Power Lunch 9/17/26

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1:02Stocks rising as the market seems to like yesterday's Fed rate hike. Welcome to Power Lunch. I'm Brian with Kelly. Oil dropping again. And speaking of oil, it's Venezuela, the new Texas. Doug Lawler runs the world's largest privately held oil and gas company, and he is here to talk about that and more. Super Micro, Intel, Hewlett-Packard, But Enterprise are among the market's top performers as lower yields reignite the AI and infrastructure trade. But the big question for investors, is this a durable, like a real reset in rates or just a pause after a volatile run higher? And Palantir CEO Alex Karp making a bold call on AI safety.

1:38We'll bring you his latest comments and what they could mean for the next phase of the AI build out. But let's begin with the market. Stocks are bouncing back, like Brian said, after the Fed's first hike in three years. Oil and treasury yields cooling a bit. although the president is calling for a quick reversal, writing on Truth Social, lower the interest rates for the United States of America and fast. The Fed's own projections still pencil in another rate hike this year. Refinitiv shows traders seeing a 54 percent chance of an October hike and 90 percent for December. For more on rates, inflation and the markets, let's bring in Torsten Slock, the chief economist at Apollo Global Management.

2:14Torsten, welcome to you. Pretty good verdict so far to what was more hawkish, I think it's fair to say, in the 12-0 decision. And also then we're definitely letting the market run with the idea that more rate hikes are on the way. Absolutely, Kelly. I think this is really important. I mean, the market is clearly voting today and saying this was a good decision. Long rates have come down very substantially today. And, of course, equities like the hike. This is really completely against the textbook. The textbook would have said that when the Fed is hiking, stocks should be worried and rates should be going higher.

2:46But the fact that this is showing instead the opposite is because the market is saying that Walsh is delivering what the market wants and delivering what the economy needs. And if that's the case, what should, what will, what's next? Yeah, the key issue, of course, as usual, is inflation. Unemployment is still very low at 4.1 percent. The labor market is still relatively strong. We're still not seeing labor displacement be particularly substantive. Instead, we're seeing significant growth in the number of new businesses because of AI. So the net result of that is still a labor market that's relatively strong.

3:19And the outlook for inflation still is that we will see sticky inflation, according to the consensus and in our forecast, at least in the next six to nine months. So that's why it makes sense that markets are pricing that rates will be higher for longer, because we still have a sticky inflation environment with inflation roughly at three and a half and still too far away from the Fed's 2 percent target. Next Fed meeting is October 28th, if you're circling it home, by the way, and you probably are, Torsten. I want to just veer off just a little bit because you pointed out a couple hours ago that on X, or somebody posted a chart, where you're talking about hyperscaler credit default swaps against the banks, and that we're seeing the hyperscalers, credit default swaps go up in risk, banks are staying flat.

4:04Does that imply that you're worried about what's happening in debt levels for the big tech companies? Or is it just something to note but not necessarily worry about right now? I'm not worried about that. But there is something very important going on, namely that there is, of course, more discussion around the IG market. For a long, long time, the IG market was dominated by financials. And over the last 12 months, the IG market is now also dominated by hyperscalers. They have grown so much because they are also investment grade. So now we have an investment-grade market that is, of course, the U.S.

4:35government is investment-grade. And we also have financials, meaning banks. But suddenly a new player has arrived in the IG market, and that is, of course, hyperscalers. So the discussion, of course, is now you begin to think about relative value. Well, are hyperscalers trading relative to banks? What is the situation in terms of crowding out dollars that would normally have gone into U.S. treasuries that now instead is going into hyperscalers? This has opened up this gap that we're seeing in that chart that namely shows that CDS has begun to widen a bit, probably because of a concentration issue among primary dealers.

5:07But you're right, Brian, this discussion, in my view, is not a big issue. It's not really a relevant issue for the topic of the day. But it is something that's happening in the background where we need to think about the credit risks that are inherent in this case in the investment grade credit market. I would only say, I guess, in response to that, Torsten, what happens now with things like gold, Bitcoin? Well, the last thing, of course, that is left now is that if the Fed is truly now, of course, embarking on a campaign of trying to really get inflation down to 2 percent and maybe a bit faster than it otherwise would have, that should at least be putting some downward pressure on gold and Bitcoin and other assets, because this should mean that inflation is going to come down faster than at least if we did not have the Fed hiking.

5:54But of course, there are other issues going into So gold sanctions also play a important role in gold prices. Chinese demand for gold has also been strong. German in India for gold has also been strong. So overall, it's not only inflation that's driving the gold price, but from purely a Fed perspective, the Fed hiking should, at least in theory, put some downward pressure on gold. Well, Torsten, sit tight. I know you're talking about IG investment grade because I want to go now to our friend on set. We're going to call the OG in the bond market. You see what I did there, Rick Santelli? Love, I think this is one of your few visits to CNBC's headquarters in your 30-year-plus illustrious career.

6:30It's great to have you on. Yeah, a handful of people. Are we going to actually get you a little choked up? Like, is this, can we get? I've been practicing my emotional control, so I think I've been rather successful thus far. Today. You had. But it's been wonderful to have you here. What is Rick Santelli right now? We've got the Fed in the rearview mirror. I've got the next one coming up October 28th. We just talked a little bit about banks and hyperscalers. What is Rick Santelli right now most focused on in the bond market? What I've been focused on my entire career, which my club in terms of debt and deficits has grown substantially in the last couple of years.

7:08It's just amazing to me how many people now are talking about$40 trillion. Where were they when it was$25,$28,$30,$35,$38? Where were they? We could have done something about it. At this point in time, when I look at the way the globe set up, we're in the Mideast. EU, other than Spain, kind of, eh, Japan going to raise rates. What's that going to be? For a 31-year high, by the way. I know. 31-year high. Everyone's like, what's wrong with America? I'm like, bro, have you looked around the world? 1995. This is a global debt issue. And the two-decade club. We see so many economies that are close to 20 years haven't seen these rates.

7:46whether you look at France, whether you look at what's going on with regard to the EU, you look at boon yields moving higher. This is all big. So listen, Torsten is a legend in the bond market. Everybody likes him. He's a great guest guy, really understands what's going on. But I'm not so convinced that today's activity is going to be representative of what we're going to see in the future. OK, stocks like it today. Are they going to like it next week, the week after that because I continue to think that the work could make crude oil a bit nasty. It's going to make traders a bit nervous. And I'm not convinced that the 10-year is going to spend an awful lot of time under 5 % considering debt deficits and issuance.

8:26It's not going away. And the AI community almost could care less about interest rates. They want the money. They're looking at the big prize down the road. Yeah, we were just talking to the former Treasury Secretary about that. I didn't hear it. You know, I mean, he says, everybody says, yeah, we got to do something. We got to do something about Social Security. And the problem is they talk about it. These congressmen talk like, OK, we're going to do who can do something. They can do something. People don't want it. Who who in the public wants any of their benefits to be trimmed at all? Once again, I've said this a thousand times.

8:59Once the government gives a dollar to any constituent, trying to get it back is nearly impossible. Oh, it's a crisis dollar. It's temporary. Uh huh. Look at all the hassles we had with the card. to what happened during COVID and some of the medical probabilities of the extra money we put in, how hard it was to pull back. And in an election year, how many? What Jack Lew said was the next president, Social Security is going to start, the existing funds are going to start to be exhausted under the next president's watch. And so anyone running for Senate right now or running for president is this, they will probably have to deal with this.

9:34And how many people are talking about it in primaries? Zero, basically zero. You know what they're talking about? getting rid of police. Let's debate this. Let's do. You know what? There are so many other directions, for instance, with health care and saying Medicare for all again. Can I give a little good news? We got Torsten Slock still here. Here's the good news for people. Definitely your age, hopefully my age. I don't know. Is that the demographic shift is massive. There's about 75, 80 million baby boomers that are retiring or already retired. There's about 43, 45 million little old Gen Xers like myself are kind of stuck in the middle.

10:10I mean, we built the internet, developed everything and built a modern economy. But other than that, and there's about 80 million millennials behind us. So I'm encouraged, Torsten Slock, by the demographic shift that is coming. In other words, fewer paying for more now, but more paying for fewer like myself down the road. Should I take some comfort in that, that we're not maybe totally doomed, But the next 10 years are going to be sketchy. Well, and the key issue, exactly as Rick is saying, is that about 75 million people receive Social Security. That's a lot of voters. So as Kelly is saying, if you take anything away from 75 million people, politicians, of course, are struggling in how to deal with this problem.

10:52That about 60, 65 percent of all government spending is exactly entitlement. So in other words, there's not much left, which is discretionary spending. So from a government finance perspective, Rick is absolutely right at the government debt problem. It may be resolved. And I was mainly talking about a verdict on what Walsh was doing yesterday. But the underlying challenges on the fiscal front are unfortunately not going away. And the demographics, as you're saying, Brian, is not helpful at all. And towards it even worse, if interest rates do move a bit higher, the bill that we get for our credit card debt as a country continues to go up.

11:25And it's going to continue to crowd out all the spending you're talking about. And I don't know that that's going to reverse anytime soon. And when it comes to Social Security, the problem is, is that not only can't we get people that are running to talk about it, but until we get term limits, nobody's going to do anything about it. In my opinion, that's the only way that we'll get anything done, because we're going to have to elect people that don't care if they're going to get reelected because there's a term limit and they're going to do the job they're supposed to. The problem is Congress is going to never vote themselves out of a job.

11:56I don't even know if term limits would help. Oh, they would help. Who in the public really wants a change to be made? Right. Like that's that's the ultimate. But isn't that what Miss Carter said, that a true leader is somebody who takes people where they need to go, but not necessarily where they want to go. And that is exactly the situation we're in today. Except they're not leading. They're just following the voting trends. So do you know what I mean? Which so that is a different issue. So you know what is one of my last times on TV? Let's give a little honesty here, OK? Most of the big issues like immigration, OK, Social Security, you know why they never get solved?

12:31Because they're hot-button issues that bring in money so they can keep running and running and running. Once you cure it, just like if you cure cancer, you're going to kill a multibillion-dollar research industry. Well, I would say this. Nobody wants the ad that says, and he voted to cut your Social Security benefits. And they will run that. And it's like black and white, and there's ominous music. and it's like you're the, you know, Satan's little cabana boy. Yeah, Grandma Wheelchair. We've seen this movie before. Torsten Slock of Apollo. We appreciate you coming on, Torsten. You got a final message, by the way, for our friend Rick Santelli here?

13:05Oh, absolutely, Rick. Thank you for your service. You've been helping us in the financial service industry for decades, and it's so much appreciated. You've been enlightening us very significantly. Well, thank you. And you know what? You're going to continue to do that, and we all appreciate you as well, sir. We'll take the mantle of the baton from you here. Thank you. I guarantee you, Rick, Torsten Slock is the only former IMF economist who's going to give you some love right now. By the way, but not the only one giving you love. I know you guys did something on the exchange. Jeffrey Gunlack chiming in saying, Godspeed, Rick Santelli.

13:34Congratulations on a great career. I know that, Kelly, you pointed out that what? The current Treasury Secretary had a nice thing to say about Mr. Santelli. There's the draft. Not the draft. There's the letter right now. He said you're one of a kind. Sometimes you read those and you go, well, what? What kind is that exactly? It's so true, though, Rick. I mean, and people don't appreciate because everyone talks about like how we debate these issues. They don't understand how prepared you have. When this man has how many papers do you have for an 830 data release? I'm going, OK, that's the biggest up or down moves.

14:08This man is so great. Give me these papers. Give me these papers. People need to understand how much work goes into this is stacks every single day. Stacks. I'll do it like this. Stacks and stacks and stacks of work that goes into. This is like one. Look how many there are. Then there's this one. Initial jobless claim, continued claims, housing starts, permits. Kelly, I got it. I got it. Hold on. We got it. I got to chime in on this one, Rick. Kelly, I got some advice for you. Same advice that I had to take my decaf. We just appreciate all the prep, all the work that you do. It's been so awesome, Rick, to really benefit from all of your experience.

14:45I'm telling you, the rainforests are going to be so much better off when I retire. You should see how many reams of paper I go through. Remember when email was supposed to save all the paper? They're like, oh, just email. Oh, I recycle. I do recycle. I know we'll never use paper again. Now we're using more paper than ever because everybody's printing everything out. Scott Bessett, Treasury Secretary, writes, I hope retirement brings some well-earned relaxation. I don't think it's going to, is it, because you're going to be Rick Santelli forever. I'm not a relaxing character. No, you're not. I was trying to be nice.

15:12Please still text me your bond auction grades. Oh, my God. Did somebody tell you? We're just going to get a random text from Rick. I told Brianna to call me up for the options. C -. C -. I'm like, what is that, our performance? All right, Rick, thank you very much. We'll see you later. All right, on deck. The CEO of the world's largest privately held oil and gas company on why they may be ready to make a big jump into Venezuela. That's next. ever notice how every new ai tool asks you to explain your business to it all over again google workspace with gemini skips that you get google's ai built right into the premium versions of gmail docs sheets and more no new tools no extra logins just one subscription that gives you personalized ai right inside your actual workflow make work less work try google workspace with Gemini at go.gle slash workspace with Gemini.

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17:11All right, welcome and welcome back. Oklahoma-based Continental Resources is heading south. Not to Texas, but to South America. Twice. The company just signing a memorandum of understanding to develop some oil fields in Venezuela. It is a continuation of the announcements that we covered from Venezuela recently. Now, Continental is also working to build out oil and gas fields in Argentina. CLR is the world's largest privately held oil and gas developer. And CEO Doug Lawler joins us now. Doug, it's a pleasure to have you on. Welcome. Is Venezuela, it's an MOU, memorandum of understanding. So help us understand.

17:49Dan, is Venezuela happening or are you just sort of exploring options and possibilities right now? Well, hey, Brian. Hi, Kelly. Great to see you guys again. I believe there is real possibilities and distinct opportunities in Venezuela today. I think that the movement by the country, by Venezuelan government, as well as the support from the U.S. government, is going to result in real actionable opportunities to mobilize a significant amount of resources that have been off the market for some time. So what would it take then? And I was down there with the secretary of energy and we were in the room and there's a lot of smiles.

18:27But there were also a lot of questions like how exactly does this work? What is it going to take for you and your team to make the capital commitment? Yes, well, so we have entered into a memorandum of understanding, as you described. This MOU is non-binding, but it is a leading entry into contract negotiation, Brian, for us to develop, to explore and develop a greenfield opportunity in the heavy oil belt just north of the Orinoco River in the country. We know that there's been a lot of progress made in the past several months with the hydrocarbon law that have created some more favorable terms, more competitive terms for external outside investment that has attracted Continental and attracted many other companies to look at the country for potential new development.

19:24We definitely are aware that there are very distinct risks and there are some challenges, but we are encouraged by the environment the Venezuelan government is supporting. And with the support of the U.S. government, believe that there is an opportunity here for us to make a material difference to the energy security and stability in the Western Hemisphere. Doug, it's Kelly here. Just real quick, what's fascinating right now is that I don't want to be blasé about oil. You know, anything that we can do would be great, but boy, do we need help with diesel right now. and just as an expert, I mean, what do we do?

19:55We can't bring out a new refinery. Maybe there's an export ban. I don't know what that does. I'm not smart enough to figure that out, but this is a pressing issue, and do we just kind of hope this situation improves in the next couple weeks? Well, it definitely is an issue, Kelly. You're spot on right. Unfortunately, it's not something that's going to resolve in the next few weeks. It will take some time. The opportunity that we have in Venezuela is to mobilize some additional resources to provide some additional supply to the global markets that will help mitigate to a certain extent some of the issues we're seeing today.

20:31We know that increased production from Venezuela will contribute to the global supply and have a material impact. As you're aware, what we've seen there with the total production output from the country of Venezuela has declined significantly in the past several years. And it'll be quite meaningful to the U.S. consumer. I think it'll be meaningful to the entire Western hemisphere as we see the strength of and revitalization of Venezuela's oil sector. And Secretary Wright and Chevron CEO Mike Worth were both pretty bullish on how quickly they might be able to ramp up because the assets in Venezuela are there.

21:08They just were kind of mistreated. A lot of bad treatment by China and Russia interests. We don't have to go into the geopolitics or the sort of looting of the country unless you want to. Doug, you're free to do that. But how how bullish or confident are you that if this happens, that you can scale up relatively quickly? Well, there's a couple of things to consider there, Brian. You have the brownfield and opportunities that are being expanded in and around the brownfield areas. Chevron is doing an excellent job down there. They have for 100 years or so, as you know, with Mike Wirth and the Chevron team.

21:47And as they look to expand, they're developing within their existing fields and then bolting on. What we're actually doing is going into a greenfield area that doesn't have any production at all. The area of the concession that we are looking to sign a firm contract here in the next several weeks will actually be total greenfield. It'll require a significant amount of exploration work, seismic technical data. But we do know the resources there. We have a high confidence in that from tests, stratigraphic wells that have been drilled in the last 20, 30, 40 years, and even some cases longer ago than that.

22:25So we know the resources there. Accompanying our interest there, there will be a significant amount of infrastructure. In this particular case, there's not deteriorated infrastructure that's been abandoned over time. There's just frankly not any. So our forecast and how quickly we can mobilize production is going to be impacted by how quickly we can ascertain and understand the reservoir, the fluid and rock properties, how we can mobilize that oil as quickly as possible, but then also build the infrastructure out to get it to the markets. And so there's a significant amount of work to be done.

22:58And we're talking a lot about the opportunities in Venezuela. But what about kind of neighboring Argentina? Is that an area as well where you guys could put significant capital? Maybe we start talking about oil flow or some fracking and other things that can be done from down there. Would that be a significant possibility? It absolutely is. We are very excited about the opportunities that exist in South America. We believe that the continent as a whole has a tremendous production potential that just has not been fully tapped into. We know that Venezuela, Argentina, Guyana, Suriname, many discoveries, explorations, both onshore, exploration activities onshore and offshore are showing and demonstrating that there are significant resources available to be mobilized.

23:43With Argentina in particular, we've been very, very excited about our investments down there. We entered the country last year, have made some significant investments, most recently announced a joint venture operating agreement with Mercuria, the Phoenix Global Resources that's operating in the Vaca Morta. And we see the production capacity there to be significant. And we believe South America is going to play a very strong and significant role to the Western Hemisphere and the global energy picture in the decades to come. I'm going to hear, Doug, from a lot of my friends the other direction, up north, my Canadian friends who will text and they'll worry, say, well, why is the U.S.

24:22poking around Venezuela? That type of oil is going to compete with their oil, Canadian oil. Can you reassure our friends in Canada, and they are our friends, that this is not going to be competition for them? There's plenty of demand for this type of oil, to Kelly's point about diesel fuel, for both to win. Absolutely, Brian. I think we're about energy addition. We're about providing more resources to the Western Hemisphere and to the entire globe. So I don't see it as limiting. I don't see it as subtraction. I don't see it as substitution. We need to be focused on mobilizing these resources from all of these different areas in the Northern and North America and South America.

25:04And it's you know, we have a great opportunity before us and we're working very hard and we'll be working very quickly to mobilize additional production from both Venezuela and Argentina. Doug Lawler is the CEO of Conant Resources, Oklahoma City based, by the way, name on the Thunder Arena as well. So maybe we'll see an Oklahoma City someday, Doug. Appreciate you and your team. Thank you. Go Thunder. Here we go. Thank you. Good to see you. We're going to get a go Thunder. Coming up, should AI labs be nationalized or will they end up that way? Palantir CEO Alex Karp weighing in on that earlier, and Seema Modi will join us to break it down.

26:02less work. Try Google Workspace with Gemini at go.gle slash workspace with Gemini. It's the holiday season at House of Burl, which means that it's the perfect moment to review some key rules. Rule number five, more style means more celebration. Number four, buy gifts, but remember to treat yourself too. Number three, there is no dress code, but always leave them talking. Number two, Show off different outfits. No party remains unattended. And rule number one, have it all without spending it all. Happy holidays from House of Burl, Burlington. You know, Kevin, sometimes I feel like computers are the only thing around here that are getting smarter.

26:43Yeah, my model hasn't had an update in a while. But that changes now. We think that we can smarten these listeners up about all things related to this crazy new future. Welcome to Machine Gods, a new NPR podcast that will be your guide to the AI future. Twice a week, we're going to help you get smarter about AI so you know what's real, what's hype, and what you should probably install on your phone. Listen to Machine Gods from NPR on the NPR app or wherever you get your podcasts.

27:13AI safety and regulation are in full focus right now. after that post from Dario Amadei the other day. The always outspoken Palantir CEO Alex Karp weighing in earlier today on CNBC. And we have Seema Modi here on set to bring that to us. Seema, what were his thoughts? Okay, some context here, Kelly and Brian. Palantir CEO Alex Karp has been on this quest, right, over the last two months to push the entire industry towards open source models. It comes after that partnership with NVIDIA's Nebatron model back in late June. And since then, that business has done very well. And coinciding with that, he's become much more critical of their frontier lab, saying the cost of tokens way too high.

27:51There is the risk of IP theft. Today with CNBC, he took that fight a bit further, saying this whole conversation around security, no one company can handle this security risk. They need to nationalize their companies. Here's what he said. First, you migrate all the IP to your business. And then because you need uncapped, you need capped liability, both vis-a-vis the business and vis-a-vis the dangers, you've got to migrate the business to the government. It has to be nationalized. So it's actually happening. This is reported as regulation, non-regulation movement. That's actually not what this movement is.

28:24It's like the view that I believe they have is these businesses have to be nationalized because if you don't nationalize them, every single one of my clients is going to sue. So his message is that AI needs some type of reasonable guideline. line. That sort of pits him, guys, in the middle of these two emerging camps, right? All right. Welcome or welcome back. Oklahoma-based Continental Resources is heading south, not to Texas, but to South America. Twice. The company just signing a memorandum of understanding to develop some oil fields in Venezuela. It is a continuation of the announcements that we covered from Venezuela recently.

28:58Now, Continental is also working to build out oil and gas fields in Argentina. CLR is the world's largest privately held oil and gas developer and CEO Doug Lawler joins us now. Doug, it's a pleasure to have you on. Welcome. Is Venezuela, it's an MOU, Memorandum of Understanding, so help us understand. Is Venezuela happening or are you just sort of exploring options and possibilities right now? Well, hey, Brian. Hi, Kelly. Great to see you guys again. I believe there is real possibilities and distinct opportunities in Venezuela today. I think that the movement by the country, by Venezuelan government, as well as the support from the U.S.

29:41government, is going to result in real actionable opportunities to mobilize a significant amount of resources that have been off the market for some time. So what would it take then? And I was down there with the Secretary of Energy and we were in the room and there's a lot of smiles, but there were also a lot of questions like how exactly does this work? What is it going to take for you and your team to make the capital commitment? Yes, well, so we have entered into a memorandum of understanding, as you described. This MOU is non-binding, but it is a leading entry into contract negotiation, Brian, for us to develop, to explore and develop a greenfield opportunity in the heavy oil belt just north of the Orinoco River in the country.

30:31We know that there's been a lot of progress made in the past several months with the hydrocarbon law that have created some more favorable terms, more competitive terms for external outside investment that has attracted Continental and attracted many other companies to look at the country for potential new development. We definitely are aware that there are very distinct risks and there are some challenges, but we are encouraged by the environment the Venezuelan government is supporting. And with the support of the U.S. government, believe that there's an opportunity here for us to make a material difference to the energy security and stability in the Western hemisphere.

31:10Doug, it's Kelly here. Just real quick, what's fascinating right now is that I don't want to be blasé about oil. Anything that we can do would be great. But boy, do we need help with diesel right now. And just as an expert, I mean, what do we do? We can't bring out a new refinery. Maybe there's an export ban. I don't know what that does. I'm not smart enough to figure that out. But this is a pressing issue. And do we just kind of hope this situation improves in the next couple weeks? Well, it definitely is an issue, Kelly. You're spot on right. Unfortunately, it's not something that's going to resolve in the next few weeks.

31:45It will take some time. The opportunity that we have in Venezuela is to mobilize some additional resources, to provide some additional supply to the global markets that will help mitigate to a certain extent some of the issues we're seeing today. We know that increased production from Venezuela will contribute to the global supply and have a material impact. As you're aware, what we've seen there with the total production output from the country of Venezuela has declined significantly in the past several years. And it'll be quite meaningful to the U.S. consumer. I think it'll be meaningful to the entire Western hemisphere as we see the strength of and revitalization of Venezuela's oil sector.

32:26And Secretary Wright and Chevron CEO Mike Worth were both pretty bullish on how quickly they might be able to ramp up because the assets in Venezuela are there. They just were kind of mistreated. A lot of bad treatment by China and Russia interests. We don't have to go into the geopolitics or the sort of looting of the country. Unless you want to, Doug, you're free to do that. But how how bullish or confident are you that if this happens, that you can scale up relatively quickly? Well, there's a couple of things to consider there, Brian. And you have the brownfield and opportunities that are being expanded in and around the brownfield areas.

33:08Chevron is doing an excellent job down there. They have for 100 years or so, as you know, with Mike Wirth and the Chevron team. And as they look to expand, they're developing within their existing fields and then bolting on. What we're actually doing is going into a greenfield area that doesn't have any production at all. The area of the concession that we are looking to sign a firm contract here in the next several weeks will actually be total greenfield. It'll require a significant amount of exploration work, seismic technical data. But we do know the resources there. We have a high confidence in that from tests, stratigraphic wells that have been drilled in the last 20, 30, 40 years, and even some cases longer ago than that.

33:54So we know the resources there. accompanying our interest there, there will be a significant amount of infrastructure. In this particular case, there's not deteriorated infrastructure that's been abandoned over time. There's just frankly not any. So our forecast and how quickly we can mobilize production is going to be impacted by how quickly we can ascertain and understand the reservoir, the fluid and rock properties, how we can mobilize that oil as quickly as possible, but then also build the infrastructure out to get it to the markets. And so there's a significant amount of work to be done.

34:26And we're talking a lot about the opportunities in Venezuela. But what about kind of neighboring Argentina? Is that an area as well where you guys could put significant capital? Maybe we start talking about, you know, oil flow or or some fracking and other things that can be done from down there. Would that be a significant possibility? It absolutely is. We are very excited about the opportunities that exist in South America. We believe that the continent as a whole has a tremendous production potential that just has not been fully tapped into. We know that Venezuela, Argentina, Guyana, Suriname, many discoveries, explorations, both onshore, exploration activities onshore and offshore are showing and demonstrating that there are significant resources available to be mobilized.

35:11With Argentina in particular, we've been very, very excited about our investments down there. We entered the country last year, have made some significant investments, most recently announced a joint venture operating agreement with Mercuria, the Phoenix Global Resources that's operating in the Vaca Morta. And we see the production capacity there to be significant. And we believe South America is going to play a very strong and significant role to the Western Hemisphere and the global energy picture in the decades to come. I'm going to hear, Doug, from a lot of my friends the other direction, up north, my Canadian friends who will text and they'll worry.

35:49Say, well, why is the U.S. poking around Venezuela? That type of oil is going to compete with their oil, Canadian oil. Can you reassure our friends in Canada, and they are our friends, that this is not going to be competition for them? There's plenty of demand for this type of oil, to Kelly's point about diesel fuel, for both to win. Absolutely, Brian. I think we're about energy addition. We're about providing more resources to the Western Hemisphere and to the entire globe. So I don't see it as limiting. I don't see it as subtraction. I don't see it as substitution. We need to be focused on mobilizing these resources from all of these different areas in North America and South America.

36:32And it's, you know, we have a great opportunity before us and we're working very hard and we'll be working very quickly to mobilize additional production from both Venezuela and Argentina. Doug Lawler is the CEO of Continental Resources, Oklahoma City based, by the way, name on the Thunder Arena as well. So maybe we'll see you in Oklahoma City someday, Doug. Appreciate you and your team. Thank you. Go Thunder. Here we go. Thank you. Good to see you. We're going to get a go Thunder. Coming up, should AI labs be nationalized or will they end up that way? Palantir CEO Alex Karp weighing in on that earlier.

37:04And Seema Modi will join us to break it down. AI safety and regulation are in full focus right now. After that post from Dario Amadei the other day, the always outspoken Palantir CEO Alex Karp weighing in earlier today on CNBC. And we have Seema Modi here on set to bring that to us. Seema, what were his thoughts? Okay, some context here, Kelly and Brian. Palantir CEO Alex Karp has been on this quest, right, over the last two months to push the entire industry towards open source models. It comes after that partnership with NVIDIA's Nebatron model back in late June. And since then, that business has done very well.

37:38And coinciding with that, he's become much more critical of their Frontier Labs, saying the cost of tokens way too high. There is the risk of IP theft. Today with CNBC, he took that fight a bit further, saying this whole conversation around security, no one company can handle this security risk. They need to nationalize their companies. Here's what he said. First, you migrate all the IP to your business. And then because you need uncapped, you need capped liability, both vis-a-vis the business and vis-a-vis the dangers, you've got to migrate the business to the government. It has to be nationalized.

38:11So what's actually happening is this is reported as regulation, non-regulation movement. That's actually not what this movement is. It's like the view that I believe they have is these businesses have to be nationalized because if you don't nationalize them, every single one of my clients is going to sue. So his message is that AI needs some type of reasonable guideline. That sort of pits him, guys, in the middle of these two emerging camps, right? President Trump and video CEO Jensen Wang saying no regulation. The Frontier Lab saying please regulate us. He's saying we need some type of regulation or look at the government getting a stake because, again, the liability risk will be way too large.

38:45As to how this is translating in the stock market, I would just point to cybersecurity once again as this conversation evolves around the idea of AI governance becoming a bigger priority, CrowdStrike, but even beyond CrowdStrike, Kelly. Look at JFrog, Atlassian just this week, all hitting new highs because the expectation is that bigger security budgets to regulate them. That's fascinating. Every one of my clients, he said, is coming after them and will sue you. With the trials already going on with places like the New York Times over theft of their content. Is this kind of, you know, I'll bring it back to energy.

39:16Is this kind of like energy where you had the Oak Ridge, you had nuclear labs, The Department of Energy runs a lot of the labs here for this type of development, right? Because you just don't want to put certain things in the private sector because the incentives may be wrong. Is he kind of suggesting that? Maybe it is a type of regulatory body that oversees them. But I think the question is, would the industry be open to that when this technology is moving at break speed? And will that insulate them from additional liability exposure? And put the U.S. at some type of risk, too. Right. Seema, thanks.

39:48Seema Modi. Never boring. Never. Coming up, don't worry, this bull market isn't over yet, says our next guest. But we are at a different stage of the cycle. Oppenheimer's head of technical analysis has more on what to do about that right now. That's next. Welcome back. Take a quick look at the Nasdaq up 1.6 % today. So a broad-based rally really after yesterday's declines when the Fed raised rates. Our next guest is reading the technical charts, and he's here to tell us what's going on right now. Ari Wald is the head of technical analysis at Oppenheimer. It's good to see you again. You as well.

40:17I mean, you could take the very short view from yesterday at 2 at 2.30 p.m., or you can zoom out a little bit because we did tease that you're talking about the cycle kind of evolving here. Right. I think from yesterday, 2 o 'clock, the resilience of the tape is something would make you think that a lot of this was priced in 90 percent expectations of a rate hike. You got it. But really taking a step back, Nasdaq's been down since it peaked in June and still hasn't recovered to that point there. So there has been some softness to the tape in recent months. I wonder if this is a sell the rumor, buy the news type event, as we are now seeing some resilience with interest rates.

40:51Ten-year Treasury yield is one of its most overbought conditions in recent years. Overbought? For the ten-year rate there, hitting 5 % there on interest rates there. Yet equities holding in there, down about 3 % on the S &P 500. So what's the evolution that you see taking place? Well, if you look back historically, these Fed tightening cycles, they're not bullish. I don't want to paint it in that picture. They do typically cause some near-term volatility, but they're not bull market killers either here. And that's what we're keen on is the fact that through this move in interest rates, which would generally be viewed as a bearish signal for markets, there's been resilience to the tape.

41:33There hasn't been a lot of technical damage. And so for all those reasons, I think a lot of bad news has been priced in. were set up for the Q4 rally. Well, the NASDAQ composite, as Kelly hit on the top of the show, 1.55 % gain. And with that move right now, here's an RBI, the NASDAQ is higher for the month. It's been a pretty lousy month for stocks. But with this move today, the NASDAQ is up 0.05. So 5 one-hundredths of a percent. I'm not making too much of it. But does it go to kind of the underlying, I don't want to say strength, but capacity to hold here from a technical perspective or no?

42:09That would be our read. Here's the Nasdaq, very tech-heavy index, high growth. It's not crashing on a 5 % yield. Let me put it a different way. And you think it would have been. And so I think, again, when you're reacting in that manner to what would typically be a headwind for the Nasdaq there, I think if there's any signs of long rates pausing here, if 5 % can prove to be the ceiling here, I think that could be your catalyst or at least help be a support and a tailwind for higher equity prices led by the Nasdaq. What else looks good to you and your team technically? Well, I think this is the worst month of the year for stocks.

42:48We're approaching the best period of the year for stocks. We want to be optimistic. It is. It is. We don't want to we never want to be optimistic just based on calendar year alone. But when the setup is there, when you're seeing this resilience in the market, and I would say there's still some sufficiently broad breadth. I think leadership is pro cyclical. You look at what's leading the strength in the Nasdaq. You look at that software industry that I think is really been a standout here, specifically the cybersecurity names. That's the new momentum trade. As semis have paused, now you're seeing just remarkable strength in cybersecurity, CrowdStrike, obviously Cloudflare as well.

43:35And even beyond that, there's some other parts of software that are shaping up nicely and screen well for us. Ari, it's been great to have you here today. Thank you. Thanks so much, Ari Wald of Oppenheimer. All right, let's get over now to McKinsey-Sagalos with a CNBC News update. Hey there, Brian. And President Trump withdrew his nominee today to serve as the next director for Immigration and Customs Enforcement. The move comes just three months after the president announced he was tapping former Oklahoma State Trooper Lance Schroer for the job. Now, Schroer has been serving as a senior advisor to Homeland Security Secretary Mark Wayne Mullen.

44:09ICE has not had a confirmed director since 2017. President Trump said today the U.S. is making progress toward establishing an army base in Poland. He said the development was thanks to Polish President Karol Nowrowski and that a location could be announced soon. Poland has been pushing for more NATO troops and resources since Russia's invasion of Ukraine. And North Carolina defensive coordinator Steve Belichick has resigned. He is the son of head coach Bill Belichick. At UNC, he released a statement today following a probe into the program's culture and climate, saying that he would step down at the end of October when his medical leave comes to an end.

44:46The team's general manager, Michael Lombardi, resigned earlier this month. UNC says the investigation is now considered resolved. Kelly, I'm going to send it back to you. Mackenzie, thank you very much. It's rare to get only one rate hike. That's why our next guest is Pricing & More, and he's got picks that he says will benefit from raising rates. Market Navigator is next. All right, time now for your Market Navigator segment. And today's guest has some money making ideas for stocks to own if the Federal Reserve keeps raising interest rates. In other words, not just one and none. Skylar Winand is chief investment officer at Regan Capital.

45:23And he joins us now. Help me understand your first pick, Northrop Grumman, because we basically had a war slash conflict, whatever you want to call it, around Iran. We're using missiles, using drones, using planes. You would think this would have been a stock that would benefit. It's not. you clearly see that as an opportunity. Right. If you looked at this chart starting on March 1st, March 2nd, when the conflict started, you would not expect this to be a defense company. It's down 30 percent since then. So we really like this as a value play year over year. It's flattish. Its sector defense and aeronautics are up roughly 30 percent.

46:01The S &P is up 20. You have this huge order backlog with the U.S. government and the U.S. government's running low on munitions. So we can see this be a really great value play for the next five to six years. We're talking 10 to 15 percent compounder no matter what. Yeah, the next pick is McKesson. And this is not the spice company. That's McCormick. McKesson, not a household name, but I guarantee you they're probably in every household watching or listening right now, Skyler, because they control what, one third of all drug distribution in the United States? Yeah, one third. Add to that, it's drug mixture and what they're distributing.

46:39We're talking insulin shots. We're talking GLP-1s. They made$15 billion in revenue last quarter on GLP-1 distribution and chemotherapy. So very diversified stream of income that's impervious to inflation and what's going on in the economy, but can benefit hugely from demographics and people getting older. You know, whenever, by the way, shout out to my to my my garbage bin. I doubt they're listening right now, but if they are, I love them all because they take the stuff away and they're great. You know what else they're taking away? Money. I think that Republic Services, they may they may be picking up the trash, but based on their balance sheet, they're also picking up the cash because this is a cash cow because we're all spending a lot of money on waste management and waste removal.

47:28That's right. And nobody quits their garbage man. 94 % attrition rate. These guys are racking it up. And guess what? They pass through fuel prices and they have 5 % yearly incremental kickers on their rates that they're charging customers. So we're talking 100 % inflation proof, absolute cash cow and a leader in their industry. Yeah. And I'm just going to say this. Leave a tip when you can around Christmas time for the for the people that haul away your waste, it will pay off in spades. Trust me. Should I say that on live TV? Northrop Grumman, McKesson, Republic Services, Skylar Winan. He is chief investment officer of Regan Capital.

48:09Skylar, great stuff. Good to have you on. Thank you. Thank you. Now, if only we could pay off the critters to stay out of the trash. That's it. That would be great. Coming up, the sector may be most hurt by rising borrowing costs, and it's not real estate. We will reveal where it is and where to find some opportunity next. Welcome back. We mentioned the Nasdaq up nicely today. The chips are a big part of that. One of today's biggest rebounding sectors. Intel up 9 percent, Arm 7, Marvell, call it 4, AMD up about 6 percent, and the SMH broadly up 2 percent or so. And that, again, is helping to boost the performance of equities after a down session behind the rate hikes.

48:47Yeah, good day for big tech and many of the semiconductors. Well, apparently higher interest rates equal lower stock prices, at least for some big banks. Goldman Sachs and Bank of America shares, both down about 5 % to 7 % this week. Morgan Stanley, slightly less so, but down this week. The question now is, should you buy some of these stocks, which have had decent runs this year and over the last 12 months, on these dips? Joining us now, Erica Najarian, large cap bank analyst at UBS. Erica, so we got our first interest rate increase in years. Some of the stocks you cover didn't respond terribly, but not great.

49:25Where is the opportunity right now? So I think the opportunity is in the GSIBs, exactly the stocks that you put up on the screen. So why the GSIBs? So the biggest fear of the market would have been we got a rate hike, but we wouldn't get a path in terms of what was going to happen next. We got a pretty clear path, right? And so that takes off the table pretty significant bond market turbulence. And if anything was going to ruin the capital markets party, it was going to be that. And so with activity levels intact, and by the way, we did get pretty decent updates from most of the money center banks in terms of investment banking activity and trading activity in the third quarter, despite the base continuing to go up.

50:13So, you know, I don't really worry as much about deposit cost creep or getting deposit costs wrong as I do with regionals. And so I do think the opportunity here is in the money centers. Well, who is going to do it best within the money centers? I really like Morgan Stanley here. And so why I like Morgan Stanley is they're more than just capital markets activity. Clearly, they are one of the best investment banks in the world. But what is so impressive to me is to pull through when you do get the IPO activity or you get the monetization. So did you know that the workplace administrator for 10 out of the nine largest unicorns in the United States?

50:54Also, they are the workplace provider for 70 percent of the top 100 private companies by market cap. So what does that mean? You get something like the SpaceX IPO. It follows through in terms of net new asset flows in the wealth management business, which is, by the way, a 30 percent pre-tax margin business. So I think that, you know, in an environment like this, you know, I would stick to quality and I would stick to the company that can continue to generate, you know, pretty high returns and pretty high growth in this a little bit more uncertain environment. Yeah, people, Erica, got a little rattled with Bank of America's update earlier this week and then Goldman and others were able to provide some.

51:32So we don't know if it's company specific or if it's a little bit of an environment that needs a reset right now. But if the banks didn't trade well, I mean, this has been one of the strongest parts of the market recently. So it just didn't make people sit up and take note and take notice. Oh, for sure. And I honestly think that, you know, the Bank of America update, which came first, was a little bit more company specific because at the end of the day, J.P. Morgan came out with essentially up year over year in both investment banking and trading mid to high teens. You know, Citigroup said single digits, both in trading and, you know, investment banking.

52:07Goldman and Morgan don't give numeric numbers, but, you know, industry data would suggest that they tend to be outperformers in a market like this, you know, adjusting for the base somewhat. So I do think Bank of America is a little bit of an outlier. Erica Najarian of UBS. Erica, pleasure to have you on. I'm sure your time is in great demand following that rare rate hike. Erica, thank you very much. Thank you. All right, we're going to take a short break. The markets are higher today. Oil a little bit lower. Power lunch returns right after this very short break. A lot of interesting individual movers today.

52:40Let's take a look at them, starting with Generac. That stock leading the S &P, it's soaring nearly 20 percent after announcing a$2.4 billion data supply agreement with Amazon. Yesterday, Amazon also received warrants to buy up to 1.7 million shares of Generac. Incredible story there, the way they've kind of transformed. Brookfield, Wisconsin. If you're in Milwaukee and you're driving to Madison, you go about 20 miles outside of Milwaukee, look to the right. There's their headquarters. I don't think it's going to do anything to bring down the price. No, I just want to throw it in there. Every day, people, they're like going to be five to ten grand for a.

53:12Go to the Brat Stop and Mars Cheese Castle. Moderna is also among the top performers. It's still riding the high of positive results from its cancer vaccine trials that were announced back on August 19th. This stock is now up more than 400 percent this year, although way off the highs from the covid era. Now, on the other side of that, you got some of the homebuild. Why do I get the negatives? The homebuilders ticking lower this week, hurt by, I guess, rising rates, although mortgage rates probably going to stay the same because the Fed raised rates. But guess what? They take down a little. Yeah, they might have actually ticked down.

53:42And, you know, we learned yesterday with Patrick Harker was that basically the FOMC doesn't actually set interest rates. That was one of the more fascinating nuggets that he dropped while we were talking. In the commercial break, folks, I don't want to go like too in the weed. Just scroll forward. We're going to talk. Patrick was saying how it's sort of there's almost like an electoral college inside the Fed that actually sets the rates. And the FOMC actually votes for that. So remember when we cover the 2 p.m. decision to raise the federal funds rate, the actual rates that anybody pays have nothing to do with Fed funds.

54:09He said it's mostly a signal. After the meeting, the Fed board and only the board, I think that's five people, sits down and actually decides the administered rates. Things like interest on reserves, other parts of the rate corridor, the things we would actually pay. Just kind of a quirky little fact of the way that the system is. I know. I'm embarrassed to admit I didn't know this, but any day you can learn something is a good day. And hopefully this is some knowledge we're going to drop here. I was looking at the month to date performers, Kelly. Month to date, Dell up 29 percent. Intel, 23 and a half percent.

54:37Meta up 18 percent. This month you have another one, too. Right. You can add HPE in there as well. All of these companies still that are providing infrastructure to AI, incredibly strong. Meta coming out with that consumer product as well. Crypto is bouncing back today as well. Just wanted to quickly mention crypto gold. Keep an eye on the dollar complex, too. There's HPE. Look at that. That's today. It's up nearly 9 percent. Best Buy also up 19 percent this month. You go flat panel television. In a weird way that might also be because people need components. Look at all the building going on for people to run their agents.

55:11It is a boon for Best Buy. Let's end on a high note. I like that. Folks, thank you for watching Power Lunch. I've given my blood, my sweat, my tears to this island. What happened here? We came here seeking a great treasure. We've been out here for 14 years. After centuries of mystery. You have to hold the proof in your hands. The lifelong quest. Time to go get it. Whoa, what the heck? Has finally paid off. You found that in the money pit. This is what we've spent our entire lives searching for. The Curse of Oak Island New episode Tuesday at 9 Only on History Next day on the History app