S&P Hits New Record, Doing Business with Bots, Global Market Opportunities 10/6/26

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1:05More records for your money as big tech takes part of the markets to new highs. Speaking of highs, hi, everybody. And welcome to Power Lunch. The chips are up as some big names keep making investors, hopefully like you, a lot of money and you're in luck because the CEO of the firm behind the largest semiconductor ETF, he's here. Plus, Constellation Energy getting a nuclear size jolt of double digits on a new deal with Google leading the S &P. Other names in the sector are charging higher as well. So could nuclear be the answer to AI's power shortage problems? And it's Amazon Prime Day, another one.

1:40But as AI agents begin shopping for us, what happens to retail? And can these companies afford to keep the bots out? That's all ahead. Did I notice just a touch of cynicism or sarcasm? Is it like Prime Day or is it like Big Deals Day? I think it's Prime Big Deals Day. Either way, what'd you get me? It's in July and it's in October. Christmas and then again after. Anyway, we are at record highs for the S &P 500 and the NASDAQ. And a big reason for that is the AI trade reigniting in the last month. Just take a look at these semiconductor stocks over the last 30 days. AMD, Marvell, Synopsys, Cadence Design Systems, Teradyne.

2:21they're all up at least 20 % or more in about 20 trading days. Another way of looking at just how much AI has boosted this market, the S &P 500 is outperforming Goldman Sachs' S &P X AI stock index by 5%. So Goldman has a stock index that like strips out AI. So it's like the S &P minus AI. and if you're on TV, you can see the divergence here on the radio, you're out of luck, but it shows a blue line going up and an orange line going down, and the orange is XAI. Let's talk about all of this and more. Joining us on set is the aforementioned CEO of VanEck Funds. That is Jan VanEck, and we can talk about semiconductors and, by the way, energy, which we will get to in a moment, but let's talk about semiconductors, Marvell, and more.

3:14Or I've got to imagine the inflows to your SMH, they're high again. Yeah, they're good. They're consistently good. Not great. Not great. Great. Because there's still so much fear in the trade. It's almost ironic, right? It's been the big mega trend over the last several years. AI is very simple. Demand far outstripped supply. The chips are the big beneficiaries. And people are still, I think the market's still very worried about oversupply and, you know, all the worries that are in the market. But look, I think this has been how long you think that can go on. I mean, because at some point, do you believe supply and demand will ultimately balance out?

3:54Yes. And everyone is looking for the deceleration point. And, you know, I look at the quarterly earnings. That's my kind of reconfirmation, re-underwriting of the trade. So I pay a lot of attention to the hyperscalers and they keep reporting great, like 20 percent year over year profit growth. even though they're multi-trillion dollar companies. So I'm really good. I mean, this year has been what I call the AI 1.0 trade, which was chips and semiconductors. The AI 2.0 trade, which is the supporting ecosystem, independent power producers, right? The nuclear energy trade that you talked about. That's really been suffering, partly because of political concerns relating to data centers.

4:36I actually think today's a great day. Maybe we've seen the bottom here. with the Constellation deal. Wait, say that again. For the AI 2.0 trade, it's been challenged this year, right? Because concern about political concerns about data center growth. So NLR, nuclear ETF is off. Vistra is off. Like you look at all those supporting businesses. I think maybe the fears have been fully baked into the market. And, you know, we'll see. I'm not predicting exactly the day. But look at the bounce today, I think. And we just need one nuclear power plant to be permissioned. I think the prediction markets say it's less than a 10 percent shot that it happens this year.

5:17But I think when that happens, this dry spell for the AI to the trade will be over. Chris Verone of Strategas was here yesterday and said almost the exact same thing, that to him there was a little bit perhaps of political overlay to how poorly the AI infrastructure, the GEVs and all have been trading the past three months. Yeah. And he said either maybe the blue wave is just priced in. But that now, ironically, as Ryan Dietrich reminded us last hour, October is often the best month in a midterm year. Because things get priced in. And I wonder if we're seeing a little bit of that now. Yeah. Yeah.

5:50Well, we could talk about energy and October surprises and stuff like that. But I do think we've seen kind of the bottom in that AI correction. Is there an AI? You think we stick with the AI 2.0 trade for now then? When do we go to 3.0? more attractive. Look, I like both. And we've always been saying two things. You want the survivors. So SMH is just the top 25 chip companies, right? Because in five years, we want to remember the names that we're talking about in 2026. So that's number one. And then just diversify your trade. Because you do have parts of the ecosystem, like the core weaves and some of the more speculative names bouncing around.

6:29So you just want to have a broad exposure. Where and how does DRAM fit into all of this? You know, that was an even more specific angle on some of this, which had a massive upside, corrected throughout the early summer, has done okay lately. Today, some of those names are trading down some of the worst performers in the S &P on concerns about more supply coming online. But how does that fit into AI 1.0, 2.0? I mean, that would be sort of in the more risky part of the ecosystem, I would say, just because, and maybe I'm scarred from prior memory cycles. but you just don't want to have a commodity product.

7:03You need a competitive moat. Marvell has a great custom ASIC technology. Some of the memory companies, there was a big Chinese memory company that listed a couple of months ago, remember? Yeah, so I think that's the worry for the memory names. We kind of got a little bearish in Q2 on the memory names. All right, DRAM to maybe another type of commodity, that is oil and energy. You also have the OIH, oil and gas, ETF. I don't want to jinx it. It's been relatively calm for about a week, maybe a little more. A couple of random things happened. Oil prices have come down. They're not at 65, but they're under 90.

7:46The trend has been going down. Are you optimistic that the worst is behind us in oil and gas, or are you just agnostic and watching the headlines and watching what the companies in your OIH do? Yeah, I like to oversimplify, Brian. So I'm going to say Mideast is really cooling down. Maybe the word victory is inappropriate, but, you know, the volumes are back. I'm really more concerned about Ukraine, Russia. So what are the implications? So for oil services, that means we're going to be rebuilding. We're going to be building in Latin America. We're going to be building in the Middle East. Oil services companies, I think, are pretty attractive here.

8:24They didn't have a big run up. The interesting trade just to me is the refiner trade crack. Right. Because first of all, it's up like 75 percent this year because because diesel prices are so high. Refined products are so high. And the cost of energy in the U.S. at least has been disciplined. What's interesting, it's a global ETF, meaning it has names in India and Europe that where the refiners there have actually been hurt. And so I'll call it smart money investors. I'm surprised they're still putting money into that trade. Yeah, and what he's talking about, guys, and shame on me, it's CRAK is the refiner ETF.

9:03Right. Also from VanEck. I don't know. It's amazing how you just mentioned an ETF and it happens to be your company. Marathon Petroleum is the largest one in this. To your point, there are some global names. Listen, the earnings per share on these companies have gone up in some cases. This is not like a misquote or TV hyperbole, a thousand percent. They literally have jumped a thousand or more percent. Crazy. Year over year. It's crazy. And I wonder, again, kind of like our previous discussion, how sustainable. There's no way thousand percent. Right. I'm not a. Again, we've established we're not math people, but that's unsustainable math.

9:40This is not like a Yon or a VanEck type of trade, typically speaking. Right. Because we're into these big 10 year macro themes like AI, like just. overweight, semis stay there for a while. And typically, a lot of the oil trades are more cyclical, more short term. That's why I'm really intrigued. I think the market is saying that this Russia-Ukraine situation is going to be lasting a lot longer. And that feels right to me, right, with Ukraine taking out Russian refinery capacity. Yesterday, another one. Another one. Yeah. I mean, they're not stopping. Does anyone control Zelensky or Putin? But this is really important, what you're saying.

10:17I mean, if that, and this is why sometimes you can look to the market for these signals. So what are the repercussions, if that's true, the repercussions for what we're paying here, for gasoline, for diesel? They have to come up with other ways to try to keep diesel prices down. But so you think there's more to go? Yeah, the Gulf, right, the Mideast won't solve the price of refined products here in the U.S. And again, you know, globally, I think they're giving us bad political signals about Ukraine and Russia that that's that's going to be hotter for longer. And you're making, to Kelly's point, an incredibly important point, because we've got to tell the viewer again, if you're not paying attention, Russia is a gas station that has nuclear weapons.

10:52That's how people sort of only half jokingly refer to the country because it exports so many petroleum products. Good for Zelensky for going after Putin and his money. You want to stop the war machine. Right. You want to defeat Putin, defeat Russia. but they're causing massive damage to these refineries. And again, we can root for that because we're going to root for Ukraine. But at the same time, it's getting, it's heating up. It's not cooling down. They're fighting dirtier and dirtier, right? I mean, Russia is going to try to take all the civilian infrastructure. We showed yesterday, Russia hit a bridge, a civilian bridge in Kiev.

11:24Yeah. Yes, we showed that video. And other civilian targets. Yes. That's what Zelensky's talking about. No, I think it's very, very different situations. And that's purely to the diesel and refining story. I'm interested that what I consider smart money even recently has been putting money into that refiner trade. Right. Right. That's just what the market and the market. The stock market prices are telling you that. Right. With other energy parts of the sector, you know, you know, correcting, if you will, those refiners have been rock solid. This is something to look at. I'm not saying it's a trade per se, but it's a it's a reflection of the market right now.

11:59It's a great, great thing to shout out. Jan, thanks as always. Great to be here. Jan Van Eck of Van Eck. All right. Well, another big market story that you need to hear about that we didn't have time to get to is what's happening in Europe around debt as new warning signs flash on debt and the bond markets. Don't believe us? Look at this. The yield on France's 10 year government bond is now 4.75 percent. Now, that may be lower than what we've got here in the United States, but France's yield is now more than Italy's 10-year yield of 4.52%. In other words, Italy, which was like Greece, once a poster child for Europe's debt crisis, is now being viewed in parts of the bond market as safer than France when it comes to long-term debt.

12:47And consider this. Speaking of Greece, in 2008, the 10-year Greek bond was yielding about 4.8 percent right before the massive debt crisis there hit. I was in Athens. I watched people firebomb banks. So what is happening in France right now? By the way, massive protests all around France, mostly about schools. But you've got huge protests. You've got a big spike in yields. You've got a lot of there's some video from France, a lot of unrest that's happening in France. France is not Greece. No offense. Watch France. Yeah, and obviously the frustrations. You know, there's just not enough money to go around for all of these problems.

13:25There's never enough money to go around. All right, coming up, how a major AI nuclear deal is sending the entire sector higher. Plus, with U.S. stocks at records, is it time to go global? And after the break, how retailers are using AI to drive sales, but they do want some new rules. We'll talk about that with Kate Rooney coming up.

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15:11Download the latest episode and subscribe at schwab.com slash market update podcast or find Schwab Market Update wherever you get your podcasts.

15:23Welcome back. Meta announcing some new partnerships to help its muse agent navigate e-commerce more smoothly as more businesses prepare to interact with AI bots. Kate Rooney has the details. Kate. Hey, Kelly. So this is just out. You have Walmart, Meta, Stripe, Sierra, a handful of other companies now teaming up to try to really set a new rulebook for this new age of AI agents. The companies are introducing what they call a personal agent protocol. So it's essentially an open standard to let AI agents securely interact with businesses on customers' behalf. I talked to Brett Taylor. He's the CEO of Sierra, chairman of OpenAI, and has been spearheading this.

16:01He likened it to signing into another website with Google or Facebook, if you've ever done that. So the idea would be to help businesses verify that an AI agent is actually working for a real customer. It's not just a rogue bot and that it has the authority to do what the customer actually wants here. Brett Taylor did tell me that it is a common standard. And without that, he's called it kind of chaos right now for businesses. So they're trying to smooth that over. Meta's Muse now has millions of users. It only launched a couple of years ago. I spoke to David, excuse me, weeks ago. David Singleton over there I talked to yesterday.

16:34He said that people are now using it for everything from signing kids up for classes, booking doctor's appointments, and that other companies have pushed back on AI bots overall. We've seen examples of Amazon blocking news from accessing its website over some of these concerns, also blocked perplexity. OpenAI and Anthropic are not part of the group, we should note, but Brett Taylor does expect some of these rivals to work together and join the open standard. That's sort of the way that's going to have to work here, is everybody's going to have to sign on board, guys. Trying to help out small businesses in a way, right?

17:04Like, basically, they don't want to be left out. Well, that's part of it, right. Right. If you have a small business in a local shop that has an online store and is not used to interacting with these agents, I mean, the speed at which all this is moving, guys, you've seen how viral Muse has gone. There's also Instinct, which also signed on to this protocol and agreed to do this. They have just boomed in popularity. So the amount of e-commerce that's now all of a sudden being done by AI agents. I should also mention Rocket is a part of this. They talked about loan originations being done by AI agents.

17:35And so it really signals how the economy and e-commerce is changing so quickly. They're trying to make this a lot smoother and make sure businesses know who's actually calling. Is it an AI bot by themselves? Is it an AI bot on behalf of Kelly or Brian? They just want to make that more clear and make sure that it's secure in a lot of ways. Kate Rooney. Kate, thank you very much. All right. So what could these partnerships mean in the broader AI race? Well, your next guest says Facebook parent Meta is well positioned as agents become more popular for online shopping. He just raised his meta price target to$1 ,000.

18:08Let's bring in Ken Gawruski. He is a senior internet analyst at Wells Fargo. Ken, is the idea that basically these agents are just going to drive sales because they buy things automatically and you kind of remove the human component of, well, maybe I don't need it, the agent just buys it anyway, or is it something more meaningful? Yeah, well, thanks for having me. first. The way we look at it is that AI agents or consumer AI agents really reduce the friction of discovery. So anything from there's been a lot of discussion of or use cases you've seen about reducing bill prices and negotiating mobile phone rights or cable bills to more complex multi-step processes like planning a trip, maybe across multiple families.

19:01But we're talking about even things that will be as simple and, frankly, as daily occurrences, such as planning lunch out with a friend. My friend, instead of us texting back and forth, that friend's agent, my agent, will correspond, figure out the best time. And so I think all in all, this reduces friction. We do think this accelerates e-commerce penetration across the Internet. How does that drive money, though, to Meta? How does Meta make money off Muse? And you'll pardon all the alliteration, Ken. Yeah, absolutely. So today, the only model is there's a subscription. But really, the intention here is to say, for almost all users, this is a free product.

19:56This is a free product. And the best model to get to hundreds of millions and eventually to billions of users is free, right? And so they're following this same kind of template with other products. It's a free product at a certain threshold of usage. And I'm a heavy Muse user myself. And I've never, you know, I'm kind of made it to about 60 % or so of my weekly limit. So the intention here is to keep this free. And at that point, there's a subscription. Now, longer term, where are we going here? They've talked about a cut of transactions, a percent of transactions. I think that's a good way to build trust and to kind of build the business model.

20:37In the end, we think this likely ends up in an ad model. It may not look the same as today's ad model, but ultimately, in the end, we think it's an auction-based ads model, which is where most meta businesses end up and, frankly, where Google search has been so successful. Yeah, I think they would easily pivot that business model. Ken, what do you like most about using Muse? You know, we talked to Chris Verone yesterday from Strategia. So I'm talking a lot about Chris after his appearance. But he was just saying he had used it to say he was trying to find a flight and it was able to find the flight and book it for him and his family, all without his involvement, and did it correctly and successfully.

21:11So I just like hearing more of these use cases. What do you like about Muse? What are you using it for? Yeah, well, it's interesting. I'd say I have an older child who's just beginning out of college selection process. So that's one use case. I mean, there's so much data out there and it aggregates and all puts it together and I can present that. So hopefully that will make our college, our family a bit more calm during this college selection process. So that's maybe one on the personal side. But on the commercial side, I've found that it just reduces so much friction. If I – the hours it takes to plan a trip or a multi-step process and you can just narrow that down to just the – give me three or four great properties and simplify it all for me.

22:09And the important part also is you can present that to members of your family, other parties that may be involved in this transaction or involved in this trip. And that's really the beauty. The beauty is that you can actually collaborate and share. And maybe the last thing I'll say here is this. What really makes this special is that it is proactive often. Like these agents are proactive for you. And so they will put you in a, you know, they'll see you're between meetings. You're walking across town in midtown Manhattan, and there's this great coffee shop, and they know you love that coffee. This is where the ad model eventually will go.

22:50You'll get a 20 % discount if you stop and have that coffee. I think we're going to see the ads first around this proactive nature. Ken, quickly, it's Prime Day, as Kelly said. Again, I feel like it should be a national holiday. Should we really be working today? We shouldn't be working today. No, it should be a national holiday. I think Amazon would be in favor of that. Yeah, and just sit home and just, it's like Cyber Monday. We can dial up on our AOL account. Anyway, does Prime Day matter to Amazon on the stock? Tell us what you think about the stock. Should we buy it or sell it? But does Prime Day matter to the company?

23:24Well, absolutely, it matters, right? And the reason is because it is a showcase day for them from a product standpoint, from a promotion standpoint. And I think really what Amazon does and Prime Day is it really flexes its muscle around not only the great supply chain that it's built and probably very differentiated, but also its abilities in fulfillment and logistics. And to the stock, AWS has been the story. It's been a great growth story, an accelerating growth story. And this is one reason we like this stock. But the other reason, despite some of these agendic concerns around advertising, we believe that the real competitive moat here, and it's durable, is fulfillment and logistics.

24:10You can have as many agents you want to run around. Those agents are not delivering that package from the fulfillment center to your home. It's just there's no AI that does that. You need a physical, the offline logistics network. And to us, that's the real differentiator in Amazon retail. All right. I want to know where you're trying to get your kid to go to college. You know, I feel like you're trying to persuade, like there's a persuasive maybe element of what's going on here. But let's just say we're trying to reduce conflict in the household. How about that? If Muse can do that, then even I'm going to get on board.

24:51No. Ken, thank you. Good to see you. as always, Ken Gorelski. We appreciate it. I see. Coming up, Google goes nuclear. That's the headline. The major power deal that got the AI and energy worlds on notice. We'll tell you more about that next.

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26:32A major power deal in the world of energy. Alphabet signing a 20-year deal with Constellation Energy. The deal will secure 3.6 gigawatts of power. What does that mean? It's roughly equivalent to about 3 million sort of average-sized homes. Constellation says the agreement will unlock more than$4 billion in investments across 11 nuclear units. Shares are on the move. In fact, Constellation stock is up 11.5%. That is the best day for Constellation in more than a year. And your next guest says this could be a big win for the broader nuclear trade. Joining us, James West, head of energy and power research at Mellius Research.

27:14Just absolute must-read stuff. James, good to have you back on the show. Another day, another deal. 3.6 gigawatts. That's a lot of power. What do you make of the deal? This one's a monster deal, but not surprising. We know that the hyperscalers see power as the biggest constraint. And so we've seen, particularly in the nuclear side, 2025 was a year of kind of restarts, extensions and the existing capacity being hoovered up here. What we're seeing in 26, though, is extensions in actual power generation. So what we call upgrades to facilities and being paid for by, of course, the hyperscalers through the pricing.

27:52And as you saw with Constellation today, I already saw with the DOE loan that was announced on Monday for Bistra. You know, the big guys are winning here. So if you have existing power that you can add more power to, that you're already on the grid, it is in high demand. Does it tell us anything about future deals? The size, the pricing, the scale, the source, James? How do we read this for the future, if at all? I think we've entered into a new paradigm here of much larger transactions because the data centers are getting bigger as well. So when we went from 100 to 200 megawatts to a gigawatt or more gigawatts, we're going to need the same size of power to be either constructed or operate or delivered to the sites.

28:32And so I think this is the new generation of power deals. Yeah, Constellation up 11.3 percent. Is this deal, James, try to sort some stuff out. We keep hearing, OK, well, we're going to build this and it's going to steal power away from homes. Are these deals additive? Are they subtractive to the general population? Are they completely separate from the population at large? These deals are bi-directionally negotiated. They're separate from rate payers. What FERC and really PJM market are trying to do is make these guys work together, negotiate together to stay really out of the auction market, quite frankly.

29:12So you don't touch the rate payers at all. It's been very clear. Don't hurt ratepayers. Don't drive up electricity costs. And quite frankly, the hyperscalers are in agreement there. They don't want the backlash on data centers. They don't want the backlash on power costs. And so they're perfectly willing to pay for this. It's small in terms of the scale and size of what they perceive as the prize of winning AI. James, it's Kelly here. And at the top of the hour, Jan Vanek was talking about some of the nuclear names that he said, you know, had been not trading well, but are trading obviously really well today.

29:43And maybe it is just the news. But he said, imagine if there's the first approval, first new approval in years for a nuclear plant. There's only a 10 % odd from prediction markets that that could happen this year. Talk about that. How real a catalyst is that? When do you think that might realistically happen? And what would it mean for the rest of the space? I think approval for that, maybe not by year end, but sometime early next year. I can tell you if we got approval before year end, this Westinghouse IPO is going to get hotter than it probably already is going to be. And so it would be very good for whoever announces it.

30:20But they want government backstuffs. They want government financing. So it's going to take some time for that to happen. But it would probably be more than the big guys, a Constellation or a Vistra. And I wouldn't even rule out one we haven't talked about yet, which is Talon. And notice that Talon's been pretty quiet. Constellation announcement today and last week, Vistra announcement on Monday. What's Talon up to? What do you think they're up to? About to sign deals. If that's true, does that mean a lot more upside for these stocks? Absolutely. I think we're just getting to early stages here.

30:52I mean, all these stocks trade at cash flow yields that are in either the high single digits or low double digits. Talent actually is close to 20 % on their own guidance, which we think is soft. And so we see tremendous upside, even more so in some of the natural gas names like NRG. What if those approvals don't come, don't happen, are years off still? I think that's a different story for the equipment manufacturers. But for the guys that have existing nuclear power, that's going to get soaked up into long-term PPAs. We're going to turn from merchant power companies into really kind of infrastructure-like assets with contracted cash flow, which deserves lower cash flow yields and higher multiples.

31:32James West, Mellius Research, always a must-read. James, really glad you came on the program. Thank you very much. Thanks, Brian. Take care. Thanks, Brian. Thanks, Kelly. Alphabet isn't the only mega cap making power moves today. SpaceX is seeking approval to build a natural gas pipeline in Florida. The pipeline would help fuel rocket launches from Cape Canaveral. It would mirror a similar project SpaceX has proposed for its South Texas launch site, which is an eight-mile gas pipeline near Starbase. Nat Gas, or I'm sorry, SpaceX shares fractionally higher today at 172. All right. All right. So speaking of another commodity, before we go, let's take a closer look at oil.

32:07Now, oil was lower earlier. It's now slightly higher. But here's the number to watch. $88.67 per barrel. We're above that right now. But$88.67, why do you care? That is the 50-day moving average right now on oil. If we close below that, we probably won't today. We know that. It's over. But tomorrow, maybe. Who knows? We'll see what happens. It was the first time we'd close below the 50-day moving average since August 7th. Again, it has not happened, but we're going in the right direction. You got Brent crude at over 100. But keep in mind, as we've talked about, Kelly, extensively, these are the future prices.

32:43These are the paper contracts. If you want to get a physical barrel of oil, if you say, give me a barrel of oil, someone rolls it to you, it's going to be a lot more expensive than that. So we get it. Barrels of oil are more pricey than that. But the futures market slowly trickling down, slowly. Makes those refiner spreads that Jan was talking about at one all the more interesting to watch. If they're not coming down, is that a signal of Ukraine, Russia, the tensions there escalating? And we'll see. Thus the aforementioned crack spread. Yes. All right. With markets at record highs, is there more upside overseas than there is here?

33:19Emerging markets portfolio managers top picks around the world just for you. Next.

33:30The iShares Brazil ETF is holding on to yesterday's big gains as Morgan Stanley and JP Morgan are now upgrading Brazilian equities. All of this following the recent election results. Our next guest believes Brazil's continued success is by no means a foregone conclusion, though, and sees better opportunities in other under-the-radar global areas. Joining us now is Derek Irwin. He's the senior emerging markets portfolio manager at Allspring. Derek, it's great to have you. Let's start with your thoughts on Brazil. What are they? Well, look, in a year of mostly negative surprises globally, this has been just a great positive surprise for emerging market investors.

34:09Not only did we see a better than expected election result with regard to the presidential election and Bolsonaro, who is perceived as more market friendly, coming out ahead, at least in the first round, but also the lower houses in Congress came out more positive for markets as well. So really a very positive result. We're not out of the woods yet, but I think the market can begin to look forward to maybe a more credible fiscal spending path. Maybe we start to see rates coming down and ultimately moving into a virtuous cycle with Brazilian equities, which we haven't seen in some time. So would you be in favor of people owning and having some exposure?

34:50Especially your other strategists talking about how the currency could appreciate significantly. So that could give you kind of like a double boost there. Yeah, I think there's a lot of room. This is a very interesting rally because almost everything rallied. Rates rallied, the currencies rallied, equities rallied. And so it speaks to a lot more than just the market and positioning and a big pleasant surprise. It speaks to what is the potential for a real structural improvement in Brazil. So there is room for continued performance in Brazil. I think yesterday's move was very big and it priced in that kind of surprise in the election.

35:28But I think as we look forward and Bolsonaro's government, should he win the runoff, begins to implement positive reforms, we can really start to see a cycle that could really see a very strong uptrend in Brazilian shares. So there's still there's still room here for this market to move. All right. So you are, I would say, cautiously optimistic maybe there. What about what else is in emerging markets these days? You got the big, you know, memory trades with Korea and Taiwan. China's been kind of eh. Where else when you look around India? We were just talking about this with a previous guest. You know, a lot of pressure from higher oil prices there.

36:06Yeah, well, I mean, obviously the year has been a year of Korea and Taiwan tech. Really, an AI trade has been driving the bus with regard to emerging market performance. And we think that continues. There's very good fundamentals there for the big chip makers and the ecosystem around that in Korea and Taiwan. So we think that will continue, maybe not quite as aggressive as we've seen earlier in the year. But there's certainly a long-term good story there. So we're pleased that that's going to provide support to the market. But I think what's important to understand about emerging markets is a lot of parts of the market are trading at pretty low valuations.

36:45They sold off after the Iran crisis began in March and have yet to reach those pre-March highs. So there's some really exciting areas of the market that we've been looking at and maybe adding a little exposure to as well. Maybe the most interesting, you mentioned China as one of the big drivers in EM. It has really struggled year to date, but it's now sitting on a very substantial discount to the rest of emerging markets. There are very good companies that we believe are trading at near depressed multiples. And maybe most importantly, the Chinese market and the Chinese government is one of the few governments that is stimulating right now in an environment where rates are rising and many governments and central banks are doing just the opposite.

37:31So China has a little bit of room here to really rally off a low base. I don't know that there's an obvious catalyst tomorrow, but I think as we look into 2027, I think we can start to see some pretty interesting things happening in China. So that's great. That's a big piece of the market. And then we can look a little further afield, maybe a little more interesting parts of the market. For instance, South Africa, where I think a lot of folks might not spend too much time looking at, is a really interesting story. It's very exposed to oil. It's very exposed to global interest rates. And that's put pressure on the market.

38:06But it's also an incredible transformation story. Over the last few years, we've seen real progress in power generation, logistics. The government appears to be more functional. And we have an election that is probably going to improve that even more coming up this year. So there's a lot of room to be structurally positive on South Africa, and the shares are cheap. We're showing the ETF, the EZA, if people's curiosity is piqued. Mine certainly is after hearing those updates. Derek, thanks so much. Appreciate it. Thank you. Derek Irwin of Allspring. All right, meantime, got a couple of interesting moves and some biotech names.

38:43First up, Moderna, big name you know. Now, Moderna has been on fire. It hit a 52-week high earlier before the stock ended up turning down. Moderna was the coming into today. It may still be the best-performing S &P 500 stock over the last couple of months. Novavax seeing a similar swing, opening into green and then tumbling. That stock on pace for its worst day in a year. The move showing up across the group as well. Not exactly clear what is driving the reversal, but we are digging into it. We'll get some news, we'll bring it to you. But either way, these are moves in biotechs, which there is a lot of room to cover these names.

39:15And let's get to Frank Holland for the CNBC News Update. Frank? Good afternoon, Kelly. Ukrainian President Vladimir Zelensky said today the latest intelligence shows that Russia is preparing for a massive attack. His warning coming hours after Ukraine launched one of its largest aerial assaults on Russia's capital. Zelensky did not elaborate on the timing of Russia's attack, but said, Ukrainian services and its air force are ready to respond. Cornell is bringing in former acting U.S. Attorney General Sally Yates to lead an independent review of the explosive sexual assault allegations made by a woman identified as Jane Doe.

39:49She filed a police report weeks after saying she was raped at a fraternity party in 2024, but the local district attorney declined to file charges. The university says Yates and her team will examine whether Cornell followed its policies in responding to her claims. And the U.S. military is pausing all operations and canceling off-base privileges in Okinawa after a Marine was arrested in a local woman's killing. Officials say service members will receive training during the 48-hour pause, which also bans drinking alcohol on and off base. More Power Lunch coming up after this break. Welcome back.

40:26Time now for our Market Navigator segment. AI obviously driving a massive investment boom, but the opportunity may be spreading beyond the usual suspects. Our next guest is on two AI-adjacent stocks that have been soaring this year, and he says it's not too late to get in on the rally. Joining me is Jed Ellerbrook. He's a portfolio manager at Argent Capital Management. It's good to see you. Welcome. Okay, United Rentals and Dynatrace. Dynatrace, I believe, is also making a new 52-week high today. Pick whichever place you want to start, But what is it about these two that is giving them such momentum that you think can continue?

41:01Yeah, sure. I'll start with Dynatrace. So Dynatrace makes observability software, which for us layman means it tells you when your cybersecurity tools break and why. And of course, that that that product is in higher demand today. AI is a threat that companies want to protect themselves against. And so we expect Dynatrace's revenue growth to accelerate. Their competitor is Datadog. Datadog's revenue growth accelerated a couple of quarters ago. Dynatrace hasn't seen it yet, but we think it's inevitable and coming soon. So we like that stock. We think it's reasonably priced. And we added it to our portfolio a couple months ago.

41:33This feels like if you're right about the business, but certainly the industry is in a great spot right now, it would seem. All right. So what about United Rentals? Explain that one. Yeah. United Rentals is one of our longtime favorites. They make or they offer rental equipment to various construction sites around the country. And what's driving their business today are these mega projects. That includes semiconductor manufacturing. It includes, of course, all these data centers and their products, you know, aerial lift equipment, earth moving equipment. It's actually become in shortage recently, which gives United Rentals more pricing power, which helps them expand profitability and grow revenue.

42:09So these are great times for United. Are these companies where you have to have a point of view about kind of AI CapEx or, you know, the midterm results? I mean, is that implicit in your recommendations, or can you just look at the numbers and say, you know, valuation numbers, it just points to more upside? Yeah, I think for United, you know, which is a stock that's done really well and it's actually trading at the high end of its historical valuation range, we do need data center CapEx to continue to grow. And we also need these mega projects to lead the way because high interest rates are hurting, you know, hospital construction, office construction, et cetera.

42:46That's a great point. Jed, great to have you here. Thanks. Appreciate it. Jed Ellerbrook. Brian, over to you. I don't have a camera. I mean, it's like the radio. Still ahead. Some big data you got to see. We're going to break down. We're going to break down where all the data centers are getting built and just how much capital is powering that boom. Nobody wants to see me anyway. We're back right after this.

43:17On Wall Street, on Main Street, and now on the campaign trail, data centers. Of course, the heart of the conversation, all the conversations. But where exactly does the build out stand, literally and figuratively? Well, Bank of America is out with a new note with some very interesting numbers. Listen to this. Bank of America says August alone saw$14 billion in new data center starts. That brings the year-to-date total to nearly$99 billion. That's already above all of last year. And of course, we've basically got three months to go. Projects are also getting larger physically. The average data center like that now spans more than 700 ,000 square feet.

44:00Of course, Texas is the epicenter with about$22 billion in spending so far this year. So about one-fifth. In fact, Bank of America says about 85 percent of all planned starts through year end will be either in Texas or the southeast. But the build out is also putting pressure on the grid. Bank of America expects power infrastructure starts to jump 30 percent in the next year. Although, Kelly, like we just talked about, some of that will be purely dedicated to a data center and never touch actually the grid. True. And we'll see if that's how it plays out. Oh, and I'm on camera. Brian, you look like the weatherman right now.

44:38So you can see the storm and then it's something. Yeah. Heat dome. More power lunch after the break. Welcome back. Before we go, over the summer, LeBron James signed a two-year, $8 million deal with the Philadelphia 76ers. It's actually the smallest contract of his NBA career. And off the court, he's making up that difference and then some. According to front office sports, LeBron's polymarket endorsement is worth$15 million a year. That's four times Brian as much as he'll make from the Sixers. Interesting wrinkle in all this. I don't know if you've seen this, but Wembe Yana is out there talking about how he doesn't want to make money from the online betting platforms.

45:17And I respect that. But LeBron is, he's taking it all the way to the bank right now. Well, Wembe's also like half of LeBron's age. He's got a whole career. Of earnings, hopefully. Of earnings ahead of him. If it goes the way that LeBron. And with inflation, we could be looking at a billion dollars. Yeah, sure. The dude is good. Cheering for it. Very quickly, are you looking to fly in like the next month or plan the trip? Well, guess what? Maybe do it now or get a Muse AI agent. Get a Muse agent. Because prices for airfares have just, they've gone up faster than a United flight out of Newark. Maybe that's not the right metaphor.

45:52Either way, expensive flights, they're rising. So if you want to book, maybe book now or wait and take the chance or drive, Kelly. Or if you're going to remote Alaska, like 10 people are, then you have something to worry about. Thanks for watching Power Lunch, everybody. Closing Bell starts right now.

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