Cracks in the AI Trade, Tech Earnings Preview, Surging Airfares 10/20/26

0:00We're an agent supposed to take things off your plate. Building another to handle the others is a bit much. Don't make more work out of work. Gemini is the one agent that knows all parts of your business and actually gets stuff done. You give it a project, close your laptop, and when you come back, the job's finished. No matter your industry or role, your agent has the skills to help every team stay in their flow. Seriously, make work less work with Gemini on Google Cloud. Check response, subscription required. This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab.

0:33Schwab Market Update, an original podcast from Charles Schwab, provides an information-packed daily market preview on stock updates, U.S. and global economic news, monetary policy decisions, and key results and statistics that may impact your trading. Download the latest episode and subscribe at schwab.com slash marketupdatepodcast, or find Schwab Market Update wherever you get your podcasts.

1:03Market's still a bit jittery on big tech ahead of earnings. Welcome to Power Lunch, everybody. I am Brian alongside Kelly Evans. Small cap stocks, they're actually on fire today. Investors, though, waiting for a bevy of earnings. Yields are down, so is oil a bit. But the big test tomorrow when Meta reports earnings, so is the market, Kelly, AI, OK? We'll ask. We're also watching jets and the high seas. Fuel costs are testing airline profits and passengers will feel the pinch. Ryanair's CEO warning that European fares could rise 20 percent next year. Delta already cut its outlook. More U.S. carriers are reporting this week.

1:38Airlines for America CEO Chris Sununu joins us. And speaking of travel, Norwegian is betting big on luxury as they navigate softer bookings. Contessa Brewer takes us aboard Regent Seven Seas Splendor, they call it, where you can book a suite for, you know, 15 grand a night. $15 ,000 a night? If that's how you want to spend it. Is that the ship? Like, are you alone? Right. Like, is it your ship for a day? And you don't even get the whole boat. Let's start with the tug of war on the tech trade we're seeing in the market right now. As you can see here, a handful of bullish notes on software and AI names on the street today.

2:12He also had a bullish one from Melius saying the tech concern will pass just like others have. But on the flip side, plenty of reasons to be concerned. Elise Group, a Korean AI services company, plummeted 30 percent in its public debut in South Korea. And credit to FaultSwaps to have jumped for CoreWeave and Oracle. And all of that was before the morning. We got some names of the AI names that people were most worried about. And concern can be canaries in the coal mine. Take a look at CoreWeave, Oracle, Nebius Group, Hut8 and Applied Digital. They're all catching bids today. So the question is, what do you do now?

2:46Right now, I'm going to talk louder as you cough, Kelly, as the tech trade goes on. Yes, we need some water. Let's bring in MAI Capital Management Market Strategist, Chris Grisanti, and Defiance ETF Chief Financial Officer, Sylvia Jablonski. All I want to talk about is this$15 ,000 suite, but that's for Contessa later on in the show. Sylvia, we had this, you know, don't want to make too much of it, But two-week-long kind of sell-off, semiconductors, technology, some stocks down 50 % from their highs. It's been more calm the last few days. How do we read it as we roll into the final two months of the year?

3:21Where are we in the markets right now? Yeah, I think, you know, it's been a bit of a bumpy ride. We saw VIX spike about 41 % or so on Friday, and a lot of investors became, you know, kind of fearful about what was going on in the market and what was going to happen with the tech and the AI trade. I think where we are now is in a great spot seasonally. So I think that tech and AI and a lot of the top names that we've been looking at are poised to continue to grow into the end of the year. We have this backdrop of inflation fears, geopolitics, you know, other things like this, perhaps credit risk.

3:53But what we do know is that the demand for power and energy and AI and compute is not falling just because some of the stock prices have fallen over the last couple of days. But that doesn't mean demand for stocks, though. Like the demand for energy is up. Yes. But as we saw, the demand for some stocks in that space fell. Why? It fell because I think a lot of the names also fell about 20 percent from their 52-week highs. But what happens is when you have these trillions of dollars sitting on the sidelines that aren't deployed and you see these stocks and you put it back into the equation of we still need this energy.

4:27These stocks are still likely to rise because they will continue to generate revenues. Well, maybe I should dip my toes back in and kind of buy on the dip. It's the dollar cost averaging trade. Looking at, Sylvia, what you like and Chris, what you like and what we heard from Nancy Tengler just a few minutes ago, she liked NVIDIA and Microsoft. Sylvia, you like NVIDIA, Micron Invertive. And Chris, you like Amazon and Microsoft. I mean, you talk to all these different people with all these different approaches and things going on. If you just jump in and kind of take that. And it all seems to point back with a lot of people who have been in the market a long time to tech.

4:59But some of the bigger names. But don't worry about the NVIDIAs and so forth. Well, one of the big things, Kelly, is that I come at it from more of a value perspective. So I'm looking for the risk reward tradeoff. I'm not looking for the best appreciation. I'm looking for the least downside in many ways. So I love the hyperscalers. And it seems boring when all these exciting things are around. But they are selling more cheaply than in Amazon's case ever. In Microsoft's case, way below its average valuation. And so these two represent a terrific risk reward. Earnings are going to increase by more than we thought they would.

5:34And this earnings growth, which is accelerating, not slowing down, that's the place to be at reasonable valuations plus earnings. So as earnings data come in, I think Sylvia is exactly right. These worries start to dispel and the market climbs the wall. You do. Yeah, because Nancy was saying she thinks we get a big run into year end, Sylvia, at a time when a lot of people are saying, you know, there's other alternatives. There's, you know, plenty of things to worry. There's the midterms. And yet we're up 13 percent year to date on the S &P. And we can name all of these worries that perhaps we can clear here.

6:04I don't know. Yes, I think that, you know, we do have to get past inflation. We do have to get past oil prices and things like this will eventually put stress on the economy and the markets and things like this. But for now, the fundamentals are looking good. The consumer is looking strong. Earnings were great last quarter. You know, so far, I think we're about 79 percent beating, which hardly anyone has reported. But nevertheless, it's a good number. And I think that expectations are high. And what we know from from last earnings season is we've got a lot of outlook into what this earnings season will look like for the AI hyperscalers, for the Microns, the NVIDIAs and, you know, the AI related names.

6:37And if that comes to fruition, I think investors will be less worried about, you know, funding and the financing and the credit that is out there for this. Because, again, you will see that the demand is not going away. And that's the biggest thing. You know, some of these companies had 15 billion dollar backlogs like Vertiv, for example, that they're going to grow into. Well, we hope. I mean, but it's a good time for the bond report because it kind of goes into layers on to everything that we are just talking about. It is time for the bond report. And we mentioned it briefly. But the credit situation for some of the most AI sensitive names is really a big focus of a lot of people and the macro markets right now.

7:10Specifically, Seema Modi, you're watching CoreWeave and a little company called Oracle. Yeah, Brian, I mean, these are two charts you just cannot look away from. And today's move underscores just how much of the AI trade has been sentiment-driven. Case in point, Cori started the day down following a negative session in Asia, the lackluster performance of one of its data center companies, but then turned around late morning. It's currently up about 2%. But Cori's credit default swaps have come in a little bit. Big picture is that, yes, the cost to insure against the default has gone up notably in the past week as investors sort of pawned over some near-term questions.

7:44I've been speaking to a few folks today just that the ability to refinance with about$40 billion of debt obligations over the next five years. That is top of mind. How much it needs to raise. Baird analysts modeling about$30 billion for calendar year 2027, which comes out to roughly$7.5 billion a quarter. And if NVIDIA, which does have a 10 % stake in the company, would consider providing a backstop, guys, SpaceX earnings tonight will also provide important color on just how the company's thinking about funding its neocloud business with deals with the likes of Anthropic and Google. But remember, those deals are being funded by debt.

8:19And that brings us to the next big topic of Oracle and its five year credit default swaps, which are above 300. This is an all time high just one week ahead of its investor day, where a lot of questions will be around its financing mechanisms. Brian and Kelly. All right. Seema, thank you. And, you know, we've talked a little bit about this, guys. Whoever wants to me, Chris, jump in here. How do you kind of have this broadly positive view where you say the demand is still growing? this. It's a great time to be exposed to something you mentioned. This is the biggest capital expenditure boom we've ever seen in not just our lifetimes, but the entire history of the country.

8:50Even with rail. I don't blame a core weave for seeing an opportunity and saying, we'll just buy a bunch of chips. We'll lease them out to somebody else. That sounds fine, but put that in context. But be careful because not all the railroads made it. So there's a big capital spending boom, and it's time to start looking at balance sheets. It's time to start looking at who the winners and losers are going to be. And that's why I prefer the hyperscalers, not brave, not probably that exciting, but probably risk-reward-wise, I certainly think the best way to go. Chris, I think the market, though, is trying to figure out if CoreWeave is a CoreWeave thing, if Oracle is an Oracle thing, or are they representative of a bigger thing?

9:25Well, Brian, I hope that I'm here when capital spending turns over, and one year, it's going to be less than the year before, and that's going to be the time where you don't want to own these stocks. And that's not going to be five years now. Is that now? No, I don't think so, because clearly 27 is going to be higher than 26. Companies have already said that. It may be 27 into 28, but again, you've got to prepare yourself for that. And that's a big deal. And so I want investors to think about that and start focusing on what you want to own when that happens. We were talking to Doug Clinton last hour, Sylvia, and he had this musical chairs analogy that I thought was kind of fun.

9:59Is it musical chairs for AI right now? Meaning when the music stops, Mark's trying to figure out who's not going to get a chair, right? It feels like that's a little bit of what's going on right now. Yeah, I thought the last point was a great one. The AI hyperscalers are likely to get the chair. They're likely to have a seat at the table and they have strong balance sheets. They're funding a lot of their own growth and investments here. And yes, there's extraordinary cost that's going into this, but the growth opportunity is also absolutely extraordinary. If we think about the trillions of dollars of value that can broaden into the S &P 500, even beyond the AI hyperscalers and just the AI stocks, you have to think it must be worth making this investment.

10:40And these companies, they're not dummies, right? They're all spending this much. They're all trying to figure out how to spend more to build this out. And so I think that there's a great opportunity there. The other thing is like, even just like on the AI power and infrastructure trade, you need 20 New York cities to power the amount of demand that we have for the next year or two for data centers and the AI infrastructure. That's a lot. And I'd like to add there, Kelly, that the power trade is going to last longer than the picks and shovels AI trade. You think it'll last longer? I do. Because it's a five to 10 year buildup.

11:12What's your ETF that has the power and plays in it? AI powered infrastructure. Okay. Yeah. So that would, it sounds like. It sounds great. Yeah. We'll move on. I think people agree with that, Chris, but they would say, what are you willing to pay for the shovel, right? If it's$100 funded by debt. Right. High interest debt. And like in Corey's case, the insider's been selling stock, selling stock, selling stock. agree with that. Makes people jumpy. Very quickly. Totally unrelated. Yeah, I got to ask you about GM. How is that for a pivot? Thank you for having me. Listen, GM, big American company, great American company.

11:44I'm a big Michigan guy. What's going on today? Stock's down 8.5%. And it's because they didn't raise guidance. They've had such great quarter after quarter. They didn't raise guidance. The stock is off 6 % or something like that. But they announced a$20 billion repurchase. That would be like NVIDIA announcing a$2 trillion repurchase. It'll buy back a third of the company. They've already bought back 40 % of the company. This is a disappearing company. The earnings are solid. They're not magnificent, but they're solid. I love the investment at six times earnings. Chris Crisanti and Sylvia Jablonski, it was a good conversation.

12:19Appreciate it. Thank you very much. All right, folks, we are just getting started here on Power Lunch and ahead, an out-of-this-world earnings setup on SpaceX. Plus, every airplane you probably fly is full. But with fuel costs rising, will passengers keep paying up? And up next, info you will not see anywhere else on the real story on oil tankers and energy around the Gulf.

12:52Weren't agents supposed to take things off your plate? Building another to handle the others is a bit much. Don't make more work out of work. Gemini is the one agent that knows all parts of your business and actually gets stuff done. You give it a project, close your laptop, and when you come back, the job's finished. No matter your industry or role, your agent has the skills to help every team stay in their flow. Seriously, make work less work with Gemini on Google Cloud. Check response, subscription required. This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab.

13:25Schwab Market Update, an original podcast from Charles Schwab, provides an information-packed daily market preview on stock updates, U.S. and global economic news, monetary policy decisions, and key results and statistics that may impact your trading. Download the latest episode and subscribe at schwab.com slash marketupdatepodcast or find Schwab Market Update wherever you get your podcasts. at Jared Jewelers we know it's about more than fine jewelry it's the moment they open the box that smile they can't hide knowing you chose exactly right because the right gift can bring a lifetime of meaning a promise, a milestone, a memory in the making make every moment unforgettable find great gifts starting at$250 Jared, make the holiday last forever shop Jared Jewelers

14:21All right, welcome back. Let's talk about energy, because while the oil market certainly looks tight, the shipping data tells a bit more of a complicated story. Why do we say that? All right, take a look at that chart from ship and energy flow tracking firm Vortexa. Their data shows oil inventories in many places at or near record lows. This says Iranian oil exports have basically disappeared because the U.S. Navy has successfully blocked Iranian oil and money flows.

15:17Listen to this. same as before the Iranian war. So how do we kind of interpret some of these rather mixed signals on the oil market? We don't know, but let's ask the man behind that data. That is David Weck. He is chief economist at Vortexa. So David, when I saw the data, 99 million is about all the oil in the world every day. It's about 1304 million barrels. So I thought, well, that's impossible. So how much of that 99 is oil versus things like diesel fuel, jet fuel and other refined products? In other words, where are we in supply and demand right now? Yeah, that's a very tricky question that is not easy to answer.

16:01I can tell you that basically of the oil being moved at sea, about 40 percent, a little bit more, 45 percent is crude oil. The rest is products. So it's basically the same molecules if you want to transport it twice on the seaboard market. Where oil demand is, is a question where there is quite a lot of contention in the industry. If we take China as an example, some people are saying first half Chinese oil demand was declining by 10 percent. Other people say Chinese oil demand is stable this year, just to give you an idea. So it's very difficult to assess demand and ultimately also supply. What is actually in today's world much easier is to assess the flows on the water, because basically you can track every single ship via the signals and satellite imagery.

16:48David, do we know, and maybe you don't, I don't want to put you on the spot, do we know roughly how expensive these barrels are? It's been a big theme the last couple of weeks, which is oil flows are up, but at what cost, given U.S. naval blockades, cost of ship charters, I've reported$1.2 million per day in some cases. How much do the barrels actually cost? It's way more than the contract price that we show on TV here on CNBC. Yes, exactly. That's a very good question. If you look at this future prices, you are somewhere around$100. Typically, you had physical oil prices so that is spot prices prompt.

17:26For example, in the European market at$150 just last week or so. Delivered prices in Asia are even higher. prices are way higher than that. And freight prices play a really big role in that. Historically, shipping a barrel of crude from the US to Europe or even from the Middle East to Asia, very roughly, was$2 to$3 per barrel. Now we're talking about$20,$30 per barrel. So it's a completely different league here. And this very tight freight market is contributing to increasing the delivered cost and ultimately with that also increasing inflation. Yeah. David, if you could kind of talk about where you see this going a lot tighter from here, you know, maybe things can turn in a surprisingly favorable way very quickly.

18:19How are you thinking things through? Yeah, it's a really tricky question. I'm actually thinking that there is a good chance that the situation may ease somewhat. You kindly showed the chart at the beginning that oil delivered at sea or lifted at sea has really increased markedly over the last two months by about 9 million barrels per day. In good old industry units, that's about the oil demand growth in six typical years last decade or something like this. So massive increase in the supply at the margin, but this supply has largely not yet hit the market. That's why inventories have been falling to very low levels.

18:58So these supplies will start to hit markets very soon. They're already doing so. Indian crude inventories, for example, are strongly up. A lot more barrels will arrive in China soon. There is also from the product side of things, we also see strong diesel exports recently with strong LPG exports from the US. All those exports have recovered. And that should ease the product markets at the margin as well, especially as we're going into the winter season, which is not any more strong demand season. Quickly, David, the U.S., the White House is talking about basically eliminating sanctions on so-called dark fleet, you know, shadow tankers that we were sanctioning to try to, I assume, get more oil onto the market because there is effectively a shortage of super tankers.

19:45will relaxing sanctions on these old super tankers, whatever the politics behind it, will relaxing the sanctions meaningfully bring down the cost of transporting oil and meaningfully bring up the amount of ships on the water that can legally take oil? Yeah, you're asking me one tricky question after another. Sorry. I'm a bit skeptical, but at the margin, of course, yes, every single vessel that is employed additionally should help. But of course, players in the market are not necessarily relying that this waiver will remain in place. So we have seen so many changing policies that people are not really relying on that.

20:30If you think back to the waiver on Iranian exports, nobody picked that up outside China as a comparison. So it is uncertain. At the margin, yes, but I don't see it as a big game changer. Yeah, nobody I talk to does. David, I got to say, the questions may have been tricky, but you handle it like a pro because I know you are. David Weck of Ortexa, thank you. Great to get his perspective. Coming up, AI favorites have been on a wild ride this week, but our market navigator has one name he thinks can stay afloat in choppy waters. That's next.

21:14We're an agent supposed to take things off your plate. Building another to handle the others is a bit much. Don't make more work out of work. Gemini is the one agent that knows all parts of your business and actually gets stuff done. You give it a project, close your laptop, and when you come back, the job's finished. No matter your industry or role, your agent has the skills to help every team stay in their flow. Seriously, make work less work with Gemini on Google Cloud. Check response, subscription required. This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab.

21:47Schwab Market Update, an original podcast from Charles Schwab, provides an information-packed daily market preview on stock updates, U.S. and global economic news, monetary policy decisions, and key results and statistics that may impact your trading. Download the latest episode and subscribe at schwab.com slash marketupdatepodcast or find Schwab Market Update wherever you get your podcasts. What happens when you combine a cozy night in with the whole family in matching Old Navy Jingle Jammies? It's a holiday moment of joy, at least for the time it takes a snap of picture. Shop a plethora of prints this year in jammies for everyone.

22:25Adults, kids, toddlers, babies, and even pets. Grab matching sets in classic plaids, whimsical designs, and even Disney-themed prints. Plus, they have coordinating graphic tees, sweatshirts, cozy socks, pet sweaters, and fleece blankets. Get more merry for your money at Old Navy this holiday season.

22:48And welcome back to Power Lunch. I'm Dominic Chiu. Time now for your Market Navigator segment. Some big tech names are reporting earnings this week, and that's putting AI socks back in the spotlight. But given all the volatility we've seen, is there a better way to manage your risk vis-a-vis AI? Our next guest is looking at a safer way, maybe, to play that trade. Joining us now for the case is Chris Bregotti. He's the CIO at SWBC. Chris, the AI trade we know is inherently higher beta, a little bit more volatile. But if you want to kind of sit out some of the volatility but maintain that exposure, how do you do it?

23:24Really good question. And one of the ways is to focus on the companies that are really going to be able to have a diversified type of revenue stream. They're not a one trick pony, so to speak. and they have other ways of generating revenue in the space, whether it's AI-centric or AI-adjacent, there's certainly companies that can benefit in the long run. How exactly then do you come up or screen for those kinds of companies? Which ones do you consider to be some of those ones that aren't the same direct play, but can still benefit from all that spending and interest and sentiment? Basically, what you're looking for is companies that have a different type of revenue source that can contribute towards the growth.

23:59And a really good example is IBM. I mean, IBM is like very focused on its software component, but it does have the AI play as well. So when you're looking at things that can benefit, thinking of a diversified revenue stream, something that has a different way of generating the revenue. So it isn't solely tied to the ability to make revenue from an AI type of play. Additionally, IBM has the benefit of the fact that they are focused on more of the enterprise type of solutions as opposed to the more fickle, for lack of a better way of putting it, client and consumer trade. We've been focusing a lot on some of the picks and shovels, the actual kind of hardware that goes into AI.

24:35That's things like computer chips. That's things like maybe the software that goes around it. But IBM is also a services play on that as well. Tell us how that plays into your thesis around AI adjacent type plays. Yes, I mean, if you're looking at companies that are solely focused on the designing of the chips, they're kind of looking for the way to generate revenue. It's a very high CapEx spending. Whereas if you're looking at companies like IBM, they're looking at ways to generate around the edges of that and be able to be thoughtful about how can they contribute towards the growth of the enterprise in general or the AI infrastructure play.

25:11And they're building the technologies that help get the information out but aren't solely focused on designing of the chip. All right. Chris Bregatti over at SWBC, thank you very much. We appreciate it. We'll see you next time soon. Brian, I'm going to send things back over to you guys. All right, Dom Chu, thank you very much. Right up next, Sylvia Jablonski is back with us and brings her top pick. Now, this stock down almost 30 % this month. Could it make a quantum leap higher? That's called a hint.

25:50All right, let's get your power check on the stock that we just talked about down only 50 % in the last year. It's a name right at the center of quantum computing. And your guest says this is a buying opportunity. Let's bring back in Sylvia Jablonski, CIO at Defiance ETFs. And the Quantum Leap pun, dad joke that I tried at the tease, is a quantum computing stock. It is? IonQ. IonQ. Ah, IonQ. Okay, stock's been beaten like a rented mule. Why do you like it? It has. I think it's just getting some of the bad blood from its cousins in AI. But I like it because it's a call option on quantum computing.

26:33And quantum computing is, you know, the next generation of technology. It's the fourth industrial revolution. We're paying so much attention to AI, but quantum computing is a massive transformation that we're going to see. And it's becoming less of a science experiment and more of an actual commercial entity now. So IonQ is a company that has had, you know, tripled its revenues in the last year or so. They've actually done some things that are considered to be commercial. So they had a project with AstraZeneca, for example, and NVIDIA where they improved the timing on a chemistry experiment by 20 times.

27:04They worked with a trucking company to optimize driverless vehicles. They worked with Airbus to optimize cargo loading to make fueling more efficient and travel more efficient. They're doing cool stuff. They're doing really cool stuff. What they're not doing is producing earnings. Right. Right. Well, this is the problem is that they're sort of it's sort of a I don't want to say it's a theory company because they're doing stuff. Yes. But it's pre earnings. So so revenues are growing a whole lot faster than the stock has fallen in the last year or so. And I think it's it's a it's a new entrant. Right.

27:38It's a pure play quantum company. And that's actually why we built the quantum ETF the way we did. Right. Because you have the the ballast of the big AI hyperscalers like the Google's, the NVIDIA's, the companies that invest in all of this. IBM is another big quantum computing company that people don't think about. And then you pair that with the IonQs that are, again, very much the call option. So their revenues are growing. They're projecting, you know,$490 million in the next year or so. And, you know, their proof in the pudding is also growing as well with these commercialized projects coming to fruition.

28:07And so if investors want to, you know, take that call option, I think it's a great stock to do it. How long, we were showing the year-to-date chart, and you can see the ups and the downs. Yes. But how long should people think about owning this if they're going to buy it now? Like literally 10 years? I mean, yeah, I think literally 10 years. You know, this is this is the chat GPT moment, I think, for quantum computing. You know, again, like you're actually starting to see these these projects come to life. You're starting to see the government invest in it. You know, it can change the outlook for material science, for for pharmaceuticals, for biology, research, aerospace and defense.

28:41DARPA just invested a huge amount in quantum computing and quantum computing research. And so I think that this is the forefront of the next next jet of tech. All right, Sylvia, thanks again. Thank you. Sylvia Jablonski of Defiance ETFs. SpaceX earnings are on deck after the bell today. The stock up about nine percent from its June IPO. We've got Netflix after the bell as well. But that one is down 25 percent this year. Let's get out to Oliver Rennick. He's tracking the options activity for both of them out at the SIBO. Oliver, what do you see? Two very different volatility setups between Netflix and SpaceX, Kelly.

29:17Netflix has a more discernible trend behind it, a 45 % year-long bear market and five-quarters of post-earning sell-offs. As a result, volatility is very high for Netflix standards as traders price in a 9 % move for the stock. For many traders, that increases the appeal of selling options and fading a big move. And judging by today's flows, actually, a slight preference to fade a big move to the downside, i.e. neutral to bullish positioning. In SpaceX, it was that type of big put selling back in August that signaled the low for the stock. But today, options are quite literally directionless. Almost exactly as many puts are trading as calls.

30:02For SpaceX, market makers are pricing a 6 % move, smaller than Netflix and also significantly smaller than its 13 % swing after the last report. So arguably the opposite setup as in Netflix. One in SpaceX's case that invites traders with a strong fundamental view to place a bet by buying options that pay off after an outsized move. All right, Oliver, thank you. We'll see what happens after the bell tonight. Oliver Rennick at the SIBO. So let's get over to Frank Holland now for a CNBC news update. Hi, Frank. Hey, good afternoon again, Kelly. Norway's prime minister said a meeting between U.S. envoy Steve Witkoff and Ukrainian President Vladimir Zelensky was good and constructive.

30:42He says Witkoff will fly to Russia tomorrow to meet with Russian leadership. Witkoff and Zelensky met just days after President Trump suggested the Ukrainian leader should be replaced. U.K. police say they rearrested two of the seven men linked to a suspected plot at a U.S.-run airbase in England last month. They are accused of assisting Iranian intelligence in connection with that incident. The U.S. withdrew its B-1 bombers from the base shortly after the initial arrest last month. And a food importer sued the Trump administration today to stop the latest tariffs on imports from Canada. President Trump used a section of the 1930 Tariff Act in July to impose 50 percent duties on a range of Canadian goods.

31:20But the lawsuit filed by New Jersey-based Gellert Group argues he doesn't actually have the power to do that. The importer is asking the court to declare those tariffs are unlawful, block their enforcement and order the Trump administration to issue refunds. Kelly, back over to you. All right. Thank you, Frank. Still ahead, the airline stocks taking off ahead of a busy earnings week. But can they keep gaining altitude as fuel costs and airfares climb? We'll talk about that next.

32:06The CEO of Ryanair is out with a new warning. He says European airfares could soar as airlines have little protection from higher jet fuel costs. You're going to see airfares rise next year in Europe, I think by 10, 15, maybe 20 percent. You're going to see the biggest increase in airfares, I would say, in history in Europe in the next 12 months. It's already happening here. His comments come as U.S. fares are surging. According to Hopper, the average domestic round-trip ticket this Thanksgiving travel period is 31 percent more expensive than last year. For Christmas, we're talking 23 percent.

32:43Joining us now is Chris Sununu, the president and CEO of Airlines for America, the trade association for the leading U.S. airlines and cargo carriers. He's also the former governor of New Hampshire. It's great to have you here. I wasn't sure if there was a, is Spirit Airlines going defunct a part of this as well? Is Spirit Airlines going defunct as part? No, Spirit Airlines went defunct because it was terribly managed, frankly. No, no, no. But I mean, without having those fares available, is that one reason why? Why are we already up 31 % when Ryanair is saying it's going to be 15 or 20 % in Europe next year?

33:14Well, we're up 31 % because jet fuel alone is up 250%, right? Right. So jet fuel is far more than doubled. The vast majority of the cost of putting a plane in the air is jet fuel. Now, the airlines themselves are eating most of that cost. They're actually they're going to lose 12 billion this year just by eating that. And some of it, unfortunately, has to be passed on to the customer. And so you see that 20 to 30 percent increase as we go into the holidays, which is actually not only a fraction of what Michael's talking about over in Europe. Europe is far more sensitive to the oil issue and the Strait of Hormuz issue.

33:49Right, but I'm saying our fares are up 31 percent. And he's saying theirs are going to be the worst ever, and they're only going up 15 or 20 percent. Sorry, they're going to go 15 to 20 percent next year. So that's more than they already have. So right now their fares are already up 30, 40 percent. They're going to see probably another jump of 15 percent. We likely won't see that. Now, as things escalate in Iran, that's going to put a whole different kind of scenario in play where I guess theoretically we could. But if things stay the status quo, hopefully we get out of Iran. Hopefully we here in the United States have seen the worst of it.

34:23They're just so much more susceptible to refinery issues, to the Hormuz issues. We can actually create and refine a lot of our own oil here. So we've had to endure some pretty tough. You know, no one likes to see their cost go up 25 percent. But anything that runs on diesel or jet fuel right now, you're really seeing that. Jet fuel especially. I don't know if you're a fan, Chris, of the band Radiohead, but they have a song that goes something like this. I won't sing. You do it to yourself. And when I look at Europe, they outsourced refining. We don't want refiners. It's dirty. It's filthy. Climate change.

34:57We don't want refiners. I get it. We're going to have to buy the jet fuel from somewhere else that doesn't care. And that's what they've done. They buy the fuel. They import it. Now those lines are in trouble. I mean, I hate it because I love my friends in Europe. But how much of this is self-imposed because they just whacked their own refining capacity and relied on shipborne imports? Which, by the way, shipping stuff by giant carbon spewing ships, not exactly green. Yeah, look, I think you've hit it right on the head. And the irony is Michael O 'Leary, who you just heard talking about those increases, he was warning Europe about this 10, 15 years ago, that they had to develop their own infrastructure, their own refinery capacity so that not just they had oil, but they had the diesel, they had the jet fuel, they had the gasoline.

35:44I mean, just filling a gas tank over in Europe, you know, we've always known for years has been, you know, 50 to 100 percent more than what you do here in the U.S. And now, again, that's getting exacerbated. My belief is always it's never too late. Right. You've got to plan 20, 30, 40 years ahead in the future. They have to hopefully learn what's happening today and develop that refinery infrastructure. Because, again, our airlines fly over there. The FedExes, the UPSs, the Atlas Airs that are great American, they fly over. And they're actually quite susceptible to European rates because they need to refuel more overseas than the traditional United Deltas and Americans.

36:22You just agreed with me, which is nice. I'm going to say something that you will not agree with and you're not going to like, but I'm going to say it anyway, Chris, because I know you can handle it. You'll only be a little wrong. Is there an end to the airlines at this point are credit card companies that also have planes attached to them? Is there like an end to this or are we now in the permanent credit? What am I going to call it? Why would you want to end it? No, no. Why would you possibly want to end it? You know why airlines and their credit card programs are so awesome? because they provide 15 to 20 million people a year with free airline tickets.

36:55That's the points program. That's your ability to use those points. It's not free. I mean, you're spending money at Wegmans to then hope to get a ticket. Yeah, that's right. So low - and middle-income America, more than ever before, can fly on airplanes because the credit card points programs are so awesome because they can do their grocery shopping here and go visit grandma over Christmas there. So those points programs have provided millions and millions of people with a flying opportunity that they otherwise wouldn't have. And that's why the fact that between 2019 and 2026, the early 2026, before the Iran crisis, airlines prices didn't budge at all.

37:32They did not even move with inflation. They stayed absolutely flat because so many folks are taking advantage of the credit card program. So, yes, you're absolutely right. We'll disagree. And you're even more right because you're incredibly wrong. We love the credit card programs. Americans love the credit card programs. It's the point programs and the gateway to cheap and discounted tickets. I can't be wrong. I didn't say yes or no. By the way, you're talking to like a 3 million mileage plus mile guy on United, Chris. They should love me. You've got to use those points. You know those white stickers where you go on vacation?

38:04It'll be like A-C-K if you go to Nantucket. My family got me one as a joke a couple years ago. It says EWR because I'm at Newark Airport so much. They got me like the sticker for my car. because I'm basically living in Terminal C, now occasionally Terminal A, at Newark. I'm curious, Chrissy, the Wi-Fi issue being what it is for Delta, are you going to wade into this one or no? Well, no. So just to be clear, there was a question of whether Ed Bastian would take Starlink as part of his Wi-Fi. I'll say this. Ed Bastian is one of the best CEOs you're ever going to find. Delta is incredibly well-run, and he knows his tech.

38:42And they just decided Starlink wasn't for them. That's fine. Starlink is great for certain airlines. It's not for them for certain reasons. You know, they the need and demand for Wi-Fi in the sky over the Pacific Ocean is very high, which is a miracle, by the way. Thank you to the American Airlines, to the airlines across the country for making that happen. But no, they're going to have some some solution there. He just said, look, it's no no big deal. Starlink just isn't for us. There's going to be other options out there. But they know they have to provide you for their customers. It's going to be fun.

39:10Do you know who's throttling Starlink in Ukraine? Do I know who's throttling Starlink in Ukraine? The owner of Starlink? You know, while we're on the subject, feel free to shed any light on the situation. Chris, thank you. We appreciate having you on today. And I hope you're right that the worst of it's over for U.S. airfares and for jet fuel prices as well. You bet. Governor Chris Zanunu, Airlines for America. All right. We just talked about airplanes. Coming up, we're going to go to a different mode of transport. And Contessa Brewer is going to show you. She's going to show us a sneak peek into the life that Contessa Brewer probably secretly lives on the side.

39:49It's not that secret, actually. Today, I'm on the pool deck of the Seven Seas Splendor. It's a Regent ship, a luxury line. Thank you, Macklin. Where champagne rishes and caviar dreams are part of an everyday job for the staff on this incredible ship. I'm going to tell you all about the mad dash to luxury right after I have a sip of champagne and a commercial break. We're back on Power Lunch after this.

40:26Norwegian Cruise Lines is betting big on all you big spenders out there. They now have a$15 ,000 per night suite on the Regent Seven Seas Splendor. In fact, next year, apparently, as Contessa Brewer is about to tell us, there's a suite that's even more expensive. We gave you time to drink your champagne, Contessa. Now show us the suite. Yeah, one quick commercial break and a whole glass of champagne down like that. Listen, we're going from$15 ,000 for a top suite to$25 ,000 by December on the Prestige. This is the Seven Seas Splendor. It's really built around the idea that luxury travels will, and the travelers will pay for a trip where the details are all handled for them.

41:17It is not the floating city with the big water slides. This ship only has 373 suites. The biggest, the Regent Suite, which I got a tour of, costs$15 ,000 a night. Now, a standard cabin on board is about$1 ,800 a night for comparison's sake. They're very nice. All the fairs include specialty dining, drinks, Wi-Fi, gratuities, all the shore exclusions. This is truly an all-inclusive, but with a one-of-a-kind experience that's part of a broader bet across travel and leisure that affluent customers will still spend, that companies can add more premium rooms, that they can add premium lie-flat seats on airplanes and on ships to capture the business.

42:03Regent is owned by Norwegian, and its stock, well, it's having a pretty good day today, up 3 percent, struggling this year, down almost 30 percent year to date. The luxury lines that it owns, Regent and Oceana, are seeing bookings, though, up 20 percent year over year. It's not just Norwegian. Royal Caribbean is seeing similar trends with its Silver Sea line. You've got Ritz-Carlton yacht, Amman at sea coming on board, Four Seasons, Orient Express. They all want these big spending travelers, and they're competing with the world's top hotel brands and airlines and restaurants, all getting into this luxury segment.

42:40If it's hospitality, the gold rush is focused on the travelers, Brian Kelly, who can afford to spend big. And, in fact, in cruising, luxury and expedition are the fastest growing segments in the cruise industry. Luxury, expedition, really, that's where it's at. In fact, one more thing. Go ahead. Well, the big suite on this ship, never unoccupied. And it has a grand piano. What else? What are the other goodies in there? OK, well, so you have Butler Service. They have in-room dining that seats six. But only the regent occupant, the regent guest, has access to a private dining room that seats like 20.

43:25and it's so secret that no other guests on board ever even see it. They have on board a cigar bar with high-end whiskeys. They have a culinary center where you can go and take classes and learn how to make, I don't know, Chateau Brion. This would be the perfect corporate thing, wouldn't it? If you're an individual, fine, the super rich. But if you're a company, you can spend that kind of money on an off-site. I mean, this sounds like it's got everything built in. That's exactly right. Plus, you can tailor, if you were to rent out the whole ship, then the itineraries might be something that you could negotiate with.

44:02This is an incredible experience. And again, it's not just this particular ship, though this is a good one. Prestige is coming out in December. That one has the$25 ,000 suite, like bigger, grander, more opulent. And they're just competing across the board. And CLIA, which is the Cruise Industries Trade Association, said from 2025 to 2028, they expected the cruise industry passengers in general to grow 11 percent. The luxury business is expected to grow 30 to 40 percent. I want side by side comparisons. Yeah. Yes. Marriott CEO, Hilton CEO, Wins Resort CEO, MGM, Las Vegas Sands. they're all going towards smaller customer base, but customers who are paying more.

44:51And I've asked all of them, how crowded is too crowded in this luxury space? I mean, are there enough rich people to keep all of you in business? And Marriott's CEO said there's almost an insatiable demand for luxury travel. Because if you bought Amazon stock 30 years ago, you have$20 zillion now, now and you're going to drop $100, which is a lot of money for pretty much everybody except for those people. Listen, we heard a helicopter above you. Hopefully that comes with it too. That'll just take you on and off the boat. Yeah, it's just landing right on the deck. Well, not right on the deck, but like there's an H.

45:28You know, you go on that, not just right on the deck. Contessa, thanks for what happens. One glass, two glasses of wine. Now she's talking about landing helicopters on the deck. We'll get a quick check on strategy. The world's largest corporate Bitcoin holder, a 5 % second best performer in the Nasdaq 100. The shares have rebounded more than 40 percent in the past three months, even outpacing Bitcoin's recovery. And we'll have more Power Lunch after this quick break.

45:57Wrapping with this, Braze is ablaze. Stock up 51 percent. Martech marketing technology firm, Kelly, Salesforce buying the company for$5.6 billion. And Salesforce shares have been fluctuating today, but then they were positive at last check. 3M has been helping the Dow, which is at 467 points, having a pretty good session. They can afford that cruise. Thanks for watching Power Lunch. Closing bell starts right now.

46:21At Jared Jewelers, we know it's about more than fine jewelry. It's the moment they open the box, that smile they can't hide, knowing you chose exactly right. Because the right gift can bring a lifetime of meaning, a promise, a milestone, a memory in the making. Make every moment unforgettable. Find great gifts starting at$250. Jared, make the holiday last forever. Shop Jared Jewelers.