Power Lunch - Stocks surge after down tape on Wednesday 10/23/25

Episode Date: October 23, 2025

Chauncey Billups and Terry Rozier were arrested in FBI probe linking the NBA to a Mafia gambling ring. The U.S. dials up sanctions on Russian oil and gas.  And is this rally running out of steam. It's all here on Power Lunch. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Stocks back on the upswing, the White House hitting out at Russian oil and a pair of gambling scandals rocking the NBA. Welcome to Power Lunch, everybody. I am Brian Kelly is off today, and what a wild day it is. Stocks are moving back up, most of big tech back on track. So what does big financial firm Raymond James have to think of it all? Guess what? We'll find out their CEO here for a Powerhouse exclusive interview.

Speaking of Power, oil prices back on the rise, the White House hitting Russia, some big new sanctions. But could this all really be about another? their country will ask energy superstar Halima Croft, everybody. Welcome. Thanks for joining us here on this busy Thursday. We've got a lot to do. But we have to begin here with a gambling scandal that is rocking the NBA, really two scandals. Federal prosecutors arresting over 30 people, including Miami Heat Guard, Terry Rozier, and Portland Trailblazers's head coach, Chauncey Billups for their alleged involvement in two separate illegal gambling-related cases. It has widespread not only sports, but business, money, and gaming implications as well.

So let's kick it off, bring in our sports and media reporter Alex Sherman and Katessa Brewer, who covers gaming for us as well. Alex Katessa, thank you both very much. First off, what are the facts as we know them? Okay, so two different investigations. One that involved the Trailblazers head coach, Chauncey Billups, was about illegal poker and organized crime. Basically, they'd set up these poker parties in Manhattan. They were using modified card shuffling machines and cameras and the desks and things like that.

They were bilking, unsuspecting gamblers out of millions and millions of dollars. And they say that the head coach, as well as Rosier, Terry Rosier, were, and Damon Jones, who was a former Cavs player, were there to lend an air of legitimacy to these poker games and lure them in. Who doesn't want to sit next to the head coach for the trailbla? Is it, do we know, in all? I want to be very clear. All these are allegations. Everybody here may be found innocent.

That's a critical part of the story. Do we know at all if Billups was aware of his role in sort of bringing in marks, if you will? Prosecutors say that he was in on it, that he was part of the scheme to lure people in and to lend this an error of legitimacy. He will be in federal court in Oregon this afternoon. The second investigation is about throwing basically NBA games and then. then profiting on inside information. They point specifically to Terry Rosier when he was with the Hornets in 2023 in March playing a game telling people he was going to have an injury and they go out

and they bet about $200,000 on the unders for Rosier. They profit tens of thousands of dollars on those player props. They go back to Roe. He played nine minutes of the game. They go to Rosier's house. They split up the proceeds. Bada bing, bada boom. So for a lot of our viewers and listeners that are not sort of sports gamers. What Contest is talking about, and if I'm wrong, tell me, Alex, jump in. You can bet on individual player stats. This player is going to score

either under 14 and a half points or more than, you don't just bet on sports outcomes. You can bet on player outcomes, and so if a player is betting on him or herself, and then takes him or herself out of a game before they reach said point, they're effectively,

as I think prosecutors, Alex called this, insider trading the NBA. They call it the insider trading saga for the NBA. Yeah. Cash Patel's. And look, the leagues and the betting companies themselves for years have defended legalized sports gaming, broadly speaking, primarily by saying it facilitates the openness of regulators being able to identify potential scandals in a way that didn't exist,

when this was all black market. So if you look at it from that lens, you can say, okay, well, the betting platforms were able to provide information of unusual betting patterns around these particular prop bets because what happened here was there was a surge of betting on the under for Terry Rozier in that particular game, and then Terry Rozier pulled themselves out of the game early,

and so the under paid off. And so people were able to connect the dots here and say, wait a second, this is unusual. They connected the dots because the legal sports books and the integrity monitoring technology, they all work together to alert authorities. This is part of the same conspiracy that got Jonte Porter when he was in Toronto for betting on. Because the fan duels and the draft kings and all the other ones of the world, they're already putting out statements like the integrity of the game.

They're going to do one of these back off because they're, and I'm going to use a CNBC analogy. Again, if I'm wrong, jump in. this would be the equivalent of a Robin Hood or a Schwab or a TD Ameritrade saying, yo, people are going to do bad things in the stock market, and we're going to help find them. We're not enabling them. We're going to actually help fix them. But to be clear, the legal gambling industry has, their biggest competitor is the illegal gambling industry. They put the sports betting offshore unlicensed gambling at more than $600 million. And so they have a vested interest in trying to get everybody to come on the

platform. So why you're using, if you're a professional athlete and you're using a legal platform to gamble on yourself, it raises more questions. Well, we're not talking astrophysics here. Go ahead. Yeah, look, I mean, the counter argument to this is that the proliferation of legalized sports betting potentially elevates the likelihood of something like this happens. That would be the argument to say something needs to be changed here. And maybe what needs to be changed is things like prop betting on individualized players. Does it go? Okay, I tweeted out. Does it go away? Should prop betting on players go away?

Or is it not... That's what they're worried about. Why? Because the player props are what go into the parley's. The parlays are the most profitable product that the sports books have. So they'll never go away. Too much money. The regulators are in charge of that.

And it goes state by state. There are some states that are very fierce on regulation. They don't let you bet on college sports if that college is in your state. So there's a lot of, let's let's back it up for a second because a lot of our viewers may not be in states where they can legally gamble. So we're using terms that people maybe know, but they don't, whatever. So let's just, let's just make it a totally legitimate situation, right? I'm a professional athlete, insert joke here, but I'm a professional athlete and I have a cold. I don't feel good.

And I tell some of my buddies, I'm really sick. I don't have any ill intent whatsoever. I'm just telling my friends, I don't feel good. They go out and put a bunch of bets on me. against me as a player the next day. I have no idea they're doing that. They just happen to know that I innocently set out of cold. This is the kind of stuff we're going to have the industry, Alex,

is going to have to deal with. Yeah, that's right. I mean, that's the argument. NCAA commissioner Charlie Baker wants to eliminate prop betting. He's said it publicly. So. And again, the sports books, some of them do not offer player props in college sports for this very reason.

They think that college, they think, no, no, no. College sports is not pro sports, Contessa, you know that. It's money. It's the same thing as pro. Okay. Well, but look, college athletes were just allowed to start betting on professional sports. That just happened. Yes.

And they're getting paid millions of dollars now. In today's CNBC Sport newsletter, I wrote about how the media companies themselves almost have to get into bed with the betting companies or at least have a closer relationship with them from a partnership standpoint because they're trying to develop alternative revenue streams to pay for the ever-increasing cost of the media rights to carry NBA basketball or NFL football. And these partnerships allow them a new revenue stream to tack on to the advertising and the subscription revenue they had. So we've seen that come together.

Yeah. Okay. In the indictment itself, switching a little bit of gears here, this is really random but interesting, I suppose. They list the number of unknown player one, player two, player three. It looks like from your reporting, Alex, that player three, and I want to be very clear, nobody's implying or implicating these players in anything, except they're mentioned as playing in games where this allegedly may have occurred.

They're not involved in this other than being in the game, but player three was likely LeBron James? I think without a doubt, nobody else fits what player three is. And so just to explain what player three. And again, nobody's implying any, they're involved in this in any way other than being in the game. But it's a bold. Or not in the game. Or not in the game.

But it's a bold face name. Right. It's a bold face name. The connection is to Damon Jones, who has a long-term relationship with LeBron James. If you look at the indictment, it says player three is a prominent Lakers player who had known Damon James for a while, who was out on this particular game in February of 2023 with an injury. LeBron James was the only player out. with a lower body injury on that day.

And the implication is that Jones got this information that LeBron was not going to play, and then, in essence, sold the information to betters. And that was how this kind of... Unbeknownst to LeBron, James... Unbeknownst to LeBron. And you reached out to LeBron. No comment officially from his people,

but a person familiar with LeBron's thinking said he didn't know anything about this. Yes, he was friends with Damon Jones, but he had no idea that he was selling this information. But again, the legal sports books monitor for suspicious activity. And when they see an unusually large amount of wagers coming in on an under for a player who then goes out, then they go back and they look, where are they coming from? Because they can track locations too, right?

Absolutely. That all exists. And then the legal sports books are working with the authorities to crack down on this. But what's happening is if you've got illegal offshore unlicensed sports books that are doing $600 million, billion of business, it's massive. It's a massive, massive industry. Are you then encouraging people to go offshore to do their dirty business because they're going to go undetected? This is one reason why the legal sports industry is saying, and the sports books are saying, we have got to have more enforcement.

That's why I said it a few minutes ago. It's not astrophysics. I mean, it's like if you're going to elite, don't inside. trade. But like, it's like people get caught insider trading because they put these huge outsized buys or sells on rent. It's very easy, folks, especially with AI, the fan doles of the world, they can track behavior better than you. One more business impact here. And I don't want the poker thing to get lost in this, because when you have poker games in bed with organized crime, which is the allegation that

U.S. prosecutors have come up with, it also, harms commercial casinos that run poker tournaments, they are trying to move beyond the old dirty. Back room, cigar chomping, kneecapping. And that's exactly, I mean, the days when Al Capone was running Vegas are days that the guys who are worried about how am I going to report my profit margins on the quarterly earnings call, they're trying to distance themselves. And if you're trying to get into Texas. Las Vegas Sands has spent years and tens of millions of dollars trying to get Texas to legalize casinos. A poker scandal like this does not help. Final word, Alex? Just through your earlier point, like this, it wasn't as if this was some sort of ingenious scheme. No, it was not. So it was a very

straightforward, okay, we're going to bet you're under, throw a bunch of money on, very easy to catch, very easy to execute. And so, yeah, I think at least the silver lining here might be like, Don't do that for anybody involved. You're going to get caught. Don't do that. It's a good left. Thank you. One to grow on.

But the NBA had three things the top of the list to not happen at the beginning of the season. Last night you had Victor Wenignon come out as one of the stars or the star of the league now. Seven foot five stud just had an unbelievable game. Now you got this headline. NBA, NBA. NBA had nothing to do with it. But the NBA's name is splashed all over it. This is just awful, awful time.

Yeah, we should mention Terry Rozier and Chauncey Bill. were both indefinitely pulled away from their team. He's the coach of the trailbla. And a Hall of Fame. And Andre Igadala came out with the Players Association and said, we also have to give the benefit of due process to our players, you know, innocent until proven guilty. And if you read the indictment, I think one of the things that stuck out to me was

Terry Rozier has two nicknames. One of them is Scary Terry. I knew that one. And the other one is Chum. Did not know that one. So it's like you're covering both. There's a lot of nicknames. There's a lot of nicknames.

You're covering both sides, though. Chum, which is a nice guy, scary Terry, which is not so nice. Anyway, a little bit of lighthearted look at a very serious, troubling story. Contessa, Alex, thank you very much. All right, coming up, Trump trying to hit Vladimir Putin in the pocketbook, announcing big new sanctions on Russian oil, but will they work? And could this really be about a totally different country? Analysis ahead with Halimacroft.

All right, welcome back. It is the big energy news that is moving both oil and many oil and gas stocks. U.S. Treasury hitting Moscow with new sanctions, the agency sanctioning oil from Russia's two largest oil exporters, Rosneft and Luke oil, the sanctions designed to try to force Russia to stop selling oil around the world and making billions to help fund its war in Ukraine. China and India, the two biggest buyers right now of Russian oil, so they are in the crosshairs, but another country may also be sort of indirectly involved. Let's talk about it. Tie it all together with our friend Halima Croft, Global Head of Commodity Strategy at RBC.

Halima, welcome. There were already sanctions on Russian oil. It was a price cap on Russian oil. What does this do that that didn't? I would argue that we never really significantly sanctioned Russian oil. I mean, the price cap, Brian, was designed to ensure that the barrels that were going into Europe could move to Asia. There's a reason why India became such a large importer of Russian oil. It was a price cap.

We told India, take the discounted Russian barrels. India backed up the truck. We endeavored at all time since the start of the war to keep Russian barrels on the market. This is the first major move by the White House to basically sanction a major Russian exporter. Because we wanted at the time, 2022, when oil prices spiked,

we didn't want people to be paying $8 a gallon for gasoline in America. So you wanted Russia to continue to sell oil just not make a lot of money at it. But the real question, Brian, was though, people would say, You let Russia retain significant oil revenue and you let Ukraine have weapons. That's not a short war scenario.

And we're in a situation now where Russia has been able to build a massive manpower advantage. We've talked about this before. They pay soldiers. A thousand a day. Significant signing bonuses, death bonuses. This is the reason why Russia is not losing this war. When you talk to U.S. military officials, they consistently say, you have to break the funding machine for the war.

So I think this is the first real attempt by the White House to go after the ATM. Although I would say if I am Narendra Modi, the Prime Minister of India, I'm pissed off right now. I'll tell you why. Because in 2022, I didn't buy any Russian oil. Now I was told buy a bunch of Russian oil by the Biden administration because like keep it flowing, just buy it, whatever. Now we're basically saying to them, don't buy Russian oil or we're going to sanction you under the Trump administration. India's got to be really angry. Well, I think that's why Mone was really angry.

He was like, look, I did you a solid United States. Like, you were too afraid of the price consequences of Russian oil off the market. I backed you up by basically taking the barrels. And now what we've done with this sanction, which I think is kind of ingenious, is we've shifted the decision away from Modi. Modi is not going to make the decision on whether to import or not. It'll be the C-suite of reliance. So you're shifting, you're shifting the, you're shifting the,

the annoyance, for lack of a better term, to companies, Rosnev, Luqua, and others, not governments, because the companies, and this is CNBC, the companies are going to affect change because they're going to be like, I can't work like this. If you are Reliance, you are a major global conglomerate, you have to make the decision. Do you want to risk being sanctioned, being losing access to U.S. capital markets, or do you want to continue to take Rossneff barrels, Lukol Beryl barrels? Reliance is a major importer of Russian oil. That's why. we're getting reports out that they're making the decision to potentially walk back from those barrels. Find alternative sources of supply. Okay. We have got a beautiful map here. You've got, yes,

OPEC and OPEC plus nations. OPEC plus is in the yellowish orange. OPEX is in white. Focus in there on South America, Venezuela. Reading your note, always a must read, by the way. Your note highlights Venezuela's indirect role in all this. Is there a scenario where we, we, try to replace Russian oil with Venezuelan oil, but to do that, we might have to replace Venezuelan dictators. Well, it's interesting at the same time that we're sort of dropping the hammer on Russia, and it will come down to sanctions enforcement. I should have said that. But we're also, it looks like, potentially getting ourselves involved in a regime change operation in Venezuela. And so the question is, because we've deployed, you know, significant naval assets

down to Venezuela. We've had these ongoing, you know, strong. And periodically hitting, you know, drug dealers, blowing them out of the water. You know, Maduro is on our wanted list. And so the question is like, tell me how this ends. Are we going to be, you know, having Machado, the opposition leader who just won the Nobel Peace Prize? Is she going to be the future leader of Venezuela? What does that mean in terms of potential revitalization of the Venezuelan oil sector? You've reported.

I mean, Ross Neft, the Russian oil company is deep into Venezuela. Oh, two countries are deep into Venezuela. China and Russia. Rossneft has significant, like you go to the Petavasa Towers in Caracas, they have floors on the Pedurza Tower and Caracas. The question is, if this does end with Maduro out of power, is there a potential foreign policy angle because we have China and Russian interests there? This is Geopolitics 101.

We'll see if this round of sanctions actually works oil prices up. Some oil-related stocks are up. Halima Croft. We're glad you came into Engloatcliffs. Thank you very much for having me. Always. pleasure. All right. All right. So here we go. We just hit about that. Now we'll talk about something else. How to make money, maybe not in stocks, but in the credit markets. Yeah, a little bit of a

different angle for a market navigator, and that's next. Well, it's been a rough year for investors in so-called alternative asset management. Managers, those are private equity, investment firms like KKR, Apollo, Blackstone, Hamilton Lane, and others. In fact, KKR and Apollo, those stocks down 18% in just the past 90 days. Both are lower for the year as well. But your market navigator says the better days are ahead. Let's find out why Jed Ellerbrook is portfolio manager at Argent Capital Management. It's not a group, Jed that we talk about a whole lot. Hamilton Lane doesn't get a lot of attention. You think that the sell-off's been unfairly overdone. How come? Hey, Brian. Yeah, I think so. I think the alternative investment management firms have been

hold down recently by some of the kind of one-off credit concerns that have popped up over the last few months with First Brands, Cantor Group, and some of the subprime auto lenders. I think that those were bank originated credits. And I think that the private credit firms and the alternative investment management firms continue to generate really significant inflows quarter after quarter, and they're also producing good investment results. We got Blackstone earnings. I believe they're out tomorrow morning. You think those numbers are going to be pretty good. And maybe that turns around the sentiment a little bit for some of these companies? Yeah, Blackstone reported this morning, and I think the results were pretty good.

The stock is down a little bit because investors wanted a little bit more growth from their real estate business, but $35 billion of flows into private credit is really significant for a quarter. We're going to see Apollo reports similarly strong inflows next quarter. And I do think as this group reports earnings here over the next couple weeks, it will give investors some comfort that credit remains high, credit quality remains good across these managers. Well, those auto parts, I mean, literally nobody ever heard of tricolor or first brands, unless you're in the auto and auto parts world. Now all of Wall Street knows who they are. Sounds like you're not as concerned yet as some are that there's what they call cockroaches.

There's other bad loans, bad debt, bad credit sort of tucked in and that it's going to pop its ugly head up later on. Yeah, I think the reality is that subprime auto has been in really tough conditions for three or four years now. And yes, there have been bankruptcies and defaults among subprime auto lenders. That's a pocket of our economy that's been weak. But I think the broader economy, the broader credit spectrum remains really good. And you see that in bank earnings here over the last week or two, even with the regional group this week. And we're starting to see that with the alternative investment managers as they report to.

All right. Jedd Ellerbrook, Argent Capital Management. Jedd, a really interesting look into a group we don't. We don't talk about nearly enough. Jed, appreciate it. Have a great day. Thank you very much. All right. Still ahead. When or maybe if the government shutdown starts to matter to stocks. We'll hit that as the markets are higher on a Thursday, and we're back right after this. All right, welcome back. It's a pretty good Thursday on the street of dreams. You got stocks up across the board. The S&P's up three quarters of 1%. Nasdaq up 1%. And today really just can continuing a rally for the ages. The S&P 500 is basically doubled off its intraday low exactly five years ago. The NASDAQ 100 though says, hold my beer. It's up 128% in just 60 months. This market, along with crypto and maybe even gold, have hopefully made a lot of people like you very rich.

The fear is that at some point stocks stop going up, maybe for a long time. Are we seeing any signs that potentially happening? Let's talk about that and more joining us. Newveen, Chief Investment Officer Sarah Malick. Sarah, like, is there any? What do you see in here in terms of the market? Any risk of an end of this rally permanently? There's three factors causing the markets to lose steam in the likely nearer term, and that's inflation, the China situation, and the shutdown.

So starting with inflation, we're finally going to see CPI tomorrow, and that's likely going to be firm up almost. four-tenths of a percent month over month driven by tariffs on goods prices. And also oil prices rallying again, another factor to drive inflation higher. November 1st isn't here yet, so we don't know exactly what's going to happen between the U.S. and China. So that's causing uncertainty. And then the shutdown now about three or more weeks long, when is that going to end? And then finally, looking at momentum stocks, which has been what has driven this rally higher, November through January tends to be seasonally weak in terms of momentum stocks.

I think they will likely ride the market lower for the shorter term. I guess if you're believing the rally is going to continue, you've got to believe in AI, right? Is that a fair statement, Sarah? I think AI will drive the markets higher over the medium to long term. AI is alive and well, looking at third quarter earnings, which when all is said and done, should be up over 9%. Three quarters of that earnings growth is going to be driven by technology companies, we're going to see significantly more investment in AI and much more commentary from companies about how they're implementing AI into their business models to increase productivity.

But as I mentioned, over the next two to three months, we may see this rally take a breather. This is a seasonally week period for momentum and tech stocks. But after that, I think it will be off to the rare prices. And we're not going to go into a permanent bear market in the near future. How do we look at the Federal Reserve in years ahead? because Jerome Powell is the current chair. He's got a couple meetings left. We're not saying goodbye to Jay Powell yet,

but we've already talked about a potential successor, that person likely to be a lot more dovish than Jerome Powell is right now. How do we view the Fed's role in the stock and bond markets next year going forward? Fed will remain a significant driver for stock and bond markets. We saw one cut last month. We expect one more cut at the end of October, and then two more cuts after that by the, about the second or third quarter of 2026.

I think the next Fed chairperson will be reasonably dovish. The balance, of course, for the Fed is inflation versus the slowdown and economic growth. Even though we haven't seen an array of employment numbers in a while, we do know that employment markets were slowing and are continuing to slow. So the Fed needs to balance that with the impact of tariffs on inflation. I do think you'll get this moderate pace of rate cuts, though. So starting last September, last month, three more cuts through a budget. about the 12 months past September 2025, and then we'll see from there.

Utilities used to be the most boring stocks in the world. They were like annuities. They grew a little bit every year. They kicked it off in terms of dividends and cash flow. They just, you know, as long as the light and the heat worked, you really didn't care, but that's changed. And a name like a nice source, which is really a public utility of Indiana and some other places, they're now sort of sexy AI plays.

It's right. Utilities are the new AI derivative plays. They're much cheaper. They come with those great characteristics that you just mentioned. Income generation. Also, they tend to be more defensive for those who are worried about an economic downturn. But on the upside, all those data centers and all the electricity that's needed for artificial intelligence needs to come from those utilities. NISORS is a stock that we think is attractive. Not only is it based in Indiana where they have strong loads, but also as we need to upgrade our grids, not only for AI, but also, Also, as we shift to using more renewable energy, we're going to need more from our utilities.

And that's a nice, less cyclical play on AI and data centers. I like it. A little shout out to the, I guess Indiana is considered the Midwest, the corn belts utility. Sarah Malick of Neveen, really appreciate your time. Thank you very much. Thank you. Is Indiana the Midwest? It's a good question.

All right, let's turn now to the bond market. With the 10-year yield briefly crossing back about 4% again at the price of oil, also moves up. Let's head now to Rick Santelli, who's in Chicago with more in the bond market. And I guess we could probably tell us as an Illinois guy. Is Indiana considered the Midwest? Oh, of course it is. Absolutely. We're all part of flyover country. You know, we need to make sure the audience knows tomorrow, 830 Eastern September CPI. And I think that along with this, Sully pointed out, oil prices moving higher, is contributing to the reversal in rates. Look at a chart of 10-year intraday, right around 1211. We briefly top 4% were back under, but toying with it nonetheless.

It's been since what? Monday when we had an intraday above 4%. It was Friday the last close above 4%. We now have a new low-yield close for the year. It was yesterday at 3.95, Sully. And of course, that takes us back one year to October of 24. But maybe the most interesting feature will be that tomorrow, all the metrics look to be hot and a year over year look to both be over 3%.

So tomorrow is going to be key and it explains why there's some selling pressure in treasuries today. Back to you. All right. Well said, Rick Santelli from Chicago. Thank you. All right. A key read on the state of credit from a massive player in global finance. All that right after this.

All right. Welcome back. Let's talk about Raymond James, the latest investment firm reporting a big beat on earnings. Analyst, they're bullish on the state. stock with price targets, hikes at Jeffries, Bemo, T.D. Cowan, citizens, and more. Company is seeing strong growth in its securities-based loans category, adding it anticipates demand for these loans to go up as interest rates are expected to come down. Now, the street seems to have its doubts stock down about a half a percent in today's session,

but let's be honest. This stock is up 128 or so percent in just five years. Joining us now in an exclusive interview is Paul Schuke, He is CEO of Raymond James, I believe, his first time on CNBC, Paul, at least as CEO. So good to have you on Power Lunch. Thank you. I don't know what's in the water down there. You guys, the stock's more than doubled in five years. The earnings call looked great. Do you see any cracks, first brands, any credit issues, any cracks in the story going forward? Yeah, it's great to be with you today, Brian. We reported our fifth consecutive record year of revenues.

and earnings last night. So it's not the water down here in Florida, it's all the people we have across the country, Canada and the UK, the financial advisors, bankers, taking very good care of their clients and helping them with their long-term financial planning. So I want to thank all of those folks

for helping us generate our fifth consecutive record year of record results. To your questions around, are there any early signs or cracks in the market? We really don't see them. You know, I know there's some idios and crows idiosyncratic loan losses and the subprime auto loan space and some with some of the other banks Not loans that we were participating in

But if you look at the loan quality across the industry and at Raymond James as well I think the non-performing loans the total loans is around a half a percent which historically is very low And as a leading indicator if there are any concerns around credit you would see it in credit spreads and if you look at credit spreads both in the high yield and investment grade category, they're still near record low credit spreads, record tight credit spread. So the environment, the economy is still strong, and I would say the environment overall is still very strong as well. I think the Silicon Valley Bank issue a couple years ago collapsed. That got everybody a little bit jumpy. And so when they have these auto parts companies come out and all of a sudden they see Wall Street firms, not yours, but other firm stocks get hit because they have exposure.

People get nervous, right? So you guys have grown very quickly. securities-based loans, explain the difference between those and sort of what happened with some of these high-profile bankruptcies? Yeah, if you look at Silicon Valley, Signature Bank, those issues, they really weren't credit issues, and they really weren't capital issues. They were liquidity issues and funding issues. And so a very different issue than we're dealing with today, where some of the firms had idiosyncratic credit issues. You know, the banking sector is still very well capitalized. And so in a normal credit environment, you would expect to see some credit losses. Banks reserve for those credit losses. And so, you know, again, the credit environment

is still very benign now. There will be probably more credit losses in the next 15 years and we saw in the last 15 years. But the banking system is very well capitalized and has plenty of capital to absorb those losses. The funding issue that we saw three years ago or so was really unique in that they were upside down in their securities portfolios, taking too much duration risk and how to run off on cash. How do you view AI? You know what, Paul, but I think I'm required by law to ask about AI now I'm joking, but sort of. How does AI not only impact the markets you serve, but also Raymond James, itself.

Well, it impacts both significantly. As far as Raymond James, we're doubling down on our AI investment. We just promoted a chief AI officer and a new head of AI strategy. We're building out the team, and we have budgeted increases next year that are fairly substantial within our technology budget. And really what we're focused on is resiliency, cybersecurity, the foundational aspects of our technology platform, efficiencies, doing more with the same number of people, people and also in helping advisors better serve their clients in a more efficient way.

And then also data-driven insights, so advisors can provide more bespoke and tailored advice to their clients. And of course, it's impacting the market more broadly, so all of our clients that invest in the market are certainly looking for the productivity gains that AI should bring to the market and to companies that they invest in. And so that's going to be a significant driver of productivity gains and hopefully earnings growth and valuations going forward. Paul Shukry, the CEO of Raymond James, I believe first time on CNBC in that capacity.

Paul, really appreciate you coming on. The number's pretty good. Stock's not responding today, but like I said, more than doubled in five years. Thank you. Thanks, Brian. All right, take care. All right, let's step out of the business for a while and get to Kate Rocks today. CNBC News Update.

Kate. Hi, Brian. A group representing the mayors of more than 1,000 cities is urging the Agriculture Department to use emergency funds to pay for November food benefits during the ongoing government shutdown. Tens of millions of Americans are at risk of not receiving their food stamps and other food aid next month. Virginia's Republican governor said today his state would cover the cost of the benefits for the month, but roughly two dozen other states have warned that benefits could be interrupted. Meanwhile, a White House official says the demolition of the East Wing is nearly complete as President Trump pushes forward plans for his roughly $300 million ballroom.

The president says the project, will be paid for by him and quote some friends of mine at no cost to taxpayers. Our parent company Comcast was included on a list of top donors to that project. And the two-hour series finale of Stranger Things is getting a theatrical release. The final episode of the popular Netflix series, The Right Side Up, will premiere on Netflix and in more than 350 movie theaters on December 31st. Brian, back over to you. I just started season two with my family, so I got to catch up. But I'm looking forward to catching up with you in person from San Francisco next week.

Kate, it'd be good to see it. Likewise. We'll see you then. Look forward to it. Be out in San Fran starting on Tuesday. All right, Kate, thank you. And I know you don't call it San Fran. Coming up, how boats, boats may tell the real story of the American economy.

The CEO of Brunswick is next. All right, welcome back. Let's have a little fun and talk about you, the consumer, and also some very cool boats. Brunswick is the parent company of boat and engine brands. like Boston Whaler, Bayliner, Sea Ray, and Mercury. Company reporting third quarter sales rose nearly 8% across all business units. But what does the future hold for boating and consumer spending? Let's find out now.

We are pleased to be joined by the CEO and chair of Brunswick, David Fulks. David's great to have you on. We talked to the CEO of Malibu Boats a couple of weeks ago. I asked you the same thing that I asked him, which is, are you seeing any cracks in the consumer? Yeah, thank you for having me, Brian. It's great to be on the show. I would say in third quarter, sales has stabilized very nicely. Obviously, second quarter was impacted by the tariff announcements and some of the gyrations of the capital markets.

But I would say third quarter was very strong. We continue to see the buyer of premium boats and some of our core brands probably stronger than some of our more value boat buyers. But even the value boat purchases have stabilized as well. So I would say, you know, a strong third quarter overall. As you mentioned, we have four reporting segments. All of them beat guidance and consensus, top line, bottom line. So I would say that, you know, really solid quarter for us

and good indications of a strengthening consumer going forward. The boats are made in the United States, your headquartered right outside of Chicago. But some of the parts come from around the world. So what is, if any, the tariff impact for Brunswick? Yes, so as you say, we're very much a U.S. manufacturer, something like 75% of all the products we make

are manufactured in the U.S., and about 75% of our supply base is domestic as well. But we do import some components from other countries, China, Southeast Asia, Mexico, et cetera. This year, the full impact of tariffs on our business will be somewhere in the $75 million range. And that is primarily China-based tariffs, a few others. So even though China is only actually less than 5% of our supply base,

because of the size of our company, that's about a $150 million-ish exposure, which gives us something like 75 million of tariff exposure. We've been working very hard to reduce that. We're reducing the content that we purchased from China, making it more domestic, vertically integrating, et cetera. But for this year, something like 75 million. Hopefully this isn't too weird of a question, but I don't think it is because you used to in a previous life, you worked at oil and gas, you came up on the engine side and you ran the racing program.

Yeah. So if I want to throw a couple of twin 300 V8 mercuries in the back of a boat, I care about gas and gas prices. How much, if at all, do lower gasoline prices matter to Brunswick, if at all? They certainly help. And of course, gas prices have been low for quite some time now. speaking, but really it isn't until gas starts to cross into the kind of $5 plus range that we see any material change in boating behavior. And even then, it's mostly boats as just curbing their use a little bit as opposed to

not using their boats. So at the moment, I would say gas prices are very stable and historically pretty low. So certainly not an inhibited to boating in any way at the moment. Okay. Listen, I know the White House and the administration watch. NBC all day long. Hopefully they're watching right now. You've got the stage. What would you say to the White House as far as tariffs and the business environment right now, David? Well, you know, I would say that the good news for us is we're primarily a domestic manufacturer.

And we have facilities, production facilities in 21 states in the U.S. So we stand on a long-term basis in an environment of persistent tariffs. We're probably in an advantage. If you think about our Mercury Marine business, you mentioned earlier, Brian, we manufacture pretty much all of our engines in the U.S. Most of our competitors are Japanese, so currently facing 15% import tariffs. So I would say, you know, as a business, we are well equipped to deal with any environment, and certainly working to mitigate our tariff exposure going forward, but really well-placed, foundationally well-placed, I would say. What I wanted to ask you is what's the max horsepower I could theoretically safely put on

pontoon boat. Is it like 500? But we'll save that for the for the next interview. David, folks of Brunswick, you're welcome back anytime, David. Thank you very much. Thank you, Brian. All right, folks, a big new season premiere of CNBC's On the Record. And we're going to give you a little sneak peek right after this. All right, CNBC Sports on the Record series is coming back for a new season. The series features interviews with some of the biggest names in sports media money. And this season includes a great conversation between me and the NASCAR Commissioner, Steve Phelps. Here's a preview. I think it's a good thing, honestly. So we're seeing lots of money, lots of capital come into NASCAR teams, not NASCAR proper, but NASCAR the teams,

buying equity position in the teams. And I think it's a good thing. One, I think it makes the race teams more competitive. Fan wins. Good for the race team. Two, they're bringing in in many cases, knowledge, expertise that the race teams don't have. And then three, in many cases, they're actually bringing in additional sponsorship with businesses they either own or are affiliated with. So I'm a big fan of private equity coming. On the record, kicks off this Saturday, 3 p.m. Eastern Time. Check out local listings.

All right, folks, just a reminder next week. Most of the next week, we'll be in San Francisco, new names, new stocks, just for you. but this show's done. I'm off tomorrow on Monday. See you Tuesday. Closing the bell starts down.