Power Lunch - Tech Earnings Season, SpaceX Targeting Telecoms, CME Group CEO Interview 10/21/26

Episode Date: October 21, 2026

Tech stocks are leading the markets higher as the latest developments surrounding SpaceX and Tesla lead investors to move back into technology.Brian Sullivan and Kelly Evans are joined on set by Schwab Center for Financial Research Head of Macro & Strategy, Kevin Gordon, who gives a broader look at the state of the markets following SpaceX’s strong quarterly results as Tesla gears up to report after-the-bell.LightShed TMT Analyst, Walter Piecyk, joins the show to discuss why he believes SpaceX’s StarLink business can pose a problem to legacy telecommunication companies like Verizon and AT&T.Later on, Terry Duffy, CME Group CEO, chats with the anchors about his company’s latest earnings report and his forecast for global bond yields amid the political unrest happening across Europe and beyond. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Tech is back on top, at least for today. Welcome to Power Lunch, everybody. Alongside Kelly, I am Brian. The big test, though, for the AI trade just two hours away. Meta, expected to report third quarter results. Shares actually down over the last year, but expectations, they're high. Earnings seem growing nearly 450% from last year. We're tackling that and more. Plus, the CME group posting record results as markets demand more ways to manage risk. They just reported record third quarter revenue and are pushing further into 24-7 trading as are other platforms moving into the space. But can the traditional exchange keep its edge as the battle for Always On gets more competitive. CME chair and CEO Terry Duffy is coming up. That is a big one. Can't wait to talk to Terry, but we're going to begin with this.

The countdown to one of the most anticipated earnings reports officially on. Facebook parent meta reporting in just about two hours. investors in global markets eager to find out if Medica can answer the call and give another green flag to the AI trade. It is not, though, just about meta for your money today. IBM also set to roll their numbers out. Now, all of this happening under the framework of still high energy prices and global debt markets that are following and costs spiraling higher. So let's try to tie it all together and make sense of it. Joining us, Kevin Gordon, he is Schwab Center for Financial Research's head of macro research and

strategy and very good to have him on set today. Kevin, good to see you again. Nice to see you guys. All right. So meta earnings, IBM earnings, they'll be, you know, they'll come out tonight. They'll be done. The bond stuff's not going away. I don't think energy costs are going away. What is top of mind for you and your team? Well, I'm glad you mentioned energy because I still think that, you know, amidst all of this, you know, coverage around what's going on with earnings season and the AI trade lately and especially the bond market as well, you still have a really sharply negative correlation between oil prices and the stock market. And that's actually continued to get worse, depending on the time frame you're using. If it's rolling 60, rolling 90 days, it's about it.

It's worst, you know, in three decades. So oil is still very much in the driver seat. Energy prices are still very much in the driver's seat. And I think that to the extent, do you want to take any signal from the most recent retail sales report we got, maybe you're starting to see some impact that is having on how the consumer in the U.S. is spending their money, not decisively pulling back in terms of not spending. But I think the strength of the labor market is still a support there. But I think to the extent you're starting to see it filter through, especially as you start to get closer to holiday season, people start to treat some of these energy prices as permanent. That to me, I think, is a much bigger story for the economy. Well, we talk about tech and AI every day, as we should. It drives kind of everything. And I don't want you to tell anything, anybody, Kevin. This, Kelly, this is just between you, me and Kevin. The NASDAQ 100 is at the same price as it was five months ago, despite all the talk, despite all the the talk for five months, the NASDAQ 100 is the same price as five months ago. By the way, that's about when oil prices really began to take off and stay elevated. So if we somehow,

and I'm not saying we will, but if we somehow see a meaningful drop in the price of crude oil, is that a kind of all clear for equities? I mean, mechanically, yeah, I think because you have such an extreme, you know, negative correlation, not just for oil, but also for bonds. So to the extent that those are going to still trade together, if you do get a big drop in oil prices, if that leads to a drop in yields, then, yeah, I think mechanically that sets you up for a bounce. I think the trouble from there is how big is the decline and at what level do you ultimately settle? I think it's still hard to get to, you know, that thesis of us going back to what, you know, the pre-February average was. There's just a lot that's sort of standing in the way from a

supply standpoint to get at least Brent crude back to that level, at least on a sustained basis. I mean, still, the market overall has done so well, given this. We've had a huge spike in oil prices, so many things that you would think it would result in more harm. Yes, we've gone sideways for five months. Could be a lot worse, though. Well, I think what's interesting, too, is that even as semis were selling off aggressively, you also had a lot of weakness in some of the deeper cyclicals in the market, in particular small caps. And you had actually gotten to a spread in terms of the max drawdown for the Russell 2000 versus the S&P. The spread between those two, meaning the S&P 500, at least on a cap weighted basis, had basically been just a couple of percentage points at its worst point recently off of its high. Russell 2000 went into correction territory. You haven't seen that kind of split since late 2024, and then you'd have to go back to late 2021. So that, to me, I think, is the more important market story where under the surface of the indexes,

seeing a lot of these wounds sort of heal. Now, you know, Russ 2000 has been healing over the past couple of days. Same thing for the banks. Same thing for some of the laggards. And it is, I think, that rate story in terms of volatility coming down, the move index compressing a little bit. That, to me, is the bigger story for the market. Just finally, can you tell us, are the highs in? Can we be done with higher interest rates now?

Or do you look at France? For the U.S.? Are the highs? For the U.S. You know, I think that to the extent you look back at Fed hiking cycles, you think about the idea that at least for the 10-year, it has tended to peak closer to the end of a hiking cycle as opposed to right at the beginning. Maybe that gives you some more room to move a little bit higher, or at least stay around these levels. And I don't think that these are horrible levels. I mean, yes, it's been an adjustment. You've seen a pretty significant rate of change for the 10-year over the past several years on pace with something you haven't really seen since the 80s. But at the same time, time, I think very much like you're seeing with, with, you know, parts of Europe, in particular France today, you have the nominal growth story in the U.S. right now backing you up for getting yields to that higher elevated level. So it makes sense. Presting that a little bit. Maybe we're closer to that. Well, you pointed this out yesterday. Yeah. You said the bond yields here and in France are about the same, but we have growth on our side.

Right, right. And you posted that as well to X. Yeah. Almost a percentage point differential. I know we're going to get to IBM in just a second very quickly. Is France just a France thing? or is France Greece 2.0 from 2008 and symbolic of something more meaningful with the market?

I think France is a when you don't have a reserve currency and you do struggle with, you know, the market pushing back on fiscal policy that just won't work at some point, you know, to the extent that you're in that kind of a budget hole.

I mean, we have similar dynamics in the U.S. and across the developed world when it comes to budgets and when it comes to yields, but you are learning, I think, in a real time, what the lack of the benefit or the detriment, I would say, to not having a reserve currency. All right. And let's talk some IBM, right? I mean, why not? Because they report after the bell tonight, along with Tesla, by the way. Western Digital reports tomorrow morning,

or tomorrow afternoon, I should say. Those shares are up more than 200 percent in the past year. Let's bring in Womsey Mohan. He's B of A's senior IT hardware analyst. Wamsi, it's good to see you. And there seems to be renewed excitement in having exposure to AI and that the demand maybe is there and it's going to continue to be there. Is that at least the message to you? Yeah, thanks, Kelly, for having me. Yeah, absolutely. Look, I think that there was definitely a pullback in shares of AI-centric stocks over the last couple of weeks, given the concerns that you saw from neoclods. But at the same time, I would say when we look at the fundamentals of these businesses, we think they're really, really robust.

when you do a bottoms up analysis and you look at where units are tracking, where pricing is tracking, those are tracking better than expected. So we actually expect a very solid earning season from the likes of Western Digital, from the likes of Seagate, from the likes of Dell and HBE. We think that all of these companies are going to have very robust results, very strong upward revision to estimates. So we think the tactical pullback actually gives us a very nice entry point into many of these names that are AI-centric. Can we make money? Can your clients make money in IBM or Apple stock today?

Yeah, look, I mean, Brian, I think timing is everything when it comes to some of these things, right? Like last quarter was a difficult quarter for IBM, but we think that they've put a lot of that behind them. We think that we'll hear from the company saying that a lot of those deals that were slipped last quarter are closing. We've already heard that a third of them had closed earlier in the quarter. We know increasingly larger amounts of those are starting to close. And so we take that some of those challenges that were there in 2Q will see some optimism from the company about the way 3Q is trended. We do expect them to beat a little bit on both the top and bottom line in the quarter and then come at the high end potentially of guidance for the year that they've given, which means that it's got to be a very strong fourth quarter. So it's a large transactional quarter for IBM.

However, I think we're going to see some signs that say that we are going to get like a little bit of a better spending profile guidance from. them, which would suggest that they would come towards the high end of the guidance range for the year. Quickly, Wamsi, then how much upside would you say, and you can kind of frame this however you want, is left in the hardware provision part of this whole AI cycle? Yeah, look, I mean, Kelly, I think that one way to slice and dice this is to look at, like, how much upside are there to earnings estimates, right? Like, we're about 20 to 30 percent higher than consensus on names like Western Digital and Seagate when you stretch out to 2028.

So that, along with some multiple re-rating from the contraction that we just got, would mean that you could have as much as 50% plus upside. So there is a lot of upside potential in the hardware trade yet to come. And remember, I mean, when you frame this from the perspective that the AI trade is really about generating tokens, well, what is used to generate tokens? It's the hardware infrastructure. It's the semiconductor infrastructure that is used to generate these tokens. And that is the world that we're living in. There was just absolutely unprecedented, very strong demand for token growth. That just means that the pipeline of demand for these hardware companies is extremely robust.

And that's why we feel so comfortable with the upward revision estimate trend that we think will continue well into next year. WebZee, thank you very much. Really appreciate your insight. Thank you. Let's go back now to Kevin Gordon. So, Kevin, you have noted yourself. You had a little dot plot, as we say, with the EPS. This is an outlier year for earnings.

I pay attention. earnings per share really an outlier year. So if the market discounts six, nine, 12 months out, what are we seeing next year? Because next year is going to determine what happens really soon. Yeah, I think it's interesting just to look at, you know, earnings growth, and you look at the forward 12-month estimate. So far this year, we've come up to, you know, close to 30%,

maybe 30 plus, depending on, again, which time frame you're using. I just think that the idea and the notion of going through this without having gone through a crisis, basically your base effect and your view of terms is not negative. So the fact that you're going through that right now and you're seeing those kinds of estimates outside of a crisis is really something you've never seen, at least in the past 30 years of earnings data that we have, forward earnings data that we have. So once that starts to crest, as we've learned in history, because at some point, earnings growth rates do slow down, then you do tend to have a little bit of a wobble.

Whether that turns into a bare market, I think that's still a stretch to say. not necessarily the way we're thinking about it, but much to what Wamsi was talking about in terms of revisions and estimates moving higher, we still do view that as some sort of a risk where maybe there's some point that the market can't maybe attain some of that extreme growth

that you're seeing in some sectors, not that the market can't grow, earnings can't grow, but just having to maybe dial back those expectations. And I think also, you're sort of living this in real time, you mentioned the statistic in the past five months of some of the big AI trades, not having done anything,

especially the NASDAQ 100, that's actually very much consistent with where you are in the earnings cycle. You're very much in the top decile. You're in the top tier of growth. Historically, that is a zone. Well, it's a zone where you see a little nervous, well, historically it's a zone where you see positive growth, but it's not the strongest zone in history.

So I think that's, you know, because the market is mostly priced in, a lot of that growth that's priced in a lot of the good news. All right. Kevin Gordon, really appreciate it. Good to see you. Thanks for making the time. Join us from Schwab. Well, we've got a lot of show ahead, including trading and business legend Terry Duffy.

He is here. We'll talk 24-7 trading, prediction markets, and some of the geopolitical wildcars happening right now. Plus, General Motors vision for the road ahead, but is the real road hazard a coming influx of cars made in China? And after the break, is SpaceX going to absolutely decimate the cell phone and maybe even the cable TV companies? Shares of the telecom giants, AT&T, T-Mobile, Verizon, all taking a hit today. AT&T's down 6%. And the reason is SpaceX, they reaffirmed last night their plans to take Starlink beyond broadband and into wireless. Here's what CEO Elon Musk said on the earnings call. I can say we do see a clear path to several hundred billion dollars here in connectivity revenue.

But I think we should probably describe that in more detail in a forum that's not limited to a few minutes at an earnings call. Well, it was detailed enough for the stock reaction. SpaceX is putting the industry on notice. How should it respond? Let's ask Walter Pichick. He's the co-founder and technology, media and telecom analysts at Lightshed. Walter, great to see you. This can't be new information, I mean, to you.

Even to see the stock reaction is interesting because we've been talking about this for months. Is it just the clarity of him saying, yeah, we're going to come and do this? It means not new, but when Elon says stuff, a lot of people don't believe him at first for whatever reason. there's things that he said that have taken longer to accomplish, but they just don't take him seriously. And I think in part, it's the building of a terrestrial network that provides more credibility to the plants. And I think they layered those comments in yesterday versus prior comments, you know, from the company himself, SpaceX, whether it's been shot well or Elon himself talking about femto cells or like, you know, before they had gotten some low-band spectrum,

that may have legitimately given people reason to question. in the plan. But as we step forward in time and as SpaceX unveils more and more of the plans, Elon, as a quote you just showed with Elon talking about, where at some point they'll unveil at all. But as they do more things, it just adds more credibility. This is going to take some time now. Right. So let's say you're John Stanky. You've run AT&T. You've looked through the whole fixed Wi-Fi thing. You've invested in fiber. You're confident that you have the better product. that's going to be what people want and need in the future. You're investing billions to bring this all around the country.

You're looking at your share price at $21, down another 6% today, as all of this speculation, not speculation, as Musk says these things, what do you do? Well, what he is doing, I think he just laid it out. He's investing in fiber, having that bundle. You're going to typically prefer a fiber connection to a satellite connection. On the wireless side of things, there's ways for them to also, fill the holes. And then I think the other thing you mentioned with your stock at $21 and your EBITDA now growing 5%, right, which is not a bad EBITDA for a telco, finally above the inflation

rate, right? You just buy stock back. You buy your own stock back. But you just have to kind of keep doing your thing and believing in how you are differentiated, you meaning AT&T in the market. And then when Elon launches his service in 28 or 29, you know, we'll see where the chips fall. But, you know, obviously stocks are going to be volatile in some of these longer-term concerns. And while, you know, Bezos is building out his own platform as well. So you look at the two and let's look out two or three years from now. What does it look like if you're not only Verizon AT&T or T-Mobile, but if you're Comcast or Charter, right? That moat they had, that, you know, that physical line into the home or into the business now seems at risk.

I mean, for sure, and these are companies, particularly in the broadband side of things that aren't really known for being able to handle competition. They downplayed when the wireless companies came into the market with fixed wireless. They downplayed when AT&T talked about investing in fiber and said that they couldn't get a return on it. And now you look at how the cable companies are suffering with their inability to stop customer losses that are out there. Amazon, I think, is probably more of a risk to the cable companies. They're not really approaching the market the same way SpaceX is. is, meaning building a terrestrial network to go after these telcos. So I think, you know, Bezos could provide some incremental competition for Brobin,

not necessarily the same old wireless. If anything, maybe they could be a friend to wireless once they can get their consolation going. But again, they've been delayed. Well, we'll kind of leave this to the side, Walter. But your points about it are excellent. And I think what I would remind people is what you just said, it's not over. You know, just because the telco shares are down today, the product, yes, The product has to come to market, but customers have to see if they prefer it.

Speaking of which, let's talk a little Apple. The duo reviews are a little bit mixed. We already know the 18 is weak. The duo reviews are like, you know, what do you think about it? What do you think about Apple right now? I mean, it's not the first foldable phone in the market. It is $2,000. And, you know, historically, when Apple continues to eke up the price of their phones,

the operators have been there to help you and subsidize. and they've increased their subsidies. This year, the year that Apple increased their price again and introduced a $2,000, you know, foldable phone, you know, two of the three telcos have pulled back on their trade-in values, pulled back on the subsidies. So putting more strain on the consumer to have to come up with these dollars. And what we've seen initially, at least,

is that people just aren't buying the phones. The volumes in the market are very low. You saw what AT&T reported today in terms of their upgrade rate and their gross additions, there's just not compelling enough reason to continue to pay more and more. The bigger risk then becomes open AI, clawed, who knows, maybe Elon,

going to Qualcomm, developing a new device, we have AI and how we're going to interact with our data, with our social media services. It could change, you know, fundamentally, how the type of device that you use. I agree, Walt, I, Kelly and I are so aligned on this and aligned with you, and I'm going to say,

I think this thing, I'm holding up a phone. You're holding it with the notification, just, yeah. This phone, whatever it is. This phone, I think this is a, this is a dinosaur. Like, it had its time. It'll be around for a couple more years to come. There'll be people that have phones for 10, 20 more years. But as a whole, I just don't see.

It's not cool anymore. It's annoying. You got to carry it around everywhere, right? It's like, but I just, I think you're right. Like, how long does the phone last? And if the phone does die, then what happens to Apple? Well, Apple obviously is the greatest at risk, but it has an impact of the entire ecosystem. I think about how telcos have relied on phone subsidies in order to retain customers and steal their competitors, a customer.

So it's going to have implications throughout the ecosystem if that happens. But sure, like Apple, for all this, you know, focus on services and all these other things, you know, the iPhone is still the vast majority. of their revenue and the profits and the ecosystem that builds around that. So I don't know when it shows up in first in units and then maybe in price where they just can't push price. You have a new CEO, obviously, a guy that hopefully will reinvigorate new products. So you say what happens to Apple? Well, maybe they should have they should reinvest in some of those product things like autonomous cars that have been killed in the past under Tim Cook. So under the new CEO, maybe you have new product categories that can add the tens and

20s of billions of dollars of revenue that they would need to replace what could be, you know, a struggling, you know, device market going forward. But then that's expensive and it raises CAPEX and they're benefiting from not having that. Walter, didn't we talk, when was it the point at which you called and said Tim Cook should actually step aside? Because now he has. Now we've got John Turnus. Do you think he, you know, so far, what do you think? I mean, this was the call from last year. It happened less than a year after we made the call,

and it was the exact type of person. I didn't name him specifically, but we were looking for a product-focused CEO, which is great. But it's too early to say, right? And unfortunate for him, he's going to face probably some lower volume quarters. We'll see, again, we'll see how the duo sells, who knows, maybe some people, you know, want to spend $2,000. It's probably going to be a relatively low-volume product versus the mass market.

But you got to give them some. time to promote some of the other development. I mean, they spent a ton on R&D. It goes up as a percentage of revenue in absolute terms every year. There's investment there. There are smart people there. You just need a leadership team to identify the things to elevate to, you know, come up with some of these incremental revenue streams. Hopefully, Tarnus is the guy to do that. All right. Walt, that's great to see you again. Thanks for the time. I see you. Walter Pichick from Lightshed. Coming up, GM's vision for driving, including an AI assistant you can talk to like a person. Who needs a phone? We'll be right back.

Shares of General Motors had a big sell off yesterday and are in the red again, adding to their recent declines after the latest quarterly results. GM, of course, looking ahead, hoping to get investors back on board with their second annual GM Forward event in New York City. Our CNBC Auto's reporter, Mike Whalen, was there and joins us with the details. Were you dazzled, Mike? Because our guest yesterday just said he's dazzled by the share buyback since companies effectively going Right. Listen, this was GM's kind of AI coming out party. It wasn't a flying car or a jet propelled car, but it was tangible examples about how they're using AI and also software to develop autonomous vehicles, advanced driver assistance vehicles.

So this was really just kind of GM showing media and then in lieu investors that we're on the right track and we're going to cut our development times down from four to five years to two years. And that is going to help them compete with the Chinese. and there's going to help them kind of catch up with Tesla when you talked about software as well as vehicle. Apparently model refreshes have gotten so bad in the U.S. and I forget exactly all the reasons why, but there basically have been no new car models in recent years to the point at which it's kind of like the iPhone.

They're like, what's the difference between this year and last? I read this. It's the camera, Kelly. It's a slightly better camera and battery life. You read my mind on both self-driving and China. So let's take them, let's split them up, okay? I have an F-150. It's got Blue Cruise.

I love that. It's not FST. I've used that as well. It's a different animal. What does GM got? Is GM got a product where I can literally just be on my phone or whatever device I'm going to be using it a couple of years? And the car, like a boss, drives me to work. GM has super crews.

They've had it for a decade. I know. I've used it. It's fine. To iterate that technology. It hasn't gotten much. Word came up, copied it, and they did the same thing, but they rolled it out a lot quicker. GM's goal.

Also $500 a year of Blue Cruise. GM's chief product officer, Sterling Anderson, A.V. guru kind of form of Tesla, he said that the goal is to have the vehicles drive themselves. That will eventually start with eyes off driving in 2028 on highways, and that is what they are aiming for for these vehicles to be personal autonomous vehicles down the road where, Brian, you can not just take up your hands off the wheel, you can turn around and have a conversation with your passenger, or you can even maybe take that. Because right now with Blue Cruise, I just do this, the phone, and the truck goes, ding,

watch the road. It's like, okay, I'm just picking up my coffee, but that is, I'm a safe driver. How does GM or Ford or anybody, Stalantis, Jeep and whatever, how do they compete against China, Mike? How do we compete when you've got a median wage for manufacturing workers in China of $15,000 a year? Their hourly wage is infinitely below a living wage in America. The cars are fine. How do we compete against three to five dollars an hour workers? It is literally the top discussion in Detroit for every single executive I speak to. It was a topic I talked with Sterling Anderson today on, and he believes that the software developments that they're doing right now, and along with the speed that they can do, can help them compete better against China,

not just globally, but eventually when they come here. Because every executive I speak to, they say it's not if, but when the Chinese come in some form, in some form of progression. Right. Obviously, we have super high tariffs right now, but it's, there's big fallout from the speed with which China's become the world's biggest auto exporter. And what else? It's good to hear the GM thinks it can now go to two-year model development cycles.

I think everyone, we all just made a little bit skeptical. Like, that's great, but can they really match the speed and prowess of what China's doing? I have been covering this industry now for more than 15 years, and skepticism is the name of the game when it's come with a lot of these legacy automakers. What we're seeing from GM right now is they believe data is currency when it comes to AI. And GM believes that it has the best currency and the most currency over 100 years of it, and then 30 more when it comes to on-star and connectivity. So they truly believe that this is the next step for them to be able to compete against China,

to be able to kind of take that next leap forward, to be more of a tech-focused automaker when it comes to compete against Tesla. Or we just ban them from ever being imported into the United States because we can't compete on a labor basis. I'm sure that conversation is happening in Detroit. But Mike, we'll save that for another segment. Glad to see you on set. Thank you for having me. All right.

Appreciate it. Mike Waitland. All right, let's get now to PIPA Stevens with a CNBC news update. Hey, Brian, a New Mexico judge ordered Facebook owner MEDA to pay $25 billion after a jury found the company misled customers about the privacy of their personal data. The trial stemmed from allegations that the political consulting firm, Cambridge Analytics, obtained information about millions of Facebook users without their consent. The state had sought a $35 to $40 billion penalty.

A group of Democratic organizations and lawmakers filed. the lawsuit against President Trump and the Justice Department over efforts to pressure states to remove voters from their roles. The complaint argues the demands from the federal government are based on, quote, shoddily compiled lists. The organizations are asking a judge to block the Trump administration from any future efforts to change state voter roles. And the United States has a new national park for the first time in six years. President Trump signed an order re-designating Chiricahua National Monument in southeastern Arizona

as the nation's 64th National Park. It features towering rock spires formed by an ancient volcanic eruption 27 million years ago. Brian, I'll send it back to you. Power lunch live at Chiracua National Park. So cool, thank you. Beautiful.

It is beautiful. Look at that. My kids would love that. It's no Isle Royale. I just need a cafe. The Great Terry Duffy is coming up. We'll talk trading, prediction markets, and maybe even his take on what is happening around the world as rioters.

Keep France on edge and global markets react. Lots to talk about with Terry. He's up next. All right. Welcome back. Business is booming at CME Group. It posted record third quarter revenue at top estimates across the board. Trading volume also hitting a third quarter record. Joining us now from the CME is the chair and CEO Terry Duffy.

Terry, it's great to have you on a lot to talk about what is the state of trading in America. globally and at the CME right now. How much interest are we seeing from your clients? Well, Ryan, we're seeing a tremendous amount of interest. You know, you just turn on any network and you can see what's going on around the world. There's so much uncertainty, whether it's geopolitical or otherwise. I mean, prices are all over the map due to the Iranian situation. And then you've got the Ukraine and Russia situation.

And so you got the spikes with. diesel and other oil products, and then obviously the inflationary pressures are in there. People need to manage that risk. I mean, it's just too big of a risk not to allow yourself to participate in the marketplace today. So we're seeing record level of participation coming from our institutional commercial participants each and every day, which is reflective of, Brian, and our open interests of our positions of 133-plus million contracts open on CME, holding hundreds of billions of dollars of customer

capital, and we're creating $100 billion a day of efficiencies for those participants. So it's really important that people manage their risk right now, Brian, as you know. And Terry, it's Kelly, just to jump in here, you know, there's so much innovation with financial products right now. Do you guys need more scale? I mean, when I look at CME and CBO and then here come perps and here come, you know, like you name it, right? There are big, big changes coming. And I'm just curious, I know you're there till next spring, if I'm not mistaken. How are you thinking about, like, what's the legacy that you want to leave? Or what's the next chapter that might be coming?

Well, I think, first of all, there is innovation and there has always been innovation in our world, Kelly. Because if there wasn't, I wouldn't be sitting here right now talking to you and Sully. So thank you for having me on that part. But innovation is critically important. It's the lifeblood to any institution. The question is, you've got to be careful not to have innovation for the sake of innovation, without regulation. And sometimes that's what I'm seeing with the products. We're seeing over 4,000 self-certifications going into the CFTC without any of those contracts being stayed or

upheld. So that's a problem because they all can't be legitimate and they all can't be not readily susceptible to manipulation. There's got to be some that's a problem for the participants. And we're just not seeing the CFTC act like that. So innovation is great as long as it's not, at the cost of efficiency and credibility to the marketplace. But that is kind of what's happening right now. In other words, perps are perpetual future. I mean, I'm thinking, to me, they seem like more of a rival to what you're doing. Maybe I'm wrong about that.

But they kind of got big in the Bitcoin world. It's things that you don't want to take physical deliver. I don't want a barrel of oil, right? A perpetual future would avoid that outcome. But it also can be leveraged, I don't know, 1020, maybe more, 1020X. So there's a lot of risk exposure there. And all of this innovation is happening. And as you know, here's what can happen.

The disruptor comes. They take the market. And then regulation catches up five or ten years later. But the original guys are already out of the picture. I mean, you can make the analogy to Uber or hotels or whatever it is. But it feels like a little bit of that is happening with financial products right now. Well, Kelly, it's an excellent point. And when you're looking at some of these products and you talk about the leverage, you know, you're on the low end.

There's products overseas right now that are levered up 250 times. I mean, that's just extraordinary what it could do to the risk of any product. So I don't believe that that is something that the U.S. participants want to have. Now, some of these new entrants say that they'll cap their leverage exposures, but those are just words. I haven't seen anything come out on a rulemaking from any agency or any legislative process on leverage associated with it. So that's a big deal, and that could be very disrupted to the financial system in general and put other people at risk. And so when you talk about perps, like, it's not so much about the expiration date, Kelly. It's about the funding rate. The funding rate is what ties the market to the spot. And when you

have a funding rate on a perpetual, what it means is we pay each other. If it goes up, I pay you because you're short. And if it goes down, you pay me because I'm long. So that's the way it works. And that is the definition of a swap. That is my contention associated with it. So we'll have to wait and see, but you've got to remember most of these products, if not all, are basically retail products. CME group is 94% institutional, Cal. So this is not primarily our main client base, even though we have a big retail base. Can we talk about French debt? And you don't have to go into France unless you want to, Terry, but I will say this.

French debt. Well, what's happening in global debt markets is pretty dramatic. The speed and the rapidity and even the violence of the moving yields has been, to our earlier guest point, 20 and 30-year sort of benchmarks. We haven't seen these kind of moves in a couple of decades. French yields today over 5%. We're seeing a lot of stuff happen in France. What is your take on the global bond market moves right now?

You think the worst of it is over? Yeah, but I don't know if the worst of it's over or not, but my job is to manage risk. I won't so much focus on the French debt, but I'll focus on the U.S., and you can draw the parallels to the French debt. But we're sitting over $40 trillion of debt. Our 10 years sitting over 5% right now. We are sitting at, you know, levels of yield that we haven't seen in quite some time here, and it costs the American consumers more. So it is a problem. And we're operating $2 trillion a year deficit spends.

And that is not sustainable for any economy around the world. So we need to get this under control. Everybody says we need to get under control, but no one seems to do anything about it, except we continue to see the amount of debt this country has go up exponentially each and every month and each and every year. So whether it's in France or whether it's here in the United States, we need to get these debt levels.

is under control. Finally, Terry, what do you have to say about 24-hour reading? You know, 24-5, and we're doing it in a little bit of piecemeal fashion. But just from your point of view, what does this kind of innovation represent? Kell, I really believe that 24-7 trading is inevitable. But here, let me just remind you and your viewers that in order to have 24-7 trading, you need to have the infrastructure around it to support it. And that means the banking system needs to be 24-7 as well. So I can pre-fund here at CME, a small crypto contract on a Friday, a small gold contract, a small silver contract,

and we do that today 24-7. But I can't pre-fund $76 trillion U.S. equity market, nor can anybody else. So I think in order for us to go 24-7, which I think, again, is inevitable, we need to have the infrastructure or the banking system in place with the government 24-7 as well. So if we want to remain competitive, that's where the market is going, in my opinion. I guess that's how you grow jobs.

You just take what we're doing now and then you double it so that you need twice, you know, twice the people keeping this going. Or AI agents, Brian can do the whole thing. Well, I want to, he said going. I said, when is power lunch going to the CME? I love Chicago. I mean, got to get in there before winter, Terry. We love your city. We'd love to have you, bro.

Brian, we'd love to have Kelly as well. Well, she's a lot nicer than I am. Probably maybe her and not me, Terry Doffy. CEO, the CME group, Terry, really appreciate it. Thank you very much. Thanks, Sally. All right, you're very welcome. All right, coming up, a major Russian shipment of fuel is headed for America.

What? Yeah, it's happening. Say when and what? Coming up. All right, time now for a power insider. And Russia says it is now preparing. to send its first tanker of diesel fuel to the United States tomorrow. Moscow says the shipment will be about 300,000 barrels of fuel.

That's only about 10% of America's daily use or really a few hours of American demand. But still, it's something. Remember that earlier this month, the White House eased some restrictions on Russian diesel and more is expected to arrive before the end of the year. The move comes as Trump looks to bring down diesel prices just weeks before the midterm elections. But as we just noted, folks, really this is just a, few hours of demand. So the people were talking to saying this is unlikely to impact prices much, if at all. And the deal is also drawing fire from American and even European lawmakers,

warn that America buying Russian fuel will mean that we are directly fueling Putin's war in Ukraine. That is wild. And so a ship of Russian diesel is heading to the U.S. Well, they say it's going to leave tomorrow. Is that a national security risk? there's a lot of questions. Where's it coming? I'm going to find out. All right. You should because that...

We may be there, but like, I'm going to find out what ship this is and where it's going. That would be great. It's probably coming into Philadelphia. Most Russian fuel imports come into Philadelphia. Yes, that's true. Which is why one time I went to that, remember that deli that was worth $150 million? Yes. The hometown deli.

I actually went to look at the docks for fuel imports. end up going to that hometown deli because I wanted to check that place out. When I walked in, I don't know if they recognized me. You're just like, why is this guy here? But I got the stink guy. I did get a sandwich. It was pretty good. But it wasn't $150 million. If you could trace that story, that would be incredible. Okay. Is that a challenge? Indeed, it is. The gauntlet is thrown down. Still Ed, SpaceX's blockbuster print has Tesla in its orbit. What options markets expect from Tesla after the bell? Shares of meta are rising into their results after the bell today. up a little less than 2% now. Revenue is expected to grow 24% year on year. Tesla is higher as well,

probably because what we heard from SpaceX last night, it reports later as well. Oliver Renick is following the options activity. Oliver, how are people positioning? Pretty bullish, Kelly, options in both Meta and Tesla looking positive into earnings. Meta this morning was particularly one-sided right now about $240 million of premium, likely spent buying calls. Double the dollar amount. looks like was spent on puts, including one big buyer of a 700-800-strike call spread expiring in a month that cost the net $13 million. It also looked like there was someone who sold more than 4,500680 strike puts expiring this month and collected $8 million.

So two forms of bullish positioning way up top in Meta's tape today. Tesla started out more balanced early on, but bulls are getting revved up there as well as the day goes on here and stocks firm up. someone there casually fired off almost $9.5 million buying $3,000 each of the 365 strike calls and 400 strike calls expiring this Friday. Those 365s are expensive because they're deep in the money. And apparently the trader thought the 400 strikes were cheap at $6 a pot because it looks like they paid above the ask. That is some pretty strong last minute conviction for an earnings trade, guys. And we'll see if they're proven right on that. Oliver, thank you, Oliver Renick.

Data Dog, meanwhile, is getting its bark back. The shares are up 8% after a Bernstein upgrade with Missouho, Barclays, and RBC upping price targets as well. Comes after the stocks slid 14% in that AI sell-off last week. All the firms have positive ratings into its Q3 print in November. More power lunch right after this break. Let's talk football and money because they go together, and I don't just mean in college. With a bunch of private equity billionaires buying teams, now that is expanding. The League is launching a new investment fund with General Atlantic that will target businesses

in sports media, consumer products and technology. Here is Commissioner Roger Goodell on the partnership at the owner's meeting in New York a short time ago. It's a relationship to look at various opportunities for us, investment opportunities that we think can benefit the league overall. and make us smarter ultimately when we're doing those types of things. So we're very excited by it. Meantime, some private equity firms are looking to buy teams or buy into teams, Kelly. Well, to your point, we're seeing more and more money going into this on the hopes that, you know, the valuations will just keep going up and overcome a lot of these challenges we've talked about.

Going up are these month-to-date winners in the S&P 500. PTC is number one up 38%. Fair Isaac is bouncing, back. That's a long story, but it's up 34% right now. There's your price chart for PTC. So you may not recognize some of the names on that list, but many are pacing for their best month in even years or decades. So PTC is a computer software company up 38% for its best month since 2012. Earlier this month, Francis Schneider Electric agreed to buy it for $22 billion. That's how you get there. FICO is well bouncing back best month since 99. That comes after FICO had just lost a ton of ton of its market cap and, of course, has rivals like Vantage score now being used by the government, and it had its worst month ever in September.

Yeah, PTC got bought, so. Yeah, that would be the quicker way to say that. Yeah. That price story. Got bought. There you go. That's how it works. Thanks for watching Power Lunch, everybody.

Closing Bell starts right now.