Reaction to PPI Data, TeraWulf CEO Interview, Global Energy Markets 10/15/26

0:00I'm Mike McNerney, Equity Investment Strategist. Markets move fast. My mission is to provide market insights to our clients that help turn uncertainty into opportunity. Janice Henderson, investing in a brighter future together.

0:41ever.

0:48big tech in focus as the market tries to hold up welcome to power lunch everybody i am brian alongside kelly evans trouble in tech land the big semiconductor index now down for eight straight days that's its longest sell-off in a decade the korean market having its worst run in nearly 20 years many of the ai darlings they've been getting dumped by investors and the ceo of One of them, Tara Wolf, is here on set with what investors are getting wrong. And U.S. crude oil prices are higher as investors assess potential supply disruptions after those attacks on ships in the Strait of Hormuz. Energy expert Bob McNally will help us navigate that.

1:26And consumer stocks are among today's stronger performers. What's behind the rally and what it says about shoppers and the broader economy? The former CEO of Walmart U.S., Bill Simon, is here. But let's start with the AI trade, a stunning reversal for CoreWeave. The stock is now green after falling 10 percent earlier today. The corporate bond yields still higher as concerns mount over how much debt it has to fund its AI build out. The chip and memory stocks broadly are also still under pressure. Seagate, Western Digital, they're trading off along with SK Hynix and Intel. But gains outside of tech or even in areas like software are helping to lift the broader market.

2:01So is this just a blip or is it a red flag for the whole rally, really? Let's ask Steve Sosnick. He's the chief strategist at Interactive Brokers. And for the technical take, Mark Newton is here as well. He is Fundstrat's global head of technical strategy. All right. Who wants to jump? Let's talk technicals, Mark, first with you, OK, because the price action has been kind of crazy. And so divine that a little bit for us. What's going on? Look, I think it's fair to say the cross asset volatility has really started to pick up in the last month. We saw equal rated S &P down about 6 % at a time when the S &P literally just hit new all-time highs seven trading days ago.

2:37So a lot of this has already been happening while tech was rallying during September. That since has reversed, tech has pulled back very sharply in this last week. Arguably, we really have not seen that much damage in technology compared to the move that it had back in September. This whole year has been marked by rotation. We saw initially an energy rallying almost 40%. That spread to technology. Now it's spreading to health care, which just hit new all time highs. Investors need to be prepared for these shifts in sectors. Arguably, you need to be diversified. But right now, you know, in my opinion, it's right to buy the dip in technology.

3:14Steve, coming into a week ago, about 40 percent of the S &P 500 was in a technical bear market. But nobody cared because those were the companies that are not running the show. The problem now and what worries me a little bit, why I tweeted out last night, the market feels a little bit fragile. is that the companies that are being sold the last couple of days are the ones that are running the show. They are AI, AI-related, and semiconductors. They're holding up right now. How important is this time, these next few days, for the market? Well, I don't disagree with you, Brian. I think the problem here is it's not a problem.

3:49It's worked really well, but we are all heavily invested in AI, whether we want to be or not. If you're taking your 401k and a certain amount of it goes into an S &P 500 index fund, you're 45 % invested or more in technology, whether you like it or not. Or if you intend to do it or not. That's my point. Exactly. Even people that may be like, I'm not worried about it because I'm not invested in AI. Yes, you are. Folks, you are probably invested in AI even if you don't think or know that you are invested in AI. And there's hundreds or thousands of ETFs devoted to this. And my worry is that if these stocks get sold, they have been, ETFs get sold, index funds then get sold, and you get this sort of rolling stone down the hill momentum trade on the downside.

4:39That can happen. As of now, we've seen a lot of rotation going back and forth, to Mark's point, with different sectors. I almost call it like the whale watching boat thing. We all run to one side of the boat. You know, the whale's there. It swims around. We all run to the other side of the boat to see something else. The problem is if we have a sustained decline in technology, if people really start to question the ROI on AI investment, which has allowed the stock market to rally despite bond yields going up, because if you think the ROI is infinite, what do you care if you borrow at 9 % or 20 %?

5:12I don't care. I'm making 60%. What's the difference? If that starts to become a real concern, and that's what CoreWeave is telling us, that's where the fragility comes in. So, look, I think it's important to say that technical trends remain in fantastic shape. We have not broken near-term uptrends from July, nor the longer-term trends. You know, we're all hoping for a 10 % to 15 % pullback into midterms to buy into, right? Well, S &P is down precisely 1.1 % off its all-time highs. We literally just made new all-time highs last week. And, yes, that is thanks to technology. It's had such a great run in the last month that this, you know, two or three day pullback feels a lot worse than really it is.

5:51So I don't think we have a whole lot to be concerned about. Equal weighted S &P bottom the beginning of October. We look at things like RSP or the SPW. It's at the highest level since mid-September. Health care is at new all time highs. That says something that the broader market has stopped going down. Breadth is actually starting to improve. So even if we have this minor blip in technology, Look, the profit picture isn't going away for any of these companies. Profit growth is going to be the best in 30 years. GDP estimates are raised to 2.2 percent. In my view, economy is clicking. Profits are in good shape.

6:23Technical trends are in good shape. And now we have fear ahead of the midterm election. Well, guess what? That's going to be a time to buy dips, just like it is almost every midterm election. Where do you see the best buying opportunities right now? I still like health care in the near term better than technology, given its recent breakout. But I would look to buy dips in majority of technology, except that you have to with a caveat. We need to see signs of memory and semiconductors start to stabilize. Right now, Mag7 just hit new all time highs. Software is actually a very good buy. For those who like to buy dips, look at things like Salesforce.com, CRM.

6:56It's hitting the highest level in a few weeks. It's still well down off all time highs, but starting to definitely make progress off those lows. You know, in terms of where I'm looking at, where I'm looking now is I'm still trying to deal with the bond picture here. And so that to me is the biggest issue. And ultimately, I think you need a healthy bond market to keep stocks going. I'm still looking at, to me, some of the out of favor stuff that like industrials and things like that are looking reasonably attractive just because they're out of favor. Well, that's a great segue to do the bond report.

7:26So we're going to do the bond report because we want to and we have to. And then we're going to come back. So investors, Let's talk about bonds. Ten-year yield, by the way, is at 5.09%. If you're looking for some kind of silver lining in what has been happening just the last couple of days, to Mark's point, it's that yields have come down as people have started to buy bonds. They've sold stocks. They put money in bonds. We're at 5.09%. 5.9%. Steve would be a very different story. I don't want to, like, will that into existence. So going back to this, how much of the last few days, and don't worry, Mark, we're not making too much the last few days, but how much of what has occurred, if any, Steve, is related to interest rates, borrowing costs and bond yields or maybe just buyer exhaustion.

8:14They made a lot of money. They're looking to make money somewhere else. Some and some. I mean, if you look, for example, the Russell 2000, one of the graphics showed it was up about a percent today. It's gotten hit because a lot of these stocks are not profitable and they need to be able to go out and borrow money. And if people are not lending money to lesser credits, then the Russell 2000 components are in some real trouble. On the flip side, but I think it's fascinating today. If I told you coming in this morning, Brian, that the PPI numbers would absolutely stink, right? Would you expect a 10 basis point rally in bonds?

8:51Of course not. So what this is telling us is it's something else. It's a combination of an oversold bond market and a flight to safety coming in here. The question is, if we do see continued money flowing into treasuries, is that because of the flight to safety, because it's flowing out of somewhere else, which is problematic for risk assets? Or is it just sort of, OK, we went a little bit too far. Bonds do that. We're going to bounce back a little bit. That's a relatively benign trade. It's so tempting for me to feel like it's over, right? Like the highs are in. That was a crazy stretch. But like maybe things can calm down now.

9:26Mark, what do you think when you look at it? I don't think Treasury yields have officially peaked for the year. I see one more push up into November. I don't want to hear that. No, no, no. One cannot disagree that the trends are still quite positive. The bond market today took its cues from what's happened in Japan, honestly, in Europe. I mean, bond yields had already started to pull back. So today's economic data being hotter than expected, you know, would not have caused yields to necessarily go higher. Why? Well, the U.S. bond market typically will, it has in the past, has been following the trends being seen in Europe, given some of the unrest and French bonds obviously selling off.

10:00And so our own treasuries have started to accelerate to the downside a little bit quicker. Yes, growth has been raised. So 2.2 percent, the term premium has largely been taken out, I think, of some of the bond market. That's a good thing. So rates going up because of growth is good. We know that the inflation data largely outside of energy has been gradually ticking down. The majority of those components, you look over the last 12 months, are all below baseline. So everybody's saying inflation is back. Well, my thinking is it's a supply shock only. But I agree with you. That's why. We start getting crude to pull back, and I think that will happen in the weeks to come.

10:32We're going to see a lot of relief to CPI. But that's why I'm wondering if bond yields can actually go back down to what we saw earlier this year was when we were sub 4%. Now, a lot would have to go right, unfortunately, with the Middle East situation. But you still think we could have new highs before that? I think we can have temporary new highs. We're not that far off into all-time highs. So I think there will be temporary into November. Remember, a lot of my work says that cycles should start to turn down for bond yields. One thing to keep in mind about energy, and I looked at this earlier today, is we focus on the front end of the futures curve.

11:03We always look at whatever the front end future is. I've been looking at the level of backwardation, the amount, the way the futures curve is shaped. And interestingly, at the front end of the curve, let's say versus a month ago, front end futures are down$4. Looking out a year or so, they're up$8. So the crude futures are telling us the supply situation is not getting better anytime soon. And I know, Brian, you've had statistics about how expensive it is to move tankers through. And so my newsletter, which is coming out later today, the lead article is about oil is not$95 a barrel. It's$135 or$125 a barrel.

11:42The futures price that we show on the screen has no basis in the actual physical commodity. That's nobody's fault. That's a paper trade. That number right there, the reality is if you have to ship oil anywhere, you're paying a lot more than that. We had a ship sunk yesterday morning. And we got more with Bob McNally coming up in a few minutes on energy specifically. The airport in Riyadh's hit. I just don't know if we're going to see that pullback. I hope we do. I hope we get peace, Mark. But I wonder how much of this market, when we're seeing semiconductors sell off, the KOSPI had the biggest seven-day down move in 20 years.

12:19And I know it's at super high highs. But when I hear the worst in 20 years, Mark, that definitely gets my sizable ears hooked up. So I've got a couple of comments, Brian. So look, we've had a continued difficulty at the endgame for ceasefire negotiations, given some of the Houthis' actions. We still see crude down over 10 percent in the last month and a half. The second is that the U.S. has continued to raise their production. We're up to over 14 million barrels a day. I think that does go to show that the U.S. oil infrastructure is in very good shape. And regardless of all the ongoing difficulty, you know, crude is not moving up materially, back up above 100 in my view.

12:57So I think we're very, very close to a time when it should start to turn lower. Well, wouldn't that be nice? Yes. Guys, thank you. Really appreciate it today. Mark Newton and Steve Sosnick, we appreciate it. And we want to hear from you in today's Power Poll. We asked whether you're buying the AI dip. You can scan that QR code on your screen or head to our X page. We'll reveal the results later in the show. I'll just put it this way. It's neck and neck right now. I think it's legitimately neck and neck. Literally tied. Literally 50-50. Yeah. The two votes that have come in, one from Kelly, one from Brian.

13:28I'm joking. Go vote now. All right. We've got a lot more to do in this show coming up. Many of the AI power companies have been hammered in the market lately. The CEO, though, of Terawolf says investors are getting it wrong. Paul Prager is here on set to tell you what you're not getting right about this AI story. Stick around.

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15:21All right. Stocks of the AI power companies, they've been sold off hard lately. Look at these one-month moves. Cypher Digital down 35 percent. Riot 25 percent. Terawolf down just under 20 percent. Hut 8 down about the same. Now, of course, this after investors have made a lot of money in these companies over the last year or two. So what changed? Is it interest rates? Is it investors looking somewhere else? Or maybe is it public pushback on data centers? Or maybe it's D, all the above. Joining us now for a Power Lunch exclusive is the CEO of Terawolf, Paul Prager. And Paul, we're glad you're here.

15:54Listen, obviously what's happened the last few days, you've met with investors, I think, this morning or yesterday, correct? Okay. So tell us, and we appreciate you coming in here. I know you're busy. What happened? What's going on right now? And what are investors potentially getting wrong by selling your stock? Well, I think investors need to differentiate. They need to understand the difference between companies like CoreWeave, Neoclouds, versus companies like ours. We're a co-location company, which means we own the land, we own the energy, we build the building, and we operate the data center.

16:33So we have long-term predictable cash flow, and we get quality energy from an investment-grade credit like a utility, Kentucky Power, AP, and we sell it to a high-quality credit. In this case, our customer, Elite Mariner, effectively is Anthropic. in the announced deal Hawesville Anthropic. But what the investors also need to understand is that we have an investment grade backstop. In Lake Mariner, it's from Google. In Kentucky, in Hawesville, we have an investment grade backstop commitment. So we can raise the capital at very competitive rates. I think the other thing that the investors need to understand is we're not all the same.

17:18You have to focus on execution. You must focus on execution. We have guided the markets that we're building at our facilities at 8 to 10 per megawatt, 8 to 10 million a megawatt. We are squarely right in that range. We haven't changed our story, and we're delivering Data Hall 4 at the fourth quarter and CB5 in the first quarter of next year. So we're on schedule. We are on track to deliver within a timely fashion. We are delivering at the cost that we told the customer we would deliver at. And we have the capital. We have a fortress balance sheet. We have an investment-grade backstop for debt.

18:01So I think we're in great shape. Let me ask you some of the concerns or the connections people are drawing. Maybe you can dispel some of the – so some have said that companies like yours could be affected by the neoclouds because in some cases neoclouds might be tenants of yours. And so you're saying maybe for your company that's just not the case. We don't have Neoclouts as tenants. We are focused on investment-grade credit. But others do. Would you acknowledge that other players in the space might? But I think that's an important point of differentiation. You need to have access to capital. So one of the things I learned early on is raise capital when you can, not when you need to.

18:36We raised equity capital last spring. We did it at advantageous terms. We have a fortress balance sheet. Now, if we need to go out and get debt, we have an investment-grade credit backstop. I mean, it's Google, OK, in Lake Mariner. It doesn't get better than that. So we don't have the the risk associated that maybe somebody who's, you know, who has a neocloud as a customer. It's a very different business model. Well, it's kind of like, you know, and again, you're not a Corwee person. I get it. But when Corwee bonds yesterday hit whatever, 17 percent interest, the stock fell. Well, people panicked.

19:14They sort of sell everything and then they kind of reevaluate later. What it sounds like you're saying, Paul, is don't lump everything in AI into the same basket. That TerraWolf operates more like, in some ways, a utility than it does one of these neocloud AI providers. Brian, we don't bet on technology. We don't bet on the value of TPUs, GPUs in the coming years. We have long-term 20-year deals with predictable revenue streams where on both sides of it, we have investment-grade credit. You make energy. We deliver energy to a site, to a building on a site where we operate the facility for our customer.

19:59We are a landlord of powered real estate. My last question would be, and this is just based on your knowledge of the industry. So now the concern you could say about the neoclouds, you spoke with an analyst last hour, and he said he doesn't see how they can compete against the hyperscalers, the Googles and like that that you mentioned. Whereas we've seen a different take from Brad Gerson, which might be why the shares are green today, where he said he thinks they're going to turn themselves into a hyperscaler. Do you think the neoclouds can become hyperscalers or are they going to become obsolete by the hyperscalers?

20:31It's not my business, but my view is that a couple of the neoclouds will win. and I think the rest probably will not. It's a very expensive and risky business to be in. It is a business we deliberately avoided. Why? Because we like to sleep at night. But why is it expensive and risky? Because they're making a bet on a technology and they're making a bet on the value of that technology at some later date. And they cost tremendous amounts of money to buy this machinery, these TPUs and TPUs. We simply sell to a customer of investment grade quality our powered real estate, and then we operate it for them.

21:13It's very predictable. One of our favorite guests is Stephen Byrd, analyst at Morgan Stanley. Stephen, very smart guy, puts out these huge research reports. Stephen, as I've said, they're too long. TLDR. Steve's wildly bullish on your company. I think his price target is, what, 65? Stock's 11 and almost just under 12 bucks a share. What were the questions that you were getting from the Morgan Stanley client base yesterday? It was like the main thing, or was it this morning, that people are asking you? It was all day yesterday and last night. We got questions about differentiation. I think we were very comfortable that the institutional investors understand that.

21:50I think their question was, what happens in a higher interest rate environment? Can you go raise debt? And my response to that is, my job is to protect the economics for a shareholder. So from a debt perspective, we think we're in great shape because we negotiated for that investment grade credit backstop in a world where the cost of equity goes up. We believe it's our tenant, our customers responsibility then to step up to the plate. They need compute time. They need that energy and they should share in the cost. So if the costs are increasing, at least in the leases that we structure, we pass that on to our customer.

22:32Paul Prager, CEO of Terrowolf. Paul, we appreciate this. You're a former naval officer. You're not afraid. You came right in here. Stocks could hit. We appreciate you schlepping out to New Jersey and coming out and talking about the industry because everybody has been dumping everything sort of en masse today. A bit of a different story. Paul, we really appreciate you coming on. The market price will catch up to the value we're bringing the shareholders. I'm confident of it. Thank you. Coming up with the tech trade taking a turn lower, the blue chip retailers are stepping up. Could it be more than just a one-day bid?

23:03We'll have more on that next.

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24:44There's a bit of a consumer conundrum. Some key economic data this week showing inflation running hot. Wholesale prices up 6.3 % in September. That is the biggest jump since 2022. But there's also signs consumers are still spending. XRT retail ETF having its best day since last November. Etsy and eBay hitting 52-week highs. Macy's, Best Buy, Walmart climbing. Kimberly Clark up big. So what's driving the consumer resilience? Let's bring in Bill Simon. He's the former Walmart U.S. president and CEO. Bill, first of all, welcome. Hey, how are you? Glad to be here. We appreciate your perspective. And if you had to just describe what's going on with consumers right now, what would you say?

25:27The consumers are incredibly resilient and they have been for quite some time. I think a lot of that is in the basis of the economy. Right. We we still have near full employment. Everybody who wants a job has one. We have wage rates that are historically high, haven't been growing as much as they did during the peak inflationary periods a couple of years ago, but still substantially high. So the consumer is generally spending because they have a job and they have cash. There are negative inputs as well. Those fuel prices that sit there on every corner,$4,$5,$7 in California is a big flashing kind of caution light.

26:09I also think, you know, anytime we get into a heated political discourse like we have today, that slows the consumer down for a period. But generally, by and large, you know, we're a consumer consumption driven economy. And if the consumer is spending, it's going to be difficult for us to slip into, you know, into a recession or a decline. This personal hypothesis testing time. OK, I'm just looking at the data. OK, and we had a beige book yesterday. Brian, you weren't here for that. It was actually kind of interestingly bad. had it talked about how in the beige book was actually interesting for once it was it's not named a beige book for no reason it was kind of it's beige it was flashing a little bit of red really yes 25 years the beige book has never done anything it's starting day i'm not here it does something that's amazing so bill it was basically hinting that that companies are not able to pass along the price hikes to the extent that they did back in 2020 21 but this is not covid we don't have $5 trillion of government spending and$5 trillion of Fed monetization.

27:07They're starting, the 6.3%, I wonder if they're going to have more trouble passing it along, if that's going to hurt profit margins. You know, it likely could. I think they also have pressure. There's a lot of activity, class action suits against most of the big retailers and some of the manufacturers around these tariff rebates. Walmart got nearly$3 billion. Target got a billion. Nike got a billion. I mean, those rebates, those prices were passed through to the consumer and blamed on the tariffs. Now that the tariffs have been rebated to the companies, there's a pressure for them to push those through too.

27:45So I think we're going to see some of that happen during the Christmas selling season. They have to. Otherwise, I think they're going to lose some of these class action suits. Wait, say that again. What do they have to do at Christmas time? Yeah. You know, Walmart said that they were going to pass back some of the tariff rebate. They got nearly three billion dollars back from from the government for tariffs that were paid, by the way. And the pricing was passed through. And now there's pressure in the form of lawsuits to try to get them to return the money to the consumer, either directly or through price reductions.

28:19And Walmart said that they're going to give the money back through price reductions. and so have several of the other retailers. I think that's going to start happening during the Christmas season when it will have a bigger impact. That's a great point. Bill, thank you. As always, pleasure to have you on today. You bet. Former Walmart U.S. CEO Bill Simon. All right. Technology, of course, a big story the last couple of days, but do not lose sight of some of the action and more trouble in the Middle East and also Russia. We'll talk about exactly what has happened over the last five days and what may be to come with Bob McNally of Rapid App next.

28:56All right, if you haven't followed the last five or so days around energy, you should be. But here's a recap. The Riyadh Saudi Arabia airport was attacked Thursday, then again on Saturday, and then on Sunday. It is still largely not operational. Saudi Aramco's headquarters was also attacked by Houthi terrorists, causing damage and a fire at the civilian facility. Outside of that, despite a proclaimed energy ceasefire, the fighting between Ukraine and Russia continues. And then there was this. About 24 hours ago, a cargo ship called the GFS Pride was hit by some kind of weapon, a projectile. It caught on fire and it sunk in the Strait of Hormuz.

29:33Thankfully, the crew was OK and they were rescued. And even though this cargo ship was not a crude oil tanker, the message should be clear. The area remains incredibly dangerous. In fact, I had a conversation with a marine insurance executive just last night. And I can report that while insurance does exist, you can get it. The costs are going up, up, up every day. And in some cases, ship cargos are now being insured at prices exponentially higher than even just a couple of months ago or at the same price as the total value of the cargo. Let's talk about all this with Bob McNally of Rapid End Group.

30:11We just got back from a major energy conference in Riyadh that did go on, even with the terror attacks on civilian targets. Bob, we're glad that you and your friends there are safe. I know you were posting on X that the conference did go on successfully, which was great news. But this doesn't feel like a decline in political violence. It feels like an increase, whether or not it's the Houthis or Iran. How do you see it? Right, Brian. Great to be with you. Look, we have three now conflicts that are directly impacting flows of energy, but also fixed energy infrastructure. The Saudis and the Houthis, Iranians, the U.S., and the Russians and the Ukrainians.

30:53And unfortunately, none of them seem to be getting better. Each of them has a escalatory dynamic underway. And again, I feel like we've been talking about this for months. My sense is the market, while not optimistic, the market is not pessimistic, but they're less optimistic, I would say. The market, though, still, I think, wants to believe, especially that crude, that Brent market, that President Trump's going to sign some sort of taco deal, and this is all going to end, and we'll be back to normal and looking at surpluses next year. Not what I see, but I think that's still out there. But there's three fronts now, right?

31:29So, and I think this is critical to understand, because I understand that it's confusing, it's global. Nobody understands it as well as you do. You were literally just there. I was actually scheduled to be there, but the trip was canceled. You've got the Iran front, Strait of Hormuz. You've got Russia, Ukraine, Black Sea. I mean, a ship, a crude oil tanker was blown up a week ago in the Black Sea. And you've got now the Houthis, which are, while funded by Iran, are separate and distinct from Iran. They're the ones launching missiles at civilian targets in Saudi Arabia. So it's not two fronts, Iran and Russia.

32:06It's three fronts now. And I think there's an exhaustion in the energy markets where everywhere you look, these are these are desperate. The Iranian economy is imploding. The real is collapsing. But that desperation, I think, makes the whole region maybe more dangerous. It does. But, you know, Brian, I'll be uncharacteristically optimistic. And I saw it firsthand. You know, the Saudis are keeping calm and carrying on. Right. They are repairing. They repaired that east west pipeline. The minister announced a new idea to repurpose a natural gas pipeline to take crude oil to the Red Sea. So the oil system has been under attack since 2019.

32:45So I have to say I was impressed. And maybe that's a little bit why the market's confident, because they're seeing ship owners pay those prices, you were mentioning, and flowing out even though they're being attacked. So I have to say there is this resilience, this determination to harden up and keep going on. Now, the risk is, is that as the violence escalates, that overcomes even the stalwart efforts by the Saudis and others to to cope with these disruptions. Bob, we're looking at the price of crude WTI there at 98, but there's so many dimensions to this. There's the diesel price. There's the Brent price.

33:22There's the heating oil price. There's, you know, and I think we're wondering if we're just dependent on, you know, a better turn of events in the Middle East. The escalation from what we read seems to now be as bad or worse as it was in March. So I guess we could say at least prices aren't back at 120 or 140 a barrel. You're right, Kelly. You know, looking in hindsight now, in March, we didn't all see the Chinese crash diet when they dropped their imports of crude by four and a half to five million barrels a day. Suddenly, I didn't expect. We saw the Iran crisis, the Hormuz crisis coming last year.

33:56Didn't expect that. But China is now back to buying. Back then, we had SPR releases that were fresh and new. Now they're trying to kick out the last barrels that the Europeans are slow walking, but that's pretty much done. And meanwhile, the refining sector has tightened up cracks, diesel crack, still above$100 a barrel. So we're back to where we started and without the buffers and some of those offsets and easing factors that we relied on. The thing that remains the same, though, is I think the market just doesn't want to believe that this isn't going to end soon. You know, and we got to go very quickly.

34:27I literally was in conversation with a marine insurance executive last night. You heard the intro, Bob. The cost of insurance in some cases are like the same cost as the cargo. It's unheard of what's happening. I mean, I could make it I could make the case that a barrel of oil in certain markets going to other certain markets is two hundred dollars a barrel. Is that is that crazy? The actual all in landed delivered cost of a physical barrel of oil. No, absolutely not. Much more expensive in the physical markets. Look, they don't call it black gold for nothing. It is nothing less than the lifeblood of modern civilization.

35:02And the artery is being crimped. So, of course, it's going to cost a fortune. It should. Bob McDally, really appreciate it and glad you guys had ultimately a successful conference. Bob McDally, thank you very much. Thank you. All right. Let's get now with Frank Collin with a CNBC news update. Good afternoon, Brian. The FBI employees fired for their roles in the probe into President Trump allegedly keeping classified documents at his Florida estate are suing to get their jobs back. They said in a federal lawsuit today that their firings were unlawful acts of political retribution. In previous congressional testimony, FBI Director Cash Patel said the FBI workers had weaponized the FBI.

35:38Federal authorities are investigating suspicious letters that have been mailed to congressional and election officials across the country. The FBI says some of those letters contained an unknown substance, while the Postal Service says it intercepted some of those The investigation comes three weeks before Election Day. And the Department of Justice sued California today to block the state from counting mail-in ballots from some 20 ,000 people it claims are likely non-citizens. The DOJ says their vote shouldn't be counted until their immigration status is verified. It comes after the department earlier this week gave the state 48 hours to review its list of potentially ineligible voters it says have received ballots.

36:15Kelly, back over to you. All right, Frank, thank you. Frank Holland, should you be getting defensive? to play offense in this market. Our next guest has some healthcare names that he says still have good value with the sector at all-time highs today. We'll talk about that next.

36:32All right, the slick graphic calls a market navigator, so let's navigate these markets. And your next guest says it could be a good time to maybe rotate out of technology and rotate into a more defensive sector, including healthcare. And that guest, he's got a couple of names, including one that hit an all-time high today. That guest also has a name, Todd Gordon, the founder of Inside Edge Capital. There he is. Okay, we don't talk about Halozyme Therapeutics ever. In fact, I don't think we've ever talked about Halozyme Therapeutics. Somebody's talking about it. New high today. What's the company?

37:08What's the trade? Could we first start, Brian, just talking about health care, if you don't mind? Would you believe that healthcare is number three on the year, year to date? So, of course, energy, technology, now healthcare sneaking up. So, it's not so much about defense, but these companies are making money like Halo. So, it broke out to new highs, clearing resistance, it's above moving averages. This company, they literally take IV drugs and they turn them into quick shots under your skin and they get a royalty every time a partner sells one. They've been growing sales like 20 to 60 percent since 2019.

37:45They're making money. They made about$4 a share the last two years. This year, in 2026, you're expected to go to$884 and then up to about$11. So they're beating estimates. They raised full-year guidance. They bought about$330 million back in stock. They just won an injunction against Merck. I like it. It's not just a value play. It's a growth story as well. Well, and with a name like this, and I'm not saying this about HaloZime, but with a company like this that maybe has some intellectual property protection, there's always also the, quote, call option of a potential buyout, right? If companies get sick of paying them, they might just buy the company.

38:23Gardent Health, another name, again, small mid-cap. We don't talk about it a lot, but you like it, Todd. How come? I do. You know, and back to that point, Brian, Halo is trading only 14 times earnings. So, I mean, it's a very, very good valuation as well. Garden is a little bit more of a cancer drug. It's sort of a blood play. It's been quiet right now. I'd wait for that. Another one, a big one that I like is Lilly in here with the new oral GLP-1 pill. You can take it any time compared to Novo where you have to take it in the morning at a particular time. Healthcare in general is looking good.

39:00I would say Lilly's a little bit more actionable. Halo, buying a pullback, and then let's wait for Garden to wake up if you want to add to that name. Halo Zion Therapeutics, Garden Health, and Todd Gordon. It's quite the combination. Todd, appreciate it. Thank you very much. All right, coming up, is Corwee and its bonds and its stocks, that stock's down another 5 % today, is it a canary in the AI coal mine? You have not heard from Herb Greenberg in a while, but you will because we are welcoming back our friend Herb Greenberg to power lunch next after this.

39:41All right, we are still watching CoreWeave. CoreWeave stock actually is up. I think we showed it down going into the commercial break. No, it's up now. But it's up now. Okay, well, it didn't happen in two minutes. Maybe that was either way. Last hour. Thank you. CoreWeave may be the biggest story on Wall Street right now. And somebody who's been following the company and the AI debt story for a long time is Herb Greenberg. Last year, Herb Greenberg wrote this on his subset. Quote, last week's news that CoreWeave has launched the CoreWeave Ventures Group is actually a big deal. This has nothing to do with whether CoreWeave will be a winner or a loser.

40:13It has everything to do with WTF, as in WTF is CoreWeave doing. I'm keeping it family friendly. Joining us now to discuss the piece is the guy who wrote it. That is our good friend, Herb Greenberg, editor of Herb on the Street. God, it's good to see you, Herb. And I want to be clear, fair disclosure, you are not a Corweave analyst. This is not about the company itself. But when I see debt at 17 percent and a stock of this size down 15 percent, I think, what's going on? Well, what's going on, which everybody has been talking about, is that Corweave is essentially the one to watch. You know, Corweave was controversial long before it ever went public, Came public, controversial sense, as my friend Michael Lewitt, who writes The Credit Strategist, points out.

41:01He says, you know, this thing, remember, it came out with a 50-page risk factor section. You know, Corwee's sort of positioning itself as a new wave tech company. But what I was pointing out back then with that Corwee Ventures, which I said, you know, isn't quite the canary in the coal mine, but it's worth watching, is as much as I think everybody's sick of comparing what's going on with AI and the AI bubble to what happened in telecom, when companies start rolling out venture capital arms, when they're not making any money, they have no free cash flow, they're loaded up to their eyeballs in debt.

41:37Well, that harkens back to what happened back in the telecom boom. Because as we know, I always like to say, Every generation throws a hero to the pop charts. Is he Paul Simon? Is he Paul Simon? Right? By the way, I love the boy in the bubble. It's just a legendary song. We had the CEO of Terrowolf on a couple minutes ago, Paul Prager. Not sure if you heard that. But he basically said he wasn't slamming any specific companies. But he did say, I think, Kelly, right, that he said not everybody's going to survive. Oh, for sure. Right? So we're not talking about, I want to be clear, we're not talking about Corweave.

42:11I want to make that extremely clear. But would you agree in general that in the AI boom and AI companies that used to make certain things are now switching over to everything's Herb Greenberg AI? Not everybody's going to make it. Of course not everybody's going to make it. And we see, I mean, even Gardner's out with this report the other day saying, you know, 60 percent of the neoclouds are going to disappear or won't be around by 2030. And that's the issue because you have so much debt, so much tied to it. And you say it's, you know, I compare it to Jenga, right, or something, anything like that.

42:43Everything is priced for the ultimate of perfection. There cannot be anything untoward. I sometimes say this is like the giant civil war. You have the civil war of Wall Street. You have the civil war in AI. When do you see that? Where so many people who know the nuances even disagree on what's going to happen, how it's going to happen. And I think we all agree, AI here, I use it, you use it. It's part of what we do now. But putting the cart before the horse, we're watching data centers being deferred, canceled, et cetera. You have to say, wait a second, all that debt, I wrote it a few weeks ago.

43:25I said, you know, something's got to give. It's just part of what is going on. And Brian and Kelly, what we have with all these companies, and if you have the civil words, them against us, right? So there's a smaller group and there's all of us. It's the ultimate in just trust us. Just trust us. That's what we're being told. Just trust us with the debt. It's going to work out. Just trust us. It's a very dangerous set of phrase out there. To leave this on kind of a very actionable note, do you have an opinion about areas in tech that you think, yeah, that's fine, that's not a worry spot? And then do you have areas of the AI trade that we're kind of talking about where you think, even if you hear people saying it's a buying opportunity, like, no way, Jose?

44:17No, I don't have any opinions either way on any of that. I'm sorry not to give you something actionable to end this on. And I just know that I fly red flags. You've got to be cognizant of the risks out there. You always do. And there's never been a time right now more important knowing that the one question we all say is, will everybody be buying on the dip the next thing this goes down and will it keep going down? I don't know. Neither does anybody else. But I think that's what you have to be cognizant of here. This is a lot of risk right now in this quote-unquote trade. We're seeing it. And we're seeing how jittery people are.

44:53Anytime anything hiccups. Imagine if it's more than a hiccup. Would you say it's staccato signals and constant information? Maybe a loose affiliation of millionaires and billionaires and babies? So great, Brian. Yes, yes. You took the words right out of my mouth, even though I wasn't going to say them. That's why we need the music back. Herb, thank you. Herb Greenberg, editor of Herb on the Street. Musical aficionado. More Power Lunch after the short break. Let's reveal the results of our power poll, which did shift as more of you weighed in. 59 % say they're buying the AI dip. 41 % Brian say, kind of like Herb, I think, was casting his phone in this direction, saying no way.

45:32Markets go up. More buyers or more buying pressure than sellers. There you go. All right. Muse may be number one in the App Store, but JPMorgan Chase not quite sold. The company blocking AI assistants like Meta's Muse from accessing JPMorgan's customer accounts. It seems like a good idea. Don't let it access people's accounts. But what do you think? Not just that. They're also debuting their own tools that they say will help people maximize what they're earning on deposits because it goes back to this concern if your agent says, oh, yeah, just go earn 5 % elsewhere. And you just sell without even knowing it.

46:05That's it for Power Lunch. Thanks for watching. Closing bell starts right now.

46:17about coordinating another meeting to prepare for the pre-meeting ahead of the follow-up meeting, which will, of course, require a recap meeting. And then another meeting. Hit your booking point, book with Southwest, and enter airplane mode.