Power Lunch - Trump, Xi hold talks 9/19/25

Episode Date: September 19, 2025

President Trump and Chinese leader Xi Jinping held talks on Tiktok on Friday. Apple's newest iPhone goes on sale. And how should you be playing stocks right now? It is all here on Power Lunch.  Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

The markets and your money. They are higher again to end the week. So it really is a happy Friday. Welcome to Power Lunch, everybody. Another big show for you today. The average is on pace for more record highs. Another big week. The last of the bunch, the little small cap stocks. Also, this week, hitting a new record. So what do you buy now? We'll dig in. Plus, deal or no deal. President Trump holding a call with China's President Xi Jinping. They will meet face-to-face next month in South Korea. Wall Street's most outspoken China Hawks. Kyle Bass here for reaction. And it's Friday.

Thankfully, let's have some fun. Six-time NBA All-Star Jimmy Butler is getting into a new sport. No, he is not leaving the NBA, but he is investing in one of the fastest growing games in the world. He is here to talk about it. Wow. So you can tell we've got a full, full hour ahead, but let's kick it off with our focus on China. Because Amon Javrish, who you might have seen on, on this network like 30 seconds ago, has more on Trump's call with China's president and the

upcoming meeting between Trump and the president of China, which I assume, Aeman, you will probably be in South Korea next month. We'll see. I'm trying to make sure my passport's updated, though, Brian, before we do that. So here's what we know. The call started around 8 a.m. this morning. It ended around 11 a.m. this morning, East Coast time. So obviously, a lengthy discussion between the two leaders.

And we know that bite dance, the parent company of TikTok, put out a statement a short time ago, maybe within the past hour or so. And here's what they said. They say, we thank President Xi Jinping and President Donald J. Trump for their efforts to preserve TikTok in the United States. Bite Dance will work in accordance with applicable laws to make sure that TikTok remains available to American users through TikTok U.S. So that's attributable to a TikTok spokesperson. Here's what the president put on social media earlier today. The president taking to truth social with a statement. He said, I just completed a very productive call with President Xi of China.

We made progress on many very important issues, including trade, fentanyl, and the need to bring the war between Russia and Ukraine to an end and the approval of the TikTok deal. The president goes on in the second part of the statement here to say the call was a very good one. We will be speaking again by phone. Appreciate the TikTok approval. approval and both look forward to meeting at APEX. So the president there talking about the TikTok approval here in the past tense, that is,

this is a deal that has been done. No specifics yet from either side on what exactly was agreed to. And no answer from either side to this important national security question of what happens to the TikTok algorithm, whether or not the Chinese would have access to it, whether they are selling the algorithm to this consortium of American buyers, and who will have control of that, how much data might flow back and forth between the Chinese. sides. As contemplated, this deal involves several American investors buying about an 80% share of TikTok US. The Chinese would retain about 20%. And then the United States would have a reconstituted

board of directors here. And that would include one member, at least as some media reports have it, one member of the board appointed by the U.S. government. So we'll wait and see all the specifics of this deal, when that can be announced. We'll see if the White House has something to say before close of business today, guys. Back over to you. All right, look forward to you going into that big white house behind you. Amen Jabbers, thank you very much. All right, so there are obviously, then, some encouraging signs about a kind of detente with China's leadership, and that has maybe help power China stocks. The FXI and the K-Web ETFs and many others are soaring. The FXI, large-cap China-based ETF is now up 15% in just 90 days. Let's talk about that and more. Kyle Bass,

founder and chief investment officer and Hayman Capital Management joins us now. Kyle, great to chat with you, especially on a Friday. If you were going to advise the president about something he would want to get from Xi Jinping at that meeting in South Korea, what would it be? Well, you know, we can start with the TikTok deal, Brian. You know, in the end, President Xi and Biden dance all along have said they would never allow control of the algorithm to leave their hands. And the appellate court, the Supreme Court, and the law, the protecting Americans from

Foreign Adversary Control Act specifically states that we can't take anything short of control and ownership of that algorithm. You know, the fact that this deal is not fully announced yet tells me that, you know, there's still a pretty significant hurdle here in this transaction. And in the end, the buyer's group of Oracle and Dresen and Silver Lake, again, they, they're going to need to own the algorithm and have the Chinese government or bite dance, you're not going to have any control of that algorithm. It can't be a licensing.

Then what is, why would China want it then? Because number one, I'm assuming the TikTok deal is just kind of a larger vessel for something else. I mean, it's a social media site. It's big. It's important. So it matters. But to me, it seems like more of a bigger picture thing. You can address that.

But also, if you don't have that algorithm, then China's leadership doesn't have that direct line to the American consumer, a lot of younger American consumers, and I'm assuming that's what the real value is. It is. I mean, it's the greatest tell of all, Brian. If TikTok does, you know, somewhere between 15 and 20 billion in revenue in the United States, is things worth, I don't know what the number is. It's worth at least $50 billion, if not more. And if she is willing to just let it go dark, as opposed to receiving $50 billion, it's the, again, it's the biggest poker tell of all time, as to what the intent and what the rationale for China's ownership of the algorithm originally was and currently still is. So, you know, if you read any of the amicus briefs in the Supreme Court,

you know, Matt Pottinger, former head of the National Security Council under Trump One, wrote an amazing brief calling TikTok digital fentanyl. It's just as bad as the fentanyl that China is sending to Mexico and killing, you know, hundreds of thousands of Americans each year. I would assume then if this TikTok deal is not. done. If it's never completed, the two sides can't come to some agreement where we transfer to your point, that ownership stake to the United States, that itself also would be a tell. Oh, 100%. All right. I want to ask you about the Federal Reserve, if I can, Kyle. Okay, because our friend Jim Bianco, very smart guy in the bond market, coined the Fed meeting this week a, quote,

mess because the Fed members have sort of all future guesstimates of interest rates that some are calling for huge cuts. One's calling, I think, for a raise, a bunch of calling for nothing. Jerome Powell himself called it a risk management cut. Do you agree with Jim Bianco that the meeting was, quote, a mess and that maybe the risk management cut was Jay Powell just trying to get the president off his back? Well, I mean, Brian, if you go back and look at the BLS revision, you look at last year, the Biden administration overstated the number of jobs created by a total of one and a half million jobs, Brian, that number is hard to fathom, it's hard to believe that that was done. And so in the last four or five months, we basically had a jobless economy. We are at a full stall. And so if all of that data was out there before the last Fed meeting, we certainly would have cut in the last meeting. I expect them to cut two more times this year and four or five times next year. I think the new kind of neutral rate, Brian, is somewhere 3% or lower. So I think you're going to see future cuts.

Now, that being said, if you read the Fed's statement, the Fed statement, they cut, it was a doveish cut, and yet they increased both their inflation and their economic expectations for 2026. That was the head scratcher for me. When you look at what they actually wrote after the cut, I've never seen that before. So if you want to call it a mess, I would call it a mix. signaling for sure. But in the end, what you're seeing is inflation is moderating after we've had, I think we've had 50% inflation since COVID first set in, certainly in asset prices and

many goods and services. So, you know, having a year over year kind of two and a half percent number is not going to be that hard, especially in a jobless economy. The question is, is how many jobs does AI actually take out? That is the question. And I'm not sure, Kyle, and let you go today, but I don't think anybody right now knows the answer. Almost every technology improvement has added jobs and killed some, but added others. I don't know if AI is the same. I was actually talking about this at home last night because I'm really, really boring. Kyle Bass, Hamid Capital Management, Kyle, my friend, have a great weekend. Thank you very much. Pleasure. Pleasure, Brian. You too.

Thank you. All right. Thank you. All right, folks. Do you want a new iPhone 17? Well, the doors at Apple are now open for business. And Steve Kovac will tell you there have been some lines. We'll hear from him and then a top analyst on Apple. Stick around. All right, welcome back. There were long lines in front of Apple stores across the globe. The latest iPhone 17 hitting the shelves.

Steve Kovac has been at Apple's Fifth Avenue location, the mean streets of Fifth Avenue. Steve Kovac, what are you seeing? what have you seen? Yeah, what I've been seeing all day, Brian, it's just massive lines. You know, a year ago, I was on Power Lunch at this very same time in the day, and the lines of the iPhone 16, they were gone. They were empty by this time.

Lines today for the 17, they have extended. They just keep getting longer. I just walked around the block. They are all the way down to Madison Avenue, from Fifth Avenue, and even beyond. So we're seeing early signals here, Brian, of incredibly strong demand for this iPhone 17 lineup. It's not just here in New York. We're seeing it in Beijing. We're seeing it in Mumbai and all across the world.

London, we've seen it as well. And this is just backing up what J.P. Morgan said this morning. They are seeing the same demand signals as well with this new iPhone lineup, raising their price target because of that. So this is just a huge day for Apple right now. And potentially the beginning of a new growth spurt for the iPhone business. As it turns out, redesigning the phone makes a really big difference to get people out in line and buying this phones, Brian. I'm going to let you go because I would say that sales have been so hot.

They're almost on fire. And that's a reference to the very loud sirens. There are one or two fire trucks. That we can hear very clearly through your microphone. If the Apple store is on fire, Steve, let us know also on that. And we hope it's not. Steve Cobb. No, everything's okay there.

All right, that's good news. And by the way, thanks. A shout out to the brave men and women of New York's finest and sharpest at the fire department. All right. Now it's good analysts take on Apple. They recently upgraded Apple stock to a neutral, raised the price target by about $100, though, that's stating that many of the worst case scenario risks are gone. Let's bring in that analyst.

Joining us now is Craig Moffat, founder, partner and senior managing director at Moffat. Nathanson. No sirens where you are, Craig, correct? Just. Hey, Brian. No, it's quiet here, fortunately. Fantastic. All right. What risks were there that are now gone? There were two big ones, Brian. The first was tariffs. When even before Liberation Day in April, we knew there was going to be something with tariffs, and Apple is unique among the Mag 7 and that it's really a manufacturer and an importer.

And so it was most exposed to tariffs. We didn't know how that would go. And by and large, the worst case scenarios for tariffs have been. and side-stepped by side deals. The bigger one actually was the risk from the Google antitrust case, where, if you'll recall, Judge Ahmed Meda had already found that the payments that Google makes to Apple, which account for 25% of Apple's operating income, are illegal. And so it was not unreasonable to think there was considerable risk to those payments when the remedies portion of that case proceeded. And what we heard in the remedies, perhaps surprising,

was, yes, they're illegal, but we're not going to do anything about it so they can remain in place. Those two risks being taken off the table leave Apple, in our view, as a still somewhat overvalued stock. It's just an expensive stock, given what it is. But the really big downside risks were gone. Okay, so still expensive. You don't love it. You upgraded it from a cell to a neutral. By the way, the sell call, I think, was very good because the stock fell this year. And I I want to say this carefully, Craig, because I am an Apple fan. Everything I have is Apple. I had a Lisa. I had a Newton. I had the first iPod. By the way, I'm a huge Apple fan too. I've got like a little museum of discarded Apple products at my home, but I just posted on X this

very simple question. Since the iPhone came out, almost 20 years ago, 2007, changed all of our lives. Then shortly thereafter, there was the iPad, which is basically a larger iPhone. What is Apple done? Like, the Mac is kind of the same, a little faster, right? What is Apple? Is it they just sell phones? Well, no, look, phones are about half of the revenues. It's probably not fair to say they haven't innovated. They've created.

I said, what is their greatest innovation? Because the innovation has actually been largely on the soft. The email client is arguably not great. The biggest innovation actually is probably the app environment in the app store, right? And the innovation that has happened around the app store. And all that's truly wonderful. You know, we get all of these, when we had a cell rating on the stock, we had all of these kind of straw man arguments that would be thrown at us.

Like, do you really think people are going to switch from Apple to Android or that phones are going to go away and we're going to start using glasses instead? all these arguments, and we never believed any of that stuff. People are really, really committed to the Apple ecosystem. The Apple ecosystem works wonderfully well. Our pushback was simply, okay, but this is a company that's growing substantially slower than the market, and it's priced at, right now, it's crept back up to 37 times earning. So it's trading at about a 24% premium, 25% premium to the overall S&P, including the S&P, the MAG 7, if you, you take the Mag 7 out, it's trading at a 49% premium to the market.

And it's growing slower than the market. And so over time, unless they can meaningfully accelerate the growth and perpetually accelerated in order to support the multiple, it's going to be down more slowly than the market. And a lot of people responding to my ex post with kind of that locked in ecosystem. I don't know if they mean that as a compliment. Again, I pay for Apple One. I think it's $38 now per month. music on iTunes. Yes, I'm still the guy that does that. I haven't probably put a new app on my phone

in years. There's not been anything hot, but I pay for a lot of apps that currently exist for weather and flight tracking, stuff like that. And I think that the genius maybe is the ecosystem. Is it not? Yeah. It's a wonderful ecosystem. Now, by the way, I should point out, there was another issue that poses at least some risk to Apple, and that is when Apple lost the epic game suit with the video game manufacturer, publisher, Epic, that said that you can now go outside of the Apple ecosystem in order to process payments, and Apple doesn't get 30% of all of those payments anymore if the customer does go outside of Apple to make payments. That does pose a risk to the growth rate of services revenue, and services revenue is a really important part of the Apple story,

It's very high margin and high growth. Yeah, we'll leave it there. But as I have pointed out, because I'm not knocking Apple. What I've said is that their services revenue alone would be more revenue than the majority of every company in the United States. There's a couple that are larger, but Apple's second business is bigger than almost every other company's first business. Is that fair to say? Absolutely right. Absolutely right.

It's simply a question of how fast it can grow. It's not a question of, is it a good company? It's clearly a great company. It's just how fast can it grow and does that support a multiple that is now flirting with 40 times earnings? Yeah, they just got to make a better email client. Craig Moffat, founder, partner and senior managing director, Moffat, Natheson, with a recent upgrade of Apple to a neutral. Craig, thank you.

All right, coming up, Disney quietly taking a small stake in a company called Webtoon this week. The stock soaring on the news. It left us wondering, who is Webtoon and why is Disney so interested? Answers to both after the break. We're going to talk about comic books and anime, and it's a big stock story as well. Webtoon is a digital entertainment company that does a lot of things. But one of those things is making vertically integrated comic books that can be read on your phone. Webtoon creates content and has content and a deal with Disney, which soared the stock.

In fact, Webtoon just announced an expansion of that partnership this week and pop their stock almost 40%. Webtoon is building Disney a platform to house all of its comic book IP, Disney taking a 2% equity stake in Webtoon. Joining us today is Webtoon Entertainment C-O-O and CFO, David Lee. And David, this is a very personal moment for me here on the air. I'm going to reveal something that that'll get me, I'm sure, some comments. I'm a comic book nerd. I grew up collecting comic books. I still have them.

Many of them worth a lot of money. I've got X-Men number three. What are you going to do? Are you going to digitize all the old comic books and make them available online? Because some of my books, I can't even read because they've been graded and they're basically sealed shut. Well, Webtoon is not just. for you, therefore are numerous Gen Z consumers who never had a chance to read anything in paper like a web comic. So what we do is we allow 24 million creators globally, many of whom have

full-time jobs, to serve 155 million monthly active users, great stories, original stories. And now with the announcement you mentioned, we have the privilege of creating an all-new digital destination that also has access to not just content that we had seen before, but content from Disney, these 35,000 comics that come from Pixar and Star Wars and Disney, allowing our digitally native generation of consumers to be able to consume stories that they may not be aware exist. So we're super excited to be not just for you and folks like of my generation, but for Gen Z, who love to consume our digital products on their phone. Okay, because that was my next question.

I've looked at your website. There's a lot of stuff, anime from around the world. But what I think a lot of Marvel fans don't realize is that a lot of the storylines that are playing out in movies now are actually from comic books from the early and mid-1980s, kind of the golden era of comics. That's the stuff now that this Disney deal, David, I assume, gives you access to.

Well, before we go into that aspect of the Disney deal, let me just remind our viewers that we have already created 100 examples of great movies on Netflix, Amazon Prime, other great streamers. Our stories may resonate on our platform with Gen Z, and yet they transform great small-screen adaptations. They become merchandise. They become video games. So for us, a web comic is a bit like a digital storyboard that can live on our

platform, but can live off our platform and transform the story beyond just the consumption on Webtoon. That's what we're super excited to do. For our audience, that is not like me and just not have the kind. My son loves a show called One Piece, which is like a pirate movie on a different show on a different, it's like a thousand episodes of it on a different sea, whatever it is. How big is this opportunity, David? Well, I think the cross, what we call cross over IP opportunity. You know, for example, Sideline, the quarterback in Me starring Noa Beck, was a hit release on Tobeet Thanksgiving last year. It started as a web novel on our Watt Pie platform. Or Mary and My Husband was a top charting Amazon Prime release that we knew about years ago took it from being a web novel to a global webcomic hit.

I think this is an enormous opportunity for our consumers and our creators. Financially, it is still quite small. It's less than 10% of the 1.4 billion. and revenue we posted last year. So I think that it will show up eventually in a big way in our financials, but it's still a great option for creators and our consumers. Well, it's an amazing amount of content that is on there, David, and I know for guys that are my age, remember those comic books, going to be really exciting to kind of see them come back to life. David Lee of Webtoon, congratulations on the deal. Appreciate you coming on CBC. Thank you. Thank you.

Are you very welcome. All right. Next, playing a game of investors. chest. The Fed making the first move. Now it's your turn. What do you do? We're going to ask City's U.S. Equity Strategist for a play call coming up. All right. At the top of the show, Amin Jabber said he was going to go into the White House to try to get an answer to a specific question. Apparently he's gotten that answer. He's come back out to the camera and he joins us now. Amen, what do we learn? Yeah, Brian, so this is the White House's reaction now to that suggestion by Steve Bannon. Remember, Steve Bannon is making the suggestion on Sean Spicer's podcast that Scott Besson should be both Treasury Secretary and Fed Chair. The White House now

saying such an arrangement is not being and has never been considered by the White House. So consider that a full and complete denial by the White House that that idea is being considered by the White House. Now, clearly it's being considered by Steve Bannon and Sean Spicer, who are discussing it on Spicer's podcast tonight. And that idea is going to get some traction within the MAGA base as a result of that. The question is how much traction will the president catch wind of that? And does the president think that's a good idea? And is it even practical at all?

All of those questions out there right now. Neither man is obviously a current administration official. And we'll see. Obviously, that is an idea, the idea of Besson holding two hats at the same time that would just be enormously unprecedented and controversial. And I saw the debate at the end of the exchange. Is this just getting a lot of attention because of who said it, Steve Bannon? Because otherwise, it's just kind of podcast fodder, right?

You say stuff, sports, you know, a hot take on the Cowboys quarterback or whatever it is. It's kind of a hot take on Scott Besson. Yeah, and I think the White House is looking at this as, you know, this is Steve Bannon being Steve Bannon. He's out there doing this stuff. He makes a lot of provocative statements. And so, you know, take that for what it is. Clearly it's an idea that it's out there. And for our audience, you know, watching all this, why is this important what somebody says on a podcast?

Well, because it's somebody who has a strong relationship with the president who does have friends inside the building and who may be making this case privately to people inside the building as well. We'll see if we hear anything from the president about it. What the president has said is that Bessent is out of the running for Fed Chair because Besson tells him he doesn't want to be Fed Chair. So that's where we stand officially from the announcements from the person who is the President of the United States and the Secretary of the Treasury right now. Still, this idea is kicking around out there. It's worth kind of putting a pin on it and just watching to see where that discuss. goes, I think, Brian. Well, it's keeping you busy. It's keeping everybody busy. Every day. There's some new, we went from almost no news to just news every day. It's somewhere in the middle.

There's got to be an answer. Aiman Javers. Target rich environment for news. That's right. Target, well said. All right, Amon Javers, thank you. Turning out of the markets. A strong week for stocks, for small caps in particular. Finally, the Russell 2000 hitting a new record high yesterday. everything kind of getting a boost after the Federal Reserve cut interest rates by a quarter point on Wednesday. Earnings remain strong. There's a lot of, you know, talk about a Goldilocks potential for the economy. Let's talk about all of it now with Scott Cronert of Citigroup. But Scott, good to have you back on the program.

What sort of is the playbook now? What are you recommending to clients? Hey, Brian, great to be on. And I'm glad we're in the middle of football season and can talk playbooks here. So I think the way we're talking about it is we've come charging down the field. We're probably first in goal and we're calling a time out here. We just need to catch our breath, make sure we got our playbook in place here as we go further down this Fed rate path, look ahead to the Q3 earnings setup, and then think

about how we're going to get into the end zone. Bottom line here, our view all year has been we want to be bar-billed between growth is our leading call with a cyclical bias. Now as you go further down the Fed-easing path, the cyclical bias begins to take on a different perspective. In this soft landing Goldilocks scenario, that's where you can be getting to go down cap into small midcap on the premise that you're going to get more of an earnings recovery into 2026 as we get a little bit more fed stimulus relative to the past two years of, let's call it, earnings recession that Smith's been living in. Are all the earnings just coming from the AI-related

companies or the companies that we don't talk a lot about, the ones that finally hit a new record high as an index yesterday, are they also seeing earnings growth? Well, it's a good question, and the answer is yes, you're starting to see the broadening. We saw some evidence of it in Q2. We think we'll see more in Q3. We probably have to fine-tune around tariffs and other policy initiatives on this. But the way we think about the S&P 500, the capitalization right now is roughly half attributable to AI-related. The other half is going to be everything else that's going to have a combination of economic sensitive and defensive. It's the AI-related stuff, whereas we've searched the NASDAQ off the April lows. You've really begun to price in a fairly,

fairly strong earnings growth dynamic, not just for this year, but in forward years. So what this does, it puts pressure on that part of the market for beat and raise. At the same time, the other half that's going to have more economic sensitivity to it is still kind of working its way through how to think about the labor condition, the rate condition, underlying economic trajectory. So our point here is that we've run expectations pretty high. We think it's going to be a pretty high bar for Q3 earnings to really deliver on. That said, pullbacks we want to be aggressively buying into for what we think will be very strong finish to the year. Well, we've hit your target for the year, correct, Scott? Yep, yep. So you do have a super bowl case. Yeah, we hit 6,600. You do have a Super Bowl case

of 7,200. What's it going to take to get there, and please don't say like another 500 points? Well, what it's going to take is coming back to this earlier comment. So right now, we're predicating our year-end view for this year on what we think 2026 earnings are going to look like. We already had a consensus with a $308 earnings estimate for the S&P. So essentially, where this needs to go, we need to see the path towards earnings estimate. for 2026 go even higher than where we are currently. And that's where you begin to go down this argument of, okay, are we going to get a traditional stimulative effect out of the Fed or is it already being priced in? And that's really where the edge is going to be. So now, we're talking about

$6,600 is more or less what we think of as fair value for the index. Again, sentiment can always take things higher and sometimes lower. So we're open here. The bottom line is we think structurally, the S&P 500 and its fundamental backdrop is in really good shape. It's just question of how this playbook unfolds in terms of the next couple of plays versus how you get to the end of the game. Yeah, well said, and we'll see if we get some earnings raises at the next go-round for corporate earnings, but we're going to just enjoy the weekend ahead of that. Scott, Croner of City. Scott, really appreciate it. Thank you.

You bet. All right, now let's get the Contessa Brewer for a CNBC news update. Contessa. Brian, the U.N. Security Council has voted against permanent. implementing lifting sanctions against Iran over its nuclear program today. The resolution received support from only four countries, including China and Russia. Last month, France, Germany, and the UK moved to trigger snapback sanctions, which automatically would reimpose those restrictions in place before the 2015 nuclear deal.

Iran calls this whole effort hasty, unnecessary, and unlawful. The Trump administration is warning it may withhold federal funds from Chicago and Boston. if those cities don't take more steps to ensure safety to transit workers and passengers. The Transportation Department demanded both cities respond to its letter within two weeks. The department made similar demands to New York last month. And Kevin Durant finally has access to his Coinbase account. Yay, jazz hands. Late yesterday in a post on X, Coinbase CEO Brian Armstrong announced

the crypto exchange platform had recovered the NBA Star's account. Earlier this week at CNBC's Game Plan Conference, in Los Angeles, Durant's agent, Rich Kleinman said that Durant couldn't track down the login information for the 10-year-old account. But, you know, if you got friends in high places, magic happens, Brian. Well, that's why I know you. But also, it's like that guy in the UK that had his login information on a USB drive and he got thrown out and he's spending years where he spent a lot of time trying to find the USB drive in a dump because it was worth tens of millions of dollars. And has he found it yet?

I don't know. I don't think he has. I think it would be like, but me. I'm going to Google search it. No, I'm going to chat GPT that. Why don't you bang it? Contessa, borough, it. Contessa, thank you very much.

Up next, a CNBC investigation into Walmart's digital boom. Has it come with a big cost? A CNBC investigation with Gabby Fon Rouge into just that next. Crypto Watch is sponsored by Crypto.com. Crypto.com is America's premier crypto platform. Over the last few years, Walmart's been working to leverage its brick and mortar empire and grow into a major online player. And it did not take long for the world's biggest retailer to build a pretty massive digital

marketplace with hundreds of millions of products and thousands of different third party sellers. But Walmart's digital boom has a little known and much darker side, where some sellers steal the identities of legitimate companies so they can pedal counterfeit, sometimes dangerous products to unsuspecting online shoppers. After CBC shared its reporting with Walmart, company made changes to some of its product and selling vetting policies. Gabrielle Fon Rouge has this story. Just down the street from Chicago's iconic Wrigley Field, is Demos Pizza, known for serving up slices to hungry baseball fans. Its menu has classics like pepperoni pies to creative combos like chicken and waffles.

What's not on the menu? Luxury beauty products. But here's Demos pizza selling Lancombe face cream on Walmart's online marketplace for just $25.99. A 91% discount from its typical retail price of $280. Just to be clear, you don't have a side hustle selling beauty products in Walmart.com, right? I do not. No. We, yeah, we just make pizza here. Dimitri Circa Nicolao, the restaurant's owner, was startled when we told him there was a third-party seller on Walmart.com using his business credentials to sell Lancombe beauty cream. And lab testing confirmed the cream was counterfeit.

That somebody could just take our name and sell whatever they would like. It doesn't feel good. During our investigation into Walmart's marketplace, we identified at least 43 instances, including demos, where a business's name and address were stolen to create a third-party seller account. Walmart declined an on-camera interview, but in a statement wrote, trust and safety are non-negotiable, and that it has a zero-tolerance policy for prohibited or non-compliant products. Walmart said it could share more details about its robust vetting process. but only on the condition that we would not report it publicly because it could compromise the integrity of our trust and safety systems. We spoke with more than a dozen current and former Walmart employees about the company's vetting process. Tammy Jones was one of those former employees. She said she reviewed seller applications that failed the initial automated process.

When she first took the role, she said the requirements to join the marketplace were strict. But over time, Jones said there was pressure for management to approve more sellers. Why was Walmart so inclined to get so many sellers onto the platform? They wanted to take away from other companies that are doing basically the same thing to be able to beat the competition. And who were they competing against? Amazon. We were told we have sellers that are leaving Amazon because Amazon is more strict. you all are more lenient. So I'm going to take my products from there and bring it over to Walmart.

Other former employees, some of whom asked to remain anonymous because they signed confidentiality agreements, told us that prior to the COVID pandemic, Walmart Marketplace closely monitored third-party sellers and products. But over time, some said it became clear. Strict policies could be a barrier to growth. I wasn't sure if something that I'm approving to be pushed through was going to be a product that could potentially harm someone, or if it was a product that was fake. Just three weeks after we asked for a response to this story, Walmart issued an email to some sellers

announcing it'll restrict product listings in the beauty and personal care categories. It also said it would require select sellers to participate in an enhanced vetting program that would require them to submit documentation to verify the authenticity of their products. Changes that addressed some of the issues we raise in our reporting. To see our full investigation,

head on over to cnbc.com inside Walmart Marketplace. Important piece very quickly. I want to be clear. The poor pizza guy, he's an innocent victim as well, right? It's on his website, but it has nothing to do with him. His name and business information was used to set up a seller account on Walmart, get, you know, without his permission.

And he was a victim in this. So he is. I want to make that clear. He seemed like a nice guy. He was. Gabrielle Fon Rouge. Look forward to, I'll push that out as well. Great piece.

Thank you very much. All right. All right. Up next, find out why NBA All-Star Jimmy Butler. has his eyes on a different type of port this week. It has to do with, well, it's a ball and a racket. It's in Spain. And he's coming up next.

All right, here is a little Friday fun for you. Let's talk about one of the world's fastest growing sports with one of the world's most well-known athletes. It's called Paddell. It uses the court larger than paddle tennis. Now, it's huge in Europe, South America, but it's also growing fast here in the United States. And happening right now is a major tournament. It's called the Reserve Cup, and it's going on in Spain.

It's run by a company called Reserve Paddle, and they've got a club right here in New York City. Wayne Boych is CEO and founder of Reserve Paddle. He is joining us now the very special guest, who is the honorary chairman of the Reserve Cup, six-time NBA All-Star, Jimmy Butler, and they were gracious enough to join us at nearly 9 p.m. on a Friday night in Spain. So guys, I really appreciate it. We know it's late there. Won't keep it too long. And Jimmy, I really liked your piece, by the way, in the magazine on your house.

I think it was Architectural Digest. And yes, I still read magazines. Don't judge me. Jimmy, why did one of the world's greatest athletes and NBA stars get into Padell? It's really tough. I think the group here at Reserve, amazing. I feel like all my friends around the world, no matter what sport, you know, a musician, everybody's trying to beat somebody at something.

And Padell is the new thing. And then here in Marbeah with Reserve, you get the best of the best here competing, putting on a show. And it's super exciting to watch. I'm a fan. I wish I was better, but I'm for sure a fan. Yeah, because actually, Jimmy, the question is,

Wayne, I think, went to, Wayne, correct me if I'm wrong, you went to college on a tennis scholarship. So, like, if you two played, who would win? Well, there's a good story to that. That's actually how we met. He thought he made me,

he could challenge me and Pat. Well, we never played as the answer, but we met because he knew I liked Patel, well before I started the company, and he challenged me to a match. And the next day he came over to check me out playing, and he said, I think it's better we would just be friends. And with that, a friendship was born,

and several years later I started up reserve, and I was fortunate enough to have Jimmy come along with me and you really couldn't have a better friend and a better ambassador for Reserve and Reserve Cup and everything that we're doing. And Wayne, how do you grow this? We've talked about it before, but you've got pickleball, which is just growing super, super fast, paddle tennis, which is different than this. How do you grow this in the United States? Well, I think, listen, it's growing now very quickly in the U.S. And for us, when we started up, reserve. We really, in playing paddle for a lot of years, we thought we could start up a lifestyle

brand that starts off the backs of paddle, all that it entails and all it has to offer. It's a sport that clearly you get addicted to very quickly. You feel very athletic. There's a community feeling to it. And, you know, we have five clubs now. We started many different verticals, all of which are growing quickly. 30 million people are playing across the world. And now it's a quickly growing sport in the in the u.s so with us we're sitting in marbea spain right now um having our first international reserve cup event um about a year after we started reserve we wanted to showcase paddle in the u.s at the highest level so we started reserve cup 16 players played over three days high competition high stakes unique format and because of its success in the first couple of years that

we did it we got asked to take it to europe and there was no better place to take it to than spain and as we've been growing reserve and the different verticals in Reserve Cup, you can feel the energy around Paddle. And the incoming now we get as a brand is really amazing. And, you know, we have to turn down some deals because we're very focused on where we put clubs and how we grow.

But the market is there. The growth is there. And, you know, we at Reserve are very excited about the future. And the money, I think, Jimmy, is coming. I read the article about you in Paddell magazine. And, you know, listen, obviously it's small compared to NBA money, but you're giving out over half a million dollars in prizes. That sounds pretty good to me, by the way.

What's the investment angle in this for Jimmy Butler? For me, my investment is a lot about the time. And for me, I also get to learn about these guys. I get to work on my Spanish, too. But I get to be better on the basketball court because of this. I mean it. Now, hear me out. I like to play so many different sports.

to train for whatever upcoming season. This is another one. So I would like to say that my biggest investment is I kind of get to get better at basketball throughout this entire thing for myself. Okay. How does it make you better at basketball, Jimmy? And eye coordination, reflexes,

being able to pivot when the ball comes off the wall, all the movement, all the conditioning that you do. Like seeing these guys work up a sweat, it's super incredible. I don't know if I had that in me to do it for that many straight sets. It won't lie to you. But it looks exhausting and it can definitely help on the basketball floor, I promise you. Well, yes.

You have a mutual friend with somebody I know by the name of Adam in New Jersey. He's a trainer. But he doesn't want you to get hurt either, Jimmy. You know what I'm – and I think he's there with you, but I'm not going to go any further on that story. He doesn't want you to get hurt. So what precautions are you taking – one of the world's greatest basketball players.

What precautions also are you taking to have it? Play, have fun, get better, but don't, you know, don't twist your knee. Yeah, of course. I would never do that. I'm not going super hard, okay? I don't know the ends and out of the game, like these pros that I get the opportunity to be around to learn from and to watch and be a fan of. But yes, I do play.

I'm not going all out. I'm not trying to hit the ball out of the arena thing. I'm not trying to run outside and hit it back in. But I do like to pretend that I'm a pro. I would like to think that one time soon, I'm going to be ranked number one in the world. Wait, you're going to be number one in the world in Paddell, and you're going to do it.

I mean, if I keep playing here at Reserve, what do you expect? It's the best club in the world, so there's only one way up from here. I love that. And, Wayne, it's not just for some elite athletes, It's like, Jimmy, I would imagine that, you know, a mildly overweight, 54-year-old suburban father, beloved news anchor could also maybe play said game? My son is obsessed with the game now. He's eight years old. And we have members at our clubs that are in their 70s and they play five days a week.

Part of the attraction for me was that the demographic was so wide, both male and female. When we started our first club in February of 20, it was 80% men, and now it's close to 50-50. We're talking now about getting it into schools because we think that's very, very important. And certainly we're going to grow a reserve cup. Next year we plan on taking it to three events from two events this year. And we'll be selective about what we do.

But the beauty of what we're doing at reserve is the brand is in a position now where we're getting, oh, yeah, we're getting, we got, unfortunately, the final whistle has blown The show's over in 10 seconds. Wayne and Jimmy, go have some sangria. Go have some paella. Have a great time.

Congrats the Reserve Cup. Have a great evening, guys. Really appreciate you coming on to talk about it. Thank you for watching, everybody. See you Monday. Closing bell. Starts right now.