroughs in creativity, the breakthroughs in solving complex problems, solving math problems, you name it, it's absolutely worth it. It's funny because I have this kind of kumbaya outlook about it all, Steve Marego. You know, right now it probably needs massive compute.

At some point, it probably needs less. You know, are the business model is all valid? I suppose it shifts. You know, right now it's all about NVIDIA. In the future, it could be about, you know, other companies. But let's bring this back to your bread and butter, which is the power aspect. Probably the place where the consumer pushes back against what's otherwise been a very helpful innovation is in their electricity bills. And we're hearing huge complaints and concerns about this.

And if I were these companies, I would solve this now before it triggers all these antitrust and all this political backlash. So what could they do now to stay ahead of this problem? I completely agree with you. and I do think in next year during the election cycle, this is going to be an extremely hot political topic. The interesting thing to me is this is solvable if you approach this from the beginning. So for example, some states are setting up very separate tariff rates, utility rates for the hyperscalers that are significantly higher than for everybody else. And then you can show fairly clearly that, in fact, there's not going to be a negative impact that rates could actually go down for other customers. Now, in some competitive power markets like the Mid-Atlantic and Texas, it's not quite so straightforward to isolate the cost structure.

So in those areas, it's very possible you could see hired bills for everybody. So in states like New Jersey and Pennsylvania, this is becoming a super hot political topic. I'm frankly a little disappointed. We haven't seen more solutions. It's going to take a bit of time. And the politics are decidedly moving in a not-favorable way on this. No, but some of these states, they made their own mistakes with power supply. now they're going to blame AI as the big boogeyman.

Like Darth Vader over here, he did it. It's a trap, right? Like, I mean, when it could lower rates in certain states because they're going to have to pay so much into it that it may hopefully, hopefully, keep stabilized or lower the rates. It's a great discussion. Stephen Bird and Morgan Stanley. Really appreciate you coming on.

Look forward to having you back on again soon. Yeah, this story has many chapters to play out still. Let's get to Bertha Coombs for the CNBC News Update. Hi, again, Bertha. Hey, Kelly. The White House says imaging of President Trump's heart and abdomen came back normal during a visit to Walter Reed Medical Center back in October. Press Secretary Caroline Levitt said the MRI was conducted for preventive reasons and that all major organs appeared very healthy. The White House shared the information one day after President Trump said he would release it, but he had said that he did not know what part of his body the MRI was examining. The French government says Presidents Trump and Emmanuel Macron just discussed the war in Ukraine.

Conversation coming on the same day Ukrainian President Volodymyr Zelensky met with Macron in Paris. French officials say Macron emphasized the importance of security guarantees for Ukraine in his talk with Trump. And the TSA announced today that travelers without a real ID compliant license must pay a $45. fee to pass through its airport checkpoints starting on February 1st. The fee covers a required biometric screening for 10 days. Passports will still be accepted in lieu of a real ID, and you can also use your global entry card as well. Brian? I do pay. Credit card, just like swipe a card at TSA. I am not sure, but... Tap it. Cash. A good incentive to get something. There's 4,500 pennies. It's a great question.

How do you pay? How do you pay? You're literally ready to board a playing with your family. Like, that'll be $180 for four people. Bertha Coombs, thank you very much. They might take you into custody just for doing that. Yeah, turn you upside down to get the pennies out of your pocket. Bertha, thank you.

All right. Up next, the huge attack on Russia that may move the needle on oil, and you've probably heard nothing about it over the weekend, but you will next. All right, welcome back. Let's talk about oil and energy. A big development over the weekend could have an impact on peace talks between Russia and Ukraine. The Caspian pipeline, which carries oil from Western Kazakhstan through Russia to a port on the Black Sea,

remains severely damaged after a Ukrainian drone attack on Saturday. The pipeline is down to just a fraction of its loading capacity. It is important because it handles more than 1% of global oil, which doesn't sound like a lot, but it is. All this comes is OPEC's group of eight nations, sort of a group within a group, decided to pause on adding more oil to the market beginning in January going through March.

So January, February, March, OPEC will add no new barrels to the market. Oh, and there's a Venezuela thing swirling around all of this. Let's talk about it all with Halima Croft, managing director, global head of commodity strategy, at RBC Capital Markets, also a CNBC contributor. First off, the CPC. pipeline. By the way, co-owned by Chevron, ExxonMobil, buy some oil from it. What do we know about

the damage to this loading port? We know that one of the single mooring points is down. There's three. There's three. They load three ships at a time. They usually have to use two of them, though. One was already in for repair. So that is a reason why the loadings are basically a fraction of what they normally load. The big question, though, is, is this the one-off attack on this pipeline and on the terminal, or we had a start of a new phase in this conflict because Brian, we also had over the weekend two sanctioned shadow fleet tankers also struck by Ukrainian drones en route to the same port. And last night, there was another tanker struck. So three Russian tankers have been struck over the weekend as well as this pipeline.

So oils up a little bit, but let's be clear, it's still below 60 bucks a barrel, well lower than it was. It's not at 100 bucks a barrel. We're not making more of that. But we've talked a lot about these ongoing peace talks, potential peace talks with Russia and Ukraine, there were some in Miami over the weekend. Is there a way to, could these attacks help or hurt the peace? I could see them helping in a way if Russians get sick of being blown up. Well, I think the question is the Russians decide they have to make more concessions because they are under a track. I mean, it's important to understand that Ukraine does not need U.S. technology for these attacks. They have sophisticated drone capabilities, and they are doing

these attacks with their own technology. The question is, does Vladimir Putin feel squeezed by these attacks and the U.S. sanctions on rostneft and loquil? When those sanctions took effect, we were expecting the market to rally on that. But that very same day, we had the announcement of the Wickoff, Kushner, Kirill Demetriev, peace proposal, and everyone in the market is now thinking we're going to get an off-ramp to this war. I think there's a lot of skepticism in Europe that Russia is going to make any meaningful concessions. I think Europe, I think Europe, still wants Ukraine having a path into NATO, so unclear that this is really going to be the proposal that brings this war to an end. It's hard for me to hold these two things in my head

at the same time, which is one you probably saw the journal today talking about Germany's preparations for war with Russia by 2030, and thinking about all the strikes that we've seen across Europe and what might be behind that. And at the same time, to Brian's point, I look up the other day, I go, is WTI at 55? I think there's a view that President Trump can manifest this peace agreement. Because if we look at what's happened with Gaza, he was able to basically bring the active fighting to an end in Gaza. But when we talk about Russia, Ukraine, there are so many important stakeholders that have not bought into this, and Ukraine gets a vote. And we saw that over the weekend with these attacks. This was an escalation on the part of Ukraine. And if they

continue targeting Black Sea tankers, this pipeline, do we have to raise a risk profile for the entire Black Sea commodity corridor? Because it's not just oil. It is grains. There's a variety of commodities that go through that port. So to Kelly's point about oil where it is, here's the dirty secret, which even with oil in the 50s, U.S. oil production has never been higher. We're at 13.84 million barrels a day. That's amazing. Yeah, you'd think it would go down. What's the incentive? Money. Right. But I mean, you'd think at some point on the margin. It might go down. And I keep hearing the Permian is tapped out or the marginal barrel takes

more investment. In a couple years, they might be. But I do wonder, there's this whole hanging Venezuela. Right. Okay, we've talked about it a lot. Venezuela, Nicholas Maduro, and President Trump is talking about it this afternoon with his advisors. This afternoon.

This afternoon. So what do we know about that conversation and what it might mean for Maduro's future? Is it possible that by force or coercion, we, the U.S., remove Nicholas Maduro from Venezuela? I mean, if you're a betting person with this much U.S. military assets

in the region, you'd have to assume that the end game is Maduro gone. Now, I'm sure President Trump would like Nicholas Maduro just to say, like, I'm leaving on my own, you can roll these forces back. But if you're Nicholas Maduro, let's say you go to Madrid, you are not out of the loose

in terms of potential prosecution. You could have the International Criminal Court issue an indictment against you, and the question is, where are you safe if you leave Venezuela from being prosecuted in the hay? If we got them out, could we add another one million barrels a day of export?

capacity from Venezuela benefiting, by the way, in five years? I think that's the question. Like, what is the timeline? We certainly can't do it immediately. No. We can pull off all the sections. It's all rusted and banged up and they need investments. And we've had thousands of PEDA employees have left the country. There was this Venezuelan old strike in 2003 and essentially thousands of Peta Vesa employees went to Canada, the United States, Kuwait. They're no longer in Venezuela. The infrastructure is terrible. Millions of arms are in circulation. Country is terrible. human development indicators. The question is, how much is it going to cost to rebuild Venezuela

and who's going to lead on that? Well, we'll wait for your next note, because the meeting happening today, maybe that note from you will come out tonight or tomorrow morning. Stay tuned. Or in an hour. No. Not that. Where's the note, Halima? I'll go to the newsroom and write it. You might do it. Alina Croft, thank you. Thank you. The weight loss drug race is heating up with Eli Lilly announcing price cuts to its blockbuster drugs. And we'll look at how that can impact the stocks and the whole space next. Welcome back. Eli Lilly is dialing up the pressure in the GLP1 race because they're cutting cash

prices on single-dose vials of its blockbuster drug Zepbound. It comes on its own platform and it follows Novo Nordisk's recent discounts as well. Annika Kim, Annika, help me out here. Annika Kim Constantine. Thank you very much. The lovely Annika covers biotech. and pharma for CNBC Digital, and you are all over this. So please enlighten us, because I've seen the headlines about the administration putting pressure on these prices. But this is now

the company itself, just at the same time. What's happening? Right. First of all, welcome back, Kelly, and thanks for having me today. But what Lilly is trying to do today is stay competitive in the direct-to-consumer space for its weight-loss drugs, especially following similar moves by Nova Nordus two weeks ago. And so what Lilly is doing today is specifically cutting the cash price of single-dose vials of Zepbound on its direct-to-consumer website, Lilly Direct. Okay. And what's different with this compared to the Trump deal

is that the Trump deal focuses on a totally different form of Zepbound, which is a multi-dose pen that has yet to win approval yet. Really? So the current, when I hear the administration is cutting prices, it's not on the drug people are actually using right now, the injectable mostly, right? Right, at least for Lilly. So this multi-dose pen is not available yet,

but that's why Lily's coming here today to say, we want to bring these immediate cost savings to patients with these single-dose vials that are already available to patients on LilyDirect. On their own website. Yes. On their own platform. Correct? Yes.

So how would that impact then other platforms where people might buy it? I would assume then they would have to go to Lilly Direct to get this. Right. And that I suspect, I'm just relatively. How would this work for them? This might be a good thing for them as more people go to their website to find the drug. Right. And I mean, this direct-to-consumer space,

is huge for Lily. You know, when I've talked to Lily Direc's general manager in the past, they've emphasized that Lilly Direct already makes up more than a third of new prescriptions for Zepbound. So this move is not really surprising for Lily. They want to drive more people to this platform or to this channel that is driving uptake for Zepbound. Is that unusual? So is this because the drug is so expensive that we all think normally you access insurance to pay for these prices. And I would imagine still a lot of people are going through insurance, but as we understand, a lot of people couldn't get qualified or there were shortages or what have you. So is it unusual for so many people to be buying a drug directly from the manufacturer?

No, it's not unusual at all, honestly. I mean, especially given that obesity drugs don't have insurance coverage. I mean, a lot of employers are very reluctant to cover it because of their high cost. And it's only until next year that we're going to see some Medicare coverage for obesity drugs for the very first time. So a lot of patients have been opting for these sort of direct-to-consumer pathways that are coming from directly from these companies. All right, so help me out. So we've got Zepbound. We've got Moundjaro.

We've got Ozempic, which I think is kind of the biggest name. Is that fair to say right now? The most householdy. And we govi. We have four. And then, of course, you've got the compounders on the hymns and you see the ads on TV. Is this a market? Are we now in a full-on market share death battle over these weight loss drugs?

Yeah. What's important to know here, actually, Brian, is that Lily already holds this majority market share in this space. And a lot of analysts that I've talked to have said that this is because of Lilly Direct. You know, they launched Lilly Direct more than a year before Novanortas started offering these direct-to-consumer sales of Ozembic and Magovie. And so this is just another way today for Lily to continue to maintain its dominance and maintain its edge here. First pharmaceutical company to hit $1 trillion.

Right. I saw that incredible. You're watching CNBC last week? You know, getting ready. Just getting ready. Brushing off the dust. Annaica, Kim, Kim, Constitina. No, thank you.

Thank you, guys. Another San Diego. Yes, another San Diego. Fantastic. Good to have you. Thank you. All right, are you looking for a new way to play the bond market? I mean, who is it?

This weekend I said, I'm really looking for a new way to play the bond market. And someone said, well, you've got to look at Scotland. And then I had a scotch. And we'll talk more about the combination right after this. Before we go, as we mentioned, something pretty interesting happening in Scotland. The country preparing to issue its first bond in more than 300 years. The last time they tried to do so was back in 1695, and it didn't end well. Nearly 1,500 merchants and aristocrats pooled a quarter of the country's wealth to start a colony in Panama.

But local tribes weren't interested in what the Scots were selling, and Spanish forces attacked the settlement. Fast forward to today, Scotland has received investment-grade ratings on par with the U.K., higher than Spain, Italy, and Japan, but they depend on Scotland, Brian, staying in the UK, which led some critics to call the new bond just a, quote, vanity project. But they could say first time they've had a bond in over 300 years. That's right. Good stuff. We should mention the markets as well here. Session lows right now. Yeah, down about what? It's a pretty big decline for many of these tech-related stocks. Yeah, and Russell 2000s again underperforming. Keep an eye on the 10-year, as always putting some pressure across the markets. Thanks for watching, everybody. And closing bell

Starts right now.