Power Lunch - The Cost of Financing U.S. Debt, Signs of Life for Biotech Stocks 9/3/25

Episode Date: September 3, 2025

CNBC’s Kelly Evans and Brian Sullivan take you through the heart of the business day bringing you the latest developments and instant analysis on the stocks and stories driving the day’s agenda. ���Power Lunch” delves into the economy, markets, politics, real estate, media, technology and more. The show sits at the intersection of power and money. “Power Lunch” gives viewers a full plate of CNBC’s award-winning business news coverage, plus a healthy dose of personality from the show’s anchors and the network’s top-notch roster of reporters and digital journalists. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Big Tech higher again as the end of a lawsuit drives your money higher. Welcome to Power Lunch. I'm Brian Sullivan. Kelly is off today. Google and Apple flying high as the judge helps them both out, which is helping the NASDAQ out. Look at that. But don't lose sight of the bigger picture because tariffs, jobs, and the macro economy, they will likely drive your macro money ahead. Speaking of driving, while auto sales could come in red hot and the risk of a government shutdown could drive the economy off a cliff if indeed it happens. Hello, everybody, and welcome.

That Google lawsuit certainly is a big deal for a couple of market-moving companies. We just showed you Google up more than 8%. But what about the macro picture? The economy and the Federal Reserve are likely going to be the driving force for stocks for weeks and months and maybe years to come. We've got a huge jobs number on deck in just two days with a lawsuit around Trump's tariffs and a big spike in global borrowing costs also kind of clouding the picture. So let's try to make the skies a little bit more clear.

And bring in our opening guest, Jenny Johnson, President and CEO Franklin, Templeton, one of the largest global investment managers in the world, more than one trillion in assets under management. Jenny, appreciate you coming on. By the way, as you probably know, we're also waiting on details from the Fed's latest monthly beige book number. So we'll probably have to interrupt you politely at some point. Then we'll come back. Thank you for your patience. Jenny, that said, speaking of the Fed, what do you think is going to drive global stock markets in months and quarters to come?

Well, I think you said it, right? It's tariffs. It's innovation, right? So I think as we see continued productivity improvements in companies, you're going to see that translating into the bottom line, you're going to see, you know, I think we're going to have a continuation with the AI theme and the MAG7 and the improvements, you know, and the growth there. And I think that the economic numbers, and the problem with the economic numbers is what we're learning is actually the government's pretty antiquated in how it collects these numbers.

And so there's a lot of revisions. And so that'll tend to have short-term volatility, but I think you have to kind of see through them. Jobs number on Friday, non-farm pay rolls is going to be really important. That'll probably inform the Fed, among other things, as to far as their September decision. So I think all those factors are key to this. I've got to imagine your clients are feeling pretty good because the markets are at record highs, balances are at record highs, 401Ks, 529s, retirements, IRAs, any acronym or number I can throw out of Jenny, it's probably close or at a record highs. but does that also make people more nervous?

You're feeling good, but I do wonder if you're kind of a little more jumpy about things because we have done so well the last few years. Well, I think that's right. I mean, I think when people, you know, ask certainly me about where I see the market, you know, I say I'm still cautiously optimistic, which I actually think was the prior guests used that term as well. Why? Because, you know, the consumer is still strong. They're still spending.

You look at high yield spreads. they're really tight, so it's a sign that people have a lot of confidence in the economy. But, you know, the market's also at something like 21 times 26 earnings projections. And so, you know, it's a somewhat expensive market. But then I look at it and say, and then, of course, you have all this noise around things like tariffs, which I think make a lot of people nervous. Although, let's face it, I think companies and the economies have adjusted pretty well to the tariff story. And it hasn't been as big of a deal as people thought it would be. And then, frankly,

I am such a fan of the innovation and the AI. And we are not seeing that yet in productive. We're seeing productivity numbers improve. Last decade, companies, it was like 1.5% was their productivity gains. That's up to 2.5% now. And I can tell you, even at Franklin Templeton, we're just really starting that AI story. And it's going to take time for that to play through. I do wonder, you mentioned tariffs. I do wonder, Jenny, if the bigger risk to the stock market is the tariffs staying on or the tariffs going away? Because if the Supreme Court agrees the appeals court and wipes the tariff, everything we've talked about for six months, pretty much now gone, some companies will celebrate, others won't. But the bond market yesterday

made everybody jumpy. And I wonder if that's a bigger risk. What do you think? Well, so first of all, I think it's really important to think about what tariffs. So the big issue was we got the big, beautiful bill passed, right? So that gave a lot of certainty around fiscal policy. That was really important. And remember, tariffs were not part of the calculation as far as the government debt that we'd see post-terrorists. As a matter of fact, they were going to help improve it. So if immediately all the Supreme Court votes and says, we're going to get rid of tariffs, I think in 2024 tariffs, we collected 80 billion. We're already over 100 billion year to date as far as what we've collected from tariffs. But that's not in the calculation. So let's just

imagine it goes away. We already sort of accepted that there's another 10-year number of somewhere between 2.4 and $3 trillion added to the debt, which is a whole different problem. And then if you think about it, again, it depends on where you're sitting. If you're U.S., only 14% of the economy, GDP, is associated to exports and 11, or sorry, imports and 11% to exports. If you're Germany, it's 50%. So again, actually in the U.S., tariffs aren't that big of a deal. We haven't exactly calculated what the impact will be on earnings. But actually, historically, companies, it takes them a little time,

but they figure out ways to adjust their supply chain to either absorb that and kind of reroute themselves or be able to pass it onto the consumers. So I don't think from an economic standpoint, it's going to be a massive deal as far as the story. Well, sit tight, Jenny, as promised, we've got some breaking news from the Federal Reserve, and I want you then to bring you back in.

The comment on this, we've got the latest reading of what they call the beige book, but Steve, I think at the first Maybe it's a little more red than beige because I do wonder how many times or if the word tariff is mentioned or inflation. Yeah, I was going to say, Brian, this is a darker shade of beige is the way I ever put it. This is a pretty downbeat beige, but one of the more downbeat ones I've seen in quite a while. It says little to no change in economic activity compared to the last report. Four districts did report modest growth, which means the eight didn't report much growth at all.

A flat to declining consumer spending seems to have been the case across most districts. Wages were failing to keep up with rising prices. Economic uncertainty and tariffs were cited as negative factors throughout the districts. The auto sector was flat to slightly higher, but consumer demand was up for parts and services to care for older vehicles, something Brian Sullivan knows a thing or two about. There was a surge in data construction across several districts. This was seen as a rare strength in commercial real estate, little or no net change in overall employment. one district actually reported a modest decline.

Seven districts say firms were hesitant to hire workers. Of course, there are 12 districts, so seven of the 12 districts say people were hesitant to hire workers because of weak demand or uncertainty. Two districts reporting an increase in layoffs. Multiple districts saying head counts were being reduced through attrition. The increase in number of people looking for jobs was reported throughout several districts. Half of the districts say there was a reduction of immigrant labor availability. also said they saw a modest rise in wage growth, half apparently not.

Price growth was seen as moderate to modest, and this is where it gets even trickier, though. Nearly all districts reported the tariff-related price increases, and they were especially acute in pushing up the prices of inputs. But there was some hesitancy in raising prices due to customer price sensitivity and some of the other weaknesses we talked about. And then this is probably worth noting here. Most districts were saying firms expect price.

price increases to continue in the months ahead. So, Brian, I did not search the number of uses of the word tariff, but that is replete throughout this report. The negative impacts of them right now is what we're seeing. And now we seem to be getting an impact here on, at least anecdotally, of course, these are anecdotes, but weak economic growth, weak employment growth, but pricing pressure, it's got a stagflationary tinge to it. Well, you did not because you're actually doing the news.

So I took the time when you were reporting it to do exactly that. And so I did a word search on tariffs, Steve. So in this page book, the word tariffs, plural, mentioned 69 times. In the July beige book, tariffs mentioned 41 times. The number of inflation references went from six to eight. So it would appear, just anecdotally, just doing the old Leasman-Sullivan-Word count here, that those references, the concern about tariffs and inflation went up.

Yeah, I think that's probably right, Brian. And this, by the way, goes along with something we're hearing from economists. The politicians are fast to say, we haven't seen it yet. The economists are saying, just you wait. It's coming along. It's come along over time. And you can see the tug of war going on

between the sellers and the buyers right here, where this price sensitivity, if it's a weaker job market, it's tough to pass it along. So, Brian, like I said, you cannot uncreate the tariff price increase. They have to go somewhere. They're going to come out of margins. They're going to come perhaps with higher price to the consumer. Some Fed officials think it's a third, a third, a third,

where the exporters absorb a third of it, the retailers absorb a third, and the customers will pay a third higher price. We'll see that's not going to be true across. the border, it'll be different for every product. But you can see the kind of negativity that all of this. And I think there are two separate things, Brian. It's important to realize there's the uncertainty factor, and then there's the tariffs themselves. If we could reduce the uncertainty, we could focus on the tariffs, maybe businesses could figure it out. But with

all of the changes going on, it becomes very difficult. I will say it's not been all that difficult for the stock market. They seem to be focused on that one bright spot that was in this report, which is AI, and that seems to basically trump everything else that's going on. And meanwhile, the economy underneath, outside of that AI economy, looks to be having a bunch of problems here. Steve Leesman, breaking down the beige book, literally breaking the news on breaking down the beige book. Steve, we appreciate that. We sell Franklin Temple's CEO, Jenny Johnson, standing by. Jenny, I'll kind of open-end it.

You can react any way you want to what Steve just said about the beige book, as I noted, the number of words. referencing to tariffs or inflation on the way up. And that jolts the job opening and labor turnover survey number that came out earlier today was really weak. It does feel a little more economically fragile, but at least big parts of the stock market don't seem to care. Yeah. So a couple things.

Number one, there's no question that tariffs are going to impact some amount of pricing. The question is, how much does that slow down the consumer? I bought my daughter a wedding dress yesterday, and they had a line item for tariffs, which I thought was very interesting. And, you know, so you're definitely going to see it. And it depends on, if you're buying a car, it's probably going to have a lot of impact, depending on the type of car, on tariffs. Now, first of all, tariffs are a one-time inflationary increase. Once you've moved up to that new pricing level, it stays flat there. So that, you know, again, is kind of a one-time.

It's not an ongoing inflationary thing. And then number two, companies are quite, they are, I've talked to CEOs. They are actively thinking through how they adjust their supply chains to deal with tariffs. The challenge is when the tariff story is moving and you're not quite sure with certainty what it looks like to actually be able to reset up your supply chain. So again, that uncertainty, I totally agree with this point about uncertainty. that creates concern. And then companies think, you know, I'm not going to hire.

I'm going to try to reduce expenses because I don't quite know what's going on. So that, I think, is the bigger issue. Again, I think over it, it takes a couple of years to do it. But over time, people figure out ways to get around those tariffs or to reprice. Yeah. I do wonder how much of the job market has nothing to do with tariffs. So, Jenny, because only 12% of things that we buy are tariff. And if you've got a college-age kid, the job market's pretty crappy right now.

Jenny Johnson and Franklin Templeton. Jenny, appreciate you coming on. Next time, come into the studio. We'll see you soon. Thank you. Thank you. All right. Up next, the looming risk to markets in your money

that is not getting nearly enough attention right now. Welcome back. Time now to talk power, part of our growing weekly focus on all things energy. We've got a few big headlines to hit and talk about today. First off, a new report from Reuters suggesting OPEC Plus may add to production. Quotas again when it meets this weekend. Also, next week is the largest natural gas conference in the world. We will be there, by the way.

All of this goes to American investments and things like energy, gas, nuclear, and more. Let's talk about it all. Clear for your energy partners. They just put out a big new think piece on this very topic. And managing director, Kevin Book, joining us now. Kevin, it's good to have you on. I don't want to just focus narrowly on OPEC, but it's kind of newsy today. There's talk that they may increase the headline, quote, a number.

Of course, the big debate on the street and oil traders and whatever is, even if OPEC plus raises the production number, do you think the actual production, hard barrels, will go with it? Or can countries not make those new numbers? Hi, Brian. Good to see you, as always. And that is a critical question. Sometimes it does come up short. What we're looking at, though, in OPEC Plus land, over the 15 years of sort of shale liquids primacy, start in 2009 and go to. through the end of last year.

Six percentage points of market share decline. U.S. production has gained more than 11 percentage points. I think that gains are gains or gains, maybe not all the gains that are on paper, but gains nonetheless. Yeah, gains on paper, but gains nonetheless. And I also wonder how much, Kevin, the paper gains, the headline number, the stuff that we talk about, how much that will impact the oil market versus the real barrels that are added to the market.

And more importantly, I think, what price those barrels are added to the market? Because if Russia keeps selling India, you know, pretty cheap oil to get around or under price caps, that also is an issue. Well, so the first part, I think if we look at the fourth quarter right now, my colleague Jacques Rousseau, I think you know, is projecting about 2.6, 2.65 million barrels per day of supply ahead of demand. So you're teetering on a pretty well-supplied market already.

You don't need all of the headline to come true to have an impact. But you're very right to bring up the sanctions question and that continuation of those sales. To what extent would the Indian purchases stop and to what extent would China be targeted by sanctions? Right now, it looks like the answer to the first question is not very much, at least not yet. And to the second question, not very much at all. Yeah, not much at all. And you wonder if there's any at all in the not much at all. In your note, and I'm not going to steal from it, but I'm going to steal a little bit from it.

Because we're going to be speaking with Interior Secretary Doug Bergam next week. In that note, you quoted him where everyone's heard the term knowledge is power. Knowledge is power. Well, now maybe we flip it, right? Power is knowledge because if you don't have the electricity creation ability, you can't run the AI, which will be, quote, the brains of tomorrow. The U.S. looks to be leading the global competition for this, Kevin. What will it take for us to maintain that global lead?

Well, yeah, that was a very memorable quote in the cabinet meeting by the secretary last week. And it really gets to the change in focus, maybe not in the tools that are being used because the last administration was an industrial policy-focused administration, and so is this one. But in the last administration, it was about the CO2s. And in this administration, it's about the BTUs to run the GPUs. And so I think it's very clear that they very much want to drive supply. And there's some concern about the idea that we're falling behind. The next thing the Secretary said after that memorable quote was,

China's outpacing us in adding power to their grid. And we just had Xi Jinping and Vladimir Putin, and to some extent, Narenda Modi, of India together. I mean, Xi Jinping and Vladimir Putin walking together talking about organ transplants

or whatever, it doesn't matter. The fact that they were together and there appears to be this new coalition along maybe with India, to me when I look at that and I look at both the power demand from country like India and the power supply

from a country like Russia, it feels like a new global order on that end of the world. Am I overstating it? How do we read this? I don't think you are. I mean, there are degrees of alliance as opposed to, you know, treaty partnership at sort of the farther extreme. But the repartitioning of the post-war global order into this Shanghai cooperation organization and BRICS mediated grouping. In his speech, President

Xi did say that energy was one of the areas where they could lead. In fact, he mentioned not just energy, but clean energy. Two resources where those partners, those alliance or affiliate partners are quite strong. Yeah, I mean, China can build solar panels. They can build wind. And everyone's like, oh, they're leading in renewables. Yeah, but they're also building a ton of coal. Are they not?

They are. It's a resource they have. Sort of the principal tenet of energy security. You don't have to go very far deep into the weeds here, is to use the fuels you've got. And they're half of the world's coal production right there. That's it. You use what you have, so you don't have to rely on other countries

because that is the definition of security. Something that we're going to talk about next week with Secretary Wright, Secretary Bergam, and many more, but we're glad to talk with you, Kevin Book, about it today. Thank you. Thanks for having me, Brian. I look forward to those interviews. All right. Thank you very much. All right, coming up, while the betting odds of a government shutdown are growing a little uncomfortably high. Congress is back in session, and along with realizing just how rich many of your lawmakers seem to have become recently, there's more of a pressing issue, a possible government shutdown. Yep, another one. In fact,

In fact, the clock is ticking as Congress has just two weeks to negotiate a new funding bill to try to avoid a government shutdown. Emily Wilkins on Capitol Hill, and I should note that there's some kind of protest going on somewhere in Capitol Hill. So I heard a bunch of people yelling a few minutes ago, Emily. It seems like it's calmed down, but hopefully nobody's throwing rotten tomatoes. No rotten tomatoes so far, Brian. But actually the protests, oddly enough, kind of does tie. in with what's happening in the shutdown. The threat is back. It is much more serious this time than what we had earlier in the year. And congressional leaders say that a stop cap is going to be

needed by the end of the month to give them more time to work out the fiscal 2026 funding. Republicans cannot do it alone. They're going to need Democrats. And Democratic leaders, Chuck Schumer and Hakeem Jeffries, they're ready to make this a fight about health care. If Republicans want their votes on funding, they need to have something on health care. Now, the leaders have suggested either reversing some of the provisions on Medicaid in the Trump megabille. That's actually what some of these protesters seem to be shouting for, or extending some premium tax credits for those who get insurance through the Affordable Care Act. If those expire as they are set to do, that means that the cost is going to go up for a lot of Americans. But further complicating this entire debate is whether the funding that Congress is negotiating on right now and could agree on is even going to be spent by the White House.

The Trump administration, remember, they just announced they were going to cancel that $5 billion in foreign aid. That was funding that Congress approved in a bipartisan manner just months ago. And now Democrats and Republicans, they have slammed the White House for the decision, but it really seems that all they can do is let this issue play out in the courts, but it definitely throws a bit of a curveball for these lawmakers who are trying to thread a bipartisan needle here to come up with an agreement to keep the government open after September 30th. Brian? We have any idea how close or far apart the two sides may be right now, Emily? It depends which chamber you want to look at. If you look at the Senate, they actually seem to be pretty close.

The Senate has already passed a couple different spending bills with bipartisan support. But you look over at the House, the House has made much more drastic cuts, cuts that the White House wants to see, but ones that simply cannot get enough Democratic support needed. So those two sides are going to have to come together and figure out a path. forward here when it does come to giving the overall funding for the next fiscal year. Emily Wilkins, Emily, thank you very much. Glad there are no tomatoes involved. Meantime, the predictions market agreeing the chances of a shutdown are pretty doggone real and polymarket. The odds now standing of over 70%. That is a big jump on the 37% being

forecasted back in July. And your next guest says the Democrats are in a tough spot forced to either accept another short-term extension or take part of the blame for any shutdown. Joining us now is Jimmy Pethakus Economic Policy Analyst at the American Enterprise Institute. And what I guess Jimmy is starting to feel like kind of an annual right of passage where we talk about a potential government shutdown here. Sadly, the two sides are going to play politics. Ultimately, how does this play out? Yeah, listen, I don't think we're going to get a shutdown, you know,

you know, at the end of the month. But like that 70% number, if you're going to say, will there be a shutdown between now and the end of the year, you know, that very well might happen. There's actually, you know, there's a pretty big gap here between what the president want, what Democrats want. We're talking hundreds of billions of dollars over 10 years. It's pretty significant. And I think also complicating it, as you alluded to earlier, was that Democrats are being pushed by their base to, like, show a pulse to fight. And if they decide to fight over something right now, whether it's health care cuts or whether it's that, you know, $5 billion rescission foreign aid that the president doesn't want to spend, if they make that decision, it'll be a bold decision. If something that should happen, it could be a long shutdown.

And I don't know about you, but you have an economy uncertain about tariffs, uncertain about AI. An extended government shutdown would not seem to be what the economy needs right now. No, and you've also got the doge cuts, some of the federal spending cuts from earlier in the year. And I know a lot of our viewers that they've watched D.C. grow unfettered for 30 years. Different views on that. That's whatever. We'll leave the politics out of it. But the reality is that to your point, Jimmy, I feel like adding in, by the way, tariff uncertainty, markets don't like it.

Bond markets don't like it. We want to know what's going on. There's always uncertainty. It's just kind of that level of what we know that matters. Yeah. Ideally, I think you would like to believe that your elected leaders are competent, can solve the problems that you're concerned about. And so, yes, so a shutdown goes against it. But also consider, like, what would the shutdown be about?

If the Democrats decide to fight about this $5 billion that the president doesn't want to spend and, you know, rather than let it play out in the course, if they want to make that an issue, okay, that's fine. But is that like the big issue? We're sitting here with, like, rising debt, bigger than the economy, and our elected leaders are fighting about,

like, a $5 billion in foreign aid that won't be spent. It just seems that when Congress is focused on fighting, they're fighting on things probably seem fairly removed from the concerns of everyday voters. Yeah, you live there. Dick, you live in Virginia around the bellway. Tell us why. I mean, because it plays well in certain parts of the media. Does it not? I mean, that's the thing. You get up in front. And by the way, there's 535 members of Congress. We hear from like eight of them. I would hope and imagine that the big, the bulk majority, 500 plus, are just kind of quietly going about their job to solve problems like you referenced. And a few of them, both. parties love microphones. Well, you know, you know, that the classic sort of political science division is you have your show horses who go on TV and then everybody, then the rest of all these

workhorses, workhorses, or sort of grinding away getting stuff done. I think, I think that balance has become far more unbalanced where you have people who more, who really do like to go on TV or on podcasts or on social media and get the base of, you know, excited. So the incenses are all wrong because you're rewarded for being sort of inflammatory, not sort of doing the hard work on, you know, entitlement reform or something like that. It's, so the incenses are wrong and this is what we get, which is, as you mentioned, a regular cycle of shutdown or at least shutdown threats. Yeah, it's become, I think since 2011 or 2013, almost basically like an annual right of passage.

And I don't mean that in a good way. Jimmy P. appreciate it as always. Thank you very much. All right, still ahead. Perhaps the story to watch in the markets what other countries' debt may be signaling to us and the world. Well, you know we have our RBI random but interesting. Call this one WBI, wonky, but important.

Borrowing costs that many countries keep going up. UK, France, Germany, Japan, and others. All seeing bond yields rise, and it's hitting us as well. The 30-year bond hitting 5% again, which means a borrowing cost for things like mortgages could actually be on the rise. The UK 10 and German tenure yields both soaring. The UK 30-year bond at its highest level since 1998. France's debt also getting more expensive, and it's not just Europe.

Japanese government bonds, better known on the street as JGB's, also popping higher. But you may be wondering, why do I care? How does this impact me? Because it is all about you. Let's talk about it here with us. MCC, Global Enterprise, CEO, Michelle Caruso Cabrera. It's a good question. People watching the lot?

It's sad for them. Why do they care? Well, government borrowing is going up all over the world because governments... At the same time. Because governments all over the world have been spending more than they take in when it comes to revenue. And at some point, it comes home to roost. And while we have issues in the United States and a lot of people are justifiably very concerned about our levels of debt, we look like amateurs when you look at what's happening in place.

like France, which have far less flexibility than we do, right? They can't print their way out of their problem because they have the euro and they don't have an independent central bank that controls only their currency, right? They're really constrained. The U.K. doesn't have the world's reserve currency. And so as a result, they could, at a worst-case scenario, face some kind of run on the currency. The pound dropped dramatically yesterday because of those concerns. So how does that impact the average American?

When we saw the Greek deck crisis, which would be tiny, tiny, tiny, compared to a French debt crisis, banks across Europe almost shut down. I mean, it was very dramatic. Here's what's crazy. You and I were both in Athens at Syntagma Square. Yes. You were at Brandex at the time.

Yes, I was a different network. And people were throwing bottles with Molotov cocktails in the banks. The Greek, Greece is doing better, I think, than many other nations. in quote, mainstream Europe now. Oh, yeah, their debt trades better than France now because they've done so many reforms in the subsequent 10 years. But that crisis is an example of what can happen.

We woke up in Athens one morning and the elderly found out that their pensions had been cut by 30% overnight, that they were going to go from 1,500 euros to 1,000 euros a month. Something like that. That may not be exact, but that's directionally what happened.

And when countries don't control their spending, that can happen. Somebody has to eventually pay for it. I've got to print it or you got to cut spending in really painful ways. So, you know, and that's what makes this government shutdown issue right now, particularly thorny, right? Because you have two things that are different this time around. The U.S. government's costs for borrowing are rising.

So that means it's more and more expensive and it takes more and more of the government budget to pay. Now is more than Medicare and also defense spending to pay our interest. Okay, that's a lot. At the same time, it could be that the government, has far less revenue than they expected because of this appeals court that said that the tariffs, a lot of the tariffs are not legal, and that was bringing in a lot of money. So this budget situation is a little more thorny than usual. Usually the government shutdown story, I think, is like the boy who cried wolf over and over again. We hear about it. And I'm guessing that

the problem is going to be eating at the end. Didn't he eventually die? Like the wolf killed him. Like so for you, he was a wolf, wolf, and everyone ignored him. But then he actually was eaten. So we don't want that. I mean, I get your point. Listen, this government for 10 years, we've been almost every year, minus, I think, COVID, talking about this potential government shutdown. But to your point now, this is not those times because A, the numbers are a lot bigger.

We spent trillions and trillions and trillions during COVID, and much of that was not on COVID. It was just kind of lumped in as like, oh, let's do this and this and this now. But unless we're going for, and I want everybody out there to mute their radios, we're going to have to hire taxes for everybody. Are we not?

Because taxes on a small group of people is not going to work out. The numbers don't work out. We're going to have to have middle-class tax hikes if something doesn't get fixed. There are other options, right? You can cut spending. Can you? Yes, I mean. 85 or whatever percent is like it's already like in law, you know.

You're talking about mandated benefits. Yes, you can't. Well, I'm cutting Social Security. Right. That's the worst. That's the worst case scenario. Because grandma and Greece will throw a bottle through a bank. Politically, that's the worst case scenario, for sure. But in worst case scenario, that is what happens. Let's hope it doesn't come to that. You can get spending. You can grow your way out of it.

If the economy grows fast enough, you can absolutely. We are in a much better position than many of those other countries to grow our way out of it if we can get our act together. And I want to give a little bit optimism. Right now we've got Gen X, which is our generation. small, starting to take care of the boomers, which is huge. 75 to 80 million people, 45 million here. If you want to be optimistic, I think, Michelle, you'd say that when we get older, the generation behind us is about 80 million strong. So we'll have more taking care of fewer. I hope that's a reason for long-term optimism.

I hope. Yes, I think it is. And when you look at the GDP equation, there are two things that go into it, right? productivity and population growth, especially working populations. So if the working population goes up, yes, that is absolutely good news. Because I am more than fine to sit in a rocking chair somewhere and have somebody else take care of you. Somebody else pay for me. It's going to be great. Michelle, as always, love your insight. Thank you very much. Just getting out of Bertha Coombs with the CBC News update.

Thanks, Brian. President Trump suggested today that he could deploy federal troops to New Orleans in his latest threat to use the federal government to crack down on crime. in Democrat-run cities. The president deployed the National Guard last month in D.C. and has also threatened to send troops to Baltimore and Chicago. In a social media post, Louisiana's Republican governor said he welcomed to the help from New Orleans to Shreveport. The conservative network Newsmax filed a lawsuit today accusing Fox News of suppressing its right-leaning

competitors. The lawsuit says New Max, newsmax, would have achieved greater pay TV distribution and won over more advertisers if it weren't for Fox News. Fox did not immediately respond to a request for comment. And Superman will fly back into movie theaters in July 27th, Director James Gunn announcing the official release date

today for Superman, Man of Tomorrow. It is the sequel to this summer's creative reboot of the iconic superhero franchise, which stars David Kornswet as the man of steel. How many Superman movies have there been at this point, Brian? Otis Berg. I actually don't know. Bertha, I don't know. But for me, I know I'm an elder states, but at this point, it's always going to be Christopher Reeves. You know what I mean? Yeah. Yeah, he's the true. Otis Berg? Bertha Coombs, thank you very much. All right, up next. The Under the Radar

quietly sector that is enjoying its best run in about a decade. Stick around. Crypto Watch is sponsored by Crypto.com. Crypto.com is America's premier crypto platform. All right, don't look now, but there are signs of life and beaten up biotech, the XBI biotech ETF, is very quietly caught a bid, up about 13% this quarter. It's now higher on the year. And investors seem to have found some stocks to love in the past month. Myriad genetics up 70%, Bausch Health up 30%, halosyme, popping 25%. Those are just a few specific examples.

Let's broaden it out. Talk about what has been one of the most hated groups on Wall Street, Jared Holes, with Mizzouho back with us, Chair. Don't have a whole lot of time. What's behind the slight turn, or maybe not bigger than slight turn and sentiment? Hey, Brian, thanks a lot for having me. Yeah, I think the fact that the index stopped going down every day, I think is kind of point one.

I mean, there's been just so much damage that's been done to the XBI and biotech in general over the past few years. So just the fact that it started to move higher and not consistently down on a daily basis to me was the biggest difference. And I think, again, the negatives in this industry we've discussed in nauseam for a while now. And they just seem to be much more appreciated and in the stocks. Well, I think people, did they realize that you can't sell everything? don't just dump these ETFs, all the stocks that are in them, but we like to lump them together, but they're all, all the names I mentioned and more, they're all very different. Totally. I mean, every single stock in this index is, is basically mutually exclusive of everything

else. So it's super tough to make a call on the index. You and I have talked about it before. Having like a directional call on biotech, either way has been so hard because each name is so unique. But I think we're finally at the point where the selling is stopped, and some of the stories are better appreciated. All right. Any names that you do like, Jared? I like Argenics. I mean, the stock has been on fire, but I think they're still upside there. Cytokinetics had a great day yesterday, kind of out of the blue, and the move was a little bit more magnified than we thought it would be. But there's still probably upside there. You know, there's a few others, but I just think the entire index as a whole, I mean, go back 10 years.

years from today, biotech is up 20% over over, over that period of time while the market has tripled. So I think like there's enough evidence there that makes me think there's upside to go. Who is Argenics? I believe I think they're based in the Netherlands, but that's about literally all I can tell you about them. I mean, this is a company that serves, you know, very big markets. They have a product launch going on now. It's basically turned into a large cap. biotech company, you know, akin to what we have looked at with Gilead and Vertex and a Nilem. So this started out as a small cap, but it's graduated now. I think that's the point. That's what we're seeing with this, with Inzamed, which is, you know, now north of a $25 billion

company. So there are real assets here serving big markets that finally, I think the street's paying attention to. Jared Holes, Missouho Healthcare Sector Strategist. Jared, always, always appreciate you coming on. Thank you very much. Folks, we do have some breaking news out of Capitol Hill. Let's go back to Emily Wilkins. Hey, Brian. Well, we are now a setting a report from Politico saying that Senator Tom Tillis is saying that he will not be considering anyone to replace Lisa Cook until the courts have wound up adjudicating her case. Now, of course, we'd have to see exactly how many other senators might agree with Tillis. But if there is a critical mass here, it could prevent even if the White House did try to fill her space from Congress. from naming a nominee until the court goes. So at this point, we're hearing just one report from

one senator, but we're certainly going to be following other lawmakers to see if they do have enough. It would be 50 to advance the nominee, so you have to have at least four Republicans who would oppose doing so. And that could really pose a hurdle should the White House try to find a nominee for Cook before the courts are done looking at whether or not she can remain a governor at the Fed. Brian? All right. Interesting breaking news there from Politico and Emily Wilkins. Thank you very much. All right, NASDAX up half a percent. We'll be right back. The August auto sales numbers are out and there's a lot to read into them, including

demand-free Vs, $100,000 SUVs, and maybe the state of the entire American economy. Joining us now, Phil LeBoe. Phil, what do we know? Brian, strong numbers for the month of August. When you look at where the numbers are, take a look at whether it is Hyundai, Toyota, Ford, all up year over year, Honda, the one outlier down 4.2%. What's driving all of this strength? Not all of it, but a good chunk of it is because of strong demand for electric vehicles last month. Remember, the EV tax credit, it goes away at the end of September. That's $7,500 from the federal government. That won't be available come October. And as a result, the market share for EVs in August, likely to be 12% of sales. Two stocks want to look at here. First, General Motors,

reporting the best month ever for electric vehicle sales. And then you have Toyota. EV and hybrid sales up 9% last month. Almost one out of every two vehicles, Toyota sells, is a hybrid or an EV. That says something about where the market is right now. Brian? Yeah, it certainly does. Anything else that we can read out of these pretty doggone good numbers?

The strength of the consumer. It's not just EVs that drove strong sales last month. If you look at what was happening with SUVs and pickup trucks, trucks, they had relatively strong numbers. So I know some people will sit there and say, well, everybody's buying an EV. That's not what drove all the sales last month. It may be 12% of the sales overall, but we saw generally speaking relatively strong demand for internal combustion engine vehicles as well. Yeah, it's hard to know the trends with the tax credit expiring, right? I mean, it's kind of muddling the data, I think. Exactly. And that's

what we'll see in September, too. It won't be until we get into October and November. that we get a better sense of, okay, what do we see with the consumer right now? Phil LeBoe with some pretty strong numbers. Stocks aren't necessarily responding. Most of the stocks are down today. But again, we've got to wait and see how the numbers shake out. Phil LeBoe covering the auto sales stuff. Phil, thank you very much. Certainly do appreciate that. Before we go to break and toss it over to closing bell, here's how things look. The NASDAQ's up a half percent. But remember, a huge chunk of that is Alphabet and Apple because of that lawsuit, I have no doubt. It will be mentioned on closing bell.

We'll see tomorrow. Take care.