Power Lunch - Tech’s Record Rally, Assessing Amazon’s Valuation, Global Energy Uncertainty 10/7/26

Episode Date: October 7, 2026

Stocks are falling on Wednesday as pressure continues to build in the bond market, pushing yields to their highest levels in 20 years.Brian Sullivan anchors the show and is joined on set by Cantor Fitzgerald’s Eric Johnston to lay out why he is closing out his bullish view on the technology trade.Later, RBC Capital’s Helima Croft speaks with Brian on the global energy markets as the conflicts in Russia and the Middle East complicate the natural gas and crude oil shipping logistics.Meanwhile, David Parkinson, MS Now Senior Weather Data Analyst, reports on Tropical Storm Isaias as it threatens to hit the Gulf Coast as a life-threatening hurricane. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

The tech-led rally. It's taken a bit of a breather. Welcome to Power Lunch, everybody. I am Brian Kelly. Be back tomorrow. The NASDAQ 100 trying for its seventh straight day of gains. The broader market, though, under a bit of pressure the Dow down more than 350 points. Investors like you reassessing just how much higher interest rates can really go. The 10-year yield remains near multi-decade highs, putting a higher cost of capital back at the center of the market conversation. And in moments, we're going to get the minutes of the Federal Reserve's latest meeting and get. get a fresh look at the debate over inflation and whether monetary policy is restrictive enough and maybe if rates are going to keep going up. Plus, the global energy complex back in focus. Brent crude, back above 100 bucks a barrel, geopolitical risk. It is back. It is repricing supply, inflation and the outlook for the global economy. Halema Croft is here with what matters most

for oil and your money right now. Folks, welcome, everybody. We're right off record highs that we've hit the last couple of days in the NASDAQ and the S&P. Markets down a bit today, but remember, we're coming into today on a six-day win streak. And a lot of the AI stocks that really propelled the market, and hopefully your money higher in the past month or so, are today giving back some of those gains. You've got AMD, meta, Palo Alto networks, and many more on the downside. But not everything can go up every day or can it. Well, your next guest, or first guest, is actually closing out as bullish view.

on tech after this recent run. But overall, he is not worried about the macro market, expecting a nice run-up in the midterms. Joining us now, Eric Johnston. He is chief market strategist, Cantor Fitzgerald, Asset Management, and Head of Equities at O'Connor. Eric, good to have you back on. Good to see you, Brian. You selling stocks, then? Selling stocks? Yeah, no. Some stocks? I think we're going to break out, and it's going to be somewhat of a more correlated move. So we turn bullish in tech in August, and we've gotten a sharp outperformance. It's almost been a flight to almost perceive safety, while everything else has been sold around related to interest rates related to oil and related to a slower IPO calendar. But I think that the next

move up, I think we're actually going to break out. There's a big wall of worry out there. Obviously, rates is number one, you know, is number one focus. Well, we'll keep, sorry to interrupt. Keep your mind on rates. Because we've got some breaking news with Steve Leesman right now on the minutes of the latest Federal Reserve meeting. Steve Leasman, bring them to us. Hey, Brian, thanks very much. Minutes from the last meeting say that most participants said it would likely be appropriate for another rate hike by year end. This leaves open the possibility of October, but also keeps December into play.

Of course, they said that decisions of the future meetings would depend on the incoming data, which has been mixed in the meantime. Many said that the higher path for a fund rate would be prudent on risk management grounds. something we've heard increasingly amounts from Fed officials. It would provide insurance against, you know, high inflation because of stronger demand and further supply shocks to the economy. Several said the current policy rate was not restrictive or only mildly restrictive, kind of picking up on language from Fed Chairman Kevin Warsh, who had said he didn't really find it very restrictive at all when he looked around most parts of the economy. Participants noted that inflation remained elevated, had not seen sufficient progress, and the risks were skewed to the upside when it came. to inflation being elevated in the near term or the medium term. And of course, they talked about what was driving inflation. That includes geopolitical developments and supply shocks. And they were

concerned that these inflation expectations, which had been running higher, we had a report this morning about that, could affect wage and price decisions. Strong business investment, consumer spending, all supported solid economic growth. And there was not much worry at all about the labor side of the economy. They said the scale of the AI bill that, continue to surprise them and the underlying momentum in the economy looks like it also increased. They said the labor market they viewed as broadly in balance and it was close to maximum employment and it actually had strengthened the bit. And this was before this last job support. So I'll leave it there, Brian, except I'll be checking for a minute here, the what's happening

in fixed income markets. The 10-year broadly unchanged at 528 where it was before the number and the two-year at 4-76, maybe down a tick. And the outlook for October rate hike remains very low with just a 17% probability. But again, a little bit of an increase in the December probability at 89%, maybe just up about four ticks from what was before the meeting because of that statement at the top that said, most agree or many agree, that another rate hike would be warranted this year. I'd say this is in line with market expectations, Brian, not a big surprise. Well, listen, you're the music guy, so I'll throw this out of you.

It feels like the who was wrong. The new boss is not the same as the old boss. It feels like the new boss is actually the bond market. And the bond market is going to do it at once, and it's going to force the Fed to align with its thinking, yes or no? So, Brian, that's a very important statement you made, which is if you could please put up the two-year, you could take me off camera or take Brian off camera.

Oh, I didn't mean Brian. You could have taken me off. That's the 10-year. but the two-year is at 476. And let's do a little math, Brian. The Fed funds minus the two-year is now, what, about 100 basis points or more over where the Fed funds rate is. And that is exactly to Brian's point that the two-year is indicating that the average

of the funds rate over a two-year period is going to be much higher than it is right now. So there is more baked into the two-year. Does that force the Fed's hand? I would point out that Fed Vice Chair Phil Jefferson just said in a recent speech that the Fed is going to have to make its own decisions separate from what the markets have decided, and that could take some time. So you're right. The market is pushing the Fed, but it's not entirely clear the Fed will be pushed quite that far. Steve Leesman, great stuff. As always, Steve, really appreciate this. Eric Johnston, you could hear what Steve was saying. does that outlook or prospect or potential for higher rates? Does that change your stock market thesis in any way?

It doesn't. I think the peak Fed hawkishness is now priced in. So the market's pricing in, you know, three hikes, basically between now and June. I think the long end of the curve is doing some of the work that was, you know, was necessary to try to bring down inflation. So I think that's probably, you know, somewhat close to peak. If you look at the four-month average, for example, for CPI, core CPI, four-month, month-over-month annualized, 2.1%. Supercore, four-month, month-over-month annualizing around 1.6, 1.8%. You know, wage growth is somewhat under pressure.

Yeah. And so I do think that the inflation trends are there. What's driving up the long end is really real yields, and they're getting attractive now. They are. Okay. Sit tight. We're going to bring another voice into this conversation that is, uh, Kai Wealth founder and CIO, Chem Carson from the Sibo.

Chem, welcome. Good you have you on the program. Technically, this is our bond report, but we should call it the Fed report, because that's what we just heard. What are you watching the most closely now? And what is your reaction to what Steve Leesman just told us about the Fed? I agree with Steve. The Fed minutes are a bit stale, candidly. We've had an unemployment report since then.

Obviously, the longer of the curve is not reacting. We're getting a bit of a steepener today. it's more of the same, right? Why is the long end of the curve breaking out? I get that question all the time. And my real question to you is, why wouldn't it be breaking out? If you look at every single factor that would go into the input of the long end of the curve, every single one points to continued increase in the back end of the curve.

What are those things? Less international buying, obviously. Inflation, that's a lot of people point two due to the Strait of Horm moves. But the two biggest things by far is that we're hitting the five to seven year anniversary, which is the average duration of bonds that were taken out in 2020, 2021. And all of that refinancing is a tidal wave of demand here, of supply on the bond market. So on top of that, obviously, this major other issue, which not enough people are talking about, which is the crowding out of the long end of the curve from all the hyperscalers

and all the other debt that's being taken for, Cappex spending and whatnot. At some point here, we're catching, we're going into a catch-22. If the market is going to continue and be more and more concentrated to the CPEX that's happening in equities, that itself is going to drive more stress in equity CDS. We are seeing that. Credit default swaps in the last month across the board, whether it's corporate or sovereign, are starting to really break out. That is a sign of risk premium increase, and that is basically a buyer's strike. People starting to say, wait a second, if we're going to take this kind of risk,

we need more price. We need a little bit better pricing here. And that's starting to move, not just at the same pace, but really starting to break out. That is something you really, really need to watch. We're hitting a point where the back end is starting to break things.

And if it continues, it is going to break things very quickly. In the words of Hank Paulson, who is just very vocally. Sorry to jump in on you, but I've never met anybody They didn't like interrupting. So I apologize, but I got to jump in. What number is going to break things then? Five and a half, five and a quarter, six percent. Do we know?

I think we're getting very close. Again, you're starting to see it in CDS. You're starting to see it in France with some of the stress we're seeing in French bonds. I'd say we're probably 20 basis points away, but it's less about the basis points. It's more about that move, that volatility in that index. So it's how fast does it move? If it keeps ticking, ticking, ticking, you're kind of wrong. right up against the edge. You're on this cliff looking over, but as some other people highlighted, that can be a wall of worry in the short term. We knew about COVID, for example, I know this is not the bond market, but in December and January, but the market continued to rally, vault continued to be compressed until Feb Ophics. You can get this wall of worry kind of rally, but I'm telling you, we're getting up to that edge, and you can see it happening. At some point,

we'll wake up one morning and bonds will move 20 basis points along the end of the curve, and things will really start to break. Well, now I'm not going to sleep tonight. Chem Carson of Kai Wealth. Chem, thank you very much. So, Eric, yeah, that was a little scary. What he just said. If you listen to what he said, he thinks bond rates are going to keep going up,

and at some point, it's going to break things. So I would just add to that. You know, the 10-year yield, three-year average is 4.3%. So we're right now 100 basis points above that level. So the and the real driver, right, of the, the economy and the borrowing within, you know, the S&P 500 companies is coming from the AI CapEx buildout. And so the 100 basis points in terms of the incremental, what it's going to do to the outlook for spending is just not that significant. And the economy overall, while certain

parts of it are clearly sensitive to the long end of the curve for sure, if you look at the broad S&P 500, its impact and sensitivity has gone down significantly. So we showed this at the top of the other show, the 1 o'clock show. which was 2022, yield spiked quickly. And the stock market went down 20%. Not all at once. It took months, and there were moments where stocks went up too,

but over the long trend, the S&P was down 20%. It went into a technical bare market as rates rose. Is it, Eric, is it the absolute value of where 10-year yields are? Or is it the speed and ferocity at which they get to whatever level that is?

So speed is super important, but I would say that the 22 S&P 500 is very different than the 2006 S&P 500. Explain. And so the driver now, that was sort of pre-ChapT and pre-any of this AI CAP-X. If you look at the makeup of the earnings, you make up of the S&P 500, the contributors to earnings are all coming from selling into this CAPX build debt that's likely to be unaffected. by the long end of the curve. So is it going to hit housing, of course?

Is it putting some pressure on the consumer for sure? But there's offsets, for example, with the wealth effect. And the wealth effect today versus 22, also, or the end of 21, significantly different. And I don't like talking politics, but we do have these midterm elections coming up. You did refer to the, but when you say it, I can now talk. Yes. Talk about you open the door. Let my love open the door.

I think somebody from the Who once saying that. How much are you watching the midterm elections? And does it matter from a markets perspective if we get Democratic House, Democratic Senate, Democratic both, whatever? So the short answer is no, is that we know, with very high certainty, we the market, right, that Democrats are going to take the House. The Senate's going to be up for grabs. But the bottom line is, they might take both. They might take both. We don't know.

We don't know. But there's not going to be a V. The market's not going to be shocked. The market will not be shocked, and there won't be a veto-proof majority. And, of course, the Republicans have the White House. And so their noise level will go up. Investigations will go up, but I don't think to mean that broad of an impact. And if you look at the performance of the market after midterm cycle since 1950,

we put this data out. It is incredibly strong. Since 1950, there's been 19 midterm elections. Six months later, 19 for 19, the market's been green. average and median performance has been about 14% over that six-month period. So I think it's going to be a clearing event, and the market's going to see as that risk is now behind, and the market can move forward. I think in many cases, the noise level around AI is going to go down post the election.

Well, it sounds like we've got to go, but it sounds like if we get that outcome, let's say the Democrats take the House and the Senate, but by a couple people each, to your point, no veto, proof majority. Trump's angry, they're angry, they say a lot of stuff, but nothing happens. Maybe it's that Goldilocks porridge where we can tune out of politics for a couple years. That's our dream. Nothing is good. Nothing is good.

Nothing is good. Nothing, comma, is good. Yes. That's exactly. Right. I just want to make sure, you know, stop clubbing baby seals, but you got to have a correct comma in there because otherwise. Yes, no, for sure. And so, you know, getting some, the budget passed will be tricky, but in the end, whether

there's government shutdowns, as we know the market hasn't cared about that beyond a few days. And so I think no legislation is going to be something the market's going to like a lot. So you're bullish post-midterm election? Yes. Even with rates where they are, you're bullish? Yes. Fantastic. Can we market that hat that says nothing is good?

Like that guy from 30 Rock who would change his hats every show? Nothing. I get royalties. There you go. Nothing is good. That's right. I love. This was good.

Eric, always good. Thank you very much. Appreciate that. All right. On deck. Dramatic video from around Russia, you've got to see. Helima Croft will be here to talk about that and more. Plus, more in Porsche's big turnaround plan, but is it maybe a little late for Porsche? And after the break, why analyst, extraordinary Laura Martin says that Amazon stock is still on sale. Welcome back. Got some breaking news down on Anthropics, new AI model. We're in you with this. Kate, what's going on? Hey, Brian. So this is Anthropics third model in the Claude family. just the past month or so, it does come after CEO, Dario Amadeh, talked about, quote, pacing the frontier of AI. This one's called Haiku 5.5. They say it's designed to be the fastest, and the cheapest

option out there. It costs about 75 percent less than its previous version or the previous similar version. It is another sign, guys, that Price is becoming the battleground in AI. And this version, they talk about, is aimed at high volume tasks. So think about summarizing things. AI agents, which need to really respond in real time. It does also come as these agents we've been talking about are becoming the newest form factor in AI. The company also highlights safeguards for cybersecurity as well. And this also does signal a strategic move on the enterprise side for Anthropica. As it's looking to go public, this company has been offering now a range of models at different price points.

And it has also been offering different performance levels. It does come as other companies are trying to really rein in their own AI budgets, open source, options out of China are a lot cheaper and more viable at this point. Anthropic does want to have these lower cost options to keep enterprises in the Claude family. That is really important right now. And it does also have those more premium models. Think of things like Opus. We've talked about Fable before for some of those more complex coding tasks and things like knowledge work, they say.

But some of those deeper, harder tasks, Brian. All right. Kate Rooney, thank you very much. All right, let's kind of stick with AI and the hyperscalers. And your next guest is looking for double-digit gains. in two magnificent seven stocks, including one, she says, is undervalue. Laura Martin, a senior intranet and media analysts at Needham Always, a compelling interview, one of the best in the world, certainly on the street.

Laura, why do you think that Amazon's stock is undervalued? You know, one of the things that we're saying is that only 20% of its total traffic is exposed to agentic commerce, like Muse or Open AI shopper, and Amazon is doing a really good job of actually, it now says 67% of its users use AI to search for things on its own website, so it's making its product better. And one of the things we're seeing is that actually AI is concentrating winners in the biggest because they have the most tech stack,

they can organize the best word search, and they have the best infrastructure. So these hypers, I think, in these wall gardens are going to be the big beneficiaries of generative AI disruption. Assuming you can get people to come into that garden, once they're in there, they've got the walls, Laura, it sounds like you're convinced that Amazon, which of course already has people in, quote, the garden is going to be able to keep them there. Keep them there and very little of its traffic. Like I said, one out of every five prompts is actually available in the open web to steal. The rest are all in app. People just type. in Amazon or they have Amazon in their bookmarks or they have the Amazon app and that's where they shop. Those aren't exposed to AI agents. So that helps that helps that whole thesis. Can I ask kind of a dumb question, Laura, because I know you hopefully won't think too low of me for asking

this. What is Amazon? I mean, we all shop on it. I get that. But I don't think, do they make a lot of money on that? What fundamentally is the company? One percent margins on e-commerce. I would argue the economy is now, Amazon is now a cloud company. The cloud is growing 40% at 35% margins. The commerce business is funding that because it's a cash cow, but it has 1% margins and it's really capital intensive. So I really like this pivot, whereas Google and meta used to be, you know, CAPEX light and now they're becoming CAPEX heavy. Amazon was always CAPX heavy, which is why it's doing such a good job of building out data centers. This is their core confidence is building physical assets. But,

in the cloud, when it does its cloud business, it takes a physical asset and turns it into 35% margin businesses. So Amazon is becoming more capital light compared to the earnings power of those data centers compared to the old world, where to have 1% margins on the e-commerce business. I'm going to pivot to media and entertainment skydance. Obviously, they got the deal done with Warner Brothers. They got kind of a new, newish name. I know David Faber sat down with David Ellison, great stuff. But they got a lot of debt, Laura. They got a lot of debt. You've said this is a levered call option on the future of entertainment. Is it going to work? So that's the great question. They must sell assets, in my opinion, because everything they're talking about, like $6 billion

of synergies, synergies take years, plural. And they start, at closing today, they have seven times leverage. Investment grade is two and a half times. And they've said they're going to get to 3.8 times in two years, I have no idea how they're going to accomplish that unless they sell assets. They just, I think they, so the debt, nothing can go wrong here. If we have a black swan event or if rates keep going up, it's going to be, it's a call option because the public float is only 500, 5 billion out of 50 billion of equity. And the total market enterprise value here is a 110 billion, of which the public floats like 5 billion. So it really is almost as a warrant, highly levered. So if it works, it's going to work big because a lot of value flows to the equity

holders. But if it doesn't work, the public equity will be the biggest, the people hurt most. Yeah. So I'm not going to ask you if it will work because we just don't know. And they could come out with some show that we're not aware of and it could be the greatest hit in the history of the world and they could make a ton of money. What do you think, though, they need to sell? Do they sell CNN? You know, they have a lot of real estate. They did it, you know, in order to get the deal approved, a lot of promises, like they won't sell the lots for five years. But I am hoping that they lease to generate cash flow some of their excess stages and real estate because they have two lots. They don't need two lots. And they have a lot of corporate office buildings. They have everything in

corporate is duplicative, which takes up office space. So you don't need two controllers and you don't need two head of sales. And they have announced their management teams, which means a bunch of people are going to lose their jobs in the next 30 days. I'm hoping all that real estate gets released to somebody else or sold. That would be great, too. Yeah, sold to somebody who will then use it. I know you are in Los Angeles. What we don't want to see are a bunch of empty lots. Laura Martin, really appreciate your time. As always, Laura, thank you. Have a great day. Have a great day. All right. Let's get a check right now on shares of Micron in a down market, micron popping today after a very bullish note from Gil Loria at DA Davidson that included a price target increase to 3,000. Now, the

stocks at $1,087. Gill's got a $3,000 price target on Micron. The note acknowledges that that's a big jump, but ultimately Gill concludes that the demand for memory, longer term, higher prices for DRAM stuff micron makes, justifies that a little bit of a halo effect on the stock as well. You've got sand disk up about 4%. So Gil Lurie, would they, if that's not the, I'm not looking at it, but if that's not the highest price target on the street, then somebody let me know who's above 3,000. And by the way,

Micron was like a $50 stock just a couple of years ago, not a couple decades ago, a couple years ago. All right. Coming up, the Middle East, not the only energy flashpoint right now. We're going to show you some dramatic footage around Russia and a super tanker and talk to Halima about it. Stick around. While much of the energy world's attention has been fixed on the Middle East, do not lose focus on what is happening in Eastern Europe because the war between Russia and Ukraine is, if anything, intensifying and energy infrastructure is once again literally in the crosshairs. Look at this. Russian officials say a naval drone struck a Liberian flagged oil tanker off the coast of Sochi, Russia yesterday. That is the video of the ship

burning. It was a massive fire, black smoke sent over parts of the resort city as well. That is quite dramatic footage. And now it is not clear whether Ukraine was behind that attack. Again, we're going on what Russia said. But this morning, Ukrainian president Vladimir Zelensky claimed responsibility for strikes on Russian oil facilities. So let's talk more about this. I'm bringing Halima Croft, Global Head of Commodity Strategy, RBC Capital Markets. We've got some other stuff to get to as well. We've been rightly focused on Hormuz, but Ukraine pounding Russia. You've been actually focused, though, on this story since the summer because it's so important to the diesel story. I mean, this is why President Trump has repeatedly asked Ukraine not to target Russian energy infrastructure

because the refinery attacks are contributing to the diesel problems that we're facing here. But the question is right now is, has Ukraine just made the decision that they are going to disregard Washington's pleas to cease and desist and is energy going to remain in the line of fire? because this is not a crisis that the White House can easily deal with while we're still trying to deal with the Hormu's situation and the Houthis in Saudi Arabia. It's not just respectfully to the White House. It's not just us.

It's Europe is in a bigger hole. I know they've got a lot of diesel inventories, but they might be in a bigger hole. I think we just got our answer. I mean, 50% of Russian refining assets have been hit. 100%. They could be currently offline. The information's a little bit sketchy.

I don't think Zelensky cares. No, because the reality is, like, we're not giving Ukraine the type of assistance we did at the start of the war. And Ukraine took the position that if you're not going to fund us, we have to at least try to defund Russia's war ATM. So there's no indication that Ukraine is pulling back on these attacks. And so I think we have to anticipate that particularly when we think about the refining sector, that we're not going to get a turnaround story when it comes to Russia anytime soon. Helene, I also want to mention this as something that I think really highlights how tight and expensive shipping is getting. A shipbroker

source of mine. Told me this morning that a ship was just chartered from the U.S. Gulf Coast, basically the Houston, Texas area to China. The cost of that charter was $76 million. A normal pre-war rate was $7 to $10 million. The ship is called the Alexandros. The charter is trading firm Traffigura. It will load around November 19th, assuming the ship holds around 2 million barrels of oil. That is a cost to Lima of $38 per barrel to sail from to China. There was another one that happened about an hour ago. The same source telling me 77 million for a ship from Houston to Korea. It's not just the paper contract that we show on the air. The price of the physical barrel is soaring. Soaring. And I think we pay too much attention to the

price that we see on the Bloomberg terminal. This is now a shipping crisis. And this is the challenge, again, when we think about the price of a refinery has to pay, exorbitant shipping costs, Exorbitant costs for crews. Some ship captains are commanding $100,000 a month to sail through Hormuz. Because the crews don't want to die. Right, and that's something again. I wouldn't. Barrels are moving.

But the key question is, at what cost are these barrels moving? A cost in terms of shipping costs, risk to, you know, personnel on these ships. Was it, I guess my question is at one point, we've been talking a lot about interest rates. At what point are these costs unsustainable? What costs, you know, right now buyers are willing to pay? because they need the oil to keep their economy going. But at some point, the marginal buyer is going to be like, we're out. What point does it cause demand destruction? And the question is, how much higher can these rates go? I mean, that's why you had Russell Hardy, CEO Vitol, talking about these much higher oil price scenarios, because he said this is now a shipping crisis compounded by the fact of low inventories. So this is the critical point, folks. And the reason that we're talking about this is bringing this data is that even if the paper contract, the number that we show you on the screen there, the 90s,

box or 92 box or whatever it might be. Even if that goes down, the price of moving the oil is going up. It is not going down. If you are the refiner sourcing those barrels, your price is going up. So the paper price is not reflecting what is happening in this physical market. Do you see any end of this? I mean, it sounds like the idea might be if we refund Ukraine that maybe they back off a bit, give us a break on the diesel side. I don't know. What's our time frame? I don't know.

And I'm not going to speak for you. No, we've been talking about this since summer. I know. The White House has been upping the ask of Ukraine in terms of cease and desist on infrastructure. And there is no indication that Ukraine is answering that call right now. So again, where is the off ramp? Where's the strategy for dealing with Ukraine now? Yeah, and let's bring that video back up one more time of that ship off the coast of

Sochi, Russia. By the way, Sochi, Russia, I was there. It was in 2014. That's where the Olympics were. Yeah, I was there for the Winter Olympics, which is weird because it was 70 degrees and it's a seaside port. That is an environmental catastrophe as well. This is, Russia just hit Ukraine a couple of days ago, a civilian bridge when the chancellor of Germany happened to be in town. I need our audience to understand that this is heating up, not cooling. There's the video from a couple days. That's people going to work or coming home from work and their bridge gets blown up. And that's what Ukraine has said to the administration in Washington. If Russia stops attacks, we will stop attacks. And so right now there's no indication that either side is pulling back in this dispute. Yeah. Halema Croft, always great to get your insight, real world insight, scary stuff that's happening in a lot of places. Halima, thank you very much.

Yes, thank you. All right. Still ahead. One of the world's most iconic carmakers struggling, to drive profits higher. We will talk about the path proportionate. Next. We got some breaking news out of Washington, D.C. Let's get more now with Amen Javre. Damon. What's going on? Hey, Brian, just want to flag for you, something that happened in the Oval Office. Just a couple of minutes ago, President Trump talking to reporters, and he was asked about this new

campaign ad by Mike Rogers, who's the Republican candidate for Senate in Michigan. In that ad, Rogers appears to break with President Trump on the issue of the trade war. against Canada. I'm going to play you the ad, and then I'll play you the President's reaction to it after that. But here's what Mike Rogers is running now for his campaign for Senate in Michigan as a Republican. Take a look. Here in Michigan, we know that Canada is not our enemy. We need to end this tariff war now. So the President asked about that comment from Rogers who says, Canada's not our enemy. We need to end the tariff war. Here's what the President said in response to it.

I viewed it as though he wanted Canada to make a deal. I viewed him as saying that he thinks Canada should make a deal. So really interesting, Brian, because you see Rogers, that ad is widely viewed as Rogers sort of breaking with the president on this issue of tariffs and Canada. The president, though, says his interpretation is Rogers is actually on his side and wants Canada to get to a deal. So the president said he's not worried about it.

Clearly, the trade war with Canada, obviously playing a big role in that Michigan Senate campaign. We'll see how it plays next month in November in these midterm elections. You're looking across late Sinclair from Detroit, and guess what's over there? It's Canada. They are literally connected. I can see it from your house. You really can't. If you have a nice house on the water.

Amen Javors, thank you very much. Appreciate that. All right, changing gears, it is no secret that Porsche is in the midst of a rough stretch. Been dealing with years of slowing sales and weakening demand. and the stock has lost more than half of its value just going back three years. But Porsche holding an investor day this morning with a plan to turn his business around. Philabo, joining us now with more. Phil, what did Porsche say?

What are they going to do? Essentially, this is a playbook where the new CEO, Dr. Michael Liders, has essentially said, we are going to become much more exclusive, much more restrictive. We're going to raise our prices. And essentially, less is more, Brian. and if you look at Porsche, that's a smart move. It's got huge brand equity. It is a brand that resonates especially with high-end buyers. The problem for Porsche has been twofold. One, the China market that used to juice sales, that's gone due to competition over there. And second

of all, in terms of that exclusivity, there's not a whole lot of it. If you want to buy a Porsche, you can, and certainly you will pay a pretty penny for a new Porsche model. But what's the difference between a McCann crossover utility vehicle and, say, a competitor from BMW or from Mercedes. If you look at it that way, you realize there's not a huge difference. Dr. Lighters has basically said, you know what we're going to do in the future? We're going to focus on our core DNA, performance, luxury vehicles, especially sports vehicles, sports cars. That's in the DNA. And they're going to have fewer model variants, focus more on those model variants, raise the prices about 20%

and really almost copy the playbook that was laid out by Ferrari, which is why Ferrari has been so successful. You want a Ferrari? You can have it, but there's not a lot out there. You're going to have to pay more for it. So that's essentially what Porsche is doing. I want to turn out of used car prices,

not just Porsche's any used car, because Cox and its Mannheim division coming out with an index. They've got an index. Very handy. We like charts. And the index shows that used car prices ticked a tiny, I mean, a smidge down in September. They think they'll keep going down.

But where are we right now with used car pricing? They're down about 1% relative to last year and down about 0.6%, I believe, compared to August. Again, not a huge drop in prices where you're noticing that softness in prices, pickup trucks and large SUVs. People are simply not going to be paying as much for them. And the dealers know this. In the wholesale used market, they're not buying. as many of those and the ones they're buying, if they can get them at a little bit lower price, that's what they're doing. Where the demand is smaller fuel efficient vehicles as well as

electric vehicles. Those prices on the used market have actually gone up a little bit. Bottom line is this, Brian, this is the first decline we've seen since early last year, but you've got to look at where the average retail list price is for a used vehicle. I know. It's just over $27,000. Hasn't really changed a lot in the last several years. still remains for the used market relatively elevated. Maybe I'll get a 2012 Jeep Wrangler for 27,000 at this point with roll-up windows, Phila-Boe. Thank you very much. By the way, which is a quality car.

All right, let's get now with Frank Holland with a CNBC News Update, Frank. Hey, good afternoon, Brian. Attorneys for Krista Pikes say she's unable to swallow, eat, or move her arms after Tennessee attempted to execute her last week. They say she's angry and confused after regaining consciousness. This afternoon, a judge ordered the state to preserve evidence related to the watch execution, including surveillance footage, medical supplies, and communications. President Trump said today the U.S. does not believe a lab worker's death in Russia was the result of a bioweapon. He also said Russia says they, quote, have it very much under control

despite releasing new details about that incident. The director of the CDC, Erica Schwartz, said the risk to the U.S. is extremely low, but that the agency is prepared to monitor and screen travelers. And a new report from Common Sense Media says, Chad CPP's new feature for teens is an unacceptable risk. The nonprofit says the feature does not send alerts to parents when it should, does not offer the right to help in crisis situations, and it still does homework for kids. OpenAI released its first report on teen use today saying teens spend less than 15 minutes a day on average on chat GPT. Brian, back over to you. No, we did our homework for us, Frank.

The dog ate it sometimes, Brian. The dog ate every night. Frank Holland, thank you very much. Thank you. All right, folks, coming up here. We've told you that this is the first year in 112 years where there wasn't a hurricane. Well, it's no longer true. We'll talk about it next.

Tropical storm Isayas is expected to strengthen into the first hurricane in the Atlantic Basin since before the year began. David Parkinson is the senior weather data analyst at MS now, and he's also charting Isayas' path. And what do we know, David, about that path right now? Yeah, so right now the storm's not terribly well organized. as it is up to 50 miles an hour, it's moving to the east-northeast to eight miles an hour, and it is to the west-northwest of Progresso Mexico. It's going to be heading out over some incredibly warm water over the Gulf of Mexico. So it'll be a category one by tomorrow and by Friday,

a category two with 110 mile an hour winds at 7 a.m. And by the evening, it may be weakening just a little bit as it makes landfall. Here's the interesting thing. You know, this is one mile an hour from a category three, so it would not take much for this to be. a major hurricane. But I want to pay attention here to all of these blue dots that are on your screen. These are the locations of the offshore oil platforms. So if we take a look at those, you can see there is actually a decent amount that's clustered right in the track. But if this one

hugs to the west, that would impact them some more. The other thing is this red flag right here. This is Chevron's Pascagoula Refinery. It handles about 369,000 barrels of oil per day. And so the problem here is that if this one comes offline and you have 100 mile an hour wind, it's not coming back online the next day. It's going to take a while. So exactly where this tracks could have real impacts on the refinery side and not just the rig side. Yeah. And you're speaking our language here, David, which we appreciate, by the way, it's why you're on. And thanks for flagging this to us this morning, David, reaching out to me directly, which is great. So we got the warmer water. That tends to be an accelerant for these storms, not like I know anything. But do we know how much? big that East IS might ultimately become. Yeah, so the interesting thing is the models, at least as we were seeing them earlier, we're saying that we could top out as a cat three or a cat four. Now they're likely topping out as a category three. You have two things.

One, you have the really warm water. So that is bullish on how strong this storm is going to get. The downside is you do have some sheer. That is what hurricanes hate, and it stops them from really developing. The interesting part about this here is that if you remember what a, purpose sort of ecologically a hurricane serves, it is nature's heat release. And because we've had no heat release, the water temperature in the Gulf is bathtub warm. It is over 90 degrees in some places. And so as a result, you are having the perfect strengthening opportunity there, assuming you don't

have sheer taking it apart. And again, here is the European model. This is the most accurate model in the world. We run it 50 times. And it's all taking the west side of this cone, which brings you closer to New Orleans, closer to some of these rigs, and right on top of that past Googula refinery. David Parkinson, you keep us informed about East IES and that because a lot of people worried about it, but we also watch the energy infrastructure, David. Thank you very much. Sure thing. All right. Coming up, call it the rise of the robots. We're going to reveal some eye-poppinning humanoid numbers next. Let's talk about the rise of the robots, because the Humanoid revolution is beginning to get real, and investors are pouring billions into the race.

According to a new note from Morgan Stanley's Adam Jonas, investment in humanoid robots, startups like that one, has already hit $4.9.4 billion this year. That's the only double the money raised in all of last year, and Jonas thinks the market could become even more massive. Ten years from now, Jonas estimates, humanoid robot adoption could reach 28 million, 28 billion human-hard robots in America for context. That is larger than the populations right now of Florida and New York. And then get this. Jonas says that we could see one billion robots by the year 2050.

That would translate into a $7.5 trillion annual market. But here's the number that may really get your attention. China is way out in front of robot patents. In fact, more than 7,500. Chinese patent applications have mentioned humanoid over the past five years. That compares fewer than 1,500 such patents here in the United States. There we go. Humanoid robots.

Would you buy one? Did you have one? I would. It would be great. All right. Let's get a quick market check before we go here because the major averages, they're mounting a slow comeback. Remember, we're coming in on a six-day win streak for the NASDAQ. The NASDAQ right now is down three-tenths of 1%.

The S&B down two-tenths of 1%. The doubt off a little bit more, six-tenths, but here's a thing. Two-tenths. That's not a lot. We got an hour and a couple minutes left in trading. It is possible. The S&B 500, the NASDAQ, they turn around and end the day positive. We'll see. Take a short break. Back right after this. All right. Before we go, we're going to check out some market movers. We got an interesting call from Bank of America. The firm says that Spotify is what they call muse proof, at least in terms of subscriber risk. That's the, the meta. AI agent, Spotify at 5% today, Bank of America maintaining its buy rating and its $685 price target. Next up, two refiners hitting new highs today, Valero Energy and Marathon Petroleum.

Folks, we've talked about these for a long time. Look at their one-year moves up 159 and 130%. These have been huge moves as what they call the crack spread. The price between oil and the refined product just keeps going up. We are done here on Power Lunch. See if the markets can turn it around by day's end. Closing bell starts right now.